The state Public Service Commission says Kentucky Power Company’s agreement to spend $10 million on “vegetation maintenance” across 20 eastern Kentucky counties “was a very important factor” in its acceptance of an agreement granting a 12.5 percent rate increase to the power company.
Kentucky Power said the increased spending will enable it to achieve a four-year cycle in clearing vegetation from near its power lines. The PSC said it intends “to closely monitor the work in the field to gauge the progress being made.”
Following are excerpts from the settlement agreement pertaining to the “vegetation maintenance.”
“The Unanimous Settlement Agreement between Kentucky Power Company and the state Public Service Commission contains three provisions that address distribution system reliability.
First, it locks in a $7,237,965 in ‘test-year’ distribution vegetation management expenditures. Without the agreement, the Company would have been free to shift a portion of those expenditures to other needs if circumstances so required. Second, it provides $10 million annually to fund increased distribution vegetation management work. Combined with the test-year amounts, Kentucky Power’s distribution vegetation management expenditures will be at two and one-third times the test year. Third, the Company is obligated to provide the Commission and the Attorney General annually with a circuit-by-circuit work plan prior to beginning each year’s work, and a circuit-by-circuit report of the work actually performed after the completion of each year’s.
The Plan and subsequent Report will enable the Commission Staff and the Attorney General to monitor the Company’s distribution vegetation management efforts, and to measure the results achieved against its plans. The Plan and Report are in addition to other reliability reports Kentucky Power is currently providing the Commission.
Although the reduced funding amounts under the Unanimous Settlement Agreement mean it will take the Company longer to achieve the four-year trim cycle than it would if the full ‘as filed’ Distribution Vegetation Management Initiative were implemented, Kentucky Power still projects it can reach a four-year trim cycle under the Unanimous Settlement Agreement in seven years instead of the five years under (an original plan filed in March).
Once the four-year trim cycle is achieved, Kentucky Power projects, as it did under the ‘as-filed’ plan, a 47 percent decrease in tree-caused sustained outages.’ This alone should have a significant impact on Kentucky Power’s distribution system reliability in light of the fact that tree-related outages are the largest single cause of service interruptions.’ In addition, it will allow faster restoration of service after storms.
In the initial implementation of the Distribution Vegetation Management Plan, Kentucky Power will perform the work calculated to have the largest immediate effect on improving distribution system reliability.’ In particular, Kentucky Power will focus on many of the 2009 worstperforming circuits, as well as circuits with large number of customers. As early as the first six months of the increased spending, the Company expects to expand its distribution vegetation management efforts substantially:
• Approximately 1,257 miles of distribution line will be re-cleared by manual trimming, mechanical trimming and herbicide treatment during the six months ended December 31, 2010. This is 851miles more than the 406 miles planned for the second half of 2010 in the absence of the increased reliability funding.
• The Distribution Vegetation Management contract crew complement will be expanded from 71 existing crews to 91 crews (60 Asplundh new hires). Twelve experienced contract crews will be brought in from other locations for three months of work.
• An aerial saw will be utilized to trim 90 miles of distribution line. No aerial saw work was in the original 2010 work plan. The use of an aerial saw allows re-clearing in the most inaccessible areas and helps resolve tree overhang problem.
• Herbicide application will be increased from the 182 miles in the original plan for the second half of the year to 600 miles.
• Three contract foresters will be employed to assist the Company’s foresters in planning and monitoring the work performed.
• Planned overtime work of 80 hours per Asplundh crew will be performed.
As a result of this expanded work, Kentucky Power ‘customers will recognize the power quality and reliability benefits (from the vegetation management work) immediately once the work has been completed on their circuit.
In the context of this settlement, the commitment by Kentucky Power under the Unanimous Settlement Agreement to spend $17.237 million annually on Distribution Vegetation, $10 million of which is to be funded by the increased rates, properly balances the need for signifi- cantly increased funding for reliability work against the competing need to limit the impact of increased rates on customers.
By focusing the effort on distribution vegetation management, the parties agreed to deploy the increased funding where it could have the greatest immediate effect on reliability.
In sum, the Distribution Vegetation Management provisions of the Unanimous Settlement permit the Company to significantly strengthen its efforts to increase the reliability of the distribution system, albeit at a slower rate, without unduly burdening Kentucky Power’s customers.”