Project Costs 2016 Transmission & Distribution Benchmarking Community Insights Conference Project Costs August 22-25, 2016 Park City, UT

Project Cost Analysis – What was Included Original list of projects were reported as completed in 2015 by participants: Substation – 32 Transmission – 39 Distribution - 49 Only transmission projects with reported line and/or circuit miles reported and substation projects with “installed MVA” were included in the analysis. Transmission capital expenditures = 88% Substation capital expenditures = 77% Distribution capital expenditures = 70% Voltage (kV)2 Transmission Line Substation Distribution Line # Reported Projects Projects Analyzed 8.32 2 15 1 34 19 25 4 35 (D) 5 35 (T)  1 69 11 9 7 115/138 10 6 161  3 230  2 345 500 Total Expenditures $594,905,520 $523,190,241 $98,226,929 $66,753,781

2014 Transmission Projects – Cost Summary Voltage Geography Construction Structure Purpose Cost per Line Mile Cost per Circuit Mile Cost per Structure Line Miles Circuit Miles Structures Total Cost 69   All $323,827 $1,482,006 $44,952 38.45 8.40 277 $12,451,812 Rural Single Pole Wood Rebuild $113,814 $16,268 13.15 92 $1,496,658 Relocate $6,181 $3,931 15.90 25 $98,270 Steel New $1,316,183 $87,667 7.46 112 $9,818,722 $482,004 $9,640 0.20 10 $96,401 Suburban $380,195 $21,122 1.00 18 Urban $96,547 $4,345 0.72 16 $69,514 Mixed $22,365,985 $123,013 0.02 4 $492,052 115 $999,757 $1,667,322 $85,843 84.92 50.92 989 $84,898,358 $499,430 $38,680 34.00 439 $16,980,635 $5,305,326 $78,696 0.09 6 $472,174 $1,093,713 $125,560 37.54 327 $41,057,998 $1,653,808 $74,597 2.12 47 $3,506,074 $1,477,091 $125,257 $3,131,434 $1,184,241 $46,383 3.29 84 $3,896,153 Concrete $2,420,395 $349,228 2.02 14 $4,889,197 $2,931,736 $233,291 3.74 $10,964,694 161 $839,910 $838,353 $66,863 29.61 29.67 372 $24,873,102 $1,088,039 $1,083,673 $80,274 13.65 13.70 185 $14,850,650 $349,074 $31,887 13.98 153 $4,878,664 $1,254,764 $109,941 1.84 21 $2,308,765 $19,026,993 $218,079 0.15 13 $2,835,022 230 $1,137,696 $205,206 78.10 433 $88,854,040 $1,074,051 $170,058 17.10 108 $18,366,276 $1,155,537 $216,885 61.00 325 $70,487,764

2015 Transmission Projects – Cost Summary Voltage Geography Construction Structure Purpose Cost per Line Mile Cost per Crkt Mile Cost per Structure Line Miles Circuit Miles Structures Total Cost 35 Suburban Single Pole Mixed New $4,360,307 $186,870 0.30 7 $1,308,092 69   All $1,336,010 $1,308,955 $79,017 48.38 49.38 818 $64,636,177 Steel $452,185 $422,299 $56,047 14.13 15.13 114 $6,389,377 Rebuild $1,590,909 $83,460 26.65 508 $42,397,731 $2,085,404 $80,863 7.60 196 $15,849,069 138 $1,540,312 $1,482,872 $534,472 32.27 33.52 93 $49,705,883 Rural $1,765,082 $329,076 16.22 87 $28,629,633 $500,714 $495,805 $1,011,443 12.12 12.24 6 $6,068,656 Urban $5,827,434 $2,913,717 1.13 2.26 $6,585,000 $3,008,069 2.80 $8,422,594 161 $931,622 $795,128 $114,491 28.02 32.83 228 $26,104,051 230 $1,768,770 $1,345,619 $244,552 31.80 41.80 $56,246,879 $1,500,850 $243,193 17.50 108 $26,264,868 $435,667 $26,762 4.30 70 $1,873,370 $2,810,864 $1,405,432 $540,551 10.00 20.00 52 $28,108,641 345 $1,658,983 160.00 $265,437,243 500 $1,457,364 $322,983 41.00 185 $59,751,916

Transmission Standards The group of projects used in the analysis are built nearly exclusively using steel structures. In 2015 (2014 projects) the mix of structure material was much more balanced with lower voltages using wood and higher voltages being built primarily with steel and concrete. Voltage Class Total Structures Structure Material (kV) Wood Steel Concrete Other 35 7 2 29% 5 71% 0% 69 818 1% 811 99% 115 93 100% 161 228 230 500 185 2015 Total 1561 9 0.6% 1552 99.4% 2014 2083 249 12% 993 48% 816 39% 25 3

Transmission Design and Cost Observations Average costs (per mile and per structure) should generally increase with higher voltage. Conversely, span lengths decrease with higher voltages. However, for this year, a few outliers in a relatively small database distorted the averages. Also, different than last year, many of the projects across the voltage levels were constructed in suburban areas. Voltage Class Structures Average Cost Geography (# of projects) (kV) (per mile) Line Mile Structure Rural Suburban Urban 35 23 $4,360,307 $186,870 1 69 17 $1,308,955 $79,017 7.5 .5 138 4 $1,540,312 $534,472 2 3 161 8 $931,622 $114,491 230 7 $1,768,770 $244,552 500 5 $1,457,364 $322,983

2014 Substation Projects – Cost Summary The list of substation 2014 projects used for the analysis was pared down to include larger projects (based on total cost) with a representative range of high side voltages and installed MVAs. Project Number Total Cost High Side Voltage Low Side Voltage Installed MVA Cost per MVA Power Transformers >500 kV Breakers 230 kV to 499 kV Breakers 100 kV to 229 kV Breakers Line Terms 27S-1404 $27,485,981 230 115 400 $66,252 1 N/A 3 8 7 27S-1403 $12,477,361 161 69 100 $122,654 4 48S-1415 $3,162,367 46 40 $79,048 42S-1401 $8,179,549 25 80 $102,244 2 42S-1404 $11,549,516 21 $533,940 42S-1403 $3,669,735 10.50 $330,088 42S-1406 $30,818,020 20 60 $377,675 42S-1407 $6,662,677 12 $166,567 27S-1405 $10,536,478 $418,706 6 10 48S-1404 $3,627,763 $120,833 48S-1408 $2,979,424 $110,299 47S-1426 $573,795 22.40 $25,616 47S-1408 $802,540 12.50 $64,203 27S-1407 $3,384,780 $135,391

2015 Substation Projects – Cost Summary The list of substation projects used for the analysis includes larger projects (based on total cost) with a good range of high side voltages and installed MVAs. Project Number Total Cost High Side Voltage Low Side Voltage Installed MVA Cost per MVA Power Transformers >500 kV Breakers 230 kV to 499 kV Breakers 100 kV to 229 kV Breakers No. <100kV Breakers Line Terms 3 $36,138,423 230 13 150 $240,923 2 4 9   3500 7 $7,354,648 161 46 125 $58,837 8 $3,521,175 25 30 $117,373 1 10 $5,931,704 138 36 100 $59,317 11 $8,203,055 $82,031 $6,488,108 13.8 40 $162,203 14 $5,200,000 12 50 $104,000 15 $11,718,577 115 250 $46,874 16 $39,700,000 56 $708,929 17 $1,523,691 69 20 $76,185 18 $1,324,599 $66,230 19 $1,495,363 $74,768 $1,220,735 $61,037 21 $1,216,799 $60,840 22 $4,924,488 34 9.375 $525,279 23 $8,392,017 $2,797,339

Distribution Projects – Cost Summary There are many more permutations of design for distribution than for transmission incuding blends of overhead and underground facilities. Average cost per structure is likely distorted by reconductor only projects. Voltage Geography Structure Purpose Cost per Crkt Mile Cost per Structure Circuit Miles Structures Total Cost 8.32   All $756,510 $61,411 2.76 34 $2,087,968 Rural Wood New 15 $843,747 $41,319 67.58 1380 $57,020,405 $369,146 $25,245 8.48 124 $3,130,358 Suburban $464,931 $21,035 25.20 557 $11,716,260 Urban $1,156,738 $43,465 18.60 495 $21,515,327 Concrete $1,151,038 $646,774 11.80 21 $13,582,244 Mixed $1,579,289 $102,361 3.50 54 $5,527,511 R,S $309,741 $12,005 5.00 129 $1,548,705 25 $257,022 $201,334 11.75 $3,020,005 $3,719,172 $92,979 0.25 10 $929,793 $181,758 $418,042 11.50 5 $2,090,212 35 $737,175 $11,261 2.49 163 $1,835,565 $829,070 $28,603 0.69 20 $572,058 Steel $701,948 $8,836 1.80 143 $1,263,507 15, Underground $218,332 2.35 $513,081 $743,920 0.20 $148,784 $169,440 2.15 $364,297 15, Mixed (OH & UG) $554,603 $72,745 7.87 60 $4,364,725 $898,596 $100,942 3.37 30 $3,028,267 $296,991 $44,549 4.50 $1,336,458

Correlation Variables Relationships of Substation Cost Data to other Project variables for 2015 Project database For the 2015 program, substation capital cost correlated well with installed MVA. Companies report using historical costs to generate budget or preliminary level budgets. Given a statistically adequate database, a relatively accurate estimating model can be created. Correlation Variables Correlation Data Source MVA Installed v. Capital Cost/MVA -0.111914271 Sample Projects Only Voltage v. Capital Cost/MVA 0.076947716 Capital Cost v. Installed MVA 0.751282569 New station projects Capital Cost v. Voltage 0.599260603

Relationships of Substation Cost Data to other Project variables Correlating the same variables this year has not generated the same positive results. Additional analysis will be done as the database grows.

Relationships of Substation Cost Data to other Project variables – 2014 and 2015 projects combined The correlation (.500349)of the combined data set is OK but the regression isn’t good. Going forward, it will be important to improve the project information used in the analysis as well as to increase the number of projects in the database.

Project Cost Analysis – observations Transmission and substation costs increase with voltage and installed MVA respectively. Transmission span lengths increase with increasing voltage lines.(fewer structures per mile) Lines were constructed more with steel and concrete than with wood. Substation costs correlated well with installed MVA in 2015. Additional analysis is needed on the 2016 data. Larger project databases will be needed to increase statistical significance. The complexity and cost of added appurtenances (breakers, line terminations, security, etc.) need to be factored into the analysis in order to fully define cost relationships. Follow-up cost analysis would benefit from a more detailed description of the work and breakdown of project costs including, for example, cost sources (engineering, material, construction labor, fleet/equipment, overheads, etc.) Distribution project cost analysis requires much more detailed project information (description and cost data) to clearly define the project parameters against which cost is compared.

Thank you for your Input and Participation! Your Presenters Ken Buckstaff Ken.Buckstaff@1QConsulting.com 310-922-0783 Debi Cook Debi.Cook@1QConsulting.com 760-272-7277 Gene Dimitrov Gene.Dimitrov@1QConsulting.com 301-535-0590 Rob Earle Rob.Earle@1QConsulting.com 315-944-7610 Dave Canon Dave Carter Dave Weiler Dave.Canon@1QConsulting.com Dave.Carter@1QConsulting.com Dave.Weiler@1QConsulting.com 817-980-7909 414-881-8641 607-761-6778 About 1QC First Quartile Consulting is a utility-focused consultancy providing a full range of consulting services including continuous process improvement, change management, benchmarking and more. You can count on a proven process that assesses and optimizes your resources, processes, leadership management and technology to align your business needs with your customer’s needs. Visit us at www.1stquartileconsulting.com