20150812AVU to Staff 50.doc

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/29/2015
CASE NO.: AVU-E-15-05/AVU-G-15-01 WITNESS: Bryan Cox
REQUESTER: IPUC RESPONDER: Rodney Pickett
TYPE: Production Request DEPARTMENT: Asset Management
REQUEST NO.: Staff - 050 TELEPHONE: [phone]

REQUEST:

Regarding the distribution system capital projects for Idaho described in Cox DI, pg. 37, line 17, please provide the following:
The 2012 and 2013 budgeted amounts as compared to the amounts actually booked and included in test year revenue requirement;
a description of the method(s) used to develop individual program budgets;
the differences in program costs and priorities over the past five years;
the specific locations of the proposed investments in the distribution system;
circuit locations, performance data, reliability index(es) data, and available information on asset management/optimization;
a description of how the Company analyzes project costs and benefits;
results of distribution system project costs and benefits analysis;
a description of the Company’s voltage and other power-quality monitoring equipment, including locations within circuits located within Idaho;
copies of the supporting studies that document the necessity for the capital investments;
a description of the Company’s efforts to increase reliability and distribution capacity through operation enhancements or controls including voltage support, frequency response, and the Company’s ability to rotate outages among circuits;
a description of key program elements such as meters, cyber security, outage detection/response, and
a description of the Company’s optimized Distribution Asset Management Program.

RESPONSE:

Please see Staff_PR_050 Attachment K for a tabular presentation of the budgeted and actual capital expenditures for 2012 and 2013 for the aforementioned projects. The budgeted balances are based upon the data used in preparation of Avista’s 2012 general rate case filing (AVU-E-12-08 and AVU-G-12-07). Additionally, Table No. 4 included in Cox DI, pg. 38, presents capital projects on the basis of Avista’s business cases; however, in the 2012 general rate case, the equivalent table was presented on a more disaggregated level, as the business case format was implemented during 2012. Therefore, there will not be a one-to-one relationship between the table provided at Staff_PR_050 and the 2012 testimony.

Throughout the year and in subsequent years the capital expenditures authorized by the Capital Planning Group for a given business case may change to reflect updated prioritization of projects, the release of funds identified by projects as no longer being needed during the given period (as a result of the achievement of cost efficiencies in project completion, project delays, or other similar reasons), or the allocation of previously unavailable funds released by a different project. Therefore, the actual capital additions (transfers to plant) experienced in 2012 and 2013 may not perfectly correspond to the originally budgeted balances.

2. See Staff_PR_050 Attachment A – Selection Criteria for an example the rip Modernization program.

3. See Staff_PR_050 Attachment B – Grid Mod Program Report.

4. See Staff_PR_050 Attachment C – Proposed Locations and Staff_PR_050 Attachment D – Proposed Locations Budget Circuit Data.

5. Please see Staff_PR_050 Attachment E - 2013 Asset Management Distribution Program Review.

6. Asset Management develops asset models that provide the customer internal rate of return, projected Capital and Expense budgets, resource requirements, risk impacts for each alternative examined. The process used to develop the project costs and benefits based on an Asset Management model may best be illustrated by Staff_PR_050 Attachment F - IAM Case Study – Wood Pole Management.

7. The Company will supplement this data response with this information at a later date, as the information is gathered.

8. Avista utilizes a ‘Supervisory Control And Data Acquisition system’ (SCADA) to monitor and control substations and other smart devices, such as smart breakers, smart regulators, etc., recently installed on the distribution system. 44 substations in Idaho are equipped with SCADA. Where available, demand, voltage, current and status of SCADA equipment is continually monitored at the primary level. Distribution Dispatchers are available on a 24/7 basis to respond to system problems and customer outages.

9. Please see the attached documents for the Wood Pole Management program (Staff_DR_050 Attachment G), Feeder Upgrade program (Staff_PR_050 Attachment H), Transformer Change Out program (Staff_PR_050 Attachment I), and Vegetation Management program (Staff_PR_050 Attachment J).

10. Avista uses a variety of operational and capital reinforcement strategies to support service reliability, including efforts to minimize outage frequencies, severity, duration and to support customer service voltages that meet industry standards. Operationally, Avista maintains both transmission and distribution control centers to monitor transmission and distribution system voltages and circuit utilitization. Avista operates various voltage control and reactive devices to effectively and efficiently support system voltage, including load-tap changing transformers, distribution voltage regulators, and both transmission level and distribution capacitor banks. We also maintain a series of programmatic distribution capital reinforcement programs including: a. Segment Reconductor & Feeder Tie-Line; b. Grid Modernization; c. Transformer Change-Out Program (TCOP); d. Wood Pole Management; and e. Underperforming Distribution Circuits. These programs are managed through the Company’s Asset Maintenance, Engineering, System Planning, and Divisional Operation departments. Key metrics such as outage rates (e.g. maifi, saifi), together with equipment failure rates and system planning capacity studies are combined to yield a tiered approach to maintaining system reliability and capacity. In particular, Avista developed the “Distribution Feeder Management Plan (DFMP)” to guide the design and reconstruction of circuits associated with the wood pole management and grid modernization programs. Avista’s ability to restore customer load following a large scale event is rooted in the Company’s “Distribution Planning Standards”. In part, those standards ensure sufficient reserve capacity to restore an urban distribution circuit load from two (2) adjacent sources. That guidance is realized in the Company’s Segment Reconductor and Feeder Tie-Line program where distribution constraints are identified and upgraded on a case-by-case basis. Avista has also actively replaced aging and obsolete transformer equipment to minimize core and coil losses and to align with the Federal Department of Energy guidelines with respect to transformer efficiencies. While we incorporate the philosophy of ‘transformer change-out’ in other programmatic work, the TCOP program addresses individual equipment that fall outside the planning horizon for other capital reinforcement. Lastly, the “underperforming distribution circuits” program addresses the unique challenges of providing reliable service to rural customers. Several Avista distribution circuits are several hundred miles in overall length and transverse remote and heavily forested areas. Maintaining service to these rural customers requires dedicated preventative maintenance programs. Avista monitors the sustained outage rates for these customers and aligns capital reinforcement efforts with specific problem areas. In some instances, lines are rerouted away from inaccessible and heavily forested zones while in other situations, additional circuit protection and isolation devices are installed to minimize outage exposures.

11. The key cyber security program elements which will be used to address cyber security of the distribution system capital projects are:
Security Incident and Event Manager (SIEM) is a tool which collects logs from multiple systems and uses a correlation analysis engine to detect any suspicious activity. When suspicious activity is found, the SIEM sends alerts to response personnel. These alerts are investigated and remediated by security operations personnel.
Network Security Manager (NSM) is an intrusion detection system with sensors that monitor network traffic to look for suspicious activity. Similar to the SIEM, this system generates alerts which are investigated and addressed by security operations personnel.
Firewalls - Multiple layers of firewalls are used to isolate and protect the various office and field networks and the systems contained therein.
Vulnerability Scanning - Systems are periodically scanned using tools which detect known cyber vulnerabilities. Vulnerability findings are remediated as appropriate.
Encryption technology is utilized to protect communication with field devices.
Risk Assessment – At the onset of new technology deployments and at regular intervals thereafter, risk is assessed as it pertains to each type of technology. Before new technologies are selected for deployment, an assessment is made of the cyber security capabilities of potential devices. Security capability is an important factor in the selection of any new device. Any risks and mitigating measures are evaluated by the Enterprise Security Committee.

The Company will supplement this response with the outage detection response information at a later date, as information is gathered.

12. The Asset Management team maximizes the life cycle value of Avista's physical assets. This team researches and collaborates to integrate knowledge, in order to achieve Avista's strategic objectives. The detailed process used to develop and optimize the project costs and benefits based on an Asset Management model may best be illustrated by the Staff_PR_050 Attachment F as an example of how Avista develops Asset Management Plans. Please see Staff_PR_050 Attachment E - 2013 Asset Management Distribution Program Review for more specifics about the Distribution Asset Management program.

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