Myths and Realities in Projecting the Trend of Future URD Cable Failures

Myths and Realities in Projecting the Trend of Future URD Cable Failures A Comparison Study Presented by Dan O’Neill To the EEI TD&M Meeting On April 4, 2006 In Houston, Texas

Agenda • The typical problem • A comparison of URD programs • The myth of the ‘tsunami’ dispelled • How to address the problem • Observations and key questions 1

Left alone, URD cable failures can be an accelerating problem For example, in Company A: • Outages were increasing at 5-6% per year, which means doubling every 12-14 years • Repair costs were averaging tens of million$ per year, and growing at the same rate • Customers were experiencing multiple interruptions, with some averaging 3-4 per year on their half-loop, not counting upstream outages from feeder lockouts, trees, etc. • Replacement spending had been very little, and needed to ramp up to sufficient levels to arrest the growth in outages, and would have to grow to keep up with deterioration URD Cable Failures 6,000 Company A 5,000 Company B 4,000 Failures Per Year 3,000 2,000 1,000 0 1982 1985 1988 1991 1994 1997 2000 2003 Company A needed to fund a URD cable replacement program that would arrest the growth of outages and maintain the level like Company B did * URD – Underground residential distribution – typical way of serving a post-1960’s residential subdivision, i.e., 300-5000 feet of usually single-phase, 12-34kV primary voltage cable, direct-buried (not in conduit), connecting 1-30 padmount transformers per half-loop, with 2-10 customers per transformer, so about 50 customers per half-loop (from riser to ‘normally open’ point) 2

The solution involves four key questions about the replacement program • Does the utility know: • What causes failures? • How to avoid them? • How much it costs? Measuring the right data? Predicting the right future? • Does the utility know: • What will happen if programs stay as they are today? • Whether there will be a ‘crashing wave’ or a ‘long swell’? • How the future could be changed? Funded at the right level? • Does the utility know: • What level of funding would at least stabilize URD outages? • What funding would be needed to achieve customer satisfaction? • What funding is needed to at least break-even on repair costs? Replacing the right cable? • Does the utility know: • Which cable segments or half-loops are most cost-effective to address? • Whether and when to inject, outsource, directionally bore, etc.? • How to ensure the field replaces what the model assumed they would? Answering these four key questions will allow the utility to optimally manage its URD cable replacement programs 3

Companies’ URD cable installation histories differ by year… • Most companies started ramping up in the 1960’s • Some were responding to local ordinances requiring URD for residential developments of any significant size • E.g., NY in 1967: URD for developments with 5 or more • Housing growth is the key driver • Often a good correlation between feet installed and customer growth • Recession in early 1980’s shows • In 1990’s some were affected by local or regional limits to growth • There can be problems with getting this data and trusting it • Plant accounting is a source • But may not be consistent with engineering data 5

…and by type, wherein the problem originated • Typical progression of URD types: • HMW unjacketed (1960’s) • XLPE unjacketed (1970’s or later) • XLPE jacketed (1970’s or later) • TRXLPE jacketed (1980’s to now) • EPR jacketed (1980’s to now) • Virtually all is concentric neutral • Original HMW was un-stranded • Some went from DB to in-conduit • Especially in rocky soil • And some had a period of C-in-C • Typical insulation by voltage: • 12kV – 170 mil • 34kV – 240 mil Unjacketed 3-phase cable with worn concentric neutral around insulated conductors * Glossary: HMW – High Molecular Weight Polyethylene XLPE – Cross-Link Polyethylene TRXLPE – Tree-retardant XLPE EPR – Ethylene Propylene Rubber DB – Direct Buried C-in-C – Cable in Conduit (cable pre-inserted) For most companies, the problem is their 34 kV-class or, for their 15kV-class, the 170-mil HMW unjacketed cable installed in the 1960’s and 1970’s, if they have not already replaced it 6

It is important to quantify failure rates in order to fix the problem There was/is a solution: start installing good cable (early), and/or replace (or inject) the failure-prone cable as you identify it 7

Many components’ failures fit the exponential process modelWhich means they are ‘memory-less’ and independent of ‘age’ or ‘cycles’ So, for an exponential process, preventive replacement will not work at all, e.g., electronic chips For the exponential curve, the slope at the origin points to the mean At any point on the curve, the mean ‘cycles to failure’ is the same 9

The Weibull curve assumes ‘wearout’ caused by cyclesWith a failure rate that increases with ‘age’ or ‘cycles’ This is typical for devices like circuit breakers, where the ‘cycles’ are fault operations, and for URD cable with ‘cycles’ as years 10

Scenario 1: “The egg thru the snake” When the Weibull distribution has a shape value of 30 and a scale value of 25 years, the assumed rate of cable failures are tightly bunched around the 25-year point, and the profile of predicted cable failures follows the distribution of installations, with the peak failures shifted about 25 years in the future (the dispersion adds about three years: the 1973 peak in installations corresponds to a 2001 peak in failures) Predicted Cable Failures -Illustrative- 120 100 80 Failures (000s) 60 40 20 0 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019 2023 2027 2031 Cable Sections Left By Year Installed -Illustrative- 5,000 4,500 4,000 3,500 3,000 Sections 2,500 2,000 1,500 1,000 500 0 1982 1986 1990 1994 1998 2002 1950 1954 1958 1962 1966 1970 1974 1978 Three scenarios paint the picture… Assumed Rate of Cable Failures -Illustrative- 50% Shape = 30 Scale = 25 yrs 40% 30% Failures 20% 10% 0% 1 5 9 37 41 45 49 13 17 21 25 29 33 Years Since Installation 11

Predicted Cable Failures -Illustrative- 60 50 40 Failures (000s) 30 20 10 0 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019 2023 2027 2031 Cable Sections Left By Year Installed -Illustrative- 5,000 4,500 4,000 3,500 3,000 2,500 Sections 2,000 1,500 1,000 500 0 1982 1986 1990 1994 1998 2002 1950 1954 1958 1962 1966 1970 1974 1978 …Wider failure distribution smoothes the installation profile… Scenario 2: “Smoothing the profile” When the Weibull shape value is reduced to 10, • the assumed rate of failures are more dispersed around the 25-year point and • the profile of the predicted failures is a smoothed version of the distribution of installations, • with its peak failures shifted about 34 years into the future (from 1973 to 2007) Assumed Rate of Cable Failures -Illustrative- 16% 14% Shape = 10 Scale = 25 yrs 12% 10% Failures 8% 6% 4% 2% 0% 1 5 9 37 41 45 49 13 17 21 25 29 33 Years Since Installation 12

Scenario 3: “The egg disappears” When the Weibull shape value is reduced to 2.5, the assumed rate of failures are widely dispersed around the 25-year point and the profile of predicted failures is virtually a straight line after the first 25 years, with its peak failures shifted almost 100 years into the future Predicted Cable Failures -Illustrative- 14 12 10 8 Failures (000s) 6 4 Peak in 2072 >> 2 0 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019 2023 2027 2031 Assumed Rate of Cable Failures -Illustrative- 5% 4% 4% 3% 3% Failures 2% 2% 1% 1% 0% 1 5 9 37 41 45 49 13 17 21 25 29 33 Years Since Installation …With a wide distribution erasing the installation profile Cable Sections Left By Year Installed -Illustrative- 5,000 4,500 Shape = 2.5 Scale = 25 yrs 4,000 3,500 3,000 2,500 Sections 2,000 1,500 1,000 500 0 1982 1986 1990 1994 1998 2002 1950 1954 1958 1962 1966 1970 1974 1978 13

The third scenario is born out by existing evidence • For companies that have done little URD cable replacement, the trend is much like what is pictured in the third scenario: • Failures increasing at a steady annual rate of about 5 percent, which, with compounding, means a doubling in about 14 years • With an active replacement program, no such increase will occur, but: • The replacement itself might need to grow at about 5 percent per year to keep up, until the failure-prone cable is substantially replaced • The replacement program’s impact can beincreased or diminished by how the cable to be replaced is selected: • It needs to be, as much as possible, worst first URD Cable Failures 6,000 Company A 5,000 Company B 4,000 Failures Per Year 3,000 2,000 1,000 0 1982 1985 1988 1991 1994 1997 2000 2003 The myth that cable installed in the 1960-70’s had a ‘thirty-year’ life and so will come ‘crashing down on us’ in the next ten years is just not true. There is no ‘crashing wave’, only a ‘long swell’ until the worst is replaced 14

HL&P addressed its URD problem effectively HL&P (CenterPoint Energy) had the same type of problem as many and addressed it with a combination of Lightning Arrestor (L/A) upgrade and a cable replacement program: • Key program items • L/A change out program to limit “let-through current” starting in the mid 1980’s • From 1981 to 2001 all replacement cable was jacketed cable in conduit, but due to cost and no observed increase in reliability, the installation practice was shifted back to direct buried after 2001 • 35kV Cable • Adopted an aggressive 5 year replacement program (1987 to 1992), funded at $10 million per year, that replaced 95% of the original installed cable • 15kV Cable • Active policy for past the 10 years of replacing half loops with 2 or greater failures in a rolling 12 month period. 2005 funding level was $2.4million or a 19 mile replacement program (at $24/ft) HL&P 35kV Failures HL&P 15kV Failures HL&P has leveled the exponential growth of failures, and stabilized failures at an acceptable level, where it has stayed for over a decade. Others can do the same. 15

It is important to investigate causes of failure… New Construction Manufacturer Defect Thumping Insulation Thickness/Type Maintain Cath Prot Rock Bruising Cable Injection Cable Replacement Jacket/casing missing/broke Cathodic Protection Corrosion Strength Insulation Breakdown Treeing Street Crossing Moisture in cable/joint Thermal Instability Cable Failure Maintain Manholes Wet Manhole Arresters around open Lightning Temperature of cable Steam (Ducted) Upgrade to MOV Enforce Penalties Dig In Mechanical Damage Ventilation (Ducted) Loading Mark-outs Add Capacity Enforce Trench Standards One Call Improper Training Improper Installation Capacity Planning Rocky Soil …in order to know how to fix the problem 17

URD Failure Rates Per Mile -Illustrative- 2.5 60 Actual Data 50 2.0 Weibull Fit 2/6/04 had 2” rain 1.5 40 Failures Per Mile 30 1.0 20 0.5 - 10 2 7 12 17 22 27 32 0 Years Since Installation 0 10 20 30 40 50 60 70 80 Monthly Average Temperature (Islip) Experience with many utilities’ URD data confirms certain patterns 2002-2004 Primary Cable Failures excluding exit cables 200 150 UG outages 100 50 0 Jan Feb March April May June July Aug Sept Oct Nov Dec 2004 - Primary and Secondary Cable Failures excluding exit cables UG Outages Most utilities URD data show that URD failures are correlated with age, temperature, moisture, and, of course, cable type 18

Typically, age-based failure rates are still low (~ 50% above average)So age-based programs must replace a lot of good cable to get the bad Although a failure rate difference of 3x is significant,some conditions provide 10x, e.g., 350’ cable sections that have failed 3 times in the last 5 years fail at 9.0 per mile Note: System average failure rates noted earlier are affected by average age of the system 19

The key to optimal replacement is high failure rate… Bang per buck Cost per mile Past outages per mile Growth rate of outages Minutes per outage Miles of line to be replaced Dollars spent Past outages per year Miles of line to be replaced Future outages avoided per year Past outages per year Future minutes avoided per year Future outages avoided per year Future minutes per year avoided Dollars spent 1 min. $2.00 1 $90,000 x 8 x 1.25 x 4500 = The higher the failure rate... …the higher the bang per buck Where: • $90,000 per mile = 5280 feet/mile x $17 per foot to replace • 8 outages/mile/year = 13 spans/mile x (3 outages per 400ft span in past 5 years) • 25% growth rate = 3 outages in past 5 years becomes 3 outages in next 4 years • 4500 minutes per outage = 50 customers per outage x 90 minutes per outage 20

…As well as ways to reduce the unit cost • Injection is sometimes a cost-effective option • Guaranteed by some vendors for many years • Typically half the cost per mile when used on the right cable • Not effective with blocking splices • Does not solve problem of corroded neutral • Not really an option for replacing individual segments, but good for half-loops • Volume can reduce unit cost • Half-loops get better cost than individual segments • But not worth it if failure rate of replaced cable drops faster than unit cost when volume increases • Use trenchless technology where possible • Tunneling under driveways, through tree root systems, etc. • Take credit for saving O&M, if appropriate • Repairing future failures can be made easier, e.g., conduit 21

URDFailures Distribution of Failure by Half-Loop (2001-2005) 60% 49% Possible target of replacement program 50% 37% 40% 30% Devices 20% 7% 3%* 3% 10% 0% 0 1 2 3 4 or greater Failures The distribution of failures by half-loop is a key part of the program • Most of utilities’ URD cable sections and half-loops has not failed in the last five years. Replacement of that cable would be unnecessary at this time • A customer satisfaction-driven program would target those half-loops that experienced a high rate of failure, because every segment that fails in the half-loop causes outages to all customers behind that device (the fuse on the riser) • The replacement program should then be further refined by replacing only those half-loops or sections in the half-loop that have not already been replaced, or that fit certain criteria, e.g., corroded neutral, voltage, etc. The goal is not to replace all the cable, but to replace enough of the right cable at the right time to affect the trend of failures 22

With the right approach, an optimal program can solve the problem Based on the number of miles of cable that fit the criteria of the half-loop program: • A program of 2x miles of URD cable replacement, beginning in 2007 and rising by y% per year, would stabilize failures at a normal 2007 level • 2005 was a hot year, like 1999, so a normal 2006 would be less • An x-mile program would leave failures rising, although at half the rate Company A URD Cable Failures 9,000 Actual '82-'05 8,000 Projected '82-'16 7,000 Repl x mi +y% per yr 6,000 Repl 2x mi +y% per yr 5,000 Failures Per Year 4,000 3,000 2,000 1,000 0 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Without a replacement (or injection) program, or with a minimal program, Company A’s URD failures would continue to double every 12-25 years 23

Elsewhere*, we have shown how to choose the right level of replacement From the viewpoint of a prudent company (and its regulator), there are three tests of a replacement program of this type: • Trending – What are the trends in spending and outages of this type? • If spending is down while outages are up, more spending is needed • If spending is level and outages are level, spending may be adequate (but see below) • Obviously, there are issues in adjustment for weather, costs, productivity, etc. • Benchmarking – What are other companies doing in spending and performance? • If other comparable companies are spending more or getting better results, shouldn’t you? • Obviously, there are reasons why some companies may differ for good reason • Modeling – When the process is modeled, what does it indicate the required level of spending should be to maintain performance or improve it to what customers expect? • This is the kind of modeling we have demonstrated above • There is customer satisfaction data to suggest that the threshold may be around three outages per year – including outages caused by devices upstream of the URD half-loop • Compared to the other two tests, this one is the most useful if the modeling is done right A ‘prudent’ replacement program should be designed with these tests in mind, especially the third * See “The Reliability Conundrum – What Is the Right and Prudent Level of Spending on Service?”, Public Utilities Fortnightly, March 2004, by Daniel E. O’Neill 24

What we have learned • Capturing the right information during installation and failures, e.g., date installed, insulation type, location and protection device operated, etc. that will enhance the data mining and prioritization process going forward Measuring the right data Predicting the right future • Modeled correctly in terms of installation history, failure rate, and replacement/retirement • No ‘tsunami’, just growth at a compounded rate Funded at the right level • Based on trending, benchmarking, and modeling • As a ‘stake in the ground’, at least determine the amount of funding needed to stabilize failures at current levels, then determine what it would take to achieve customer satisfaction Replacing the right cable • Replacing based upon centralized selection criteria that include failure history, voltage, corroded neutral, restoration time, number of customers, etc. Answering these four key questions will allow the utility to optimally manage its URD cable replacement programs 26

Observations and Key Questions Observations • Replacement program – Utilities need to implement an enhanced replacement program for URD cable. Because the new types of cable have much lower failure rates, replacement of older vintages will result in lower failures • Cable selection – Utilities need to select cable that is failing at a rate of 2 or more per half-loop per year supplemented with a section replacement program • Without such a replacement program, URD failures will continue to double in 10-15 years, with consequences for repair cost, increased multiple interruptions to the same customers, possible lengthy outages during heat waves, and accumulation of the inevitable replacement cost • There is no ‘tsunami’, only a long, high swell, in the sense that failures and costs will continue to rise at about 5% per year, doubling every 12-15 years. But a replacement program can stabilize the failures, or even reduce them Key Questions • Is the current level of failures acceptable, or should the utility aspire to reduce them further? • Can the utility execute an enhanced replacement program effectively with its current processes? • Are their other opportunities to reduce and refine the selection process e.g.: cable injection, lightning arrestor upgrades, partial discharge condition testing, etc.? 27

Questions? 28

Myths and Realities in Projecting the Trend of Future URD Cable Failures