Wisconsin Public Utility Institute. June 28, Minimum Distribution Charges. Larry Vogt. Director, Rates Mississippi Power

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1 Wisconsin Public Utility Institute June 28, 2017 Minimum Distribution Charges Larry Vogt Director, Rates Mississippi Power 1

2 Costs of Service vs. Cost Recovery Residential Service Example Assuming that all defined customerrelated costs are recovered through the Customer Charge. 2

3 Principal Cost-of-Service Study Cost Components The classification step of the cost-of-service study assigns all of the functionalized cost elements to the fundamental cost-causation components of Energy, Demand, and Customer. Energy-related costs variable costs which are dependent on kwh energy requirements. Demand-related costs fixed costs which are dependent on kw load requirements. Customer-related costs fixed costs which are independent of load or energy requirements. 3

4 Classification of Functional Costs Fuel Energy Costs: VARIABLE Demand Costs: FIXED Minimum Distribution System (MDS) Customer Costs: FIXED 4

5 Distribution System Lines and Facilities Costs FERC Description 360 Land and Land Rights 361 Structures 362 Station Equipment S MCM ACSR SUB M R N.C. 363 Storage Battery Equipment 364 Poles, Towers & Fixtures 365 OH Conductors & Devices Switches 4/0 CU NO. 2 AL C/N 75 N.C. N.C. 1,500 ckvar Reclosers & Sectionalizers 366 UG Conduit 367 UG Conductors & Devices Line Transformers Regulators Capacitors Cutouts 15 1/0 CU Arresters 369 Services 370 Meters N.O. 373 Street Lighting 5

6 Distribution System O&M Costs FERC Description Operation Maintenance Distribution Expenses (Excluding Substations) Customer Account Expenses - Operation Customer Assistance Expenses Operation Sales Expenses Operation Administrative and General (A&G) Expenses (Allocated portion) Operation 935 Maintenance 6

7 Cumulative 1-Phase Residential Customer Cost Components Revenue Requirement per Customer per Month MDS Customer Costs Minimal Customer Costs 7

8 Minimum Distribution System What is MDS? MDS is an analysis module of the cost-of-service study in which primary and secondary voltage distribution system investment and O&M costs are classified between demandrelated and customer-related cost components. Why is MDS important? MDS quantifies those fixed costs that are independent of load or energy usage and thus provides a cost-justification basis for inclusion in the Customer Charge portion of the rate structure. 8

9 The Access Function Of The Distribution System All primary and secondary voltage customers are connected to a distribution voltage source, i.e., a local substation. SUB There is a physical path which brings voltage to the customer s premise. Maintaining the voltage path ensures customer access to electrical power. 9

10 The Capacity Function Of The Distribution System Primary and secondary distribution system facilities and lines must be sized to adequately handle the customers demand for power. Electric service facilities are rated in terms of kva capacity (conductors rated in terms of ampacity). Customer Load Feeder Load 10

11 Objective of the Minimum Distribution System Analysis To assess each device utilized in the distribution system in terms of its mission in order to determine if its function is: Dependent on kw load requirements and therefore demand related, or Independent of kw load requirements and therefore customer related. 11

12 Customer or Demand? 12

13 Capacitor-Based Voltage Control MW SUB FEEDER 132 V +10% 120 V 108 V 10% TIME DISTANCE 13

14 Customer or Demand? 14

15 Protection Scheme Temporary Fault Condition SUB CB R 15

16 Protection Scheme Permanent Fault Condition SUB CB R 16

17 Protection Scheme Permanent Fault Condition No Load SUB CB R 17

18 Customer or Demand? 18

19 Classification of Distribution Plant for the Cost-of-Service Demand Customer Distribution Substations X Primary Lines* X X Line Transformers* X X Secondary Lines* X X Other Line Equipment* X X Service Lines Meters X X * Minimum Distribution System facilities. 19

20 Zero-Intercept Methodology Applied to: Line Transformers Conductors Poles THE Y-AXIS INTERCEPT UNIT COSTS IS THE UNIT COST OF ZERO CAPACITY COST OF A STANDARD SIZE UNIT CAPACITY 20

21 Line Transformers 21

22 Zero-Intercept Example Single-Phase Overhead Transformers 1. ZERO-INTERCEPT: $ /transformer Based on various kva sizes of 7.2 kv - 120/240 V, single bushing, polemount transformers 2. TOTAL NUMBER OF OVERHEAD TRANSFORMERS: 98,278 CUSTOMER COMPONENT = $ ,728 = $45,807, TOTAL OVERHEAD TRANSFORMER COST: $109,960,813 DEMAND COMPONENT = $109,960,813 - $45,807,307 = $64,153,506 CUSTOMER COMPONENT = 41.7% DEMAND COMPONENT = 58.3% 22

23 Primary and Secondary Conductors and Poles PRIMARY NEUTRAL SECONDARY 23

24 UNDERGROUND PRIMARY CABLE CONCENTRIC NEUTRAL CONDUCTOR 24

25 CONDUIT FOR UNDERGROUND CABLES RIGID PVC FLEXIBLE 25

26 Distribution Poles Types Of Materials 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 1.0% 0.9% 0.8% 0.7% 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% ALUMINUM CONCRETE FIBERGLASS STEEL 0% ALUMINUM CONCRETE FIBERGLASS STEEL WOOD 26

27 Pole Heights Relative Frequency Distribution 40% 35% 30% 25% 20% 15% 10% 5% 0% 30' 35' 40' 45' 50' 55' 60' 65' 70' 75' 80' 85' 90' 95' POLE HEIGHTS 27

28 Clearance Requirements Poles lines must be designed to ensure proper safety clearances, such as specified in the National Electric Safety Code (NESC), Section 23. The NESC provides specific minimum clearances of power lines located over: Roadways, parking lots, driveways, pedestrian areas, railroad track rails, water ways, etc. Other electric conductors and services, trolley/electric train cables, communications cables, etc. 28

29 Pole Line Grading IMPROPER GRADING: POLES ALL HAVE THE SAME HEIGHT PROPER GRADING: POLES WITH VARYING HEIGHTS 29

30 Distribution Pole Classification Conclusion On Pole Height Pole height requirements are mainly a function of clearances and line grading, which are related to safety and mechanical design. In some situations, a pole height may need to be increased (e.g., from a 40 to a 45 ) to accommodate some facilities. Overall, pole height is not a predominant function of load. 30

31 Pole Class 31

32 Standard Pole Classes Example: 35 Wood Pole No No No No No No No MINIMUM CIRCUMFERENCE OF SOUTHERN YELLOW PINE POLES (@ GROUND LINE) 32

33 Pole Class Requirements Based On Transformer Capacity 0 TRANSFORMER kva POLE CLASS TRANSFORMER 2 TRANSFORMERS 3 TRANSFORMERS 33

34 Distribution Pole Classification Conclusion On Pole Class The physical sizes and weights of line transformers and conductors are related to their current carrying capabilities. Pole class must be increased in order to carry heavy mechanical loads caused by large line transformers and conductors. Overall, pole class is a predominant function of load. 34

35 Example MDS Analysis Results Poles, Transformers, and Conductors Customer Demand Poles Wood 66.4% 33.6% Concrete 47.3% 52.7% Steel 57.5% 42.5% Transformers 1Φ OH* 41.7% 58.3% 1Φ UG** 61.5% 38.5% 3Φ UG** 34.2% 65.8% Customer Demand Conductors Primary Bare ACSR OH 21.0% 79.0% 15 kv CN UG* 57.4% 42.6% Secondary WP AL OH 38.4% 61.6% Duplex OH 31.4% 68.6% 1-Conductor UG* 60.7% 39.3% * Basis for classifying transformer vaults ** Basis for classifying transformer pads * Basis for classifying conduit 35

36 Example MDS Analysis Results Distribution Line Devices Primary Secondary Customer Demand Customer Demand Regulators & Capacitors 100% Reclosers and Sectionalizers 100% Cutouts & Arresters Line Transformers (OH) 41.7% 58.3% Regulators & Capacitors 100% Reclosers & Sectionalizers 100% Line Protection 100% Bypass Switches Regulators 100% Reclosers & Sectionalizers 100% OH Line Switches* 21.0% 79.0% UG Line Switches* 57.4% 42.6% * Based on conductors 36

37 Example Cost-of-Service Results For Three Low Voltage Customer Classes 37

38 Q&A Larry Vogt 38

39 Appendix Materials 39

40 Weighted Linear Regression For Distribution Line Transformers m N nxy nxny 2 N nx nx 2 SLOPE N = Total number of all transformers of a given type, e.g., 59, kv - 120/240 V, single-bushing, polemount units n = Number of a given size transformer, e.g., 9, kva b y INTERCEPT ny m N nx N X = Transformer size in kva, e.g., 5, 7.5, 10, 15, etc. Y = Transformer unit cost in $ per unit, e.g., $ (cost of a 15 kva unit) 40

41 Zero-Intercept Analysis The Problem With Vintage Costs $2,000 $1,800 $1,600 $1,400 Analysis of Pad-Mount Line Transformers Based on Booked Installed Costs Unit Cost $1,200 $1,000 $800 $600 $400 $200 3Φ 1Φ $ kva 41

42 Zero-Intercept Analysis Utilizing Current Costs $15,000 Analysis of Pad-Mount Line Transformers Based on Rebuild Costs $13,500 $12,000 3Φ Unit Cost $10,500 $9,000 $7,500 $6,000 $4,500 $3,000 $1,500 1Φ $ kva 42

43 Zero-Intercept Example Primary Overhead Conductor 1. ZERO-INTERCEPT: $0.396/ft Based on various MCM sizes of bare ACSR conductors 2. TOTAL LENGTH OF PRIMARY CONDUCTORS: 15,708,000 ft PRIMARY CIRCUIT LENGTH: 15,708,000 2 = 31,416,000 ft CUSTOMER COMPONENT = $ ,898,000* = $11,827,081 * Minimum Distribution System Length 3. TOTAL PRIMARY CONDUCTOR COST: $56,416,253 DEMAND COMPONENT = $56,416,253 - $11,827,081 = $44,589,172 CUSTOMER COMPONENT = 21.0% DEMAND COMPONENT = 79.0% 43

44 Determination Of Overhead Circuit Lengths For The MDS TOTAL POLE MILES PRIMARY SUB PRIMARY NEUTRAL COMMON NEUTRAL SECONDARY NEUTRAL SECONDARY UNDERBUILD SECONDARY TAPS 44

45 Weighted Linear Regression For Distribution Conductors m N nxy nxny 2 N nx nx 2 SLOPE N = Total feet of all conductors of a given type, e.g., 47,557,568 ft of ACSR conductors n = Number of feet of a given size conductor, e.g., 26,194,939 ft of #2 ACSR b y INTERCEPT ny m N nx N X = Conductor size in MCM (a #2 wire is MCM), e.g., 26.24, 41.74, 52.62, 66.36, etc. Y = Conductor unit cost in $ per feet, e.g., $0.659/ft (cost of a #2 ACSR conductor) 45

46 Pole Capacity Poles have no electrical capacity component, but they do have a mechanical capacity (strength) component that can be viewed as a proxy for electrical loading. Pole class (or circumference) can represent loading capability for wood poles, but it does not work for steel or concrete poles since different classes can have the same physical dimensions. Ground line moment capacities do differ by class for all poles. Example: 35 5-C Pole Transverse Wind Load of 1,200 lb GLMC = 33,000 ft-lbs = 33 kips 46

47 Weighted Linear Regression For Distribution Poles m N nxy nxny 2 N nx nx 2 SLOPE N = Total feet of all poles of a given type, e.g., 55,642 ft of 40 ft wood poles n = Number of feet of a given size pole based on its GLMC, e.g., 21,137 ft of kilopounds (kips) poles b y INTERCEPT ny m N nx N X = Ground Line Moment Capacity in kips, e.g., 48.0, 60.8, 76.8, 96.0, etc. Y = Pole unit cost in $ per feet, e.g., $12.05/ft (cost of a 76.8 kips pole) 47

48 Zero-Intercept Example Wood Poles 1. ZERO-INTERCEPT: $7.883/ft Based on various kip ratings of 40 southern pine poles 2. TOTAL LINEAR FEET OF WOOD POLES: 5,579,390 ft CUSTOMER COMPONENT = $ ,579,390 = $43,982, TOTAL WOOD POLE COST: $66,254,744 DEMAND COMPONENT = $66,254,744 - $43,982,773 = $22,271,971 CUSTOMER COMPONENT = 66.4% DEMAND COMPONENT = 33.6% 48

49 Differentiated Cost Allocation Based on Voltage Magnitude & Phase 49

50 3-Phase vs. 1-Phase Customers Cost-of-Service Weighted Allocators CUSTOMER VOLTAGE CLASS 1Φ LV 3Φ LV 1Φ HV 3Φ HV 1Φ OH Line Transformers L 1 L 3 3 Services: 1Φ Lines L 1 3Φ Lines L 3 Meters: Watt-hour (non-demand) LN 1 1Φ Demand LD 1 H 1 3Φ Demand L 3 H 3 LV CT LD 1 L 3 3 LV VT LD 1 L 3 3 HV CT H 1 H 3 3 HV VT H 1 H 3 3 L 1 = # of 1Φ LV customers (LN 1 +LD 1 ); L 3 = # of 3Φ LV customers H 1 = # of 1Φ HV customers; H 3 = # of 3Φ HV customers 50

MINIMUM DISTRIBUTION SYSTEM CONCEPTS AND APPLICATIONS. Larry Vogt. Manager, Rates

MINIMUM DISTRIBUTION SYSTEM CONCEPTS AND APPLICATIONS Larry Vogt Manager, Rates Minimum Distribution System What is MDS? MDS is an analysis module of the cost-of-service study in which distribution investment