January 2012 Capital Investment - National Grid

Exhibit ___ (EIOP-19)Page 56 of 684Problem Identification Worksheets (PIWs)The Company employs a process called "Problem Identification Worksheets" todocument faults and defects with in-service substation and overhead line equipment thatare identified either through normal maintenance activities (often called 'follow-up' work)or through inspection routines (often called 'trouble' work). Typically, the issues identifiedthrough the PIW process cannot be corrected immediately and require investigation,engineering analysis and solution design. These activities and the solutions proposedoften lead to low cost capital projects to replace or refurbish items of equipment.Drivers:Historically, issues identified during inspection or maintenance were added to the capitalplan in outer years to avoid reprioritizing other planned projects. In FY10 a budgetaryline for PIWs was introduced to recognize that a number of high priority, low cost, capitalprojects will inevitably arise during the year and these should be undertaken to addressfound-on-inspection issues. PIWs typically require some degree of investigation andengineering to identify a solution. PIWs are also used to identify and correcttransmission overhead line components that no longer meet minimum NESCrequirements. This work is over-and-above that required during normal I&M activitiesand is likely to increase over the Plan period as a result of overall capital investmentreductions.Issues arising from PIWs are prioritized and engineering solutions for the highest priorityare developed within year. Utilizing this approach, the Company can make progress onlow cost capital investments that might otherwise be lost in the capital plan.Customer Benefit:The Problem Identification Work (PIW) approach followed by the Company benefitscustomers and the overall health of the system. PIWs identify important issues and workthat are high priority, but the work does not usually fall into the scope of ongoingstrategies, and are not yet damage / failures. PIWs help identify trends throughout thesystem and give the Company feedback on how better to manage the system as awhole.2011 to 2012 Variance:This line item was first added to the 2010 Plan to capture the costs of capitalreplacement projects that are identified during inspection or maintenance. Theinvestment levels in FY13 to FY17 have been held at the same levels as the 2011 Plan;however, PIW driven projects are likely to increase over the Plan period as a result ofother capital investment reductions.Table II-23Transmission – Problem Identification WorksheetsProgram Variance ($millions)CIP FY12 FY13 FY14 FY15 FY16 FY17 Total2011 1.5 1.0 1.0 1.0 1.0 - 5.52012 - 0.0 1.0 1.0 1.0 1.0 4.1II-3957