Application No.: A.13-11-003Exhibit No.: SCE-08, Vol. 03, Pt. 2 �Witnesses: R. Park

A. Riddle

(U 338-E)

2015 General Rate Case

Financial, Legal, and Operational Services (FL&OS) Volume 3, Part 2 Operational Services – Capital

Before the

Public Utilities Commission of the State of California

Rosemead, CaliforniaNovember 2013

Errata to: SCE-08, Vol. 3, Pt. 2and SCE-08, Vol. 3, Pt.2R

Application No.: Exhibit No.: SCE-08, Vol. 03, Pt. 2 Witnesses: R. Park

A. Riddle

(U 338-E)

2015 General Rate Case

Financial, Legal, and Operational Services (FL&OS) Volume 3, Part 2 Operational Services – Capital

Before the

Public Utilities Commission of the State of California

Rosemead, CaliforniaNovember 2013

Errata to: SCE-08, Vol. 3, Pt. 2

2

B. Corporate Real Estate 1

This section of testimony addresses the capital forecasts for activities sponsored by Corporate 2

Real Estate (CRE). The capital forecast for CRE activities from 2013 through 2017 is $480.9 million. 3

CRE is committed to providing a safe, productive, and cost-effective work environment which allows 4

SCE’s workforce to support SCE’s core business of providing electrical service to our customers. CRE 5

activities are based on two main principles, strategic facility planning and asset management. Key 6

elements of CRE’s process for accomplishing the goals are: 7

� Managing its assets by aligning available facility and equipment resources with SCE’s 8

workforce needs; 9

� Establishing and maintaining internal standards for planning and operating facilities to 10

maximize the value of each facility and its component systems throughout their respective 11

life cycles; and 12

� Complying with regulatory requirements and Company policies and standards for building, 13

planning, construction, operation, maintenance and occupancy. 14

Due to the delay in the decision on SCE’s 2012 GRC, Operational Services’ allocation of capital 15

funds was restricted by uncertainty surrounding what funding the Commission would authorize for 16

SCE’s proposed facility capital projects. As a result, CRE’s planned capital expenditures on various 17

projects were delayed or deferred, as outlined in greater detail below. This is reflected by CRE’s capital 18

spending in 2012 and 2013 coming in at lower levels than was otherwise planned and anticipated. A 19

consistent level of funding from 2015-2017 is essential to prevent permanent deterioration of our 20

facilities and avoid larger expenditures in the future to repair critical defects that otherwise could have 21

been avoided by earlier remedial action. Although we continued to provide safe and reliable service 22

during 2012, the lower level of spending we realized that year is not sustainable. The funding requested 23

in this 2015 GRC will allow SCE to continue addressing the challenges of sustaining and improving the 24

condition of its non-electric building portfolio. There are several factors underlying CRE’s capital 25

forecast as outlined below. 26

1. Facility Planning 27

The strategy and planning needed to address and anticipate facility requirements are 28

challenging due to, among other things: 29

� Changing infrastructure development and replacement plans to address evolving 30

needs in SCE’s electrical system which in turn impacts facility requirements; 31

$506.7

3

� Emerging corporate initiatives such as SmartConnect™, and Transmission and 1

Distribution Operating Unit’s (TDOU’s) Advanced Technology efforts to advance the 2

smart grid and plug-in electric vehicles; and 3

� Changing regulatory requirements which necessitate new facility plans. 4

The primary driver of facility requirements is the number of personnel that need to be 5

housed in those facilities. In this GRC, we forecast a decrease of 1,600 office-based SCE employees 6

between year-end 2012 and year-end 2015. CRE presently projects the need for approximately 14,000 7

seats to be used by office based SCE employees and supplemental workers during the 2013 to 2017 8

timeframe with the balance of SCE’s workforce working at job sites in the field. Several capital projects 9

in our testimony support the consolidation and reconfiguration of facilities for more effective use in light 10

of the reduced size of SCE’s workforce. 11

2. Asset Management 12

Prudent and effective management of SCE’s facility assets is essential to provide safe 13

environments for SCE’s workforce and customers. Consistently meeting those needs combined with 14

heavy and consistent use of SCE facilities requires continuous investment in managing, maintaining, and 15

repairing SCE’s non-electric facility portfolio. 16

CRE presently operates and maintains 226 non-electric buildings. As noted in Table I-1 17

below, the average age of our non-electric buildings is 36 years, and over 60 percent of our facilities are 18

greater than 30 years old. Our oldest site, the Alhambra Combined Facility complex, is 83 years old. 19

The combination of intense use and aging facilities drives the capital maintenance expenditures 20

described herein. 21

1,400

5

Based on the 2013 assessment, the FCI score for the aggregated SCE non-electric 1

portfolio is shown in Table I-2 below. As an illustrative example, if a building structure and system 2

suffer from deficiencies costing $31,000 to repair, and the replacement cost of the same building and 3

systems is valued at $100,000, the FCI, expressed as a percentage, would be: 4

FCI = $31,000/$100,000 = 0.31 or 31 percent 5

Table I-2 Portfolio FCI Score

Description 2006 2013*Bldg for Bldg Match 25% 27%Previous Bldgs Plus Sites Aquired Since 2006 N/A1 22%

All sites including substations N/A2 22%* Preliminary Report �1 2006 report did not include bldgs not yet aquired2 Substations were not in CRE jurisdiction in 2006

As noted above, an FCI of 5% or less is considered “good.” Scores of 10 to 30 percent 6

are “poor,” and scores of 30 percent or higher signify a critical state and immediate need for massive 7

investment in or complete replacement of the facility. 8

3. Capital Project Estimating Methodology 9

The cost estimating methodologies employed by CRE to determine capital funding 10

requirements for construction, remodeling, and maintenance projects are detailed in this section. 11

CRE follows industry standards and best practices in developing estimates for capital 12

remodel and construction projects. The two primary methods of estimating capital project costs are 13

planning estimates and competitively bid contract pricing. 14

a) Planning Estimates 15

New or future year projects utilize planning estimates to forecast costs. The 16

purpose of a planning estimate is to facilitate budgetary and feasibility decisions. The development of 17

planning estimates includes a description of the scope of the project addressing geographic location, 18

building size, planned remodel area in square feet, vehicle parking and other workforce and/or customer 19

accommodation requirements, and intended facility use. These estimates are prepared to develop project 20

budgets and are based on historical data, current market rates, internal support organization data, and 21

third party construction experts. 22

0 percent to five percent5 % to 10 percent areconsidered "fair". Scores of

considered

20

parking spaces, especially when large events are held. This high volume of pedestrian and vehicular 1

traffic in the existing lots exposes GO5’s occupants and visitors to safety hazards that would be 2

ameliorated by the new parking structure. This current lack of parking also reduces the number of 3

employees who can effectively use GO5 and limits SCE’s ability to optimize its use. 4

As the GO5 site is located in an area with limited off-site parking, the 5

construction of a parking structure is the best solution to ameliorate the safety issues and maximize 6

efficient use of GO5. By constructing a new partial subterranean parking structure on the surface 7

parking lot located at the southern end of the GO5 site, 450 parking spaces would be added to allow this 8

asset to accommodate more employees and optimize use of GO5. The parking structure will be 9

designed in accordance with SCE’s energy efficiency policy to include the following sustainable 10

opportunities and green concepts: 11

� Shading of the top level with Photovoltaic panels to provide electricity 12

to the structure; 13

� Day-lighting opportunities with reflective panels and open 14

architecture; 15

� Spaces for carpool and electric vehicles with outlets for recharging; 16

� Use of recycled building materials; 17

� Use of high solar reflective concrete and paving materials to reduce 18

heat; and 19

� Educational features to provide awareness of green building practices. 20

This 450-space parking structure at GO5 will require a total expenditure of 21

$10.9 million. We forecast an expenditure of $4.7 million for designing, engineering and permitting the 22

project and commencing the land excavation in 2014. In 2015, we estimate expenditures of $6.2 million 23

to construct the project, complete work on electrical/mechanical systems and support, and close out the 24

project. 25

(3) GO5 Food Service 26

Approximately 800 HR and CS employees and supplemental workers are 27

housed in GO5. Currently, GO5 offers no food services. It does have lunch room areas designated on 28

each floor where staff can bring their own meals, store it in refrigerators, and warm items in 29

microwaves. The surrounding area offers limited food service options and the remote distance of 30

restaurants creates safety issues for GO5 occupants who struggle to fit traveling to the restaurant, 31

containing 450 spaces

300

after taking into account the existing surface parking that will be displaced by theconstruction of the parking structure. The parking structure will

allow SCE to

34

maintenance records. In the modern work environment, all employees from entry level to management 1

require convenient and ergonomically compliant access to a computer or terminal to be fully productive. 2

f) Administrative Facilities Infrastructure – Upgrade Program (Field Facilities) 3

During CRE’s long-range facility planning, the following Field Facility projects 4

have been identified to support efficient use of facilities, safe work environment and asset preservation. 5

Table I-16 Administrative Facilities Infrastructure Upgrade Program (Field Facilities)

2013-2017 Forecast Capital Expenditures (Nominal $000)

2013 2014 2016 2016 2017 TotalRancho Cucamonga Office Building 5,000 5,000Hotel Workspace 1,500 2,500 4,000AROF Master Plan 4,700 18,100 22,800AROF Secure Storage 5,000 5,000LBRO Improvements 5,000 5,000Rennovate SSID Administration Building 520 4,600 5,120Totals 5,000 5,000 6,720 30,200 46,920

Capital Expenditures ($000s)Project No. COS-RE-NA-698200

(1) Rancho Cucamonga Office Building Optimization 6

The Leased Facility Optimization program is designed to align our leased 7

spaces within the SCE portfolio with our operational efficiencies that support delivery of service to our 8

approximately 5 million customers. CRE seeks to reduce overhead expenses while maximizing the use 9

of vacant spaces at other SCE facilities to support SCE’s Operational Excellence initiatives. In support 10

of the projected reduction of seated employees across the company, CRE plans to divest a significant 11

portion of its leased office space and accommodate the remaining employees to the greatest extent 12

possible, in remaining facilities during the 2013-2017 timeframe. 13

The Rancho Cucamonga Office Building lease is scheduled to expire in 14

2015 and the possibility of exiting this lease is being evaluated. Exiting this lease will help reduce 15

operating expenses while maximizing the use of vacant space at SCE owned facilities. SCE plans for 16

the employees currently seated at the Rancho Cucamonga Office Building to be consolidated into spaces 17

at other SCE locations which have vacancies as a result of Operational Excellence initiatives. Exiting 18

2015

62

percent of the seated employees. For the remaining employees, SCE maintains ergonomic furniture 1

parts that can be substituted into the work areas to meet their requirements. 2

Funding is required to support this replacement and reconfiguration work, and to 3

supplement our existing installed base of furniture. In 2013, ergonomic requests and replacements were 4

centralized within CRE in order to improve contracts terms due to larger scale purchases and more 5

accurately track usage. The change in location of cost centers among SCE departments for ergonomic 6

furniture has a net zero impact on the overall expenditure amount. Our forecast total for the Ergonomic 7

Furniture Blanket for the period of 2013 through 2015 is $1.6 million. Estimated annual expenditures 8

are as follows: $300,000 in 2013; $306,696 in 2014; $313,682 in 2015; $320,436 in 2016 and $326,825 9

in 2017. 10

e) Various Major Structures 11

Table I-30 Various Major Structures Projects

2013-2017 Forecast Capital Expenditures (Nominal $000)

CRE’s responsibilities over SCE’s non-electric building portfolio also includes 12

the many thousands of individual building system components such as electrical switchgear, 13

transformers, distribution panels, plumbing, doors, windows, heating, ventilation, air-conditioning 14

systems, roofing, walls, asphalt/concrete, and interior furnishings. 15

The scope of work to maintain these individual building system components to 16

protect the safety and health of SCE’s employees and the general public is extensive. Our routine 17

preventive maintenance programs, capital repairs and replacements, and strategic planning activities 18

generally forecast our facilities’ needs and keep most of our facilities in reasonably safe operating 19

condition much of the time. However, there are still occasions each year when unplanned major capital 20

work must be undertaken. 21

Examples of the type of work funded by this work order include: 22

� GO 3 Roof Upgrade – ($1.5 million) – 2012 23

� Garage Office Safety Remodel – ($2.3 million)- 2012 24

Application No.: Exhibit No.: SCE-08, Vol. 03, Pt. 2� Witnesses: R. Park

A. Riddle

(U 338-E)

2015 General Rate Case

Financial, Legal, and Operational Services (FL&OS) Volume 3, Part 2 Operational Services – Capital

Before the

Public Utilities Commission of the State of California

Rosemead, CaliforniaNovember 2013

Errata to SCE-08, Vol. 3, Pt. 2R

� OPERATIONAL SERVICES

CAPITAL FORECAST 2015

� Corporate Real Estate o Headquarters $98.5 Million o Field Facility Asset Preservation $63.0 Million o Critical Facilities $60.2 Million o Blankets $256.3 Million o Projects Under $1 Million $2.9 Million

� Supply Management $3.4 Million

� Transportation $36.0 Million

�

$282.6$282.1

2013-2017

96.11 128.82 153.19 170.50 41.89 92.5

$546.19

1,773 2,090

78a

h) IT Equipment and Infrastructure

Table-34A IT Equipment and Infrastructure (CRE Projects)

2013-2017 (Nominal $000)

Providing IT equipment and infrastructure at our new and existing

non-electric facilities is an essential part of optimizing use of such facilities by SCE

personnel. Examples of such IT equipment include redundant fiber installation, SONET

terminal, router core, racks, cable and fiber trays, radio/cellular/phone/VOIP systems,

access point/data infrastructure, communication rooms (main and supplemental) and

communication closets and associated cabling, grounding, fire safety, ventilation and

power (UPS/DC) systems and are not included in the estimated costs of CRE capital

projects described above.

Particularly relevant to the forecast period is the advent of new,

more mobile, styles of working, which have driven the need for upgrades to IT equipment

and infrastructure in several existing and/ or new buildings. In addition, as described in

SCE-08, Volume 3, Part 1, CRE expects to exit several leased office spaces and relocate

employees to other SCE owned facilities. As a result, the density of increased occupants

will drive the need for additional IT equipment and infrastructure to support productivity

by SCE personnel.

CRE forecasts $26.3 million for IT equipment and infrastructure to

accommodate all projects in the SCE’s non-electric facility portfolio. These forecast

expenditures are not included in the capital project cost estimates discussed in other

testimony and related workpapers (e.g. the project planning estimates). The forecast is

based on an average ratio of historical IT expenditures to the total annual recorded costs

respectively. The average IT expenditures to annual project cost ratio is then applied to

the 2014-2017 forecast for CRE’s capital projects Where IT equipment and

infrastructure costs were not typically incurred for certain categories of projects, they

2014 2015 2016 2017 TotalCIT-00-OP-NS-000154 5,646 7,684 6,472 6,524 26,326

Project No.

78a

CRE

4

78b

were excluded from this forecast. Hence, the forecast does not include projects within

the “Blankets” category (except for the Various Major Structures) or “Projects Under 1

Million” category. The table below provides an annual breakdown of the IT equipment

and infrastructure forecast from 2014-2017.

Table 34B IT Equipment and Infrastructure Forecast

2013-2017 (Nominal $000)CIT-00-OP-NS-000154 2014 2015 2016 2017 2014-2017 TotalCRE 2014-2017 Forecast $88,633 $106,618 $97,432 $98,739 $391, 422Less: Blankets & Projects Under 1 Million Category* ($41,580) ($42,584) ($43,501) ($44,369) ($172,034)Adjusted CRE Forecast $47,053 $64,033 $53,931 $54,371 $219,3882010-2012 Average IT spend- 12% $5,646 $7,684 $6,472 $6,525 $26,326* Excludes Various Major Structures Blanket

78b

4