2018 General Rate Case - Southern California Edison · 12 SCE requests $27.8 million (nominal...

Application No.: A.16-09- Exhibit No.: SCE-07, Vol. 7 Witnesses: T. Guntrip

(U 338-E)

2018 General Rate Case

Operational Services (OS) Volume 7 – Transportation Services

Before the Public Utilities Commission of the State of California

Rosemead, CaliforniaSeptember 1, 2016

SUMMARY

This volume presents the capital expenditures for the Transportation Services department

to provide vehicle and air operations services necessary for SCE’s operating units to execute

their work.

SCE forecasts $28 million in capital expenditures for 2016-2020 for Transportation

Services Department:

• Vehicle Electrification Program ($1 million)

• Electric Vehicle Fleet Chargers ($1 million)

• Vehicle Leasehold Capital Improvements ($8 million)

• Garage Tools and Equipment ($3 million)

• Aircraft Operations Program ($5 million)

• Helicopter Lease Buyout ($10 million)

Transportation Services Department Capital Expenditures 2016-2020 Forecast

CPUC-Jurisdictional Only (Nominal $Million)

SCE-07: Operational Services Volume 7 – Transportation Services

Table Of Contents

Section Page Witness

-i-

I. INTRODUCTION .............................................................................................1 T. Guntrip

A. Content and Organization of Testimony ................................................1

B. Capital Request and History ..................................................................1

C. Overview ................................................................................................2

1. Regulatory Background and Policies Driving SCE Request .......................................................................................2

a) California Air Resources Board .....................................3

(1) §2022: On-Road Municipal and Utility Heavy-Duty Diesel Airborne Toxic Control Measure ......................................3

(2) §2025: The Truck and Bus Rule ........................4

(3) §2449: Off-Road Diesel Airborne Toxic Control Measure ......................................5

(4) §2450 and §93116: Portable Equipment Engines Program and the Airborne Toxic Control Measure for Diesel Particulate Matter from Portable Engines ................................................5

b) Energy Policy Act ..........................................................5

II. 2015 DECISION ................................................................................................7

A. Comparison of Authorized 2015 to Recorded .......................................7

III. DESCRIPTION OF ORGANIZATION ............................................................8

A. Overview of Activities: ..........................................................................8

1. Fleet Operations and Maintenance .............................................8

2. Fleet Asset Management ............................................................9

3. Aircraft Operations ..................................................................10


Table Of Contents (Continued)


-ii-

IV. TRANSPORTATION SERVICES DEPARTMENT OPERATING COSTS .............................................................................................................11

A. Overview ..............................................................................................11

B. Fleet Ownership ...................................................................................11

C. Fleet Maintenance ................................................................................12

D. Fuel ......................................................................................................12

E. Aircraft Operations ..............................................................................13

V. CAPITAL .........................................................................................................14

A. Vehicle Electrification Program ..........................................................14

1. WBS Indicator of Project and Capital Forecast .......................14

2. Description ...............................................................................14

3. Scope and Forecast ..................................................................15

B. Electric Vehicle Fleet Chargers ...........................................................15


2. Description ...............................................................................15


C. Vehicle Leasehold Capital Improvements ...........................................16


2. Description ...............................................................................16


D. Garage Tools and Equipment ...............................................................18


2. Description ...............................................................................18


Table Of Contents (Continued)


-iii-


E. Aircraft Operations Program ................................................................19


2. Description ...............................................................................19

a) Aircraft Capital Maintenance .......................................19

b) Aircraft Camera Replacement ......................................20

c) Unmanned Aircraft System Pilot .................................20


F. Helicopter Lease Buyout ......................................................................21


2. Description ...............................................................................22


1

I. 1

INTRODUCTION 2

A. Content and Organization of Testimony 3

The Transportation Services Department (TSD) manages a vehicle and equipment fleet1 4

supporting a wide range of Southern California Edison’s (SCE) activities, including Transmission and 5

Distribution, Customer Service, and Power Production. Since TSD’s operating costs are charged back to 6

other SCE Operating Units (OU), those costs are embedded within the Operation and Maintenance 7

(O&M) and capital forecasts of those OUs and this testimony does not separately request recovery for 8

them. This testimony presents 2015 recorded expenditures, and describes TSD’s organization and 9

activities and the basis for TSD’s operating costs and capital expenditure forecasts. 10

B. Capital Request and History 11

SCE requests $27.8 million (nominal dollars) of capital expenditures from 2016-2020 to support 12

TSD’s operations, $9.3 million of which is for Test Year 2018. The forecast is an $8.4 million increase 13

from the 2015 recorded capital spend of $915,000, driven primarily by helicopter lease buy outs ($5.0 14

million), vehicle leasehold capital improvements ($2.0 million), and aircraft operations ($1.4 million). 15

Figure I-1 below represents a summary of TSD’s 2016-2020 capital forecast2. 16

1 SCE’s vehicle and equipment fleet includes Work Trucks, Passenger Vehicles, Trailers, Construction

Equipment, Wire Stringing Equipment, Helicopters, Cranes, and Forklifts.

2 Numbers may not add to totals due to rounding.

Figure I-1 Transportation Services Department 2016-2020 Capital Forecast

(Nominal $000)

2

C. Overview 1

TSD’s operating costs (expenses charged back to SCE OUs and ultimately recorded as their 2

O&M and capital) are driven primarily by Fleet Ownership, Fleet Maintenance, Fuel Services, and 3

Aircraft Operations activities. TSD’s capital request is driven by the activities of vehicle electrification 4

program, electric vehicle (EV) fleet chargers, vehicle leasehold capital improvements, garage tools and 5

equipment, aircraft operations, and helicopter lease buyouts. TSD activities are driven by operational 6

needs and regulatory requirements. 7

1. Regulatory Background and Policies Driving SCE Request 8

To sustain the vehicle and equipment fleet, SCE must comply with numerous federal, 9

state, and local laws and regulations. TSD collaborates with the Corporate Environmental Services 10

(CES) and the Corporate Health and Safety (CHS) organizations to comply with environmental laws and 11

sustainability initiatives for the fleet. Federal and state government bodies charged with issuing and 12

enforcing regulations applicable to the fleet include: 13

• Environmental Protection Agency (EPA) 14

• Department of Transportation (DOT) 15

• Federal Motor Carrier Safety Association (DOT-FMCSA) 16

• Federal Aviation Administration (FAA) - Title 14 Code of Federal Regulations, Aeronautics 17

and Space 18

• National Transportation Safety Board (NTSB) – Title 49 Code of Federal Regulations, 19

Transportation 20

• Federal Aviation Administration Modernization and Reform Act of 2012 (FMRA) 21

• California Highway Patrol (CHP) 22

• California Air Resources Board (CARB) 23

• Department of Energy (DOE) – Energy Policy Act (EPAct) 24

CARB and EPAct requirements, as described in more detail below, have a significant 25

impact on TSD’s activities. 26

3

a) California Air Resources Board 1

CARB adopted separate regulations in the California Code of Regulations (CCR) 2

to control emissions from different vehicles and equipment. SCE complies with the following CARB 3

rules by replacing or retrofitting covered diesel vehicles: 4

• On-Road Municipal and Utility Heavy-Duty Diesel Airborne Toxic Control 5

Measure (13 CCR §2022);3 6

• Reduce NOx Emissions from Heavy-Duty, Diesel-Fueled Vehicles (also 7

called the “Truck and Bus” rule 13 CCR §2025);4 8

• Off-Road Diesel Airborne Toxic Control Measure (13 CCR §2449);5 9

• Portable Equipment Registration Program (13 CCR §2450)6 ; and 10

• Airborne Toxic Control Measure (13 CCR § 93116)7. 11

(1) §2022: On-Road Municipal and Utility Heavy-Duty Diesel Airborne 12

Toxic Control Measure 13

Sections 2022 and 2022.1 seek to improve the emission standards for large 14

diesel vehicles and apply to any municipality or utility that owns, leases, or operates an on-road diesel-15

fueled heavy-duty vehicles with either a 1960 to 2009 model-year heavy-duty engine or manufacturer's 16

gross vehicle weight rating greater than 14,000 pounds. These sections require particulate matter (PM) 17

filters for certain engines followed by removal of those engines from the fleet or designation of the units 18

as ‘low use’ vehicles subject to the ‘Low Use Vehicle Exemption’ rules. PM is the soot in diesel 19

exhaust. ‘Low Use’ rules allow vehicle exemptions when vehicles are driven less than 1,000 miles per 20

3 The On-Road Municipal and Utility Heavy-Duty Diesel Airborne Toxic Control Measure (13 CCR §2022)

can be referenced at www.arb.ca.gov/msprog/publicfleets/publicfleets.htm.

4 The Reduce NOx Emissions from Heavy-Duty, Diesel-Fueled Vehicles (also called the “Truck and Bus” rule 13 CCR §2025) can be referenced at www.arb.ca.gov/dieseltruck.

5 The Off-Road Diesel Airborne Toxic Control Measure (13 CCR §2449) can be referenced at www.arb.ca.gov/msprog/ordiesel/ordiesel.htm.

6 The Portable Equipment Registration Program (13 CCR §2450) can be referenced at www.arb.ca.gov/portable/portable.htm.

7 The Airborne Toxic Control Measure (13 CCR § 93116) can be referenced at www.arb.ca.gov/toxics/atcm/atcm.htm.

4

year in California (CA) and have auxiliary engines used less than 100 hours per year in CA. SCE has 1

1,410 vehicles that fall under this regulation, of which only six are currently designated as “Low Use.” 2

To comply with these sections, SCE added control equipment and 3

replaced certain vehicles that were not feasible to retrofit to meet new emission standards. The specific 4

remedial measures depended on the model year of the vehicle. Between 2007 and 2015, SCE replaced, 5

scrapped, or returned to the lessor 1,035 vehicles subject to these sections and retrofitted an additional 6

154 vehicles. For 2016, SCE has 692 large diesel vehicles remaining that must be replaced under the 7

second rule (§2025 outlined below) due to pending compliance milestones in 2021, 2022, and 2023 for 8

the removal of older engines from fleets. Many of SCE’s vehicles that were required to be replaced to 9

achieve compliance with the first rule must now be replaced to comply with the second rule before the 10

normal life-cycle end date. Table I-1 below demonstrates CARB Heavy-Duty Diesel compliance dates. 11

Table I-1 CARB On-Road Municipal and Utility Heavy-Duty Diesel Compliance Dates

Engine Year 14,000 – 26,000 pounds

Gross Vehicle Weight Rating (GVWR)

Greater Than 26,000 pounds GVWR

2004 and older --- January 1, 2021

2006 and older January 1, 2021 January 1, 2022

All Pre-2010 Engines January 1, 2023 January 1, 2023

(2) §2025: The Truck and Bus Rule 12

Public utilities must comply with the CARB rule (§2022 and §2025) 13

covering on-road, heavy-duty, diesel-fueled vehicles. SCE must meet future milestones mandating that 14

all pre-2010 model year engines be removed from SCE’s fleet between January 1, 2021 and January 1, 15

2023. SCE has initiated the replacement of the 692 heavy duty diesel vehicles operating with pre-2010 16

engine models. Many of the vehicles purchased to comply with §2022 must be replaced early to comply 17

with §2025. Many vehicles purchased from 2007 to 2009 to meet earlier rules, which have an expected 18

useful life of 15 to 25 years, must be replaced early to comply. The same 1,410 vehicles noted in the 19

prior section fall under this regulation. 20

5

(3) §2449: Off-Road Diesel Airborne Toxic Control Measure 1

The off-road diesel airborne toxic control measure regulation addresses 2

diesel powered equipment greater than 25-horsepower and covers SCE cranes, backhoes, forklifts, 3

graders, and bulldozers. This regulation requires either equipment retrofitting or replacement to meet 4

emission standards. SCE has 229 pieces of equipment that must meet these emission average standards. 5

The off-road diesel airborne toxic control measure regulation was approved in July 2007, and has 6

multiple compliance milestones from 2010 through 2020. By year-end 2015, SCE replaced 81 vehicles. 7

To meet subsequent milestones, SCE forecasts replacing 24 vehicles per year from 2016 through 2020 8

and those vehicle replacements are timed to coincide with the normal end of vehicle life. 9

(4) §2450 and §93116: Portable Equipment Engines Program and the 10

Airborne Toxic Control Measure for Diesel Particulate Matter from 11

Portable Engines 12

On January 1, 2013, the Portable Engine Airborne Toxic Control Measure 13

(ATCM) fleet emission standards went into effect. ATCM required owners of portable engines to submit 14

an initial Fleet Compliance Report to the Air Resources Board by March 1, 2013. ATCM also requires 15

owners to ensure that the average PM emission level for their fleet does not fall out of compliance due to 16

changes in the fleet. The Portable Equipment Registration Program and ATCM for Diesel Particulate 17

Matter from Portable Engines affects SCE’s portable engines associated with air compressors, 18

generators, stringing equipment, and cable pullers which have greater than 50-horsepower. SCE 19

currently has 27 pieces of equipment that fall under this requirement. 20

This program imposes more stringent emission standards for these 21

portable engines and was originally scheduled for staggered implementation goals on January 1, 2017 22

and January 1, 2020. The implementation has been delayed by CARB with revised rules and deadlines 23

under review in a pending public hearing process scheduled for the fall of 2016. In pending hearings, 24

CARB has proposed to push back the original January 1, 2017 compliance milestone to a new 25

compliance date of January 1, 2018. 26

b) Energy Policy Act 27

EPAct8 compliance requirements are driven by the number of light-duty vehicles 28

(less than 8,500 gross vehicle weight) acquired each year. For every 10 light-duty vehicles acquired, 29

8 Information on the EPAct rules for vehicles and covered fleets can be found at

http://www1.eere.energy.gov/vehiclesandfuels/epact/.

6

SCE must either purchase nine electric vehicles or purchase nine EPAct credits through the DOE. 1

Because newly manufactured electric vehicles are relatively expensive (e.g. aftermarket plug-in-hybrid 2

pickup truck) and do not always correlate to SCE’s fleet needs, SCE’s purchase of EPAct credits from 3

other alternative fuel suppliers is the most viable option to meet EPAct requirements. Based on our 4

current fleet plans, SCE forecasts the need to acquire 200 EPAct credits per year between 2016 and 5

2020. 6

7

II. 1

2015 DECISION 2

A. Comparison of Authorized 2015 to Recorded9 3

TSD recorded $915,000 in capital expenditures in 2015, $4.272 million less than the $5.187 4

million SCE requested and the Commission authorized in the 2015 GRC. The underspend was driven by 5

a strategic change from lease-end capital purchases to lease renewals for SCE vehicles. By the end of 6

2015, SCE negotiated modifications to vehicle master lease structures to provide firm renewal options 7

for vehicles. Concurrently, SCE negotiated lease renewals for vehicles that did not have defined renewal 8

options. 9

Figure II-2 Transportation Services

Summary of 2015 Capital Request, Authorized, and Recorded (Nominal $000)

9 Refer to WP SCE-07, Vol. 7, p. 1.

($4,272)

$5,187 $5,187

$915

0

1,000

2,000

3,000

4,000

5,000

6,000

2015 Request 2015 Authorized Variance 2015 Recorded

Transportation Services

8

III. 1

DESCRIPTION OF ORGANIZATION 2

A. Overview of Activities: 3

SCE manages a vehicle and equipment fleet comprising passenger cars, vans, pick-up trucks, 4

forklifts, heavy-duty trucks with aerial equipment (buckets and cranes), loaders, tractors, stringing 5

equipment, trailers, helicopters, and other vehicles to support delivery of safe and reliable electrical 6

service. SCE’s fleet is employed to sustain the operation and maintenance of transmission, distribution 7

and generation facilities, customer service activities, materials supply logistics, and workforce needs. 8

TSD provides fleet management and maintenance services (e.g. acquisition, maintenance, repair and 9

disposal), aircraft support of utility operations, crane operations, oversight of regulatory compliance for 10

drivers, pilots, and fleet, technical training for SCE employees, and other transportation-related services. 11

TSD is managed by the three groups further detailed in the sections below and the associated costs are 12

charged back to SCE's OUs. Table III-2 below identifies the OUs that incur the majority of SCE’s 13

transportation-related expenses. 14

Table III-2 Primary OUs Charged for Transportation Services

1. Fleet Operations and Maintenance 15

Fleet Operations and Maintenance (FOM) performs maintenance, repairs, and fueling 16

tasks to uphold the safety and dependability of SCE’s vehicles and equipment and comply with 17

applicable regulations. FOM manages SCE’s 41 vehicle maintenance facilities supporting approximately 18

6,100 vehicles and equipment. 19

FOM also includes the Crane Operations unit, which plays an integral role in constructing 20

and maintaining SCE’s infrastructure. Crane Operations provides 24-hour support for SCE crews 21

throughout our 50,000 square mile service territory. This is accomplished with four SCE-owned cranes 22

and a network of four external crane vendors to serve the territory. FOM operates under a “fit to need” 23

model, which optimizes the types and capabilities of cranes owned by SCE for work assignment to 24

Exhbit SCE Operating UnitSCE-02 Transmission and DistributionSCE-03 Customer ServiceSCE-05 Power SupplySCE-07 Operational Services

9

maximize SCE crane utilization and minimize use of typically higher cost external vendors. 1

2. Fleet Asset Management 2

Fleet Asset Management (FAM) activities include overseeing the planning and strategy 3

of vehicle replacements, dispositions and additions, and designing and delivering SCE fleet vehicle 4

assets, fleet telematics administration, and vehicle rentals. FAM covers both long- and short-term 5

planning for the fleet and evaluates the impact of financial, design and regulatory requirements to 6

support SCE’s fleet needs accordingly. This includes annual vehicle replacements and additions planned 7

through real-time evaluation of organizational requirements. These efforts also manage emerging 8

vehicle resource needs and disposal of vehicles when they have reached the end of useful life or are 9

rendered obsolete by regulation. 10

The FAM team also includes several technical and engineering functions. This unit 11

creates, maintains, and updates vehicle specifications, incorporates work method requirements, 12

prescribes safety standards, fleet electrification options, and fuel efficiency and emissions goals, and 13

addresses regulatory compliance requirements in vehicle designs. The team also analyzes product 14

failures and ways to mitigate such failures, and works with vehicle manufacturers to deliver useful and 15

dependable products and solutions to SCE. 16

FAM’s Vehicle Acquisition unit oversees purchase order contracts for the fleet, manages 17

the delivery of and in-service protocols for each vehicle, manages a network of rental suppliers, 18

negotiates favorable agreements with the Supply Management team, and processes rental requests. 19

FAM’s Fleet Planning and Strategy unit provides a single point of contact for the fleet 20

clients. A dedicated communication conduit is critical to align goals and strategies between TSD and the 21

fleet’s clients for effective fleet management. 22

Fleet Planning and Strategy also provides support for the telematics technology installed 23

on SCE’s on-road powered vehicles. The telematics technology allows for automatic retrieval and 24

monitoring of vehicle-specific data (e.g. global position, fuel consumption, miles driven, engine idle 25

hours, specialty equipment operation, hard braking and hard acceleration.) Fleet Planning and Strategy 26

oversees telematics equipment use, manages the relationship with telematics technology vendors, 27

engages with drivers on use of the technology to promote safe and more efficient operation of the 28

vehicles, and analyzes data concerning fleet fuel costs, vehicle usage, and operational issues with the 29

vehicles. 30

10

3. Aircraft Operations 1

Aircraft Operations provides aviation services for maintaining and constructing SCE’s 2

infrastructure. SCE’s territory has a diverse and ecologically sensitive geography spanning three states 3

and 50,000 square miles, with terrain elevations ranging from below to over 12,000 feet above sea level. 4

Aircraft Operations supports SCE’s core utility functions as performed by Transmission and Distribution 5

(T&D) and Power Procurement. Aircraft Operations provides critical support during major 6

environmental events to mitigate service interruptions and works collaboratively with its users to 7

support operational needs associated with safe and productive work execution. The Aircraft Operations 8

fleet comprises six helicopters that include both single and twin-engine helicopters. Additional support 9

services provided by Aircraft Operations include: 10

• Patrolling T&D lines 11

• Setting poles (wood, steel, and composite fiberglass) and stringing wire 12

• Installing and repairing fiber optics 13

• Identifying Right of Way hazards and encroachments 14

• Conducting environmental and land surveys 15

• Utilizing high definition and thermal vision cameras to film key matters of interest and 16

concern for utility operations 17

• Providing cargo lift services (concrete buckets, equipment, etc.) 18

• Providing crew support for Transmission, Distribution, and Hydro field sites 19

• Assessing damages following disasters and other emergency event 20

• Providing snow survey work per licensure requirements 21

• Supporting public awareness campaigns (e.g., wire strike avoidance for general aviation) 22

• Exploring and developing Unmanned Aircraft System (UAS) operations to support utility 23

operations 24

11

IV. 1

TRANSPORTATION SERVICES DEPARTMENT OPERATING COSTS 2

A. Overview 3

TSD’s operating costs are described but not requested in this testimony, as they are charged back 4

to and included in the forecasts and testimony presented by the OU’s that incur transportation-related 5

costs. The following sections discuss the historical and forecast costs and the drivers for TSD’s 6

operating costs. As shown in Table IV-3 below, TSD operating costs are expected to remain generally in 7

line with historical costs through Test Year 2018, with an increase of 5.9% over 2015 levels due to an 8

increase in fuel, maintenance, fleet ownership, and air operation costs. 9

Table IV-3 Transportation Services Department Operating Costs

2011-2015 Recorded/2016-2018 Forecast (Nominal $000)

B. Fleet Ownership 10

SCE forecasts $58.254 million of 2018 expenses for fleet ownership, which includes vehicle 11

leases, rental expenses, lease buy-outs, licensing expenses, and activities to responsibly administer these 12

assets. Between 2011 and 2015, ownership costs increased by $1.646 million due to a shift from a 13

capital purchase of vehicles upon completing an initial lease term to a lease renewal strategy which has 14

resulted in an increase to lease expenses. 15

The majority ($54.0 million) of the 2018 fleet ownership forecast is related to vehicle lease and 16

rental expenses less vehicle sales. These expenses are driven by SCE’s approach to renew vehicle leases 17

in lieu of a capital purchase upon initial lease term expiration, long lead time CARB vehicle 18

replacements entering the fleet, and fleet growth for T&D crew vehicles. The remaining forecast is for 19

Project Title 2011 2012 2013 2014 2015 2016 2017 2018Fleet Ownership 56,100 58,600 52,116 59,989 57,746 57,114 57,661 58,254

Fleet Maintenance 42,000 39,300 39,006 38,119 40,985 41,352 41,412 42,754 Fuel Costs 23,354 24,400 21,783 19,896 14,378 16,789 17,622 18,352

Aircraft Operations 6,440 6,618 6,491 6,036 6,763 7,361 7,531 7,604 Totals 127,894 128,918 119,396 124,039 119,873 122,617 124,227 126,965

12

costs associated with licensing fees, administrative expenses, and adding 29 vehicles to our fleet. SCE 1

forecasts a total fleet of 6,156 vehicles for 2018.10 2

C. Fleet Maintenance 3

SCE forecasts $42.754 million of expenses in 2018 for fleet maintenance. The rise in fleet 4

maintenance costs is primarily due to inflationary pressures and partially offset by gains from realigning 5

and reducing vehicle maintenance facility personnel, consolidating maintenance activities, and 6

leveraging the use of outsourced maintenance support for scheduled light vehicle maintenance. 7

D. Fuel 8

SCE forecasts $18.352million of expenses in 2018 for fuel and related services. Fuel expenses 9

include both diesel and gasoline. Though fuel costs are expected to increase, SCE forecasts flat diesel 10

and gasoline fuel volumes between 2015 and 2018.11 Additionally, in 2015, SCE staff fueled 68% of the 11

diesel fleet. With recent workforce reductions to improve efficiency and allow greater focus by TSD 12

staff on more complex maintenance work (e.g. engine and hydraulic replacements), TSD staff will fuel 13

40% of the diesel fleet in 2018, resulting in additional purchased diesel fuel services. Table IV-4 below 14

displays historical and forecasted fuel costs. 15

Table IV-4 Fuel Costs (Annual Forecasted Costs)

10 SCE’s peak fleet count was 6,800 in 2010.

11 While there was a significant decrease in fuel costs in 2015, the 2015 Energy Outlook database, published by the Department of Energy’s Energy Information Administration, forecasts a 5.72% average annual diesel price increase and a 5.95% average annual gasoline price increase from 2016-2020.

Fuel Forecast Worksheet(Dollars are in $000)

2011 2012 2013 2014 2015 2016 2017 2018Gallons - Diesel 2,211 2,478 1,879 2,024 2,158 2,160 2,160 2,160

Gallons - Gasoline 3,420 3,513 2,268 2,355 2,297 2,350 2,350 2,350 US EIA $/MMBtu - Transporation Diesel* 20.40 23.26 24.05 24.60

US EIA $/MMBtu - Transporation Gasoline* 19.69 22.85 23.84 24.30US EIA Annual Inflation - Diesel 14.0% 3.4% 2.3%

US EIA Annual Inflation - Gasoline 16.0% 4.3% 1.9%Average Price - Diesel * 4.09$ 3.86$ 5.15$ 4.23$ 2.48$ 2.83$ 2.93$ 2.99$

Additional Diesel Pumping Fees / gallon (SCE Labor) (SCE Labor) (SCE Labor) 97$ 829$ 959$ 1,166$ 1,555$ Average Price - Gasoline * 3.87$ 3.94$ 5.18$ 4.68$ 3.46$ 4.02$ 4.19$ 4.27$ Annual SCE Cost - Diesel 9,042$ 9,566$ 9,679$ 8,662$ 6,189$ 7,075$ 7,491$ 8,024$

Annual SCE Cost - Gasoline 13,234$ 13,843$ 11,759$ 11,015$ 7,954$ 9,445$ 9,855$ 10,045$ Annual Fuel Allocation Adjustment 490$ 614$ -$ -$ -$ -$ -$ -$

Annual Oil / Propane 545$ 394$ 345$ 219$ 235$ 268$ 277$ 284$

Total 23,312$ 24,417$ 21,783$ 19,896$ 14,378$ 16,789$ 17,622$ 18,352$

*http://www.eia.gov/ AEO (Annual Energy Outlook) - Forecasts - Data Table; April 2016

Recorded Forecast Utilizing 2015 Consumption Levels

13

E. Aircraft Operations 1

SCE forecasts $7.604 million of expenses in 2018 for aircraft operations. Aircraft operations 2

expenses are forecast to increase $841,000 over 2015 expenses due to an increase in flight hours and 3

corresponding increases in fuel, parts, and maintenance. Flight hours are forecast to increase due to 4

T&D initiatives related to helicopter assisted pole sets, and line patrol and maintenance work. 5

Additionally, with an increased focus on safety, SCE added an Assistant Chief Pilot to improve aviation 6

safety by adding safety protocols that require an Assistant Chief Pilot to support the Chief Pilot and 7

allow for the Chief Pilot to also function as the Aviation Safety Manager. 8

14

V. 1

CAPITAL 2

SCE forecasts $27.813 million (nominal dollars) in capital expenditures for 2016-2020 related to 3

the projects identified in Table V-5 below. 4

Table V-5 Transportation Services Department Capital Forecast

A. Vehicle Electrification Program 5

1. WBS Indicator of Project and Capital Forecast12 6

Table V-6 Vehicle Electrification Program Forecast

2. Description 7

SCE supports California’s electric vehicle green transportation and “Zero Emissions 8

Vehicle” adoption goals by moving vehicle technologies from SCE’s Advanced Technologies 9

Transportation Electrification testing center into the active fleet. In addition, SCE supports the Edison 10

Electric Institute’s initiative for Fleet Electrification calling for member utilities to allocate a minimum 11

of five percent of their annual fleet acquisition dollars towards plug-in vehicles. While the availability of 12

electrified passenger vehicles continues to increase, electrification technologies for pickup trucks, vans, 13

medium and heavy duty trucks are still evolving. SCE takes advantage of these emerging technologies 14


2016 2017 2018 2019 2020 TotalVehicle Electrification Program COS-00-TS-TS-VP6943 384 339 292 216 1,230

EV Fleet Charger COS-00-TS-TS-FE0000 15 138 160 166 173 653Vehicle Leasehold Capital

Improvements COS-00-TS-TS-VP69421,009 3,053 1,989 1,181 1,208 8,439

TSD Garage Tools & Equipment COS-00-TS-TS-TS0001 431 781 464 482 502 2,659Aircraft Operations Program COS-00-TS-TS-AIR001 1,050 956 1,351 1,261 460 5,078

Helicopter Lease Buyout COS-00-TS-TS-267202 1,614 4,955 3,185 9,754Total 2,504 6,925 9,257 6,568 2,558 27,813

Project Title Project No.Capital Expenditures (Nominal $000)

2016 2017 2018 2019 2020 TotalCOS-00-TS-TS-VP6943 384 339 292 216 1,230

Project No.Capital Expenditures (Nominal $000)

15

by, in some cases, modifying an original equipment manufacturer (OEM) vehicle. Modifying OEM 1

vehicles to add emergent electrification technologies typically requires SCE to purchase the base vehicle 2

and/or the aftermarket electrification equipment. TSD’s Vehicle Electrification Program, developed in 3

2015, implements aftermarket vehicle electrification modifications, such as electric transmission power 4

take-off implementations, plug-in anti-idle systems, battery electric vehicle conversions. This project 5

also includes piloting aftermarket electrified vehicles. 6

3. Scope and Forecast 7

SCE forecasts $1.230 million for electrification projects. This forecast includes 8

modifying 22 vehicles in 2017 with plug-in anti-idle systems at an average cost of $17,455 per unit and 9

acquiring three new large plug-in trucks in 2018, 2019, and 2020 for $339,000, $292,000 and $216,000 10

each. 11

B. Electric Vehicle Fleet Chargers 12


Table V-7 EV Fleet Chargers Forecast

2. Description 14

As of June 1, 2016, SCE has 288 plug-in electric units in the fleet. To charge these 15

vehicles, SCE has 337 fleet chargers across the service territory. The Electric Vehicle Fleet Charger 16

program, developed in 2015, supports the purchase of vehicle charger hardware for new and 17

replacement chargers.14 Chargers must support SCE’s electric vehicle fleet. This program reinforces 18

fleet electrification activities underlying CARB, EPAct, and EEI. 19


SCE forecasts $653,000 for the purchase of six charger heads in 2016 and 60 charger 21

heads per year at an average of $2,300 per charger between 2017 and 2020. The average rate per charger 22

is based on current market rates for a blend of non-connected and connected charger heads. To support 23


14 The electric vehicle fleet chargers discussed in this volume differ from the employee/public vehicle chargers discussed in Corporate Real Estate SCE-07 Volume 03.

2016 2017 2018 2019 2020 TotalCOS-00-TS-TS-FE0000 15 138 160 166 173 653


16

2016 2017 2018 2019 2020 TotalCOS-00-TS-TS-VP6942 1,009 3,053 1,989 1,181 1,208 8,439


the addition of electric vehicles to our fleet, chargers will be installed at 79 sites. Charger heads vary 1

from simple basic non-connected chargers (plug and charge) to smart chargers connected to payment 2

processing centers that can be used for both fleet vehicles and employee/visitor pay-charging stations. 3

The fleet chargers which SCE typically installs are non-connected chargers dedicated to our fleet. 4

However, connected chargers with authorization systems are required at certain locations where 5

chargers need to be positioned outside of a secure fence. 6

C. Vehicle Leasehold Capital Improvements 7


Table V-8 Vehicle Leasehold Capital Improvments Forecast

2. Description 9

SCE’s Vehicle Leasehold Capital Improvements program includes modifications made to 10

a leased vehicle to improve the functionality of the vehicle, support operational needs or meet a 11

regulatory requirement16. A major component replacement or overhaul that significantly increases the 12

value of the vehicle (e.g. replacement of an engine with a new engine) qualifies as a capital 13

improvement. An example of a capital improvement to comply with regulatory requirements is 14

retrofitting a vehicle to comply with CARB standards (see Section I.C.1.a). An example of a capital 15

improvement to enhance a vehicle’s function is the addition of a hydraulic front axle drive system to 16

convert a 6x4 truck into a 6x6 truck. 17

Vehicles are evaluated case by case for replacement or capital improvement. Sometimes 18

(particularly for certain costly, customized vehicles), replacing an engine or chassis is a lower cost 19

option compared to purchasing a new replacement vehicle, doing nothing, using alternative work 20

methods, or renting a comparable vehicle. For higher volume and lower cost work vehicles, an overhaul 21

is often not practical due to the deteriorated condition of the remaining vehicle components. CARB rules 22


16 Refer to Federal Accounting Standards Advisory Board, p. 21, point 37 for guidelines on capitalizing these types of improvements or overhauls (http://www.fasab.gov/pdffiles/sffas-6.pdf)

17

have caused certain engines to be deemed obsolete prior to the end of the vehicle’s expected useful life. 1

While engine replacements with newer engine models can be difficult due to size or complexity (e.g. 2

additional emissions systems), SCE seeks to pursue retrofits whenever feasible. 3


SCE requests $8.439 million for Vehicle Leasehold Capital Improvements in 2016-2020 5

as shown in Table V-9 below. 6

This forecast includes $400,000 per year (2015 dollars escalated to nominal) to overhaul 7

major components on approximately 30 medium and heavy duty vehicles annually. Because major 8

component overhaul is conducted in response to component failures, historical overhauls were used to 9

develop this forecast. SCE completed an average of 32 major component overhauls in 2013-2015. 10

We forecast $2.471 million for the overhaul of 16 underground cable pulling units in 11

2016-2018 at $150,000 each in lieu of purchasing higher cost new replacement units. 12

We forecast $2.122 million for 10 CARB retrofits per year at $50,000 each (2015 dollars 13

escalated to nominal) in 2017-2020 and $798,000 for 39 CARB Cleaire Longmile PM Filter recall 14

replacements at $20,000 each (2015 dollars, escalated to nominal) as required by CARB §2022 and 15

§2025 as discussed in Section I.C.1.a)(1) of this testimony. 16

The remaining $949,000 is needed for vehicle enhancements to meet emerging business 17

and operational needs. 18

Table V-9 Vehicle Leasehold Capital Improvements Forecast

(Nominal $000)

2016 2017 2018 2019 2020 Total Major Component Overhauls 404 410 419 430 439 2,101 Underground Cable Pulling Units Overhaul 404 1,229 838 2,471 CARB Retrofits - 512 524 537 549 2,122 CARB Cleaire Longmile PM Filter Replacements 101 697 798 Vehicle Enhancements 101 205 209 215 220 949 Total 1,009 3,053 1,989 1,181 1,208 8,439

* Due to rounding, subtotals may not sum to the totals

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D. Garage Tools and Equipment 1


Table V-10 Garage Tools and Equipment Forecast

2. Description 3

This program includes the purchase and/or replacement of tools and equipment for SCE’s 4

41 vehicle maintenance facilities throughout the service territory. There are three major types of tools 5

and equipment accounted for in this program: 6

• Diagnostic equipment (e.g., engine analyzers, break system micrometers, gas 7

analyzers, and diagnostic software). 8

• Shop hand tools (e.g., wrenches, pneumatic tools, and other hand-held tools). 9

• Shop equipment (e.g., tire machines, tire balancers, brake lathes, drill presses, 10

welders, and bench sanders). 11

As vehicles, maintenance tools and related technologies evolve, TSD adds and replaces 12

tools and equipment to maintain vehicles, increase repair efficiency and accelerate vehicle diagnostics. 13

Certain tools and equipment also support worker safety by providing a productive and sound work 14

environment. 15

The Garage Tools and Equipment Program also includes the equipment and related work 16

to comply with air conditioning refrigerant recovery regulations.18 TSD shall replace air conditioning, 17

refrigerant recovery, recycling and recharging equipment, to be compatible with the new HFO-1234yf 18

refrigerant (Hydrofluoro olefin Opteon™ YF). HFO-1234yf is a low Global Warming Potential (GWP) 19

refrigerant for automotive air-conditioning systems. In addition, we shall replace obsolete opacity 20


18 EPA – Title 40 Code of Federal Regulations, Part 82; https://www.gpo.gov/fdsys/pkg/CFR-2015-title40-vol18/xml/CFR-2015-title40-vol18-part82-subpartB.xml.

2016 2017 2018 2019 2020 TotalCOS-00-TS-TS-TS0001 431 781 464 482 502 2,659


19

machines needed to meet CARB Heavy Duty Vehicle Inspection Program (HDVIP)19 requirements. 1


SCE forecasts $2.659 million for the Garage Tools and Equipment Program, including 3

$425,000 (2015 dollars, escalated to nominal) annually for the purchase of new and replacement garage 4

tools and equipment. The forecast is based on historical spend. SCE spent approximately $430,000 in 5

2015. The remaining $306,927 of the total forecast in 2017 is for the scheduled replacement of 15 6

opacity machines (at $10,000 each in 2015 dollars) and the replacement of 30 air conditioning, 7

refrigerant recovery, recycling, and recharging equipment (at $5,000 each in 2015 dollars) to comply 8

with the aforementioned regulations. 9

E. Aircraft Operations Program 10


Table V-11 TSD Aircraft Operations Forecast

2. Description 12

The Aircraft Operations Program consists of aircraft capital maintenance, an aircraft 13

camera replacement, and an unmanned aircraft system (UAS) pilot. 14

a) Aircraft Capital Maintenance 15

SCE owns and operates a fleet of six helicopters, comprising three American 16

Eurocopter A-Star 350’s (AS 350), two American Eurocopter EC 135s (EC 135), and one Bell 17

205A1++. C. This program includes the purchase and overhaul of significant aircraft components 18

exceeding $2,500 for aircraft owned or leased by the company. The purchase and overhaul of capital 19

components is needed to maintain SCE’s fleet of helicopters and comply with manufacturers’ 20

maintenance standards and Title 14 Code of Federal Regulation subchapter C part 43. Examples include 21

components related to main rotor systems, tail rotor systems, power plant, power transmission, avionics, 22

and airframe. 23

19 CARB Heavy Duty Vehicle Inspection Program (HDVIP) - Title 13 CCR, sections 2180-2189;

http://www.arb.ca.gov/enf/hdvip/ccr_title_13_hdvip.pdf 20 Refer to WP SCE-07, Vol. 7, p. 6.

2016 2017 2018 2019 2020 TotalCOS-00-TS-TS-AIR001 1,050 956 1,351 1,261 460 5,078


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b) Aircraft Camera Replacement 1

The Aircraft Operations Program also includes expenditures to replace an existing 2

aircraft camera with a radiometric infrared (IR) device. The current camera is ten years old and its 3

design lags behind current technology. This camera provides no definitive temperature information and 4

only displays standard definition images in black, white, and varied shades of gray. Such a camera lacks 5

a true temperature baseline from which to draw a reference and leaves the viewer unable to interpret and 6

diagnose the problem. The replacement camera with IR device supports SCE’s safety and reliability 7

initiatives by providing current thermal imaging technology and accurate real-time temperatures of 8

components during circuit inspections. The IR device measures the thermal radiation (radio-metric) and 9

provides accurate temperature data at over two million points in the image. This feature provides 10

quantitative temperature data during capture and is recorded and allows for detailed analysis. We have 11

learned that such a capability is needed to determine the true current carrying capability of a power line. 12

This tool will improve SCE’s emergency response, inspection and early fault detection capabilities, and 13

contribute to enhanced system reliability. 14

c) Unmanned Aircraft System Pilot 15

Aircraft Operations includes an Unmanned Aircraft System (UAS) pilot. SCE 16

participates in the Edison Electric Institute UAS forum, a group of member utilities exploring the 17

integration of UAS capabilities with utility operations. The potential uses of UAS include infrastructure 18

inspection and maintenance, survey and GIS data acquisition, security, environmental and regulatory 19

compliance, and emergency response. The potential benefits of integrating UAS with utility operations 20

include safer work practices, more efficient work methods, greater proficiency for patrolling lines and 21

conducting environmental studies, and improved system reliability. 22

UAS includes three components: (1) unmanned Aircraft vehicles, (2) flight 23

controls, and (3) payload. In 2017, SCE plans to procure a new UAS with flight planning software and 24

post production software to process sensor data into useful products, such as digital surface models and 25

digital elevation models. The vehicle is the unit, the flight controls are used by an operator to direct the 26

vehicle, and the payload is sensor capability. Sensor is a broad term that encompasses a camera and 27

imaging. 28

In the Federal Aviation Administration Modernization and Reform Act of 2012 29

(FMRA), the federal Director of the Department of Transportation was authorized to exempt small UAS 30

from current regulation, so that small UAS can be carefully introduced into the National Airspace 31

21

System. SCE filed a section 333 Exemption with the FAA in January 2016 for an exemption to fly small 1

UAS as part of the Federal Aviation Administration Modernization and Reform Act of 2012. This 2

exemption would allow the company to fly UAS to support SCE’s infrastructure. In June 2016, the FAA 3

amended regulations to allow the operations of UAS in the National Airspace System. SCE will operate 4

our UAS under the Section 333 or under the new regulations as they may apply. 5


SCE forecasts $5.078 million for the Aircraft Operations Program in 2016-2020 as shown 7

in Table V-12 below. This forecast includes $3.824 million for aircraft capital maintenance including 8

$2.122 million for aircraft components and $1.702 million to overhaul three turbine engines for the three 9

AS 350’s. These overhauls are a part of regular maintenance cycles and are forecasted for these 10

timeframes based on projected flight hours.21 There are no overhauls forecast for the EC 135’s or the 11

Bell 205A1++ in this period. This forecast also considers $625,000 in 2018 for an IR camera. SCE 12

forecasts $629,000 to purchase six UAS to support the UAS pilot. 13

Table V-12 Aircraft Operations Program Forecast

(Nominal $000) 2016 2017 2018 2019 2020 Total Aircraft Components 495 240 517 518 352 2,122 Turbine Engine Overhaul 555 563 584 1,702 Radiometric IR Camera 625 625 UAS Pilot 153 208 159 108 629 Total 1,050 956 1,351 1,262 460 5,078

F. Helicopter Lease Buyout 14


Table V-13 Helicopter Lease Buyout Forecast

21 SCE forecasts 500 annual flight hours per year for the AS350B3’s and 350 annual flight hours for the

EC135’s.


2016 2017 2018 2019 2020 TotalCOS-00-TS-TS-267202 1,614 4,955 3,185 9,754


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2. Description 1

Helicopters are vital to the operation and maintenance of SCE’s system. SCE needs 2

aircraft as a normal part of operations in the diverse service territory we serve and the three states we 3

traverse to connect our system to other utilities and generators. The geography is diverse and much of it 4

is remote. Helicopters allow us to access remote locations within hours when air support is required. 5

Lease buyouts are a standard part of the lifecycle of aircraft assets. Historically, SCE has 6

entered into 10-year lease agreements to acquire new aircraft. The lease agreements include an option 7

for an early buyout from one to two years prior to the end of the lease term. The buyout amount is a 8

fixed sum that approximates the balance of the lease principal. If the early buyout option is not 9

exercised, SCE must decide at the end of the lease term whether to (1) return the aircraft to the lessor, 10

(2) enter into a new lease agreement for the aircraft, or (3) purchase the aircraft at the fair market value. 11


SCE forecasts $9.754 million in 2016-2020 for early buyouts for two AS 350 aircraft and 13

lease end buyouts for two EC 135 aircraft as shown below in Table V-14. The forecast for the early 14

buyouts are based on the fixed amount stipulated in the leases. We anticipate the fair market value of the 15

AS 350 aircraft at lease end to be higher than the early buyout amount. Therefore, we are exercising early 16

buyout in those cases. The forecast for the lease end buyouts of the EC 135 aircraft are based on the 17

estimated fair market value of those models. For these aircraft, the fair market value at lease end is 18

expected to be less than the early buyout amount. Therefore, we plan to purchase these aircraft at lease 19

end. 20

Table V-14 Helicopter Lease Buyout

2016-2020 Forecast by Aircraft Type and Year (Nominal $000)

* Due to rounding, subtotals may not sum to the totals

2018 General Rate Case - Southern California Edison · 12 SCE requests $27.8 million (nominal...

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