Please state your name and position, business address and position with Virginia

(1)

1 2 Q. DIRECT TESTIMONY OF STEVEN A. EISENRAUCH ON BEHALF OF

VIRGINIA ELECTRIC AND POWER COMPANY BEFORE THE

STATE CORPORATION COMMISSION OF VIRGINIA CASE NO. PUE-2013-00020

Please state your name and position, business address and position with Virginia Electric and Power Company ("Dominion Virginia Power" or the "Company").

3 A. 4 5 6

7

Q.

8

A. 9 10 11 12 13 14

Q.

15 A. 16 17 18

My name is StevenA. Eisenrauch, and I am Manager - Customer Solutions for the Company. My business address is One James River Plaza, 701 East Cary Street,

Richmond, Virginia 23219. A statement of my background and qualifications is attached as Appendix A.

Please describe your areas of responsibility with the Company.

I manage the Customer Solutions system organization, which is responsible for supporting distribution design activities as provided for in the Company's Terms and Conditions for the Provision of Electric Service ("Terms and Conditions"), on file with the State Corporation Commission of Virginia ("Commission"). My organization also supports joint utility business, centralized subdivision design, customer contracts, and right-of-way acquisition.

What is the purposeof your testimony in this proceeding?

Dominion Virginia Power is proposing a line extension plan that will expand the

utilization of underground distribution lines for new services and enhance the opportunity to convert overhead service feeds to underground for existing residences. This new plan is facilitated by the development of improved and more reliable underground distribution

(2)

1

2

3 4 5 6 7 8 9 10 11 12 Q. 13 14 15 A. 16 17 18 19

Q.

20 A. 21

22

cable and other facilities and equipment. These improvements have contributed to lower life cycle costs of underground distribution facilities. As a result, the Company is

shifting its prior preference for overhead facilities in all cases to a plan that both meets our customers' preferences for underground distribution facilities and best provides for safe, reliable, and economic service. The expected savings from the proposed plan for customers requesting new underground extensions and installations will be

approximately $10 million annually.

I will also explain how the Company has analyzed financial and operational information obtained over the last several years to develop a revised line extension plan that meets the Company's standards for safety, reliability, and cost, while accounting for customers' expectations with regard to aesthetics.

Is the proposed line extension plan you are supporting in this proceeding the same plan that the Company filed in the Company's 2009 going-in review (Case No. PUE-2009-00019)?

The line extension plan that the Company is proposing in this proceeding is very similar to the Company's 2009 filing; however, the Company adjusted the 2009 plan based on comments and recommendations contained in the Commission Staff s testimony in the 2009 going-in review. I will discuss those adjustments later in my testimony.

Are you sponsoring an exhibit in this proceeding?

Yes. Company Exhibit No. _, SAE, consisting of Schedule 1, proposed Section XXII-Electric Line Extensions and Installations ("Proposed SectionXXII"), and Schedule 2, Analysis of New Line Extensions, was prepared under my supervision and direction, and

(3)

1

2

3

4

Q.

5 A. 6 7 8 9 10 11 12 13 14 15 16

Q.

17 A. 18 19

20

21

22

23

is accurate and complete to the best of my knowledge and belief. Also, the entire Analysis of New Line Extensions, including all supporting data, is presented in Filing Schedule 41, which portion I am sponsoring.

Mr. Eisenrauch, please elaborate on Proposed Section XXII.

Proposed Section XXII of the Terms and Conditions constitutes a thorough revision of current Section XXII, Electric Line Extensions and Installations ("Current Section XXII") and will replace Underground Electric Service Plan F ("Plan F"). A copy of Current Section XXII and Plan F can be obtained from the Company's website at

https://www.dom.com/dominion-virginia-power/customer-service/rates-and-tariffs/terms-and-conditions.jsp. The Terms and Conditions comprise that part of the Company's tariff governing the relationship between the Company and its customers for connecting,

disconnecting, and re-connecting electrical service, as well as billing and other related activities. Within those Terms and Conditions, Current Section XXII primarily relates to the rights and responsibilities of the Company and its customers when a customer

requests an extension of the Company's electric lines.

Please describe the Company's existing line extension plan.

The Company's existing line extension plan is comprised of Current Section XXII and Plan F. Current Section XXII establishes the charges and restrictions associated with the installation of overhead nonresidential and multi-phase residential line extensions, as well as line extensions to appurtenances of residential dwellings. The charges are equal to the estimated installation cost of the line that exceeds four times the reasonable expected continuing annual revenue less fuel revenue. In addition to these charges, the customer is required to secure rights-of-way, if needed, without cost to the Company. In the case of

(4)

1

2

3 4 5 6 7 8

9

Q.

10 A. 11 12 13 14 15 16 17 18 19

20

21

22

23

multi-phase extensions, certain load characteristics and sizes are established in order for additional charges not to apply. In addition, Current Section XXII establishes the restrictions associated with single-phase overhead residential service, establishes the guidelines for designated "Underground Distribution Areas," and refers to Plan F in cases where customers request, or are required by a third party to install, underground service outside the Company's designated Underground Distribution Areas. Furthermore, Current Section XXII lists general requirements that must be met in order for the requested line extension to be installed.

Please describe the Plan F component of the current line extension plan. Plan F establishes the terms and conditions under which the Company will provide underground facilities to customers not located within the Company's designated Underground Distribution Areas. Section I of Plan F defines the underground facilities that will be utilized when a residential or nonresidential customer requests, or is required by local ordinance to request, underground service, as well as the process for determining the cost for providing these underground distribution facilities.

Section II of Plan F relates to residential customers. Section IIA establishes the terms and conditions for providing underground service at no cost in residential developments. These terms and conditions consist of limits to service size, service lateral length, lot size, and number of units per acre for multi-family developments. Section lIB lists the

limitations associated with providing underground service at no charge to individual residences. Such limitations include the new service requirements for the proximity of the overhead lines, that no underground primary or road crossing is required, as well as limitations on service length and size restrictions. Plan F goes on to establish in

(5)

1

2

3 4 5 6 7 8 9 10 11 12 13 Q. 14

15

A.

16 17 18 19 20 21

22

23

Section IIC that other new residential services not covered above will be provided underground upon payment to the Company of an amount equal to the

overhead/underground "cost difference." Cost difference as used in Plan F means the amount by which the estimated cost of providing underground facilities exceeds the estimated cost of providing comparable overhead facilities.

Section III of Plan F relates to nonresidential services. In addition to the cost difference, nonresidential services are charged for the cost of the estimated overhead cost in excess of four years of anticipated revenue, less fuel revenue. Finally, Section IV of Plan F establishes the methodology for charging residential or nonresidential customers when they request to convert overhead facilities to underground. The methodology consists of charging the depreciated reproduction cost, less salvage, plus removal cost and any applicable Plan F charges.

Why is the Company proposing to change Current Section XXII and eliminate Plan F?

In the past, in most areas, overhead distribution facilities were the best construction method to accomplish the objective of safe, reliable, and cost-effective service. In the 1960s and early 1970s, however, underground cable and associated devices used for electric distribution became available, with more widespread use developing in the late 1970s. At that time, underground distribution cable was expected to last more than 30 years, but usually had to be replaced in approximately half that time. However, over the past 30 years, the underground distribution industry has matured, and underground distribution facilities have become more dependable. Today, replacement cable, as well as the cable used in new distribution extensions, has a life expectancy of 30 years.

(6)

1 2 3

4

5 6

7

8 9 10 11 12 13 14 15 16

Q.

17 18 A. 19 20 21 22 23

Currently (for 2012), approximately 85% of the Company's new distribution lines are installed underground. Moreover, the Company has developed more reliable operating and financial models to evaluate the life cycle cost of these facilities. These financial models show that the Company's focus should be less on initial installation cost and more on the net present value of facilities, taking into account operating and maintenance cost. This financial review, based on the more reliable cable now used in underground

extensions, permits the Company to present Proposed Section XXII to further expand the installation of underground distribution facilities, and reasonably spread the cost of the initial installation of these facilities over their useful life.

When life cycle costs are compared, as illustrated in Schedule 2, the ongoing savings related to operation and maintenance typically offset the higher initial cost of

underground installation when standard equipment and work practices can be used. Proposed Section XXII reflects a change in the Company's focus from the previous overhead standard to one favoring the increase in underground installation resulting from the Company's review of the net present value of the facilities being installed.

Please describe the differences between the existing line extension plan and the line extension plan that the Company is proposing in this proceeding.

The Company is proposing to revise its existing line extension plan, specifically as it relates to installing underground distribution facilities that serve as Branch Feeders (facilities to be installed on the customer's or developer's property to serve the associated load). The Company is now proposing, with few exceptions, to install all new

distribution Approach Lines (facilities installed from an existing source to the customer's or developer's property) overhead and all new distribution Branch Feeders underground.

(7)

1

2

3 4 5

Q.

6

7 A.

8

9 10 11 12 13 14 15 16 17 18 19

Q.

20

21 A.

22

23

My Schedule 1 presents the terms and conditions of the Company's Proposed Section XXII (which defines the terms under this plan, including for Branch Feeders and Approach Lines). Paragraphs B, C, D and E of Proposed Section XXII set forth the specific terms and conditions applicable to the most common types of line extensions.

Please elaborate on the instances where the Company is proposing to continue to install overhead distribution lines.

The proposed line extension plan designates the use of overhead distribution facilities in locations where tree exposure is reduced, facilities are accessible, and/or the likelihood of future alteration is more likely. These characteristics are typical of Approach Lines, and installing these facilities overhead is supported by the Company's financial analysis. Conversely, the proposed line extension plan designates the use of underground distribution facilities where tree exposure is more prevalent, accessibility is difficult, and/or the likelihood of future alteration is not significant. These characteristics are typical of the Branch Feeders as defined in the Proposed Section XXII. Therefore, the Company's proposed line extension plan no longer includes a preference for overhead facilities, but attempts to take into account cost and operational factors to support the blended use of overhead and underground facilities to achieve the ultimate goal of safety and reliability at a reasonable cost.

How will the proposed line extension plan affect reliability of the Company's distribution system?

The proposed line extension plan will have a positive impact on the reliability of the Company's distribution system. As I mentioned earlier, in recent years, the underground distribution industry has matured considerably and underground cable has demonstrated a

(8)

1

2

3 4

Q.

5

6

A.

7 8 9 10 11 12 13 14 15 16 17 18 19

20

21

22

23

reasonable operating life. The Company's experience demonstrates that on a system average, underground distribution facilities have a lower outage frequency and duration per mile of line than overhead.

Please explain in more detail the financial and operating models on which the Company relies.

A life cycle cost evaluation utilizing a discounted cash flow analysis was performed in order to compare the net present value of similar installations utilizing overhead versus underground facilities. The cost model was run for several scenarios of line extensions and installations considered typical on the Company's distribution system. The factors considered in the model include the following: installation cost; annual operating and maintenance ("O&M") expenses; annual line losses; and capital replacement cost. Installation costs were consistently higher for underground installations. The annual O&M expenses, including tree trimming and major storm costs, were consistently higher for overhead installations. The annual line losses were typically lower with the larger cable sizes utilized in underground distribution installations. Capital replacement costs were factored in on a prorated basis to account for the varying life expectancies of overhead and underground facilities.

The various effects of these components on the Company's life cycle cost analysis led the Company to determine that the higher initial cost of installing underground facilities (using typical equipment to install Branch Feeders) was significantly, if not totally, offset by the lower operating and maintenance costs over the life of the underground cables. Additionally, the Company's operational models showed improved results in reliability, when including major storms, for underground facilities as compared to overhead

(9)

1 2

Q.

3 4 A. 5 6 7 8 9 10 11 12 13 14 15 16 17

Q.

18 19 A. 20 21 22 23 facilities.

How will costs to customers under the Company's proposed line extension plan compare with their costs under the current plan?

Branch Feeder installation costs to customers requesting certain underground facilities under the Company's proposed line extension plan will be lower due to a decrease in customer payments in the form of contributions in aid of construction ("CIAC"). The annual impact for the Company's customers requesting underground service is expected to be a reduction of approximately $10 million. Also, these customers will see an additional $2.9 million reduction in the Tax Effect Recovery Factor ("TERF") on CIAC, bringing the total annual customer benefit to approximately $12.9 million. The $10 million cost of placing services underground will be included in rate base and depreciated and represents an approximately 14% increase in the Company's annual expenditures for new services. As I mentioned previously, the Company's analysis demonstrates that when life cycle costs are compared, the initial higher costs of undergrounding Branch Feeders will be offset by the reduction in the ongoing operational cost ofthe facilities installed.

Are there any other differences between the proposed line extension plan and the current plan?

Yes. Currently, 95% of the Company's new residential customers already receive the benefits of underground installations. The Company is proposing to eliminate several of the previous restrictions on installing new underground Branch Feeder facilities at no cost, reflecting the changing preferences of the Company's customers and developers, and thus opening the accessibility of such installations and extensions to a greater number

(10)

1 2 3 4 5

6

7 8

Q.

9

10 A. 11 12 13 14 15 16 17 18

Q.

19

20

A.

21 22 23

of customers. Proposed Section XXII will afford more of the Company's rural residential customers, builders of multi-family facilities with three-phase service, and the

Company's medium and large commercial customers with the benefits now enjoyed by residential developments. For Branch Feeders, the distribution overhead-to-underground cost comparison will be eliminated, and anticipated four-year revenue amounts,

excluding fuel charges, will be applied directly to the estimated installation cost of new underground distribution facilities.

How do the Company's new line extension customers benefit from this change?

As I mentioned previously, the Company's customers prefer underground distribution facilities as opposed to overhead facilities. Proposed Section XXII promotes the installation of underground facilities at no charge for a wider range of customers, with commercial and rural residential customers experiencing the most significant increase in opportunity for underground line extensions. Additionally, the proposed line extension plan is designed to be more easily understood and administered than the existing line extension plan. Restrictions related to lot size, service size, and service length would be lifted to better reflect home building and customer expectations in today's market.

Are there any other aspects of Proposed Section XXII that you would like to discuss?

Yes. In addition to new distribution line extensions, Proposed Section XXIIG covers the conversion of existing distribution service facilities from overhead to underground. The current conversion methodology, as I discussed earlier, has been simplified. This change in methodology is easier to understand and administer, and will result in cost savings to

(11)

1 2 3 4 5 Q.

6

7 A. 8

9

10 11 12 13 14

Q.

15 16 A. 17 18 Q. 19 A.

the majority of the Company's customers requesting conversion from overhead

secondary to underground secondary. These conversions further create aesthetic benefits for the Company's customers, as well as a potential reliability benefit for the Company (which itself also benefits customers).

Can you discuss the differences between the line extension plan that the Company proposed in the 2009 going-in review and the Proposed Section XXII?

The phrase "including Bulk Feeder" was added to Proposed Section XXIIC 3 to clarify that there is no additional charge for this type of installation in residential developments. Several terms have been added to Proposed Section XXIIA (Definitions) to further clarify the intent of the proposed line extension plan. AsImentioned above, these clarifications were made based on comments filed by the Commission Staff in the 2009 going-in review (Case No. PUE-2009-00019) on the modified line extension plan proposed in that proceeding.

Do the proposed revisions to the line extension plan relate or apply in any way to transmission lines?

No. The facilities targeted for expanded underground installations are rated below 50 kV.

Does this conclude your direct testimony? Yes, it does.

(12)

APPENDIX A

BACKGROUND AND QUALIFICATIONS' OF

STEVEN A. EISENRAUCH

I received my four-year Bachelor's degree in Electrical Engineering Technology from Old Dominion University in 1988. That same year, I joined Virginia Electric and Power Company as a Service Representative, and I have spent my entire career with the Company. I was promoted to Senior Service Representative in 1993, Business Systems Analyst - IT in 1999, Senior Designer/Technical Analyst - Distribution Standards in 1999, Project Manager - Six Sigma in 2003, Manager Electric Delivery Projects in 2006, and Manager Distribution Forestry in 2007. I assumed my current position as Manager - Electric Distribution Customer Solutions on January 1,2011. I have also been certified as a Six Sigma Black Belt and Master Black Belt in January of2002.

(13)

Company Exhibit No._ Witness: SAE Schedule 1 Page I of 13

XXII. ELECTRIC LINE EXTENSIONS AND INSTALLATIONS

A. The following definitions apply to terms used in this Section XXII:

1. Adequate - Facilities that have the capacity to serve the Customer's load at the existing service characteristics (i.e. voltage, single-phase or three-phase, wye or delta). Facilities are considered inadequate when their capacity is not sufficient to serve the load at the existing service characteristics.

2. Adjacent - Contiguous to Public Right-of-Way. The Company reserves the right to have final determination on the placement of the facilities.

3. Approach Lines - Facilities installed from an existing source to the property of the customer or developer requesting Electric Delivery Service.

4. Branch Feeder - Facilities installed on the property of the Customer or developer (only includes property within the recorded development) requesting Electric Delivery Service.

5. Bulk Feeder - A three-phase main feeder circuit with an ampacity greater than 200 Amperes that is required to serve a general area, or large load(s).

6. Company's Preferred Route - The route required by the Company to meet the Company's obligation of providing reliable Electric Service at a reasonable cost. The route selected will factor in accessibility, location of equipment, and the economics of the installation while using the Company's standard engineering practices.

7. Conversion - The replacement of overhead facilities with underground facilities in essentially the same area.

8. Nonresidential Development - For nonresidential Customers, a recorded development of multiple contiguous properties comprised of at least four building sites.

9. Permanent Residence - A single unit, providing complete and independent living facilities for one or more persons, including permanent provisions for sleeping, cooking, and sanitation.

10. Public Right-of-Way - Publicly owned and/or maintained streets, roads and highways.

(14)

Company Exhibit No._ Witness: SAE Schedule 1 Page 2 of 13

XXII. ELECTRIC LINE EXTENSIONS AND INSTALLATIONS (Continued)

11. Residential Development - For detached single-family homes, a recorded development of multiple contiguous properties comprised of at least four new residences. For garden-type homes, apartments, condominiums, and town homes a recorded development comprised of at least four new residences and an average density of not less than four new residences per acre.

12. Transitional Cost - The amount by which the estimated cost of providing underground facilities exceeds the estimated cost of providing comparable overhead facilities along the Company's Preferred Route (switches, pads, terminals, etc. required for this installation will be included in the comparison). This cost difference in no event will be less than zero.

B. New Residential - Single-Phase Not Within a Residential Development Contracted to be Served Underground

The Company will provide single-phase Electric Service to a Permanent Residence not previously provided with Electric Service, and not located within an area designated by the Company as an Underground Distribution Area, in accordance with the provisions stated herein.

1. Primary Approach Lines located on or Adjacent to Public Rights-of-Way normally will be installed overhead at no cost to the Customer.

a. Should the Customer request or be required to install primary Approach Line facilities located on or Adjacent to Public Rights-of-Way underground, a payment equal to the Transitional Cost will be required. b. Secondary Approach Lines (600 Volts or less) located on or Adjacent to

Public Rights-of-Way will be installed underground at no charge to the Customer if the Company deems the composition of the land where facilities are to be installed is such that the Company's standard underground trenching equipment can be used to complete the installation. c. Single-phase Approach Lines not located on or Adjacent to Public Rights-of- Way normally will be installed underground at no charge to the Customer, if the Company deems the composition of the land where facilities are to be installed is such that the Company's standard underground trenching equipment can be used to complete the installation. The Company reserves the right to determine the operational feasibility and effectiveness of this installation.

(15)

2. Branch Feeder facilities will be installed in accordance with the following: a. Branch Feeder facilities not located on or Adjacent to Public

Rights-of-Way normally will be installed underground at no charge to the Customer, if the Company deems the composition of the land where facilities are to be installed is such that the Company's standard underground trenching equipment can be used to complete the installation. The Company reserves the right to determine the operational feasibility and effectiveness of this installation.

b. Branch Feeders installed on or Adjacent to Public Rights-of-Way that can or will be utilized to serve future customers will be installed overhead at no charge to the Customer. Should the Customer request or be required to install these facilities underground, a payment equal to the Transitional Cost will be required.

c. Branch Feeders installed on or Adjacent to Public Rights-of-Way that cannot, or will not, be utilized to serve future customers will be installed underground at no charge to the Customer, if the Company deems the composition of the land where facilities are to be installed is such that the Company's standard underground trenching can be used to complete the installation.

3. If the Customer requests or is required to install Branch Feeder facilities not utilizing the Company's Preferred Route, a payment equal to the difference in the estimated installed cost of the Company's Preferred Route and the agreed upon route will be required. This cost difference in no event will be less than zero.

4. In reference to installations in 1. and 2., above, should the Customer request underground facilities when the composition of the land is such that normal trenching cannot be used, then the Customer will pay the Company the amount by which the estimated cost of providing underground facilities exceeds the estimated cost of providing normal trenching, or receive overhead installation at no charge.

(16)

XXII. ELECTRIC LINE EXTENSIONS AND INSTALLATIONS (Continued) C. New Residential Development

The Company will provide Electric Service to individually metered Permanent Residences and or residential units within a Residential Development not previously provided with Electric Service, and not located within an area designated by the Company as an Underground Distribution Area, in accordance with the provisions stated herein.

1. Approach Lines normally will be installed overhead at no cost to the Customer/Developer.

a. Should the Customer/Developer request or be required to install Approach Line facilities located on or Adjacent to Public Rights-of-Way underground, a payment equal to the Transitional Cost will be required. b. Single-phase Approach Lines not located on or Adjacent to Public

Rights-of-Way normally will be installed underground at no charge to the Customer/Developer if the Company deems the composition of the land where facilities are to be installed is such that the Company's standard underground trenching equipment can be used to complete the installation. The Company reserves the right to determine the operational feasibility and effectiveness of this installation.

2. Branch Feeder facilities installed on or Adjacent to Public Rights-of-Way (not located within the Residential Development) that can or will be utilized to serve future customers located outside the Residential Development will be installed overhead. Should the Customer/Developer request or be required to install these Branch Feeder facilities underground, and the Company deems it to be operationally feasible, a payment equal to the Transitional Cost will be required.

3. Branch Feeder facilities not defined in Paragraph C.2., above, will be installed underground within the Residential Development (including Bulk Feeder) along the Company's Preferred Route at no charge to the Customer/Developer when all the criteria below are met.

(17)

a. The Customer/Developer, at the Customer/Developer's own expense, installs Company provided conduit, at locations specified by the Company, within the new Residential Development. This is to include road crossings, driveways, obstructions, etc. (If a Duct Bank/Conduit System installation is required or requested, it will be installed in accordance with Paragraph V., below).

b. There is no residence and or residential unit with electric motors rated at 15 horsepower or more.

c. The Customer/Developer executes an Underground Agreement and/or all required easements before any lots or units in the development are sold. d. The Customer/Developer cuts and clears the Right-of-Way to Company

specifications.

e. The delivery characteristics requested at each residential unit is single-phase 1201240 Volt.

4. If the Customer/Developer requests or is required to install Branch Feeder facilities not utilizing the Company's Preferred Route, a payment equal to the difference in the estimated installed cost of the Company's Preferred Route and the agreed upon route will be required. This cost difference in no event will be less than zero.

5. In reference to installations in this Paragraph C., above, when the composition of the land is such that normal trenching equipment cannot be used, then the Customer/Developer will pay the Company the amount by which the estimated cost of providing underground facilities exceeds the estimated cost of providing normal trenching.

6. If the Customer/Developer does not meet all the criteria in this Paragraph C.3., above, overhead facilities will be provided at no charge utilizing the Company's Preferred Route.

(18)

Company Exhibit No __ Witness: SAE Schedule 1 Page 6 of 13

XXII. ELECTRIC LINE EXTENSIONS AND INSTALLATIONS (Continued) D. New Non-residential and New Residential Three-Phase Service

The Company will provide Electric Service, to individually metered permanent non-residential units (including garages, tool sheds, swimming pool pumps, well pumps, etc.), or individually metered three-phase detached single-family residential homes not previously provided with Electric Service, and not located within an area designated by the Company as an Underground Distribution Area, in accordance with the provisions stated herein.

1. The Customer will pay the Company the amount, if any, by which the cost contained in Paragraphs D.2., D.3, D.S, D.6.a., D.6.b., D.6.c., D.6.d., and D.6.e. exceed four times the continuing estimated annual revenue - less fuel charge revenue - that can reasonably be expected.

2. Primary Approach Lines located on or Adjacent to Public Rights-of-Way and all multi-phase Approach Lines normally will be installed overhead along the Company's Preferred Route.

3. Secondary Approach Lines (600 Volts or less) located on or Adjacent to Public Rights-of-Way will be installed underground if the Company deems the composition of the land where facilities are to be installed is such that the Company's standard underground trenching equipment can be used to complete the installation.

4. Should the Customer request or be required to install underground Approach Line facilities defined in Paragraph D.2., above, a payment equal to the Transitional Cost will be required for facilities located on or Adjacent to Public Rights-of-Way, or any multi-phase extension.

5. Single-phase Approach Lines not located on or Adjacent to Public Rights-of-Way normally will be installed underground if the Company -deems the composition of the land where facilities are to be installed is such that the Company's standard underground trenching equipment can be used to complete the installation; otherwise, overhead facilities will be installed. The Company reserves the right to determine the operational feasibility and effectiveness of these installations.

(19)

Company Exhibit No._ Witness: SAE Schedule I Page 7 of 13

6. Branch Feeder facilities will be installed in accordance with the following: a. Branch Feeder facilities with a rated voltage greater than 50 kV will be

installed overhead.

b. Branch Feeder facilities located on or Adjacent to Public Rights-of-Way installed to serve individually metered nonresidential Customers not located within a Nonresidential Development, or individually metered residential three-phase Customers will be installed overhead.

c. Branch Feeder facilities within a Nonresidential Development located on or Adjacent to Public Rights-of-Way, and that can or will be utilized to serve future customers located outside the development, will be installed overhead.

d. Branch Feeder facilities where Bulk Feeder is not required and not defined in Paragraphs D.6.a., D.6.b., and D.6.c., above, normally will be installed underground if the Company deems the composition of the land where facilities are to be installed is such that the Company's standard underground trenching equipment can be used to complete the installation. Otherwise, overhead facilities will be installed. The Company reserves the right to determine the operational feasibility and effectiveness of this installation.

e. Branch Feeder facilities wherein Bulk Feeder is required will normally be installed overhead.

f. Should the Customer request or be required to install underground Branch Feeder facilities defined in Paragraphs D.6.a., D.6.b., and D.6.c., above, a payment equal to the Transitional Cost will be required.

g. Should the Customer request or be required to install Bulk Feeder underground, a payment equal to the Transitional Cost will be required. 7. When the Company deems the composition of the land is such that normal

trenching cannot be used, then the Customer will pay the Company the amount by which the estimated cost of providing underground facilities exceeds the estimated cost of providing such underground facilities with normal trenching.

(20)

8. If the Customer requests or is required to install Branch Feeder facilities not utilizing the Company's Preferred Route, a payment equal to the difference in the estimated installed cost of the Company's Preferred Route and the agreed upon route will be required. This cost difference in no event will be less than zero.

E. New Residential Development Three Phase Service

The Company will provide three-phase electric facilities to serve individually metered residential units (garden-type homes, apartments, condominiums, and town homes) within a Residential Development not previously provided with Electric Service, and not located within an area designated by the Company as an Underground Distribution Area, in accordance with the provisions stated herein.

1. The Customer will receive a credit of four times the anticipated annual revenue, excluding fuel charge revenue, per metered unit, which will be applied to the applicable charges, if any, contained in Paragraphs E.2., EA. and E.6.

2. Approach Lines will normally be installed overhead along the Company's Preferred Route.

3. Should the Customer request or be required to install Approach Line facilities underground, a payment equal to the Transitional Cost will be required.

4. Branch Feeder facilities installed on or Adjacent to Public Rights-of-Way that can or will be utilized to serve future customers located outside the Residential Development will be installed overhead.

5. Should the Customer request or be required to install these Branch Feeder facilities underground, as defined in Paragraph EA., above, a payment equal to the Transitional Cost will be required.

6. Branch Feeder facilities not defined in Paragraph EA., above, will be installed underground within the development along the Company's Preferred Route upon execution of an Underground Agreement and provided all required easements are executed before any lots or units in the Residential Development are sold.

(21)

7. If the Company deems the composition of the land is such that normal trenching cannot be used to install Branch Feeder facilities, the Customer will pay the Company the amount by which the cost of providing estimated underground facilities exceeds the estimated cost of providing normal trenching, or the facilities will be installed overhead.

8. If the Customer requests or is required to install Branch Feeder facilities not utilizing the Company's Preferred Route, a payment equal to the estimated difference in the cost of the facilities utilizing the Company's Preferred Route versus the cost of the facilities utilizing the agreed upon route will be required. This cost difference in no event will be less than zero. The Company reserves the right to have final determination of location of facilities.

9. Customers who do not qualify for service in accordance with the provisions of this paragraph will be served in accordance with Paragraph D.

F. Service Upgrades

1. Residential (not located within an area designated by the Company as an Underground Distribution Area)

a. The Company will provide Electric Service to previously served individually metered Permanent Residences in accordance with the provisions stated herein.

b. The Company will replace inadequate overhead facilities with adequate overhead facilities at no cost to the Customer.

c. The Company will replace inadequate underground facilities with adequate underground facilities at no cost to the Customer, except as otherwise provided in this subparagraph. When the Company deems the composition of the land is such that normal trenching cannot be used, then the Customer will pay the Company the amount by which the estimated cost of providing underground facilities exceeds the estimated cost of providing normal trenching. If the Customer requests or is required to install Branch Feeder facilities not utilizing the Company's Preferred Route, a payment equal to the difference in the estimated initial installed cost of facilities in the Company's Preferred Route versus the estimated installation cost of facilities in the agreed upon route will be required. This cost difference will in no event be less than zero.

(22)

Company Exhibit No,_ Witness: SAE Schedule I Page 10 of 13

2. Non-residential (not located within an area designated by the Company as an Underground Distribution Area)

a. The Company will provide Electric Service to previously served individually metered non-residential Customers in accordance with the provisions stated herein.

b. The Customer will pay the Company the amount, if any, by which the cost contained in Paragraphs F.2.c. and F.2.d.; below exceeds four times the incremental continuing estimated annual revenue, less fuel charge revenue, that can reasonably be expected. Incremental estimated revenue is defined as the revenue associated with the additional usage that will be added after the Company's facilities are upgraded.

c. The Company will replace inadequate overhead facilities with adequate overhead facilities.

d. The Company will replace inadequate underground facilities with adequate underground facilities.

e. When the Company deems the composition of the land is such that normal trenching equipment cannot be used then the Customer will pay the Company the amount by which the estimated cost of providing underground facilities exceeds the estimated cost of providing normal trenching.

f. If the Customer requests or is required to install Branch Feeder facilities not utilizing the Company's Preferred Route, a payment equal to the difference in the estimated initial installed cost of the Company's Preferred Route and the agreed upon route will be required. This cost difference in no event will be less than zero, and revenue, if any, will not be applied to this charge.

G. Conversions

1. When a Customer requests the Company to convert existing adequate overhead secondary facilities to underground, such service will be furnished, provided the Customer pays to the Company an amount equal to the estimated cost of removing the adequate secondary overhead facilities, plus the charges, if any, specified in the applicable paragraph for new service, above.

(23)

Company Exhibit No,_ Witness: SAE Schedule 1 Page 11 of 13

2. When a Customer requests the Company to convert existing inadequate overhead secondary facilities to underground, such service will be furnished, in accordance with the applicable paragraphs for new service above. There will be no charge for the removal of the inadequate overhead secondary facilities.

3. When a Customer requests the Company to convert existing overhead primary facilities (greater than 600 Volts) to underground, the Customer will pay the Company the estimated removal cost of the overhead primary facilities, less salvage, plus the estimated installation cost of the underground facilities. H. Three-Phase Service Qualification:

The Company will provide three-phase service in accordance with the provisions of the applicable paragraphs, above, to Customers having one three-phase motor larger than five horsepower, or to a single metered Customer having multiple three-phase motors which total at least 15 horsepower, provided the motors are properly sized for their expected use, or to a single metered Customer having 50 kilowatts or more of lighting load. Customers that request three-phase service but do not meet the foregoing minimums may receive three-phase service upon payment of the amount, if any, by which the estimated cost of constructing a three-phase extension exceeds the estimated cost of constructing a single-phase extension with capacity to serve the same kilovolt-ampere load. This charge shall be in addition to any other charges normally applicable for a single-phase extension.

1. Underground Distribution Area

Within any major metropolitan, high-load, high density center which the Company has designated as an "Underground Distribution Area," the Customer requesting service will pay the Company the amount, if any, by which the cost of the Approach Line exceeds four times the continuing estimated annual revenue--less fuel charge revenue-- that can reasonably be expected, except that the Company shall not be obligated to construct or own any electric underground facilities beyond the property line of the Customer.

J. The Company will make electric delivery installations other than those specified in Paragraphs B., C., D, E., F., and G., above, under conditions specified in the Company's electric Line Extension agreements on file with the Commission.

(24)

K. If a proposed electric Line Extension is of such great length or high cost, or if, in the Company's opinion, the anticipated Electric Delivery Service revenue from such Line Extension is insufficient or temporary, or if the Customer or Customers to be supplied are unable to establish a credit standing satisfactory to the Company, the Company reserves the right to determine the advisability of making such Line Extension.

L. The Company shall not be required to make any electric Line Extension until the Customer or Customers to be supplied from such Line Extension have signed all applicable applications or agreements, and fulfilled such other conditions for the connection to the Company's facilities and for receiving the Electric Service as may be required by the Company, and until all premises to be supplied have been wired and made ready for service.

M. The Company shall not be required to make any electric delivery installations on private property until the property owner shall have granted to the Company an easement of Right-of-Way for the construction, operation and maintenance of such electric delivery installation.

N. The Customer may be required to secure Rights-of-Way on private property without cost to the Company, or to assist the Company in obtaining Rights-of- Way. O. Whenever it is determined that an electric delivery installation on private property to serve one Customer will be built by the Customer, such installation (l) shall start within 100 feet of the Company's line, (2) shall be constructed in compliance with the Company's standards and be approved by the Company, (3) shall be maintained by the Customer at all times in a manner satisfactory to the Company, and (4) the Customer shall assume the liability for the maintenance and operation of the line. If the line owned by the Customer is not operated and maintained in a manner satisfactory to the Company, or, in the Company's opinion, may interfere with or be detrimental to the Company's facilities or to the provision of Electric Service by the Company to any other Customer, then the Company may discontinue Electric Service as provided in Section XVI--Discontinuance of Electric Service. After such discontinuance the supply will not be restored until conditions are made satisfactory to the Company as provided in Section III - Inspection and/or in Section XVII-Reconnection of Electric Service.

(25)

P. When any governmental authority requires that electric lines and related facilities be located or relocated underground, to the extent such installation or underground facilities is not covered by this Section XXII the cost incurred by the Company properly attributable to such installation will be charged, in a manner approved by the Commission, pro rata to the Customers receiving Electric Service within the jurisdiction imposing the requirement.

Q. In conjunction with Paragraph D. above, the Company may at the Company's option require the Customer (or group of Customers) to provide definite written guarantees of revenue to justify the provision of Electric Service.

R. These general rules and regulations shall not be construed as prohibiting the Company from making electric delivery installations of greater length or higher cost, provided there is no discrimination between Customers receiving Electric Service under the same classification.

S. Where applicable, the Company will install, own and maintain electric line facilities as provided in this Section XXII. The Company reserves the right to have final determination of the location of the Company's facilities.

T. Cost Estimates will be in accordance with the Company's current design practices. U. The Company reserves the right to determine the operational feasibility and effectiveness of any installation.

V. Should the Customer request a Duct Bank/ Conduit System installation, or the Company determines the need for such is dictated by site conditions, obstructions or space limitations restricting the installation, maintenance, or operation of the Company's normal underground facilities, the Customer will pay the Company the amount by which the estimated cost of providing such underground facilities exceeds the estimated cost of providing facilities normally required per the appropriate paragraph in Section XXII. The Company should be contacted if the Customer desires to install the Duct Bank/Conduit System, as a plan and profile submission may be required.

(26)

CompanyExhibitNo._ Witness:SAE

Schedule 2

Page I of13

ANAL YSIS OF NEW LINE EXTENSIONS

The current Line Extension Plan is based on the condition that the Company is considered an "overhead" company.This analysis removes that condition and examines the total ownership cost of a new line extension.

Assume a new single phase line extension from an existing overhead pole as shown in Figure 1.This is a single phase extension of 500 feet of primary to a transformer and 75 feet of service conductor. Figure 1A shows the extension underground and Figure 1B shows the extension overhead.

---Figure IA

---Figure IB

If the customer does not qualify for free Plan F, the cost to the customer would be the difference between the initial underground cost and the initial overhead cost as shown in Table 1. Since it is known that the installation cost of underground is less than overhead if tree trimming is involved ,it is not included here.For this analysis it is assumed that the customer does all initial tree trimming .

A.I Initial Installation Cost

The examples are based on typical installations and the costs are calculated based on the Company's Work Management Information System (WMIS).Appendix A.l provides the details on how the cost per unit is determined.For the installations shown in Figure 1 the cost are computed as shown in Table 1.

(27)

Installation Cost Underzround Installation Cost Overhead

Facility Unit Unit # of Cost Facility Unit Unit #of Cost

cost Units ($) Cost Units ($)

1/0 3.576 ft. 500 1788.00 1/0 Hot 3.46 ft. 250 865.75 Primary Primary 30" 2.73 ft. 500 1365.00 1/0 Cold 1.87 ft. 250 466.50 Trench Primary 25kVA 3484.03 1 3484.03 Pole 663.03 2 1326.06 TX ea. ea 4/0 3.164 ft. 75 237.3 25 kVA TX 2341.85 1 2341.85 secondary ea. 4/0 fixed 120.39 1 120.39 1/0 1.64 ft. 75 122.70 items ea secondary 24" 2.46 ft. 75 184.50 1/0 fixed 17.68 1 17.68

Trench items ea.

1P

1490.51 1 1490.51 Entrance 9.24 ft. 30 277.08

terminal ea Cable

Ent. Cable

152.84 1 152.84

fixed items ea.

Down Guys 949.68 ea. 1 949.68

Total 8669.73 6520.14

Table 1

For the examples shown in Figure 1, the cost to the customer would be $8669.73 - $6520.14

=

$2149.59

A.2 Joint Trench

Historically, the Company's cost of trenching assumed that the trench was not shared by other utilities. This was typical at the time of the Company's last rate filing. Today the practice of "Joint Trench" is more frequent for residential services and includes both telephone and cable tv. Appendix B shows the determination of the average cost of trench based on 5 years of data from 2008-2012.

On average, the cost of a residential 30" primary trench was $2.73, compared to $3.01 for non-residential trench. The cost of a residential 24" secondary trench was $2.46, compared to $2.71 for non-residential trench.

A.3 Net Present Value of Initial Capital Expenditures

The actual net present value (NPV) of a capital expenditure is less than the actual expenditure due to annual taxes, depreciation and property insurance. Appendix C shows the NPV of a $1000 expenditure is worth $838 or $0.838 per dollar spent. The actual NPV of the installation cost of Figure 1 would be $5463.87 if installed overhead and $7119.51 if installed underground.

(28)

There are five categories of O&M expenses as shown in Table 2. The expenses shown are based on 2011 data, except for major storm which is the average of five years (excludes Irene). Some of these expenses are easily determined to be on the underground system or overhead system. The other expenses are allocated to underground or overhead by inspection of the individual expenses. For line items that cannot be designated, the expense is allocated by pro-rating. The expenses to maintain streetlighting, networks and meters have been excluded.

Category OH

UG

Cable Locating

°

4,211,202

Major Storm 31,887,701

°

Tree & Brush 43,338,667

°

Maint. / Repair 17,454,842 7,277,618 Service Restoration 17,085,855 18,302,129

TOTAL 109,767,065 29,790,949 Table 2

Appendix D shows the actual expenses and their allocation.

The Company has 35,084 miles of overhead lines and 21,772 miles of underground lines on the system. This equates to an annual O&M expense of:

$3128.69/ mile of overhead line $1368.31 / mile of underground line

The installation shown in Figure 1 is to extend 575 feet of overhead or underground facilities. The Company expects to spend $341 per year if installed overhead or $149 per year if installed underground.

B.2 Net Present Value of Annual Operating and Maintenance Expenditures

The NPV of the annual O&M expenses are calculated as shown in Appendix E. The annual expense is escalated every year based on the GDP less the annual taxes. The NPV of an annual expense of $1000 for 40 years is $13,342, or $13.342 per annual dollar spent. For the examples shown in Figure 1, the NPV of annual O&M is $4,545.88 if installed overhead and $1,988.11 if installed underground. If this is added to the NPV of Installation cost, the revised NPV would be $10,009.75 if installed overhead and $9253.34 if installed underground.

C.1 Capital Replacement

All facilities have an end of life. For this analysis, the expected life is determined from the accounting depreciation tables shown in Appendix F. On average, underground facilities have a shorter life than overhead facilities. There will be cost of replacement at some time in the future, however the NPV of this expense depends on when the expense occurs. Tables 3 and 4 show the NPV of replacing underground and overhead facilities, respectively.

(29)

Replacement Cost of Underground Facilities

Facility Depreciable NPV Replacement NPV

Life (yrs.) / $1000 Cost

(in today's dollars)

1/0 Primary 29 $267 $1788

+

$1365 $841.85 1P Terminal 29 $267 1490.51 $397.97 Transformer 32 $241 $3484.03 $839.65 4/0 Secondary 29 $267 $184.5

+

$237.3 $112.62 4/0 fixed items 29 $267 . $120.39 $32.14 Total $2224.23 Table 3

Replacement Cost of Overhead Facilities Depreciable NPV Replacement Facility

Life (yrs.) / $1000 Cost NPV

(in today's dollars)

1/0 Primary 37 $205 $865.75

+

$466.5 $273.11 Pole 30 $258 $1326.06 $342.12 Transformer 32 $241 $2341.85 $564.39 1/0 Secondary 29 $267 $122.7

+

$17.68 $37.48 Entrance Cable 29 $267 $277.08

+

$152.84 $114.79 Down Guys 30 $258 $949.68 $245.02 Total $1576.91 Table 4

lfthe facilities shown in Figure 1 were installed overhead the NPV of capital replacement would be $1576.91 and $2224.23 if installed underground. Added to section B.2, the revised NPV would be $11,586.66 if installed overhead and $11,477.57 if installed underground.

D.1 Line Losses

For a 200 amp service, the Company has standardized on a 1/0 aluminum service drop if installed overhead. This conductor has an ampacity of 205 amps based on manufacturer's specifications. For most residential services, the Company installs 4/0 aluminum entrance cable, sized in accordance with the NEC.

For a 200 amp service, the Company has standardized on a 4/0 aluminum service lateral if installed underground. This conductor has an ampacity of 240 amps based on manufacturer's specifications.

For a 2,300 square foot, all electric house, the Company expects the peak load to be approximately 80 amps. This load will cause the service conductors to heat, which is wasted energy. The calculation of line losses for the installations shown in Figure 1 are shown in Appendix G.

(30)

For the underground installation shown in Figure 1, the losses are $5.3 per year. D.2 NPV of Line Losses

Line Losses are an annual expense and the NPV calculation, shown in Appendix H, is similar to the annual O&M expenses shown in section B.2.

The NPV of line losses for the overhead installation is $169.79. The NPV of line losses for the underground installation is $70.75.

Added to Section C.3, the revised NPV is $11,756.45 for the overhead installation vs. $11,548.32 for the underground installation. The difference is $208.13.

G.! Total NPV

The total net present value of the facilities shown in Figure 1 is tabulated in Table 3 and 4, respectively.

Net Present Value of Overhead Installation

Expense Year NPV

Initial Installation 6,520.14 1 5,463.87

AnnualO&M 341 Annual 4,545.88

Replacement 6,520.14 32.5* 1,576.91

Line Losses 12.73 Annual 169.79

TOTAL 11,756.45

Table 5

Net Present Value of Underground Installation

Expense Year NPV

Initial Installation 8,669.73 1 7,265.23

AnnualO&M 149 Annual 1,988.11

Replacement 8,669.73 30.3* 2,224.23

Line Losses 5.3 Annual 70.75

TOTAL 11,548.32

Table 6 F.! Reliability

Since the cost of installation is about the same, additional consideration is given to the performance of an underground installation versus and overhead installation. The Company's Trouble Reporting System (TRS) provides SAIDI and SAIFI due to events on an overhead facility or an underground facility, as shown in Tables 5 and 6. This is based on the five year average from 2007-2011 data and includes major storms (but excludes Hurricane Irene).

(31)

SAIDI (Customer Minutes)

I

Overhead

I

Underground

Total

_I

278.25

_I

29.36

Table 7

SAIFI (Number of Events)

I

Overhead

I

Underground

Total

_I

1.644

_I

0.239

Table 8

The Company has 35,084 miles of overhead lines and 21,772 miles of underground lines on the system. This equates to an annual SAIDI of:

7.93 customer minutes 11000 miles of overhead line 1.35 customer minutes 11000 miles of underground line

SAIDI is over five times higher for an overhead system than an underground system. The same evaluation can be done for SAIFI.

0.05 events11000 miles of overhead line 0.01 events 11000 miles of underground line

SAIFI is five times higher for an overhead system than an underground system. G. Results of Single Phase Extensions

For the examples shown in Figure 1, the NPV of overhead vs. underground is essentially the same; however the reliability of an underground system is five times better. The current rate structure does not place a monetary value on reliability (except for loss of revenue, which is negligible). Where the NPV of overhead service vs. underground service is essentially the same, reliability considerations direct the decision to install underground facilities.

Under the current plan, if the customer desired underground service, the cost to customer would have been the difference in the cost of underground and overhead service as calculated in section A.I. Added to this would be the Tax Effect Recovery Factor (TERF) of 29% for a total charge of $2,772.97. This has discouraged some customers such that overhead service is installed at no charge; however the overhead service may be more expensive to maintain. If the total ownership cost of underground service is cheaper it should be installed at no charge.

TERF only applies to customer charges and it is a "direct pass through" as a tax. If there is no customer charge, there is no TERF. It does not transfer to the Rate Base and by eliminating cost; the actual savings to the customer is greater.

(32)

Company Exhibit No,_ Witness: SAE Schedule 2 Page 7 of 13

Not all installations are best installed underground. Appendix 1 shows various designs and the results of the Discounted Cash Flow analysis described above.

Design #1

Shown in Figure 1 above and Appendix I.1, a single phase extension from an existing overhead line is best installed underground.

Design #2

Shown in Appendix 1.2, an underground single phase extension is not economical from an existing underground single phase line that continues on to serve other customers. This result is not due to the extension, but of the source. Except for subdivisions (see Design #8), single phase lines that continue on to serve many customers are best kept overhead. Note: T taps on underground primary systems do not provide reliable service. There is no economical method to provide over-current isolation of the tap (see Design #5) and troubleshooting an underground system relies on the system being linear. To maintain a linear system it is necessary to "loop" the primary in and out ofthe property.

Design #3

Shown in Appendix

1.3,

this installation is identical to Design #1, except the Company's normal trenching methods can not be used due to existing rock. Underground installations in rock are not economical.

Design #4

Shown in Appendix lA, this installation is identical to Design #1, except the Company's normal trenching methods can not be used due to existing pavement. Underground installations via guide drilling are not economical.

Design #5

Shown in Appendix 1.5, this installation is extending from an existing bulk feeder. The comparison is if the bulk feeder is underground or overhead. To extend from an existing underground bulk feeder a switch is necessary to transition between large and small conductor, in addition to the reasons stated in Design #2. Bulk feeder circuits are best kept overhead.

Design #6

Shown in Appendix 1.6, this installation is extending 250 feet of secondary from an existing overhead transformer. The facilities are best installed underground.

Design #7

Shown in Appendix 1.7, this installation is extending 250 feet of secondary from an existing underground transformer. The facilities are best installed underground.

Note: A single underground service is more economical when extended from an existing padmount transformer than from an existing pole mount transformer.

(33)

Design #8

Shown in Appendix 1.8, this installation is to install only the primary and six transformers in a subdivision (no secondary). The current practice is to "loop" primary that serves a multitude of customers in an effort to reduce the duration of underground failures. In a typical subdivision, the layout is conducive to looping to an alternate location in lieu of looping directly back to the same source. The costs are comparable and when combined with Design #9, these facilities are best installed underground.

Design #9

Shown in Appendix 1.9, this installation is to install only the secondary in a subdivision (from an existing transformer). The design includes three services directly from the transformer, a larger secondary to a point of junction (pedestal or lift pole) and three services from the point of junction. These facilities are best installed underground.

Design #10

Shown in Appendix LlO, this installation is extending 75 feet of secondary from an existing overhead transformer. The facilities are best installed underground.

To summarize the single phase extensions in Designs 1-10:

• Facilities that only serve an individual customer are best installed underground, as long as the Company's standard trenching equipment can be used.

o If the company cannot use standard trenching equipment due to rock or pavement, the underground installation becomes economical if the customer contributes monetarily or does the trenching,

• Facilities that continue on to serve other customers are best installed overhead. • Facilities installed in a subdivision are best installed underground, as long as the

Company's standard trenching equipment can be used. H. Three Phase Service

Three phase services, which are typically commercial, have major differences which can lead to different results.

1. The smallest padmount transformer used by the Company is alSO kVA compared to a 45 kVA (3XI5) pole mount transformer. A smaller service will have higher cost if installed underground.

2. A smaller service will have higher line losses if installed overhead. This is due to the "load loss" in the smaller transformer (if loaded to nameplate) and conductor. This is offset somewhat by the higher "no load loss" of the larger padmount transformer.

3. The overhead three phase service conductors are heavier thus requiring either shorter spans or more lift poles.

4. The customer owns the entrance cable for an overhead service.

5. A commercial lot is larger than a residential lot and longer lengths of primary are required between transformers.

6. Typically, only one commercial building can be served per transformer due to the larger lots.

(34)

CompanyExhibitNo._ Witness:SAE

Schedule2 Page9of13

7. Fewer commercial services can be served by one loop or switch depending on the SIze.

8. Underground service requires more sets of conductors due to ampacity deration.

9. Overhead service conductors for larger services require additional labor to install. Note 1:Based on Company usage,500 kVA Transformer sand smaller tend to be 120/208 volts. 750 kVA Transformersand larger tend to be 277/480 volts.

Note 2: The WMIS costs usedfor installation are shown in Appendix A.2.

HI. Analysis of Three Phase Services 500 kV A and less H.I.a Effect of kVA

Figure 2 shows the effect the load has on the NPV of an underground service compared to an overhead service. This design is to extend 500 feet of primary from an existing overhead pole and 25 feet of secondary(similar to Figure 1).For this design the customer installs the secondaryconduit.The calculations are provided in AppendixJ.l.

Vary kVA 60 50 40

--

_.:.: 30 20 10 0 0 100 200 300 400 500 600 kVA

I

-

UG

-

O

HI

Figure 2

Figure 2 shows smaller services are economical if installed overhead. The difference is greater for a 45 kVA service because it can be served overhead with a transformer bank of 3-15 kVA transformers where if the service was underground,the transformer would be a 150 kVA padmount transformer. Padmount transformers are available in 45 kVA and 75 kVA however the cost is comparable to a 150 kVA due to the amount of labor required to assemble a padmount transformer. This difference in transformer cost makes an overheadinstallation more economicalfor small services.

When the number of sets of secondary exceeds four, the Company requires each set of service conductor be installed in separate conduit to facilitate replacement.The cost of

(35)

CompanyExhibit No__ Witness:SAE

Schedule 2 Page 10 of 13

the secondary conduit further increases the cost of underground service and the Company gives the customer the option to install the conduit. This analysis assumes the customer installs all secondary conduit.

H.l.b Effect of Transformer Location

Secondary conductors cost more than primary conductors thus the Company wants the transformer adjacent to the point of service. This is often in conflict with the customer who may want the transformer further away from the building than what the Company feels is economical. Added to an underground service is the cost of the secondary conduit when required. Added to an overhead service is the cost of additional lift poles since the weight of secondary conductors limit the span lengths and service conductors are not installed to full tension where attached to the customer's structure.

Figure 3 shows the effect the length of secondary has on the NPV of an underground service compared to an overhead service. This design is for 150 kVA of load from an existing overhead pole, total distance from the source is 525 feet. For this design the customer installs any secondary conduit. The calculations are providedin AppendixJ.1.

Vary Length of Secondary

-

---45 ,--- - - ---,

4°

35

E~~~3

30 _.25 +-- -=..-.- =-- - - -i .:.:: 20 + - - - --1 15 + - - - - -- - - ----l 10 + - - - ----l 5 +-- - - --1 0 +-- - - -,-- - - --,.- - - - .---- - - --.--- - - -1

o

50 100 150 200 250

Length of Secondary (feet)

j

-

U

G

-

OH

!

Figure 3

Increasing the secondary length affects the overall cost, thus transformers should be located close to the point of service, however the location of the transformer does not affect the comparison.

H.l.c Effect of kVA on Seconda ry

Figure 4 is similar to Figure 2, however this only compares the effect the load has on a secondary extension from an existing overhead transformer bank. The calculations are shown in AppendixJ.2.

(36)

CompanyExhibit No._ Witness:SAE Schedule2 PageII of 13 VarykVA Secondary Only 9000 -,-- - - -, 8000 + - - - : = - -- -___1 7000 + - - - --:;;:. . - = - - - -- ___1 6000 +---;:;;:I""""'---:~"---___1 5000 -+---.".-=---:::;;;>'~---j -. 4000 - + - - - ---::0""'---:::;00. . - = - - - . , 3000 -+---~__"""""--- - - ___1 2000 +---=~~---___1 1000 -+---;;~:;;;...~---__1 0 +-- - - .---- - - ..,.-- - - ..---- - ----,,.--- - ---,.- - - --1

o

100 200 300 kVA 400 500 600

I

- U

G

-

O

H

I

Figure4

Larger services conductors are best installed underground. Smaller services can be served overhead using quadruplex cable, however this is not available for larger services. The only option to serve larger services overhead is to bundle together individual conductors, which is labor intensive and not economical.

H.2 Results of Small Three Phase Services

«=

500 kVA)

These designs do not include any trenching for secondary and assumes that the customer installs thesecondary conduit,unless noted.

Design #1

Similar to Figure 1 above and Appendix J.1, a three phase extension from an existing

overhead line is most economical ifit remains overhead.

Design#2

Shown in Appendix J.2, this installation is extending secondary from an existing

overhead transformerwhere the customer installs the secondarytrench and conduit where needed. Larger services are most economical if installed underground where smaller servicesare best installed overhead.

Design#3

Shown in Appendix J.3, this installation is extending secondary from an existing underground transformer.The facilitiesare best installed underground.

Design #4

Show n in Appendix J.4, this installation is extending secondary from an existing overhead transformer where the company installs the secondary trench and conduit,