January 2012 Capital Investment - National Grid

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Exhibit ___ (EIOP-19)Page 19 of 684further detail in the annual Report on the Condition of Physical Elements ofTransmission and Distribution Systems filing to the PSC (Case 06-M-0878), mostrecently filed on October 1, 2011. Each section describes the drivers for capitalinvestment programs and the projected customer benefits along with a description ofsignificant changes between the February 7, 2011 Capital Investment Plan and thisfiling.A. Statutory or Regulatory Strategies and ProgramsStatutory or Regulatory work includes capital expenditures required to respond to, orcomply with statutory or regulatory mandates. These include expenditures needed toensure minimum compliance with the requirements of the North American ElectricReliability Corporation (“NERC”), Northeast Power Coordinating Council (“NPCC”), NewYork State Reliability Council (“NYSRC”), the Occupational Safety and HealthAdministration (“OSHA”), National Electrical Safety Code (“NESC”) and the New YorkPublic Service Commission. It also includes expenditures that are part of theCompany’s regulatory, governmental or contractual obligations, such as responding tonew customer service requests, transformer and meter purchases and installations,outdoor lighting requests and service, and facility relocations related to public worksprojects. For the most part, the scope and timing of this work is generally defined byothers and is non-discretionary for the Company.With regard to regulatory mandates, NERC has approved a new definition of the BulkElectric System (BES) to which their standards will apply. This definition was formulatedin response to FERC Order 743-A. NERC intends to file this new definition with FERCby January 25, 2012. It is not clear at this time whether FERC will accept this newdefinition as it has been developed by NERC and the Industry, remand it back to NERCfor additional changes, or take some other action. Based on the current, new definition,National Grid estimates that 216 additional 115kV lines will be considered part of theBES. The implementation timeline proposed by NERC for entities to become compliantwith the new definition is 24 months.While the development of this definition is nearly complete, it is difficult to determinewhat changes will be necessary to comply with the NERC standards in the future.National Grid believes the new BES definition may require some capital projects that arecurrently in the CIP to be advanced as well as addition of some new capital projectsimplemented to maintain compliance. In some cases new capital projects are onlyrequired when one looks at the combination of the new BES definition and the new,Transmission Planning Standard TPL-001-2 that has also been submitted to FERC forapproval. In addition, if the NERC Alert on Facility Ratings is applied to the newlydefined BES circuits, then capital expenditures in the amount of $75 million dollars areexpected to be needed. While the conductor clearance strategy discussed later in thischapter includes plans to address all of these circuits, the timing of review and mitigationwould be advanced if the NERC Alert needs to be applied to a new BES definition.Due to this uncertainty, in this submission of the Capital Investment Plan, National Gridhas not reflected capital investment requirements to comply with anticipatedrequirements. Rather, the Company intends to wait until the requirements aredetermined and then identify the needed investments to comply. At this time, NationalII-220
Exhibit ___ (EIOP-19)Page 20 of 684Grid has estimated approximately $50 million dollars over a ten year period startingFY13 in the plan will be needed to address NERC Transmission Planning Standards(TPL).Northeast Region ReinforcementThis major program consists of reinforcements of the transmission system in theSaratoga and Glens Falls area of the Company’s Northeast Region. It is necessitatedby current thermal and voltage needs and area load growth in the Northeast Region. Itis also impacted by the proposed Luther Forest Technology Campus (“LFTC”).Currently, there are a number of major projects each with a total forecasted spendinglevel of $2 million or more under this program during the period covered by this Plan 1 ,including:• Installation of a new Eastover Road (formerly Turner Road) 230/115kVsubstation near where the existing Rotterdam-Bear Swamp 230kV line crossesthe existing Mohican-North Troy #3 line and the Battenkill-North Troy #10 115kVlines. This station would serve as a primary source to those 115kV lines servingthe east side of the Northeast Region. (Project #s C31326 - $20.9m & C31419 -$5.8m)• Installation of a new 115kV line parallel to the existing Spier Falls to Rotterdam#1 & #2 circuits. This line would reinforce the west side of the 115kV system thatserves the Northeast Region. An Article VII application has been submitted forapproval to construct this line under the title “Spier Falls to Rotterdam New115kV Transmission Project.” (Project # C31418 - $53.5m)• Rebuild the Mohican-Battenkill #3 and #15 lines between Mohican and Battenkillsubstations and reconductor 14.2 miles of the #15. This project requires anArticle VII application, which the Company intends to submit by spring 2011.(Project # C34528 - $30.2m)• Installation of reactive compensation at distribution and transmission substationsin the Northeast Region. (Project # C35773 – $2.2m)• In addition, studies indicate that reconductoring of 22.9 miles of existing 115 kVlines in the Northeast Region is required.The timing of some facets of this program (including the reconductoring of existing lines,and reactive compensation) depends on the actual load growth for the Northeast Region(Saratoga and Global Foundries) during the next 1-10 years. Other projects in theprogram are needed absent additional load growth to relieve exposure to existingperformance issues in the area. These include the new Spier-Rotterdam lines, EastoverRoad Station, and rebuilding the Mohican-Battenkill 115 kV lines.Drivers:The transmission system serving the Northeast Region is currently exposed to postcontingencythermal overloads during summer peak periods, including inadequate1 The dollars shown for projects below within this program are the spending forecasted for theproject within the term of this 5 year Plan (FY13-FY17), not the total capital cost for the projects.The same is true for all projects listed with dollars in this Plan.II-321
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January 2012 Capital Investment - National Grid

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