January 2012 Capital Investment - National Grid

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Exhibit ___ (EIOP-19)Page 153 of 684re-construct equipment to allow public requirements work to proceed. The capitalinvestment plan includes estimates for this type of work based upon historicalexperience. The capital investment Plan will be affected if the agencies substantiallyreduce or expand their public requirements work from historic levels.The Company’s Plan makes assumptions regarding customer activity and usesplanning, forecasting, and disciplined processes to lessen the fluctuations in investmentfrom customer-related changes. However, the Company recognizes that it must adaptto changing circumstances. Thus, the Company approves Programs that consist ofmultiple projects which allow us to manage the overall capital expenditure plans over thebusiness plan period.Governmental and Other ApprovalsNearly every capital project requires some level of approval from one or moregovernment agencies or other third parties. In the Adirondacks, the Department ofEnvironmental Conservation and Adirondack Park Authority are pivotal in approving anyconstruction. Overhead line construction in the public right of way requires permits fromlocal municipalities and/or the Department of Transportation (“DOT”). Obtaining privateland, whether for a substation or off road line work (involved in most transmission andsub-transmission projects) requires the Company to purchase land and/or private rightsof way from landowners. Local town and village planning boards play a pivotal role inthe placement of overhead and underground facilities. Many projects include anynumber of these approvals from agencies and/or other third parties which can createhurdles to the project schedule and cost. To mitigate this risk, the Company hasestablished a permitting and licensing team with focused expertise in this area.To obtain the necessary approvals of government agencies and third parties, the scopeand configuration of projects often must be changed. This can delay investments andincrease costs. To mitigate the risk of these delays and cost increases, the Companyactively works with stakeholders to ensure that the scope of projects is communicated asearly as possible and any contentious issues are raised early in the process.VI-77154
Exhibit ___ (EIOP-19)Page 154 of 684Transmission Outage SchedulingNational Grid does not have the final authority to approve outages on elements identifiedas both “controlled” and “secured” by the NYSIO. The Company must coordinate thoseoutages through the NYISO process, which can affect the timing of transmissionupgrades that require outages for work to be performed safely. The NYISO may notapprove transmission line outages due to conflicts with work on other transmissionfacilities, including those of other transmission owners, impacts on generators or impactson grid congestion. The Company is investigating ways to mitigate the risk of notobtaining outage approval. In addition, as the Company’s asset replacement programsincrease in number, careful planning is required to ensure that there are not anexcessive number of system components simultaneously scheduled for constructionwork in the same general area to ensure that the system is not limited in its capability toprovide service to our customers.Planning CriteriaNational Grid conducts its transmission planning studies to comply with the followingstandards and criteria as applicable:NERC Standards TPL-001, TPL-002, TPL-003 and TPL-004, effective November2009.NPCC Regional Reliability Reference Directory #1 – Design and Operation of theBulk Power System – Northeast Power Coordinating Council (NPCC), datedDecember 2009.New York State Reliability Council (NYSRC) Reliability Rules for Operating andPlanning the New York State Power System, dated December 4, 2009.National Grid Transmission Planning Guide, (TGP28), Issue date: November2010.Compliance with the NERC, NPCC and NYSRC requirements is mandatory, andpenalties may be imposed on the Company for failure to comply. In addition to theseexternal requirements, the Company’s TGP28 provides a comprehensive guide for theCompany’s planning studies. Changes in requirements and planning criteria couldimpact how the Company approaches system planning and evaluates infrastructureinvestment needs.Although the projects presented in this Plan reflect the Company’s assessment of theinvestments needed to provide safe and adequate service to customers at the lowestreasonable cost, the Company nevertheless is committed to continued dialogue withDPS Staff on planning issues, and the identification of approaches that can be mutuallyacceptable.New Requirements from Evolving Technical StandardsChanging technical standards can also impose unanticipated costs on the capital Plan.For example, as discussed in Chapter II, there is a risk that as a result of changesenacted by FERC to the definition of Bulk Electric System (to include all bulk powerVI-88155
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January 2012 Capital Investment - National Grid

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