transmission lines august 20-22, 2014 vail, co 2014 transmission & distribution benchmarking...
TRANSCRIPT
Transmission Lines
August 20-22, 2014
Vail, CO
2014 Transmission & Distribution BenchmarkingInsights Conference
Agenda
◼ Introduction◼ Statistics and System Activity◼ Financial◼ Initiatives and Practices
Picture source: www.energy.gov
2
Key benchmarking Issues in Transmission
◼ Transmission Systems are unique and designed to serve a particular geography, customer base, and other generation source and load constraints.
◼ Costs are particularly uneven over time, so really need to be evaluated on a longer time horizon.
◼ FERC capital additions do not reflect actual spending because of CWIP; Activity –based costs provide a more realistic spending level as well as the purpose of expenditures.
◼ There is no agreement on cost normalization; asset base is the best predictor, but circuit miles, structure miles, MWh transmitted, MW-miles can be used to “triangulate” your performance.
◼ Reliability is based primarily on “availability”, but also on contribution to ”End use” Customer reliability.
Regulatory◼ NERC regulations; other Regulatory bodies◼ NERC compliance audits◼ NERC performance standards (TADS)
System Challenges◼ Distributed Generation◼ Interconnections (e.g. Windmill Farms)◼ Aging infrastructure◼ New transmission corridors◼ ROW management under increasing
regulations and restrictions◼ Capacity Constraints◼ Transfer Capability Crisis (mitigated by the
recession)◼ Intelligent Grid (or more intelligent Grid)◼ Upgrading EMS systems◼ Equipment lead times
Organizational Challenges◼ Aging Workforce -- Brain Drain◼ Contractor Management◼ Cross-silo prioritization and involvement in
projects
Industry Methodology
2014:• Cyber security• Physical security• FERC politicization
3
Transmission Line Spending
We saw increase in spending in 2013 . . .
4
5
Total Transmission Capital Additions: US Utilities
Total market size for the US for the last 7 years has grown consistently, following a drop off during the recession. Only a portion of this will be for labor costs since some portion will be for materials.
This is total US utility population – FERC Capital Additions. Capital additions represents capital spending that closed to the books and became part of the asset base in the given year.
2014 T&D: Capital Projects
CAPITAL PROJECT SPENDING PER ASSET NEXT 3 YEARS - TRANSMISSION
Mean Quartile
Mean 39 %
Comments
Calculation used
( CP125.1A ) / ( TF65.1 ) * 100 , ( CP125.2A ) / ( TF65.1 ) *
100 , ( CP125.3A ) / ( TF65.1 ) * 100
Page 6
Statisticsand
System Activity
Landsnet – National Grid, Iceland
7
Transmission versus Distribution
◼ For purposes of this survey, we define distribution to be a voltage level of 45kV and below. The distinction is somewhat arbitrary, but picks a point between 69kv which is generally considered a transmission (or at least sub-transmission) level and 21kV which would generally be considered distribution.
◼ It is unrealistic to ask utilities to redefine their cost or reliability reporting on the basis of these definitions. However, a utility that has very different definitions may want to restate these statistics to better compare their performance.
Distribution Voltage Classes◼ 5kV class (>1kV, <=9kV)◼ 15kV class (>9kV, <=15kV) ◼ 25kV class (>15kV to <=26kV) ◼ 35kV class (>26kV to <=36kV) ◼ 44kV class (>36kV to <=44kV)
Transmission classes >=45kV ◼ <69kV class (>=45kV <69kV)◼ 69kV class (>=69kV <100kV) ◼ 100kV class (>=100kV <200kV) ◼ 200kV Class (>=200kV <300kV) ◼ 300kV Class (>=300 kV <400 kV) ◼ 400kV and above
8
Transmission Lines Demographic Profile
Min Mean Max # of BarsService Territory
Wage Rate: Transmission Journey Level Line Worker $35.30 $39.30 $42.15 9Transmission Staffing: FTEs per $100M Transmission Assets 0.00 9.84 23.72 11ROW Miles Managed per Structure Mile 0% 69% 144% 13Line work done while the line is energized: Transmission 0% 22% 100% 14
System - DemographicsTransmission Structure mile per Transmission Circuit 0.00 12.73 38.02 13Transmission Voltages on system by circuit
<69kV 0.0% 5.5% 39.6% 1569kV 0.0% 17.8% 79.4% 15100kV class 8.2% 51.9% 93.8% 15200kV Class 0.0% 13.5% 54.9% 15300kV Class 0.0% 8.4% 37.0% 15400kV and above 0.0% 2.8% 9.8% 15
Transmission structures on systemWood poles 0% 46% 97% 15Steel poles 0% 19% 84% 15Concrete poles 0% 1% 15% 15Steel lattice towers 0.% 34% 90% 15
Financial - DemographicsTransmission Line Assets per Circuit Mile $49,469 $231,977 $487,340 13
TYPES OF TRANSMISSION STRUCTURES ON SYSTEM
Calculation used
ST150.1 / ( ST150.1 + ST150.2 + ST150.3 + ST150.4 ) *
100 , ST150.2 / ( ST150.1 + ST150.2 + ST150.3 + ST150.4 )
* 100 , ST150.3 / ( ST150.1 + ST150.2 + ST150.3 +
ST150.4 ) * 100 , ST150.4 / ( ST150.1 + ST150.2 + ST150.3
+ ST150.4 ) * 100
ST p28
10
TRANSMISSION VOLTAGES ON SYSTEM BY OH CIRCUIT
Calculation used
ST120.3C / ( ST120.1C + ST120.2C + ST120.3C + ST120.4C +
ST120.5C + ST120.6C ) * 100 , ST120.4C / ( ST120.1C +
ST120.2C
+ ST120.3C + ST120.4C + ST120.5C + ST120.6C ) * 100 ,
ST120.5C / ( ST120.1C + ST120.2C + ST120.3C + ST120.4C +
ST120.5C + ST120.6C ) * 100 , ST120.1C / ( ST120.1C +
ST120.2C
+ ST120.3C + ST120.4C + ST120.5C + ST120.6C ) * 100 ,
ST120.2C / ( ST120.1C + ST120.2C + ST120.3C + ST120.4C +
ST120.5C + ST120.6C ) * 100 , ST120.6C / ( ST120.1C +
ST120.2C
+ ST120.3C + ST120.4C + ST120.5C + ST120.6C ) * 100
ST p29
11
TRANSMISSION CIRCUIT MILES PER TRANSMISSION CIRCUIT
Calculation used
(ST120|5_Trans OH & UG Circ Mile v.13) / ( ST120.1C + ST120.2C
+ ST120.3C + ST120.4C + ST120.5C + ST120.6C )
ST p30
12
TRANSMISSION LINES PLANT IN SERVICE PER CIRCUIT MILE
Calculation used
TF65.1 / (ST120_Trans Circ Mile 09)
Mean $188,795
Quartile 1 $129,110
Quartile 2: $213,938
Quartile 3: $244,047
ST p39
13
2014 T&D: System Activity
\
NEW TRANSMISSION CIRCUIT MILES
Mean Quartile
Mean 0.84 %
Comments
Calculation used
SA55.1 / (ST120_Trans Circ Mile 09) * 100
Page 14
Financial – Overview of the Cost Model
Working with an adjusted FERC model
Conceptual transmission tower design by Choi Shine Architects15
2013YE 2012YE
Mean Q1 Q2 Q3# of Bars
Mean Q1 Q2 Q3# of Bars
O&M Cost
Transmission Lines O&M Expense per Circuit Mile
$15,565 $3,839 $6,288 $9,414 14 $8,992 $3,067 $6,868 $11,593 16
Transmission Line O&M per MWh transmitted $0.75 $0.32 $0.47 $0.87 14 $0.63 $0.33 $0.51 $0.67 15
Transmission Line O&M per Total Trans Assets
4.33% 2.08% 3.12% 4.03% 14 2.98% 1.98% 2.43% 4.02% 15
Investment Rate
Transmission Line Capital Spending less New Lines per Asset [Activity Based]
11.89% 11.54% 7.78% 2.94% 12 7.11% 8.05% 4.27% 3.24% 14
Transmission line Cost Profile
16
Median investment rate is high compared to last year
Substations
General Plant FERC Costs
Transmission
Capital
Trans Lines
Exclusions
Trans Substations
O&M
Trans Lines
Exclusions
Trans Substations
Distribution
Capital
Dist Lines
Exclusions
Dist Substations
O&M
Dist Lines
Exclusions
Dist Substations
A&G
FERC: The ADJUSTED FERC COST MODEL
FERC provides a general framework Certain costs must be excluded to provide fair comparisons that focus on operations Substation costs must be separated out, including certain allocations
17
FERC: Specific Adjustments
◼ The following page is a schematic of how basic FERC cost data will be adjusted for this benchmarking study. A&G costs will be excluded – Utilities are asked to adjust their costs to exclude costs typically
reported as A&G (e.g. pensions and benefits) from their O&M data. General plant costs will be excluded – Utilities are asked to adjust their costs to exclude costs
typically reported as General Plant (e.g. IT/Communications infrastructure) from their T&D Capital data.
Other T&D Capital exclusions:• Transmission: Land acquisitions and extraordinary items• Distribution: Land acquisitions, street lighting and extraordinary items
Other O&M exclusions:• Transmission: Wheeling, Rents/Leases, IT costs, extraordinary items. If you charge IT
support to account 569, you should exclude it. Regional Market Expenses (Accts 575, 576).• Distribution: Streetlight Maintenance, Rents/Leases, IT costs, extraordinary items. If you
charge IT support to Distribution O&M accounts, you should exclude it.• If you normally charge R&D, such as EPRI dues, to O&M, include it, unless it is an unusually
large amount for this year Substation costs will be allocated from Transmission and Distribution accounts, and similar
adjustments made. ◼ The goal of the exclusions is to provide a fairer comparison of T&D operational performance, by
excluding certain costs that relate to demographic differences not under the control of T&D management.
18
DV| % OF FERC - TRANSMISSION LINE CAPITAL
Calculation used
( TF5.6 ) / TF5.1 * 100 , TF5.2 / TF5.1 * 100 , TF5.3 / TF5.1 *
100 , TF5.4 / TF5.1 * 100 , TF5.5 / TF5.1 * 100
Mean 96 %
Quartile 1 100 %
Quartile 2: 100 %
Quartile 3: 100 %
TF p32
Very few adjustments to Capital Additions (FERC) beyond Substation allocations . . .
19
TRANSMISSION LINE O&M & CAPITAL PER ASSET [FERC]
Calculation used
(TF20_Trans Lines O&M FERC) / TF65.1 * 100 , (TF5_Trans
Lines Capital FERC) / TF65.1 * 100
TF p2
20
DV| % OF FERC - TRANSMISSION LINE O&M EXPENSE
Comments
Calculation used
TF20.8 / TF20.1 * 100 , TF20.2 / TF20.1 * 100 , TF20.3 / TF20.1 *
100 , TF20.4 / TF20.1 * 100 , TF20.5 / TF20.1 * 100 , TF20.6 /
TF20.1
* 100 , TF20.7 / TF20.1 * 100
TF p33
Wheeling Expense and Revenue is not included. The O&M cost is a measure of operational efficiency, not economic efficiency.
21
FINANCIAL COSTS ADJUSTMENTS - TRANSMISSION O&M
Comments
Calculation used
TF20.8 / TF20.1 * 100 , TF20.2 / TF20.1 * 100 , ( TF20.3 + TF20.4
+ TF20.5 + TF20.6 + TF20.7 ) / TF20.1 * 100
TF p34
22
Financial – Overview of the activity-based
Cost Model
Photo source: Scientific American23
Develop Network Strategy
Develop and Approve Asset Plans
Project/Portfolio Management
A Process Model for Managing the Network
Expand Network
Operate Network
Sustain Network
Add New Customers
Respond to Emergencies
24
ACTIVITY-BASED Cost Model
While FERC has the benefit of being a uniform system of accounts, there are several important shortcomings:
•FERC capital spending lags behind actual spending; costs for large projects go into a Construction Work in Progress (CWIP) account and are not transferred until the assets are placed into service, sometimes a several year lag. •FERC capital accounts generally follow plant accounts and units of property (e.g. poles, towers, and fixtures) – not the typical reasons why utilities spend (e.g. new business)•FERC O&M accounts tend to be more activity-oriented, but do not necessarily track important categories (e.g. vegetation management)
For those reasons, a simplified Activity-Based Costing system was developed to get current year spending by activity. The following diagram depicts the Activity-Based approach
25
Activity-Based Cost Model
Activity-Based Costs
Transmission Lines Transmission Subs Distribution Subs Distribution Lines
Transmission Line Capital• Serve New• Expand• Sustain• Other • CIAC
T&D Substation Capital• Serve New• Expand• Sustain• Other• CIAC
Distribution Line O&M• Sustain• Other
T&D Substation O&M• Sustain the Network• Operate the Network• Other
Transmission Line O&M• Sustain the Network• Operate the Network
Distribution Line Capital• Serve New• Expand• Sustain• Other • CIAC
The activity-based cost model breaks the expenditures into capital and O&M, and then splits them into the activities shown on the process model introduced above. The following 3 pages provide more details of the individual activities for Transmission, Substations, and Distribution.
2014 Data Collection Guide
26
Activity Based Costs – Transmission Lines
While capital expenditures are split among several different processes from the overall process model, O&M expenses are almost entirely associated with sustaining the network.
Transmission Line Capital• Serve New: Extension to new customers
or utility substations [Industrial/Generation/Wholesale]
• Expand: Capacity Additions (Adding additional lines to existing substations, increasing capacity of existing lines)
• Sustain: Replace/Repair in kind• Sustain: system improvements
(reliability/efficiency)• Sustain: Service Restoration• Sustain: Line Relocations• Sustain: Transmission Operations Center• Sustain: Asset Retirement Costs for
Transmission Plant (FERC 359.1) • Other • CIAC
Transmission Line O&M• Inspection and Maintenance
Expense (except 569.1-4)• ROW/Vegetation Management • Service Restoration• Transmission Operations Center• Engineering/Design O&M
(including FERC 561.5-8)• Other
2014 Data Collection Guide
27
Transmission Line: Replacement Capital Spending
Spending Category
2010YEQ2
2011YEQ2
2012YEQ2
2013YEQ2
Total Capital Spending 5.3% 5.3% 6.6% 9.0%
Less Serve New 0.6% 0.6% 1.0% 1.1%
Subtotal Cap Add & Sustain 4.7% 4.7% 5.6% 7.8%
Less Capacity Adds 2.0% 1.9% 3.4% 4.9%
Subtotal: Sustain 2.8% 2.8% 2.2% 2.9%
28
2013 saw a relatively high rate of total capital spending …
29
TRANSMISSION LINE CAPITAL SPENDING PER ASSET [ACTIVITY-BASED] [V.14]
Calculation used
TF45.1 / TF65.1 * 100 , TF45.2 / TF65.1 * 100 , TF45.3 /
TF65.1 * 100 , TF45.1 / TF65.1 * 100 , TF45.4 / TF65.1 *
100 , TF45.5 / TF65.1
* 100 , TF45.6 / TF65.1 * 100 , TF45.1 / TF65.1 ,
TF45.7 / TF65.1 * 100
TF p11
TRANSMISSION LINE CAPITAL SPENDING SUSTAIN- EX SERVE NEW, EXPAND PER ASSET [ACTIVITY-BASED] [V.14]
• #31 has very high TOC capital activity cost
• See change in title to refer to “Sustain”
Comments
Calculation used
TF45.1 / TF45.1 / 1000000 , TF45.2 / TF45.2 / 1000000 , TF45.3
/ TF65.1 * 100 , TF45.1 / TF65.1 * 100 , TF45.4 / TF65.1 * 100 ,
TF45.5 / TF65.1 * 100 , TF45.6 / TF65.1 * 100 , TF45.1 / TF65.1
, TF45.7 / TF65.1 * 100
TF p13
30
OTHER ACTIVITY BASED COSTS: TRANSMISSION LINE CAPITAL SPENDING
Calculation used
TF46.1
31
ID Response22 Back Office expenses31 Capital Tools, R&D, Premise Equipment, Facilities28 N/A33 Tools and Equipment23 NA38 Environmental/Legislative/Regulatory24 Not applicable21 n/a30 Under line relocations, reimbursements exceeded costs in 201327 n/a32 Not applicable
2014 T&D: Transmission Financials
TRANSMISSION LINE O&M EXPENSE PER ASSETS [ACTIVITY-BASED] [V.14]
Comments
Calculation used
TF55.1 / TF65.1 * 100 , TF55.1 / TF65.1 * 100 , TF55.2 / TF65.1 *
100 , TF55.4 / TF65.1 * 100 , TF55.5 / TF65.1 * 100 , TF55.1 /
TF65.1
* 100 , TF55.6 / TF65.1 * 100
Page 32
Mean Quartile
Mean 3.04 %
Quartile 1 1.86 %
Quartile 2: 2.58 %
Quartile 3: 4.19 %
#359 has reporting anomalies
Comments
OTHER ACTIVITY BASED COSTS: TRANSMISSION LINE O&M
CommentsCalculation used
TF56.1
TF p23
33
ID Response31 Management/Admin, R&D28 Planning and Operating Costs that are not directly charged to the work
programs above33 miscellaneous transmission expenses FF123 NA38 na40 Misc transmission expense net of O&M Substation included in Pension &
Benefits24 not applicable21 Transmission support30 N/A27 NERC Training359 Internal building rents32 Studies, compliance
CWIP AS A % OF CAPITAL EXPENDITURES - TRANSMISSION LINE
#32 very low CWIP#28 very high CWIP
Comments
Calculation used
TF80.1 / TF5.6 * 100
TF p24
34
Expense/Miles Managed (TF p27)
Expense/Mile Trimmed (TF p30)
Expense/Acre Managed (TF p28)
Q2
201
2 (N
=5)
Expense/Acre Trimmed (TF 29)
10x 5x
Vegetation Management
35
2014 T&D: Transmission Financials
FERC VS ACTIVITY SPENDING: TRANSMISSION LINE O&M PER ASSET [V.14]
Comments
Calculation used
TF20.8 / TF65.1 * 100 , (TF55_ABC Trans Line O&M v.14) / TF65.1
* 100
Page 36
2014 T&D: Transmission Financials
FERC VS ACTIVITY SPENDING: TRANSMISSION LINE CAPITAL PER ASSET [V.14]
Comments
Calculation used
TF5.6 / TF65.1 * 100 , (TF45_Trans Line Cap ABC v.14) / TF65.1
* 100
Page 37
Transmission LinePractices and initiatives
Things I would like to know about transmission?
The drivers of work◼ How much are companies spending?◼ On what activities?◼ What is driving spending? ◼ Role of Interconnections? ◼ Regional differences?◼ How do designs influence cost?◼ How are companies overcoming community resistance or NIMBY?◼ What is the response to the terrorist threat?◼ What does NERC/FERC require?
Organizing to do “new” and “expand” work◼ How are companies organizing to meet workload?◼ How are companies managing projects?◼ What are the challenges in contracting?◼ Where do companies get the skilled labor?◼ How are companies organizing to meeting regulatory requirements?
Organizing to do the “sustain” work◼ What are the challenges in ROW and vegetation management?◼ How are companies dealing with maintenance, especially wood pole replacement?◼ How are companies dealing with relocations?
39
Related consulting studies:• Project level benchmarking• Project management best
practices• Construction Competiveness
Develop Network Strategy
Develop and Approve Asset Plans
Project/Portfolio Management
A Process Model for Managing the Network
Expand Network
Operate Network
Sustain Network
Add New Customers
Respond to Emergencies
40
Developing Regulatory Strategy regarding transmision operations is increasingly important
Transmission Line Practices/initiatives
2013 Sections◼ Asset Management -- Role of Asset Management,
replacement programs, and problematic equipment◼ Planning/Engineering/Design –Improvement
initiatives and changes to standards ◼ T-line Field Activities – Initiatives underway and
maintenance approaches◼ Work management systems – WMS Vendor and
efforts to improve usefulness◼ Contractor Productivity – Challenges, measures
and initiatives◼ Transmission Operations Center (TOC) – Changes
and challenges.◼ Right of Way –Growth inhibitors, ROW uses,
challenges and practices.◼ Transmission Automation – Technology initiatives
underway◼ NERC Standards – Impact of NERC standards on
transmission organizations, especially Critical Infrastructure Protection (CIP), Protection and Control (PRC), and Facilities Design (FAC).
◼ Maintenance – Inspections, impact of deferred maintenance, initiatives to reduce outages
2014 Sections (by process)◼ Strategy
Regulatory Strategy (including NERC compliance)
Operational Strategy (including Transmission Planning and Automation)
◼ Asset Management ◼ Capital project and program
management◼ Transmission Operations Center (TOC)◼ Sustain Activity and Respond to
Emergencies (Maintenance, including ROW)
◼ New Customers and Expand Activity (including Engineering/Design, New customers T-line Field Construction Activities
(including WMS and Contractor Productivity)
41
“Under Mr. Bay, the Office of Enforcement has also focused on the reliability arena. For example, the Office of Enforcement has launched investigations, at times contemporaneous with investigations led by the North American Electric Reliability Corporation (NERC) and other regulators, into various weather-related blackouts, including the October 2011 snowstorm in the Northeast and, earlier that year, outages in the Southwest. In testimony before the Senate Committee on Energy and Natural Resources regarding the October 2011 outages, Mr. Bay stated, “there is room for improvement” in utilities’ “vegetation management and other practices to reduce transmission outages during snowstorms and similar weather events.”6 Thus, the physical security of the grid may well be another top priority if Mr. Bay is confirmed. A natural corollary to physical security of the grid is cybersecurity of the grid, which would likely be another area of focus for Mr. Bay—especially since the Obama Administration has made it an executive priority in recent years”
FERC ORDER 1000
“Order 1000 is as complicated as many of the other rules FERC has finalized and published over its history, many of which foil all but specialists. But at its heart it deals with the simple issue of whether states can be forced to coordinate on transmission planning and meeting cost obligations for new electricity transmission capacity. The order, which is now at the mercy of pending and still nascent court filings, says that states can be compelled.”
43
Final Briefing on Final Rule on Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities Briefing on Order No 1000”• Order No. 888 in 1996 Requires open access to transmission facilities to address undue
discrimination and to bring more efficient, lower cost power to the Nation's electricity consumers
• Order No. 890 in 2007Requires coordinated, open and transparent regional transmission planning processes to address undue discrimination
• Order No. 1000 in 2011• Requires transmission planning at the regional level to consider and evaluate possible
transmission alternatives and produce a regional transmission plan• Requires the cost of transmission solutions chosen to meet regional transmission needs
to be allocated fairly to beneficiaries
“
FERC ORDER 791
44
FERC ORDER 745
“Demand response was dealt a blow on Friday when the U.S. Court of Appeals in Washington, D.C. vacated the Federal Energy Regulatory Commission’s Order 745 in a 2-1 decision, stating that FERC has gone too far.
FERC’s Order 745, approved in 2012, calls for grid operators to pay the full market price, known as the locational marginal price, to economic demand response resources in real-time and day-ahead markets as long as dispatching DR is cost-effective. The ruling found that FERC overstepped its jurisdiction and that the decision of payments should lie with states.
“In Order 745, however, FERC went far beyond removing barriers to demand response resources. Instead of simply 'removing barriers,' the rule draws demand response resources into the market and then dictates the compensation providers of such resources must receive,” Judge Janice Rogers Brown wrote in the majority opinion.
45
http://www.greentechmedia.com/articles/read/what-us-appeals-court-decision-on-ferc-order-745-means-for-demand-response
NERC Compliance
Benchmarking Practices and Initiatives
Key Success Factors: NERC Compliance
Develop Strategy
Organize for Success
Establish Implementation Plan
Select Performance Metrics
Execute Transition Plans
Reinforce and followup
47
Transmission Practice Questions
NERC Compliance• Impact of CIP5 and the change from requirements
to results-based regulation• Handling and structuring audits• Separate NERC audits for Critical Infrastructure
and Reliability Standards• People fully-dedicated to the NERC compliance
organization• Process changes implemented for Critical
Infrastructure Protection [CIP]• Organization and staffing levels for Critical
Infrastructure Protection [CIP]• Process changes implemented for Protection and
Control [PRC]• Organization and staffing levels for Protection and
Control [PRC]• Process changes for Facilities Design,
Connections, and Maintenance [FAC]• Positions added for compliance with [FAC]• Future changes coming that will impact on
transmission organization
2014 Sections (by process)◼ Strategy
Operational Regulatory
◼ Asset Management ◼ Transmission Operations Center (TOC)◼ Maintenance (including ROW)◼ Planning/Engineering/Design ◼ T-line Field Construction Activities
(including WMS and Contractor Productivity
48
IMPACT OF CIP5 AND THE CHANGE FROM REQUIREMENTS-BASED TO RESULTS-BASED REGULATION
TP165.1
ID Response• 31 On November 22, 2013, FERC issued Order 791 approving CIPv5 with implementation scheduled for April
2016 for High and Medium Impact assets and April 2017 for Low Impact assets. With approval of CIPv5, FERC directed NERC to make several modifications. The modifications are still in development. Full impact of CIPv5 is yet to be determined.
• 28 The result-based regulation enabled us to improve on the management of our centralized data repositories and expectations from the various Stakeholders who produce and/or use these critical data/information.
• 33 Many more assets in scope because of the CIP5 requirements (approximately 200 additional assets)• 37 Changes for CIP5 do not have a finite date of implementation so there has been no impact as yet• 38 To date there has been minimal impact on the transition from CIP V3 to CIP V5. Although the V5 standards
have been approved, NERC is tweaking language in the standards. Over the next year, we will begin the process of identifying BES (Bulk Electric System) Cyber Systems and updating processes/procedures in preparation for the standards to go into effect on April 1, 2016.
• 40 Because the implementation date for CIP Version 5 is still far off, the impact has been relatively small so far.• 21 CIP V5 will have a substantial impact. The extent of which we are still evaluating. We have begun the
transition to V5 and are implementing the necessary controls.• 30 Uncertain at this time• 27 CIP v5 has added additional facilities, monitoring & control, and demonstration of results . We are
meeting these requirements by automating the change control process and spreading out the additional workload.• 359 1) For CIP V5, we have active projects underway in preparation for an April 2016 enforcement date. We are
further along with the existing cyber assets in that we completed our assessments and initiated projects to address the necessary changes. For new cyber assets, we are currently assessing the impacts. 2) Our existing identify, assess and correct programs will effectively address one aspect of the Reliability Assurance Initiative (RAI). As for internal controls, we expect to improve our documentation to more effectively demonstrate our existing controls; as well as do a gap assessment for any new controls.
• 32 CIP Version 5 is not in effect yet; impacts still under evaluation
49
HANDLING AND STRUCTURING NERC AUDITS
TP170.1
ID Response• 31 Audit timing and scope are determined by the Reliability Entity. In 2012,
Company audits for CIP and other Reliabiity Standards were scheduled by the Reliability Entity at the same time.
• 28 1) Annual Self Certification Audit. Directed by the Utility Commission and managed by WECC. 2) 3 Years NERC Audi. On site audit review of evidence.
• 33 Audits are coordinated by our NERC Compliance Department.• 37 The company has not been audited on CIP as yet• 38 Audits are performed on a 3 year cycle. Evidence for Audit Compliance is
collected annually and stored in a document management system for easy of reference. Subject Matter Experts are prepared for testimony by performing mock interviews ahead of the audit by internal auditors and legal services.
• 40 Operations groups coordinate with the Reliability Compliance Office to write RSAWs (Reliabiiity Standard Audit Worksheets) and gather evidence.
• 21 All NERC related compliance and enforcement activities are handled by the NERC Compliance Group which resides in Regulatory Affairs.
• 30 Audits are managed by an internal compliance organization. • 27 An internal compliance program describes how we handle audits. A coordinator
facilitates all communication between the auditors and the Company. Teams of subject matter experts and standard owners prepare the material for the audit and answer questions posed by auditors during off -site or on-site interviews.
• 32 SME's are assigned and responsible for every standard. SME's work with compliance analysts to ensure standards are met. NERC RSAWs are utilized where available. All evidence is packaged up and submitted by the Compliance Department. Request for information are answered by SMEs.
50*Not certain of what the question is asking, this question is decided by the regulator so the benchmarking of such is irrelevant to some extent. It would identify inconsistencies between regions).
359 Audits are coordinated by a central group (EU Compliance) within the Transmission organization. EU Compliance establishes a project plan/schedule to prepare for the audit. The plan includes gathering evidence; building evidence packages (bookmarked pdf files); coordinating with the regional Auditor on schedule, on -site logistics and data requests; subject matter expert (SME) orientation; audit dry runs for SMEs to practice evidence presentations; and a 3rd party review of evidence.
PPL
PEOPLE FULLY-DEDICATED TO THE NERC COMPLIANCE ORGANIZATION
TP180.1
ID Response• 31 10• 28 2• 33 3.5 FTEs + many Subject Matter Experts that are part time• 37 4 employees in the Transmission NERC Compliance & Standards Unit and 3 employees in NERC
Compliance & Standards (oversight)• 38 Seven plus one open position.• 40 6• 21 6 FTE's are fully dedicated within Regulatory Affairs.• 30 Compliance, 11 with 5 dedicated to CIP, not including subject matter experts• 27 Legal has 2 FTE's - 1 on CIP and 1 on Reliability; Generation has 2 FTE's, IT currently has 2.5 FTE's that
support the whole company, Engineering has 1 FTE, Operations has no dedicated FTE's but the supervisors spend much of their time as subject matter experts. There are also several areas of the company that have part -time responsibility for CIP: Engineering, Physical Security, IT, System Control& Reliability, Generation.
• 359 4 compliance group resources within the Transmission organization supporting both Legacy (FERC Order 693) and CIP (FERC Order 706) Reliability Standards. Some of the compliance staff responsibilities include: a) owns relationship with Regional Entity (Reliability First), b) provides guidance to SMEs on compliance activities as part of their business processes, c) leads self –certifications, d) coordinate audits, e) coordinate responses (comment and ballot) for new or changing standards and f) manage corrective actions. There are additional corporate services (Information Technologyand Physcial Security) resources that support our programs, which are not in this count.
• 32 3
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ID# FTEs
Comments
31 10 NA
28 2 NA
33 3.5
Plus many Subject Matter Experts that are part time
37 7 4 employees in the Transmission NERC Compliance & Standards Unit and 3 employees in NERC Compliance & Standards (oversight)
38 7 Plus one open position
40 6 NA
21 6 Fully dedicated within Regulatory Affairs.
30 11 In Compliance group, with 5 dedicated to CIP, not including subject matter experts
27 7.5
Legal has 2 FTE's - 1 on CIP and 1 on Reliability; Generation has 2 FTE's, IT currently has 2.5 FTE's that support the whole company, Engineering has 1 FTE, Operations has no dedicated FTE's but the supervisors spend much of their time as subject matter experts. There are also several areas of the company that have part -time responsibility for CIP: Engineering, Physical Security, IT, System Control& Reliability, Generation.
359 4 4 compliance group resources within the Transmission organization supporting both Legacy (FERC Order 693) and CIP (FERC Order 706) Reliability Standards. Some of the compliance staff responsibilities include: a) owns relationship with Regional Entity (Reliability First), b) provides guidance to SMEs on compliance activities as part of their business processes, c) leads self –certifications, d) coordinate audits, e) coordinate responses (comment and ballot) for new or changing standards and f) manage corrective actions. There are additional corporate services (Information Technology and Physical Security) resources that support our programs, which are not in this count.
32 3 NA
PROCESS CHANGES THAT HAVE BEEN IMPLEMENTED FOR CRITICAL INFRASTRUCTURE PROTECTION [CIP]
ID Response• 31 Current processes are aligned with current CIP version standards and may be
modified as newly approved CIP version standards become effective.• 28 New/Revised policies, procedures, etc. to meet CIP Requirements as needed.• 33 Many. For each of the 43 requirements of CIP version 3 we have implemented
some form of process change. Using a single standard, CIP-003, as an example, can illustrate the scope of process changes. For other standards even more significant changes had to be made.
• 37 The company established a CIP program that meets the requirements of CIP standards 002 through 009. Protection of Critical Cyber Asset is done through established processes involving Trans Business and IT Services. Equipment is obtained and installed for this purpose and processes to maintain the equipment are in place
• 40 Developed enterprise- wide process document to address all the requirements of the CIP Standards
• 21 Continually enhancing processes and procedures. Monitoring the development of Physical Security Standard CIP- 014.
• 30 Updated processes to improve existing CIP related transmission processes and address the dynamic nature and ever-evolving CIP compliance environment
• 27 All visitors entering a Physical Security Perimeter (PSP) must manually sign in and out and must also be escorted at all times. Company employees who do not have access to a PSP are considered visitors.
• 359 Some recent changes: 1) 24-hour revocation requirement access to NERC CIP assets in preparation for CIP V5. 2) Role-based training fin preparation for CIP V5. 3) Integrated CIP compliance approvals into our automated change management system. 4) Performed our initial assessment of NERC Critical Assets in preparation for CIP V5.
• 32 Implemented policies, programs, procedures, and processes required by CIP Standards. This includes asset and cyber asset identification, physical and cyber security, and cyber incident response, and cyber asset recovery process and procedures.
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TP185.1
38 Successfully completed NERC audits for both CIP and the reliability standards. The next round of audits is anticipated in 2017 (normal cycle) along with recertification as a TOP that same year due to completion of a new backup control center and upgrade of the EMS system. Over the next two years, we will develop and communicate strategy to successfully complete these audits as well as the implementation of the new version 5 CIP standards. We will also develop and implement processes to mitigate security and financial risks associated with possible violations. Additionally we will create strategy for implementing the new Physical Security standard CIP- 014.
CPS
PROCESS CHANGES FOR PROTECTION AND CONTROL [PRC]
TP195.1
ID Response• 31 More documentation, Evaluate new relays• 28 Existing documentation updated to include PRC Requirements.• 33 Purchased operational software to help us manage compliance + added staff.• 37 Implementation of Aspen Relay Database, Maximo Work & Asset Management system refinements, general
reliability enhancements to administrative and technical processes in PRC Compliance Programs, Annual Compliance Program reviews and institution of routine auditing of PRC -related compliance evidence (both internally and externally)
• 38 Transport Operations is considering the use of an existing automated software (CASCADE), pending license and form template estimate. There are procedural/process changes that will be implemented for battery testing, PT testing and DCB communication testing. These changes are ongoing.
• 21 Created several new processes and procedures. Continue to implement additional improvements and controls. New systems are also being utilized (Cascade and PowerBase).
• 30 Standardized documentation of transmission line settings, central storage of all e -mail for protection coordination• 27 For the protection standards we have not changed anything other than to indicate that we are in compliance with
the standards. On the maintenance side it is forcing us to be timely and do a better job of tracking our maintenance. Some of the transmission assets were not being maintained regularly and now are. Takes a lot of effort to keep all the records for the maintenance up to date and functioning.
• 359 Some recent changes include: 1) New Protection System and Maintenance Program (PSMP) to align with the most current version of PRC-005. 2) Also, changed our testing methodology from an element by element approach to a scheme -based approach, where a logical group of protection system elements are tested together. This helped improve our testing efficiency and ensure that DC control circuitry is fully tested in an end to end functional test.
• 32 None
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PROCESS CHANGES FOR FACILITIES DESIGN, CONNECTIONS, AND MAINTENANCE [FAC]
TP205.1
ID Response• 31 Affirmed commitment to buy America for all trans structure and line components.• 28 Existing documentation updated to include FAC Requirements.• 33 Compliance integrated into SME's daily work to ensure that a strong compliance
effort is maintained.• 38 Continued refinement and documentation of massive physical and cyber security
related projects. Implementation and communication of audit strategy plan, including mock audits with Legal Svcs, Internal Audit and SMEs. Annual review of reliability standard audit worksheets (RSAWs) and mock audits for subject matter experts (SMEs). Implemented a formal procedure for tracking ratings.
• 40 As a NERC registered Transmission Owner, internal documents, maintains, and publishes facility connection requirements to meet NERC Standard FAC -001. These requirements are posted on our website for public access. In 2013, we implemented no material changes to the posted process. We have developed an enterprise- wide Facility Ratings Methodology and implementation process
• 21 Several new processes and procedures. Continually enhancing the rating methodology and documentation.
• 27 Adopted the WECC SOL(System Operating Limit) Methodology by conducting Next Day Studies, attending Bi-weekly outage calls and work on Coordinated Studies with utilities.
• 30 no change in 2013• 32 None• 37 No process changes
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The wire zone–border zone (WZ/BZ) approach . . is a site explicit way of dividing the ROW width into three distinct management zones from edge to edge: the border zone, thewire zone, and another border zone.
359 Implemented a revised Transmission Vegetation Management Program (TVMP) to use the Wire Zone/Border Zone standards. Established a special project to mitigate Facility Rating anomalies, consistent with the NERC Alert, including an as-build confirmation on ground clearance. 3) Implemented a new Facility Ratings Database / System.
PPL
Wire Zone/Border Zone
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Impact of FUTURE CHANGES in nerc regulations
TP215.1
ID Response• 31 Increased NERC standards support activities.• 28 None from NERC/WECC compliance perspective.• 33 Besides CIP5, the new CIP-014 physical security
standard. Also, the new GMD standard will have significant impacts.
• 37 FERC Order 1000• 40 NERC's Reliability Assurance Initiative• 21 New and modified version of NERC Standards will have
an impact. Particularly CIP V5/6, PRC, TPL, MOD.• 30 Potential for new transmission line built across/through
territory that may not be owned/operated by us• 27 Continue to be engaged in any Regional Requirements
through WECC to comply with future NERC changes.• 359 New Physical Security Standard (CIP- 014); New GMD
Mitigation (TPL-007); New CIP Version 5 Implementation; Concerns over new regulations that are inconsistent, conflicting or duplicative,specifically as it relates to Cyber and Physical security; 5) Substation Connectivity - This is a project to enhance communications to our substations.
• 32 New Peak RC SOL Methodology; Establishing emergency line ratings, Real-Time Contingency Analysis software
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38 One of the largest impacts will be implementation of the new Physical Security standard, CIP-014. This implementation will require assessments to determine what facilities are critical and how to protect them. The standard also requires engagement of 3rd parties to review the assessments and make recommendations. Reliability Standards CIP -014, PRC-005, EOP-010 (GMD), TPL- 007 (GMD), and CIP-002 (all new version 5 Standards) will result in increased capital expenditures. One of the largest impacts will be implementation of the new Physical Security standard, CIP-014. This implementation will require assessments to determine what facilities are critical and how CPS Energy will protect them. The standard also requires CPS Energy to engage 3rd parties to review the assesments and make recommendations. Reliability Standards CIP-014, PRC-005, EOP-010 (GMD), TPL -007 (GMD), and CIP-002 (all new version 5 Standards) will result in increased capital expenditures. One of the largest impacts will be implementation of the new Physical Security standard, CIP -014. This implementation will require assessments to determine what facilities are critical and how CPS Energy will protect them. The standard also requires CPS Energy to engage 3rd parties to review the assesments and make recommendations. Reliability Standards CIP -014, PRC-005, EOP-010 (GMD), TPL -007 (GMD), and CIP-002 (all new version 5 Standards) will result in increased capital expenditures.
CPS
Key Success Factors:Transmission Network Planning
Deploy automation strategy; microprocessor relays, cyber security, and digital fault recorders are most frequently addressed Assure NERC compliance; CIPS, protection and control, and FAC are noted as having most impact
Use a comprehensive scheduling and permitting process, with early engagement of stakeholders
Use a well-designed process for getting jobs from planning to delivery, with accurate estimating and effective project management
Have current, comprehensive standards covering many specifics, including use of high temperature conductors
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INITIATIVES UNDERTAKEN TO IMPROVE THE PROCESS FOR GETTING A JOB FROM PLANNING TO DELIVERY
TP25.1
ID Response• 28 Assign PM as early as possible on in the process (preliminary
study/feasibility phase). PM walks the client through and eliminate briars and enable quick response.
• 33 PM, hand off meetings between engineering and sub operations, conceptual design meetings and scoping meetings, design signoff procedures
• 23 Trans PM implemented in 2012 provides coordination of the transmission and substation planning, engineering and construction activities. Continued on a two year planning cycle.
• 37 Transmission Planning is been working with PM to improve processes of developing preliminary estimates
• 38 'We have revised our activity management project process and have• 40 Use process flowchart, in house training on design and construction• 21 'The following steps have been added, reviewed, and updated to ensure
T&S projects are completed on schedule, on budget, safely, and with the desired degree of quality:
• 30 none• 27 We conduct annual captial budget studies to determine which projects
are to be recommended for inclusion in the 5 Year Capital Budget. Transmission Planning is striving to have recommendations communicated by May 2nd.
• 359 P3 process - this is a new group that takes a conceptional design, evaluates alternatives, developes estimated costs, and turns the design into a 'real project' that can be given to PM.
• 32 Now requiring Project Portfolios and 30% design completed prior to budget approval
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31 The company submits future projects that have been approved by leadership to the Transmission Projects Information Tracking (TPIT) list maintained by ERCOT. The TPIT list communicates future projects to ERCOT market participants, indicates whether they are included in the ERCOT planning models, and is updated three times per year. The company's Substation Engineering and Transmission Engineering groups update the expected energization dates and project costs. Transmission Planning consolidates this information and submits the updates to ERCOT. After the completion of this ERCOT list, Transmission Planning updates an internal Transmission Planning Sponsored Projects Status report. This list contains all of the projects shown in the TPIT list as well as budgeted projects that have yet to attain an approved for construction status. These two lists help Transmssion Planning communicate to the other company's groups as to the status of projects and ensures that the information Transmission Planning communicates to ERCOT market participants has been vetted through the company's management.
Centerpoint
PRACTICES OR PROCESSES AROUND PERMITS AND CERTIFICATIONS THAT MAKE PLANNING MORE EFFECTIVE
TP30.1
ID Response• 31 A one stop permit request for each project utilizing Land & Right of Way personnel.
Coordination between the Trans Planning division and Regulatory Advisors who coordinate the regulatory approval process for new trans lines is facilitated by organizational structure. Both groups report to the same Director.
• 28 Early engagement and consultation with First Nation (Aboriginal), Public and government agencies is effective.
• 33 Land and environmental is brought in during the project planning stage of the project to identify issues with siting a facility. Estimates and design work are driven by environmental impacts. Designs must be stamped by a registered professional engineering with peer approvals.
• 23 We work within the State's Public Utility Commission Rules for all transmission line projects.
• 37 Apply for permits ASAP• 38 Because our Utility Coordination area have become experts in dealing with permits
and certifications from the City, they have been empowered to assist PMs in the acquisition and negotiation of these permits and certifications. In addition, we have been outsourcing the civil site design of substations which includes the acquisition of required construction permitting.
• 40 Engineers obtain permits for their jobs• 30 Maintain a list of permits and environmental issues• 27 Trans Planning studies ensure that NERC TPL, FAC and MOD standards are
thoroughly addressed to demonstrate need and that the system with the addition of proposed projects are adequate.
• 359 The P3 process includes investigation of permits and lead times, which leads to better planning of the project.
• 32 Bringing multiple departments to the table to discuss and attempt to predict timelines.
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21 Attending Scope Meetings in the early planning stages and having the opportunity to provide early input regarding potential permitting difficulties and to propose ways to reduce the impact to make obtaining the permit easier or even possible, In addition this can avoid compensatory mitigation such as threatened and endangered species habitat replacement, and other expensive requirements by permit requirements, etc. In addition, this process/practice can reduce company risk/liability.
Westar
Other Practices and initiatives
Transmission Practice Questions
Strategy - Transmission Automation• Top 5 technologies being deployed for Transmission Automation• Other transmission automation technologies
Asset Management• Predicting condition of various critical components • Role of the Asset Management organization in your decision -making• Key responsibilities of the Transmission Asset Management organization• What keeps you up at night worrying about your system• Infrastructure replacement programs underway• Classes of equipment that are becoming problematic: Transmission• Initiatives undertaken to improve getting a job from planning to delivery• Practices around permits and certifications that make planning effective• Transmission line standard changed recently and why• Measure used to track the success of engineering/design function
Transmission Operations Center• Transmission energy control centers• Changes in energy control centers in the last few years• Major challenges facing the energy control center• Initiatives that have been successful in improving the energy control function• Response to External Forces• Changes being made to energy management system (benefits or
challenges)
2014 Sections (by process)◼ NERC standards) ◼ Strategy (including
Transmission Automation)◼ Asset Management ◼ Transmission Operations
Center (TOC)◼ Maintenance (including
ROW)◼ Planning/Engineering/Design ◼ T-line Field Construction
Activities (including WMS and Contractor Productivity
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Transmission Practice Questions (cont)
Maintenance - ROW• Technologies/tools/practices that have improved ROW
management: Chemical growth inhibitors; Herbicides; Other• Use of ROW land• Major challenges - near and long term - being faced by ROW
management• Initiatives successful in improving ROW management operations• Initiatives successful in improving ROW contract management
Field Construction• Number of reporting locations transmission line field personnel
work out of• Most important initiative underway to improve
◼ Transmission line construction◼ Transmission line maintenance practices◼ Transmission line reliability
• Important initiative underway to improve Transmission line reliability: Poles/Towers; Cable; Insulators; Other
• WMS vendor and year of implementation or last major upgrade• Challenges seen in managing a contract workforce: Transmission• Productivity measures in place for contract crews• Practices that have been successful for improving contractor
management
Transmission Maintenance• Regulatory drivers for Transmission Line inspection and
maintenance• Regular inspections performed• Inspections added in the last year
2014 Sections (by process)◼ NERC standards◼ Network Planning (including
Transmission Automation)◼ Asset Management ◼ Transmission Operations Center (TOC)◼ Maintenance (including ROW)◼ Planning/Engineering/Design ◼ T-line Field Construction Activities
(including WMS and Contractor Productivity
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Key Success Factors:Transmission asset management
Develop and use processes to assess condition using both observational and model-based efforts
Identify risk categories including aging assets, reduced budgets, and specific equipment
Strengthen asset management role
Conduct replacement programs. Wood pole inspection and replacement are most common
Identify problematic equipment
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Key Success Factors:Operate the Transmission system
Involve stakeholders in planning system outages
Continue to upgrade EMS
Conduct Timely and Safe Switching Operations
Monitor and Restore Operations
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Key Success Factors:Maintain the Transmission Network
Address challenges to ROW maintenance
Conduct regular inspection programs
Improve maintenance practices; scheduling is most mentioned
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Organization: Strategy on priorities and contracting strategies
Design tools including WMS and compatible units
Construct scheduling and coordination using developers and contractors
Closeout and Follow-up
Key Success Factors:Engineering/Design of sustain/capacity additions
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Key Success Factors:Build Infrastructure (Field Construction)
Improve contracting; oversight, schedule planning, and routine meetings and feedback are some successful practices for improving contractor management
Improve field productivity; initiatives focus on crew size, training, and system changes
Use a Work Management System to schedule jobs. SAP and Maximo are the most used
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Thank you for your Input and Participation!
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About 1QC
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