2018 General Rate Case Rebuttal Testimony

Transcription

1 Application No.: A Exhibit No.: SCE-1, Vol. 0 Witnesses: A. Ayorinde (U -E) 01 General Rate Case Rebuttal Testimony Transmission & Distribution (T&D) Volume - Customer-Driven Programs Before the Public Utilities Commission of the State of California Rosemead, California June 1, 01

2 SCE-1: Transmission & Distribution (T&D) Volume - Customer-Driven Programs Table Of Contents Section Page Witness I. INTRODUCTION...1 A. Ayorinde A. New Service Connections ORA s Position.... SCE s Rebuttal to ORA s Position.... TURN s Position.... SCE s Rebuttal to TURN s Position... a) Meter Set Forecast... b) Use of 00 Data is Inappropriate in Forecasting Residential Line Extensions... c) Residential Tract Development... (1) TURN Provides No Support for Using a Average for Residential Tract Development... () TURN s Confusion About Excess Cable Is Unfounded... d) Residential Backbone Development... e) Commercial Service Connections and Tract Development.... CFC s Position.... SCE s Rebuttal to CFC s Position... B. Overhead to Underground Conversions ORA s Position.... SCE s Rebuttal to ORA s Position... C. Distribution Transformers ORA s Position... -i-

3 SCE-1: Transmission & Distribution (T&D) Volume - Customer-Driven Programs Table Of Contents (Continued) Section Page Witness. SCE s Rebuttal to ORA s Position...1 Appendix A Response to ORA-SCE--TCR Q.01 Supplemental -ii-

4 I. INTRODUCTION Customer-Driven Programs are largely driven by SCE s obligation to serve, and are subject to SCE s Preliminary Statement 1 as well as Tariff Rules,, 1, and 0. Customer-Driven Programs include capital expenditures that SCE incurs in responding to requests from its customers. Accordingly, the level of capital spend in this area is largely out of SCE s control, since the amount of spend pivots based on the number and type of customer requests. SCE s opening showing focused on the costs to: (a) connect new residential, commercial, and agricultural customers to SCE s system; (b) meet customer requests under Rule 0 to underground certain overhead facilities; (c) relocate existing SCE facilities to meet customer needs; and (d) provide customers with added facilities under Rule. ORA, TURN, and the Consumer Federation of California (CFC) addressed various aspects of SCE s Customer-Driven Programs request. SCE addresses each of these parties recommendations in the following sections. In Table I-1, Table I-, Table I-, and Table I-, we summarize SCE s forecasts for capital expenditures, as well as the forecasts proposed by ORA, TURN, and CFC. 1 See Advice Letter 1-E-B subject to Decision

5 Table I-1 Summary of Customer-Driven Programs Capital Expenditures 0-01 Recorded 0% CPUC Jurisdictional Nominal $000 Recorded Activity Residential Service Connections $ 1,1 $ 1, $ 1, $ 1,1 $ 0,0 $ 1, Residential Line Extension $, $,0 $ 1,0 $ 1,0 $ 1,0 $ 0, Residential Tract Development $ 1,1 $ 1, $ 1,1 $, $ 0, $, Residential Backbone Development $, $,0 $, $,1 $, $,1 Commercial/Industrial Service Connections $ 1, $ 1, $ 1, $,0 $ 1,0 $ 1, Commercial/Industrial Line Extensions $ 0, $, $, $,0 $ 0, $, Commercial/Industrial Tract Development $, $, $ 1, $, $, $ 1,0 Agricultural Service Connections $ 1 $ 1, $ 0 $, $, $, Agricultural Line Extensions $,1 $, $, $, $,0 $, Street Light Installations $,0 $ 1,0 $ 1,0 $ 1, $, $,0 Distribution Rule 0A Conversions $, $, $ 1, $ 1, $ 1,1 $ 1, Distribution Rule 0B Conversions $ 1,0 $ 1, $, $ 1, $ 1,0 $ 1,1 Distribution Rule 0C Conversions $,0 $,1 $,1 $, $, $, Transmission Overhead to Underground Conver $ 1, $, $, $ 1, $,0 $, Relocation of Distribution Lines $, $, $, $ 1,1 $,1 $ 1, Distribution Added Facilities $, $,0 $,0 $ 1, $, $,0 Distribution Transformers $, $ 0,1 $, $, $, $,0 Capital - Customer Driven Programs $,1 $, $,0 $ 0, $, $, SCE forecasts include November 1, 01 Errata filing.

6 Table I- Summary of Customer-Driven Programs Capital Expenditures Forecasts for SCE and ORA 0% CPUC Jurisdictional Nominal $000 SCE Forecast ORA Forecast Activity Variance Residential Service Connections $, $, $, $,0 $ 1, $, $, $,0 $ (1,0) Residential Line Extension $ 0,0 $,0 $ 1, $, $ 0, $,00 $, $, $ (1,0) Residential Tract Development $, $, $,0 $ 1,0 $, $, $ 0,0 $ 1,0 $ (,) Residential Backbone Development $ 1,0 $,1 $,1 $,0 $,1 $,1 $, $,0 $ (,) Commercial/Industrial Service Connections $,01 $, $, $ 0,1 $ 1, $ 1, $, $, $ (,1) Commercial/Industrial Line Extensions $, $, $ 1, $ 0, $, $, $, $,00 $ (,) Commercial/Industrial Tract Development $ 1,0 $ 1, $, $ 0,1 $ 1,0 $ 1, $ 1,0 $, $ (,) Agricultural Service Connections $,1 $,00 $, $,0 $, $, $,0 $,0 $ () Agricultural Line Extensions $, $, $, $, $, $, $, $,1 $ () Street Light Installations $, $ 0, $,00 $, $,0 $ 1,000 $,1 $,1 $ (1,) Distribution Rule 0A Conversions $ 1,00 $,0 $, $,0 $ 1, $ 1,0 $ 1,0 $, $ (1,) Distribution Rule 0B Conversions $ 1,1 $ 1, $ 1, $, $ 1,1 $ 1, $ 1, $, $ - Distribution Rule 0C Conversions $, $,00 $, $ 1,1 $, $,00 $, $ 1,1 $ - Transmission Overhead to Underground Conver $, $, $,01 $,1 $, $, $,01 $,1 $ - Relocation of Distribution Lines $, $, $ 0, $,0 $ 1, $, $ 0, $,0 $ - Distribution Added Facilities $ 1, $ 1,0 $ 1, $, $,0 $ 1,0 $ 1, $, $ - Distribution Transformers $, $ 0,1 $,1 $, $,0 $,01 $,0 $ 1,0 $ (,0) Capital - Customer Driven Programs $, $, $,00 $ 1,0, $, $,1 $ 0, $, $ (,) Table I- Summary of Customer-Driven Programs Capital Expenditures Forecasts for SCE and TURN 0% CPUC Jurisdictional Nominal $000 SCE Forecast TURN Forecast Activity Variance Residential Service Connections $, $, $, $,0 $ 1, $,1 $ 0, $,1 $ (,) Residential Line Extension $ 0,0 $,0 $ 1, $, $ 0, $,1 $, $ 0, $ (,) Residential Tract Development $, $, $,0 $ 1,0 $, $ 0,0 $, $ 1,1 $ (,) Residential Backbone Development $ 1,0 $,1 $,1 $,0 $,1 $ 1,0 $ 1, $, $ (1,) Commercial/Industrial Service Connections $,01 $, $, $ 0,1 $,01 $ 1,0 $ 1,1 $,0 $ (,0) Commercial/Industrial Line Extensions $, $, $ 1, $ 0, $, $,00 $,0 $, $ 1, Commercial/Industrial Tract Development $ 1,0 $ 1, $, $ 0,1 $ 1, $ 1, $,1 $, $ () Agricultural Service Connections $,1 $,00 $, $,0 n/a n/a n/a n/a n/a Agricultural Line Extensions $, $, $, $, n/a n/a n/a n/a n/a Street Light Installations $, $ 0, $,00 $, n/a n/a n/a n/a n/a Distribution Rule 0A Conversions $ 1,00 $,0 $, $,0 n/a n/a n/a n/a n/a Distribution Rule 0B Conversions $ 1,1 $ 1, $ 1, $, n/a n/a n/a n/a n/a Distribution Rule 0C Conversions $, $,00 $, $ 1,1 n/a n/a n/a n/a n/a Transmission Overhead to Underground Conver $, $, $,01 $,1 n/a n/a n/a n/a n/a Relocation of Distribution Lines $, $, $ 0, $,0 n/a n/a n/a n/a n/a Distribution Added Facilities $ 1, $ 1,0 $ 1, $, n/a n/a n/a n/a n/a Distribution Transformers $, $ 0,1 $,1 $, n/a n/a n/a n/a n/a Capital - Customer Driven Programs $, $, $,00 $ 1,0, $ (,1) SCE forecasts include November 1, 01 Errata filing.

7 Table I- Summary of Customer-Driven Programs Capital Expenditures Forecast for SCE and CFC 0% CPUC Jurisdictional Nominal $000 SCE Forecast CFC Forecast Activity Variance Residential Service Connections $, $, $, $,0 n/a n/a n/a n/a $ - Residential Line Extension $ 0,0 $,0 $ 1, $, n/a n/a n/a n/a $ - Residential Tract Development $, $, $,0 $ 1,0 n/a n/a n/a n/a $ - Residential Backbone Development $ 1,0 $,1 $,1 $,0 n/a n/a n/a n/a $ - Commercial/Industrial Service Connections $,01 $, $, $ 0,1 $ 1, $, $ 0,00 $, $ (,0) Commercial/Industrial Line Extensions $, $, $ 1, $ 0, n/a n/a n/a n/a $ - Commercial/Industrial Tract Development $ 1,0 $ 1, $, $ 0,1 n/a n/a n/a n/a $ - Agricultural Service Connections $,1 $,00 $, $,0 n/a n/a n/a n/a n/a Agricultural Line Extensions $, $, $, $, n/a n/a n/a n/a n/a Street Light Installations $, $ 0, $,00 $, n/a n/a n/a n/a n/a Distribution Rule 0A Conversions $ 1,00 $,0 $, $,0 n/a n/a n/a n/a n/a Distribution Rule 0B Conversions $ 1,1 $ 1, $ 1, $, n/a n/a n/a n/a n/a Distribution Rule 0C Conversions $, $,00 $, $ 1,1 n/a n/a n/a n/a n/a Transmission Overhead to Underground Conver $, $, $,01 $,1 n/a n/a n/a n/a n/a Relocation of Distribution Lines $, $, $ 0, $,0 n/a n/a n/a n/a n/a Distribution Added Facilities $ 1, $ 1,0 $ 1, $, n/a n/a n/a n/a n/a Distribution Transformers $, $ 0,1 $,1 $, n/a n/a n/a n/a n/a Capital - Customer Driven Programs $, $, $,00 $ 1,0, $ (,0) A. New Service Connections To connect new residential, commercial/industrial, and agricultural customers to SCE s system and to provide street lighting systems to new developments, SCE performs the following ten types of customer growth-related activities: a. Residential service connections; b. Residential line extensions; c. Residential tract development; d. Residential backbone development; e. Commercial/Industrial service connections; f. Commercial/Industrial line extensions; g. Commercial/Industrial tract development; h. Agricultural service connections; i. Agricultural line extensions; and j. Street light installations. Customer growth-related work activities ultimately revolve around a meter installation. The work can consist of installing a new meter in a new home or business, upgrading a meter due to increased load needs, extending electrical facilities to new communities where meters will be ultimately set, or installing street lighting to serve the new or expanded communities where new meters must be set. Therefore, SCE uses a meter set forecast to develop its capital expenditure forecasts for each new service connection work category. This approach is consistent with the forecasting methodology the Commission adopted in SCE s 01 GRC and 0 GRCs.. SCE forecasts include November 1, 01 Errata filing.

8 Table I- New Service Connections 0% CPUC Jurisdictional - Nominal $000 Recorded Activity Residential $,0 $, $ 0, $,00 $ 1,1 $, Commercial $,0 $, $,1 $, $, $, Agricultural $, $, $, $,0 $,1 $,0 Streetlights $,0 $ 1,0 $ 1,0 $ 1, $, $,0 $,1 $ 1,1 $ 1, $,1 $ 1, $,0 SCE Forecast ORA Forecast Activity Variance Residential $,1 $ 1,0 $,0 $,0 $, $ 1, $, $,1 $ (1,0) Commercial $ 0, $, $,0 $, $, $, $,1 $ 1, $ (1,) Agricultural $, $, $,1 $,1 $,0 $, $,0 $, $ () Streetlights $, $ 0, $,00 $, $,0 $ 1,000 $,1 $,1 $ (1,) $, $,0 $ 1,0 $, $,0 $, $, $,0 $ (1,) SCE Forecast TURN Forecast Activity Variance Residential $,1 $ 1,0 $,0 $,0 $, $,0 $, $,0 $ (,) Commercial $ 0, $, $,0 $, $, $ 0, $,00 $ 1, $ (1,0) Agricultural $, $, $,1 $,1 n/a n/a n/a n/a n/a Streetlights $, $ 0, $,00 $, n/a n/a n/a n/a n/a $, $,0 $ 1,0 $, $ (,1) SCE Forecast CFC Forecast Activity Variance Residential $,1 $ 1,0 $,0 $,0 n/a n/a n/a n/a n/a Commercial $ 0, $, $,0 $, $,0 $, $, $, $ (,0) Agricultural $, $, $,1 $,1 n/a n/a n/a n/a n/a Streetlights $, $ 0, $,00 $, n/a n/a n/a n/a n/a $, $,0 $ 1,0 $, $ (,0) 1 1. ORA s Position ORA agrees with SCE s forecast methodology for New Service Connections but utilizes its own meter forecast in developing its proposal. SCE and ORA s forecast for each element of new service connection is shown in Table I-. Please note that the CFC forecast only made recommendations to the Service Connections portion of the commercial forecast; however, Commercial Line Extensions and Tract were also added to the forecast in order to make comparisons in like terms. ORA s meter set forecast is presented in Exhibit ORA-: Sales, Customers and New Meter Connections.

9 SCE s Rebuttal to ORA s Position SCE agrees to adjust its forecast for New Service Connections based on the final new meter set forecast adopted in this GRC.. TURN s Position TURN proposes reductions to all areas of Residential and Commercial New Service Connections based on its own meter set forecast. TURN also proposes additional reductions to the Residential Line Extensions, Residential Tract, and Residential Backbone work activities based on its estimate of cable feet per meter. Finally, TURN suggests reductions to Commercial Service Connections and Commercial Tract work activities based on TURN s unit cost estimates.. SCE s Rebuttal to TURN s Position a) Meter Set Forecast SCE assumes that the amounts adopted for these categories will reflect the meter set forecasts adopted in the Commission s decision. b) Use of 00 Data is Inappropriate in Forecasting Residential Line Extensions TURN uses the same methodology as SCE to estimate the cable feet per meter for Residential Line Extensions, but recommends the addition of 00 data to SCE s 00-0 regression analysis. SCE maintains that 00 should be excluded from this analysis as the conditions experienced in 00 were fundamentally different for Residential Line Extensions. As described in SCE s 0 GRC showing: During periods of lower customer growth, the majority of new meter sets are from replacement of single residential units by multiple units or from adding a few homes to existing developed areas, all of which require line extensions charged to this work category. In contrast, during periods of higher customer growth, a significantly smaller proportion of the total meters are driven by conversion of single meter homes to multi-meter homes and small-scale development. Most of the new meters set growth is driven by new residential developments that require tract and backbone facilities to serve them, rather than the limited construction necessary for line extensions. Based on this experience, SCE contends the relationship of feet of cable to number of meter sets shows a marked difference when the number of meter sets exceeded 0,000. In 00, SCE installed, residential meter sets, which is significantly higher than SCE s forecast of SCE s rebuttal to the meter set forecast is presented in Exhibit SCE-, Volume 1.

10 ,0 and TURN s forecast of, for test year 01. While TURN s proposal to include 00 generates a higher r-squared value, it does not consider the demonstrated impact of residential meter sets in excess of 0,000. The Commission should reject TURN s proposal to include 00 in developing the forecast. The year 00 is not an accurate representation of the residential meter set volumes that SCE or TURN are proposing in the test year. c) Residential Tract Development SCE believes that its proposed cable feet per meter estimates are reasonable for Residential Tract Development. TURN makes two arguments: 1) that the cumulative cable feet per meter is highly dependent on the year the analysis is started; and ) excess cable is still left in SCE s system due to the large amount of overbuild several years ago. (1) TURN Provides No Support for Using a Average for Residential Tract Development TURN states that SCE s calculation of cable feet per meter is an artifact of the starting point year; TURN then proposes starting with 00 and ending with 01 instead of SCE s proposal to use 00 through 0. TURN has presented no data to support including and excluding SCE s most recent recorded data, 01 and 0. TURN also considers various steady states but again provides no reasoning why it believes its 1-year average (which excludes the more recent years) serves as a better indicator than a more recent -year average when forecasting upcoming work in this category. SCE s proposal to utilize the ten most recent years of data is an appropriate forecast methodology for Residential Tract Development. () TURN s Confusion About Excess Cable Is Unfounded TURN asks, A primary question is how much excess of cable is still left in SCE s system due to the large amount of overbuild several years ago. SCE answered this question in its workpaper for Residential Tract Development, stating: Since the inventory is now depleted, the demand for tract work for is dependent on the gross meter forecast and the cumulative cable TURN-, page, lines -. TURN-, page, lines -. SCE-0, Vol., workpaper p..

11 feet per meter. TURN s use of excess inventory to justify a revised number of cable feet per meter is unfounded. d) Residential Backbone Development SCE s proposed cable feet per meter estimate is based on a ten-year average for Residential Backbone Development. TURN continues the argument, introduced in Residential Tract Development, that the cumulative cable feet per meter is highly dependent on the year the analysis is started. As discussed above in SCE s rebuttal to Residential Tract Development, the starting year also has an impact on the use of an average such as TURN s proposed five-year average. TURN cites that SCE has installed 1, 1, 1, 1, and feet per meter installed in the next year, respectively, an average of 1 feet over the last five years. TURN then defends its recommendation to use 1 feet as: a more reasonable steady state estimate. 1 TURN says its recommendation is consistent with SCE s forecast for the last GRC, higher than TURN s forecast from the prior GRC, reflects the growing number of new meters and current conditions, and lower than what utility has actually installed in two of the past five years. TURN provides no evidence to support why using an average of the last five years is a more reasonable estimate than the last ten years, or how TURN s averaging would reflect the growing number of meters and current conditions. TURN does not provide any explanation for how SCE s and TURN s forecasts from the 0 GRC support its proposed methodology. The one statement TURN makes that is supported is TURN s assertion that its forecast is lower than SCE s. SCE s forecast methodology for Residential Backbone Development uses years of cumulative meter installation and cumulative cable installation. As described in testimony, in 00 SCE saw residential backbone installation in excess of our model; in SCE saw a buildup of residential backbone inventory as meter installations failed to materialize; and in 00-0 new residential backbone installation slowed down. In the period following 0 the excess inventory of residential backbone was depleted when housing was completed and meters installed. The use of a - year average to forecast Residential Backbone Development captures the year-to-year variability during the housing bubble and decline. ORA s proposal to use a five-year average excludes backbone installed prior to 0, thereby selecting a range of years that does not accurately predict future activity. SCE s TURN-, page, lines -. 1 TURN-, page, lines -.

12 use of a -year average smooths the variability of the historical period and presents an accurate forecast for Residential Backbone Development. e) Commercial Service Connections and Tract Development TURN proposes to move from a five-year to a ten-year average for unit costs in Commercial Service Connections and Tract Development. This appears to be solely driven by a desire for lower forecasts. Here, SCE believes that the past five years better reflect the level of activity we expect in the forecast period. As described in SCE s opening testimony, 1 the years prior to 00 included costs for a significant increase in work resulting from the robust housing market. The recorded commercial meter sets for do not reflect the current-day commercial service connections and tract development, which is characterized by smaller-scale development similar to what we described for residential new service connections. Additionally, the years reflect a period of significant market recession; during this recession period SCE had excess inventory. That inventory has now been fully depleted. The effect of TURN s selection of historical years to develop its test year forecast is particularly pronounced in TURN s proposed unit cost for Commercial Service Connections, which is reduced by percent when the years 00-0 are included. As shown in Table I-, the unit costs from 00-0 show an upward trend. The period from is significantly lower with a weighted average cost per meter set of $1,0. This is percent lower than the weighted average from 0-0 of $,. Additionally, the 01 cost per meter set was within percent of SCE s proposed cost per meter of $,. TURN s proposal does not justify why 00-0 is more representative of SCE s future costs. And as demonstrated by 01 data, SCE s forecast methodology is accurate for forecasting test year expenditures. The Commission should adopt SCE s use of the five most recent years of recorded costs to forecast Commercial Service Connections and Tract Development. 1 SCE-0, Vol., pages 1-.

13 Table I- Commercial Service Connections Cost Per Meter Set CFC s Position CFC uses an exponential trend model to reduce SCE's forecast by $.1 million in 01. CFC proposes this adjustment by examining the relationship between the new meter installations versus customer counts forecasts, the observed associated growth rate for those activities, the variance between the 0 GRC forecast for the series and the eventual actuals, and the observed installations for SCE s Rebuttal to CFC s Position As previously mentioned, SCE agrees to adjust its forecast for New Service Connections based on the new meter set forecast adopted in this GRC. B. Overhead to Underground Conversions SCE converts existing overhead facilities to underground facilities pursuant to CPUC Tariff Rules 0A, 0B, and 0C. SCE selects conversion projects based on the criteria established in the tariff. In turn, each governmental agency selects locations that meet these criteria within their jurisdiction. The Overhead to Underground Conversions category includes the costs SCE incurs in compliance with Tariff Rules 0A, 0B, and 0C. This work occurs in direct response to customer requests, and fluctuates significantly from yearto-year based on those requests. 1 CFC-0, pages 1-.

14 Table I- Distribution Rule 0A Conversions Capital Expenditures 0% CPUC Jurisdictional - Nominal $000 Recorded Activity Distribution Rule 0A Conversions $, $, $ 1, $ 1, $ 1,1 $ 1, SCE Forecast ORA Forecast Activity Variance Distribution Rule 0A Conversions $ 1,00 $,0 $, $,0 $ 1, $ 1,0 $ 1,0 $, $ (1,) ORA s Position ORA recommends that the Commission adopt SCE s 01 and 01 forecasts for Rule 0A expenditures, but also incorporate a temporary penalty to reflect the underspending that occurred in 01 through 01. ORA s proposed adjustment of $. million in 01 and 01 represents one-half of SCE s $1. million underspend for years 01 through 01.. SCE s Rebuttal to ORA s Position SCE should not be penalized when it does not perform work that occurs at the direction of the cities receiving the Rule 0A funding. The annual budget for Rule 0A is divided amongst the 0 cities and counties within SCE s service territory according to the formula provided in the Rule 0 tariff. The allocation methodology results in a nonlinear distribution of the funds allocated to each city. 1 This means that the penalty proposed by ORA would heavily impact the allocations for some cities and counties, with 1 cities receiving zero allocation. 1 This is especially problematic for cities with projects that are mortgaging future years allocations. Cities are allowed to borrow up to a maximum of five years of future allocations to proceed with a project. The calculation to make sure a city is within a five-year mortgage is a simple calculation ORA-0, page, lines As defined by the Rule 0 tariff, any changes from the budget level are allocated Fifty percent of the change from the total budgeted amount shall be allocated in the same ratio that the number of overhead meters in any city or unincorporated area of any county bears to the total system overhead meters and Fifty percent of the change from the total budgeted amount shall be allocated in the same ratio that the total number of meters in any city of the unincorporated area of any county bears to the total system meters. 1 These cities include Anaheim, Irvine, Laguna Hills, Lake Forest, Beaumont, Jurupa Valley, Lake Elsinore, Murrieta, Perris, City of Riverside, San Jacinto, Temecula, Adelanto, Chino Hills, Colton, Victorville, Yucca Valley, and Unincorporated Tuolumne County.

15 of their total balance after committing the project, divided by the annual allocation. For example, a city with a balance of $1,000,000 receiving $0,000 per year, could theoretically move forward with a project estimated at $1,00,000. With the reduced allocation associated with the penalty, the city would then be required to delay the project by two years until the allocation returned to $0,000 per year following the penalty. The penalty proposed by ORA would serve to further reduce the amount of expenditures toward Rule 0A projects by slowing accruals that allow for new projects to be proposed and potentially delaying currently mortgaged projects. ORA argues that SCE has continued to spend less than authorized. SCE agrees it has recorded less than its authorized since 01. In both the 01 and 0 cases, SCE had requested the previously authorized amount. However, SCE has since revised its forecast methodology to better align with actual expenditure levels. In this GRC, SCE recommends using a five-year average to forecast future needs. This is a conservative approach; the expenditures found in the base of the five-year average include delays triggered by ligation that Verizon Communications, Inc. initiated. That litigation has since been resolved. In Exhibit SCE-0, Volume, SCE said: In January of 0 the city of Santa Barbara filed a complaint with the CPUC against Verizon regarding cost responsibility for Verizon s service laterals on private property. The city of Santa Barbara alleged that Verizon changed its practice to no longer pay for the installation of subsurface conduit and trenching on private property. Verizon had paid for these items on previous Rule 0A projects. This change by Verizon delayed a number of Rule 0A projects involving Verizon facilities. The change adversely impacted SCE s ability to move forward with projects involving Verizon service laterals. In addition, new projects were also impacted, as cities struggled to identify new funding sources or decided to wait for a final decision on the Verizon proceeding. A [CPUC] Decision 1 was issued in August of 0, ordering Verizon to pay for its pro-rata share of no more than 0 feet of each customer s underground service connection facility on private property. 1 1 D SCE-0, Vol., pages 1-. 1

16 Table I- 0 Rule 0A In-Progress Projects Region ID City/County ROM Project Estimate North Coast.0 Unicorp. Santa Barbara $1,00,000.1 Camarillo (K St. from Cedar to Oak) $00,000.1 Camarillo (Las Posas from Marcos to Antonio) $1,00,000 North Coast $,00,000 San Joaquin.0 Visalia $,00,000.0 Delano $1,00,000 San Joaquin $,0,000. Unicorp. L.A. (Topanga Cyn) $,00,000. Unicorp. L.A. $,0,000. Unicorp. L.A. $1,00,000 Metro East $,00,000 Metro West 1.0 Cudahy $1,00, Long Beach $,00, Norwalk $,00, Bell Gardens $,00, Torrance (Hawthorn Blvd.) $,00, Torrance $1,00, West Hollywood $1,00, Redondo Beach $1,0, Cerritos $00, Seal Beach $00,000 Metro West $,00,000 San Jacinto. Murrieta $ 1,000,000 San Jacinto $1,000,000 Metro East. San Marino $0,000. Whittier (Broadway) $,00,000.1 South El Monte $,00,000. Montebello $,00,000. Baldwin Park $,000,000. South Pasadena $,00,000.1 Glendora $1,00,000. Montclair $00,000. Rancho Cucamonga (Arrow) $,00,000. Rancho Cucamonga (Baseline) $1,00,000. La Puente $,000,000. La Verne $,00,000.0 Whittier (Greenway Tr - Pts) $1,00,000.1 Rosemead $,,000 Metro East $,0,000 Desert.0 Palm Springs $,000,000.0 Unicorp. San Bernardino $,00,000.1 Redlands $,00,000. Apple Valley $ 0,000. Rialto $ 1,00,000 Desert $,00,000 Rural.0 Barstow $,000,000.0 Palms $ 1,00,000 Rural $,00,000 Orange. Whittier $,00,000. Fullerton (PH A / B) $1,00,000. Huntington Beach $,00,000. Brea $1,00,000. Newport Beach $,00,000. Stanton $,00,000 Orange $0,00,000 Grand $,0,000 0 Please note, this list includes all approved Rule 0A projects in progress that have forecast expenditures in 01 and 01. All estimates are Rough Order of Magnitude estimates that include all design, material, and construction costs to construct a new underground electrical system and remove SCE s existing overhead facilities. Corporate Overhead, such as A&G and AFUDC, are included at 1.1 percent of the total. Project estimate may include expenditures incurred prior to 01. 1

17 SCE has continued to work with the various cities and counties to identify Rule 0A projects. Table I- shows that there are currently projects in progress for 01-01, which total an estimated $ million. However, annual expenditures for the Rule 0A program can vary significantly due to the mix of multi-year projects and the variability of costs throughout the lifecycle of a project. At times, when there is a high proportion of new projects in the design process with relatively few in construction, expenditures will be minimal. This is because design costs represent a relatively small percentage of project costs. In cases where there is a high percentage of projects in the construction phase, expenditures will tend to be higher. These projects are also subject to delays that can be caused by joint utilities, 1 easement acquisition, or issues triggered by the sponsoring cities with regard to permit requirements and construction scheduling. Additionally, the sponsoring cities may have issues that prevent them from moving forward with projects at all. For example, many cities are subject to staffing constraints, and often city-driven public works projects are prioritized over Rule 0A projects. Another issue that impacts the rate of identified projects is that there are some cities with large amounts of accruals that have not been interested in proposing undergrounding projects. These cities continue to accrue a balance, which effectively decreases the amount of the budget that is allocated to other cities with a desire to propose undergrounding projects. Given the natural variability of this type of work, SCE believes that a five-year average presents the most sound estimate for the forecast amount of work in this GRC period. Further, SCE is aware that the Commission recently opened an Order Instituting Rulemaking to Consider Revisions to Electric Rule 0 and Related Matters. SCE believes that this OIR proceeding is the best venue to consider any changes to the Rule 0 tariff. C. Distribution Transformers T&D must constantly maintain an inventory of distribution transformers (rated less than 00kVA) because we need relatively large volumes for installation and replacement on a regular basis. The work we perform related to new service connections is a major driver for new transformer 1 Joint utilities refers to other utilities, such as Verizon Communications, Inc. or AT&T Inc., with equipment located on SCE s lines that would also need to be moved in order to complete an overhead to underground conversion. CPUC R.1-0-0, Order Instituting Rulemaking to Consider Revisions to Electric Rule 0 and Related Matters. 1

18 1 1 1 purchases. However, most distribution work activity involves installing or replacing under-sized, failed or deteriorated transformers. Without an inventory, customers directly connected to these failed or deteriorated transformers would experience outages; there are only limited means to re-route service. SCE replaces distribution transformers when they fail in service, or when we observe deterioration during inspection or other fieldwork. When SCE replaces a pole or cable, it is often costeffective and prudent to replace the attached transformer at the same time, depending on the condition of the transformer. Similarly, during new construction to serve new customers, or when converting overhead lines to underground, distribution transformer installations accompany installation of poles, cables, and underground structures. SCE capitalizes the material and associated costs for distribution transformers at the time of purchase. When the transformer is installed on or removed from SCE s system, the labor costs are charged to capital through the specific work activity. Table I- Distribution Transformers Capital Expenditures 0% CPUC Jurisdictional - Nominal $000 Recorded Activity Distribution Transformers $, $ 0,1 $, $, $, $,0 SCE Forecast ORA Forecast Activity Variance Distribution Transformers $, $ 0,1 $,1 $, $,0 $,01 $,0 $ 1,0 $ (,0) ORA s Position ORA agrees with SCE s proposed methodology but calculates its proposed distribution transformer forecast based on ORA s proposal for capital activities which utilize distribution transformers. SCE forecast based on Errata served on June 1, 01. Please see response to ORA-SCE--TCR Q.01 Supplemental on page A-1 of the Appendix.

19 1. SCE s Rebuttal to ORA s Position SCE agrees to revise its distribution transformer forecast based on the Commission s authorized amounts for capital activities which utilize distribution transformers. 1

20 Appendix A Response to ORA-SCE--TCR Q.01 Supplemental

21 Question 01 Supplemental: Southern California Edison 01 GRC A DATA REQUEST SET ORA-SCE--TCR To: ORA Prepared by: Matt Stumpf Title: Project Manager Dated: 0/0/01 Originated by: Tom Roberts Exhibit Reference: SCE-, all SCE Witness: Multiple Subject: CPUC jurisdictional T&D costs for 0-0 Please provide the following: 1. Excel file SCE0 - T&D Capital Summary by Volume_01 GRC (see attached) was provided in response to an Ora request for working spreadsheets. Within this file, the tab with CPUC jurisdictional costs, Capital Master Sum.(CPUC) table, does not include recorded data for Please provide a revised version of this spreadsheet that includes a new tab with all the data columns provided in tab Capital Master Sum. for tables, but that includes CPUC jurisdictional recorded and forecast expenditures. SCE0 - T&D Capital Summary by Volume_01 GRC.XLSX Response to Question 01 Supplemental: SCE recently discovered that the file attached to ORA's question was the original file prior to SCE November 1th, 01 Errata filing. SCE has revised the attachment to include the errata filed in November 01 and additional changes identified during the data request process. Changes from the original application are highlighted with a legend included at the bottom of the two master tabs. The attached file includes the requested data. SCE added 0-01 columns for recorded nominal dollars to the tab entitled "Capital Master Sum.(CPUC) table" and added 01 recorded nominal dollars to the tab entitled "Capital Master Sum. for tables."