direct testimony of the capital expenditures, reliability, and - nyseg

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Case 09-E-____; Case 09-G-____ (NYSEG)DIRECT TESTIMONY OF THE CAPITAL EXPENDITURES,RELIABILITY, AND OPERATIONS PANEL1234567891011121314151617181920T&D Loss and Cost of Losses StudyQ. Can you briefly describe the need for the T&D Loss and Cost of Losses Study?A. In Case 08-E-0751, the Commission directed the utilities to specifically identifyall major sources of losses on their T&D systems. As directed, NYSEG explainedin its filing made on December 23, 2008, that data used to quantify the T&Dlosses was no longer current. NYSEG proposed to retain a consultant to performa loss study based on 2007 system configurations. The estimated cost of that studyis $350,000.Storm Costs and RecoveryQ. How does NYSEG currently recover storm costs?A. NYSEG's revenue requirement provides for a $7.4 million funding of aMajor/Minor Storm reserve. To the extent the Company incurs cumulative stormdamage costs in excess of the reserve balance, NYSEG defers the costs for futurerecovery. If NYSEG incurs cumulative storm damage costs that are less than thereserve balance, the net balance is carried forward to future years.Q. Is NYSEG proposing a change to its annual storm funding in this proceeding?A. Yes. Based upon its historical experience with major and minor storms since2004, NYSEG proposes to increase the $7.4 million base by an additional $10.0million, bringing the new annual funding amount to $17.4 million. Recovery ofthe deferral is addressed by the Revenue Requirements Panel.61
Case 09-E-____; Case 09-G-____ (NYSEG)DIRECT TESTIMONY OF THE CAPITAL EXPENDITURES,RELIABILITY, AND OPERATIONS PANEL123456Q. What were NYSEG's storm expenses for each year for the period 2004-2008?A. As the following table demonstrates, NYSEG's recent spending on storm repairsand restoration activities dwarf the ongoing recovery amount of $7.4 million,creating large deferrals and exacerbating the Company's cash flow problems.Note that the expenses NYSEG incurred in 2008 for minor storms alone exceededthe $7.4 million threshold for minor and major storms combined.NYSEG 2004 - 2008 Storm Charges2008 2007 2006 2005 2004Minor $11,272,788 $6,413,006 $2,457,079 $2,087,000 $1,856,000Major $42,118,286 $11,049,159 $33,527,374 $8,589,000 $1,538,000Total $53,391,074 $17,462,165 $35,984,453 $10,676.000 $3,393,00078910111213141516Q. Please explain the reason for the increase in Company's storm costs in recentyears.A. One reason for the increase in the Company's storm costs is due to changes inweather patterns and the increased number of damaging storms during the period2005-2008 compared to prior years. Using the activation of the NYSEGEmergency Operations Center as a reference, 2005 through 2008 showed anincrease compared to prior years, with 2006 and 2008 being significantly higher.The severity of the storms and the resulting damage to NYSEG's facilities andelectric system infrastructure have also increased, leading to longer restorationefforts and higher costs of repairs. In 2008, NYSEG's experience with days with62
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