STATE OF INDIANA INDIANA UTILITY REGULATORY COMMISSION PETITION OF NORTHERN INDIANA PUBLIC ) SERVICE COMPANY FOR APPROVAL OF ) CAUSE NO. 44370 PETITIONER’S 7-YEAR PLAN FOR ELIGIBLE ) TRANSMISSION, DISTRIBUTION AND ) STORAGE SYSTEM IMPROVEMENTS, ) PURSUANT TO IND. CODE § 8-1-39-10(a). ) PETITION OF NORTHERN INDIANA PUBLIC ) SERVICE COMPANY FOR (1) APPROVAL OF ) A TRANSMISSION, DISTRIBUTION AND ) STORAGE SYSTEM IMPROVEMENT ) CHARGE (“TDSIC”) RATE SCHEDULE, (2) ) APPROVAL OF PETITIONER’S PROPOSED ) CAUSE NO. 44371 COST ALLOCATIONS, (3) APPROVAL OF THE ) TIMELY RECOVERY OF TDSIC COSTS ) THROUGH PETITIONER’S PROPOSED TDSIC ) RATE SCHEDULE, AND (4) AUTHORITY TO ) DEFER APPROVED TDSIC COSTS, ) PURSUANT TO IND. CODE CH. 8-1-39. ) PETITIONER’S SUBMISSION OF TECHNICAL CONFERENCE PRESENTATION Northern Indiana Public Service Company, by counsel, hereby submits the attached presentation given at the August 23, 2013 IURC Technical Conference.
Electric TDSIC August 23, 2013 IURC Technical Conference Cause No. 44370 & Cause No. 44371
Agenda • Roadmap of Testimony • Seven Year Plan (44370) – Annual Program Spends • Project Categories – Year 1 Project Detail – Need for Flexibility – Black & Veatch Presentation • Tracker/Deferral Mechanism Shell (44371) – Revenue Requirement Calculations – Proposed Capital Structure and Cost Allocation – Projected Rate Impacts • Overall Timeline 2
Roadmap of testimony • Seven Year Plan (44370) – Frank A. Shambo • Overall request for approval • Statutory authority • Definitions of key terms • Treatment of economic development projects • Updating the Seven Year Plan via the Tracker/Deferral petition • NIPSCO’s capital allocation process including direct, indirect and AFUDC dollars • Economic impact of the Seven Year Plan ( B&V Economic Study ) • Impact to retail revenue of the Seven Year Plan • NIPSCO’s stakeholder process – Timothy A. Dehring • Development of the Seven Year Plan • Detail of the Seven Year Plan (structure, projects and categories, timing, dollars) • Black & Veatch Long-Term Capital Plan • NIPSCO’s detailed cost estimates • Black & Veatch Independent Cost Review 3
Roadmap of testimony (cont.) • Tracker/Deferral Mechanism Shell (44371) – Frank A. Shambo • Relief requested • Statutory authority • Timely recovery under the TDSIC schedule • Timing of deferrals • Cost allocation methodology • Calculation of allowed return • Projected average aggregate increase of NIPSCO’s TDSIC – Derric J. Isensee • Calculation of tracker and deferral revenues and accounting treatment • Timeline of NIPSCO’s future tracker filings • Interaction with FAC earnings and expense tests • Impact on customer rates and charges • Proposed changes and additions to NIPSCO’s electric service tariff 4
Required findings for the seven year plan • Determination that the seven year plan is reasonable • Finding of the best estimate of the cost of the eligible improvements • Determination that the public convenience and necessity require or will require the eligible improvements • Determination that the estimated costs of the eligible improvements are justified by incremental benefits attributable to the plan 5
Proposed definitions for the seven year plan • Safety – Investments made in facilities that protect life and/or property • Reliability – Investments made in facilities that preserve the ability to serve peak load, maintain system performance, or respond to unplanned events • System Modernization – Investments in facilities that will cost effectively upgrade the system that will maintain system stability and/or reliability over a long period of time • Economic Development – Investments in incremental facilities undertaken to attract new jobs in NIPSCO’s service territory • Transmission and Distribution – Equipment that is classified as transmission and distribution from the FERC Uniform System of Accounts • Under Construction – The date the utility incurs charges that are assignable to a project’s work order through the date the project is placed in service and all charges that are assignable to the project’s work order have been incurred 6
NIPSCO electric TDSIC long term plan overview Long Term Plan Strategy Long Term Plan Aging Infrastructure T&D System Deliverability • New Lines & Substations • Replace Prone to Failure Cable • Upgrades to Existing Lines & • System Protection Modernization Substations • Risk Based Replacement of Aging Assets (POF x COF) Long term plan refreshed annually with new asset condition and system information 7
NIPSCO’s decision model for TDSIC investments • T&D System Deliverability Investments – Deliverability tested during periods of high system stress – Target preservation of contingencies • Transmission – Consistent with NERC reliability requirements Distribution – ability to serve customers with loss of 1 st system element • – Outputs • New lines and substations • Capacity upgrades to existing lines and substations Aging Infrastructure Investments • – Assess risk of T&D system elements • Risk score = Probability of Failure for each asset x Consequence of Failure for each asset – Rank replacement based on risk score for each asset – Additionally, target prone to failure system elements (UG Cable, System Protection) Annual Refresh of Both Segments • 8
Seven year plan – annual program spends NORTHERN INDIANA PUBLIC SERVICE COMPANY 7-YEAR ELECTRIC PLAN BY PROJECT CATEGORY (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) Project Category Line No. 2014 2015 2016 2017 2018 2019 2020 7-Year Total % of Total Direct Capital Transmission Project Category 1 Transmission Substations $19,287,771 $6,940,922 $30,656,338 $21,268,715 $30,613,541 $42,658,936 $65,241,980 $216,668,203 2 Transmission Lines $3,479,414 $3,941,591 $12,517,710 $2,384,768 $21,736,967 $23,406,269 $22,829,854 $90,296,573 3 Transmission Project Category Total $22,767,185 $10,882,513 $43,174,048 $23,653,483 $52,350,508 $66,065,205 $88,071,834 $306,964,776 Distribution Project Category 4 4kV Lines $1,620,000 $720,000 $2,160,000 $1,238,000 $3,155,000 $3,260,000 $3,025,000 $15,178,000 5 4kV Substations $0 $600,000 $100,000 $1,100,000 $125,000 $50,000 $0 $1,975,000 6 Underground Cable $5,000,000 $5,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $22,000,000 $120,000,000 7 Distribution Substations $13,231,915 $20,072,029 $26,480,979 $18,991,985 $35,205,891 $42,178,591 $30,051,461 $186,212,851 8 Distribution Lines $9,380,900 $8,425,458 $35,484,973 $22,716,532 $35,163,601 $63,546,204 $53,651,705 $228,369,373 9 Distribution Project Category Total $29,232,815 $34,817,487 $86,225,952 $66,046,517 $95,649,492 $131,034,795 $108,728,166 $551,735,224 $10,000,000 $10,000,000 $10,000,000 $10,000,000 $10,000,000 $10,000,000 $10,000,000 10 Economic Development $70,000,000 11 Total Direct Capital $62,000,000 $55,700,000 $139,400,000 $99,700,000 $158,000,000 $207,100,000 $206,800,000 $928,700,000 12 Indirect Capital $11,616,009 $8,740,946 $14,472,263 $11,145,949 $17,866,112 $23,410,055 $23,531,169 $110,782,503 13 AFUDC $1,622,394 $2,114,909 $5,049,985 $3,637,890 $5,771,808 $7,565,186 $7,559,315 $33,321,487 14 Total Capital $75,238,403 $66,555,855 $158,922,247 $114,483,839 $181,637,920 $238,075,241 $237,890,484 $1,072,803,990 15 Amount of Transmission $26,895,935 $23,792,131 $56,810,914 $40,925,243 $64,931,226 $85,106,222 $85,040,176 $383,501,848 35.7% 16 Amount of Distribution $48,342,468 $42,763,724 $102,111,333 $73,558,596 $116,706,694 $152,969,019 $152,850,308 $689,302,142 64.3% 17 Total Capital $75,238,403 $66,555,855 $158,922,247 $114,483,839 $181,637,920 $238,075,241 $237,890,484 $1,072,803,990 100.0% 9
Project categories • NIPSCO’s 7-Year Electric Plan represents work that NIPSCO must perform in order to maintain safe, reliable service – T&D substations and lines, 4kV replacement, underground cable • Economic development (“ED”) was also included as a component of the plan to meet the legislative intent of Ind. Code § 8-1-39 – ED category is a projection and may be redeployed within the 7-Year Electric Plan as circumstances warrant (lack of ED opportunities, ongoing System Deliverability testing, emergent conditions, etc.) 10
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