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DISTRIBUTION UNIT COST VEGETATION MANAGEMENT BENCHMARK STUDY DISTRIBUTION UNIT COST VEGETATION MANAGEMENT BENCHMARK STUDY INTRODUCTION AND FRAMEWORK INTRODUCTION AND FRAMEWORK

William Porter

Director of Research, Development and Industry Intelligence 22‐Oct‐2015

Appendix 3. Presentation Slides

PURPOSE OF BENCHMARKING STUDY

The objectives of this study by CN Utility Consulting (CNUC), enabled by peer and longitudinal comparisons, are:

• To help Hydro One comply with Ontario Energy Board’s

(OEB) directives (EB2013‐0416),

• To identify best management practices,
• To identify measurements to substantiate continuous

improvement, and

• To recommend innovative approaches to ensure a

successful and cost‐efficient utility vegetation management (UVM) program over the next seven to ten years and beyond

THE VEGETATION MANAGEMENT STUDY TEAM

• Project team members:

– William Porter: Director of Consulting of CNUC and Project Lead – Nina Cohn: Statistical Analyst [CNUC’s Senior Analyst] – Stephen Cieslewicz: President of CNUC and Project and Expert Witness Advisor and Witness

• 60 years of experience in Utility Vegetation Management

(UVM)

• Same project team that performed the 2009 UVM

benchmark project for Hydro One

• CNUC team has provided expert testimony for numerous

legal and regulatory cases

• CNUC team has produced several peer‐reviewed

publications and scientific articles

CNUC BACKGROUND AND RELATED PROJECTS

Projects relevant to the current Hydro One Benchmarking Study

• CNUC has been performing comprehensive benchmarking
• f UVM programs since 2002 and has data dating back to

1997.

• The team is comprised of the authors of the UVM

Benchmark & Industry Intelligence publications in 2002, 2010, 2012 and 2014. Numerous projects for utilities in which UVM benchmarking was a key component, examples include: Hydro One, MidAmerican Energy, Connexus Energy, Ameren Illinois, Puget Sound Energy, BC Hydro, United Illuminating, and Avista Utilities

BENCHMARKING STUDY FRAMEWORK

Hydro One Distribution UVM Benchmarking Study

Survey Design, Participation, and Deployment A Review of Hydro One’s Program Data Management Data Analysis Recommendations and Conclusions

Regulatory and Literature Review

HYDRO ONE PROGRAM REVIEW

• Data is collected in five datasets,

entire company and four zones:

– Hydro One – Northern – Southern – Central – Eastern

• Longitudinal internal study of the

five datasets

2009 CRITERIA FOR CHOOSING APPROPRIATE COMPARATORS

• 2009 comparator locations based on

climate conditions, growth, storm paths, and forest canopy cover:

– Around Ontario – Northeastern North America – Western North America – Southeastern North America

• 2009 customer density:

– ≤ 30 customers per circuit kilometre

CHOOSING CURRENT STUDY COMPARATORS

• Peer comparators

– 2009 criteria – Unit and categorical comparisons – Total productivity factors

• General comparators

– Policies and procedures – Best practices – Regulatory drivers – Workforce

COMPARATORS FOR 2015‐2016

The following two slides are select lists of North American companies that have participated in CNUC benchmark surveys and who are potential comparators for this study Additional companies may be invited

RECENT DISTRIBUTION BENCHMARKING PARTICIPANTS ‐ 31 COMPANIES

Alabama Power Company [AL, USA] Ameren Illinois Company (AIC) [IL, USA] Appalachian Power Company [VA/WV, USA] Avista Utilities [WA/ID/OR, USA] Baltimore Gas and Electric Co (BG&E) [MD,USA] BC Hydro Distribution [BC, CAN] Commonwealth Edison [IL, USA] Connexus Energy [MN, USA] Consumers Energy Company [MI, USA] Entergy Corporation [LA/AR/MS, USA] EPB (Electric Power Board) [TN, USA] Hydro One Networks Inc. [ON, CAN] Hydro‐Québec [QC, CAN] Indiana Michigan Power Company [USA] Indianapolis Power & Light [IN, USA] Kentucky Power Company [KY, USA] Lincoln Electric System (LES) [NE, USA] MidAmerican Energy (MEC) [IL, USA] Northern Indiana Public Service Company [USA] Northern States Power – MN [USA] Northern States Power – WI, MI [USA] Ohio Power Company [USA] Omaha Public Power District (OPPD) [NE, USA] Pacific Gas & Electric (PG&E) [CA, USA] PacifiCorp [CA/OR/WA/ID/WY/UT, USA] Public Service Company of Colorado [USA] Public Service Company of Oklahoma [USA] Southwestern Electric Power Company [TX/AR/LA, USA] Southwestern Public Service Company [NM/TX, USA] Tampa Electric Company (TECO) [FL, USA] United Illuminating Company [CT, USA]

Companies Names in Italics and Brown Fonts were in the 2009 Hydro One Rate Case CNUC Benchmarking Study 12 of the 14 comparators in the 2009 study are recent participants

ADDITIONAL RECENT BENCHMARKING PARTICIPANTS ‐ SPECIAL TOPICS 17 ADDITIONAL COMPANIES

ATCO Electric [AB, CAN] Con Edison Inc. [NY, USA] Duke Energy Corporation [NC, USA] ENMAX Power Corporation [AB, CAN] Horizon Utilities [ON, CAN] KCPL [KS, USA] Manitoba Hydro [MB, CAN] National Grid [MA, USA] National Rural Electric Cooperative Association [VA, USA] New Brunswick Power [NB, CAN] Nova Scotia Power Inc. [NS, CAN] Puget Sound Energy Inc. [WA, USA] Saskatoon Light & Power [SK, CAN] SaskPower [SK, CAN] Southern Company [AL, USA] Toronto Hydro‐Electric System Limited [ON, CAN] We Energies [MI/WI, USA]

Companies in 2009 Study not represented:

Allegheny Power [WVA/PA/MD/VA, USA] Central Maine Power [ME/NY, USA]

SURVEY DESIGN AND STRATEGY

Defining and Gathering Data:

• Utility characteristics
• Productivity

Labour Hours, Work Types, Equipment, Costs, and Cycles

• UVM Practices
• Safety
• Reliability
• Workforce characteristics
• Regulatory Policies

METHODOLOGY FOR ANALYSIS

• Data Management and Analysis
• Normalizing measurements to reflect total

productivity factors

• Identifying Trends and Best Management

Practices

• Modeling Efficiencies
• Forecasting Workload

TOTAL PRODUCTIVITY AND EFFICIENCY FACTORS

– Tree density – Customer density/customer service – Weather/catastrophic events – Cost of living indices – Reliability measurements – Terrain and site characteristics – Forest composition and health – Worker turnover – Safety – Environmental Quality

THE STATE OF THE UVM INDUSTRY IN NORTH AMERICA

Is Reliability Centered Maintenance (RCM) a standard of care for UVM?

UNDERSTANDING THE UVM INDUSTRY

UTILITY VEGETATION MANAGEMENT (UVM) PROGRAM DRIVERS

1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5

2002 2006 2012 2013 2014

Weighted Ranking of the Importance of Each UVM Objective

• 1. Reliability
• 2. Safety
• 3. Comply with Specific Laws
• 4. Cost Effectiveness
• 5. Customer Service
• 6. Prevent Fires
• 7. Preserve and Provide

Environmental Quality

Most Important at the Top Previous Studies Had Safety Ranked as the Number One Objective

SAFETY: HOW TO MEASURE SUCCESS

• Electrocutions in the public sector
• Average percent of trees in contact

at time of maintenance

• The frequency and costs of fires

caused by trees and power lines

• incident reporting is not a true

measure of line clearance safety

• Tree and power line contacts are an

unsafe condition

• Accidents are not reported to

external stakeholders by the majority of companies

RISK TOLERANCE

0% 1% 8% 10% 15% 15% 35% 35% 35% 50% 60% 60% 60% 70% 70% 75% 80% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% BB BD AH AA AP AZ AF AO BE AN AE AW AR AG AI AD AJ

Percent of Trees in Contact Company Code

Trees in Contact at Time of Maintenance

Sample Size: 17 Average: 40% Q1: 15% Median: 35% Q3: 60%

COST: WHAT IS THE VALUE OF EFFECTIVE UTILITY VEGETATION MANAGEMENT?

• Electric reliability has gained the

most attention by regulators

• The risk of electrical

contacts, accidents, fires and increased customer interruptions has been significant enough to make a case for adopting best management practices in a UVM program

PREFERRED VS. DEFERRED MAINTENANCE

If a property owner, private tree company or worst of all, a child enters a tree that

• bscures the presence of a single phase

primary tap and there is an injury or fatality, then the utility has suddenly lost all of the gain from taking a risk with trees that have low reliability impact.

GETTING TO KNOW THE CUSTOMER

40% 5% 25% 10%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

The CSS information is available to the forestry notifiers/planners Vegetation data and permissions collected by the UVM program is stored in the CSS A record is kept on customers that have vegetation near overhead lines on their property The UVM dept knows percent of overhead customers have trees that routinely require UVM

Percent of Companies

Recorded Data about Customers Who Own Properties That Require UVM

INDUSTRY PERCEPTION OF WORKLOAD

• The UVM customer base is a subset of the utility

customer population

• How many customers (meters) have UVM

performed on their property? Question asked in survey

• 45% of utilities perceive their workload as 100% of

their electric customers

• Is UVM is viewed as a system correction more than

a customer transaction?

SYSTEM RELIABILITY

The efficacy of a program isn’t just measured by how long it has gone without an outage but rather how well it can prove the conditions that cause an outage won’t happen in the future.

RELIABILITY: A CHANGE IN UVM PRACTICES

• In the past, the UVM goal was to create enduring

airspace between trees and conductors

• Current UVM objectives have been realigned to fit

budget constraints, realistic schedules and greater tolerance for tree/wire conflicts

• Reliability metrics have been used to measure

performance and direct UVM programs

• Changing reliability expectations has led to a shift in

the primary purposes for performing UVM

• UVM has shifted from the singular endeavor to keep

all vegetation away from the conductor to a reduction of outage consequences

RELIABILITY CENTERED (RC) UVM CHALLENGES

• What causes the system

to fail the most often?

• What kind of outages

have the longest duration?

• Which outages impact the

most customers?

• Which outages interrupt

the most load?

TRENDS IN THE UVM INDUSTRY

VEGETATION‐RELATED SAIDI/SAIFI TO MEASURE UVM EFFICACY

70% 59% 48% 4% 4%

0% 10% 20% 30% 40% 50% 60% 70% 80%

SAIFI SAIDI CAIDI CAIFI MAIFI

Percent of Companies that Use Each Metric for UVM

Reliability Metrics Used for Utility Vegetation Management Planning and Evaluation

Sample Size: 27

PROBLEMS WITH UVM RELIABILITY CENTERED MANAGEMENT

• Less emphasis on safety
• Increased cost of reactive maintenance
• Unpredictable reliability once trees are

in contact with conductors

• Down stream customers experience

more tree‐related outages

• Inadequate emphasis on grid resiliency

to high intensity, major, or widespread events that cause trees to fail into power lines

DESIGNATING MAJOR EVENT DAYS

93% 89% 85% 84% 82% 80% 78% 75% 73% 72% 69% 68% 68% 57% 49% 47% 45% 44% 44%

7% 11% 15% 16% 18% 20% 22% 25% 27% 28% 31% 32% 32% 43% 51% 53% 55% 56% 56% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% AP AW AD AF BD AE AA AI AC AG AJ BB AZ AK BG AR AO AH BE

Percent of Tree‐Related Outages Company Code

Major versus Non‐Major Event Tree‐Related Outages:

Average Annual Percent in Each Category for Years 2010 ‐ 2013

Non‐Major Event Major Event

Sample Size: 19 Averages: Non‐Major Event: 69% , Major Event: 31% Median: 72%

ARE INDUSTRY RELIABILITY METRICS A GOOD MEASURE OF VEGETATION CONDITIONS?

A COMPARISON OF COMPANIES X, Y AND Z

• X is a large UVM reliability‐centered maintenance

company with best‐in‐class electric reliability performance

• Y is a large compliance‐centered, multiple
• bjectives performance company with best‐in‐

class UVM performance

• Z is a small company with best‐in‐class reliability,

but an underfunded UVM program with increasing levels of liability risk

TREE‐RELATED SAIFI COMPARISON

0.110 0.110 0.112

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

J C T S Y Z X O R E Q N K G H A I B L M

Tree‐Related Non‐MED SAIFI Company Code

Tree‐Related Non‐Major Event Day SAIFI Five‐Year Average 2009 ‐ 2013

Average: 0.258 Q1: 0.110 Median: 0.165 Q3: 0.314

TREE RELATED SAIDI

10.7 11.6 17.3

50 100 150 200 250 J C S Z X O Y R T Q H E K N G I A B L M

Tree‐Related Non‐MED SAIDI in Minutes

Company Code

Tree‐Related Non‐Major Event SAIDI Five Year Average 2009 ‐ 2013

Average: 51.3 Q1: 14.0 Median: 24.9 A3: 60.0

TOTAL NUMBER OF TREE‐RELATED OUTAGES

0.015 (0.024 /mile) 0.081 (0.131/mile) 0.291 (0.168/mile)

0.00 0.05 0.10 0.15 0.20 0.25 0.30 Y S B H J T A C Z Q G O K E R N L I M X Non‐MED Tree‐Related Outages Per Pole Kilometre Company Code

Non‐MED Tree‐Related Outages per Distribution Pole Kilometre Five Year Average 2009 ‐ 2013

Average: 0.111 Q1: 0.068 Median: 0.089 Q3: 0.134

RELIABILITY CAN IMPROVE WHILE THE NUMBER OF TREE‐RELATED OUTAGES INCREASE

2006 2007 2008 2009 2010 Outages 8,906 12,194 13,918 14,865 16,197 SAIFI 0.0822 0.1073 0.1297 0.1237 0.0993

0.02 0.04 0.06 0.08 0.1 0.12 0.14 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

Non‐Major Event SAIFI Number of Non‐Major Event Outages

Comparison of Non‐Major Event Outages and SAIFI for Company X 2006 ‐ 2010

AN EFFECTIVE UVM PROGRAM HAS TO LOOK BEYOND THE CURRENT RELIABILITY PICTURE

Suburban: r = 0.868, p < 0.001 Rural: r = 0.960, p < 0.001

1 2 3 4 5 6 2 4 6 8 10 12 14

Average Number of Outages per Circuit Number of Years Since Vegetation Was Managed

Average Number of Tree‐Related Outages per Circuit versus Number of Years Since Vegetation Was Managed

Suburban Averages Outages Rural Averages Outages

WHAT DO CUSTOMERS PAY FOR UVM?

RESIDENTIAL 38% AND INDUSTRIAL/COMMERCIAL 62% OF ELECTRICITY SALES

If 33% of all electric customers receive UVM on average every 4 years the Median at time of work cost per UVM customer is estimated to be $298

$16.38 $37.14 $39.00

$0 $20 $40 $60 $80 $100 $120 $140 $160

C U R O V H W X AA AB AC E AD AE AF G S AG AI Z Y I T AJ N L J K B M

Cost per Customer in CAD

Company Code

Average Annual Cost of UVM per Customer

Sample Size: 30 Average: $35.88 Q1: $17.01 Median: $26.98 Q3: $54.60

UVM FUNDING: A PERENNIAL PROBLEM

Inadequate budgets were characterized as follows:

• Significant annual fluctuations
• Lower than the needs of the approved program
• No where close to meeting program needs
• Unpredictable

31% Adequate 10% Somewhat Adequate 59% Not Adequate

Percent of Companies with Highly Adequate, Somewhat Adequate or Inadequate Budgets in 2014

INDUSTRY RELIABILITY INDICES ARE INADEQUATE FOR ACCESSING THE RELATIVE EFFICIENCY OF A PROGRAM

• Outages per kilometre is a better indicator
• f vegetation conditions
• Measurement of program efficiency should

not rely primarily on reliability

• Program efficiency should include other

stated objectives of UVM

KEY TO A SUCCESSFUL UVM PROGRAM, ADEQUATE FUNDING AND CUSTOMER ACCEPTANCE Utilities can facilitate the relationship between the utility, the regulator and the customer by improving the data they collect and by providing clear analysis that proves compliance to UVM regulations and shows improvements in performance.

HYDRO ONE STUDY HORIZONS

• Best management practices and
• pportunities for gaining efficiency
• Balanced objectives and risk tolerances
• Measurable performance against industry

trends

• Modeling the system for various scenarios
• Forecasting costs, including cost of

deferred maintenance

• Opportunities for capitalization of UVM

QUESTIONS?

Distrib utio n T

• ta l F

a c to r Pro duc tivity Study

STEVE FENRICK FENRICKS@POWERSYSTEM.ORG WWW.POWERSYSTEM.ORG OCTOBER 22, 2015

Stakeholder Engagement Meeting

Communications

• Strategic Communications Planning
• Technology Assessments: Private vs. Commercial
• Land Mobile Radio Design
• Radio Path & Propagation Studies
• Fiber WAN Design & Procurement
• GIS Mapping & Integration of Communication Assets
• Microwave & Fixed Data Design & Procurement

Utility Automation

• Technology Work Plans
• Integration, Testing, Training and

Support

• Cyber Security & IT Assessments
• Substation and Distribution

Automation

• Strategic Planning
• Consulting and Procurement

services on SCADA, AMI/AMR, OMS, GIS, CIS, and others

Engineering & Design

• System Planning Studies
• Distributed Generation Strategies
• Transmission Studies
• Power Factor Correction Studies
• System Loss Evaluation
• Substation Design
• Line Design

PSE Se rvic e s

2

• Load Forecasting
• Statistical Performance

Measurement (Productivity & Benchmarking)

• Market & Load Research
• Alternative Regulation
• Demand-Side Management

(DSM)

• Value of Service
• Other Economic Studies

Economics & Research Rates & Financial Planning

• Revenue Requirement Studies
• Class Cost of Service Studies
• Rate Design
• Key Account Services
• Rate Comparisons &

Competitive Assessments

• Strategic & Financial Planning

My E xpe rie nc e

Ste ve F e nric k (L e a de r, E c o no mic s & Ma rke t Re se a rc h)

 Wo rke d o n e mpiric a l T

F P a nd b e nc hma rking re se a rc h fo r 3rd Ge ne ra tio n I R (while a t Pa c ific E c o no mic s Gro up)

 E

ng a g e d b y the Onta rio E ne rg y Bo a rd to pro duc e the OM&A a nnua l stre tc h fa c to r upda te s (2010-2013)

 Pe e r g ro up b e nc hma rking upda te  E

c o no me tric b e nc hma rking upda te

 Pro vide d T

F P re se a rc h in E nb ridg e Ga s (2013) c a se

 Be nc hma rking a nd T

F P e xpe rt o n b e ha lf o f the Co a litio n o f L a rg e Distrib uto rs during the 4th Ge ne ra tio n I R pro c e e ding (2013)

 Be nc hma rking e xpe rt o n b e ha lf o f T

• ro nto Hydro

 I

CM (2013/ 2014)

 Custo m I

R (2014/ 2015)

 Be nc hma rking e xpe rt o n b e ha lf o f Hydro Otta wa

 Custo m I

R (2015)

3

Ag e nda

4

Se c tio n 1: Pro je c t Ove rvie w Se c tio n 2: E mpiric a l Appro a c h Se c tio n 3: I nc o rpo ra ting T F P Drive rs into the T F P Me a sure Se c tio n 4: Pro je c t Ne xt Ste ps

Pro je c t Ove rvie w

Bo a rd’ s Ma rc h 12, 2015 De c isio n in E B-2013-0416, pa g e 17:

 “T

he OE B se e s value in H ydro One me asuring its o wn to tal fac to r pro duc tivity o ve r time to be able to de mo nstrate impro ve me nt in pro duc tivity to its c usto me rs and the OE

• B. T

he OE B le ave s it to H ydro One to de te rmine its pre fe rre d to tal fac to r pro duc tivity study me tho d. H

• we ve r, the pe rio d o f the

study sho uld inc lude ye ars at le ast go ing bac k to 2002. T he re sults o f the study must be file d as part o f H ydro One ’s ne xt rate s applic atio n.”

5

Pro je c t Ove rvie w

I n 4th Ge ne ra tio n I R, the Bo a rd Sta ff’ s e xpe rt de ve lo pe d industry T F P tre nds

 T

he Bo a rd’ s me tho d wa s b a se d o n de ve lo ping a n X-fa c to r fo r ra te a djustme nts, no t fo r pro viding a c o mpre he nsive vie w o f pe rfo rma nc e

 Bo a rd’ s No ve mb e r 21, 2013 De c isio n in E

B-2010-0379 sta te d o n pa g e 17: “T he Bo a rd a c kno wle dg e s tha t a c hie ve d industry T F P ma y b e ne g a tive due to unfo re se e n e ve nts a nd/ o r situa tio ns in whic h c o sts ma y b e inc urre d with no c o rre spo nding inc re a se in o utput.”

A mo re “c o mpre he nsive ” T F P me a sure is ne e de d to pro pe rly de mo nstra te the pe rfo rma nc e o f Hydro One

6

Pro je c t Ove rvie w

Pro je c t Ob je c tive s inc lude :

1.

Pro vide the Bo a rd a nd sta ke ho lde rs with Hydro One ’ s o wn T F P tre nds sta rting in 2002 thro ug h 2022



Va ria b le pro je c tio ns e stima te d b y Hydro One will b e use d to c a lc ula te T F P pro je c tio ns fro m 2015 a nd b e yo nd

2.

Build upo n the 4th Ge ne ra tio n I R T F P me tho do lo g y b y inc o rpo ra ting a dditio na l c o st drive rs into the a na lysis

3.

Cle a rly e xpla in the b a sis fo r we ig hting a nd inc o rpo ra ting the se a dditio na l T F P drive rs

 Whe re ve r po ssib le , use e mpiric a lly-de rive d e vide nc e

4.

Pro vide hig h-le ve l re c o mme nda tio ns tha t Hydro One c a n use to info rm its future pla nning o r re po rting pro c e sse s

7

E mpiric a l Appro a c h

From the Staff’s consultant PEG in 4th Generation IR proceeding:

 ∆ ∆ ∆

 Outputs = c usto me rs, to ta l kWh de live rie s, syste m c a pa c ity pe a k

de ma nd

 I

nputs = Ca pita l & OM&A

 Output c ho ic e wa s lo g ic a l whe n se tting a T

F P tre nd fo r a ra te se tting a pplic a tio n, b e c a use re ve nue s a re prima rily drive n b y the se thre e o utputs

Ho we ve r, in de mo nstra ting the tre nd in pe rfo rma nc e o f a pa rtic ula r distrib uto r, the fa c t tha t input q ua ntitie s (i.e . c o st tre nds) a re a func tio n o f o the r po ssib le o utputs must b e re c o g nize d a nd inc o rpo ra te d into the study

8

E mpiric a l Appro a c h

Othe r po ssib le T F P drive rs tha t the T F P study will inve stig a te :

 Cha ng e s in re lia b ility (SAI

F I & SAI DI ) during the 2002-2022 pe rio d

 Cha ng e s in c usto me r se rvic e le ve ls  E

nviro nme nta l o utput

 Re g ula to ry o utputs a nd c o sts  I

nput pric e infla tio n o f Hydro One

 Othe r drive rs a s the y ma y b e unc o ve re d during the c o urse o f the

pro je c t

9

I nc o rpo ra ting T F P Drive rs

T wo po ssib le a ppro a c he s:

1.

E mpiric a l mo de ling

2.

Hydro One inte rna l “a dde d c o st” e stima te s

 Whe re ve r po ssib le , PSE

will pre fe r e mpiric a l mo de ling b a se d o n e xte rna lly-de rive d e vide nc e in inc o rpo ra ting T F P drive rs

 I

f no mo de l c a n b e de ve lo pe d, Hydro One “a dde d c o st” e stima te s will b e use d if:

1.

PSE is c o nvinc e d the va ria b le in q ue stio n is c ruc ia l to pro pe rly de mo nstra ting Hydro One ’ s T F P pe rfo rma nc e tre nd, a nd

2.

Re a so na b le e stima te s c a n b e o b ta ine d

10

I nc o rpo ra ting T F P Drive rs

Wo rking Assumptio ns:

1.

Re lia b ility is a n “o utput” o f a n e le c tric distrib uto r a nd is po sitive ly c o rre la te d with c o st (i.e ., if re lia b ility impro ve s the n c o st is like ly to inc re a se )

2.

Custo me r se rvic e is a n “o utput” a nd is po sitive ly c o rre la te d with c o st

3.

Me e ting mo re string e nt e nviro nme nta l o r re g ula to ry re q uire me nts is a n “o utput” a nd is po sitive ly c o rre la te d with c o st

11

Pro je c t Ne xt Ste ps

1.

Mo dify T F P study pla n b a se d o n fe e db a c k

2.

Da ta a nd info rma tio n g a the ring



Hydro One inte rvie ws o n po ssib le T F P drive rs



Hydro One da ta a nd info rma tio n g a the ring



I ndustry sa mple da ta g a the ring

3.

Ana lysis o n inc o rpo ra ting T F P va ria b le s



Re lia b ility, c usto me r se rvic e , e nviro nme nta l & re g ula to ry, input pric e , o the r

4.

F ina lize T F P e stima te s a nd write re po rt

5.

T F P re po rt to b e file d in Hydro One ’ s ne xt ra te c a se

12

Ste ve F e nric k L e a de r, E c o no mic s & Ma rke t Re se a rc h Gro up 608-268-3549 608-334-5994 (mo b ile ) fe nric ks@ po we rsyste m.o rg

13

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