1 DIRECT TESTIMONY OF 1 W. KELLER KISSAM 2 ON BEHALF OF 3 SOUTH CAROLINA ELECTRIC & GAS COMPANY 4 DOCKET NO. 2012-218-E 5 6 Q. PLEASE STATE YOUR FULL NAME, BUSINESS ADDRESS, AND 7 OCCUPATION. 8 A. My name is W. Keller Kissam and my business address is 220 9 Operation Way, Cayce, South Carolina. I am President of Retail 10 Operations of South Carolina Electric & Gas Company (the “Company” or 11 “SCE&G”). 12 Q. PLEASE STATE YOUR EDUCATIONAL BACKGROUND AND 13 EXPERIENCE. 14 A. I am a summa cum laude graduate of The Citadel, the Military 15 College of South Carolina. I joined SCANA Corporation in 1988 in the 16 New Utility Professional Program and held a number of industrial gas sales 17 and gas supply positions until 1994, when I was named Vice President of 18 South Carolina Pipeline Corporation with responsibilities for Contract 19 Administration and Gas Supply. Then in 1996, I was named Vice President 20 of Gas Operations of SCE&G, and in 2003, Vice President of Electric 21
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1
DIRECT TESTIMONY OF 1
W. KELLER KISSAM 2
ON BEHALF OF 3
SOUTH CAROLINA ELECTRIC & GAS COMPANY 4
DOCKET NO. 2012-218-E 5
6
Q. PLEASE STATE YOUR FULL NAME, BUSINESS ADDRESS, AND 7
OCCUPATION. 8
A. My name is W. Keller Kissam and my business address is 220 9
Operation Way, Cayce, South Carolina. I am President of Retail 10
Operations of South Carolina Electric & Gas Company (the “Company” or 11
“SCE&G”). 12
Q. PLEASE STATE YOUR EDUCATIONAL BACKGROUND AND 13
EXPERIENCE. 14
A. I am a summa cum laude graduate of The Citadel, the Military 15
College of South Carolina. I joined SCANA Corporation in 1988 in the 16
New Utility Professional Program and held a number of industrial gas sales 17
and gas supply positions until 1994, when I was named Vice President of 18
South Carolina Pipeline Corporation with responsibilities for Contract 19
Administration and Gas Supply. Then in 1996, I was named Vice President 20
of Gas Operations of SCE&G, and in 2003, Vice President of Electric 21
2
Operations. In 2011, I assumed my current responsibilities as President of 1
Retail Operations. 2
Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE THIS 3
COMMISSION? 4
A. Yes, I have testified before this Commission numerous times in 5
purchased gas adjustment proceedings, as well as storm response and other 6
operational matters. 7
Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? 8
A. The purpose of my testimony is to offer direct testimony with regard 9
to SCE&G’s electric transmission and distribution systems. I will focus 10
specifically on the actions taken by the Company to operate and maintain 11
its electric system in a safe and reliable manner. I will discuss the 12
Company’s proposals to place into current rates the reinstatement of 13
collections for the storm damage reserve and payment of storm damage 14
insurance premiums. I will also discuss SCE&G’s general customer 15
service offerings and their use by customers. I will discuss the Company’s 16
efforts to identify customers needing financial assistance as well as sources 17
administered or accessed by the Company to provide financial help to 18
customers in need. I will identify the customer growth experienced by the 19
Company since the last rate proceeding. And, finally, I will discuss 20
environmental remediation issues and explain the Company’s need for an 21
environmental recovery mechanism. 22
3
Q. WHAT IS THE MOST IMPORTANT FACTOR REGARDING THE 1
COMPANY’S EFFORTS TO PROVIDE SAFE AND RELIABLE 2
ELECTRIC SERVICE? 3
A. Safety is the most important aspect of the Company’s mission. 4
Reflective of the clear focus that the Company devotes to its safety mission 5
is that SCE&G transmission and distribution operations has received the 6
top safety award given by the Southeastern Electric Exchange (“SEE”)for 7
three out of the last four years and the last two consecutive years. The 8
number one element that allows the Company to receive these awards and 9
that comprises its efforts to provide safe reliable service is the Company’s 10
dedicated employees. All of our power line workers complete a rigorous 11
four-year apprenticeship, where they are taught to safely and effectively 12
perform their duties. This training is critical because the Bureau of Labor 13
Statistics identifies the position of power line worker as one of the ten most 14
dangerous jobs in the United States. SCE&G’s electrical workers care for 15
each other and pass this concern onto each customer every day as they 16
provide safe and reliable electric service. Table 1 sets forth the Accident 17
Frequency Ratio results based upon Occupational Safety and Health 18
Administration reported incidents per 200,000 people hours that 19
demonstrate SCE&G’s commitment to being an industry leader for safety. 20
4
Table 1 1
SCE&G Electric Operations Accident Frequency Ratio 2
2000-2011 3
(Source: Company Data) 4
5
Q. WHAT OTHER FACTORS DOES THE COMPANY INTEGRATE 6
INTO ITS PROVISION OF SAFE AND RELIABLE ELECTRIC 7
SERVICE TO CUSTOMERS? 8
A. In maintaining an electric system with 3,674 miles of transmission 9
lines and 18,108 miles of distribution lines, in addition to numerous 10
additional infrastructure assets supporting that system, the Company 11
constantly performs operations, maintenance, and construction activities, 12
some required by federal law and regulations, and others necessary to 13
0
SEE& G Elecrric Opemtions ranked ¹1 among 18 reporting companies xxithin SourheasremEiecrric Exchange for3 out of the lasr 4 years.
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provide safe and reliable electric service that our customers both expect and 1
rely upon as essential in their lives. 2
Q. WHAT IS THE IMPACT TO THE COMPANY FROM FEDERAL 3
REGULATIONS REGARDING ELECTRIC RELIABILITY 4
STANDARDS? 5
A. In 2003, 55 million consumers lost electric service for a sustained 6
period as a result of vegetation-caused outages that cascaded into a major 7
impact to the national transmission grid in the northeastern United States 8
and Canada. In response to these outages, Congress included in the Energy 9
Policy Act of 2005 the authority for the Federal Energy Regulatory 10
Commission (“FERC”) to issue mandatory electric reliability standards and 11
the North American Electric Reliability Council (“NERC”) was designated 12
as the statutory Electric Reliability Organization (“ERO”) authorized to 13
enforce these standards. The ERO has authority not only to enforce the 14
reliability standards, but also to levy fines in the amount of up to $1 million 15
per day per event for non-compliance. 16
These standards apply to all aspects of planning, operating, 17
maintaining, and constructing the Company’s transmission assets, including 18
tree trimming and associated vegetation management, personnel training, 19
inspection and repair of facilities, and protection of both systems and 20
facilities. A major component of these standards involves cyber-security 21
measures to prevent disruption of transmission system operations by 22
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malicious computer programs. Physical security of control centers are yet 1
another critical requirement as well. The Company has established 2
procedures to comply with each of these standards. 3
A final component of these standards requires periodic audits of the 4
Company’s compliance programs and corresponding data and record-5
keeping. The Company must prepare for this reporting; therefore, 6
personnel and systems must focus daily in preparation for both self-audits, 7
spot audits, self-reporting incidents, and formal audits. Since inception of 8
these standards, the Company has experienced two formal audits with the 9
results being “no findings.” These results would have not been possible 10
absent Commission Order Nos. 2009-87, 2009-845, and 2011-126, which 11
enabled the Company to achieve its positive results by allowing for the 12
funding of certain vegetation management activities from the established 13
Storm Damage Reserve. With the authorization granted by the 14
Commission, SCE&G’s Transmission Vegetation Management Program 15
(“TVMP”) not only has resulted in full compliance with stringent, 16
prescriptive NERC-mandated regulations for vegetation management, but 17
also has contributed to improved reliability of the Company’s electric 18
system by increasing the system’s tolerance to weather related events. 19
Implementation of the TVMP also has significantly reduced the problems 20
posed by “danger trees,” which are trees not located in the Company’s 21
actual right of way, but are near or have grown into the Company’s rights 22
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of way and may have been impacted by drought, disease, or infestation and, 1
as such, represent a certain threat to reliable electric service. 2
Q. HOW HAVE THESE FEDERAL REGULATIONS IMPACTED 3
PLANNING, CONSTRUCTION, AND MAINTENANCE 4
FUNCTIONS? 5
A. The federal regulations, applied through the NERC Planning 6
Standards and implemented by SCE&G’s Internal Planning Criteria, 7
require that SCE&G’s electric transmission system must withstand specific 8
events on the electrical system while continuing to serve firm load 9
requirements and provide firm transmission services. The system must be 10
continually modeled and analyzed to ensure reliability of the Company’s 11
transmission system as well its interconnections with neighboring utilities. 12
Thus, the SCE&G transmission system must be designed so that, during 13
certain contingencies, only short-term overloads, low voltages, and local 14
load loss will occur and the national electric grid will not be adversely 15
impacted. These contingencies include, but are not limited to, loss of any 16
generator; loss of electrical bus operating at voltage greater than 115 17
kilovolts (“kV”); loss of entire generating capacity at any one plant; loss of 18
all circuits on a common structure; loss of generating unit simultaneously 19
with the loss of a single transmission line; loss of all components associated 20
with breaker failure; and loss of any generator, transmission circuit, or 21
transmission transformer followed by manual system adjustments, followed 22
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by the loss of another generator, transmission circuit, or transmission 1
transformer. SCE&G designs and maintains its system to properly respond 2
to these contingencies so that, after appropriate switching and dispatching 3
events, all non-radial loads can again be served with reasonable voltages 4
and all facilities are operating within acceptable limits. 5
However, as a result of such planning criteria, the Company is 6
continually required to make large capital investments not only for the 7
purpose of expanding capacity, but also to maintain the present system’s 8
operating integrity and comply with federal regulations. In fact, during the 9
2011 test period (the “Test Year”) within this docket, the largest capital 10
investment for transmission projects were the Denny Terrace-Pineland 230 11
kV line and the expansion of the Graniteville Substation, both of which 12
were projects for the sole purpose of meeting the required reliability 13
standards of SCE&G’s transmission system and its interconnection with 14
neighboring utilities. These upgrades do not expand the Company’s 15
capacity. Rather, these upgrades are implemented to comply with federal 16
regulatory requirements directed toward maintaining the overall integrity of 17
the national electric grid by enhancing the Company’s ties to and 18
connections with neighboring electric utilities. Nonetheless, although there 19
is no expanded capacity, both customers and the Company receive a benefit 20
through the existence of a more reliable and robust transmission system 21
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operated by SCE&G as well as access to a national electric transmission 1
system that is enhanced by these same upgrades. 2
Maintenance of the Company’s infrastructure is also a critical 3
component of reliability standards. Substation components must be 4
constantly inspected and activated for proper operation. This includes 5
maintenance of switches, oil testing of transformers, setting and trip testing 6
of relays, breaker maintenance, battery testing and maintenance, and 7
performance of other inspections required to ensure reliability. If such 8
maintenance indicates problems beyond what preventative maintenance can 9
correct, total replacement of components is required. Trending of 10
equipment operating temperatures through the use of thermal infrared 11
detection, as well as abnormal equipment readings, are also important 12
maintenance data allowing the Company to identify and address 13
problematic issues as efficiently and effectively as possible. 14
Transmission lines must be inspected and maintained as well. 15
Annual flight patrols allow for efficient observation of the Company’s 16
aging infrastructure. Pole replacement, brace replacement, and hardware 17
change-outs are a part of daily follow-up from such patrols. NERC 18
recently recommended that all transmission entities assess their structures 19
and lines with LiDAR (“Light Detection and Ranging”) to confirm design 20
clearances on all transmission line infrastructure. The Company has 21
implemented this recommendation, which involves an aerial survey of its 22
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transmission line infrastructure by a LiDAR-equipped helicopter. The 1
LiDAR technology involves use of a laser, typically installed in a pod 2
underneath the helicopter, by which the existing design clearances are 3
determined with a very high degree of accuracy. The Company then 4
reviews and applies this data to ensure compliance with federal regulations 5
as well as the Company’s internal requirements. 6
Q. WHAT OTHER FEDERAL OR NATIONAL STANDARDS MUST 7
THE COMPANY APPLY AS PART OF ITS ONGOING 8
MAINTENANCE ACTIVITIES? 9
A. As I indicated previously, NERC standards also require each utility 10
to have a TVMP. This prescriptive planning document must detail every 11
aspect of transmission right of way maintenance for the Company. 12
Associated record-keeping systems are also necessary to document that 13
appropriate maintenance activities have been performed. Although 14
prescribed by NERC and, thus, directed toward maintenance and protection 15
of the national electric grid, vegetation management is crucial to the 16
Company’s mission and its maintenance plan for both transmission and 17
distribution lines. 18
11
Q. WHY IS VEGETATION MANAGEMENT SUCH A CRITICAL 1
COMPONENT OF SCE&G’S MAINTENANCE PLAN TO DELIVER 2
SAFE AND RELIABLE SERVICE? 3
A. Tree trimming and vegetation management programs are 4
maintenance activities that are critical to reliable utility operations and the 5
rapid restoration of electric utility service after storms or other events. 6
Post-storm reviews and investigations regarding system outages caused by 7
heavy winds, snow, thunderstorms, tornadoes, hurricanes, and especially 8
ice have consistently resulted in recommendations to develop more 9
comprehensive and focused vegetation management plans to improve 10
reliability and customer service. As mentioned above, it is now mandatory 11
under the ERO standards that utilities adopt and carry out a documented 12
vegetation management plan. Failure to execute the plan as adopted 13
subjects the utility to self-reporting requirements and the potentially severe 14
monetary penalties discussed above. 15
Q. PLEASE EXPLAIN HOW VEGETATION ISSUES IMPACT THE 16
COMPANY’S DISTRIBUTION LINES. 17
A. Although the federal requirements apply only to transmission line 18
rights of way, the Company has long recognized that the need for and 19
benefits of vegetation management apply equally to the Company’s 20
distribution lines and rights of way. In 2006, SCE&G developed and 21
implemented a pilot program, similar to the TVMP, for its distribution 22
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lines: the Distribution Vegetation Management Program (“DVMP”). The 1
DVMP was designed to (i) assign each circuit on the distribution system a 2
reliability index; (ii) identify each circuit’s most recent tree trimming and 3