The Public Service Commission of the District of Columbia, in a Nov. 9 order, granted the joint application filed in July by Exelon’s (NYSE:EXC) Potomac Electric Power Company (Pepco) and the District of Columbia Department of Transportation (DDOT) (together referred to as the joint applicants) for approval of the First Biennial Underground Infrastructure Improvement Projects Plan and the financing order application.
The commission noted that the order also accepts the 2014 and 2016 joint stipulations filed by the Office of People’s Counsel (OPC), Pepco, and DDOT with respect to certain technical aspects of system design, construction, and operation of the Biennial Plan and the D.C. Power Line Undergrounding (DC PLUG) Education Plan.
As noted in a Nov. 13 Pepco statement, the DC PLUG initiative is a $500m joint undertaking by the District and Pepco, with Pepco’s portion being $250m and the District’s portion being $187.5m; DDOT will provide up to an additional $62.5m from its capital improvement budget.
The DC PLUG initiative includes plans for placing select power lines underground in Wards 3, 4, 5, 7, and 8 over a six- to eight-year period, Pepco said, adding that construction will begin next year.
As noted in the order, the District mayor on May 17 signed into law temporary legislation titled the Electric Company Infrastructure Improvement Financing Emergency Amendment Act of 2017 (referred to as the Emergency Act). The mayor on May 19 signed the “New Act,” which is identical to the Emergency Act and was intended to be the permanent Act, the commission said. The New Act was subject to a 30-day congressional review period before it could become effective, the commission said, adding that the Emergency Act became effective during that review period, which expired on July 10, without any congressional action. The New Act, therefore, became effective on July 11.
The commission added that the New Act requires Pepco and DDOT to jointly file, every two years, an application for the commission’s approval of a biennial Underground Infrastructure Improvement Projects Plan consisting of plans for DDOT’s underground electric company infrastructure improvement activity and Pepco’s infrastructure activity that are to be undertaken in the two-year period.
The commission said that it has determined that the application, supplemented in some instances by explanations in data responses, contains all of the basic elements required by the New Act.
The New Act requires that the first Biennial Plan include “a measurement and ranking of each overhead and combined overhead-underground mainline primary and lateral feeder in the District since January 1, 2010 through the most recently completed calendar year, using” certain selection criteria.
The commission added that the joint applicants explained in the Biennial Plan that they began the feeder selection process by ranking each of the company’s overhead – and combined overhead/underground – feeders according to the System Average Interruption Frequency Index (SAIFI), System Average Interruption Duration Index (SAIDI), and customer minutes of interruption per dollar (CMI/$).
The feeder ranking presented in the application is based on reliability performance data from Jan. 1, 2010, through Dec. 31, 2016, and includes MSOs, the commission said.
The U.S. General Services Administration (GSA) rejects the feeder ranking model as an appropriate basis for feeder selection, complaining that the feeder ranking is based on past performance rather than future performance. The commission said that the Apartment and Office Building Association of Metropolitan Washington (AOBA) also attacks the use of historical data in the feeder ranking, contending that each storm is unique in terms of its impact on the system. Pepco responds that the protests’ “suggestion that the first Biennial Plan data should have excluded MSOs and used data other than historical data is contrary to the specific requirements of the Undergrounding Act.”
The commission added that no party has presented sufficient evidence that the feeder ranking included in the joint application is incomplete, erroneous, or non-compliant with the New Act. The commission said that it concludes that the challenges by GSA and AOBA are without merit and that the application complies with the Undergrounding Act.
The commission also noted that the New Act requires that the first Biennial Plan include overhead electrical cables, fuses, switches, transformers, and ancillary equipment, including poles, that will either be placed underground or removed. The commission said that it concludes that the joint application is in compliance with such requirements, and noted that OPC requests that prior to completion of the final design by DDOT and Pepco of the DC PLUG feeders, stakeholders, such as OPC, be given, for instance, the opportunity to comment on portions of the overhead system that the joint applicants determine should be left overhead.
The joint applicants responded that they do not object to providing OPC the opportunity to comment regarding those matters as long as the opportunity to comment will not delay the program schedule.
The commission added that it is open to allowing OPC an opportunity to comment on the portions of the overhead feeders left overhead and the number of underground switches in the final design, although it is uncertain, at this point in time, whether any such comments may delay the program schedule.
The commission noted that it encourages the joint applicants to consider the comments and enter into discussions with OPC to determine whether the comments will impact the joint applicants’ final determination on the feeders to be left overhead and the number of underground switches in the final design.
The commission said that the joint applicants assert that District customers will realize reliability improvements as a result of placing the feeders underground. Based on seven years of historical reliability data included in a quantitative model used to rank overhead feeders, Pepco contends that customer interruptions that occurred on the overhead primary mainline and overhead lateral portions of the feeders scheduled to be placed underground in the first Biennial Plan will be significantly reduced and the total system reliability performance indices will be improved. The commission added that once the five feeders selected that do not represent opportunity projects are undergrounded, Pepco estimates an 84% improvement in SAIFI and an 83.6% improvement in SAIDI for the entire feeder, “including the sections that will remain [overhead] once the primary mainline and primary lateral lines are placed underground.”
The GSA asserts that the joint applicants have provided no evidence that the completion of the projects in the first Biennial Plan will produce demonstrably significant enhanced reliability benefits for the system compared to the status quo; therefore, the commission must rule on the available evidence showing the opposite – that the reliability benefits associated with the projects will be limited almost exclusively to the few customers served by the selected feeders.
The commission added that it disagrees with the GSA’s contention, noting that as reflected in the testimony of a Pepco witness, the company’s model estimates a 4.79% improvement in SAIFI and a 4.81% improvement in SAIDI and CMI for the entire portion of Pepco’s D.C. system that is comprised of overhead and combined overhead/underground feeders once the feeders in the first Biennial Plan are placed underground.
The commission said that it finds that once the feeders are placed underground, Pepco customers and District residents should experience less storm damage and associated restoration costs, faster electric service restoration when outages do occur since fewer lines will be overhead, and lower economic impact to customers from loss of electric power during major storms.
Discussing projected costs of Pepco’s undergrounding infrastructure improvements, the commission noted that for the first 12-month rate period of the first Biennial Plan, the revenue requirement is about $3.99m. For the second 12-month rate period of the plan, the revenue requirement is about $1.6m, subject to adjustment in the future under the Undergrounding Act.
The commission added that DDOT primarily will perform the required civil engineering, design, and construction work, while Pepco primarily will perform the electrical engineering, design, and construction work. The commission noted that the Biennial Plan says that while the joint applicants intend to cover about 50% of the project costs each, because the civil costs exceed the electrical costs, “Pepco will reimburse DDOT for the Civil Engineering/Program Management Services and other fees DDOT pays to their contractors. Additionally, Pepco will furnish the manhole and conduit material for each DC PLUG initiative project.”
Among other things, the commission said that it concludes that the joint applicants have provided a prima facie showing that the Electric Company Undergrounding Infrastructure Improvement costs Pepco will incur will be prudent.
Noting that no party has challenged or otherwise opposed the itemized estimates of DDOT project costs contained in the first Biennial Plan, the commission said that it finds that those estimates on their face seem reasonable and prudent, recognizing, however, that the estimates are preliminary and based on the development phase of the undergrounding projects.
The commission directed Pepco to report quarterly on all payments made to DDOT, beginning on April 1, 2018.
Discussing the financing order, the commission noted that a DDOT witness explains that under the New Act, DDOT and Pepco will file three Biennial Plans, each with a DDOT charge of $60m – $30m per year. Those plans would total $180m, which is less than the statutory maximum of $187.5m.
Contrary to the GSA’s assertion that there is no mechanism for the return of money to customers if DDOT costs are found to be imprudent, for instance, the commission said that D.C. Code provides that “any amounts collected with respect to the DDOT [Charge] and not expended for DDOT [Costs] as contemplated” are to be refunded to the electric company and thereafter credited to customers as the commission may direct. That provision, coupled with the reporting and review requirements, represents the type of refund mechanism that the GSA complains is lacking, the commission said.