1. Keeping the Lights On A road map for taking electric reliability to the next level Presented by Dan ONeill to the EEI Customer Operations Executive Workshop March 27, 2000

2. 2 Number of states with new rules What utilities were doing is no longer good enough Source: Article by Navigants Dan ONeill, Public Utilities Fortnightly, March 1999 Commissions are adopting new reliability rules

3. 3 California PBR Fines > $ millions Mandated programs Illinois Negotiated targets Economic damages Penalties Mandated programs Audits Public reporting Texas Fines > $ millions Negotiated targets Public reporting Audits New York PBR Public reporting Florida Audits Mandated programs Increased spending New Jersey Audits Mandated programs To comply, companies are looking at spending a lot more time and money The new rules have real teeth in them

4. 4 Could this happen to you? ComEds very public troubles are a good example

5. 5 SAIDI / SAIFI Worst Circuits Complaints Just managing SAIDI is no longer good enough Commissions and customers are no longer satisfied with good performance on system averages like SAIDI, SAIFI and CAIDI Many of the new regulations require reporting of performance on worst circuits, with negotiated targets for improvement, e.g., what was proposed by the Texas PUC: SAIFI SAIDI Compliance –Minimum acceptable 3.8 315 98.5% –Target 2.6 158 90.0% What they really want is customer satisfaction, few complaints, and not even small pockets of consistently poor performance Many companies dont even measure worst pockets now danger

6. 6 Customer interruptions Customer minutes Restoration time Device outages Customers per device Vegetation Animal Lightning Equipment Trim, remove, mow & spray Guards, BIL Arresters, BIL shield, ground Inspect, repair/replace Other Planning, upgrades SAIDI / SAIFI Worst circuits Satisfaction Remediation Root cause Effectiveness $ Sectionalizing Deployment Utilities need to know what it takes to move the needle Accurate estimates Know what you spend by program Dont spend money on the wrong problem Dont just assume 75% reduction Minimize the impact of outages that remain Make sure you are right-sized Customers really want to know Measure the right things

7. 7 Lightning Outages Line Flashovers 1. Number of Strikes to or Near Line 1b. Natural Shielding Atmospheric Conditions 1a. Strike Density 1c. Pole Height Elevation Construction Type Initial Construction Cost 2a. Wire Configuration Terrain Design Standards Customer Requirements 2. BIL 2b. Device Age Line Voltage 2c. Contamination Buildup 3a. Static Wire Usage 3b. Arrestor Installations Grounding Methods 3. Line Protection Program Activity 4. Equipment Condition Device Coordination Soil Properties Grounding Methods 1e. Line Length Overhead Vs. Underground 1d. Overhead Vs. Underground Soil Properties We spent money on lightning remediation, and found the problem was conductor slap Source: Navigant study of lightning root cause analysis Effective remediation starts with accurate root cause analysis

8. 8 Work Performed Effectiveness requires studies of before-and-after impact We had assumed that vegetation remediation would reduce tree-caused outages 75 percent. The study showed it was closer to 50 percent. Source: Navigant study of lightning remediation effectiveness

9. 9 Detailed geographic data can be used to spot patterns Example: For animal mitigation, we helped a company use its geographic data to detect patterns of animal-caused outages for more effective programs to prevent squirrel-caused outages Other examples of in-depth studies include lightning, vegetation, circuit breakers, etc. We didnt realize we could do that with our data Source: Navigant study of animal remediation

10. 10 Repair & restore Repair dispatch Switch & restore Patrol & diagnose Drive time Trouble dispatch Outage analysis 5 min10 min20 min10 min15 min10 min45 min Non-storm: 10 min30 min20 min15 min20 min30 min60 min Storm: Where are storms hurting you the most? Where is your best opportunity to improve? How can you keep customers well informed? What staffing do you need to meet your targets? And would an external auditor agree that you are doing all you can? Restoration can be improved at each step on the way

11. 11 Failure Rates per Mile Illustration - Vegetation model Without this kind of analysis, you could be shooting in the dark Source: Navigant T&D decision analysis model Decision analysis can be effectively applied to T&D programs

12. 12 0 50 100 150 200 250 05101520253035 Reliability program funding ($millions) SAIDI (minutes per customer) Many companies do not know where they are on the curve All reliability programs experience diminishing returns yet many companies cannot say what the impact on reliability would be...... of increasing/decreasing spending by say, $5 million in a given year Yet CEOs, CFOs (and regulators) expect to know the answer or which programs should receive more or less of the budget change Illustrative Example

13. 13 CB program funding SAIDI (minutes per customer) $1.50 Per Customer Minute Saved Transformer program funding SAIDI (minutes per customer) $3.00 Per Customer Minute Saved Line program funding SAIDI (minutes per customer) $0.50 Per Customer Minute Saved Illustrative Example Few companies have optimized across programs One utility saved tens of $millions, without reducing reliability, by redirecting its budget through this type of analysis Source: Navigant T&D decision analysis model

14. 14 An apples-to-apples comparison is now possible Navigant Consulting has obtained all of the newly public data on reliability We have contacted all of the companies to find out what is included and excluded, to get true apples-to-apples comparisons We have used proprietary detailed outage databases to estimate the impacts of various treatments and exclusions FusesCircuit Breakers Reclosers & Other Transformers SAIDI Typically Reported by Utilities Emergency Planned Outages Customer Equipment < 5Min. Duration Non- named Storms Major Named Events Total SAIDI As it becomes known that these data can be publicly obtained, utilities will need to know where they stand on this basis Source: Navigant benchmarking analysis

15. 15 Perceived SAIFI Power Quality & Reliability Index A perceived SAIFI > 1 causes a satisfaction lower than the average of 100 Source: JD Power & Associates, with Navigant Consulting Methods now exist that can target customer satisfaction Each point on the graph is a utility in the sample In another graph, perceived SAIFI was shown to track actual SAIFI Utilities with poor perceived SAIFI had poor satisfaction for power quality/reliability Most of those with poor satisfaction have now been audited by PSCs

16. 16 Regulatory Trends Know what local, state and federal regulators are doing nationwide, and get ready to respond to a reliability audit Benchmarking Know how you stand relative to other companies in terms of performance, spending, and best practices Outage Data Analysis Use a standard set of queries to develop useable information from your trouble call history Bang Per Buck Know which programs deliver the most reliability improvement per dollar spent and how much it takes to achieve your targets Service restoration Improve restoration time and customer satisfaction through employing the latest methods and technology to restore and inform customers quickly Business model Organize effectively for targeting shareholder value through performance, with links to the right indicators, measures, roles, and incentives Here is a road map up to the next level Next step - move up to the next level

17. 17 Regulatory Trends Avoid embarrassing showdowns with local, state, and federal officials that could cost $millions in penalties and mandates Benchmarking Dont spend time and money chasing the wrong target Outage Data Analysis Why re-invent the wheel? Standard analyses can provide unique, valuable insights when applied to your data Bang Per Buck Many companies are wasting money on the wrong programs. Some have saved tens of millions of dollars by doing it right Service restoration Time is money. Better methods to reduce restoration time and keep customers informed can achieve results more effectively Business model The ultimate test for the customer and the regulator is satisfaction. Link it to everyday work and use it to incent your company and reap rewards The next level - customers and regulators expect it now What kind of results can you expect?

18. 18 Taking reliability programs to the next level Questions and answers D ANIEL E. ON EILL Director, T&D Reliability & Operations Practice Main: (781) 270-0101 Home Office: (404) 816-5647 Mobile: (404) 307-3661 Fax: (404) 841-9460 DONeill@navigantconsulting.com 200 Wheeler Road, Suite 400 Burlington, MA 01803 1043 Lenox Crest NE Atlanta, GA 30324