PROPOSED RULEMAKING

PENNSYLVANIA PUBLIC UTILITY COMMISSION

Advance Notice of Proposed Rulemaking Order

[38 Pa.B. 4393]
[Saturday, August 9, 2008]

Public Meeting held
July 17, 2008

Commissioners Present: James H. Cawley, Vice Chairperson; Robert F. Powelson; Tyrone J. Christy; Kim Pizzingrilli; Wayne E. Gardner, Absent

Advance Notice of Proposed Rulemaking for Revision of 52 Pa. Code Chapter 57 pertaining to adding Neutral Connection Inspection and Maintenance Standards for the Electric Distribution Companies; Doc. No. L-2008-2044821

By the Commission:

   On May 22, 2008, the Commission entered a Final Rulemaking Order at L-00040167 which promulgated regulations at 52 Pa. Code § 57.198, establishing inspection, maintenance, repair and replacement standards for electric distribution companies (EDCs). The Final Rulemaking Order improved the Commission's ability to monitor EDC service reliability and safety. Specifically, the Commission will receive biennial inspection, maintenance, repair and replacement plans that should conform to minimum standard intervals set forth at § 57.198(n).

   Based on more recent experience and information, the Commission also determined that the issue of whether EDCs should be subject to specific inspection and maintenance standards regarding neutral connections should be evaluated. Specifically, the Commission approved Commissioner Tyrone J. Christy's Motion to consider additional standards for the inspection, maintenance and repair of neutral connections by opening a new rulemaking proceeding.

   On December 20, 2007, in Strickhouser v. Metropolitan Edison Company, Docket No. C-20077273, Order entered Dec. 20, 2007, this Commission ruled on whether EDCs should be required to inspect, maintain, repair and replace damaged neutral connections. Michael Strickhouser filed his claim against Metropolitan Edison Company (''Met Ed'' or ''the utility'') after a power surge caused damage to his home and some appliances inside the home.¹ The power surge resulted from a failed neutral connection,² and Mr. Strickhouser contended that the neutral connection would not have failed but for Met Ed's negligence in failing to properly monitor, inspect, repair and replace its neutral connections. Met Ed denied liability, arguing that it was not industry practice to routinely inspect neutral connections. Met Ed stated that because neutral connection failures are uncommon, it is neither practical nor feasible to physically inspect the multiple connections existing on each of Met Ed's approximately 157,000 overhead service lines, and the cost of conducting routine inspections on a million neutral connections by linesman using a bucket to ascend up the poles to the connections far outweighs the benefit because the failures are so infrequent. According to Met Ed's witness, Brian Lechman, a Met Ed regional manager with an electrical engineering degree, current practice is to check a neutral connection typically after a customer telephones the company and complains about voltage problems, i.e. flickering lights, or bright lights, or some other symptom that would indicate a neutral connection failure. Strickhouser, Transcript of May 30, 2007, pp. 49-50. Mr. Lechman further testified that it was not reasonable for the Company to have performed regular inspections and maintenance on thousands of neutral connections in its territory, given the small number of annual failures and that industry standards do not provide for such inspections. Initial Decision of ALJ Melillo, Docket No. C-20077273, at 10.

   Administrative Law Judge Kandace F. Melillo dismissed Mr. Strickhouser's claim, but ALJ Melillo required Met Ed to ''commence monitoring the failure rate of its neutral connections, in connection with the age and location of these connections, to ascertain whether implementation of an inspection and replacement program is necessary to assure reasonably continuous service and avoid appliance damage.'' Strickhouser, Docket No. C-20077273, Initial Decision entered July 16, 2007. ALJ Melillo stated that while the number of connections could make periodic inspections of all such connections cost prohibitive, inspections specifically targeted to connections of a particular age and location would not be as burdensome. Id. at 12. Met Ed filed Exceptions to the Initial Decision, specifically challenging the neutral connection monitoring requirements.

   The Commission upheld the ALJ's initial decision to dismiss Mr. Strickhouser's claim because there was no record evidence for ''industry standards for neutral connection inspections and that such inspections have not been shown to be warranted to date.'' Strickhouser, Docket No. C-2006673, Order Entered Dec. 20, 2007. The Commission also affirmed the ALJ's ruling requiring Met Ed to monitor the failure rate of its neutral connections and to file annual reports for the years 2008-2010 based on those findings because of ''the amount of harm and expense that such failures can cause.'' Strickhouser, Docket No. C-20066673, Order Entered Dec. 20, 2007. The Commission modified the ALJ's initial decision, however, by eliminating the requirement to collect data on neutral connection age when it is not available because of the small number of failures and the expense involved in making that determination.

   In Luke Kelley v. Pennsylvania Electric Company, Docket No. C-2006673, Luke Kelley testified that in June 2006, whenever he turned on an appliance that required a large amount of amperage, such as a dryer or air conditioner, the lights in his home would brighten. Transcript February 7, 2007, pp. 13-14. At one point, when Mr. Kelley turned on his radio, his stereo system began to emit smoke. Transcript February 7, 2007, p. 15. Mr. Kelley had a failed neutral at the time.

   In both the Strickhouser and Kelley cases, the EDCs argued that: neutral connection failure is a natural and foreseeable occurrence caused by corrosion; that 20 years is a reasonable amount of time for a neutral connection to last; that a bad neutral connection would not be discovered during the EDC's routine maintenance on a circuit because such connections are not visible to the naked eye; that the failure of a neutral connection is identified only after a trouble call is received from a customer; and that it is not practical or feasible for the company to inspect every neutral connection due to the large number of connections on each line. Instead of routinely inspecting and/or replacing neutral connections, the two EDCs relied on customer complaints to identify failed neutral connections.

   We question whether these practices regarding neutral connection failures are adequate and reasonable.

   The Public Utility Code at 66 Pa.C.S. § 2802(20) provides:

   (20)  Since continuing and ensuring the reliability of electric service depends on adequate generation and on conscientious inspection and maintenance of transmission and distribution systems, the independent system operator or its functional equivalent should set, and the Commission shall set through regulations, inspection, maintenance, repair and replacement standards and enforce those standards.

   Additionally, the National Electrical and Safety Code at Section 214.A³ provides:

   A.  When in service

   1.  Initial compliance with rules

   Lines and equipment shall comply with these safety rules when placed in service.

   2.  Inspection

   Lines and equipment shall be inspected at such intervals as experience has shown to be necessary.

   NOTE: It is recognized that inspections may be performed in a separate operation or while performing other duties, as desired.

   3.  Tests

   When considered necessary, lines and equipment shall be subjected to practical tests to determine required maintenance.

   4.  Record of defects

   Any defects affecting compliance with this Code revealed by inspection or tests, if not promptly corrected, shall be recorded; such records shall be maintained until the defects are corrected.

   5.  Remedying defects

   Lines and equipment with recorded defects that could reasonably be expected to endanger life or property shall be promptly repaired, disconnected, or isolated.

   The Electric Power Research Institute (EPRI) is conducting a Program entitled, 128 Distribution Systems and is investigating how EDCs can best improve reliability and system performance while dealing with the challenge of an aging infrastructure and increasing customer demands for higher reliability and power quality. The EPRI is studying, among other things, inspection and assessment of overhead distribution systems. The project aims to build a component reliability dataset by addressing components on an individual basis each year.

   In view of Section 2802(20) and the two recent cases addressed by the Commission regarding neutral connections, and since the National Electrical Safety Code stresses the importance of the inspection and maintenance of lines and equipment, a rulemaking proceeding is hereby initiated at this docket to consider revising 52 Pa. Code, Chapter 57, relating to electric distribution reliability.

   The Commission will be considering the establishment of inspection, maintenance, repair and replacement standards regarding neutral connections under Chapter 57 of the Pennsylvania Code. This advance notice solicits comments from electric distribution companies and other parties of interest.

   Comments are requested on the following topics:

   1.  Whether standards should be established by the Commission for inspection, maintenance, repair, and replacement of neutral connections so as to avoid unreasonable appliance and other household or business damage to consumers and to assure reasonably continuous electric service. Comments are requested on what, if any, those standards should be.

   2.  What electric distribution companies' internal inspection and maintenance procedures were in 1995, 2000, and 2007 regarding monitoring the failure rates of their neutral connections, inspecting, maintaining, replacing and repairing those neutral connections.

   3.  What were the EDCs' internal practices in 1995, 2000, and 2007 regarding the systematic replacement of neutral connections before they failed?

   4.  Whether a bad neutral connection is visible to the naked eye from the ground as part of a visual inspection. If not, what steps would the EDC have to take to properly inspect a neutral connection?

   5.  Are there limitations to the physical inspection of a neutral connection? If so, what are they?

   6.  How lengthy and complicated is a proper neutral connection inspection?

   7.  What incremental costs would the EDCs incur if required to comply with a neutral connection inspection and maintenance program interval of no less than once every five years for every neutral connection in their service territory?

   8.  What additional costs would be incurred?

   9.  What costs would the EDCs incur if required to systematically replace a portion of their neutral connections every year, such that all neutral connections would be replaced on a rolling basis (perhaps every 20 years)?

   10.  If a systematic replacement program were required, what would be the optimal replacement schedule and why?

   11.  How many neutral connection failures have the EDCs had per year in their service territories since 1995? What percentage of their overall customer base does this represent?

   12.  What have the EDCs paid over the past five years annually in compensatory and/or punitive damages to customers who have had property damage and/or personal injury due to failed neutral connections?

   13.  Whether standards should be placed in the regulations which are specific to each individual EDC, or whether all EDCs should be held to the same standard, and how this would be monitored and regulated.

   14.  Whether there should be automatic civil penalties written into the regulations for failure to meet standards.

   15.  Can smart metering/AMI systems provide a means of identifying potential bad or failing neutral connections? If so, what capabilities, specifications and communication channels would be needed to incorporate such diagnostic systems and at what incremental cost, if available?

   Due to the comprehensive nature of a rulemaking and the fact that there are no pre-existing inspection and maintenance or repair standards, interested parties will be given 60 days from the date of publication of the Advance Notice of Proposed Rulemaking in the Pennsylvania Bulletin for the submission of an original and 15 copies of comments and 90 days from the date of publication to submit an original and 15 copies of reply comments. Since the comment periods are ample, no extensions will be granted for the filing of comments. An electronic copy of all comments should be electronically mailed to Elizabeth Barnes at ebarnes@state.pa.us.

   This is an advance notice of proposed rulemaking and is in addition to the normal rulemaking procedures for publication and comment established under the act of July 31, 1968 (P. L. 769, No. 240), known as the Commonwealth Documents Law. Therefore,

It Is Ordered That,

   1.  A rulemaking proceeding is hereby initiated at this docket to consider the revision of the regulations appearing in 52 Pa. Code, Chapter 57, relating to neutral connection inspection and maintenance standards for electric distribution companies.

   2.  An Advance Notice of Proposed Rulemaking regarding revision of regulations appearing in 52 Pa. Code, Chapter 57, be published in the Pennsylvania Bulletin.

   3.  Interested parties shall have 60 days from the date of publication in the Pennsylvania Bulletin of the Advance Notice of Proposed Rulemaking to file written comments and 90 days from the date of publication to file reply comments.

   4.  Comments should, where appropriate, address the 15 issues identified in this order and should include, where applicable, a numerical reference to the existing regulation(s) which the comment(s) address, proposed language for revision, and a clear explanation for the recommendation.

   5.  Interested parties should file an original plus 15 copies of each comment to the Secretary, Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265.

   6.  An electronic copy of the comments should be electronically mailed to Elizabeth Barnes, Assistant Counsel, at ebarnes@state.pa.us, and these comments in turn will be placed on the Commission's website for public viewing at www.puc.state.pa.us.

   7.  The contact persons for this rulemaking are Darren Gill (Bureau of Conservation, Economics and Energy Planning, (717) 783-5244 (technical) and Elizabeth Barnes, Law Bureau, (717) 772-5408 (legal).

JAMES J. MCNULTY,   
Secretary

[Pa.B. Doc. No. 08-1461. Filed for public inspection August 8, 2008, 9:00 a.m.]

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¹  A similar claim was made in Kelley v. PA Electric Co., Docket No. C-20066673, Initial Decision on Remand entered November 7, 2007. In that case, Administrative Law Judge Robert P. Meehan dismissed Mr. Kelley's claim against PA Electric Company for failing to satisfy his burden of proof.

²  A neutral connection is a wire that provides a return path to complete the flow of electricity so that all appliances can operate. Strickhouser, Docket No. C-20077273, Intitial Decision entered July 16, 2007. A damaged neutral connection can cause an uneven flow of electricity that results in voltage fluctuations. Id. A bad neutral connection can be caused by weather related oxidation. Luke Kelley v. PA Electric Co. Docket No. C-2006673, Transcript dated September 6, 2007, p. 9.

³  66 Pa.C.S. § 2804(1)(ii) requires EDCs to comply with the National Electrical and Safety Code regarding the installation and maintenance of transmission and distribution facilities.

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