-: We will now reconvene this meeting
of the Public Utility Commission of Texas.
Apologies for the delay
we had some meal delivery logistics challenges,
and nobody wants to go hungry.
And I think before we dive into the agenda
regarding logistics for tomorrow,
I think everybody discussed casual.
-: Jeans.
-: Jeans tomorrow, so for all of our.
-: I'll do it, I'll do it this time,
I will, I promise, I swear.
-: But market participants need to be in coat and tie, right?
(laughing)
-: I was gonna offer the heads up to our good stakeholders
that they too should feel free to come.
-: I think that would be right.
-: Jeans and casuals if to the extent
they're gonna be participating in person tomorrow.
-: I will, I will.
(laughing)
-: I got a pair of jeans somewhere (chuckles).
-: That's not required, but given the Friday,
the Friday schedule we wanna make it as casual and relaxed
for everybody as we can.
All right, item number 36, please Mr. Janae.
-: 36 is docket 5147O,
it's the application of people's telephone co-op
for alternative technology for their polar obligations.
You have before you have revised proposed order
that was filed on September 3rd,
and Commissioner McAdams has a memo.
-: I'll defer to you to lay out your memo, sir.
-: Thanks Mr. Chairman.
As my memo indicated this is a bit of a unique circumstance.
These cases like we're looking at here they are rare,
they don't come up often.
As my conclusion of law implies I believe PURA allows us
to adjust disbursement from USF
for providers of last resort.
Hence the memo articulating that
and then the reporting requirement,
because this happens so rarely,
I believe we need ongoing data
to gauge how to best move forward in future
on cases as these do come up.
-: I think you put that very well,
agree with all of that thoughts and comments.
-: I support it, I agree.
-: I agree as well.
-: Commissioner, this is Stephanie Potter
on behalf of peoples.
First we appreciate that this application
is on the open meeting docket
and appreciate your time Commissioner McAdams
in addressing it,
I know this has been pending for quite a while,
and we certainly look forward to and hope
that it can be approved shortly.
However, we have a couple of issues with the language
and the memo that was filed last night,
with respect to the first two points regarding to USF
I think those are accurate descriptions of the law
that has not really been part of the factual record
that was established in this proceeding.
And for a rate of return regulated provider like peoples,
I don't know that it's necessary
because any changed its cost of service,
as it implements new technologies
is sort of automatically flows
through to its reported earnings
and thus to its to USF calculation,
so I don't know that those additions are necessary.
I think that your rights exist in PURA,
irrespective of whether that's laid out in this order.
But more concerned the next two findings
that discuss people's being a COA holder,
peoples as a CCN holder not a COA holder and as such
it does not file the annual reports under the rule
that cited there.
As a CCN holder, people's annual reports are filed
and under rule 26, 407, and so it files very extensive
and probably some of the most thorough annual reports
that you all have gotten for any industry.
And so it's just a distinct rule in law
that those annual reports apply to.
So I think the bottom two findings certainly
are not accurate in this particular case I'm sure,
maybe accurate in some, but for a CCN holder I don't think
we can include that language,
and so we wanted to make sure to raise that with you all
before you vote on anything,
because I think we would have to have second thoughts
about the application altogether
if a finding were added requiring
a different sort of annual report.
-: So you believe that you are already,
is this a conflict of law or a substantive rule,
or what are we dealing with here?
-: It's just a different rule,
so certainly telecom providers
that hold COA would be subject to the filings requirements
for COS but as a CCN holder
it has different filing requirements.
And so the particular provision that you cited
is absolutely accurate as to COS
which doesn't apply to peoples,
And so we don't think that it should be included here.
-: Is there a way to remedy that
by getting the substantially the information you want
with just different phrasing?
Would there be a way?
-: Well, so you are not a SB COA holder.
-: Cracker CCN holder.
But we file extensive annual reports
your staff is reviewing, right now.
-: Is it the same information that would be covered?
-: I believe it's more,
I would have to look into what specific findings
there might be about alternative technologies.
And I think that's certainly information
that we would be willing to provide
if it's not already included
but the separate report that you referenced
just as an applicable to peoples.
-: Okay, I wanna confirm that with staff
in terms of the information
that's pertinent to both holders.
-: I'm not sure either we can go back and look
and provide you information on that Commissioner Mcadams.
-: Well, maybe an easy step through here
is we could delete the one about the S-C-O-S-P-C-O-H holder.
And just say in there in the annual report
are required under 26 407 or wherever it is,
we want this information in the manner
that's requested here.
-: Will peoples have a problem with that?
-: I'd have to consult with them.
And I apologize we would have obviously coordinated
with staff more and filed a written response if we had time,
we just got caught a little flat-footed,
so I'm stepping in for people's here today
and would have to ask if that specific language
is acceptable, I imagine that it is fine.
And I think we would prefer to even delay approval
of the meeting rather than.
-: Bottom line we want the information.
-: We do.
-: So we need for further evaluation
moving forward in all of these.
-: We would hope they would.
They said they're gonna do an analysis on this
to decide which technology they're gonna use it.
They're gonna only use and do alternative technology
when there's cost savings over fiber or cable wires.
That information they're gonna have to have to do
with total (indistinct).
-: So regardless of the form or the report,
as long as that data is provided, then we're good,
and our consideration moving forward, so.
-: Yeah, I mean, let's wait and let's go back
and we'll check.
I'll make my people learn the rules
and we'll come back with something better.
-: Okay, all right I'm good with (indistinct).
-: Everybody okay with table in this item
and Commission staff to work
with peoples to address the information issues,
raising Commissioner McAdams memo.
-: Yes.
-: That we'll revisit at the earliest opportunity.
-: Yes, thank you Commissioners,
and I appreciate your time today.
-: No problem.
Thank you, all right, so we were gonna table docket
51470, and that will move us to, hold on Lori.
item, let me see item 37, I don't have anything for that.
Item 38, staff filed a memo on new interest rates
being established for customer deposits and billing issues.
-: And a proposed order with that.
-: And a proposed order, it's pretty straight forward to me.
(indistinct)
-: But we need to approve stash proposed order,
is there a motion?
-: so moved.
-: Second.
-: All in favor say aye.
All: Aye.
-: Oppose the motion, passes,
I don't have anything for 39, item 41.
Regarding customer complaints
we fortunately don't have anything specific on this,
but we do want to take this opportunity to thank staff
for the memo and the report, and more importantly,
congratulate the entire customer protection division
for winning our annual award
for distinguished employee performance.
And the fact that the award
for distinguished employee performance
went to so many employees is a mark
of how critical they have been in this very trying year,
all of them and is indicative of how important
their efforts are to this agency and the degree
to which they have performed their duties with excellence.
So thank you to all of the teammates in that group.
Not a small challenge in normal times
and especially in these times, so thank you all for that.
Any other thoughts or comments on that item?
-: No comments sir.
-: Item, I think that gets us to item 42.
Mr. Janae, could you lay that out for us?
-: Item 42 is project 52761,
sir before you is an amendment to the statement
on the use of our Consent Agenda.
We discussed last open meeting about adding proposals
for publication to the Consent Agenda and we have for you
a revised statement that would do that.
-: Thank you, sir.
Always trying to streamline processes,
improve efficiency while maintaining transparency.
This I think does that, any thoughts, comments,
or a motion to approve the proposed statement?
-: So moved.
-: Second. -: Second.
All in favor say aye.
All: Aye.
-: Opposed motion passes.
I don't have anything else for 43 to 45,
which now brings us to the end of our agenda.
At which point we will revert to item number three.
And Lori based on your work at OPEC are recused from this,
so we will excuse you from the diocese
and hope you enjoy the rest of your afternoon.
-: Enjoy your afternoon. (laughing)
-: Thank you so much, best of wishes.
(laughing)
-: All right.
Here we go.
-: All right, we're still searching our books.
(indistinct)
-: What are your mini charms doing?
(laughing)
(indistinct)
-: That's true.
-: All right, Mr. Janae could you lay this item out
for us please, sir.
-: Item three is docket 51415.
It's the application of SWEPCO
to change their base rates.
PFD was filed on August 27th.
Exceptions and replies were filed,
ALJ filed a memo with a few proposed corrections
and the changes.
-: Thank you, sir.
As you all saw from the memo,
the general agree with the PFD.
Oh, I'm sorry sir, and the chairman filed a memo.
(laughing)
-: Yeah, I guess your lunch never did get here, did it?
(laughing)
-: I was left hanging.
-: (laughs) That we can tell.
As you all saw from a memo,
generally agree with the PFD,
I think the ALJs did a good job in a substantial case
would be in support of adopting
a majority of it with of course,
the exceptions that I laid out in my memo.
So I'm happy to open up to discussion, thoughts, comments
on the items in the memo
or anything else up for consideration.
-: So I will just say subject to any feedback
as a part of this proceeding.
As I went through the PFD,
I identified key areas that I had concerns about,
and I agreed with every point
in your memo, Mr. Chairman, you hit on each one that I had.
I was gonna make a recommendation,
I can't believe we even settled on the ROE number
that's where I was gonna come in at.
Appreciate you explaining that.
-: Really?
-: Yeah, you can ask Craig.
(laughing)
-: I mean, I believe you, I'm just, I'm stuck.
-: Yeah, it's weird.
-: I'm pleasantly surprised.
-: I appreciated the methodology outlined in your memorandum.
So that's where I'm at as a starting point,
obviously hear everybody out, but appreciated the document.
-: Thanks sir.
-: Looks like I'm gonna get voted down again, but.
(laughing)
-: It feels good to get out of your system.
-: That's right.
I appreciate the memo, I appreciate the process
that everybody has gone through, all the parties have.
I have tried in my own way to make vegetation management
a priority for everybody.
As you all may recall one of my jobs many, many years ago
started the investigation of the 2003 blackout,
which began with a tree,
and many other challenges that our system face
at the distribution level are because of vegetation.
It's the single most issue.
We do a lot of things at ERCOT,
we do a lot of things in reliability rules
that make our system safer and reliable,
but the single greatest issue is trees,
it's vegetation contacts to in our rights of way.
And I agree with your memo, I think we need reporting
on what the vegetation management programs continue to be,
what are the active vegetation management procedures?
What are the lines that are being tripped,
not just the last 10 and their SAIDI and SAIFI report.
We need to really get our arms around this in my opinion.
And I just feel that in an area that,
and one of their service territory areas
they have a lot of trees we've had wet weather years.
First of all, I think an increase in the money
for vegetation management is warranted.
I can't sit here and say,
you got to improve your vegetation management
and then not give them some money to do so,
and I believe that,
and I don't even know if the number
that we're giving them is the right number.
It may not be, it may need to be more,
but if we want the numbers of distribution outages
to be reduced, we have to address this issue,
and I brought our context app
for all of the distribution utilities.
How do we ensure that rights of away are cleared?
And how do we ensure that we're using technology
best practices, drones, LiDAR,
other technologies that can help us improve
and target the necessary vegetation management practices
that we need to ensure that these systems are reliable.
I spoke with SWEPCO a few weeks ago about a single tree,
and one of their rights of away, they made a mistake,
and I acknowledged it was a mistake,
but it showed a lack of coordination.
It caused 7,000 customers to be out of service.
And it doesn't work for me,
this is the basic principle of managing these wires
for their customers is being reliable
and vegetation management is absolutely key.
And that is why I think that a 9.0% ROE is the right number,
not 9.3 but a 9.0 I think it's a important signal
all across the industry to say,
"Guys get your right of away clean,
get your house in order."
You can do a lot of things
with a lot of cool technologies out there when it comes
to smart meters and this and that,
but they don't even work,
if your rights of away aren't clear and your outages happen.
So with that, that's my proposal.
But I just, I want this to be a message
to all the transmission and distribution utilities
that we've got to get this in order,
it is an ongoing annual issue.
I don't expect it to go away, and I know y'all don't either,
let's work together to get it solved,
let's find the best practices to make it happen,
let's do what's right.
-: So on that Commissioner points well taken,
and I thought about that too,
but in the same vein that I got to have the money
and the resources and the wherewithal
to accomplish the mission.
And so that's, again,
why I didn't want to cut SWEPCO too hard
on the return on equity.
And again, provision is made within the further conditions
to remediate against trees.
But you don't consider those adequate, sufficient,
you've worked in this space.
-: First of all, I don't consider,
I mean, for the vegetation management plans
on all of our transmission or distribution utilities,
the amount that they spend is very small.
There are lots of challenges with this.
I mean, most of this is contracted,
so the contractors, there there's a lot of competition
for these contractors,
keeping them on your system is hard.
Maybe some of this should be brought in-house
and that should be a consideration
so that they can have some minimal component of this
that is, in their rates,
and they know that it will be done every year
and it will be supplemented.
That's obviously not for right now.
But I think that, I mean, I'm happy to negotiate on an ROE.
I know that that is the biggest issue
that we're setting here,
but the biggest message that I just want to make
is we got to do vegetation,
we have to do vegetation management.
We have to provide the right amount of money,
they have to be willing to spend it and spend it efficiently
and wisely and create the best practices.
-: Well, I believe I got your message,
I mean, that's a message, Mr. Chairman.
-: I'm certainly happy to just have the discussion about ROE.
It's an important issue and an often overlooked issue,
especially in the public domain.
And where our citizens interact with the resources we manage
is when tree branches fall in lines.
So it's a majority of the outage,
the vast majority of is we have,
so I'm certainly happy to have the discussion.
-: Can I just say one other thing?
-: Yeah.
To interrupt, I'm sorry, I meant to say this before,
but if we look at their last right case,
there was another issue in there
that they were supposed to report on and supposed to do,
and that was called vegetation management.
So this isn't something that's come up in 2021,
this is something that happened
in their last rate case as well.
(indistinct)
-: I would also ask if do you have either formalized
or informally a benchmark of the amount
of like dollars per mile,
or is there some benchmark in other markets
that you would prefer to have that we can set as a standard?
-: To be fair I think that's on a utility by utility basis.
It has to do with the amount of vegetation that they have,
the amount of rainfall that they have in the region
so I don't have that.
I'm sure there are some that are out there
that we could coalesce around.
I don't believe that the utility would be opposed
to doing more tree trimming, I think they probably wanted,
but we gotta find a way to do it efficiently
and in a way that helps consumers.
I think the last thing that I'll say on this
is we can't let this become an issue every single year,
every single rate case, has got it,
we got to start seeing progress.
My look back I haven't seen a huge amount of progress.
-: Yeah, behavior hasn't changed based on past efforts,
past tools, so what do we do differently
is what I'm hearing, hearing from you.
We've got some folks here that I'm sure we would be happy
to answer some of your questions here.
-: Yes, chairman thank you.
Bill Co on behalf of SWEPCO
and joining me here at the table is SWEPCO's president
and chief operating officer.
And Commissioner you are correct
in that we have addressed vegetation management
in the previous two rate cases.
And in both of those instances,
we have asked for more money to be earmarked
for vegetation management,
and we've gotten that and we've filed monthly reports.
And you can see that work improves the reliability
on those circus that we can get to.
We can't get to them all at once
but the company has been building that capability, I guess,
through its rate cases.
And concerned that throwing in some kind of penalty
on the ROE that's gonna be there on the entire rate base
all year long is counterproductive
to maintaining reliability and continuing
to expand the vegetation management program.
And I don't know, Malcolm,
do you have anything to add to that?
-: Sure, good afternoon Commissioners?
So on the issue of the additional (indistinct)
I would ask you do not do that,
I think that's being too punitive.
I would point out that we have increased
our transmission line, vegetation management dollars
and I think I've shared that with Commissioner Glotfelty.
And it is true we did have the event
that you've referred to,
and we certainly try to manage our systems
so that those don't occur T and D systems.
And trees grow and tree outages do occur
just like the equipment failure, excuse me, occur as well.
And we don't and just can't anticipate
and prevent every outage that can occur of course.
And so we respond to those that do occur,
and we try to take the dollars that we do have for T and D,
and get the most bang for the buck.
So again, I would point out that we have increased
the vegetation spending for T and on the D side,
as Mr. Cole mentioned, we've been working
on increasing that, and we have increased those
in previous cases,
and we're spending those for the need
is absolutely the greatest thing we provide reports
on that annually.
If you look at our SAIFI which is the frequency of outages
in 18 and 19, and then compare that to 20,
the SAIFI improved in 20,
which means there were less outages.
And of course, if we could eliminate all outages
there would be no minutes, of course.
So, but the valleys that we focus on preventing,
or the ones where the needs, the grays
in the most benefit would occur.
So I feel like that we have been able to do that
since our SAIFI the frequency number
improved in 20 compared to the previous years,
although our duration numbers did not,
but duration numbers are affected
by of many different causes,
lots of different things depending on, for example,
just how many hours are occurring at one time, for example,
it can affect the duration number.
So without getting too deep in the weeds, I won't do that,
I could, but I won't do that.
But we're focused on improving reliability
and have the same focus that you do Commissioner
to make it better and that's our goal.
So I'll be glad to answer any questions
that you might have about that.
-: Well, I appreciate our discussions and thank you
for following up on the incident.
I still, I kind of scratch my head a little bit,
now I recognize your answer,
which was it was gonna get cut next year,
and that we had had a communication issue on a line
being taken out, but the standards that customers expect
are for you not to do that,
for you all to maintain the rights of way
that they've entrusted you with.
And I understand that the ROE adjustment is something that,
affects the entire year.
I feel that this has been an ongoing issue.
Some of it it's our responsibility
that we have to give them more money.
Some of it it's their responsibility
that they got to manage their rights of way.
They got to come in here and tell us,
It's not getting the job done,
we can't sit here and say
that we know everything about every right of way
on your system, but we have to trust
that you all will come to us and say,
these things aren't working,
we gotta figure out a different way, that's my view.
-: Is there some combination of a reduced ROE plus more money
that is currently asked for?
-: Well, I think it was staff that suggested
a four-year cycle.
-: Rubber repairs for efficient staff,
we recommended a four-year trim cycle in docket 46 449,
the previous rate case and in this one we believe
it's the best solution to make sure
that they're trimming their trees every four-years.
SWEPCO came back with a number of those $32 million,
we have no evidence of how much it would actually cost,
it would be more than what they're requesting in this case,
but it probably is in staff's opinion the best solution
to get their distribution,
vegetation management under control.
-: So I'm not an expert on vegetation management trim cycles.
I know they can be three, four or five,
in fact, I think we ought to understand the value of,
and the benefits and the cost of each.
-: By geography.
-: Absolutely, it's very geography and weather dependent.
So I don't know, a four-years the right cycle,
I know four-years is a much greater cost, so yes,
I would believe that we would need
to coalesce around a number
that gives you additional monies in that space,
or find a way to create another mechanism for them
to spend a certain amount of money on an annual basis,
that's greater than what they're doing now that,
but with that we have to see drastic improvements
in these numbers, and we have to see drastic evidence
that they're using the best technology
to determine how they select the rights of way to be cleared
and cleaned out.
-: And Commissioner Glotfelty have some recommendations
also regarding an independent consultant
Keith Rogan says here for staff,
we had talked about making the independent consultant review
transmission related outages,
including vegetation management,
but also that recommendation could extend
to distribution level to review where there are hotspots
for outages in the near term,
and try to implement a cycle in the long-term.
-: What kind of consultant are you thinking of there?
-: Keith, you might be better to answer that.
-: Keith Rogan, Commission staff,
the recommendation for a consultant
was on the transmission system
because of the cascading outage.
In addition to the vegetation management issues,
there were other causes of failures,
so we made that recommendation
to try and get some reassurance
that this is gonna be a problem in the future.
-: But it's not specifically
a vegetation management consultant or external resource.
-: It should include a review of vegetation management,
but be more widespread than that for transmission,
at least transmission level.
-: So I guess, knowing what I do about the industry,
which has not hit anything by any means,
I'm scratching my head to think of
who are those consultants out there,
all the consultants that I know
that are kind of engineering consultants
and those that know things about the system say,
"We don't know anything about vegetation management
and go talk to the tree guys."
And there are a handful of them.
Do you all have thoughts in mind as to who those might be
that would do both or subcontracting or?
-: I think subcontracting could be an option.
Yeah, I think from stuff.
-: That was part of my concern,
not only where is that expertise,
but also the scope of what the consultant's supposed
to figure out, but also above and beyond that
who would the consultant consider themselves working for
and which master would they think they're delivering?
What answer to, I worry,
we'd spend a lot of time and money for a consultant
to come back and say, "Everything's just fine."
-: Or you need to cut your trees.
-: Right. (laughing)
-: Yeah, but happy to hear.
-: Chairman if I may on the four-year cycle, I mean,
as Mr. Smokes says, the company is very focused
on the liability, just like you are,
but you're never going to completely eliminate outages.
And so what the company is doing is trying to find
that amount of tree trimming that is giving customers
the bang for the buck as as Malcolm says.
And I think we thought that moving to a four-year cycle
was too much money, but we are increasing
as Mr. Smoke said, each rate case we've increased
the amount of vegetation management,
and we've done the best we can do with that money.
And again, I'm not sure why the company is being punished
through its ROE, if we ultimately decide
that we just need more money for vegetation management,
I'm sure they would be happy to agree with that.
Oh, I was gonna say I feel confident
you hadn't hit the sweet spot yet.
(laughing)
-: If staff can respond,
since 2017 which was during the ongoing 46449,
their SAIFI scores dropped significantly in 2018 and 2019,
and have not gotten above their 2017 level,
even though they get subsequent additional money
in that last docket.
So we believe that just giving more money to the problem,
isn't a solution to the problem.
And it needs to be something else
in a company with more money
so that they will actually have improved SAIDI
and SAIFI scores.
-: That's a great point.
Throwing money at the problem
doesn't always solve the problem.
-: Sure, but is there, I guess my earlier question was,
is there for this particular case,
is there a little bit of stick and a little bit of carrot?
Not all the way to 9.0, but.
-: Yes, there is.
-: Something, while also saying that,
what we've tried in the past hasn't worked,
so let's add a new metric,
a new standards and more resources.
We're not going all the way 9.0 but next time.
-: We are.
-: Yeah, I think that's a fair discussion
to have and a fair number.
How much do you all spend on just say,
distribution vegetation management?
According to this rate case it's.
-: Yes, Commissioner good afternoon,
Tom Bryce on behalf of SWEPCO
about nine and a half million annually.
And with the requests that we asked for in the case,
it'd be about 14 and a half million.
So in our Texas jurisdiction.
-: I'm sorry.
-: In just the Texas jurisdiction.
-: It just distribution, not transmission as well?
Narrator: That's correct.
-: What's the transmission total?
-: So with all of the East Texas growth,
with all of what they have there it's $9 million.
And to me that you have thousands of miles
of distribution rights of way.
We've got to find a better solution
to target that money, again to use technologies,
to use best practices, set the best practices,
create the best practices.
Don't just follow them
and let's figure out how we can solve the problem,
more money is partial the issue.
-: Yeah, well, so where do we get the best practices?
-: Well, I think as a staff we ought to have that discussion
that may be within many of the utilities around the state.
I know there are best practices out there.
SWEPCO you may have some of them,
you may be using some of them.
I don't have that information.
-: Fair question.
-: I think that.
-: Let's ask them, what do you all as a company
consider industry best practices on vegetation management,
both in terms of KPI, some sort of benchmark
dollars per mile and/or highest and best use of technology?
-: Well, let me just kind of slate answer that
if I could this way.
First of all, we recognize that we don't have enough money
for T and D and we've increased on T,
and we've increased on D over the last couple of cases.
And we're asking for some more,
because we recognize that we don't have enough,
and we didn't propose going to a four-year cycle
because it would be a significant increase,
that's why we didn't propose
going all the way to four-year cycle,
but we did calculate the cost.
And so what we have found is that
when we trim circuit, we trimmed the whole surrogate
because hotspotting it's a very inefficient way
of spending dollars.
If you trim the whole circuit,
what we found is based on our data in the last 10 years,
is that we will eliminate over 80% of tree calls outages,
and minutes if we can trim the whole circuit out,
that's what our experience shows us in our territory.
And so we have reduced the SAIFI in 2020.
Ultimately the goal is to prevent the outage from occurring
and the minutes come with it when you prevent the outage
that we have reduced SAIFI
and I'm glad to be able to point that out
because I'm proud of that fact.
But the best practice is if you can trim a tree,
trim any line out, so that, for example,
if you trimmed the trees for four-years of growth,
and that means you trim every tree a little bit different
because some trees grow faster than others,
so you trim the trees adjacent to align
for four-years of growth.
And theoretically in four-years,
if you can be back there, you're just in time,
the wire's here and the tree has just got out there
and there just before at the right time,
so you can trim that tree again for four-years of growth.
So that is the best practice.
And so trimming those lines like that
would mean that you would keep
the outage reduced significantly.
And we have been not on just a we'll go here every so often,
we've been going where the needs to graze
and that's why we know that our data shows,
this is an experience shows us that 80% improvement
is what we achieve.
-: Would that metric say that metric again,
80% improvement based if you do blank.
-: If we trim and surrogate from end to end
and all the customers on that circuit
and every piece of wire as well,
obviously, that's kind of intuitive,
but I want to make that clear, every circuit end to end,
then for four-years of growth,
then you will eliminate 80% of the tree cause outages
and minutes after that, as a result of that,
and the customers will experience that.
And so when we do that,
those customers will be where we trim those,
where we do that,
they don't think there's a reliability problem.
'Cause they're seeing 80% improvement.
In fact, the field employees will tell you,
who work in that area,
I don't have any more overtime over there
because all the trees are trimmed for example.
So the evidence is there that is very, very substantial
how the improvement is there when you do the trimming.
So that's what we've been doing,
with the money that we've got,
we've been prioritizing and spending the best we can
and trying to increase it as each time we come in
for the case.
-: Well, it sounds like a good start
on some sort of metric or benchmark.
Do you all utilize or deploy any real-time monitoring
or preemptive as IT or industrial engineering
we'll call it preemptive maintenance,
trying to spot the trouble before it becomes trouble.
-: We have people in the field,
and so if we know about a problem beginning to occur,
because some small outages occur,
then we will know about it, about that problem.
We have people in the field that are patrolling lines
as a normal course of their job.
And if they see a problem developing,
then we can change our plan.
Our plan is not locked down so that we,
this is the way it's gonna be for 12, we don't would say,
okay, there's 12 month plan,
we're never change for 12 months,
we will make cores corrections as needed.
-: But there's no other than line of sight observation,
there's no tool you all utilize to get in front of outages
before recognize exceptional vegetation growth
before there's an outage
or before someone happens to spot it.
-: I don't think there's any technology
that would tell you to go here before
the trees would grow in, and I don't believe there are.
-: I would say that we should explore that
'cause it's been my experience that using LiDAR
and other technologies,
both satellite and both aircraft, -: Drones.
And drones you can figure that out and it can be done easy.
It's done by other utilities,
it's probably done by your sister utilities in the mountains
in Ohio and West Virginia and such where
that it happens there as well.
-: We do use our own transmission.
So we are using a lot of LiDAR
but just not on every inch of distribution with it.
-: To build on that, I know there's extensive drone usage
in pipeline monitoring
and right of away monitoring there as well.
And there are many landowners familiar with that.
So it's out there.
-: And I understand that we use drones on transmission lines,
drone surveillance as well.
So yes, the technology that you're talking about
is being used.
-: And I recognize, I mean, the amount of distribution
right of away that you have versus transmission right of way
is three or four times is my guess,
maybe 10 times I don't know, but it's a much bigger task,
but I would also guess that
that's where the most of the outages come.
All right, and the most recent incident
was that transmission voltage,
but distribution issues they happen quite a bit,
I hope we can come to an agreement, Mr. Chairman,
I want to see the problem solved,
I want to be able to say that SWEPCO
is a leader in this space,
that they're trying to find the best path forward.
We've got to see better improvement in that,
or I have to see better improvement in that
to make that happen.
They're a very large company,
part of a very, even larger company.
I know they have some great practices and I'd love to see,
how we can better improve this.
-: Commissioners Robert Parish again,
we had in our testimony recommended a 12 and a half point
basis reduction on a 9.35,
which was our recommended ROE to 9.225.
If the Commissioners believe maybe
that would be reasonable either at 9.225
or reduction from 9.3 of 12 and a half basis points,
which is what we had calculated
was an effect to put on their ROE
based upon that outage of August 19th, 2019,
maybe that's some middle ground,
but I defer to the Commissioners
on y'all's expertise on this.
-: Chairman even the 9.3 is about 35 basis points
below the average of what's being awarded
and throughout the nation.
And it's far below any Texas utility.
And so I think what we're trying to do,
if I understand correctly
is that we're trying to encourage investment
in utility infrastructure and not discourage it.
And so I think what Mr Parish is talking about
would absolutely be a discouragement to making investments
that we need to help maintain reliability.
-: Well, and if I could add Commissioners
to Mr. Smoke's point earlier,
the reliability measures are important,
but it's important to look at each one,
as Mr. Smoke said, SAIFI has leveled and trended down
as a result of the very dollars that you've allowed
the company to spend incrementally.
The duration question is influenced by a number of factors.
As Mr. Smoke said that we can't control
where there were significant minor storms,
and I think there's even some anecdotal evidence that says,
as you spend incremental tree trimming dollars to some point
you could see an increase in SAIDI,
because what that does, is cause a number of storms
to be classified as minor storms,
which are included in the SAIDI calculation.
If we simply didn't do tree trimming,
these storms could be defined as major
and therefore excluded from the SAIDI calculation.
So it's important to consider the exact ramifications
of these measures and SAIFI has trending in the manner
that we wanted to, as a result of this incremental spin.
Major storms are excluded from these calculations,
so anytime you have a storm that takes more than 24 hours
for a certain number of customers, it's just excluded.
And by doing this tree trimming that we've done,
we've been able to restore service more quickly,
and therefore some of these minor storms
are actually in the calculation.
I know that seems a bit counterintuitive,
but that's the outcome of spending
some of this tree trimming dollars up to some sweet spot,
which I believe is 5 million that we're talking about today
will put us at that sweet spot
and allow that trend to go in the right direction.
-: Commissioners.
Narrator: Yes sir, go ahead.
-: I will be very brief.
Ben Hallmark for TIC I just wanted to briefly
address the question on average ROE.
It was in the 965 968 range in 2017,
and spoke last rate case that you noted
in your memorandum chairman, it's declined since then,
and we're now in the 93 94 range.
If you look at interest rates,
if you look at the spread between interest rates
and authorized ROE being at an all time high,
our recommendation was 9.15 and that's irrespective
of these vegetation management issues.
So I just wanted to make sure that, that effective
was out there as part of this conversation.
-: To agree with Mr. Hallmark stats 9.35 recommendation
before the reduction was the middle ground
so we also disagree with Mr. CO's analysis of ROE
being that high.
We believe 9.35 is the middle,
and that may be around 9.1 is the bottom,
but not in the 9.6 as he stated.
-: Chairman the middle of the proxy group
for staff's witness,
the average ROE for the staff's witness was 9.61,
for TIC witness the middle of the average ROE
of their proxy group was 953.
And so we're not talking about ROE that are competitive
with the rest of the industry.
-: Those numbers go back to 2017,
we're in a declining space here.
And that's what we address in our brief.
And we'd look at the equity risk premium
that the utility business is less risky than it's ever been
with all the generation cost recovery radars
and everything else that we have,
and yet we're awarding these ROE, authorize ROEs
that are at a higher premium than interest rates
than ever before.
So in our view a 915 is the right ROE,
before we talk about vegetation management.
-: Mr. Chairman.
-: It's a comparison to other investment options today,
not four-years.
-: Right, and this Commission has been tasked
by the Texas Legislature
with setting ROE for Texas utilities.
Not based on what a Commission in Oklahoma did,
or Michigan or Wisconsin or anywhere else.
-: I was just going to add Mr. Chairman,
I believe this is in either our exceptions
or the replies that there's no noticeable trend downward
in authorized ROE across the states.
If you look at the information in the graph
it's been flat over this time period,
that Mr. Mahal Marcus is referencing.
-: Right, and there is a table on page 25 of our reply
to the exceptions that demonstrates just that,
that there really statistically is not a trend.
-: Well, what was it, Jimmy you said earlier,
just because we done it that way before doesn't mean
we gonna keep doing it.
Other questions for folks we've called up.
-: None from me.
-: Okay, any other, I guess, for staff,
I'd ask in a perfect world in the concept of the consultant,
vegetation management consultant,
what is the work product you would,
perfect world what is a work product
you would expect to receive in the path forward
that would enable us to take to drive the changes
that we know we need to prevent these types of allergies
and to improve the quality of service
our constituents receive?
-: Yeah, the recommendation for a consultant
was based on that cascading outage
that had not only vegetation management issues,
but there were other issues as well.
And given the fact that it was a cascading outage
that affected a large geographic area,
we wanted reassurance
that there are not some underlying problems
that are still out there that could cause a recurrence
in the future.
And obviously vegetation management
was a clear part of the problem.
And in terms of how to manage the vegetation,
there are other things other than a standardized trim cycle
like you do on the distribution system
that could be employed.
So just given the severity of the problems,
that was our recommendation.
And just to clarify too on the trim cycle
for the distribution system,
staff didn't make that recommendation,
but it was actually based on SWEPCO's witness's statement,
that, that was the way to take care of the problem.
We are aware of utilities that use other practices
beyond just the standardized trim cycles
that can also be employed,
but given what was in the record,
and the fact that this has been a chronic problem
it's not new.
They've been underfunding this issue for years and years,
it's been too little too late,
so we wanted something serious done going forward,
that's what we were trying to achieve.
-: Yup, same question for you I suppose.
In a perfect world if we go forward with a consultant
like this, what is the deliverable?
How do we use that to move forward?
Is it benchmark, compliance standard?
-: I think it's maybe all the above.
I mean a lot of these it's benchmarking
the SAIDI, SAIFI lines, the 10 highest that 10 lowest,
I mean there are a lot of things
that we could have them look at.
I don't know the total universe of that right now,
but consultants are expensive.
I don't know if this is a million dollar consultant
that could be used for vegetation management.
I know that there are good consultants out there
that do vegetation management.
I mean, ultimately what I think
is that it's the utility's responsibility
to manage their right of away.
It's like the data shows us you're not doing it,
how are you gonna do better?
If you wanna hire a consultant and pay for it
with your shareholders, pay for it,
but get the numbers right.
The rate payers shouldn't have to pay for a consultant
to tell you how to do your right of way management.
-: Which you're already doing.
-: That you should already be doing.
Your shareholders can pay for that,
your parent can pay for that.
You can spend the money and maybe,
but what we got to get it fixed.
So I would say that I understand the staff recommendation
on the consultant.
I believe that it's the utility's responsibility
to get this done,
and they need to be coming back to us
with what they need to make it happen.
And I don't necessarily believe that $5 million we'll do it.
-: So other than a change in ROE,
is there something else you'd suggest
like move to the four-year term cycle or?
Requires more evidence?
-: So the four-year term cycle, I think folks in the case
of that was gonna be a $30 million modification,
I don't, I'm sorry.
-: Well, over 30.
-: And Commissioner Glotfelty there is nothing in the record
that indicates how that 32 million,
they came to that number,
so staff is unaware of how they came to 32 million.
If we don't get a four-year term cycle,
have SWEPCO before their next base rate case,
at least do an analysis of how much it would cost to move
to a four-year trim cycle
and show exactly where they're gonna have to spend
that money over what period of time
to be at a four-year trim cycle.
-: What the other utilities, do we have four-year term cycles
among all the other distribution companies around the state?
Or would this be like the first time we set a.
-: Run down on the Swami Commission staff,
Entergy does have four-year trim cycle,
SPS has a five-year cyclic interval.
So yes Commissioners that are other utilities
that do have trim cycles and vegetation management plan.
Narrator: You said Entergy is four-years?
-: Yes, sir.
-: Yeah, so I would say that Entergy is more like SWEPCO,
SPS is not, SPS is pretty arid up there.
-: That's right.
Maybe a four-year trim cycle is the right thing,
is the next step to say,
"Look, let's get this thing going and let's get it right."
And mandate a four-year trim cycle.
I forgot how we get the resources to make that happen,
and the best practices.
And we can modify the ROE to make it something.
-: You guys had analysis
on what a four-year trim cycle looks like?
We did have evidence of how much it would cost.
And I think that was sponsored
by our vice president of distribution.
I can't tell you sitting here right now
exactly how he made it through.
-: There is a number in evidence it's $32 million,
but staff is not seeing the underlying evidence
that gets to that number 30.
-: The methodology that gets through.
-: Right, exactly.
How much of that is catch-up to?
They're way behind a four-year term cycle now
and they've been that way for a long time.
-: What would you say just in practice,
your current trim cycle is?
-: Oh, sorry, what was the question?
-: What in practice, what is your current trim cycle?
-: Well, this is a calculated trim cycle,
and it's the number was in testimony,
I don't remember what it was but it was eight to 10 years,
as I recall, that's subs a check.
Narrator: May I?
-: Yes please.
-: So SWEPCO has what they call
a targeted management program.
They don't have a standalone tree risk management program,
which is also a practice with many other utilities.
We had provided a graph in my testimony
on like year over year spend of how much.
They have entities all over the place,
it is not even half of what they suggest
is for a four-year term cycle.
So just going by how the SAIDI, SAIFI,
SAIFI yes they are right,
but according to how they are forced outages are,
and the amount of spend it does not add up, sorry.
-: No, no, no that's perfect.
I guess what I was really angling at was when you mentioned
that the full circuit trimming solves 80% of the problem.
How on the full circuit trimming,
what that solves that 80% of the problem
if you take that framework, how often,
what is the cycle that you all get to that,
that is utilized?
-: On a four-year cycle we would do that every four years.
-: Currently, how often do you trim the full circuit
to get to that 80% of the problem solved now?
Narrator: Equal 10 Years, right?
-: Is it calculated as long as in four-years.
But am I right in saying that you're not on a cycle
that you used that in targeting.
-: But they don't do the full circuit at time,
so that's what I'm trying to tease out
is if you have that informant, I mean, that's kinda,
that would probably need to be extrapolated
for more detailed look at the operations, but that's yeah,
that's what I'm trying to get at.
-: What's the program that you said
that other utilities currently use, that they don't?
-: Well, they have a tree risk management program,
-: Tree risk management program.
-: Correct, and Commissioner, one of the two answer one,
one of your, sorry, chairman,
like to answer one of your questions.
So when they came for the last rate case,
they still they having a targeted program
and we did the wide Commission approved additional funding,
and they had certain,
they had provided a list of certain distribution feeders
that are gonna be targeted.
And they have, again, provided us a list of targeted feeders
that will be addressed with the additional 5 million
that they are asking.
So they basically have these feeders that they target,
and they do the distribution VM for those feeders.
It is not an entire distribution vegetation (indistinct).
-: Exactly.
I sorry, Mr. Chairman, thank you.
Alfred Archuleta, representing cities,
advocating reasonable deregulation, known as CARD.
I hesitate to step it up here
'cause there were enough folks already up here
addressing the issue.
The ALJs made a proposal that SWEPCO be required to conform
to a compliance program,
to report on what it's doing with its vegetation management.
We opposed adding the $5 million
to the vegetation management program for other reasons.
And one of them was precisely
because of what folks have already discussed.
We've given them money to do this before,
and we can't seem to solve the problem.
To say that you can't take it out of my return on equity,
because that's punishing me
we don't believe that's necessarily the case
because the evidence supports returns on equity
from below nine to above nine, for that matter,
including SWEPCO's witnesses and the ALJs landed
where they did a 9.15 is established recommended,
or as a TIC recommends would be good.
Our witness recommended 9% irrespective of what you do
with your management program.
The other thing I'd ask you to keep in mind
and you touch upon this Commissioner Glotfelty
is why we're here, what's the Commission's role?
And that is to serve as they substitute for competition.
If a company has not performed in a particular area
in the past, if it's in a competitive market,
what does the market do?
The market likely punishes them.
We're not asking you to punish SWEPCO here.
We believe that a return on equity of 9%, 9.2 9.15,
somewhere in that range is a sound return on equity,
irrespective of what you do with vegetation management.
With regard to vegetation management,
the ALJ gave you a good recommendation,
and that is require SWEPCO to come in
with some type of reporting
to show us what it is they're doing on that front.
For those of us, who've had been around a while,
a few rate cases back, we had a surcharge,
a radar SWEPCO's tariffs, where we gave them,
I forget if it was 10 or $15 million
to undertake a vegetation management program.
It lasted, I'm going by memory,
I wanna say it was a 12 month radar,
but yet here we are again.
We have concerns?
Yes, with the quality of service.
And we're not saying the quality service is poor,
SWEPCO is a good company.
We have issues with vegetation management,
they don't seem to be addressed.
The ALJs have given you a good out on how to follow up
with what it is SWEPCO is doing
with regard to vegetation management.
We suggested that, that would be the route,
the return on equity.
We believe it should be in the low nines at the outside,
irrespective of what you do with vegetation matters.
But if we go back to the fundamental role
of the Commission has to serve as a substitute
for competition, you would take that into account.
I hesitated getting up here
and repeating that and saying that,
but my thought is that's where we are in terms of the link,
if any between return on equity and vegetation management.
Narrator: Thank you.
-: Mr. Chairman could I respond if that's all right?
Narrator: Sure. -: Just for a few moments.
-: And we will go through Commission stuff.
-: The record in this case supports the success
of the tree trimming program.
I disagree that the reliability is degradating
and that these targeted dollar
is not accomplishing their objective because they are,
there is overwhelming evidence in the record
that on the circuits trim the reliability improved
by 85 to 90%.
First and foremost,
secondly, that the SAIFI measure from the last rate case
has stabilized and in most recent year come down,
the objective.
-: So if you know that it comes down
and it works to trim the trees, why aren't you doing more?
-: Well, it's always been our approach Commissioner
to balance the reliability with rates.
Do customers demand perfect reliability or?
-: This is $9 million and vegetation management
for the entire company?
-: No, sir, that's not correct,
it's nine and a half million for Texas,
we spend about almost 40, well,
32 to 35 million total company,
which is a significant amount for tree trimming,
and 14 and a half million at the requested level
I believe will certainly give us this opportunity.
Not only improve the performance
on the circuits week we trim,
but to improve that overall reliability measure.
And I want to go back to the comment I made earlier
that it's designed to do just that.
And it's going to keep the system
from experiencing fewer outages during storms.
But when that does occur,
when there is an outage in a storm,
by having trim the cycle, you restore it more quickly,
and that becomes a minor storm.
When you have a minor storm, those outage minutes
stay in the SAIDI calculation,
and it's caused that SAIDI calculation
to go up a little bit, but that in the end,
that sweet spot where if we get this 5 million,
I believe there's a chance where that SAIDI number
does begin to come down.
But we don't need to go all the way to the four-year cycle
for that SAIDI number
to start trending back downward in my view.
But it's important to get out there
that there is significant evidence in the record
that tree trimming has been beneficial for our customers,
and we've shown that, thank you.
I don't think anybody is arguing
that tree trimming improves reliability,
there's just not enough trees trimmed.
-: Here's the question, how does Entergy make it work
on a five-year cycle?
And SWEPCO is not saying geography (indistinct).
-: Entergy four.
-: Entergy's a four-year cycle and I believe that,
-: Oh, they are a four-year cycle.
Narrator: Entergy is four.
-: How do they make it work?
-: I can't speak to the,
might have to do with service territory.
-: [narrator[ Both these Texas there's a heck
of a lot of trees and all that East Texas.
-: I don't know, I'd have to look
into the details of their programs.
I don't know what they're doing differently.
I suspect they're spending more dollar per mile.
-: If I can respond to that Mr. Chair.
Narrator: Yes, please.
-: First to Mr. Bryce's points,
they reflect that the SAIFI score has started to stabilize
for the first time since 2017,
but their SAIDI score continues to be very high.
And generally from 2018 to 2020,
their scores were lower than in 2017
before they got the additional monies
in their last base rate case.
And the reason the staff went further
than Mr. Herrera and the PFD
is because there was a similar recommendation
in docket 46449 in the final order with a compliance docket.
And we don't think that goes far enough
that a four-year trend cycle is absolutely necessary
to actually get them to a point where their SAIDI
and SAIFI scores decrease in reliability increases.
And we think that spending additional money
is after SWEPCO proves up how much it'll cost
is the best way to improve reliability
and to lower those SAIDI and SAIFI scores.
-: So I'd certainly think it's worth considering
something along those lines where we ask for more evidence
to support and validate the costs
of what a four-year trim cycle would look like.
I think there's some merit there.
Any other, looked like you had some other thoughts to add?
-: Well, Mr. Chairman, certainly the company
would do the four-year cycle if funded ,
that's our concern that asking customers to pay
for another $30 million to fund it,
but that certainly company would support the four-year cycle
if funded and that's the challenge.
I think the recommendation was unfunded.
-: Jimmy, I know this is a key area for you
and you've got a lot of background and expertise on this.
So let me start with you and let you bring it home.
-: I'm a middleman here actually.
-: Staff can you tell me again what you had recommended
on a 9.3?
-: Well, it was a 9.35 ROE with a 12 and a half point
basis reduction to 9.225 I believe.
Based upon that August 19th, 2019 outage
the reduction of those 12 and a half basis points.
-: Sorry, Mr. Chair.
-: No, no, not at all.
-: I don't mean to make a show here.
-: No, no, this is the Jimmy show.
We're just the side characters.
Let me put this out for y'all's consideration,
I would suggest that for the day we table this
ask for two things, one, more evidence from SWEPCO
about the costs and validating the cost
of the four-year trim cycle.
If it comes out to the 32 million great,
but let's see the calculus to back that up,
if it's lower that would be even better.
And at the same time ask Commission staff
to come up with a more concrete,
compliant standard metric benchmark that we can link up
with a potential four-year trim cycle
so that we know what our north star is,
we know where we're going,
we know where we're aiming at.
And so that when we come in the next time around,
we have a clear metric on which to measure
success or failure.
-: And dovetailing on your last comment, Mr. Chairman.
And again, this is my first rodeo as a Commissioner here
on a rate case, but I assume
this Commission cannot tie the hands of a Commission
on future rate cases, is that established law?
-: That's my understanding,
that each Commission can make their own decisions.
-: Right, so if we establish some type of performance metric
that if rates are approved return on equity,
any type of performance measure is approved,
that shall be complied with,
that would affect the outcome of the next rate case
that's out of bounds, right?
Because we're tying the hands of the future Commission.
-: Mr. Lake I think we could probably find some cases
where the Commission has done that in the past.
-: Probably need to look at that,
but we need to figure out
what our performance measure capabilities here.
-: I would agree that you can't tie the hands
of a Commission.
(laughing)
Narrator: Even to the upside?
-: Sir?
-: Even to the upside?
(laughing)
-: Well, what do you have in mind?
(laughing)
-: I mean, there's sticks and carrots
out-performance can be rewarded.
-: Well, ECRF.
-: Yeah, there you go.
-: If I could ask a question on the evidence,
are you asking for SWEPCO to bring you back evidence
that's in the record, or are you asking for new evidence,
which would raise some procedural issues
for the other parties in terms of our ability
to evaluate that and respond that evidence
we opening the record either the Commissioner
is issuing a order based on that evidence
or remanding it back to the Administrative Law Judge,
to evaluate that evidence with regard to tying the hands
of a future Commission.
I think the standard would be a change,
have circumstances changed,
and can you change your mind in the future
because circumstances have changed,
perfectly fine for the Commission to do that,
so you can make a decision today
if things change in the future,
then a Commission in the future,
based on those changed circumstances
may reach a different conclusion.
-: Both points well-taken,
I think step one is figuring out the performance standard
we wanna solidify or crystallize,
and then we can figure out how best to approach,
ensuring compliance with it.
-: In cost to performance standard (indistinct).
-: In terms of the evidence I'll defer to Mr. Janae,
if we're asking for backup documentation
of existing evidence, where does that fall on the spectrum?
-: I think what I've heard is there's little evidence
of what y'all want.
What we're really asking for is new evidence.
Mr. Harris talking about when they see that new evidence,
they are gonna want an opportunity to cross examine,
or bring their own witnesses to bear,
which could be done in a Commission held hearing here,
a limited hearing on this sole issue in the future.
-: That's probably more expeditious in remaining to the LJ.
-: I think sending it back to solely for this small piece
would probably not be the best course.
-: Oh, geez.
-: We might learn something about vegetation management.
-: Your honor (indistinct) from TIC,
if I might offer a suggestion.
-: Sure, please find the microphone
and state your name on the record if you will.
Make sure folks at home can hear.
(indistinct)
-: From TIC your honor,
I've been listening to this and trying to say
this wasn't as an issue of concerned us,
but it wasn't one that we had a bunch of testimony on,
but I'm trying to find a way to do what you wanna do here.
And it seems to me that using the ALJs recommendation
to institute, not just a filing, but a compliance docket,
an open proceeding that could take evidence
that I would argue could give the Commission authority
in that compliance docket to use some sticks or carrots.
And that would allow evidence and consideration
and deliberation that it's difficult to do
in the final order meeting on a PFD where everything else
seems to you seem to be there.
So I would adjust at least consideration
of taking up the ALJs recommendation
to open up a compliance docket,
start thinking about what teeth you'd put
and what you have to require in that compliance docket.
-: What mechanisms would we have
like once we write this check,
check goes to them and it gets cashed?
-: Well, once you issue a, yes.
That is right, so what can you do in a compliance docket?
That's a good question.
There are mechanisms for you to,
if there were serious problems or mechanisms
for the Commission to reopen a rate inquiry,
to determine whether the rates are excessive
in light of performance.
That's a pretty big stick that is also hard to wield,
but it's pretty big stick,
but it just seems that there is more that can be done.
And these things they're not in the record,
and there's gonna be arguments about whether they're similar
to Entergy or whether they're not.
And there's gonna be arguments about what does the N,
and I see this opening up a lot in terms of a remand
or possible hearing.
And granted the biggest stick you have is
at a final order meeting in a rate case granted,
but it seems like maybe the balance in this case,
in light of the additional information you need
would favor the compliance docket.
And I believe the Commission still has ample sticks to use,
to ensure reasonable action
in accordance with the compliance docket.
So offer that almost as a suggestion from the outside
and your honors but as a possible way
to get us to a final order
and still address this issue and all the complexity of it.
-: And if I understand what Mr. Van Meddles is saying
is he's talking about severing this reliability issue
and cost issues and into a compliance docket
and moving forward with this case,
if that's true, then I think this concept
of lowering the ROE for reliability reasons
would be severed off into that as well,
and that we can proceed in this docket
with what is the ROE really for SWEPCO's competitors?
-: So you're suggesting we get you back up to 9.6?
-: Yes, 9.6 that would be good.
-: Staff has concerns with the compliance docket,
whether we would be able to,
if we approve SWEPCO's funding now for their VM,
go back and retroactively change it
and institute a four-year trim cycle.
And if that's possible, staff would be okay,
but staff would prefer to maybe have this
for the Commissioner so that y'all can see the new evidence
and y'all can weigh in and ask questions
and we can get this resolved sooner rather than later,
because SWEPCO has again not had great
SAIDI or SAIFI scores, and we wanna make sure
that the new vegetation management program gets implemented
as quickly as possible.
And we think maybe a Commission hearing would expedite
that process on the VM issue alone
and the cost of the vegetation management program
for four-year trim cycle.
But we leave it to the Commissioners that your discretion.
-: All right, y'all gonna make me jump in now.
So the compliance docket that is briefly mentioned
in the PFT and very briefly mentioned,
I don't think as a compliance docket,
and I think it was a docket
to basically accumulate information
similar to what you asked for in your memorandum,
going forward, give us some data points to see
how well you are doing.
-: More than just the 10% or the top 10,
just the limited scope of the SAIDI.
-: I'm not sure there's really no talking about
what the scope of the information.
-: I think that's our intent.
-: Yeah, our intent of what you were.
-: Certainly my intent to get more,
that's more information.
-: Putting the final decision off here.
If you're serious about looking
at a mandating a four-year cycle on this,
I think it's fair to say it's gonna cost more
than what they've asked for.
Going in and holding a hearing to figure out
what that is gonna be an effort,
we're going back to hearing,
parties are gonna wanna do probably discovery.
They're gonna want to bring witnesses.
We're looking at making a decision on this case
in the next year.
I don't know when,
I mean, y'all got a lot of other things own.
-: It won't be this, it won't be us this year,
given the bandwidth issues that we've got.
-: Clearly the PFD has made,
SWEPCO has asked to PFDs agreed and recommended an increase
in the funding in their expense items
for vegetation management.
If you want to send a signal,
and this is still not binding feature Commissioners,
you pick your ROE number today
and you indicate what you will do to them
when they come back with good SAIDI, SAIFI numbers,
with good vegetation management number,
give them a target to shoot for, let them go out and work.
I mean, we can get a lot more complicated
or you can talk about splitting this whole number
out of base rates.
We'll split it in a radar let's go do something else,
let's hold some, let's get into piecemeal, right?
Making let's challenge that law I mean.
We can get as complicated
and ridiculous as you want to hear.
-: How serious are you Jimmy?
-: Why'd you write this memo?
(laughing)
I think this is what.
-: I mean, I throw one before, I'm sorry to interrupt you.
The utility is free at any time to file rate cases.
They wanna go in and decide how to do a four-year
or three-year cycle on their stuff and how much it costs.
They can put a rate case together and come back in
and ask you for the money.
I mean, this is not the final rate case ever.
I know we have these new four-year cycles,
but they're not precluded from coming in.
-: That would be an unfunded mandate.
I don't even know that.
Narrator: Oh, come on.
(laughing)
-: And it's $38 million and it would be unfunded
in what Mr. Janae is talking about is incur a test year.
That's gonna take a year file a rate case,
that's gonna take six months to put together
and then another year to litigate it.
So we're talking about two and a half years of unfunded.
And I think we started out at the very beginning saying,
listen, we understand the liability costs money,
and if we want them to do more trimming,
then we need to give them money to do that.
-: The regulatory lag is one reason
that you get as high ROE as you get.
If we're gonna eliminate ROE regulatory lag
we can start talking 6% ROE I think.
-: Commissioner Glotfelty you've made a very good point
that we know that trimming trees improves reliability
and that's part of your basic job description,
that's not a bonus feature.
That's something we all expect
and all our constituents expect.
So that's part of standard business. Thoughts?
-: We have a lot of other issues to discuss
in this right here, I don't know how to split,
and maybe we ought to table this point,
vegetation management for a little bit,
and continue to walk through the worksheet that we have
to address the other issues,
and then come back revisit this before the end of the day
and see if we can find closure on that.
That would be my recommendation.
-: I'm happy to table this distinct point for the time being,
thank you all, I'm sure.
Narrator: That I will stick around.
-: Yeah, you're welcome to stick around.
We'll I'm sure we'll be chatting again soon.
What is the next item or a point of discussion
you'd like to cover?
-: Okay, well, I was gonna say,
I agree with you on the self-insurance reserve,
and I agree with you on hurricane law costs.
The ring fencing, I think is,
I talked to quick we're gonna be back
at this vegetation management issue in about two minutes.
-: I wasn't more than 10.
-: I was (indistinct) efficient.
-: Well, I guess all of the other issues on your memo
I agree with, and that I would have supported those.
-: See.
(laughing)
-: You gave yourself a 32nd break though.
(laughing)
-: Mr. Chairman, could I suggest
that y'all took a short break.
-: Sure thing let's recess for 15 minutes, it's two o'clock,
we'll be back out in 15 minutes, 2:15.
This meeting of the Public Utility Commission of Texas
will now reconvene.
Thank you all for accommodating caffeine break.
We've covered a lot of ground with a lot of good input.
I think risk of going in circles indefinitely.
Let me offer a suggestion for y'all's consideration.
Jimmy and in deference to your very valid concerns
about the vegetation issue,
I'd be prepared to move off of the 9.3 to a 9.25 closer
to staff's recommendation.
And in addition to the information
about all the vegetation management issues
and the distribution line clearance record
that's in my memo,
also ask or direct staff to include an annual update
of that information to submit it in the annual report
as part of our regular ongoing SAIDI, SAIFI hearings.
So that that information is not gonna just be filed away
and gather dust, but it will be brought on a regular basis,
be revisited a minimum of each year
before this Commissioner, any other future Commissions.
So that information is in front of us is being considered.
And I wouldn't want to put conditions
on future Commissions, but say that's the performance
of how the performance on those and the data
in those annual records,
if that improves and improves substantially,
I'd say that would be grounds for
or that would be a very clear indication of improvement
of quality of service to our customers or our constituents.
And that would be a very valid reason for considering
a higher ROI or higher spread
to whatever the appropriate benchmark
is the next time around.
So I'll submit that for y'all's consideration.
-: I like that idea, that proposal,
I would hope that in the annual report,
we could require SWEPCO to put all the lines
that had been interrupted by vegetation during the year
and the length of time, those lines,
since the length of time and vegetation management
has not been done on those lines,
we need more of that information
that go into that annual report.
And the one other thing that I would suggest
is since this doesn't have to do
with this rate case specifically,
but perhaps we ought to have a workshop on this
to get utilities input across the board on best practices.
And I would say that sometime next year we ought
to set a day or two aside to talk about trees,
I support both of those.
-: I would support your 9.25 all the way.
-: And then the annual reporting in addition to
or in conjunction with each occurrence of vegetation contact
with utility infrastructure,
the top length of time since that particular line
had been maintained.
-: Okay, that's right.
I certainly think that's valuable, happy to include that,
or staff to include that.
-: I'm okay with the 9.25, as it relates to.
And I'm okay with the docket updates for SAIDI, SAIFI
as it relates to the consultant.
Are we still on track as per your memo on that?
-: Yeah, I think.
-: Still stands?
-: Yeah, I think that it's still too ambiguous
to spend the right pair of money on it.
I think we can accomplish
a similar objective, more directly.
-: Direct oversight through updates.
-: Get that information in this house or in house here,
and we'll have staff be able to look at it, parse it,
and in conjunction with Jimmy's adjusted workshop
or work session we can make bigger strides quicker
to get to more concrete standards and metrics
to move forward.
-: And I a hundred percent agree.
I think the workshop would be valuable
because I think this is gonna be reoccurring thing
with some utilities out there.
So I hope we can add that off at the past.
-: I hope so too.
-: Yeah, the goal was to improve quality
for our customers, their constituents.
What do you need from us
other than a motion to adopt or limit?
Let me see if I can get a hold of it.
-: Can I ask one clarification?
Is it 9.25 or staff's recommended 9.225?
Narrator: 9.25.
-: Okay, thank you.
Before you make it, well, you can either make your motion,
or we can include this.
We can do this second, but we're gonna need authority,
a delegated authority to ask staff
to do number running
since we're changing some of very important services.
Narrator: And if I may ask a clarifying question.
-: Yes, sir.
-: As Mr. Janae said, after the PFD came out
in the exceptions, the ALJs filed a exceptions letter
where they made some important changes to, for example,
the Dolan Hills rate writer,
they recommended the additional orient paragraph
or with the regulatory asset
to avoid the unintended normalization violation.
So as I understand what you're about to propose
is that you're going to adopt the PFD as amended
by the ALJs and their November nine letter,
except to the extent that it may conflict
with your memo chairman, is that what's on your table?
Narrator: Yeah.
-: Okay, thank you.
Narrator: That's the intention.
-: That's our standard practice detected,
but it's good to say.
-: Thank you.
-: All right, is there a motion
to first delegate authority to OPDM,
to make necessary adjustments, to numbers,
to adopt the proposal for decision as modified
by the substantial, the full extent of my memo,
in addition to changing the ROE to 9.25
and adding the condition
to the vegetation management annual report section
of my memo to include and subsection one of section four,
that each occurrence of an outage related
to vegetation contact where utility infrastructure
also include in each of those instances,
the time since vegetation management maintenance
has been most recently conducted on that line.
-: So moved.
-: Second.
-: All in favor say aye.
All: Aye.
-: Not opposed motion passes, thank you all very much.
Narrator: Thank you Commissioners.
-: Think.
-: Yeah, (indistinct) everywhere.
Got everything you need?
All right, having no further business
before this Commission,
this meeting of the Public Utility Commission of Texas
is hereby adjourned.