Application No.: A.16-09-001 Exhibit No.: SCE-18, Vol. 01 Witnesses: R. Woods

(U 338-E)

2018 General Rate Case Rebuttal Testimony

Transmission & Distribution (T&D) Volume 01 – Operational Overview and Risk-Informed Decision-Making

Before the

Public Utilities Commission of the State of California

Rosemead, California

June 16, 2017

SCE-18: Transmission & Distribution (T&D) Volume 01 – Operational Overview and

Risk –Informed Decision-Making Table Of Contents

Section Page Witness

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I. INTRODUCTION .............................................................................................1 R. Woods

II. Operational Excellence (OpX) ...........................................................................2

A. Intervenors’ Positions ............................................................................3

B. SCE’s Rebuttal To Inventors’ Positions ................................................3

1. Overhead Conductor Program ...................................................4

2. Poles Program ............................................................................4

III. Safety and Reliability Investment Incentive Mechanism ..................................5

A. CUE’s Position ......................................................................................7

1. Capital ........................................................................................7

2. Workforce ..................................................................................8

B. SCE’s Rebuttal To CUE’s Position .......................................................9

1. Capital ........................................................................................9

2. Workforce ..................................................................................9

IV. Asset and Operational Risk Management ........................................................11

A. Overhead Conductor Program (OCP) Risk Analysis...........................12

1. TURN’s Position ......................................................................13

2. SCE’s Response to TURN’s Position ......................................13

a) TURN’s Comparison of PRISM Scores is Fundamentally Flawed .................................................13

b) TURN Criticizes PRISM’s Decision Making Capability and Then Attempts to Use It To Justify its Own Proposed Reduction to OCP ...............13

SCE-18: Transmission & Distribution (T&D) Volume 01 – Operational Overview and

Risk –Informed Decision-Making Table Of Contents (Continued)

Section Page Witness

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c) TURN Mistakes Preliminary Scoring of Untested Pilot Mitigations for the Lack of a Comprehensive and Cost-Effective OCP Strategy ........................................................................14

3. CFC’s Position .........................................................................15

4. SCE’s Response to CFC’s Position .........................................16

5. Conclusion ...............................................................................16

Appendix A Workpapers for SCE-02, Volume 1 and Data Request Response CUE-SCE-001 Q.07 a-c Supplemental

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I. 1

INTRODUCTION 2

In SCE-02, Volume 1, SCE provided an overview of the Transmission and Distribution system 3

and explained how we support SCE’s key priorities: Be Safe In All We Do; Reinforce Grid Reliability 4

and Resiliency; Integrate Distributed Energy Resources without Compromising Safety and Reliability; 5

Improve Service and Choices to Meet Evolving Customer Needs; and Enhance Operational Efficiency 6

and Effectiveness. 7

SCE also provided direct testimony on T&D’s operational and service excellence (OpX) that 8

included benefits we forecast for 2016 through 2020. SCE also proposed changes to its Safety and 9

Reliability Investment Mechanism (SRIIM) and provided information on T&D’s Asset and Operational 10

Risk Management program. 11

While no intervenor directly addressed T&D’s forecast OpX benefits, intervenors failed to take 12

these forecast benefits into consideration when they proposed reductions to both the Overhead 13

Conductor Program (OCP) and the Poles Program. This results in duplicative forecast reductions. For 14

SRIIM, CUE proposes alternatives to both the capital and headcount components. Further, while no 15

intervenor provided testimony regarding the Asset and Operational Risk Management section overall, 16

TURN makes recommendations for the OCP based on its interpretation of SCE’s risk analysis. 17

In the testimony below, SCE explains why OpX benefits must be considered when reducing 18

forecasts based on 2016 recorded amounts, and addresses CUE’s SRIIM proposals. Finally, SCE 19

discusses how the Asset and Operation Risk Management preliminary analysis was incorrectly used by 20

intervenors to support their proposed reductions to various capital programs.21

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II. 1

OPERATIONAL EXCELLENCE (OPX) 2

As described in SCE-01, Operational and Service Excellence (OpX) represents a major strategic 3

objective for SCE.1 In order to achieve this objective, T&D has undertaken multiple efforts to identify 4

areas for improvement, focusing on those areas where we can both reduce our operating expenses 5

(O&M) and increase our productivity to complete more work with fewer resources. In direct testimony 6

SCE describes the activities undertaken to launch five OpX initiatives, presented in Table II-1, with the 7

associated forecast for O&M and capital benefits detailed in Table II-2 and Table II-3 as well as the IT 8

and capital projects that these benefits are contingent upon. Pole Program benefits are included in the 9

Poles volume due to its proposed inclusion in the Poles Loading and Deteriorated Pole Balancing 10

Account (PLDPBA). 11

Table II-1 Exhibit References for T&D OpX Initiatives

Initiative Name Exhibit Containing Detailed

Initiative Description, Supporting Calculations, and Workpapers

Witness

Bulk Power SCE-02 T&D-Vol. 12 Robert Woods

Work Order Documentation Redesign SCE-02 T&D-Vol. 13 Adebola Ayorinde

Work Management SCE-02 T&D-Vol. 14 Paul Joseph

Non-Energy Procurement SCE-07 Operational Services-Vol. 6 Kenneth Landrith

Environmental SCE-07 Operational Services-Vol. 2 Don Neal

1 See SCE-01, page 3. 2 Refer to WP SCE-02, Vol. 1, pages 34-36 (OpX Bulk Power Initiative Savings), see Appendix, pages 1-3. 3 Refer to WP SCE-02, Vol. 1, pages 37-39 (OpX Work Order Documentation Initiative Savings), see

Appendix, pages 4-6. 4 Refer to WP SCE-02, Vol. 1, pages 40-44 (OpX Work Management Initiative System/Process Savings), see

Appendix, pages 6-11.

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Table II-2 T&D OpX Capital Benefits

Total Company – Nominal $000

Table II-3 T&D OpX O&M Benefits

Constant 2015 $000

A. Intervenors’ Positions 1

As stated above, T&D received no direct objections to its forecast OpX O&M and capital 2

benefits. However, reductions proposed by intervenors for both the Overhead Conductor Program (OCP) 3

and pole replacement programs ignore the forecast capital benefits. SCE discusses the appropriate 4

treatment in the following sections. 5

B. SCE’s Rebuttal To Inventors’ Positions 6

When SCE forecasts the future benefits associated with its OpX initiatives in T&D, the total 7

benefits were shown separately from forecast capital and O&M for ease of presentation. As the forecast 8

benefits are realized, the benefits (in the form of lower recorded costs) are spread across the multiple 9

projects and programs presented in T&D’s showing and not in the accounts used for forecasting 10

purposes. To the extent the Commission adopts a lower forecast in 2017-2018 based on the lower 2016 11

unit costs realized as a result of SCE’s OpX initiatives, a portion of these benefits will be double-12

counted. SCE respectfully requests that the Commission consider this potential overlap with forecast 13

OpX benefits when the Commission is deciding upon individual projects or program forecasts. 14

Activity 2016 2017 2018Total

2017-2018 2016 2017 2018Total

2017-2018 VarianceT&D OpX Capital Savings (NEP Non-Poles) $ - $ (59,873) $ (77,460) $(137,333) $ - $ (59,873) $ (77,460) $(137,333) $ - T&D OpX Capital Savings (Non-Poles) $(18,849) $ (53,357) $ (68,070) $(121,427) $(18,849) $ (53,357) $ (68,070) $(121,427) $ - Total Capital - Operational Overview and Risk-Informed Decision-Making $(18,849) $(113,230) $(145,529) $(258,759) $(18,849) $(113,230) $(145,529) $(258,759) $ -

SCE Forecast ORA Forecast

GRCAccount Description SCE ORA

ORAVariance TURN

TURNVariance

568.281 Operational Excellence Savings - Transmission (2,536)$ (2,536)$ -$ n/a n/a580.281 Operational Excellence Savings - Distribution (7,464)$ (7,464)$ -$ n/a n/a

Total SCE-02, Volume 1 (10,000)$ (10,000)$ -$ n/a n/a

2018 Forecast

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1. Overhead Conductor Program 1

The recorded 2016 costs for the Overhead Conductor Program were much lower than our 2

forecast unit costs, and the effectiveness of T&D’s OpX initiatives was one of the primary drivers.5 3

While no intervenor proposed forecasts based on 2016 recorded costs, if the Commission were to use 4

2016 as a basis for adopted funding, SCE requests that the Commission consider to the OpX benefits. 5

2. Poles Program 6

TURN recommends a reduction of $1,645 per distribution pole replacement based on the 7

increase in contractor costs per pole from 2012 to 2015,6 but does not address the overlap between their 8

proposed reduction and SCE’s forecast OpX savings. This overlap averages approximately $1,100 per 9

distribution pole.7 In other words, TURN is proposing a reduction of $1,645 per pole in addition to 10

SCE’s proposed OpX benefit of $1,100 included in the Pole Program forecast. If the Commission were 11

to adopt TURN’s proposed reduction of $1,645 for pole unit costs, the Commission should also subtract 12

the savings already incorporated in SCE’s Pole Program forecast. SCE addresses TURN’s proposal for 13

Pole Program unit costs in SCE-18, Volume 9.14

5 See SCE-18, Volume 8 – Infrastructure Replacement. 6 TURN-12, page 32. 7 SCE-02, Vol. 9, page 53, line 6.

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III. 1

SAFETY AND RELIABILITY INVESTMENT INCENTIVE MECHANISM 2

The Safety and Reliability Investment Mechanism (SRIIM) is designed to align with the 3

Commission’s stated goal “to create incentives that align SCE’s financial interests with the community’s 4

interests in safety, reliability, resiliency, and cost.”8 SRIIM is comprised of two components: (1) capital 5

expenditures focused on core safety and reliability-related projects and programs; and (2) the hiring of 6

craft employees who perform the work on safety and reliability-related projects and programs. 7

SCE agrees with the Commission’s decision in D.15-11-0219 that recognizes the importance of 8

the SRIIM mechanism and finds that “encouraging SCE to spend its authorized capital forecast on key 9

programs to meet this goal and retain employees in classifications responsible for this work is 10

reasonable.” SCE proposes to continue SRIIM for 2018 through 2020, with three enhancements to the 11

capital mechanism and four enhancements to the workforce mechanism. 12

Our capital request in this case has been informed in part by new risk analyses, as described in 13

SCE-02, Volume 1. Based on this, SCE proposes three modifications to the capital spending categories 14

to better align with the recent changes we have initiated to address safety and reliability. The proposed 15

changes to the capital mechanism are: (1) change the programs included in SRIIM by adding OCP and 16

4kV Overload-Driven Cutovers and removing Underground Structures and Underground Switch 17

Replacements; (2) set the capital target based on actual authorized capital expenditures, including 18

Operational Excellence benefits; and (3) designate that any spending in the High Priority categories in 19

excess of authorized amounts, without the two conditions adopted in the 2015 GRC, be used to achieve 20

the target established in the SRIIM capital categories to account for unforeseen conditions beyond 21

SCE’s control. 22

SCE’s craft employees are critical to achieving the Company’s strategic objectives of providing 23

safe and reliable service. If SCE fails to achieve the headcount target, SCE agrees to refund customers in 24

the same manner as approved in the 2015 SRIIM and described in direct testimony, such that SCE 25

would refund $20,000 for each employee shortfall relative to the target, up to 50 employees short, and 26

8 D.15-11-021, page 39. 9 Id.

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$80,000 per employee thereafter. SCE proposes to continue the mechanism established in the 2015 GRC 1

so that, if any employee shortfall develops in the fourth quarter of 2020, SCE should have the first 2

quarter of 2021 to address the shortfall. 3

We propose to continue the SRIIM workforce headcount target with four enhancements to the 4

existing mechanism. The proposed changes for the workforce component of SRIIM are: (1) add 5

foreman/troubleman trainer and operator trainee classifications; (2) increase the headcount target from 6

2,225 to 2,375; (3) adjust the headcount target by one-half of the percentage change in the authorized 7

versus requested T&D capital; and (4) change the measurement period from a single day to any time 8

during the period of September 1, 2020 and December 31, 2020, such that if SCE meets the headcount 9

during this period it will be deemed to have satisfied the workforce component of SRIIM. 10

Table III-4 2018 SRIIM Categories and Capital Expenditure Forecasts10,11

10 SCE forecast based on Errata served on June 16, 2017. See response to CUE-SCE-001-Q.7; a-c-Supplemental

on Appendix, pages 12-18. 11 Post-OpX savings are calculated by multiplying the CPUC capital expenditure forecasts against OpX

Reduction % (OpX capital savings forecast / total CPUC capital expenditure forecast).

PROGRAMPRIMARY DRIVER

2018-2020 CAPITAL EXPENDITURE

FORECASTS (Constant 2015 in

millions, CPUC Jurisdictional only)

2018-2020 Post-OpX CAPITAL

EXPENDITURE FORECASTS (Constant 2015 in millions, CPUC

Jurisdictional only)TESTIMONY REFERENCE

Worst Circuit Rehabilitation Reliability $355 $338 SCE-02 T&D-Vol. 8Cable Life Extension Reliability $68 $64 SCE-02 T&D-Vol. 8CIC Replacement Reliability $117 $111 SCE-02 T&D-Vol. 8Transformer Bank Replacement Reliability $146 $138 SCE-02 T&D-Vol. 8Circuit Breaker Replacement Reliability $109 $104 SCE-02 T&D-Vol. 8Overhead Conductor Program Safety $393 $373 SCE-02 T&D-Vol. 84 kV Overload-Driven Cutovers Reliability $102 $97 SCE-02 T&D-Vol. 3TOTAL $1,290 $1,227

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Table III-5 2018 SRIIM High Priority Categories and Capital Expenditure Forecasts12,13

Table III-6 Proposed 2018 SRIIM Workforce Categories

Distribution Apprentice Groundman Senior Patrolman Distribution Groundman Troubleman

Distribution Apprentice Lineman Foreman/Troubleman Trainer* Distribution Lineman Operator Trainee*

Distribution Sr. Cable Splicer System Operator Distribution E-Crew Foreman Substation Operator

Transmission Apprentice Groundman Substation Apprentice Electrician Transmission Groundman Substation Electrician

Transmission Apprentice Lineman Test Technician Transmission Lineman Supervising Test Technician

*Indicates newly proposed classification

A. CUE’s Position 1

1. Capital 2

For the core SRIIM categories, CUE agrees with adding the Overhead Conductor 3

Program and the 4kV Overload-Driven Cutovers, but also suggests adding the 4kV Substation 4

Elimination Program due to it substantial impact on reliability. CUE disagrees with removing both the 5

12 SCE forecast based on Errata served on June 16, 2017. See response to CUE-SCE-001-Q.7; a-c-Supplemental

in Appendix, pages 12-18. 13 Post-OpX savings are calculated by multiplying the CPUC capital expenditure forecasts against OpX

Reduction % (OpX capital savings forecast / total CPUC capital expenditure forecast).

PROGRAM

2018-2020 CAPITAL EXPENDITURE

FORECASTS (Constant 2015 in millions, CPUC

Jurisdictional only)

2018-2020 Post-OpX CAPITAL EXPENDITURE

FORECASTS (Constant 2015 in millions, CPUC

Jurisdictional only)TESTIMONY REFERENCE

Customer Growth $1,550 $1,474 SCE-02 T&D-Vol. 2

Storms $121 $115SCE-02 T&D-Vol. 5SCE-02 T&D-Vol. 7

Claims $94 $90SCE-02 T&D-Vol. 5SCE-02 T&D-Vol. 7

TOTAL $1,764 $1,678

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Underground Structures and Underground Switch Replacement programs, stating that these programs 1

have safety as a primary driver and that SCE has not provided data showing “how these two programs 2

actually compare to other SRIIM programs in their safety and reliability impacts per dollar expended.”14 3

CUE recommends the capital targets be updated to reflect CUE’s proposed additions and 4

deletions, as well as the increased capital expenditures CUE proposes in four SRIIM categories of Worst 5

Circuit Rehabilitation, CIC Replacement Program, 4 kV Substation Elimination, and Underground Oil-6

Filled Switch Replacement. Finally, CUE agrees with SCE that forecasts should be adjusted to include 7

Operational Excellence benefits. 8

For the two limits on diversion of spending, CUE asserts the “Commission's line of 9

reasoning was reasonable in 2015, and it is still reasonable. Small overruns (under 10 percent) of High 10

Priority spending may be absorbed by cuts in places other than the SRIIM categories, consistent with the 11

Commission's focus on improving safety and reliability.”15 And CUE states that “if the overruns can be 12

paid for without reducing SCE's profits below its authorized rate, then there is certainly no reason to cut 13

back on safety and reliability spending in the SRIIM categories. CUE no longer proposes the stricter 14

constraints that it argued for in the last GRC, but the Commission should reject SCE's attempt to reargue 15

for the position that it lost in that same GRC.”16 16

2. Workforce 17

CUE agrees with SCE’s proposal to modify the workforce categories to add 18

foreman/troubleman trainer and operator trainee classifications. CUE accepts SCE's proposed headcount 19

target of 2,375 workers at the end of 2020, an increase of 6.7 percent over the current SRIIM target, as 20

reasonable in the face of increasing customer counts and worsening SAIDI. 21

CUE rejects the notion that the reason SCE needs more employees to perform safety and 22

reliability-related work is solely driven by capital expenditures. CUE further argues that “…to the extent 23

the Commission reduces the authorized capital expenditures for reliability-improving projects, the need 24

for O&M work to restore power and repair outages may well go up, not down.”17 Finally, “CUE accepts 25

14 CUE Prepared Opening Testimony of David Marcus, page 42, lines 13-14. 15 Id. at page 46, lines 1-4. 16 Id. at page 46, lines 4-8 (citations omitted). 17 Id. at page 45, lines 1-3.

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SCE's proposal to focus compliance on the last quarter of 2020. However, compliance should be 1

measured based on the average headcount during that quarter, not the highest single day.”18 2

B. SCE’s Rebuttal To CUE’s Position 3

1. Capital 4

SCE agrees with CUE’s recommendation that 4kV Substation Elimination should be 5

included in the SRIIM capital target, since this program provides both safety and reliability benefits for 6

SCE’s customers. The purpose of SRIIM is to help ensure funding for the programs that provide safety 7

and reliability benefits; including additional programs with strong safety or reliability connections 8

furthers the intent of the SRIIM mechanism. SCE believes that CUE’s proposal to retain Underground 9

Structures and Underground Switch Replacements and add 4kV Substation Elimination is reasonable. 10

For the two limits on diversion of spending, SCE concedes that the 10 percent buffer is 11

reasonable, as most programs have some element of safety or reliability trade-off even if they are not in 12

SRIIM. Maintaining the 10% buffer introduces a reasonable tradeoff for forces beyond SCE’s control 13

for customer growth, storms, and claims. 14

2. Workforce 15

The SRIIM workforce mechanism should be linked to the authorized capital, as proposed 16

by SCE. It would be burdensome and unfair to SCE and its workforce to continue to hire additional 17

employees with a decreased scope of work. ORA proposed more than a 20% reduction for 2018; if this 18

is adopted it would not be reasonable to concurrently increase SCE’s workforce.19 SCE agrees with CUE 19

that the workforce is instrumental to maintaining reliability as well as performing restoration during 20

major events. However, the volatility of these events makes it impractical to hire additional resources 21

just for these circumstances. 22

To the degree that the Commission recommends higher workforce counts, additional 23

funds for training programs will be necessary to provide proper employee training and should be 24

authorized. At a minimum, on a percentage basis, for every one percent increase in SRIIM employee 25

18 Id. at page 45, lines 15-17. 19 ORA proposed a $788M reduction, or 21.2% of 2018 initially proposed $3.7B T&D, total company nominal.

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headcount there will need to be a ten percent increase in Training Seat-Time for Transmission and 1

Distribution Personnel.20 2

SCE agrees with CUE’s proposal to measure headcount as an average of the last quarter 3

of 2020, and recommends that the Commission adopt this proposal.4

20 Training Seat-Time is presented in SCE-02, Vol. 12, GRC Accounts 566.250 and 588.250.

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IV. 1

ASSET AND OPERATIONAL RISK MANAGEMENT 2

At the request of the California Public Utilities Commission’s Safety and Enforcement Division 3

(SED), SCE provided supplemental testimony (Exhibit SCE-14) that consolidated all of SCE’s direct 4

testimony on safety and risk-informed decision-making, plus the responses SCE had provided to SED’s 5

data requests in this proceeding.21 In this testimony, SCE presented information on risk-informed asset 6

analysis within SCE and the T&D Organization as of March 2016. We presented this material to 7

demonstrate the progress made towards complying with D.14-12-025. That decision directs the utilities 8

to evaluate safety and other risks, and manage and mitigate such risks by implementing a risk-informed 9

decision-making methodology. 10

T&D’s implementation of SCE’s risk-informed planning process and risk management 11

framework is known as the Prioritized Risk-Informed Strategic Management (PRISM) approach. 12

PRISM leverages an event-based methodology to identify risks and assess the value of mitigations using 13

a uniform, quantitative framework. This methodology evaluates the contributing factors that cause an 14

event to happen, as well as the potential negative outcomes and consequences that are produced when 15

that event occurs, followed by an assessment of the mitigations that reduce the frequency and impact of 16

identified risks. SCE’s approach relies on robust data, quantitative models, and subject-matter expertise. 17

We calibrate the results of these risk identification, mitigation assessment and scoring efforts through a 18

formal governance process. We use these results to inform and influence operational and planning 19

decisions. 20

As described in direct testimony, while SCE’s risk-informed planning approach is relatively new, 21

it has influenced some operational decisions and scoping efforts, and was one of many factors 22

considered in funding allocation decisions for this GRC22. However, as stated in testimony, our risk 23

analysis and resulting risk spend efficiency (RSE) metric, “has not matured sufficiently to drive our 24

2018 GRC request at a program or project level.”23 25

21 See Pre-Hearing Conference Transcript, pages 23 – 25. 22 SCE-14, page 22. 23 SCE-14, page 53.

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As stated by ORA, “the Commission should not base its decision on safety-related cost recovery 1

on SCE’s risk-informed decision-making analyses. The current methodology is insufficiently developed 2

to be applied in this GRC. The methodology is still evolving and additional work is needed to develop it 3

fully in the Safety Mitigation and Assessment Plan (S-MAP) proceeding.” 24 CUE points out that this 4

GRC is SCE’s last to use the historical framework where safety and reliability is an output of the 5

process, not the input that drives the Commission’s determination of the appropriate revenue 6

requirement.25 CUE also points out that “there is still too much uncertainty in every stage of the process 7

to be confident that risks and their consequences have been properly quantified, let alone mitigation 8

measures and their effects on reducing consequences. On the other hand risk analysis continues to show 9

promise of ultimately being a valuable tool if the data problems can be resolved.”26 10

SCE agrees that the progress to date and the preliminary results shown should be considered 11

with some degree of caution by the Commission in this rate case. Moreover, intervenors including 12

TURN, CFC, and CUE utilized this analysis as part of their recommendations for both the Overhead 13

Conductor and Grid Modernization Programs. The following sections describe the appropriateness of 14

the inclusion of this preliminary analysis. 15

A. Overhead Conductor Program (OCP) Risk Analysis 16

In compliance with D.14-12-025, SCE has started to perform risk analysis on various programs 17

and assets. SCE performed preliminary risk analysis of its OCP.As mentioned previously, this is an 18

ongoing process, and SCE continues to work to refine and enhance its risk analysis to be used for 19

decision-making in future GRCs. We provided the preliminary results as part of our opening testimony, 20

and provided additional details through the discovery process. The analysis was intended to demonstrate 21

the methodology SCE intends to use in identifying, evaluating, and measuring risks; it was not intended 22

for use in determining SCE’s OCP request in this GRC proceeding. 23

SCE appreciates TURN and CFC’s use of the data provided in the preliminary PRISM analysis 24

for OCP. But as clearly stated in SCE’s testimony, workpapers, and data requests responses, the 25

24 ORA-05, page 2. 25 CUE Prepared Opening Testimony of David Marcus, page 1. 26 Id. at pages 47-48.

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information was not used in determining SCE’s request in this GRC. This analysis needs to be further 1

expanded, validated, and refined before it can be solely relied on for making funding decisions. 2

1. TURN’s Position 3

TURN states: “While the PRISM is premised on the promise of better risk-informed 4

decision making in the future, its time has clearly not yet arrived.”27 TURN then uses the output of the 5

PRISM preliminary analysis for OCP to evaluate SCE’s forecast for OCP.28 6

2. SCE’s Response to TURN’s Position 7

a) TURN’s Comparison of PRISM Scores is Fundamentally Flawed 8

SCE has completed multiple rounds of risk-scoring for OCP. In the first half of 9

2015, SCE completed the first round of scoring for several pilot programs, including those referenced by 10

TURN (Single-phase automatic reclosers, ClampStar, High-Impedance Relays, and Analog Radio 11

Detection). This scoring was based on broad assumptions linked to equipment manufacturer claims, and 12

not based on in situ field testing on SCE’s grid. In subsequent rounds of scoring, SCE focused on 13

mitigations such as reconductoring and fusing, which have been field-tested on SCE’s grid and which 14

have empirically-observed results. 15

Due to the different scoring methods used in the first and subsequent rounds of 16

OCP risk scoring, it is not appropriate to compare the two as the same. It is not an “apples to apples” 17

comparison. TURN’s comparison of scores from the first round of OCP scores to subsequent scoring 18

ignores these differences and the degree to which mitigations are ready to be deployed across SCE’s 19

service territory. SCE cannot wait for PRISM to be fully functional before it makes spending decisions 20

for critical programs that impact employee and public safety. 21

b) TURN Criticizes PRISM’s Decision-Making Capability and Then Attempts 22

to Use It To Justify its Own Proposed Reduction to OCP 23

TURN has mistaken the long-term intent and purpose of PRISM with its current 24

capabilities. SCE has been very clear, and TURN concurs, that our current state of risk scoring is not 25

fully developed, and that the metrics and scoring results provided cannot be used at this time to 26

27 TURN-04, page 18. 28 Id. at page 21.

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definitively make comparisons within or across programs. SCE intends to demonstrate its full capability 1

in risk scoring in its first RAMP filing due on November 1, 2018. TURN’s use of PRISM scores to 2

evaluate OCP is incorrect and premature. 3

c) TURN Mistakes Preliminary Scoring of Untested Pilot Mitigations for the 4

Lack of a Comprehensive and Cost-Effective OCP Strategy 5

TURN takes scoring results from a preliminary set of mitigations, some of which 6

have not been tested or deployed on SCE’s systems, and attempts to redesign SCE’s Overhead 7

Conductor Program. SCE recognizes the need to continually evaluate conditions on its system and find 8

optimal solutions to address problems. However, substituting preliminary risk analysis of untested 9

mitigations in place of proven solutions does not result in a comprehensive and cost-effective strategy to 10

reduce the risk to employees and the public that can result from the very real risk of wire down events. 11

SCE’s Transmission & Distribution group follows a standard pilot process to 12

carefully evaluate the impact of new equipment to SCE’s system before creating a Standard that enables 13

widespread use. This includes the OCP “pilot mitigations” from the PRISM analysis that were 14

preliminarily scored. The pilot process also provides insight and information that may be used to refine 15

the preliminary PRISM analysis. TURN incorrectly assumes that the OCP pilot mitigations are ready for 16

widespread deployment. Table IV-7 provides the current status of each of the pilot mitigations. 17

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Table IV-7 Summary of Overhead Conductor Program Pilots

OCP Mitigation

Pilot

Current Status as of May 2017

Comments

High Impedance Relays

Pilot process ongoing

In pilot deployments on SCE’s system, the High Impedance Relays are not able to accurately detect energized wire down events, and are frequently triggering false positives (i.e., falsely detecting wire down events when none occurred). SCE continues to work with manufacturers to determine the situations when High Impedance Relays can be best deployed.

Single-phase Automatic Reclosers

Pilot process ongoing

SCE is researching and working with suppliers to develop improvements to these technologies to help mitigate conditions which may cause the down wire. Furthermore, SCE continues to explore features which may be incorporated into these products to improve the ability to detect and isolate energized down wire for some High Impedance fault conditions.

Analog Radio Detection

Pilot process ongoing

This project has been renamed to MADEC (Meter Alarming of Down Energized Conductors). MADEC continues to be evaluated, and currently we are developing a detection algorithm as well as updates to the back office (software and hardware) systems.

ClampStar Pilot process complete; Standard created

ClampStar Standard was created in 2016; PRISM scoring update is in progress.

Once a new mitigation goes through the pilot and subsequent review and approval 1

by the Standards Committee, SCE will revise the methodology as appropriate when developing specific 2

scope for OCP. As stated in SCE-18, Volume 8, as cost efficiencies and lower cost mitigations are 3

available, SCE will deploy them. But SCE will increase the annual miles mitigated with the full funding 4

(i.e., SCE will reinvest the savings back into the program to do more work with the same costs). 5

3. CFC’s Position 6

CFC addresses SCE’s use of Risk Spend Efficiency (RSE) in two of its Exhibits. In one 7

example, CFC states: “SCE uses several methods for choosing financially efficient alternatives; 8

‘reasonable cost,’ ‘Risk Spend Efficiency (RSE),’ and ‘cost effectiveness’ appear in the application, and 9

in company responses to data requests. However, the ‘reasonable cost,’ RSE, and ‘cost effectiveness’ are 10

-16-

not the same as affordability.”29 The second reference to SCE’s RSE is in relation to OCP, and CFC 1

states: “Unlike the As Low As Reasonably Practicable (ALARP) method, that requires declaring a 2

valuation of saved life (VSL), SCE’s RSE approach does not include quantifying the benefit of life 3

saved. For this reason, it is not clear whether the OCP expenditures proposed for the 2018 GRC term are 4

optimal.”30 5

4. SCE’s Response to CFC’s Position 6

SCE agrees with CFC that RSE is not the same as affordability. RSE is used to measure 7

the efficiency of a mitigation to reduce risk and enable a relative comparison of risk reduction 8

efficiencies across or within programs. Affordability metrics can be used for different purposes, such as 9

measuring costs to customers or impacts to rates. That said, SCE would like to clarify again that RSE 10

was not used in this GRC to develop project or program forecasts; rather, RSE was used as one of 11

several inputs in assessing the scope of OCP. 12

Further, CFC’s comparison of SCE’s RSE to ALARP is a topic that is being discussed as 13

part of the ongoing S-MAP proceeding. SCE, along with other utilities and parties, continue to address 14

the appropriate methodologies that should be used to assess and mitigate risks in various forums. 15

5. Conclusion 16

SCE appreciates TURN and CFC’s interest in the data provided in SCE’s preliminary 17

OCP risk analysis. However, as previously stated, this information was not, and should not, be used in 18

determining SCE’s request in this GRC. The information needs to be expanded, validated, and refined, 19

before it can be solely relied upon for making funding decisions.20

29 CFC-01, page 4. 30 CFC-04, page 5.

Appendix A Workpapers for SCE-02, Volume 1 and Data Request Response CUE-SCE-001 Q.07 a-c

Supplemental

1

A-1

INIT

IATI

VE D

ESCR

IPTI

ON

Ann

ual O

&M

Sav

ings

by

year

(Con

stan

t 201

5)A

nnua

l SCE

Cap

ital E

xpen

ditu

res

Savi

ngs

(Nom

inal

)($

000)

($00

0)

Ann

ual O

&M

Sav

ings

by

year

(Con

stan

t 201

5)($

000)

Escalatio

nratesu

sed

2016

2017

2018

2019

2020

1.02

1.04

1.07

1.10

1.13

Ann

ual S

CE C

apita

l Exp

endi

ture

s Sa

ving

s (C

onst

ant)

($00

0)

1:Savingsa

redu

eto

aredu

ctioninhe

adcoun

t.As

aresultallsavings

arelabo

r.

2:2016

savingsw

erecalculated

basedon

aph

ased

approa

ch.

3:To

talRed

uctio

nof

65FTE's:Cu

mulativesavingsa

gainst2015

budget

areas

follows:

(52FTE'sin2016,61FTE'sin2017

and65

FTE'sin2018).

4:Av

eragesavingsratepe

rheadcou

ntredu

ctionof

$99K

,$111K

,and

$102Kin2016,2017an

d2018,respe

ctively.

5:$5.1M

ofanticipated

savingsin2016

wereoffset

by$3.8M

oftransitionalsup

portcosts(tempo

rarycontingent

workers,transition

sinsupp

orto

fem

ployeesw

inding

down,ne

wprocessimplem

entatio

ns/revision

s,etc.)related

tothereorgforn

etsavingso

f$1.3M

.

6:SavingsC

apita

lvsO

&M

split

is95%to

5%,re

spectiv

ely.Ba

sedon

analysisof

the2015

budget,employeesw

ithininitiativescop

echarged

A-2

T&D

Bul

k Po

wer

Initi

ativ

e Sa

ving

s

TOTA

L BU

DG

ET -

201

5 Ba

selin

e Bu

dget

2016

Pha

sed

2017

Tot

al20

18 T

otal

FTE

168

12,6

56,0

0 0

16

818

,984

,000

16

818

,984

,000

Fle x

173,

400,

000

17

5,10

0,00

0

175,

100,

000

Tota

l18

516

,056

,000

18

524

,084

,000

185

24,0

84,0

00

BPI O

NLY

- 2

016

Hea

dcou

nt20

16 P

hase

d20

17 H

C20

17 T

otal

2018

HC

2018

Tot

alFT

E62

4,87

4,20

0

657,

939,

000

65

7,87

7,90

0Va

cant

231,

079,

050

23

2,67

8,10

0

232,

741,

400

Supp

lem

enta

l13

2,53

3,33

3

174,

850,

000

17

5,10

0,00

0Tr

ansi

tiona

l20

1,24

8,67

5

468

,80 0

0-

Hom

e O

ffice

151,

175,

130

15

1,76

2,69

5

151,

762,

695

Tota

l13

310

,910

,388

12

417

,298

,595

120

17,4

81,9

95

Tran

sitio

n Co

sts

3,80

0,00

0

-

-

Revi

sed

Tota

l14

,710

,388

17

,298

,595

17,4

81,9

95

Savi

ngs

1,34

5,61

2

6,

785,

405

6,60

2,00

5

Hea

dcou

nt R

educ

tion

(Cum

ulat

ive)

5261

65A

vera

ge s

avin

gs p

er h

eadc

ount

red

ucti

on11

1,23

6$

101,

569

$20

16 a

vera

ge s

avin

gs b

efor

e tr

ansi

tion

cos

ts98

,954

$Assum

ptions

1: S

avin

gs a

re d

ue to

a re

duct

ion

in h

eadc

ount

. As

a re

sult

all s

avin

gs a

re la

bor.

2: T

he fu

ll ye

ar b

asel

ine

budg

et s

how

n in

201

7 an

d 20

18 is

pro

-rat

ed to

refle

ct s

avin

gs in

eig

ht m

onth

s fo

r 201

6 Ph

ased

val

ues,

give

n sa

ving

s w

ere

real

ized

beg

inni

ng in

May

of 2

016.

3:

Tot

al R

educ

tion

of 6

5 FT

E's:

Cum

ulat

ive

savi

ngs

agai

nst 2

015

budg

et a

re a

s fo

llow

s: (5

2 FT

E's

in 2

016,

61

FTE'

s in

201

7 an

d 65

FTE

's in

201

8).

4: A

vera

ge s

avin

gs ra

te p

er h

eadc

ount

redu

ctio

n of

$99

K, $

111K

, and

$10

2K in

201

6, 2

017

and

2018

, res

pect

ivel

y.

In-S

cope

for

Bulk

Pow

er In

itia

tive

- 2

015

O&

M v

s Ca

pita

l cos

tsSu

mm

ary

Tota

lO

&M

Capi

tal

FTE

Engi

neer

ing

100%

Dire

ct c

harg

e to

Cap

ital

5,25

5,84

8

5,25

5,84

8

45Re

al P

rope

rtie

sSp

lit b

etw

een

O&

M/C

apita

l2,

512,

266

33

4,34

1

2,17

7,92

4

31Re

al P

rope

rtie

sO

verh

ead

943,

134

11

3,17

6

829,

958

MPO

Ove

rhea

d4,

683,

258

56

1,99

1

4,12

1,26

7

109

MPO

100%

Dire

ct c

harg

e to

Cap

ital

7,98

3,20

6

7,98

3,20

6To

tal S

taf f

21,3

77,7

11

1,

009,

508

20

,368

,203

185

5%95

%O

&M

Capi

tal

5: $

5.1M

of a

ntic

ipat

ed s

avin

gs in

201

6 w

ere

offs

et b

y $3

.8M

of t

rans

ition

al s

uppo

rt c

osts

(tem

pora

ry c

ontin

gent

wor

kers

, tra

nsiti

ons

in s

uppo

rt o

f em

ploy

ees

win

ding

dow

n, n

ew p

roce

ss

impl

emen

tatio

ns/r

evis

ions

, etc

.) re

late

d to

the

reor

g fo

r net

sav

ings

of $

1.3M

.6:

Sav

ings

Cap

ital v

s O

&M

spl

it is

95%

to 5

% ,r

espe

ctiv

ely.

Bas

ed o

n an

alys

is o

f the

201

5 bu

dget

, em

ploy

ees

with

in in

itiat

ive

scop

e ch

arge

d ap

prox

imat

ely

95%

of t

heir

time

to c

apita

l pr

ojec

ts. S

ee ta

ble

belo

w fo

r mor

e de

tails

.

A-3

A-4

INIT

IATI

VE D

ESCR

IPTI

ON

Capital

Non

Poles

Poles

Ann

ual O

&M

Sav

ings

by

year

(Con

stan

t 201

5)A

nnua

l SCE

Cap

ital E

xpen

ditu

res

Savi

ngs

(Nom

inal

)($

000)

($00

0)

Non

Poles

Poles

Ann

ual O

&M

Sav

ings

by

year

(Con

stan

t 201

5)Escalatio

nratesu

sed

2016

2017

2018

2019

2020

($00

0)1.02

1.04

1.07

1.10

1.13

Ann

ual S

CE C

apita

l Exp

endi

ture

s Sa

ving

s (C

onst

ant)

($00

0)

Non

Poles

Poles

A-5

WorkOrder

Documen

tatio

nAn

alysis

Workpaper

117em

ployees

or29

%

59em

ployees

or17

%

CostCe

nters:Actual/Plan/Va

riance

Date:

CostCe

nter/G

roup

D300

016

Total

****

LABO

RSU

MMAR

Y16

,182

,815

.42

16,182

,815

.42

96%

16,066

,065

.30

16,066

,065

.30

97%

32,248

,880

.72

97%

****

MAT

ERIALSU

MMAR

Y16

8,74

3.75

602,65

9.47

4%17

8,24

5.62

488,97

7.03

3%1,09

1,63

6.50

3%****

CONTR

ACTSU

MMAR

Y49

,478

.21

124,73

9.16

****

ALLO

CATIONSSU

MMAR

Y5,12

4.58

1,24

3.27

****

OTH

ERSU

MMAR

Y38

4,43

7.51

185,99

2.25

****

INDIRE

CTSU

MMAR

Y21

,296

.38

11,184

.69

Total

16,811

,895

.85

16,785

,474

.89

16,567

,470

.29

16,555

,042

.33

33,340

,517

.22

2014

2015

A-6

A-7

INIT

IATI

VE D

ESCR

IPTI

ON

Capital

Non

Poles

Poles

Ann

ual O

&M

Sav

ings

by

year

(Con

stan

t 201

5)A

nnua

l SCE

Cap

ital E

xpen

ditu

res

Savi

ngs

(Nom

inal

)($

000)

($00

0)

Non

Poles

Poles

Ann

ual O

&M

Sav

ings

by

year

(Con

stan

t 201

5)($

000)

Escalatio

nratesu

sed

2016

2017

2018

2019

2020

1.02

1.04

1.07

1.10

1.13

Ann

ual S

CE C

apita

l Exp

endi

ture

s Sa

ving

s (C

onst

ant)

($00

0)

Non

Poles

Poles

Assumptions

andCa

lculations:

A-8

WM

PhaseI

Savings

KeyT&

DOutcomeMetric

(s)

StrategicW

orkInitiation

$13,80

0,00

0

1.Crew

Prod

uctiv

ity:R

educehrs/un

itthroughmorestrategicinitiationandprioritiza

tion

ofworkforinternalcrews

$1,500

,000

UnitR

ateThroughp

ut

2.Crew

Utilization:

Higher

sche

dulingloadinggivenmorestrategicscop

eselectionand

release(asw

ellassched

ulemgm

t.)$1

1,90

0,00

0Crew

CostEfficiency

3.Supp

ort

Plan

ning

Prod

uctiv

ity:R

educeplanning

effortrequ

iredto

supp

ortcon

struction

givenmorestrategicinitiation

$400

,000

Supp

ortp

erFron

tline

Optim

izedSupp

ortM

odels

$2,200

,000

4.Supp

ort

IndirectRe

source

Levels:Streamlineactiv

ities/con

solidaterepo

rtingfor

indirectsupp

ortroles

(i.e.,analysts)intheregion

s$5

00,000

Supp

ortp

erFron

tline

5.Supp

ort

Sche

dulin

gProd

uctiv

ity:Streamlinehand

offs,red

ucere

workforroles

(RPP

M,P

Spec)involvedinsche

duling

$1,700

,000

Supp

ortp

erFron

tline

(FTE

"avoidance")

Continuo

usIm

provem

ent/

WorkMetho

d s$7

,300

,000

O/A

6.Co

ntinuo

usIm

provem

ent:

Individu

alsavingso

pportunitie

side

ntified

bytheOU.

$7,300

,000

N/A

Total

$23,30

0,00

0

Assumptions

andCa

lculations:

A-9

INIT

IATI

VE D

ESCR

IPTI

ON

Capital

Non

Poles

Poles

Ann

ual O

&M

Sav

ings

by

year

(Con

stan

t 201

5)A

nnua

l SCE

Cap

ital E

xpen

ditu

res

Savi

ngs

(Nom

inal

)($

000)

($00

0)

Non

pole

Pole

Ann

ual O

&M

Sav

ings

by

year

(Con

stan

t 201

5)($

000)

2016

2017

2018

2019

2020

1.02

1.04

1.07

1.10

1.13

Ann

ual S

CE C

apita

l Exp

endi

ture

s Sa

ving

s (C

onst

ant)

($00

0)

Non

pole

Pole

A-10

WM

PhaseII

Opp

ortunity

&SubOpp

ortunity

KeyT&

DOutcomeMetric

(s)

StrategicW

orkInitiation

$2,000

,000

I1Bu

ndlin

gof

Tran

smission

deterio

ratedpo

les:Bu

ndlingadjacent

deterio

ratedpo

lesto

increasesc

rewprod

uctiv

ityandalleviatede

pend

ency

issue

s$1

,000

,000

Quantity

ofbu

ndledpo

les

I2Expa

nsionof

IWPto

covera

ddition

alworktype

s:Includ

eadditio

nalw

orktype

sin

IWPto

facilitatemorestrategicinitiationandprioritiza

tionof

scop

e$5

00,000

Quan

tyof

redu

ndantp

rojects

I3Preinitiationscop

econtrol:Pe

rformingthorou

ghpreinitiationjobwalks

toiden

tify

thecorrectscope

before

investingsig

nificante

ngineerin

gresources

$500

,000

Quan

tyof

SCRs

Schedu

lingan

dCo

ordina

tion

$1,200

,000

S1Co

ordina

tionan

dde

pend

ency

man

agem

ent:Im

provecoordinatio

nof

resourcesa

ndde

pend

encies

acrossT&

D(electricalcheckerreq

uests,en

gine

eringtim

elines,etc.)

S2Sche

dulin

gtoolsa

ndintegration:Enhancetools(P6

)and

processestoen

ablebe

tter

long

term

sch.visib

ility

andmgm

t.acrossTransm

ission,GridOps,&

SC&M

$1,200

,000

UnitR

ateThroughp

ut&Crew

CostEfficiency

Continuo

usIm

provem

ent/

WorkMetho

ds$1

4,50

0,000

W1–System

Ope

ratorR

esou

rceAllocatio

n:Mod

ifySystem

Ope

ratord

eskassig

nmen

tmetho

dology

toen

ablemoretim

elyandtargeted

focuso

ncapitaland

O&M

tasks(i.e.,

developing

separate

capital&

O&M

workde

sks)

TBD

TBD

W2

GridOps

switching:M

odify

existingsw

itching

policiestoallowDB

Lcontractorsthe

ability

toselfpe

rform

selected

simpledistrib

utionsw

itching

toim

provetheirp

rodu

ctivity

,whilealso

freeingup

GridOps

resourcestope

rform

othe

rtasks

(*po

tentialincreaseinOHallocatedto

O&M,anticipated

tobe

<$1M

)$5

,000

,000

Outageplan

tostarta

ndfin

ishvs

actualvaria

nce

W3

LeaveAs

Is/Rep

airv

sRep

lace

ofde

terio

ratedTPo

les:Mod

ifywoo

dpo

leintrusive

inspectio

nproced

ures

toallowsomepo

lesw

ithvoidstobe

leftas

isandothe

rsto

berepaire

dusingtrusses;sim

ilartoindu

stry

bestpractices

$8,000

,000

Quantity

ofLeaveas

is&repaire

dTpo

les

W4

Substatio

nDe

sign

PackageQua

lity:Re

vise

engine

eringde

signs

toresolverecurring

NCR

stoincrease

crew

utilizatio

nby

minim

izing

rework,false

startsandcrew

idletim

ewaitin

gford

esignmod

ificatio

ns$5

00,000

Quantity

ofRe

curringissue

sresolved

W5

SASUpgrade

swith

HybridSo

lutio

n :InstallSA3

/HMIH

ybrid

system

storeplace

obsolete

hardwarewith

amorereadily

available,reliable,intelligent,flexible,andsecure

techno

logy

solutio

n$1

,000

,000

Quantity

ofSA

SHy

bridinstalls

Total

$17,70

0,000

Assumption:

Savingstobe

ginin20

17AllSavings

estim

ates

arefora

fullyear.201

7Ph

ase2savingsd

ollarswereredu

cedby

25%to

accoun

tfor

anAp

ril20

17estim

ated

implem

entatio

ndate.

A-11

A-12

A-13

2018 2019 2020

2018 2019 2020

2018 2019 2020

Page 1 of 5

A-14

PROGRAM PRIMARY DRIVER

LEADING INDICATOR OFPROGRAM IMPACT AND

EFFECTIVENESS

2018 2020 CAPITALEXPENDITURE

FORECASTS (Constant2015 $millions, CPUCJurisdictional only)16

2018 2020 Post OpXCAPITAL

EXPENDITUREFORECASTS (Constant2015 $millions, CPUCJurisdictional only)17

TESTIMONYREFERENCE

PROGRAM

2018 2020 CAPITALEXPENDITURE

FORECASTS (Constant2015 in millions, CPUCJurisdictional only)18

2018 2020 Post OpXCAPITAL EXPENDITUREFORECASTS (Constant2015 in millions, CPUCJurisdictional only)19

TESTIMONYREFERENCE

Page 2 of 5

A-15

Page 3 of 5

A-16

Page 4 of 5

A-17

Page 5 of 5

A-18