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PUC Docket No. 46449 EXHIBIT AMS-5
Page 2 of 2
' National Peer Group
AEP Texas Central Co AEP Texas North Co Alabama Power Co Appalachian Power Co AEP Texas Central Co AEP Texas North Co Alabama Power Co Appalachian Power Co Arizona Public Service Co Baltimore Gas & Electric Co CenterPoint Energy Houston Electric LLC Cleveland Electric Illuminating Co Commonwealth Edison Co Duke Energy Carolinas Duke Energy Florida Duke Energy Indiana Duke Energy Kentticky Duke Etiergy Ohio Duke Energy Progress Entergy Arkansas Inc. Entergy Gulf States Louisiana LLC Entergy Louisiana Inc. Entergy Mississippi Inc. Entergy,New Orleans Inc. Entergy Texas Inc. Florida Power & Light Co Georgia Power Co Gulf Power Co Indiana Michigan Power Co Jersey Central Power & Light Co Kentucky Power Co Kentucky Utilities, Co Kingsport Power Co Louisville Gas & Electric Co
Metropolitan Edison Co Mississippi Power Co Monongahela Power Co Northern States Power Co (Minnesota) Northern States Power Co (Wisconsin) Ohio Edison Co Ohio Power Co Oncor Electric Delivery PECO Energy Co Pennsylvania Electric Co Pennsylvania Power Co Potomac Edison Co PPL Electric Utilities Corp Public Service Co of Colorado Public Service Co of Oklahoma Southern California Edison Co Southwestern Electric Power Co Southwestern Public Service Co Toledo Edison Co West Penn Power Co Wheeling Power Co CLECO Power LLC Connecticut Light & Power Co El PasoTlectric Co Kansas City Power & Light Co Kansas Gas & Electric Co NSTAR Electric Co Oklahoma Gas & Electric Co Public Service Co of New Mexico Westar Energy Inc.
900
EXECUTIVE SUMMARY OF STEVEN J. WOOLDRIDGE
Steven J. Wooldri'dge, Station Technical Services Manager for the west American
Electric Power (AEP) footprint, presents testimony supporting the cost of service
required to provide safe and reliable transmission service in Southwestern Electric Power
Company's (SWEPCO) transmission service area.
Mr. Wooldridge first summarizes the physical configuration and manner of
planning and operation of both AEP's and SWEPCO's transmission systems. He testifies
that American Electric Power Service Corporation (AEPSC) and SWEPCO coordinate
with respect to planning, construction, operations and maintenance, and that AEP's
Transmission organization enables SWEPCO to benefit from economies of scale. He
describes SWEPCO's programs to maintain the reliability of its transmission system.
Mr. WoOldridge explains the overall organizational structure of the AEP Transmission
organization. He describes the services performed by each of the four primary functional,
units of the AEP Transmission organization. He testifies that each of the šervices
proyided to SWEPCO by that organization is essential to ensure the system is well
maintained, in good working order, and provides reliable electric service.
Mr. Wooldridge provides an overview of test 'year transmission operations and
maintenance expenses incurred by SWEPCO. He describes the processes in place for
establishing business planning and budgeting, annual work plans, and reviewing
expenditures on an ongoing basis to keep them within budget. He explains cosi trends
and their significant underlying drivers.
901
1
- Mr. Wooldridge explains three benchmarking studies done under his supervision
comparing SWEPCO's transmission operations and maintenance (O&M) and capital
expenditures to others in the industry. He explains how thc three peer groups — Texas,
south central, and national — were selected.. He testifies that the studies indicate that
SWEPCO transmission O&M as well as total expenditures are near or below the median
values for,each of the three peer groups: He identifies one exception, and explains that t•
SWEPCO's O&M expenditures are above median within the Texas peer group because,
of differences in geography, topography, and demography.
Mr. Wooldridge discusses the trends in the total number of SWEPCO transmission
employees in recent years. He explains how SWEPCO outsources some of its O&M
services and ensures they are provideci in a quality, cost-effective manner. He concludes
that SWEPCO's overall transmission O&M expenses are reasonable and necessary.
Mr. Wooldridge also addresses the affiliate component of SWEPCO's O&M
transmission expenses. He confirms that the seryices do not duplicate those provided by
personnel within SWEPCO or any other entity. He describes recent trends in AEPSC
billings to SWEPCO and in AEPSC's workforce and workload. He testifies that his
bepchmarking studies support the reasonableness of SWEPCO's affiliate O&M
transmission charges for the test year.
Finally, Mr. Wooldridge ,summarizes the major transmission capital
additions that have been booked to plant in-service for SWEPCO since its last base rate
case. He confirms that the capital investments support capacity requirements. He also
explains that SPP has influenced the need for significant increases in transmission
2
902
investments to accommodate regional transmission service needs. Mr. Wooldridge
explains how SWEPCO keeps the cost of transmission capital projects reasonable, and
that the benchmarking studies support the reasonableness of SWEPCO's transmission
capital addition costs, including affiliate charges comprising those costs.
3
903
PUC DOCKET NO. 46449
PUBLIC UTILITY COMMISSION OF TEXAS
APPLICATION OF
SOUTHWESTERN ELEeTRIC POWER COMPANY
FOR AUTHORITY TO CHANGE RATES
DIRECT TESTIMONY OF
STEVEN J. WOOLDRIDGE
FOR
SOUTHWESTERN ELECTRIC POWER COMPANY
DECEMBER 2016
904
TESTIMONY INDEX
SUBJECT PAGE
GLOSSARY ii
I. INTRODUCTION AND QUALIFICATIONS 1
II. PURPOSE AND BACKGROUND 3
III. AEP AND SWEPCO TRANSMISSION SYSTEMS 4
IV. AEP TRANSMISSION ORGANIZATION 10
V. SWEPCO TRANSMISSION O&M EXPENSES 13
I. AEPSC CHARGES TO SWEPCO FOR TRANSMISSION SERVICES ' 21
VII. TRANSMISSION CAPITAL ADDITIONS 27
EXHIBITS
EXHIBIT SJW-1 AEP Transmission System Map
EXHIBIT SJW-2 AEP Transmission Organization Chart
EXHIBIT SJW-3 Benchmark — Peer Groups
EXHIBIT SJW-4 Benchmark Analysis — Texas Peer Group
EXHIBIT SJW-5 Benchmark Analysis — South Central Peer Group
,
EXHIBIT SJW-6 ' Benchmark Analysis — National Peer Group
DIRECT TESTIMONY PUC DOCKET NO. 46449 i STEVEN J. WOOLDRIDGE ..
905
GLOSSARY
AEP American Electric Power Company, Inc. AEPSC American Electric Power Service Corporation Company SWEPCO ERCOT Electric Reliability Council of Texas FERC Federal Energy Regulatory Commission HVDC High Voltage Direct Current ISO Independent System Operator MISO Midcontinent Independent System Operator NERC North American Electric Reliability Corporation NTC Notification to Construct OATT Open Access Transmission Tariff O&M Operation and Maintenance P&C Protection and Control PE Professional Engineer PSO Public Service Comi5any of Oklahoma PUC Public Utility Commission of Texas ROW Right-of-Way RTO Regional Transmission Organization RTU Remote Terminal Unit SCADA Supervisory Control and Data Acquisition SPP Southwest Power Pool STEP SPP Transmission Expansion Plan SWEPCO SouthWestern Electric Power Company TCC AEP Texas Central Company TCRF Transmission Cost Recoverý Factor TFS Transmission Field Services TNC AEP Texas North Company TVMP Transmission Vegetation Management Program
DIRECT TESTIMONY PUC DOCKET NO. 46449 ii STEVEN J. WOOLDRIDGE
906
1 I. INTRODUCTION AND QUALIFICATIONS
2 Q. PLEASE STATE YOUR NAME, BUSINESS ADDRESS AND POSITION IN THE
3 COMPANY.
4 A. My name is Steven J. Wooldridge. My business address is' 428 Travis St.,
5 Shreveport, LA 71101. I am employed by American Electric Power Service
6 Corporation (AEPS6 as the Station TeChnical Services Manager for the western
American Electric Power Company, Inc. (AEP) footprint.
8 Q. PLEASE DESCRIBE YOUR RESPONSIBILITIES AS STATION TECHNICAL
9 SERVICES MANAGER OF TRANSMISSION FOR THE WESTERN AEP
10 FOOTPRNT.
11 A. I am responsible for providing leadership for the Transinission Field Services (TFS)
12 employees for construction and operations and maintenance (O&M) transmission
13 projects for the western AEP operating companies including Southwestern Electric
14 Power Company (SWEPCO or Company), AEP Texas Cenyal Company (TCC), AEP
15 Texas North Company (TNC), and Public Service Company of Oklahoma (PSO).
16 This includes coordinating with SWEPCO and other AEP. Transmission departments
17 related to thè transmission operations, construction, planning, and budgeting for the
18 SWEPCO transmission system.
19 Q. PLEASE DESCRIBE YOUR EDUCATIONAL QUALIFICATIONS AND
20 PROFESSIONAL BUSINESS EXPERIENCE.
DIRECT TESTIMONY PUC DOCKET NO. 464'49 1 STEVEN J. WOOLDRIDGE
907
1
1 A. I earned a Bachelor of Science degree in Electrical Engineering front Virginia
Polytechnic Institute and State University in 2007 as well as a Master of Business
3
Administration from Ohio University in 2013. I also obtained illy Professional
4
Engineer (PE) license from the State of Ohio in 2011 and I am an active PE.
5
I have worked for AEP for over ten years in various roles supporting the
6
transmission field staff. I started with AEP as a student intern while still attending
7
Virginia Tech. After graduating from Virginia Tech; I accepted a field Substation
8
Engineer position in Roanoke Virginia. I then took a position.in Gahanna, Ohio as a
9
Technical Support Engineer and was later promoted to Station Supervisor in the
10 Station Policy, Procedures and Standards group. A few years later I took a position
11
in Shreveport, Louisiana as a Principal Transmission Field Specialist in the TFS
12
Operations West organization supporting SWEPCO, TCC, TNC, and PSO operating
13 companies in various capacities. I was promoted to my current position as
,14 Transmission Station Technical Service-s Manager for the western AEP footprint, in
15 ' July of 2016.
16 Q. ARE YOU SPONSORINd ANY SCHEDULES TO THE RATE .FILING
17 PACKAGE?
18 A. Yes. I am sponsoring or co-sponsoring Schedules H-13.1b, H-13.1d, H-13.1e,
19 H-14.1a, H-14.1b, and H-14.2.
20 Q. WHAT EXHIBITS DO YOU SPONSOR IN THIS PROCEEDING?
21 A. I sponsor the exhibits listed in the table of contents to my testimony.
22 Q. PLEASE DESCRIBE THE CONTENT IN THE GLOSSARY PROVIDED IN THE
23 BEGINNING OF YOUR TESTIMONY.
DIRECT TESTIMÕNY PUC DOCKET NO. 46449 2 STEVEN J. WOOLDRIDGE
908
1 A. The glossary is a list of all acronyms used in my direct testimony, created for the
2 reader's ease of reference.
3
4 II. PURPOSE AND BACKGROUND
5 Q. WHAT fs THE PURPOSE OF YOUR TESTIMONY?
6 A. The purpose of my testimony is to describe the AEP Transmission organization,
7 describe the transmission-related services provided to SWEPCO by AEPSC,
8 demonstrate the necessity and reasonableness of SWEPCO's transmission capital
9 additions not already recovered in its Transmission Cost Recovery Factor (TCRF)
10 Rider, and support SWEPCO's test year level of O&M expenses. My testimony
11 specifically addresses the following topics:
12 • A description of the SWEPCO transmission system, including how the
13 transmission system is planned and operated;
14 • A description of the AEP Transmission organizatiori and how the functions
15 provided by its AEPSC transmission employees complement the functions
16 provided by SWEPCO employees, so that there is no duplication of functions
17 between AEPSC and SWEPCO employees;
18 • The necessity and reasonableness of the transmission—related costs for
19 services provided by AEPSC, associated with the SWEPCO transmission
20 system, including system planning, engineering, project management,
21 construction, and O&M of transmission facilities;
22 • The necessity and reasonableness of SWEPCO's transmission capital
23 additions placed in service since the last approved TCRF1 filing, as well as the
24 capital vegetation management costs that had been removed from the last
25 approved TCRF, as summarized in Figure 8.
I PUC Docket No. 45691.
'DIRECT TESTIMONY PUC DOCKET NO. 46449 3 STEVEN J. WOOLDRIDGE
909
1 III. AEP AND SWEPCO TRANSMISSION SYSTEMS
2 Q. PLEASE PROVIDE AN OVERALL DESCRIPTION OF THE PHYSICAL
3 CONFIGURATION AND MANNER OF OPERATION OF THE AEP
4 TRANSMISSION SYSTEM.
5 A. The AEP transmission system is an expansive system spanning AEP's 11 state
6 service territory located in the Southwest Power Pool (SPP) regional transmission
7 organization (RTO), Electric Reliability Council of Texas (ERCOT) independent
8 system operator (ISO), and the PJM Interconnection RTO. AEP's transmission
9 system encompasses facilities operating at voltages from 23 kilovolt (kV) to 765 kV,
10 and consists of approximately 37,000 miles of circuitry. Of this total, approximately
11 7,900 miles operate at Extra High Voltage -- 345 kV, 500 kV or 765 kV as shown in
12 EXHIBIT SJW-1. The AEP transmission system is also highly interconnected with
13 its neighboring utility transmission systems at numerous interconnection points.
14 Q. PLEASE DESCRIBE SWEPCO'S TRANSMISSION SYSTEM.
15 A. The SWEPCO transmission system is located in the SPP RTO footprint, which
16 provides transmission and generation interconnection services to deliver pbwer and
17 energy frorn generators throughout SPP for its members load,, including SWEPCO
18 load and loads served by other utilities, cooperatives, and municipalities located in
19 the SPP RTO. SWEPCO's transmission system is also used to deliver power and
20 energy through an asynchronous interconnection with ERCOT and through other
21 synchronous interconnections with utilities outside of the SPP RTO footprint. The
22 voltage leV'els of the SWEPCO transmission 6.cilities range from 69 kV to 500 kV.
23 There are over 4,100 circuit Miles of transmission lines in the SWEPCO system,
DIRECT TESTIMONY PUC DOCKET NO. 46449 4 STEVEN J. WOOLDRIDGE
910
1
stretching from near Grand Saline, TX east to Haughton,.LA and from the northern
2 Arkansas border with Missouri to near Crockett, TX. SWEPCO also owns
3
transmission facilities in the Texas Panhandle area from Shamrock, TX to
4
Vernon, TX.
5
SWEPCO is interconnected with other utilities, cooperatives, and
6
municipalities lo'cated in both the SPP RTO and in the Midcontinent Independent
7
System Operator (MISO) footprints.
8
SWEPCO, in partnership with TCC, Oncor, and CenterPoint, also owns one
9
High Voltage Direct Current (HVDC) interconnection with ERCOT at the Welsh
10
substation facility, commonly referred to as the East HVDC Tie. This East HVDC
11
Tie in northeastern Texas connects SPP to ERCOT.
12
SWEPCO has transferred functional control of its transmission facilities to the
13
SPP RTO. SWEPCO purchases Network Integration Transmission Service under the
14
SPP Open Access Transmission Tariff (OATT) to serve its retail and grandfathered
15
wholesale customers. SWEPCO's transmission system is also used to provide
16 wholesale transmission service under the SPP OATT to loads serviced 'by other
17 utilities, cooperatives, and municipalities connected to SWEPCO's transmission
18 system. As such, SWEPCO has been experiencing an increase in capital projects due
19 to transmission expansion projects identified by SPP and the AEP Transmission
20 organization, as well as other projects to support a more robust and reliable system as
21 well as reduce congestion in the SPP footprint.
22 Q. PLEASE DESCRIBE HOW AEP PLANS, CONSTRUCTS, OPERATES AND
23 MAINTAINS THE SWEPC6 TRANSMISSION SYSTEM.
DIRECT TESTIMONY PUC DOCKET NO. 46449 5 STEVEN J. WOOLDRIDGE
911
A. The SWEPCO transmission system is planned, constructed, operated, and maintained
2 through the coordinated efforts of AEP Transmission and SPP. AEP Transmission
3 achieves economies of scale by enabling AEP affiliate companies to share common
4 support staff and resources which help provide cost and operational efficiencies.
5 Using a combination of services provided by AEPSC 'employees, SWEPCO
6 employes, and côntractors allows SWEPCO to efficiently and cost-effectively plan,
7 construct-operate and maintain its transmission system.
8 Because SWEPCO is interconnected with other companies transmission
9 systems in SPP, as well as ERCOT and MISO, the AEP Transmission organization
10 works closely with the RT0s/ISOs and its neighboring utilities to plan and operate
11 the 'transmission grid. SPP's transmissión planning arid operational requirements are
12 set out in the SPP OATT and the SPP GoverningDocuments Tariff.2
13 Q . PLEASE PROVIDE AN OVERVIEW OF THE RELIABILITY OF SWEPCO'S
14 TRANSMISSION SYSTEM IN RECENT YEARS.
15 A. The SWEPCO transmission system is currently and has been providing reliable
16 service within SWEPCO's service area and has consistently met all North American
17 Electric Reliability Corrioration (NERC) reliability criteria. The AEP Transmission
18 organization has successfully completed various NERC Regional Entity audits and
19 performed the
2 https://www.spp.org/documents/13272/current%20bylaws%20and%20membership%20agreement%20 tariff.pdf
DIRECT TESTIMONY PUC DOCKEf NO. 46449 6 STEVEN J. WOOLDRIDGE
912
annual compliance self-certifications for each of the regions that AEP operates in,
2 including the SPP region, since the NERC Reliability Compliance Standards
3 requirements were in effect.
Q. WHY IS IT IMPORTANT TO MAINTAIN A RELIABLE TRANSMISSION
5 SYSTEM?
6 A. A reliable transmission system that is well-maintained and meets applicable state and
7 federal standards is required to maintain reliable electric service to customers. To
8 meet this need, SWEPCO has an ongoing program to refurbish the existing
9 transmission infrastructure, replacing, equipment and rebuilding lines based on their
' 10 condition and performance. Routine evaluations of the transmission system coupled
11 with network considerations are used to determine the pricirity and ,schedule for the
12 most effective impleMentation of the refurbishment plan.
13 Q. PLEASE DESCRIBE SWEPCO'S PROGRAMS TO MAINTAIN THE
14 RELIABILITY OF ITS TRANSMISSION SYSTEM.
:
15 A. SWEPCO's programs to maintain and improve reliability by minimizing service
16 interruptions on the transmission system can be divided into three major categories:
17 1) Transmission Asset Management Programs, 2) Major Tiansmission Reliability
18 Program, and 3) Transmission Vegetation Management Program.
19 Q. PLEASE DESCRIBE THE TRANSMISSION ASSET MANAGEMENT
20 PROGRAMS.
21 A. The Transmission Asset Management Programs fall into three broad functional areas:
22 Station Programs, Transmission Line Programs, and Protection & Control (P&C)
23 PrOgrams. The objective of these programs is to identify. potential -problems with
DIRECT TESTIMONY PUC DOCKET NO. 46449 7 STEVEN J. WOOLDRIDGE
913
1 existing transmission facilities that could cause an interruption of service and to
2 implement proactive corrective actions to maintain the reliable operation of those
3 facilities.
4 The Station Programs include the inspection, maintenance, and replacement,
5 as needed, of SWEPCO's station equipment such as circuit breakers, transformers,
6 switches, reactive power devices, station batteries, control buildings, supporting
7 štructures, and associated facilities.
The Transmission Line Programs include the inspection, maintenance, and
9 replacement, as needed, of line equipment, which includes structures, conductois,
10 switches, insulators, hardware, and right-of-way (ROW). The transmission line
11 inspection activities include walking, climbing, aerial, and emergency inspectiOns to
12 ensure a well-maintained system.
13 The P&C Programs primarily involve the inspection, maintenance and
14 replacement, as needed, of protective relays and associated equipment, such as power
15 line carriers, instrument transformers, and communication channels. In addition to
16 the protection relays, remote terminal units (RTU) are included in the program.
17 Q. PLEASE DESCRIBE THE MAJOR TRANSMISSION RELIABILITY PROGRAM.
18 A. Each year, SWEPCO completes various major transmission reliability projects that
19 expand its transmission system to meet load growth, to connect new customers, and
20 to construct SPP-mandated projects, including those for generation interconnections
21 and transmission service, for delivery of power from generation to load. These
22 improvements range from upgrading existing circuits to installation of new stations
23 and the associated transmission lines and assets needed to maintain reliable service to
DIRECT TESTIMONY PUC DOCKET NO. 46449 8 STEVEN J. WOOLDRIDGE
914
1 SPP OATT customers, including SWEPCO's retail and grandfathered wholesale
2 customers.
3 Q. PLEASE DESCRIBE SWEPCO'S TRANSMISSION VEGETATION
MANAGEMENT PROGRAM.
5 A. The objedive of SWEPCO's• Transmission Vegetation Management Program,
6 (TVMP) is to provide for the safe and reliable operation of ihe SWEPCO
7 transmission system. For circuits greater than 200 kV, SWEPCO clears the ROW to
the maximum appropriate width, removing all woody-stemmed vegetation within the
9 ROW to comply with NERC transmission reliability standard FAC-003-04, which,
10 addresses management of vegetation located on and along transmission ROW. AEP
11 conducts aerial inspections, as needed ground inspections, and develops, annual
12 vegetation management work plans to ensure this program objective is achieved in
13 the most efficient, environmentally sound, economical manner practical and complies
14 with all laws and regulations. A
15 Vegetation on SWEPCO's transmission system is managed on a prescriptive
16 basis for all transmission voltage levels. Ongoing evaluation of the system through
17 ground and aerial inspections. by AEP Forestry personnel provides 'the basic
18 ififormation used by AEP Forestry Operations to develop its annual work plan.
19 Circuit criticality,. historical data, circuit voltage, location, vegetative inventory
20 information, and land use are among the items considered when developing the
21 annual vegetation management work plan. These plans are dynamic during the year
22 and adjusted for changing conditions.
DIRECT TESTIMONY PUC DOCKET NO. 46449 9 •STEVEN J. WOOLDRIDGE
915
1
As plant growth occurs along the ROW, these annual work plans will change
2
based on the sizes and types of vegetation present. AEP Forestry-Operations staff
3
and their contractors continuously work to ensure the appropriate plan is utilized to
maximize effectiveness and efficiency.
5
6 IV. AEP TRANSMISSION ORGANIZATION
7 Q. WHAT GROUP IS RESPONSIBLE FOR MANAGING THE SWEPCO
8 TRANSMISSION SYSTEM?
9 A. The AEP Transmission organization, in conjunction with SWEPCO leadership,
10 operates and manages the SWEPCO transmission system as part of its responsibility
11 to manage the overall AEP transmission system. This organization is comprised of
12 AEPSC employees, SWEPCO employees, and contractors.
13 Q. PLEASE DESCRIBE THE PRIMARY FUNCTIONAL DEPARTMENTS WITHIN
14 THE AEP TRANSMISSION pRGANIZATION THAT SUPPORT SWEPCO'S
15 TRANSMISSION NEEDS.
16 A. The AEP Transmission organization consists of four primary functional departments
17 that support SWEPCO's Transmission needs. These four functional departments that
18 report directly to the Executive Vice President — Transmission are as follows:
19 Transmission Business Operations Programs, Controls and Field Services, Grid
20 Development, and Transmission Asset Strategy and Policy. The AEP transmission
21 system assets are planned, engineered, constructed, operated and maintained through
22 the coordinated efforts of the AEP Transmission organization. The AEP
23 Transmission organization structure is shown in EXHIBIT,SJW-2.
DIRECT TESTIMONY PUC DOCKET NO. 46449 10 STEVEN J. WOOLDRIDGE
916
1 Q. PLEASE DESCRIBE THE SERVICES PERFORMED BY EACH OF THE FOUR
2 FUNCTIONAL DEPARTMENTS OF THE AEP TRANSMISSION
3 ORGANIZATION THAT SUPPORTS SWEPCO TRANSMISSION.
4 A. The four departments within the AEP Transmission organization that support
5 SWEPCO Transmission are *as follows:
6 • The Transmission Business Operations Programs Organization is responsible
7 for process improvement, performance management, and portfolio
8 management.
9 • The Controls and Field Services organization is the service provider for field
10 operations, maintenance, and emergency restoration of the AEP transmission
11 system. In addition, Transmission Field Services provides internal labor
12 resources for implementation of transmission capital projects. This group is
13 also responsible for providing transmission project financial controls.
14 • Grid Development is the organization that is responsible for, including but not
15 limited fo, transmission planning, engineering, project management,
16 operations, technology development, and for providing support to the AEP
17 Transmission organization by ensuring compliance with reliability standdrds
18 and requirements established by NERC, regional reliability organizations, and
19 state regulatory agencies, and developing and executing transmission strategy
20 and business development plans.
21 • The Transmission Asset Strategy and Policy organization is responsible for
22 Transmission financial oversight and reporting and the oversight of all
23 transmission policy and regulatory" rnatters involving RTOs, the Federal
24 Energy Regulatory Commission (FERC), and State regulators affecting
25 transmission'. They also provide the regulatory support for the AEP
26 transmission-only companies, and siting and ROW for transmission projects.
DIRECT TESTIMONY PUC DOCKET NO. 46449 11 STEVEN J. WOOLDRIDGE
917
1 Q. HOW ARE THE PERSONNEL WHO PERFORM TRANSMISSION
2 ORGANIZATION ACTIVITIES CLASSIFIED?
3 A. There are three categories of personnel that support SWEPCO's transmission system:
4. 1. AEPSC Transmission employees work primarily on assignments for more
5 than one of the AEP operating companies. To the extent AEPSC employees
6 work on projects that are specific to the facilities of other affiliate companies,
7 those associated costs are not incurred by SWEPCO.
8 2. SWEPCO Transmission employees are devoted to SWEPCO transmission
9 projects and assets. All SWEPCO employees who are part of the AEP
10 Transmission organization are stationed in SWEPCO's service area.
11 Fundtional responsibilities of AEPSC and SWEPC9 transmission employees
12 are clearly delineated and divided so there is no duplication of responsibilities
13 between AEPSC employees and SWEPCO employees.
14 3. Third-party contractors are also used to support SWEPCO and AEPSC.'
15 Contractor services are an important aspect in work force planning as they can
16 be used to respond to changes in workload related to construction activities
17 and service restoration.
18 Q. ARE EACH OF -THE SERVICES PROVIDED TO SWEPCO BY THE AEP
19 TRANSMISSION ORGANIZATION NECESSARY TO PROVIDE RELIABLE
20 ELECTRIC SERVICE?
21 A. Yes. Reliable electric service requires an adequte and well-maintained transmission
22 system that meets applicable state and federal standards. Each of the services
23 performed by the AEP Transmission organization is necessary in order to operate and
24 maintain a large and geographically diverse transmission system like SWEPCO's.
25 Without the constant monitoring of performance and identification of future needs,
26- system planning, engineering and design improvements, procuring materials and
27 supplies, constructing and installing new facilities or rehabilitating existing aging
28 infrastructure facilities, coordinating with other utilities, as well as with SPP, NERC,
29 and customers, and ensuring compliance with state, federal, and other regulatory
DIRECT TESTIMONY PUC DOCKET NO. 46449 12 STEVEN J. WOOLDRIDGE
918
1 requiremenits, the transmis'sion system would ultimately fail to be adequate for its
2 purpose, and it would no longer be reliable. Thus, each service provided by the AEP
3 Transmission organization, to SWEPCO is essential to the SWEPCO mission of
4 providing safe and reliable electric service to customers in a cost effective manner.
5
6 V. SWEPCO TRANSMISSION O&M EXPENSES
7 Q. WHAT PERIOD WAS USED TO DEVELOP THE TEST YEAR O&M EXPENSES
8 FOR THE COMPANY?
9 A. The test year is the twelve-month period from July 1, 2015, through Jude 30, 2016.
10 Q. PLEASE PROVIDE AN OVERVIEW OF THE TEST YEAR TRANSMISSION
11 O&M EXPENSES THAT SWEPCO INCURRED.
12 A. Exclusive of expenses associated with SPP-related charges, SWEPCO incurred
13 adjusted test year transmission O&M expenses of apprpximately $22.0 million. This
14 includes costs recorded in FERC Accounts 560 through 564 and FERC Accounts 566
15 through 573, as shown in Figure 1. Figure 1 also provides a description of these
16 FERC Accounts, as well as the corresponding test year amounts. The O&M expenses
17 are for activities associated witli the ongoing operation and maintenance of the
18 transmission system. Effective management and. control of these costs are primary
19 objectives of the transmission management team and the support organizations'that
20 provide these activities.
DIRECT TESTIMONY PUC DOCKET NO. 46449 13 STEVEN J. WOOLDRIDGE
919'
1 Figure 1 r 2 FERC Accounts Included in O&M Expenses
FERC Account ' Description Test Year Amount
560 Operations Supervision & Engineering $3,840,939 561* Load Dispatching $3,373,884 562 Station Expenses $524,930 563 Overhead Line Expenses ' $113,509
,564 Underground Line Expense $860 566 Miscellaneous Transmission Expenses $4,240,308 567 Rents $23,446 568 Maintenance Supervision & Engineering $42,313 569 Maintenance of Structures $1,029,691 570 Maintenance of Station Equipment $2,308,920 571 Maintenance of Overhead Lines _ $6,281,499 572 Maintenance of Underground Lines $404 573 Maintenance of Miscellaneous Transmission Plant $175,774
Test Year Total Transmission O&M $21,956,478 *Includes FERC Accounts 561.1, 561.2, 561.3, and 561.5.
3 ,E'ERC Accounts 561.4 (Scheduling, System Control and Dispatching Services),
4 561.8 (Reliability Planning and Standards Development Services), and
5 565 (Transmission of Electricity for Others), are Jlot included in Figure 1, as these are
6 O&M expenses associated with SPP. Company witness Randall W. Hamlett supports
7 these expenses.
8 Q. PLEASE DESCRIBE THE COST TREND FOR SWEPCO'S TRANSMISSION
9 COSTS OVER THE PAST FEW YEARS.
10 A. Figure 2 shows the §WEPCO Transmission O&M costs for 2013-2015, and the test
11 year. The costs include those incurred both by SWEPCO Tranšmission directly and
12 also those charged to SWEPCO Transmission by AEPSC. As can be seen in
13 Figure 2, test year costs are consistent with 2015, but represeni!an increase over 2013
14 and 2014 expenses.
DIRECT TESTIMONY PUC DOCKET NO. 46449 14 STEVEN J. WOOLDRIDGE
920
1
The overall test year increase is primarily attributable to an increase in
2
operations and maintenance support and vegetation management activities that are
3
necessary to maintain the reliability of SWEPCO's transmission system. SWEPCO's
4
transmission system facilities continue to age, which necessitates additional
5
maintenance and targeted replacement of an increasing population of obsolete and
6
aging equipment. Additionally, NEk'C mandatory reliability standards, including
7
vegetation management standards, continue to impact SWEPCO's costs. As the
8
demands placed on the SWEPCO transmission system increase over, time, it is
9
necessary for SWEPCO to incur greater levels of transmission O&M expenses to
10
maintain safe and reliable transinission _service.
11
Figure 2 — SWEPCO Transmission O&M Expense
2013 2014 2015 Test Year
$17,956,397 $19,873,170 $22,876,677 $21,956,478
12 Q. DOES SWEPCO INCUR BOTH AEPSC CHARGES AND SWEPCO EXPENSES
13 IN THE OPERATION OF ITS TRANSMISSION SYSTEM?
14 A. Yes, SWEPCO incurred both AEPSC cfiarges'of $6.8 million and SWEPCO O&M
15 expenses of $15.2 million. I will address the total SWEPCO transmission O&M
16 expenses in this section of my testimony and will address the AEPSC component of
17 these expenses in section VI.
18 Budget Controls and Cost Trends
19 Q. PLEASE DESCRIBE ANY PROCESSES, SUCH AS BUDGETING, PLANNING,
20 AND COST REVIEW, WHICI4 ARE USED TO CONTROL BOTH AEPSC AND
21 SWEPCO TkANSMISSION O&M COSTS.
DIRECT TESTIMONY PUC DOCKET NO. 46449 15 STEVEN J. WOOLDRIDGE
921
1 A. AEP's transmission planning and budgeting is a cohesive and dynamic planning
process that is linked to the SWEPCO annual business planning process. Each
3 department within the AEP Transmission , organization, as well as SWEPCO
4 leadership, provides input for the business plan and the related expenses and capital
5 requirements, including inputs specific to SWEPCO. After the business plan is
6 approved by executive management, a ten-year capital budget and a two-year O&M
7 budget are prepared that describe capital and O&M expenditures necessary for the
8 AEP Transmission organization to perform its primary functions of planning,
9 engineering, constructing, operating and maintaining the transmission network. An
10 annual work plan based on the approved ,budgets, which includes projected costs to
11 support the plan, is then prepared and implemented. During the work plan year,
12 which is a calendar year, the status of the work plan and the related costs are
13 monitored by SWEPCO leadership and AEP Transmission management on an
14 ongoing basis,,and work plan adjustments are made as necessary to address emerging
15 needs. AEP Transmission management reviews any variances versus budget for
16 O&M expenses and capital expenditures in order to keep such expenditures within
17 budget. As discussed below, similar budgeting, planning, and cost review processes
18 are used to control costs related to transmission capital additions.
19 Benchmarking Studies
20 Q. HAVE YOU PERFORMED ANY BENCHMARKING STUDIES COMPARING
21 SWEPCO'S TRANSMISSION O&M AND CAPITAL EXPENDITURES TO
22 OTHERS PEER GROUPS IN THE INDUSTRY?
DIRECT TESTIMONY PUC DOCKET NO. 46449 16 STEVEN J. WOOLDRIDGE
922
1 A. Yes. Under my supervision, three benchmark studies were prepared, each u*sing a
2 different peer group. The three peer groups were a Texas peer group, a south, central
3 peer group and a national peer group. This benchmarking study was based on the
4 benchmarking studies used in the last SWEPCO Texas base case, Public Utility
5 6ommission of Texas (PUC) Docket No. 40443. ,The results have been updated to
6 reflect the available data obtained from FERC Form 1 for each of the benchmark
7 companies.
8 The benchmarking metrics included transmission O&M dollars per lirfe-mile
9 and total dollars (O&M plus capital) per line-mile from 2013 through 2015. This
10 time period was selected to provide a sufficient number of years to see the general
11 trends. Transmission total aollars per line-mile for each year consist of the sum of
12 transmission O&M for each year and a three-year average of transmission plant
13 capital additions. A three-year average is used for transmission plant additions
14 because capital expenditures can vary significantly from year to year. The resulting
15 metric provides comparisons between utilities, normalized for size. The data utilized
16 in the transmission benchmarking for all of the electric utilities comes from FERC
17 Form 1. The following FERC accounts are included in the benchmark study data:
18 560, 561, 562, 563, 564, 566, 567, 568, 569, 570, 571, 572 and 573.
19 The benchmarking studies provide the minimum, maximum, and median
20 values for each metric for the years 2013 through 2015, and the relative position of
21 the corresponding SWEPCO transmission metric for comparison.
DIRECT TESTIMONY PUC DOCKET NO. 46449 17 STEVEN J. WOOLDRIDGE
923
1 Q. PLEASE DESCRIBE HOW THE THREE PEER GROUPS WERE SELECTED.
2 A. The Texas peer group consists of the investor-owned electric utilities in Texas
3 (except for Entergy Texas, Inc. and Texas-New Mexico Power Company due to
4 incomplele FERC Form 1 data for some of the years used in the analysis) that own
5 transmission facilities. There are eight utilities included in the Texas peer group.
The south central peer group, with a total of 18 utilities, includes the Texas peer
7
group utilities, the investor-owned utilities in all of the states that border Texas, and
8
investor-owned utilities in Kansas. By including Kansas, the south central peer group
9
captures most of the investor-owned electric utilities that are members of either
10
ERCOT or SPP. The national peer group is comprised of 26 holding companies, and
11 includes the south central peer group utilities and the other similar utilities in the
12 United States. The members of these three peer groups are listed in EXHIBIT
13 SJW-3.
14 Q. PLEASE DISCUSS YOUR,BENCHMARKING STUDY RESULTS.
15 A. The results ,of these benchmarking studies indicate that SWEPCO Transmission
16 O&M as well as total expenditures, which include capital, are near or below the
17 median values for each of the three peer groups. The one exception to this trend is
18 the resultsfor the O&M expenditures included for the Tekas peer group. SWEPCO is
19 above the median within this peer group, but this result is driven by differences in
20 geography, topography, and demography. SWEPCO's service territory is a
21 combination of hilly terrain and heavy forestation, which distinguishes it from many
22 of its Texas peers. These differences all increase the O&M expenses associated with
23 operating and maintaining a transmission system. These results are provided in detail
DIRECT TESTIMONY PUC DOCKET NO. 46449 18 STEVEN J. WOOLDRIDGE
924
1 in EXHIBIT SJW-4, EXHIBIT SJW-5, and EXHIBIT SJW-6, and tliey provide solid
2 support for the reasonableness of SWEPCO's O&M and capital, costs for its
3 transmission system.
4 Q. DOES THE FERC FORM 1 PROVIDE COMPARABLE UTILITY DATA FOR
5 BENCHMARKING?
"6 A. Yes. Benchmarking requires comparable data from a coMmon source for all of the
7 entities compared in the benchmarking study. FERC Form 1 is a required filing for
8 all investor-owned electric utilities in'the United States. The FERC Form 1 includes
9 O&M expense and capital data by FERC Accounts, which are the standardized
10 accounts utilized for reporting O&M and capital expenses. For these reasons, FERC
11 Form 1 data is a reasonable source to use for benchmarking activities.
12 Staff Level trends
13 Q. PLEASE DISCUSS THE TRENDS IN THE TOTAL NUMBER OF SWEPCO
14 TRANSMISSION EMPLOYEES SINCE 2013.
15 A. Most of the SWEPCO employees devoted to working on its transmission system are
16 located in the Transmission Field Services department. Actual counts for SWEPCO
17 Transmission employees in each year from 2013 to 2015 at year-end and at test year-
18 end are shown in Figure 3 below. Figure 3 shows that staffing levels in the test year
19 are slightly above 2014 and 2015. The increase in SWEPCO employees corresponds
20 to the increase in transmissiOn activities, including construction, maintenance and
21 operations support, within SWEPCO's service territory.
DIRECT TESTIMONY PUC DOCKET NO. 46449 19 STEVEN J. WOOLDRIDGE
925
Figure 3 SWEPCO Transmission Employees
12/31/13 12/31/14 12/31/15 Test Year SWEPCO Transmission Employees 84 95 95 101
1 2
Outsourcing
DOES SWEPCO MAKE USE OF CONTRACTOR SERVICES OR
OUTSOURCING IN CONNECTION WITH THE OPERATION AND
MAINTENANCE OF THE SWEPCO TRANSMISSION SYSTEM?
Yes. SWEPCO uses contractor services to supplement SWEPCO' s,own workforce in
order to respond to changes in workload related to construction activities, service
restoration and to provide some of SWEPCO's ongoing 24 x 7 support staff. Some of
the contractors perform services (e.g., vegetation management, line inspection and
niaintenance, pole inspection afid maintenance, and station maintenance) under multi-
year contracts awarded by SWEPCO. SWEPCO utilizes competitive bidding in
3
4 Q.
5
6
7 A.
8
9
10
11
12
13 awarding these contracts" to ensure reasonable and Competitive pricing. These
14 contractors are evaluated annually for safety qualification and productivity
15 compliance.
16 For other contract services (e.g., ROW maintenance, emergency patrols and
17 emergency restoration, and specialty work such as transformer or relay maintenance),
18 SWEPCO negotiates blanket contracts under which contract services can be provided
19 repeatedly over time. These contracts include pre-determined labor and equipment
20 rates, value limits and expiration dates as a further control on contractor costs.
21 Contractors operating under blanket contracts are selected on the basis of historical
22 ,safety performance, skills, capability, and associated rate schedules that compare
DIRECT TESTIMONY PUC DOCKET NO. 46449 20 STEVEN J. WOOLDRIDGE
926
1 favorably to the rate schedules for other similar type contractors. This process
2 expedites required transmission asset maintenance activities that are time constrained,
such as emergency restöration and reliability projects, while still ensuring
4 competitive cost.
5 Q. WHAT DO YOU .CONCLUDE ABOUT THE REASONABLENESS AND
6 NECESSITY OF SWEPCO'S OVERALL TRANSMISSION O&M EXPENSES?
7 A. The budget controls and processes, cost trends, cost drivers, staffing trends and
8 benchmarking studies I have discussed, as well as our strategic use' of outsourcing,
9 collectively support a conclusion that SWEPCO's overall transmission costs are
10 necessaiy, reasonable, and are in line with other peer group utilities.
11
12 VI. AEPSC CHARGES TO SWEPCO FOR TRANSMISSION SERVICES
13 Q. PLEASE PROVIDE A DESCRIPTION OF THE AEPSC CHARGES TO SWEPCO
14 FROM THE AEP TRANSMISSION ORGANIZATION.
15 A. AEPSC's adjusted test year O&M charges to SWEPCO for the transmission services
16 it provided .totaled approximately $6.8 million as previously mentioned. These
17 charges represent the cost of AEPSC's transmission-related services to SWEPCO,
18 including: transmission planning, engineering and design, forestry support and
19' management, Supervisory Control and Data Acquisition (SCADA) support,
20 construction management, operations and dispatch services, engineering support,
21 maintenance management, budgeting and cost analysis and controls; training,
22 regulatory, compliance and settlement support.
DIRECT TESTIMONY PUC DOCKET NO. 46449 21 STEVEN J. WOOLDRIDGE
927
1 The AEPSC charges for transmission services SWEPCO fall into the major
2 cost categories shown in Figure 4 below.
3 Figure 4 4 AEPS'C Test Year Charges to SWEPCO for Transmission Services
O&M Costs Category Test Year Internal Labor $5,293,141 Outside Services • * $967,675 Materials $76,546 Other $432,444 Total $6,769,806
5
Internal Labor is approximately 78 percent of the AEPSC charges (employee
6
salaries and benefits) to provide services as described above. SWEPCO witnesses
7 Andrew R Carlin and Curt D. Cooper support the reasonableness of AEPC's
8 salaries and employee benefits as discussed in greater detail in their direct
9 testiinonies.
10 Q. DO THESE SERVICES DUPLICATE SERVIC'ES PROVIDED BY PERSONNEL
11 WITHIN SWEPCO OR BY ANY OTHER ENTITY?
12 A. No. My previous discussion of transmission-related services shows thafthe activities
13 of SWEPCO Transmission employees, AEPSC Transmission organization
14 employees, and contractors are coordinated such that there is no overlap among the
15 services provided by each group. This is also discussed in the respective direct
16 testimonies of SWEPCO witnesses Patrick L. Baryenbruch and Brian J. Frantz.
17 Q. WHAT HAVE BEEN THE RECENT TRENDS IN AEPSC BILLINGS TO
18 SWEPCO FOR TRANSMISSION SERVICES?
19 A. Figure 5 shows the AEPSC charge trend t SWEPCO for transmission services, by
20 department, since 2013.
DIRECT TESTIMONY PUC DOCKET NO. 46449 22 STEVEN J. WOOLDRID6E
928
1 Figure 5 2 AEPSC Historical Charges to SWEPCO for Transmission Services
Department 2013 2014 . 2015 Test Year Transmission
Business Operations Programs
$85,097 $107,754 $194,211 ' $357,116
Controls and Field Services
$825,168 $1,392,137 $1,984,163 $1,532,649
Grid Develdpment $3,054,371 $3,548,938 $4,090,535 $4,465,530 Transmission Asset Strategy and Policy
$232,607 $284,984 $354,711 $414,512
Total AEPSC $4,197,242 $5,333,813 $6,623,621 $6,769,806
3 Over the past few years, AEPSC staff levels arid AEPSC O&M costs have
4 been increasing. These increases in both AEPSC staff levels and AEPSC O&M have
5 been necessary to support transmission activities. As discussed earlier with regard to
6 overall SWEPCO transmission O&M, the increases in AEPSC O&M costs and
7 staffing levels are attributable to increased transmission O&M responsibilities due to
increased reliability requirements and -financial, state, federal, and other regulatory
9 reporting requirements.
10 Q. ., HOW HAS THE STAFFING OF AEPSC TRANSMISSION ORGANIZATION
11 'EMPLOYEES CHANGED SINCE 2013?
12 A. Figure 6 below shows the employee count for the AEP Transmission organization
13 personnel who were AEPSC employees at the end of each year from 2013 to 2015,
14 and the end of the test year.
DIRECT TESTIMONY PUC DOCKET NO. 46449 23 STEVEN J. WOOLDRIDGE
929
1 Figure 6 2 AEPSC Transmission Employees
12/31/13 12/31/14 12/31/15 Test Year AEPSC Transmission 1,540 1,708 1,782 1,895
3
The,number of AEPSC employees has increased from 2013 through the end of
4
the test year. The majority of the overall increase is in the Grid Development and
Controls and Field Services departments. With the increasing amount of capital work
6 occurring in SWEPCO's service territory, as well as througholit the entire AEP
7 service territory, the decision was made to convert a portion of the Grid Development
contractors to full-time employees and to increase the Controls and Field services
9 staff to support construction project execution. It was more efficient and economical
10 to convert existing contractors into full-time employees to handle the increased
11 workload.
12 Recently, the Controls and Field Services organization underwent a
13 reorganization to help improve efficiency and reduce capital costs by using AEP
14 Controls and Field Services internal resources, which are less expensive especially on
15 small to medium size capital projects. By using AEP Controls and Field Services
16 emplOyees, we can better execute our capital plan and create a more customer-
17 focused organization and culture. As part of this reorganization, some of thd AEP
18 operating company employees were transferred to AEPSC.
19 Q. WHAT HAS BEEN SWEPCO'S RECENT TREND FOR SPP-MANDATED
20 PROIECTS?
21 A. SPP-mandated projects, or those that are issued 'a Notification to Construct (NTC),
22 have been a significant portion of SWEPCO's transmission capital expenditures over
DIRECT TESTIMONY PUC DOCKET NO. 46449 24 STEVEN J. WOOLDRIDGE
930
1
the past few years. As part of the SPP Transmission Expansion Plan (SiEP), SPP
2
directs owners to construct specific regionally approved transmission projects.
3
Figure 7 shows the trend for SWEPCO's NTe projects since 2012.
4
Figure 7 — SWEPCO NTC Projects for 2012-2016
Time Period
SWEPCO Transmission Capital Expenditures
with SPP NTC
Total SWEPCO Transmission Capital
Expenditures for Time Period
% of Totil SWEPCO Transmission Capital
ExpenditUres with NTC 1/1/12-2/1/14 $128,411,379 $206,004,359 62% 3/1/14-12/31/14 $80,760,499 • $109,840,394 74% 1/1/15-12/31/15 $52,330,772 $89,956,045 58% 1/1/16-6/30/16 $73,092,316 $91,855,438 , 80% Totals $334,594,965 $497,656,237 67%
5 Q. PLEASE EXPLAIN THE BUDGETING PROCESS USED AT AEPSC FOR THE
6 AEP TRANSMISSION ORGANIZATION.
7 A. Budget targets for the upcoming year are based on prior-year budget inputs plus or
8
minus any items that are identified and approved for inclusion or omission. Labor
9 expense is budgeted by hours. Mater1als, supplies; outside services expenses, etc., are
10 budgeted based on prior activity and any anticipated'changes. Variances from budget
11 are reviewed monthly and discussed with AEP Transmission management.
12 Q. DO OTHER SWEPCO WITNESSES DISCUSS AEPSC CHARGES?
13 A. Yes. Company witness Frantz provides testimony regarding the reasonableness of
14 the AEPSC allocation factors utilized to allocate charges to SWEPCO. Also,
15 COmpany witness Baryenbruch provides testimony as to the necessity of AEPSC
16 services and the reasongbleness of costs charged by AEPSC to SWEPCO.
17 Q. IS THE BENCHMARKING YOU DESCRIBED EARLIER CONCERNING THE
18 OVERALL TRANSMISSION COSTS RELEVANT TO THE REASONABLENESS
19 OF AEP TRANSMISSION CHARGES?
DIRECT TESTIMONY 1 PUC DOCKET NO. 46449 25 STEVEN J. WOOLDRIDGE
931
1 A. Yes. The benchmarking studies I discussed above comparing SWEPCO's overall
2 transmission O&M costs to those of other electric utilities also support the
3 reasonableness of SWEPCO's AEPSC O&M .transmission charges. FERC Form 1
4 data does not separately record AEPSC charges. Accordingly, it is not possible to
5 directly benchmark AEPSC transmission services costs using FERC Form 1 data.
6 However, AEPSC charges represent a portion of the overall O&M costs provided in
7 FERC Form 1 filings. Moreover, the transmission services- I have described are
8 provided to the overall transmission operation using a combination of AEPSC
9 employees, SWEPCO employees, and contractors. Consequently, benchmarking at
10 the overall cost level is consistent with the manner in which the services are provided
11 and managed, and supports the conclusion that the AEPSC portion of those costs are
12 also the product of effective management and contribute to an overall reasonable
13 level of costs.
14 Q. PLEASE SUMMARIZE THE EVIDENCE YOU HAVE PRESENTED' THAT
15 DEMONSTRATES THE NECESSITY AND REASONA4LENESS OF THE
16 AEPSC TRANSMISSION ORGANIZATION CHARGES TO SWEPCO.
17 A. The budget controls and processes, cost trends, cost drivers, staffing trends and
18 benchmarking studies I have discussed, at both the overall O&M cost level and the
19 AEPSC cost level, collectively support a conclusion that AEPSC test year charges to
20 SWEPCO for transmission services are necessary and reasonable.
DIRECT TESTIMONY PUC DOCKET NO. 46449 26 STEVEN J. WOOLDRIDGE
932
1 VII. TRANSMISSION CAPITAL'ADDITIONS
2 Q. PLEASE DESCRIBE THE TRANSMISSION CAPITAL ADDITIONS THAT
3 HAVE BEEN RECORDED TO PLANT IN-SERVICE FOR SWEPCO SINCE THE
4. LAST APPROVED :TCRF FILING.
5 A. The transmission capital additions that have been booked to plant in-service for
6 SWEPCO since the last approved TCRF filing fall into five categories: Asset
7 Improvement, Customer Service & = Other, Forestry, ,Reliability, and System
8 Restoration.• These categories are further defined below, as well as summarized 'in
9 Figure 8.
16 • Asset Improvement projects include replacement of aging infrastructure, as
11 well as the addition of new assets. These projects include both line and
12 station equipment. This riroject category also has a significant impact on
13 reducing outages and improving customer reliability.
14 • Customer Service & Other projects include new service to customers,
15 relocation projects, and projects that are different from the other project
16 categories and include miscellaneous projects or transmission projects that
17 support other business units within SWEPCO.
18 • Forestry projects primarily include clearing for new ROW or for widening
19 ROW, which continues to be an important initiative to reduce tree contacts.
20 • Reliability projects are designed to repair or replace aging infiastructure in
21 order to mitigate potential problem§ that 'can cause an interruption of service
22 and implement corrective actions to maintain the reliable operation of- the
23 transmission equipment. Additionally, some projects are intended to address
24 operational deficiencies that could cause above average outage frequencies or
25 durations. Some of these projects are identified by SPP through an annual
26 planning process that I describe in more detail below. Examples of Reliability
27 projects include circuit 'breaker replacement, improvement of lightning
28 shielding of lines, and additions of line sectionalizing devices
29 (switches/circuit breakers, etc.).
30 • Finally, System Restoration projects are completed to replace equipment or
31 assets that failed or were damaged during stórms or other weather events.
DIRECT TESTIMONY PUC DOCKET NO. 46449 27 STEVEN J. WOOLDRIDGE
933
1 The total of the capital additions since the last approved TCRF is approximately
2 $91.9 million, and is shown in Figure 8.
3 Figure 4 Transmission Capital Projects by Category
Project Category 1/1/16-6/30/16
(000's) Asset Improvement $8,819 _ Customer Service & Other $8,899 Forestry $475 Reliability $69,249 System Restoration $4,413 Total $91,855
5 Q. WHAT FACTORS HAVE INFLUENCED THE NEED FOR THE SIGNIFICANT
INCREASES IN TRANSMISSION INVESTMENTS IN SWEPCO?
7 A. With the issuance of FERC Order 2000, and the creation of RTOs, the nature of how
8 the transmission system is planned and used 'has changed. In the SPP region,
9 generators and transmission customers submit transmission ,service requests to SPP to
10
facilitate power deliveries depending on their needs. Over, the past several years, the
11
available transfer capability calculated by ihe SPP RTO in many parts of the SPP
12
Transmission System has been fully utilized as evidenced by the projects required
13
under the 2016 STEP. This transmission expansion plan report identified the need for
14
$6.1 billion of investments throughout the SPP region for new or upgraded
15
transmission facilities to meet the regional transmission t service needs of customers
16. for the next twenty years.
17
SPP conducts studies to identify the transmission upgrades needed in the SPP
18
region to accommodate transmission service and generation interconnection requests.
19
Ultimately, the transmission-owning utilities are required to build transmission
DIRECT TESTIMONY PUC DOCKET NO. 46449 28 STEVEN J. WOOLDRIDGE
934
1 upgrades to accommodate these regional transmission servide needs because the
2 facilities,in each SPP zone are now planned and used to satisfy regional demands.
3 Additionally, existing transmission facilities require replacement and/or
4 rehabilitation as equipment deteriorates, ages, and fails. Specific equipment is
5 strategically targeted for replacement or rehabilitation based on trouble reports,
6 inspection data, and equipment database information, such as age and- condition.
7 Based on this data, replacements and rehabilitations are prioritized to minimize
8 service interruptions and system impacts.
9 Q. HOW MUCH OF THE TRANSMISSION CAPITAL PUT INTO SERVICE SINCE
10 THE LAST APPROVED TCRF IS DIRECTLY ATTRIBUTABLE TO SPP
11 REQUIREMENTS?
12 A. SWEPCO has been .experiencing an increase in capital projects due to SPP NTC
13 projects being identified, as well as other projects to support a more robust and
14 reliable system. Of the $91.9 million in transmission capital projects highlighted in
15 Figures 7 and 8, approximately $73.1 million, or approximately 80 percent of the
16 total capital ,expenditures for the period of January 1, 2016 through June 30, 2016,
17 were required by SPP. Additional details are provided below for project examples.
18 Q. PLEASE EXPLAIN WHAT PROCESSES SWEPCO HAS IN PLACE TO KEEP
19_ THE COST OF TRANSMISSION CAPITAL PROJECTS REASONABLE.
20 A. All projects are built in accordance with good engineering practices and the
21 planning/operating standards and guidelines set forth by NERC, SPP, Institute of
22 Electrical and Electronics tngineers, Inc., National Electrical Safety Code, Occupational
23 Safety and Health Administration and American National Standards Institute. Similar
• DIRECT TESTIMONY
PUC DOCKET NO. 46449 29 STEVEN J. WOOLDRIDGE
935
1 to the out-Sourcing described earlier in my testimdny, a competitive bidding process is
2 used in selecting contractors to perform transmission construction and in procurement
3 of the necessary materials and supplies. SWEPCO considers safety, customer
4 satisfactidn, reliability, capacity, availability, and adherence to planning and
5
engineering standards while maintaining cost controls in the planning and
6
management of all transmission capital projects.
7
Also, similar to transmission O&M costs, transmission capital costs are
8 budgeted and reviewed employing the same cohesive,planning process that is linked
9 to the AEP, annual business planning process. I have explained this cost control
10 process in detail earlier in Section V, of my testimony.
11 Q. PLEASE GIVE AN EXAMPLE OF A MAJOR ASSET IMPROVEMENT PROJECT
12 • THAT SWEPCO HAS PLACED IN SERVICE SINCE THE LAST APPROVED
13 TCRF FILING.
14 A. SWEPCO has completed the following major Asset Improvement project since the
15 last approved TCRF:
16 • Ellerbe Road - South Shreveport 69 kV — Rebuild ($6,071071):
17 SPP identified and mandated this project to rebuild approximately 3.1 miles of
18 69 kV transmission line from Ellerbe Road - Forbing Road Tap - South
19 Shreveport to prevent the existing line from overloading. The line rebuild
20 portion of the project, which was the SPP requirement, was approximately
DIRECT TESTIMONY PUC DOCKET NO. 46449 30 STEVEN J. WOOLDRIDGE
936
1 $4.9 million of the $6.1 million total project cost. In addition to the line
2 rebuild, upgrades were completed at the Ellerbe Road, South Shreveport, and
3 Forbing Road Tap stations that cost approximately $1.2 million.
4 Q. PLEASE IDENTIFY AN EXAMPLE OF A MAJOR CUSTOMER SERVICE AND
5 OTHER PROJECTS THAT SWEPCO HAS PLACED IN SERVICE SINCE THE
6 LAST APPROVED TCRF FILING.
7 A. SWEPCO has completed the following major Customer Service and Other project
8 since the last approved TCRF:
9 • GodfreS/ Road Station ($1,321,433):
10 Black Bayou Operating, LLC, requested to interconnect a 3.5 MW load in
11 Caddo Parish, LA, to serve their oil recovery, operations and injection wells.
12 To accommodate this request, SWEPCO constructed Godfrey Road, which is
13 a new 138 kV station.
14 Q. PLEASE IDENTIFY ANY MAJOR RELIABILITY PROJECTS THAT SWEPCO
15 HAS PLACED IN SERVICE SINCE THE LAST APPROVED TCRF_FILING.
16 A. SWEPCO has completed the following major Reliability projects since the last
17 TCRF:
18 • Layfield Station ($56,391,793):
19 SPP identified and mandated this projeCt to build a new 500/345/230kV
20 station. The Layfield station was constructed to address the overload of
21 International Paper '- Wallace Lake 138 kV Ckt 1 (SWEPCO/CLECO) and
22 International Paper - Mansfield 138 kV (CLECO) for the outage of Dolet
23 Hills - Southwest Shreveport 345 kV Ckt 1.
24 • Rock Hill - Springridge Pan-Harr REC 138 kV Rebuild ($5,313,914):
25 As part of this project, 27.6 miles of 138 kV transmission line from Rock Hill
26 , to Springridge REC were rebuilt. This portion of the line was rebuilt to
27 prevent overloads of the present summer emergency rating during
28 contingency otiage conditions.
29 Q. WHAT IS THE TOTAL AMOUNT OF CAPITAL SWEPCO IS PROPOSING TO
36 RECOVER IN THIS PROCEEDING?
DIRECT TESTIMONY PUC DOCKET NO. 46449 31 STEVEN J. WOOLDRIDGE,
937
1 A. SWEPCO is proposing to recover a total transmission capital amount of $92,710,802.
2 This amount includes the $855,364 in transmission vegetation management capital
3 expenditures that had been removed from SWEPCO's most recent approved TCRF
4 filing (representing 2015 capital expenditures), as well as tranšmission capital
5 expenditures in the amount of $91,855,438 for the period of January 1, 2016"through
6 June 30, 2016.
7 Q. PLEASE DESCRIBE HOW SWEPCO DETERMINES WHAT TYi3ES OF RIGHT-
8 - OF-WAY CLEARNG AND VEGETATION MANAGEMENT ACTIVITIES
9 SHOULD BE CAPITALIZED.
10 A. SWEPCO makes these determinations consistent with AEP's applicable accounting
11 policies, which are explained in the direct testimony of Company witness Hamlett.
12 Under this policy, costs of "initial" or "original" clearing of land and ROW, and'
13 likewise initial removal of trees, are to be capitalized. In addition, clearing of a
14 previously uncleared ROW, or expanding ROW, is capitalized.
15 Also, this policy is intended to account Tor clearing trees old enough to have
16 existed when the line was originally constructed. Had those trees been removed
.17 during initial clearing, the costs would have been capitalized. Specifying an 18-inch
18 diameter for use in determining capital is a method to distinguish between "original"
19 trees old enough to have existed when the ROW was first cleared.
20 Q. IS THIS METHODOLOGY CONSISTENT WITH HOW SWEPCO
21 DISTRIBUTION DETERMINES CAPITAL VEGETATION MANAGEMENT
22 EXPENDITURES?
DIRECT TESTIMONY PUC DOCKET NO. 46449 32 STEVEN J. WOOLDRIDGE
938
Yes. Both SWEPCO Transmission and Distribution utilize the same methodology
and accounting principles to determine what types of ROW clearing and vegetation
management activities should be capitalized.
DOES THE SWEPCO BENCHMARKING SUPPORT THE 'REASONABLENESS
OF THE TRANSMISSION CAPITAL ADDITION COSTS?
Yes. One of SWEPCO's benchmarking measures compares the total cost of
providing transmission services, including capital investments, to that of other
electric utilities as discussed in Section V of my testimony.
DO THE CAPITAL ADDITIONS INCLUDE ANY AEPSC CHARGES?
Yes. During the period from January 1, 2016 t19-ough June 30, 2016, $9.1 million of
the total capital iniTested was compried of AEPSC costs. The cost for the services
provided by AEPSC to SWEPCO, which comprise the affiliate capital costs, include
the planning, engineering, design and construction management services for all
SWEPCO transmission station, system protectioii, and transmission line facilities.
See Exhibit BJF-Š in the direct testimony of SWEPCO witness Frantz for further
detail on the AEPSC capital costs.
PLEASE SUMMARIZE THE EVIDENCE THAT DEMONSTRATES THE
REASONABLENESS OF THE AEPSC CHARGES INCLUDED IN THE CAPÍTAL
ADDITIONS.
The capital project budgeting and approval processes I described earlier ensure that
any AEPSC charges included in the capital additions are appropriate. In addition, the
benchmarking results that I discussed above, which include a comparison of total
costs (O&M and three-year average capital costs) to SWEPCO peers, provide further
1 A.
3
4 Q.
5
6 A.
7
8
9 Q.
10 A.
11
12
13
14
15
16
17 Q.
18
19
20 A.
21
22
23
DIRECT TESTIMONY PUC DOCKET NO. 46449 33 STEVEN J. WOOLDRIDGE
939
1 support for this conclusion. Finally, the staffing levels that I 'discussed or referenced
2 earlier in Section V further support the conclusion that these costs are reasonable and
3 necessary.
4 Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY?
5 A. Yes, it does.
DIRECT TESTIMONY PUC DOCKET NO. 46449 34 STEVEN J. WOOLDRIDGE
940
PUC Docket No. 46449 EXHIBIT SJW-1
113.. 8
Controls and Field Services
Grid DeiTlopment
Transmission Business
Operations Programs
Transmission Asset Strategy
and Policy
Executive Vice President
Transmission
Exhibit SJW-2 AEP Transmission Organizational Chart PUC Docket No. 46449
EXHIBIT SJW-2
• Transmission Business Operations Piograms
• Transmission Field Services
• Transmission Strategy, Planning & Business Development
• Transmission Project Finahcial Controls
• Transmission Forestry
• Transmission Asset Strategy & Planning
• Transmission Engineer & Project Services
• Transmission Reliability Compliance and Risk
• Transmission Financial Analysis & Budget Planning
• Transmission Asset Strategy & Policy
• Transmission Project Siting
• AEP Transmission Administration
942
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EXECUTIVE SUMMARY OF BRETT MATTISON
Brett Mattison, the Director of Customer Services and Marketing for Southwestern
Electric Power Company (SWEPCO or Company) supports the recovery of $23,396,395 in total
adjusted test year customer services costs included in SWEPCO's cost of service. Mr. Mattison
has overall responsibility for customer service and marketing as well as meter-related operations
at SWEPCO. Among the activities Mr. Mattison is responsible for are the following: (a) meter
reading; (b) meter electrician functions; (c) credit and collection activities; (d) customer account
management; (e) complaint management; (f) new services and expansions; and (g) billing.
Mr. Mattison describes SWEPCO's Customer Services and Marketing Organization,
including the benefits of its recent actions to acquire and install modernized meters in its service
area. He further describes the customer service component of the Customer and Distribution
Services (C&DS) organization of American Electric Power Service Corporation (AEPSC), the
service company affiliate that provides support to SWEPCO's customer services activities.
Mr. Mattison also discusses SWEPCO's quality Of customer service, including saveys
that demonstrate a high level of customer satisfaction with SWEPCO compared to national
averages. He further demonstrates that SWEPCO Customer Services has an exemplary safety
record and describes an initiative undertaken specifically designed to achieve the goal of zero
harm. Finally, he notes that SWEPCO's customers have filed no complaints with the Public
Utility CoMmission of Texas re'garding the Company's service during the test year.
Mr. Mattison also demonstrates that AEPSC C&DS organization provides essential,
complementary services to his organization through the activities of four groups: Customer
Operations; Customer Services Support; Meter Services and Repair; and Economic and Business
Development. These groups activities include: operation of call center, billing operations,
credii and collection support, responding to bankruptcy filings, providing bankruptcy-associated
1
950
account maintenance, providing customer support for all non-mail customer payment methods,
management of large chain accounts, support of SWEPCO's website as it relates to end-use
customers, raising awareness on cost-effective customer contact channels, management of
third-party asset utilization, load research, meter services support, and assistance with customer
programs.
Mr. Mattison justifies the recovery by SWEPCO of total Customer Services costs, which
includes $8,685,597 in•affiliate expenses billed to SWEPCO by the AEPSC C&DS drganization
and the AEPSC Safety and Health organization. Mr. Mattison explains that the high customer
satisfaction achieved by SWEPCO supports the fait that AEPSC C&DC is providing effective
support to SWEPCO's service operations. In addition, AEPSC customer service costs have been
reduced since the last test year and have remained consistent since 2013.
Mr. Mattison further discusses how cost trends, benchmark -studies, performance to
budget, and staffing trends collectively demonstrate the reasonableness of SWEPCO's custoiner
services costs, including the service company component of the costs.
Finally, Mr. Mattison supports the affiliate charges for AEPSC Safety and Health
organization services provided to SWEPCO. Mr. Mattison describes this organization and the
nature of its services. Based on this, and through further discussion of cost trends and budget
and cost control processes, he demonstrates the reasonableness and necessity of the AEPSC
charges for Safety and Health.
951
2
PUC DOCKET NO. 46449
PUBLIC UTILITY COMMISSION OF TEXAS
APPLICATION OF
SOUTHWESTERN ELECTRIC POWER COMPANY
FOR AUTHORITY TO CHANGE RATES
DIRECT TESTIMONY OF
BRETT MATTISON
FOR
SOUTHWESTERN ELECTRIC POWER COMPANY
DECEMBER 2016
952
TESTIMONY INDEX SUBJECT PAGE
I. INTRODUCTION 1
II. CUSTOMER SERVICE OVERVIEW 4
A. Description of the SWEPCO Customer Services and' Marketing Organization 5
1. Meter Revenue Operations Department 2. Customer Services 7 3. Energy Efficiency & Consumer Programs Department 8 4. Lean/Process Improvement Department 9
B. Description of the AEPSC Customer and Distribution Services Organization 9
1. AEPSC Customer Operations 11 2. AEPSC Customer Services Support 14 3. AEPSC Meter Services Support and Repair 16 4. Economic and Business Development 16
C. SWEPCO Interface with AEPSC C&DS 17
III. QUALITY OF SERVICE 18
A. Residential and Colnmercial.Customer Surveys 19 B. Managed Account Customer Survey 20 C. Customer Operations Center Surveys 21 D. Meter Reading 22
W. CUSTOMER'SERVICE COSTS 23
V. AFFILIATE COSTS 27
VI. AEPSC SAFETY AND HEALTH ORGANIZATION OVERVIEW 31
A. Description of the AEPSC Safety and Health Organization 31 B. SWEPCO Interface with AEPSC Safety and Health 34 C. CoS•ts and Cost Trends 35
DIRECT TESTIMONY PUC DOCKET NO. 46449 i BRETT MATTISON
953
EXHIBITS
EXHIBIT BM-1 SWEPCO Customer Service & Marketing (CS&M) Organizational Chart
EXHIBIT BM-2 AEPSC Customer & Distribution Services Organizational Chart
EXHIBIT BM-3 Texas Peer Group — Customer Service Costs per Customer
EXHIBIT BM-4 Regional South Central Peer Group — Customer Serviee Costs per Customer
EXHIBIT BM-5 National Peer Group — Customér Service Costs per Customer
DIRECT TESTIMONY PUC DOCKET NO. 46449 ii BRETT MATTISON
954
1 I. INTRODUCTION
2 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.
3 A. My name is Brett Mattison. My businesg address is 428 Travis Street, Shreveport,
4 Louisiana: 71101.
5 Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT,CAPACITY?
6 A. I am employed by the Southwestern Electric Power Company (SWEPCO or
7 Company) as Director of Customer Services and Marketing. SWEPCO is an
8 operating company of American Electric Power Company, Inc. (AEP). SWEPCO is
9 headquartered in Shreveport, Louisiana, dnd provides retail electric service to
1 0 cusfomers in East Texas, the Panhandle in North TeXas, Louisiana, and Arkansas.
11. Q. WHAT IS YOUR EDUCATIONAL BACKGROUND AND PROFESSIONAL
12 EXPERIENCE?
13 A. I earned a bachelor's degree in Business Finance from Louisiana Tech University in
14 Ruston, Louisiana and a Certified commercial .banking degree from the American
15 Institute of Banking. After graduation in 1986, I began my career in commercial
16 banking with Pioneer Bank in a management training program working in all areas of
17 banking. I became a. manager of branCh operations and a commercial loan Officer
18 prior to leaving the banking profession in 1990 to pursue a career with SWEPCO.
19 I have 26 years of electric utility experience and have held several positions in
20 the area of customer service and marketing. I began my career with SWEPCO in
21. 1990 as a residential marketing consultant. In 1992, I was named residential
22 marketing supervisor for Louisiana. In 1993, I became the SWEPCO Marketing
DIRECT TESTIMONY PUC DOCKET NO. 46449 1 BRETT MATTISON
955
1 Manager for Louisiana. I kept this title for, several years and was named Mass
2 Marketing Manager with responsibility for all residential, small industrial and small
3
commercial customers of SWEPCO, which included Texas, Louisiana, and Arkansas.
4
In 1995, I was named Middle Marketing Manager in charge of all the large industrial
5
and large commercial customers in the SWEPCO territory. In 1996, I became the
Customer Relations Manager, performing account maintenance, with responsibilities
7 for retention of SWEPCO customers. In 2004, I moved to my current position as
8 Director of Customer Services and Marketing for SWEPCO.
9 Q. WHAT ARE YOUR RESPONSIBILITIES AS DIRECTOR OF CUSTOMER
10 , SERVICES AND MARKETINC;
11 A. I am responsible for customer service and marketing as well as meter-related
12 operations at SWEPCO. I am responsible for the overall design, development,
13 implementatfon, analysis, and administration of SWEPCO field custdmer service
14 activities, including measurement, meter reading, and meter reventie operations.
15 I am also responsible for the administration of a Field Communications Team that,
16 among other thine, provides assistance and direction on credit and collection
17, service orders to SWEPCO Distribution and Customer Services groups.
18 Additionally, I am responsible for the resolution of customer inquiries concerning
19 issues such as power quality, quality of service, and billing. I ensure the accurate
20 reading of meter§ and the timely connecting and disconnecting of service.
, 21 My customer services and mdrketing responsibilities include formulating,
22 implementing, and administering policies and programs pertaining to all segments
DIRECT TESTIMONY PUC DOCKET NO. 46449 2 BRETT MATTISON
956
1 of customers, including residential, commercial, and.industrial customers. Large
2 industrial and large commercial customer accounts are managed utilizing an
3 individual employee titled "account manager" who is the customer's single point of
contact, assigned to manage each of these customers accounts on an individual
5 basis. All segments of customers that are outside of the account management
6 assignment are assigned to employees titled "customer service representatives,"
7 who are geographically assigned across the SWEPCO service territory. I am also
8 responsible for the deployment of demand response and energy efficiency (EE)
9 programs for SWEPCO customers, as well as the Lean/Process Improvement
10 Department.
11 Q. DO YOU SPONSOR ANY RATE FILING PACKAGE SCHEDULES?
12 A. Yes. I sponsor the following schedule:
13 • H-13.1c Quality of Service Complaints
14 I co-sponsor the following schedule:
15 • H-13.1e Quality of Service Improvements (with Company witnesses
16 A. Malcolm Smoak and Steven J. Wooldridge)
17 Q. HAVE YOU PREVIOUSLY FILED TESTIMONY BEFORE THE PUBLIC
18 UTILITY- COMMISSION OF TE5CAS (PUC qR COMMISSION)?
19 A. Nies. I have filed testimony before the Commission on behalf of SWEPCO in PUC
20 Docket Nos. 37364 and 40443.
21 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY?
22 A. I will provide an overview of SWEPCO's Customer Services and Marketing
23 organization, the Customer and Distribution Services (C&DS) and the American
DIRECT TESTIMONY PUC DOCKET NO. 46449 3 BRETT MATTISON
957
1
Electric Power Service Corporation (AEPSC) Safety and Health organizations,
2
which provide support to SWEPCO's customer services activities. I will also
3
summarize the quality of customer service provided to our 'customers, including
4
customer servic' e survey results, and the lack of complaints against SWEPCO filed
5 with the Public Utility Commission of Texas (PUC or Commission). I support
6 SWEPCO and AEPSC customer service and AEPSC Safety and Health
7 organization costs, and demonstrate the reasonableness, necessitY, and
8 appropriateness of the customer services charges to SWEPCO provided by its
9 affiliates, primarily AEP§C.
10
11 II. CUSTOMER SERVICE OVERVIEW
12 Q. HOW-DOES, SWEPCO PROVIDE THE customER SERVICES THAT RETAIL
13 CUSTOMERS REQUIRE IN CONNECTION WITH THE PROVISION OF
14 ELECTRIC SERVICE TO THEM BY SWEPCO?
15 A. SWEPCO's retail customers receive customer services they require in connection
16 with the provision of their electric service from the Customer Services and Marketing
17 organization within SWEPCO. In addition; the AEPSC C&DS organization also
18 supports and provides customer services to SWEPCO's retail customers. These
19 groups are complementary and do not duplicate services, as I will explain below.
20 Q. PLEASE GENERALLY DESCRIBE THE CUSTOMER SERVICES GROUPS AT
21 SWEPCO AND AEPSC.
DIRECT TESTIMONY PUC DOCKET NO. 46449 4 BRETT MATTISON
958
1 A. Customer Services employees are employed by either a specific AEP Operating
2 Company (e.g., a SWEPCO meter servicer in Longview) or by AEPSC (e.g., a
3 national account representative supporting national accounts). In general,
4
Operating Company employees are focused on the day-to-day business of serving
5
SWEPCO customers, While the AEPSC employees *vide services to improve
6
SWEPCO's ability to serve its customers. Because of the nature of these function,
7
the Company can realize efficiencies by sharing AEPSC resources with sister utility
8
companies.
9 A. Description of the SWEPCO
10 Customer Services and Marketing Organization
11 Q. WHAT, IN GENERAL, IS THE SCOPE AND NATURE OF SWEPCO'S
12 CUSTOMER SERVICES AND MARKETING ORGANIZATION?
13 A. SWEPCO Customer Services and Marketing is responsible for SWEPCO's
14 customers - from receiving outage reports and dispatching restoration orders, to
15 resolving meter access issues; coordinating the installation of new services and
16 expansions, and resolving customer inquiries. The SWEPCO organization alsd
17 administers the residential critical care customer designations, performs connects,
18 disconnects and 're-reads, and resolves billing complaints ,where necessary. The
19 specific services provided by this organization are detailed in the following sections.
20 A high-level organizational chart of the SWEPCO Custonier Services and
• 21 Marketing Organization is shown in EXHIBIT BM-1..
22 Q. EXPLAIN THE ORGANIZATION OF THE SWEPCO CUSTOMER' SERVICES
23 AND MARKETING ORGANIZATION.
DtRECT TESTIMONY' PUC DOCKET NO. 46449 5 BRETT MATTISON
959
1 A. The SWEPCO Customer Services and Marketing Organization is comprised of
2 158 employees who provide services related to the provision of electricity to retail
3 customers. SWEPCO Customer Services and Marketing is made up of four
departments: 1) Meter Revenue Operations (MRO), with 113 employees, 2) Customer
5 Services, with 32 employees, 3) Energy Efficiency & Consumer Programs, with nine
6 employees, and Lean/Process Improvement with four employees. I will describe the
7 structure and functions of each of those four departments below.
8 . 1. Meter Revenue Operations Department
9 Q. PLEASE DESCRIBE THE ACTIVITIES OF THE SWEPCO METER REVENUE
10 OPERATIONS DEPARTMENT.
11 A. The. SWEPCO MRO Department is comprised of employees that read meters,
12 complete a variety of field service orders, and perform meter electrician services - all
13 activities that are necessary to provide electric service to retail customers. Field
J 4 Revenue Specialists are responsible for completing orders, which include cu§tomer
15 move-ins and move-outs, disconnections for nOn-payment and the associated
16 reconnections, special redds for off-cycle switches, and meter re-read requests. Field
17 Revenue Specialists also investigate and resolve reports of broken meter seals.
18 Meter Electricians duties include designing, installing and maintaining
19 transformer-rated metering equipment, and performing internally generated and
20 customer requested meter tests for residential, commercial, and industrial meters.
21 MRO has three Revenue Protection Coordinators, with one in Texas, whose
22 function is to investigate and resolve energy diversion and theft.
DIRECT TESTIMONY PUC DOCKET NO. 46449 6 BRETT MATTISON
960
1
MRO also includes the Field Communications Department, which serves as a
2
radio contact point with MRO employees, as well as distribution employees. Their
3
functions include tracking and expediting . time-sensitive orders, dispatching
4 emergency orders including those received after normal business hours, and serving
5 as an emergency resource for MRO employees involved in hazardous circumstances.
6 2. Customer Services
7 Q. PLEASE DESCRIBE THE ACTIVITIES OF THE SWEPCO CUSTOMER
8 SERVICES DEPARTMENT.
9 A. The Custonier Service§ Department resolves end-use customer problems regarding
10 service and billing issues. These employees also manage relationships with large
11 end-use customers such as hospitals, manufacturers, refineries and chain accounts, as
12 well as electric cooperatives, whicli encompass all activities that are necessary to,
13 provide electric service to customers. SWEPCO Customer Services, employees also
14 play an important role in providing logistics support during storm restoration.
15 SWEPCO Customer Services field-based personnel are assigned by area to
16 investigate and resolve end-use customer problems such as meter reading access, rate
17 verification, damage claims, power quality problems, and other customer issues.
18 SWEPCO Customer Services is also résponsible for managing customer complaints
19 and conducting root cause analyses to find and correct root causes ,of customer issues.
20 Additionally, SWEPCO Customer Services facilitates local operational improvement
21 meetings with other SWEPCO workgroups to improve service and productivity.
DIRECT TESTIMONY PUC DOCKET NO. 46449 7 BRETT MATTISON
961
Additionally, this department is responsible for working with customers to provide
2
alternate energy solutions, such as renewables (i.e., wind, solar, etc.).
3
3. Energy Efficiency & Consumer Programs Deliartment
4 Q. PLEASE DESCRIBE THE ACTIVITIES OF THE SWEPCQ ENERGY
5 EFFICIENCY & CONSUMER PROGRAMS DEPARTMENT.
6 A. The Energy Efficiency & Consumer Programs Department is responsible for
7 administering standard offer programs and market tranšformation programs in each
8 jurisdiction to achieve the state-mandated goals for energy efficiency. Program
9 administration includes program design, outreach activities, application review,
10 contract execution, on-site inspections of work sUbmitted, invoice review and
11
processing, website maintenance, monitoring of the programs, cost-effeetiveness
12 review, energy efficiency expense accounting, and completion of annual energy 4
13 efficiency filings. The Energy Efficiency & Consumer Programs Department ensures
14 compliance with regulatory rules and statutory requirements.
15 Q. ARE YOU SEEKING RECOVERY OF SWEPCO ENERGY EFFICIENCY
16 PROGRAM COSTS IN THIS PROCEEDING?
17 A. No. Company witness Randall W. Hamlett has made a pro forma adjustment to
18 exclude all energy efficiency program costs, including the 'Texas portion that is now
19 recovered through the Energy Efficiency Cost Recovery Factor (EECRF).
On April 29, 2016, SWEPCO filed an Application with the Commission, seeking to adjust its EECRF in PUC Docket No. 45824.
DIRECT TESTIMONY PUC DOCKET. NO. 46449 8 BRETT MATTISON
962
1 4. Lean/Process Improvement Department
2 Q. PLEASE DESCRIBE THE ACTIVITIES OF THE SWEP'CO LEAN/PROCESS
3 IMPROVEMENT DEPARTMENT.
4 A. Lean is a system for continuous process improvement that helps to shorten the process
5 cycle by defining what is value according to the customer, and organizing and
6 improving processes to deliver what is needed, when it is needed, and with minimal
7 waste. Lean appliesin every business and every process. It is not a tactic or a cost
8 reduction program, but' a way of thinking and acting for an entire organization.
9 The Lean/Process Improvement Department is responsible for working with
10 employees to develop and implement process and productivity improvements. The
11 team is also charged with driving cultural improvements through employee
12 engagement:
13 B. Description of the AEPSC
14 Customer and Distribution Services Organization
15 Q. .DOES AEPSC ALSO PROVIDE CUSTOMER SERVICE AND DISTRIBUTION
16 SUPPORT TO SWEPCO?
17 A. Yes. As I mentioned previously, the C&DS organization at AEPSC provides
18 customer service and d1stribution support to SWEPCO and the other AEP
19 Operating Companies. I only discuss the customer service functions. Company
20 Witness Smoak discusses the distribution functions in his direct testimony.
21 AEPSC provides services that are complementary to the services provided
22 by the SWEPCO Customer Services and Marketing Organization. The AEPSC
23 C&DS organization primarily provides the services that' are common among all
DIRECT TESTIMONY PUC DOCKET NO. 46449 9 BRETT MATTISON
963
1 Operating Companies throughout the AEP system, thus allowing the Operating
Companies So benefit through economies of scale. In general, SW ÉPCO is
3 responsible for providing those services that are unique to SWEPCO.
4 Q. PLEASE SUMMARIZE THE SERVICES PROVIDED BY THE AEPSC
5 CUSTOMER AND DISTRIBUTION SERVICES ORGANIZATION AND WHY
6 THESE SERVICES ARE NECESSARY.
7 A. The AEPSC C&DS organization provides specialized energy delivery support
8 services and expertise dcross the AEP System. C&DS is made up of six groups:
9 Distribution Performance Management and Data Analytics; Customer Services
10 Support; Customer Operations; Distribution Services Support; Meter Services
11 Support and Repair; and Economic and Business Development. Within each
12 department are centralized subgroups that provide dedicated resoUrces to AEP's
13 Operating Companies in 11 states. I will discuss four of the six groups listed above.
14 CompanS7 witness Mr. Smoak will discuss Distribution Performance Management
15 and Data Analytics and Distribution Services., A high level organizational chart of
16 the AEPSC C&DS organization is shown in EXHIBIT BM-2.
17 Q. PLEASE DESCRIBE THE CUSTOMER SERVICE PORTION OF THE AEPSC
18 CUSTOMER AND DISTkIBUTION SERVICES ORGANIZATION AND ITS
19 FUNCTIONS.
20 A. The Customer Service function of the AEPSC C&DS organization has employees
21 in four groups responsible for providing customer service support for all AEP
22 Operating Companies, including SWEPCO. The four groups are:
DIRECT TESTIMONY PUC DOCKET NO. 46449 10 BRETT MATTISON
964
1 1. Customer Operations;
2 2. Customer Services Support;
3 3: Meter Services Support and Repair; and
4 4. Economic and Business Development.
5 1. AEPSC Customer Operations
6 Q. PLEASE liESCRIBE THE SERVICES PROVIDED TO SWEPCO BY THE
7 AEPSC CUSTOMER OPERATIONS GROUP.
8 A. C&DS Customer Operations is comprised of AEPSC employees, supplemented
9 with contract employees, who provide services to the AEP Operating Companies
10 through three functional work subgroups: Customer Operations Centers (COCs),
11 Credit Policy and Payment Administration, and Customer Interface and Channel
12 Management.
13 Q. PLEASE DESCRIBE THE SERVICES PROVIDED TO SWEPCO BY THE
14 AEPSC CUSTOMER OPERATIONS CENTER SUBGROUP.
15 A. AEPSC has ,five virtually-integrated COCs that are strategically locaited throughout
16 AEP's service territories. AEPSC employees are supplemented with contract -
17 employees in the five COCs, including support functions. AEP's COC located in
18 Shreveport, Louisiana provides primary call handling responsibility for customers
19 located in SWEPCO's service area.
20 The COC employees 13rocess inbound customer calls and interne inquiries
21 from www.SWEPCO.com and take the appropriate action to respond to all customer
22 service inquiries including credit-related functions, outage reporting and customer
23 hazardous, conditions. COC employees also process hazardous condition calls
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1
originatirig from 9-1-1 and other emergency service providers. In addition to AEP's
2
internal COC employees, additional services are provided by NCO Financial Systems
3
(NCO), a third-party contractor, to supplement call processing for credit-related
4
inquiries. The NCO representatives are also available to assist with outage call
5
processing as needed.
In addition, the Customer Operations Center organization contains the AEPSC
7 Billing and Accouni Operations group, which is comprised of employees whose
8
responsibilities include the maintenance of 'customer billing programs. They are
9
responsible for responding to customer correspondence, answering customer
10
complaints, and maintaining records. They process the release of all customer
11
information, run usage history requests, maintain usage history request records in the
12 database, maintain. non-metered service billing records, and resolve billing disputes
. 13 and billing complaints, including making appropriate billing adjustments. They also
14 respond to information requests, as well as process and post service orders that have
15 been referred to them by SWEPCO field personnel. In addition, they handle changes
16 in customer status associated with alterations in city limits due to municipal
17 annexations/de-annexations, work all billing account exceptions to ensure accounts
18 are billed accurately, and issue investigation orders to the field for rereading of
19 meters, lost meters, stoppedmeters, and other reasons.
20 Q. HAVE THE CUSTOMER OPERATIONS .CENTERS RECEIVED ANY
21 RECOGNITION FOR ITS PERFORMANCE?
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1 A. Yes, the Center of Excellence certification from the Center for Customer-Driven
2 Quality at Purdue University was received in 2008 and 2010 through 2015 - seven
3 years in total. The Center Of Excellence certification is awarded to customer service
4 call centers that rank in the top 10 percent of the thousands of call centers studied.
Purdue University benchmarks the performance of cus'tomer service call centers in
6 44 different business industries in North America. Certified call centers balance a
7 commitment to service excellence with cost-effective service strategies. To earn the
8 Center of Excellence certification, a, call center must meet objective, quantitative
9 criteria and pass audits by BenchmarkPortal researchers. The key drivers of superior
10 call center performance in customer service include operational efficiency, service
11 level standards, customer satisfaction, leadership, quality/training,
12 staffing/scheduling, and Customer Operations support. Ifi addition, AEP has been
13 recognized as a BenchmarkPortal Top 100 Contact Center and awarded a Top 100
14 certificate and trophy each of the past four years (since the contest's inception).
15 Q. PLEASE DESCRIBE THE SERVICES PROVIDED TO SWEPCO BY THE
16 AEPSC CREDIT POLICY AND PAYMENT ADMINISTRATION SUBGROUP.
17 A. The AEPSC, Credit Policy and Payment Administration subgroup's responsibilities
18 include custorner bill print and insert functions, responding to bankruptcy filings
19 and performing bankruptcy-associated account maintenance. They process
20 payrnents from all public and private energy assistance sources, provide financial
21 information relative to nonresidential ctistomer creditworthiness, prepare responses
22 to credit-related customer complaints to regulatory agencies, and provide statistical
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1 information and measurements related to credit and collection activity.
2 AdditionallST, they administer and provide customer support for all non-mail
3 customer payment methods, including in-person payment locations, pay-by-
4 telephone services, and various electronic funds transfer methods.
5 Q. PLEASE DESCRIBE THE SERVICES PROVIDED TO SWEPCO BY THE AEPSC
6 CUSTOMER INTERFACE AND CHANNEL MANAGEMENT (CICM)
7 SUBGROUP .
8 A. The AEPSC CICM subgroup employees have responsibilities that include support
9 related to Customer Operations including AEP's Operating Company websites.
10 The customer services sections on these websites are designed to enhance the
11
customer experience while conducting business online, and provide residential and
12
business customers valuable information and a full array of self-service account
13
functions. Among these self-service functions is the enrollment of customers in
14 both outage alert and paperless billing programs. The CICM team is also
15 responsible for the efforts to raise awareness and encourage additional customers to
16 use these cost-effective customer contact channels.
17 2. AEPSC Customer Services Support
18 Q. PLEASE DESCRIBE THE SERVICES PROVIbED TO SWEPCO BY THE
19 AEPSC CUSTOMER SERVICES SUPPORT GROUP.
20 A. The AEPSC Customer Services Support employees have responsibilities that
21 include support activities for customer-facing functions and systems. There are six
22 subgroups related to Customer Services Support that include Utility Business
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1 Development, Special Billing and Translation, Load Research, EE & Consumer
2 Programs, Customer Choice, and Customer Information Systems Implementation &
3 Support. The Utility Business Development group focuses on asset utilization 133'T
4 managing joint-use contracts with third parties who attach their own lines„cables,
5 or other equipment io SWEPC'O's distribution facilities.
6 Special Billing and Tranšlation employees prepare billing information for
7 large customers and process billing data exceptions for those large customers who
8 are metered and billed using interval data recorder (IDR) meters: They administer
9 the system that translates and processes billing information from IDR meters and
10 collect and provide interval load data for data analysis and load'research. They also
11 " provide central support to Operating Company MRO personnel, large industrial
12 customers, autornated metering systems and back office process development.
13 Load Research employees perform analyses primarily in support of
14 consumer programs, as well as providing support on a variety of issues including,
15 but not limited to, assistance whh energy efficiency and demand response programs
16 and program plan development.
17 The EE & Consumer Programs employees ensure the availability of
18 consumer programs in all AEP jurisdictions dedicated to EE, or any other related
19 utility service offerings.
20 The Customer InforMation Systems Implementation & Support group
21 supports billing and customer information systems used by all operating companies.
22 The Customer Choice group manages the exchange of account and billing
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1
information for customers within the deregulated service territories that participate
2
in choice programs with energy marketers. These employees also provide technical
3
and training support to SWEPCO-based custOmer services employees, and are
4
responsible for remediation and documentation for customer services processes and
5
functions.
6 3. AEPSC Meter Services Support and Repair
7 Q. PLEASE DESCRIBE THE SERVICES PROVIDED TO SWEPCO BY THE
8 AEPSC METER SERVICES SUPPORT AND REPAIR GROUP.
9 A. The AEPSC Meter Services Support and Repair employees represent three
10 functional subgroups. These functional subgroups consist of Meter Systems
11 Support, Meter Labs, and Repair Shops. Meter Systems Support selects meter
12 testing saniples, analyzes meter performance, and assists with meter inventory
13 management. Additionally, this group coordinates and develops meter standards
14 and service guides, and assists in advanced metering r systems and related
15 communications systems development. The four Meter Labs across the AEP
16 service territory procure meters and instrument transformers and provide regulatory-
17 required testing based on established schedules. The four Repair Shops located
18 across the AEP System provide cost-effective refurbishment of distribution
19 equipment, management of distribution tools, and testing of distribution equipment.
20 4. Economic and Business development
21 Q. PLEASE DESCRIBE THE SERVICES PROVIDED TO SWEPCO BY -THE
22 AEPSC ECONOMIC AND BUSINESS DEVELOPMENT GROUP.
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1 A. The Economic and Business Development Group provides a variety 'of professional
2 resources and research to evaluate regional and local market conditions and to
3 develop new programs and initiatives to spur growth and investment throughout
4
AEP's service territories, which brings jobs to our communities.
5
The Economic and Bu§iness Development Group also, manages AEPSC
6
National Accounts. This subgroup of employees have responsibilities that include
providing national account management services to large chain accbunts that have
8
locations in more than one AEP Operating Company service area-. These employees
-9
provide large chain account customers with a single point of contact to more
10
effectively and efficiently help resolve service issues involving new or existing
11
locations. Examples of such customers in SWEPCO's Texas service area include
12 International Paper Company, Pilgrim's Pride Corporation, Exxon Mobil
13 Corporation; Tyson Foods, Inc., and Brookshire Grocery Company.
14 C. SWEPCO Interface with AEPSC C&DS
15 Q. HOW DOES SWEPCO INTERACT WITH THE AEPSC C&DS ORGANIZATION?
16 A. SWEPCO provides direction and input to that orgariization in several ways.
17 AEPSC's C&DS organization is integral to the SWEPCO customer services
18 organi±ation. The local AEPSC COC supervisors and AEPSC Billing and Account
19 Operations supervisors regularly attend SWEPCO Customer Services and Marketing
20 management.meetings and staff conference calls and function as integral parts of that
21 team.
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1 SWEPCO representatives help with various training conferences and serve on
a number of formal functional review groups that provide input to the AEPSC C&DS
3 Organization, and in particular to AEP leadership.
4 Q. *HAT OTHER MECHANISMS ARE AVAILABLE FOR SWEPCO TO PROVIDE
5 FEEDBACK AND DIRECTION TO THE AEPSC C&DS ORGANIZATION?
6 A. Regularly scheduled meetings of the AEP Operating Company customer -services
7 directors and the AEPSC cusfomer service support organization leadership are
8 conducted where service issues are discussed and resolved. These discussions also
9 address best practices lised in other Operating Companies to better and more
10 efficiently meet the needs of our customers. Additionally, the AEPSC C&DS
11 leadership team travels to each Qperating Company periodically to discuss specific
12 concerns or needs and to obtain feedback on the quality of service being provided to
13 the Operating Company.
14
15 III. QUALITY OF SERVICE
16 Q. HOW DOES SWEPCO TRACK CUSTOMER SATISFACTION?
17 A. SWEPCO measures and tracks end-use customer satisfaction using four separate
18 surveys, three of which are performed by independent market research firms on behalf
19 of SWEPCO. There are four separate surveys, as there are four different sets of
20 customers: 1) residential, 2) commercial, 3) managed account customers, and
21 4) customers who have had a recent experience with a COC. The managed account
22 customer surveys are directed at nianaged and key accounts, including accounts such
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1 as the federal government and Wal-Mart Stores, Inc., which have operations in the
service territory of multiple AEP Operating Companies. The COC transactional
3 survey is completed only by customers who have had a recent interaction with the
4 COCs.
5 A. Residential and Commercial Customer Surveys
6 Q. PLEASE DESCRIBE THE RESIDENTIAL AND COMMERCIAL CUSTOMER
7 SURVEYS.
8 A. The surveys for residential and commercial customers Were conducted throughout the
9 year via telephone interviews with a random sample of SWEPCO customers. Both
10 surveys were conducted by Market Strategies International (MSI). MSI is an
11 unaffiliated survey research firm, which ensured the integrity and quality of the data.
12 MSI was hired to provide SWEPCO with comparative national benchmarking data on
13 standardized questions. Both surveys contained many questions, including questions
14 that MSI asked of customers of industry peers enabling benchmarking. These
15 questions iricluded topics such as being responsive to customer needs, the value of
16 customer service, the value of readily accessible customer service, and having bills
17 that are easy to understand.
18 Q. PLEASE bESCRIBE HOW THE SAMPLES ARE ŠELECTED FOR THE
19 RESIDENTIAL AND COMMERCIAL CUSTOMER SURVEYS.
20 A. The residential and commercial surveys were administered by phone interview,
21 employing a random SWEPCO-supplied sample of residential and commercial
22 customers obtained from the Company's customer information system.
15IRECT TESTIMONY PUC DOCKET NO. 46449 19 BRETT MATTISON
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1 Q. HOW DID SWEPCO'S RESULTS IN THE RESIDENTIAL AND COMMERCIAL
2 SURVEYS COMPARE TO OTHER UTILITIES?
3 A. Figure 1 displays SWEPCO's overall customer satisfaction percentage ratings for
4 2015 compared to the national average for residential and commercial customers.
5 The percentiges below represent the percent of positive responses (ratings of '6 to
6 '10' using a '0' to '10' scale). The results are shown for the entire SWEPCO service
7 territory.
8 Figure 1 — 2015 Overall Customer Satisfaction Ratings
SWEPCO National Average Residential 86% 84% Commercial 89% 87%
9 As noted above, numerous'questions were used for benchmarking SWEPCO
10 versus its national peers, in both the residential and commercial surveys. SWEPCO
J
1 1 was ranked in the top quartile in 22 of the 30 benchmarked questions asked in the
12 residential survey and 17 of the 29 benchmarked questions asked in the commercial
13 survey.
14 B. Managed Account Customer Survey
15 Q. PLEASE DESCRIBE THE MANAGED ACCOUNT CUSTOMER SURVEY.
16 A. SWEPCO utilizes AEP's Corporate Performance Management group to conduct
17 customer satisfaction surveys for its managed accounts. The managed account survey
18 is conducted bi-annually with large customers and chain account customers. The
19 survey questiops cover six focus areas as shown in Figure 2 below.
DIRECT TESTIMONY PUC DOCKET NO. 46449 20 BRETT MATTISON
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1 Q. PLEASE DESCRIBE HOW THE SAMPLES ARE SELECtED FOR THE
2 MANAGED ACCOUNT CUSTOMER SURVEY.
3 A. To survey these managed accounts, AEP selects SWEPCO's assigned account
4 contacts and`sends them e-mail invitations to participate in the online survey.
5 Q. PLEASE DESCRIBE SWEPCO'S MANAGED ACCOUNT CUSTOMER SURVEY
6 PERFORMANCE.
7 A. Figure 2 shows the results for the entire SWEPCO territory. The percentages below
8 represent the percent of 'Consistently Good and 'Excellent' responses on a five-point
9 rating scale (ratings of 'Needs Major Improvement' to Excellent').
10 Figure 2 — 2015 Key Account Customer Satisfaction Ratings
FOcus Area SWEPCO % Reliability 89% Corporate Citizenship 92% Energy Management 80% Price 89% Account Manager 96% Satisfaction with SWEPCO 86%
11 C. Customer Operations Center Surveys
1 Q. PLEASE DESCRIBE THE COC TRANSACTIONAL SURVEY.
13 A. MSI also conducted the COC transactional survey. The COC transactional survey
14 employed a telephone interview methodology to conduct the survey.
15 Q. PLEASE DESCRIBE HOW THE SAMPLES WERE SELECTED FOR THE CALL
16 CENTER TRANSACTIONAL SURVEY.
17 A. MSI randomly selected a- daily sample of customers from the SWEPCO service
18 territory who have had a recent transaction with the call center. The sample
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1 population included all SWEPCO customers who placed one of the 584,676 calls
2 received by the call centers during 2015. These samples typically are approximately
90 percent residential customers and 10 percent small commercial customers.
4 Interviews are targeted for completion no later than ten days after the transaction and
5 are self-identified by the respondent as to transaction type. Sample sizes were set at
6 the COC level with overall system data reflecting a representatively Weighted total of
7 those individual solutions centers data. •
8 Q. WHAT WERE SWEPCO'S RESULTS IN THE 'CALL CENTER
9 TRANSACTIONAL SURVEY?
10 A. Customers were asked how satisfied they were with the entire transaction experience
11 with the call center. The overall customer satisfaction rating was 86 percent out of a
12 possible 100 percent, which is viewed as a positive result.
13 Q., DID SWEPCO RECEIVE ANY CUSTOMER COMPLAINTS FILED WITH THE
14 PUC?
15 A. No. SWEPCO Texas received zero PUC customer complaints during the test year.
16 D. Meter Reading.
17 Q. ARE THERE ANY OTHER PERFORMANCE MEASURES THAT SWEPCO
18 TRACKS TO ENSURE A HIGH QUALITY OF SERVICE?
19 A. Yes. SWEPCO Texas tracks the percentage of meters that are read each month:
20 During the test year, a total of 2,297,840 meter reads were, made, which was
DIRECT TESTIMONY PUC DOCKET NO. 46449 22 BRETT MATTISON
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1
99.2 percent of the available meter reads. This high percentage shows that SWEPCO
2
uses estimation minimally and makes every possible effort to obtain actual meter
3
readings.
4
5 IV. CUSTOMER SERVICE COSTS
6 Q. WHAT ARE THE TOTAL TEST YEAR COSTS FOR SWEPCO CUSTOMER
7 ACCOUNTS AND CUSTOMER SERVICES?
8 A. The total adjusted test year expenses are $23,396,395, which includes $20,197,754
9 relating to Customer Accounts and $3,198,641 relating to Customer Services.
10 Affiliate costs make up $8,685,597 Of the total test year expenses. These costs
11 exclude the EE amounts that are recovered through the EECRF, as discussed earlier.
12 Q. WHAT METHODS HAVE YOU USED TO DETERMINE TfIE
13 REASONABLENESS OF SWEPCO OVERALL CUSTOMER SERVICE COSTS?
14 A. I have utilized several methods for proving the reasonableness of the costs', including
15 cost trends and comparisons to the customer services costs of similar utilities.
16 Cost Trends
17 Q. PLEASE DESCRIBE THE COST TREND FOR SWEPCO'S CUSTOMER
18 SERVICES COSTS OVER THE PAST FEW YEARS.
19 A. Figure 3 shows the Customer Services costs for 2013-2015, and the test year. The
20 costs include those incurred both by SWEPCO directly and also those charged to
21 SWEPCO by AEPSC. The following costs include all the costs charged to Federal
22 Energy Regulatory Commission (FERC) accounts 901, 902, 903, 904, 905, 907, 908,
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1 909, and 910, with the exception of EE costs, which are excluded as previously
2 discussed. As can be seen in Figure 3, the test yeaf Customer Services costs have
3 decreased since 2013, providing a good illustration of SWEPCO's ongoing
4 commitment to cost control.
5 Figure 3 — Customer Services Costs
2013 2014 2015 Test Year Customer Accounts $21,582,430 $22,604,151 $21,412,991 $20,197,754 Customer Services $4,324,247 $3,617,788 $5,226,368 $3,198,641
Total $25,906,677 $26,221,939 $26,639,360 $23,396,395
6 Cost Comparisons
7 Q. HAVE YOU PERFORMED ANY STUDIES THAT FURTHER SUPPORT THE
8 REASONABLENESS OF SWEPCQ'S CUSTOMER SERVICES EXPENSES?.
9 A. Yes. Internal benchmarking using FERC Form 1 data from 2013-2015 compares
10 SWEPCO's customer service accounts to three peer groups, based on per end-use
11 customer. The three peer groups were a Texas peer group, a south central peer
12 group, and a national peer group. These studies provide the minimum, maximum,
13 and median values for each metric and the relative position of the corresponding
14 SWEPCO metric for comparison.
15 Q. PLEASE DESCRIBE THE TYIREE PEER GROUPS THAT WERE SELECTED.
16 A. The Texas peer group consists of four investor-owned integrated electric utilities in
17 Texas: SWEPCO, El Paso Electric Company (EPE), Southwestern Public- Service
18 Company (SPS), and Entergy Texas Inc. Electric Reliability Council of Texas
19 members are excluded because,, as unbundled utilities, the customer 'services they
20 provide are significantly different from those provided by an integrated utility. The
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south central peer group, with a total of 14 utilities, includes the Texas peer group
2
utilities, most of the investor-owned utilities in all of the states that border Texas,
3
and investor-owned *utilities in Kansas. By including Kansas, the peer group
4
includes most of the invekor-owned elect'ric utilities that are members of the
Southwest Power Pool. The national peer group, with a total of 58 utilities,
6
includes the utilities that make up the S&P 500 Utilities Index, as well as the south
7
central peer group utilities. The members of the Texas, south central and national
8 peer groups, and the benchmarking results are contained in EXHIBITs BM-3,
9 BM-4, and BM-5.
10 Q. PLEASE DISCUSS THE METHODOLOGY YOU HAVE FOLLOWED IN
11 CONDUCTING THE BENCHMARKING STUDIES PRESENTED IN THIS
12 TESTIMONY.
13 A. As mentioned above, these benchmarking studies are based on FERC Forrn 1 data,
14 which is a required filing for all investor-owned electric utilities in the United
15 States and is information that is straightforward, ieadily available, and clear. The
16 benchmarking metrics include accounts 901-Supervision, 902- Meter reading
17 expenses, 903-Customer records and c011ections expenses, 904-Uncollectible
18 accounts, 965-Miscellaneous cukomer accounts expenses, 908-Customer assistance
19 expenses, 909-Informational and instructional expenses, and 910-Miscellaneous
20 customer service and informational expenses. I excluded account 907 as it
21 primarily reflects EE incentive cost. I would note that companies may have
DIRECT TESTIMONY PUC DOCKET NO. 46449 25 BRETT MATTISON
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1
somewhat different practices regarding which costs go into individual accounts;
2 thus, this comparison has some limitations.
3 Q. ARE BENCHMARK COMPARISONS BASED ON FERC FORM 1 FILINGS OF
4 OTHER UTILITIES THE TYPE OF INFORMATION THAT AEP AND ITS
5 OPERATING COMPANIES COMMONLY USE TO ASSESS THE
6 PERFORMANCE OF THEIR OPERATIONS?
7 A. Yes. Benchmarking requires comparable data from a common source for all of the
8 entities compared in the benchmarking study. FERC Form 1 includes data by
9 FERC Accounts, which are the standardized accounts utilized for reporting
10 operations and maintenance (O&M) and capital expenditures. For these reasons,
11 FERC Form 1 data is a reasonable source to use for benchmarking activities.
12 Q. WHAT ARE THE RESULTS OF THE BENCHMARKING STUDIES WITH
13 RESPECT TO THE TEXAS PEER GROUP?
14 A. SWEPCO's customer service costs for the benchmarked period are higher than EPE
15 and lower than SPS. This is not surprising because EPE's load in Texas is
16 concentrated in the city of El Paso, while SPS and SWEPCO serve territories that
17 are far less dehsely Populated. Customer density is a significant driver of customer
18 service costs. The cost per customer for functions such as meter reading and field
19 order completion activities, which are labor and travel-intensive, is greater when
20 serving *a large geographic area with low customer density conipared to serving a
21 small geographic area with high customer density.
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1 Q. WHAT ARE THE RESULTS OF THE BENCHMARKING STUDIES WITH
2 RESPECT TO THE SOUTH CENTRAL AND NATIONAL PEER GROUPS?
3 A. SWEPCO compares favorably to those groups. While we are higher than the
4 median in the south central group, I would note that the population in our service
5 territory is generally less dense than many of the utilities in that group. For
6 example, EPE and Entergy New Orleans have dense areas of load concentrations,
7 located primarily An large cities. Others in the group, such as Entergy Arkansas,
8 Kansas City'Power and Light, and Oklahoma Gas and Electric Company, also serve
9 cities much larger than any in SWEPCO's service area.
10 With respect to the national peer group, which is perhaps the best
11 comparison because it includes .58 companies, SWEPCO is slightly above the
12 median in each of the three years measured.
13 The overall benchmarking results demonstrate that SWEPCO's customer
14 service costs are in line with other utilities and are reasonable.
15
16 V. AFFILIATE COSTS
17 Q. WHAT EVIDENCE SUPPORTS THE REASONABLENESS AND NECESSITY OF
18 THE TEST YEAR CUSTOMER OPERATIONS AFFILIATE *CHAAGES TO
19 SWEPCO?
20 A. Below, I discuss recent budget performance and cost trends for the AEPSC C&DS
21 organization. In addition, the benchmarking of total SWEPCO customer operations
22 costs (affiliate and direct) discussed above supports the reasonableness of the affiliate
DIRECT TESTIMONY PUC DOCKET NO. 46449 27 BRETT MATTISON
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1
2
charges, since affiliate costs are 'a significant portion of the total and are ,included
therein. Finally, the high customer satisfaction achieved by SWEPCO supports the
3 fact that AEPSC is providing effective support to SWEPCO's customer operations.
4 Q. WHAT WERE THE CUSTOMER OPERATIONS AFFILIATE EXPENSES
5 CHARGED TO SWEPCO FOR THE TEST YEAR THAT YOU SUPPORT?
6 A. Test year customer operations affiliate expenses charged to SWEPCO that I support
7 total $8,685,597.
8 Q. HOW DO SWEPCO'S TEST YEAR AFFILIATE EXPENSES BREAK DOWN BY
9 MAJOR COST CATEGORY?
10 A. The expenses can be broken down into the following categories:
Category AmOunt Percent Laboi / Benefit $6,682,362 77% Outside Services $1,354,302 16% Other $ 648,933 7% Total $8,685,597 100%
11 Q. WHY ARE THESE COST COMPONENT CATEGORIES SIGNIFICANT?
12 A. This breakdown shows that a substantial percentage of test year AEPSC affiliate
13 charges to SWEPCO Custorner Services are composed of labor and benefits. In
14 addition to my testimony, the reasonableness of AEPSC's labor and benefit costs,
15 which -make up 77 percent of the AEPSC affiliate cOsts in this. catego'ry, is supported
16 by the testimony of Company witnesses Andrew R. Carlin and Curt D. Cooper.
17 Q. EXPLAIN WHAT IS INCLUDED IN TI-1E OUTSIDE SERVICES COST
18 CATEGORY.
19 A. Outside Services includes payments to outside vendors, most notably NCO Group,
20 Inc. When called upon, these vendors handle overflow' calls from the call centers.
DIRECT TESTIMONY PUC DOCKET NO. 46449 28 BRETT MATTISON
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1 These services provide benefit to SWEPCO customers by assisting during times of
2 peak call volume to ensure readily available access to customer service.
Q. WHAT •HAS BEEN THE TREND IN CUSTOMER OPERATIONS AFFILIATE
4 EXPENSES CHARGED TO SWEPCO? 1
5 A. The annual trend in Customer Operations affiliate expenses for SWEPCO is as
6 follows:
7 Year Amount
8 Prior Test Year $11,698,725
9 2013 $ 8,513,826
10 2014 $ 8,487,421
11 2015 $ 8,617,236
12 Current Test Year $ 8,685,597
13 As can be seen from,the above information, costs have been reduced since the last test
14 year and have remained consistent since 2013.
15 Q. HAS THE NUMBER OF FULL-TIME EMPLOYEES WITHIN THE AEPSC -
16 CUSTOMER AND DISTRIBUTION SERVICES ORGANIZATION CHANGED
17 SINCE THE END OF 2013?
18 A. Yes, but only very slightly. The AEPSC Customer and Distribution Services
19 organization had 763, 773, 763, and 762 employees at the end of 2013, t2014, 2015,
20 and the test year, respectively. As can be seen, the number of AEPSC dustomer and
21 Distribution Services employees has remained consistent during thMime'period.
22 Performance-to-Budget
23 Q. PLEASE EXPLAIN THE BUDGETING USED AT AEPSC IN THE AREA OF
24 CUSTOMER SERVICES.
DIRECT TESTIMONY PUC DOCKET NO. 46449 29 BRETT MATTISON
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1 A. ,Budget targets for the upcoming year are based on prior year budget inputs plus or
2 minus any items that are identified and approved for inclusion or omission. Labor
3 expense is budgeted by hours. Materials, supplies, outside services expenses, etc., are
4 budgeted based on prior activity and any anticipated changes. Variances from budget
5 are reviewedmonthly and discussed with Customer Services management.
6 Q. HOW HAS AEPSC CUSTOMER SERVICES PERFORMED AGAINST BUDGET?
7 A. Figure 4 shows the AEPSC Customer Services O&M budget versus actual
8 performance for the years 2014, 2015, and the test year. Short and long-term
9 incentive amounts have been removed from my analysis, and are discussed in the
10 testimony of Company witnesses Carlin, Hamlett, and Brian J. Frantz.
11 Figure 4 — AEPSC Customer Services Budget vs. Actuals
,. 2014 2015 Tesf Year
Budget $66,185,646 $64,023,070 $63,927,692
Actual $63,424,480 $64,394,509 $64,195,882
Over (Under) ($2,761,165) $371,439 $268,190
12 The budget has decreased approximately 3.5 peicent since 2014, and the
13 actual expenditures have consisteptly been below or near budget in all three years.
14 Q. DO OTHER SWEPCO WITNESSES DISCUSS CUSTOMER SERVICES
15 AFFILIATE COSTS?
16 A. Yes. Company witness Frantz provides testimony regarding the reasonableness of the
17 AEPSC allocation factors utilized to allocate AEPSC Customer Services costs to
.18 SWEPCO.
DIRECT TESTIMONY PUC DOCKET NO. 46449 30 BRETT MATTISON
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1 VI. AEPSC SAFETY AND HEALTH ORGANIZATION OVERVIEW
2 A. Description of the AEPSC Safety and Health Organization
3 Q. PLEASE DESCRIBE THE AEPSC SAFETY AND HEALTH ORGANIZATION.
A. The AEPSC Safety and Health organization at AEP provides support in all areas of
5 occupational safety and health, public and contractor safety, industrial hygiene,
6 ergonomics, health and wellness, and training. Its staff consists of safety and health
7 generalists and specialists who hold professional degrees and certifications in many
8 areas, including nursing, occupational health, industrial hygiene, and public safety.
9 AEPSC Safety and flealth is generally organized according to the function being
1 0 supported, for example generation, or program area, such as industrial hygiene. These
11 support groups ensure that the AEPSC Safety and Health policies and procedures
12 within AEP's operating companies, such as SWEPCO, are aligned with AEP's
13 corporate AEPSC Safety and Health policies and procedures as well as federal
14 standards from agencies such as the Occupational Safety and Health Administration.
15 AEPSC Safety and Health is comprised of six primary groups covering safety
16 and health forš generation, transmission, and_distribution operations, safety and health
17 training, industrial hygiene, and public safety. The AEPSC Safety and Health groups
18 support AEP Generation, AEP Transmission, and AEP Distribution operations, and
19 develop initiatives and programs to foster a safety and health culture in these
20 organizations. For example, the Zero Harm initiative challenges employees to not be
21 satisfied until zero harm is achieved — i.e., every employee goes home safe and
22 healthy at the end of his/her workday. A spin-off of this initiative, Target Zero,
DIRECT TESTIMONY PUC DOCKET NO. 46449 31 BRETT MATTISON
9f,35
1
promotes the same ideals of a zero harm culture within the AEP Generation
2
organization.
3
AEPSC Safety and Health support staff for AEP's transmission organization
4
have facilitated Safety Stand Downs and periodic visits to communicate corporate
5
policies on vehicle safety, fire retardant clothing, hazard assessments, and recognition
6
for employee safety efforts.
7
The AEP TransmissiOn, AEP Generation, and AEP Distribution organizations
8
have been utilizing Safety and Health's Human Performance Initiative as an error
9
reduction system for employees and have also partnered with AEP Distribution to
10
update the Contractor Safety Oversight Programs for each organization. AEP
11
Distribution is assisted by Safety and Health in the area of strategic communication
12
with safety alerts and safety bulletins for communication of significant issues.
13
Another key communication tool is The Serious Event conference call, which -ensures
14
that critical issues and events are communicated quickly across the organization with
15
an emphasis on immediate corrective actions.
16
The Safety and Health Training Team is involved with communicating AEP
17
safety and health programs to AEP's operating companies, ensuring that a consistent
18
message is conveyed system-wide. Program and initiative-specific training is also
19
facilitated by ihi group through Safety and Health Summits. For example, the Safety
20 - and Health Industrial Hygiene (IH) group conducted a welding fume study to better
21 characterize'exposure potential, implemented sharing of air sample analysis across the
22 AEP system through the IH database, and coordinated a radio frequency (RF) safety
DIRECT TESTIMONY PUC DOCKET NO. 46449 32 BRETT MATTISON
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1
workshop that led to the updating of the RF Safety Manual. The IH group also
2
determined a simple statistical process for negative exposure assessment to ensure
3
thatsampling is representative of actual industrial exposure hazards.
4
The Safety and Health Public Safety group facilitates AEP's outreach plan for
5
eliminatiorL of °preventable electrical contacts and public fatalities by producing, in
6 conjunction with AEPSC Corporate Communications, safety videos, multiple Internet
7 website communications, television safety advertising, and publishing articles in
8 Consumer Circuit, AEP's customer publicati6n. The Safety and Health Public Safety
9 group also provides -safety content for employee communications about public sa:fety.
10 Q. PLEASE DESCRIBE THE SERVICES PROVIDED TO SWEPCO BY THE
11 AEPSC SAFETY AND HEALTH ORGANIZATION.
12 A. Safety and Health groups supporting the generation, transmission, and distribution
13 operations of SWEPCO provided services including site inspections of
14 SWEPCO-owned facilities to conduct safety/health assessments, maintaining AEPSC
15 Safety and Health corpofate-wide databases to facilitate knowledge sharing, creating
16 safety bulletins, issuing guidance on safety footwear and implementation of fall
17 protection while climbing wood poles, and conducting business unit-specific safety
18 conferences. In addition, AEPSC Safety and Health provided expertise and
19 interpretation of the rules, regulations and policies that govern our business with
20 respect to safety and health, and, where applicable, changed or modified those
21 policies and procedures to meet or exceed the associated federal and/or state standard.
22 The Industrial Hygiene group of AEPSC Safety and Health conducted assessments at
DIRECT YESTIMONY PUC DOCKET NO. 46449 33 BRETT MATTISON
987
1 SWEPCO service centers to monitor exposure to chemicals, provided mandated
2
training for asbestos compliance with federal and state regulations, and served as a
3
technical' resource to plant Industrial Hygiene coordinators. The AEPSC Safety and
4
Health team provided leadership and guidance as well as identification and correction
5
of weaknesses in the AEPSC Safety and Health Management System. AEPSC Safety
6
and Health provided proactive solutions-and recommendations to prevent unwanted
7 incidents, injuries, and illnesses. AEPSC Safety and Health also has created an
8 Enterprise Hazard Assessment application that supporth SWEPCO's hazard
9 assessment/recognition efforts directly aimed at preventing empioyee injuries.
10 Finally, AEPSC Safety and Health develop public safety materials, including videos,
11 factsheets, online learning modules, social media messages, news articles, customei
12 emails, Web communications, and blog messages that are customized and reside on
13 SWEPCO's websites.
14 B. SWEPCO Interface with AEPSC Safety and Health
15 Q. ARE THERE AEPSC SAFETY AND HEALTH ORGANIZATION EMPLOYEES
16 LOCATED 'WITHIN SWEPCO'S SERVICE TERRITORY?
17 A. Yes. Since both SWEPCO and AEP place such high value on safety, AEPSC Safety
18 and Health' has placed employees within SWEPCO's service territorY in order to
19 better serve SWEPCO and its customers. Having AEPSC Safety and Health
20 organization employees in the service territory allows SWEPCO employees to have
21 immediate access, as well as face-to-face interactions, with safety and health
22 professionals. For example; AEPSC Safety and Health employees within the ;territory
DIRECT TESTIMONY PUC DOCKET NO. 46449 34 BRETT MATTISON
988
1 are able to participate in local safety inspectiOns, safety meetings, and give
2 presentations on a number of safety topics.
3 C. Costs and Cost Trends
4 Q. WHAT WERE THE AEPSC SAFETY AND HEALTH EXPENSES CHARGED TO
5 SWEPCO FOR THE TEST YEAR THAT YOU SUPPORT?
6 A. Test year customer operations affiliate expenses charged to SWEItO that I support
7 total $427,043.
8 Q. HOW DO SWEPCO'S TEST YEAR AEPSC SAFETY AND HEALTH EXPENSES
9 BREAK DOWN BY MAJOR COST CATEGORY?
10 A. The expenses can be broken down into the following categories:
Category , Amount Percent Labor / Benefits $352,156 82% Outside Services $37,254 9% Other '$37 633 9% Total $427,043 100%
11 Q. WHY ARE THESE COST COMPONENT CATEGORIES SIGNIFICANT?
12 A. This breakdown shows that a substantial pekentage of test year AhPSC Safety and
13 Health charges to SWEPCO Customer Services are composed of labor and benefits.
14 In addition to my testirnony, the reasonableness of AEPSC Safety and Health labor
15 and benefit costs, which make up 82 percent of the AEPSC costs in this category, is
16 supported by the testimony of Company witnesses Carlin and Cooper.
17 Q. EXPLAIN WHAT IS • INCLUDED IN THE OUTSIliE SERVICEŠ COST
18 CATEGORY.
DIRECT TESTIMONY PUC DOCKET NO. 46449 35 BRETT MATTISON
9S9
8 9
10 11 12 13
1 A. Outside Services includes payments to outside safety vendors. When called upon,
2 these vendors help provide specialized products, such as safety training or safety
3 surveys, that AEPSC Safety and Health are not able to provide on their own.
4 Q. WHAT HAS BEEN THE TREND IN AEPSC SAFETY AND HEALTH AFFILIATE
5 EXPENSES CHARGED TO STWEPCO?
6 A. the annual trend in AEPSC Safety and Health affiliate expenses for SWEPCO is as
7 follows:
Year Amount Prior Test Year $412,508 2013 $409,643 2014 $460,028 2015 . $598,912 Current Test Year $427,043
14 As can be seen from the above information, although Safety and Health costs
15 increased from 2013 to 2015, the 'current test year is lower than 2014 through 2015,
16 and is consistent with the prior test year.
17 Q. 'HOW HAS AEPSC SAFETY AND HEALTH PERFORMED AGAINST BUDGET?
18 A. Figure 5 shows the AEPSC Safety and Health organization O&M budget versus
19 actual performance for the years 2014, 2015, and the Test Year. Short and long-term
20 incentive amounts have been removed from my analysis, and are discussed in the
21 testimony of Company witnesses Carlin, Hamlett, and Frantz. I have also removed
22 one-time charges for safety programs during the Test Year that are not expected to
23 recur. Mr. Hainlett provides the pro forma for these non-recurring items.
DIRE& TESTIMONY PUC DOCKET NO. 46449
36
BRETT MATTISON
990
1 Figure 5 — AEPSC Safety and Health Organization Budget vs. Actuals
2014 2015 Test Year
Budget $3,434,634 $2,543,209 $2,501,339,
Actual $2,679,725 ,.$2,867,874 $2,878,878
Over (Under) ,($754,910) $324,665 $377,539
2 As can be seen in Figure 5, the AEPSC Safety and Health Organization manages
3 against their budget with no material variances. Like most other AEPSC
4 organizations and as I discussed above;this department is primarily driven by payroll
5 and payroll-related charges; and as I discuss below, the headcbunt for this department
6 has been very consistent over the last fdur years.
7 Q. WHAT HAS BEEN THE TREND OF FULL-TIME EMPLOYEES WITHIN THE
8 AEPSC SAFETY AND HEALTH ORGANIZATIONS SINCE THE END OF 2013?
9 A. The AEPSC Safety and Health organization had 26, 24, 23, and 26 employees at the
10 end of 2013, 2014, 2015, and the Test Year, respectively: As can be seen, the number
11 of AEPSC Safety- and Health employees has remained consistent during this time
12 period.
13 Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY?
14 A. Yes, it does.
DIRECT TESTIMONY PUC DOCKET NO. 46449 37 BRETT MATTISON
991
Director of Customer
Services & Marketing
Meter Customer Energy Lean / Revenue Services & Efficiency & Process
Operations Marketing Consumer Improvement Programs
PUC Docket No. 46449 EXHIBIT BM-1
Exhibit BM-1 SWEPCO CS&M Organizational Chart Organizational Chart
i
,
992
PUC Docket No. 46449 EXHIBIT BM-2
Exhibit BM-2 AEPSC Customer & Distribution Services Organizational Chart
Customer & Distribution
Services
Distribution Customer Economic & Customer Performance Services Business Operations
Management & Support Development Data Analytics
Meter Services Support
Repair
Distribution Services Support
993
PUC Docket No. 46449 EXHIBIT BM-3
Exhibit BM-3 Texas Peer Group
Texas Peer Group Sum of FERC Accts $ per Customer
--*--.SWEPCO $90
$80
$70
$80
$50
$40
$30
$20
$10
$0 ,
Year 2013 2014 2015
Lowest $45 $50 $48
Median S72 $67 $74
Highest $81 $80 $83 SWEPCo $71 $72 $76
Utilities in Peer Group: El Paso Electric Co Entergy Texas Inc Southwestern Electric Power Co Southwestern Public Service Co
4
994
PUC Docket No. 46449 ÉXHIBIT BM-4
Exhibit BM-4 . South Central Peer Group
South Central Fteer Group Sum of FERC Accts $ per Customer
—6— SWLPCo $180 -
$160 -
$140 -
$120 -
$100 -
$60 - 40........___........................A
L,
$60 -
$40 - 1.--:—
$20 -
$0
Year 2013 2014 2015 Lowest S32 $32 ' $32
Median $65 $60 574 Highest $115 $150 $157
SWEPCo $71 $72 $76
Utilities in Peer Group:
CLECO Power LLC El Paso Electric Co Entergy Arkansas Inc Entergy Louisiana Inc Entergy New Orleans Inc Entergy Texas Inc Kansas City Power & Light Co
Kansas Gas & Electric Co Oklahoma Gas & Electric Co Public Service Co of New Mexico Public Service Co of Oklahoma Southwestern Electric Power Co Southwestern Public Service Co Westar Energy Inc
PUC Docket No. 46449 EXHIBIT BM-5
Page 1 of 2 •
Exhibit BM-5 National Peer Group
i National Peer Group Sum of FERC Accts $ per
Customer 4.
.—e—SWEPCo $250 -
$200 -
$150 -
$100
41--
$50
• .
$0 ,
Year 2013 2014 2015
Lowest $32 $27 $31
Median $68 $71 $75
Highest $224 $236 $223
SWEI2Co $71 $72 $76
996
PUC Docket No. 46449 EXHIBIT BM-5
Page 2 of 2
Utilities in Peer Group:
AEP Texas Central Cd AEP Texas North Co Alabama Power Co Appalachian Power Co Arizona Public Service Co Baltimore Gas & Electric Co CLECO Power LLC Cleveland Electric Illuminating Co (The) Commonwealth Edison Co Connecticut Light & Power Co (The) Duke Energy Carolinas Duke Energy Florida Duke Energy Indiana Duke Energy Kentucky Duke Energy Ohio Duke Energy Progress El Paso Electric Co Entergy Arkansas Inc Entergy Gulf States Louisiana LLC Entergy Louisiana Inc Entergy Mississippi Inc Entergy New Orleans Inc Entergy Texas Inc Florida Power & Light Co Georgia Power Co Gulf Power Co Indiana Michigan Power Co Jersey Central Power & Light Co Kansas City Power & Light Co
Kansas Gas & Electric Co Kentucky Power Co Kentucky Utilities Co Kingsport Power Co Louisville Gas & Electric Co Metropolitan Edison Co Missis'sippi Power Co Monongahela Power Co Northern States Power Co (Minnesota) Northern States Power Co (Wisconsin) NSTAR Co Ohio Edison Co Ohio Power Co Oklahoma Gas & Electric Co . PECO Energy Co Pennsylvania Electric Co Pennsylvania Power Co Potomac Edison Co (The) PPL Electric Utilities Corp Public Service Co of Colorado Public Service Co of New Mexico Public Service Co of Oklahoma Southern California Edison Co Southwestern Electric Power Co Southwestern Public Service Co Toledo Edison Co (The) West Penn Power Co Westar Energy Inc Wheeling Power Co
997
EXECUTIVE $UMMARY OF BRIAN BOND
Brian Bond is Vice President External Affairs for Southwestern Electric Power Company
(SWEPCO). As Vice President of External Affairs, he is responsible for the Community Affairs,
Governmental Affairs, Economic Development and Environmental Affairs activities at
SWEPCO.
Mr. Bond discusses SWEPCO's External Affairs organization and the services it provides
in support of SWEPCO's mission to provide safe and reliable electricity to SWEPCO's
customers. SWEPCO's External Affairs gfoups perform the following functions for SWEPCO:
1) liaison and communications with local governments and state officials; 2) participation in
community and business development; 3) legislative analysis, monitoring, and advocacy; and
4) management of charitable contributions.
Mr. Bond also supports the reasonableness and necessity of the affiliate charges billed to
SWEPCO by the American Electric Power Service Corporation (AEPSC) Federal Affairs
organization. AEPSC Federal Affairs provides federal governmental affairs support for
SWEPCO and the other AEP Companies. AEPSC Federal Affairs services are necessary to
ensure that SWEPCO is apprised of national legislalive and regulatory developments and to
assess the impact of such developments on SWEPCO and its customers. This enables SWEPCO
to comply with resulting federal laws and regulations. These serVices are provided exclusively
by AEPSC Federal Affairs.
During the test year, $141,107 of affiliate charges for Federal Affairs services were billed
to SWEPCO. Mr. Bond demonstrates that these charges are reasonable and necessary. Finally,
Mr. Bond supports the reasonableness of SWEPCO's requested amounts included in cost of
service for memberships and for charitable contributions and donations. Contributions and
1
998
donations are primarily associated with educational, community service and economic
development activities. The amounts requested for contributions and membership expenses fall
within the Commission's requirements regarding inclusion of charitable contributions and
rnembership expenses in rates.
999
2
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