BEFORE THE NEW YORK STATE PUBLIC SERVICE COMMISSION ------------------------------------------------------x : In the Matter of : : Proceeding on Motion of the : Commission as to the Rates, Charges, : Before Rules and Regulations of Consolidated : Hon. William Bouteiller Edison Company of New York, Inc. for : Hon. Michelle L. Phillips Electric Service. : Hon. Rudy Stegemoeller : Administrative Law Judges : P.S.C. Case No. 07-E-0523 : : ------------------------------------------------------x INITIAL BRIEF ON BEHALF OF CONSOLIDATED EDISON COMPANY OF NEW YORK, INC. IN SUPPORT OF A PERMANENT ELECTRIC RATE INCREASE Dated: November 30, 2007 New York, New York TABLE OF CONTENTS Page I. OVERVIEW OF PROCEEDING........................................................................................1 A. Procedural Overview.....................................................................................................1 1. Initial Filing .............................................................................................................1 2. Leaves Suspended....................................................................................................2 3. Conferences..............................................................................................................2 4. Active Parties...........................................................................................................3 5. Discovery .................................................................................................................4 6. Preliminary Accounting Update ..............................................................................5 7. Testimony of Other Parties ......................................................................................5 8. Rebuttal/Update Testimony .....................................................................................5 9. Hearings ...................................................................................................................6 B. Overview of the Rate Request .......................................................................................6 1. Cost Drivers of Forecasted Expenditures and New Programs.................................7 2. Cost Drivers of Existing Rate Plan..........................................................................9 a) Use of Customer Credits to Mitigate Rate Request........................................ 10 b) Recovery of Deferred Costs............................................................................ 10 c) Capital Spending Targets................................................................................ 11 3. Overall Reaction of Other Parties..........................................................................13 II. RATE BASE......................................................................................................................17 A. Capital Expenditures....................................................................................................17 1. Transmission and Distribution...............................................................................17 a) The Company’s Presentation .......................................................................... 17 (i) Support Economic Growth .................................................................... 19 (a) Substation Operations..................................................................................... 20 (b) System and Transmission Operations............................................................. 21 (c) Electric Operations (Distribution System)...................................................... 22 (ii) Improve System Reliability ................................................................... 22 (a) Substation Operations..................................................................................... 23 (b) System and Transmission Operations............................................................. 24 (c) Electric Operations (Distribution System)...................................................... 24 (iii) Public Safety and Environmental Improvements .................................. 25 (a) Electric Operations Public Safety................................................................... 25 (iv) Environmental Improvements................................................................ 26 (a) Substation Operations Environmental Improvements ................................... 26 (b) System and Transmission Operations Environmental Improvements........... 26 (c) Electric Operations Environmental Improvements......................................... 27 (v) Overhead Distribution System Storm Hardening and Response ........... 27 (vi) Advanced Technology........................................................................... 29 (a) System and Transmission Operations............................................................. 29 (b) Electric Operations (Distribution System)...................................................... 30 (vii) Process Improvement............................................................................. 31 i (viii) Security .................................................................................................. 31 b) Staff’s Proposals............................................................................................. 32 (i) Support Economic Growth .................................................................... 32 (ii) Improve System Reliability ................................................................... 33 (a) Obsolete Transformers Replacement Program ............................................... 33 (b) Spare Transformers Program .......................................................................... 35 (c) Category Alarms Replacement Program ........................................................ 37 (d) Remote Terminal Unit Replacement .............................................................. 38 (e) Substation Loss Contingency Program........................................................... 40 (f) Enhancing Substation Reliability Program..................................................... 40 (g) Facility Improvement (Upgrade) Program...................................................... 41 (h) Paper-In-Lead-Covered (“PILC”) Cable ........................................................ 45 (i) Network Transformer Relief >100% and <115%.......................................... 46 (j) Transformer Purchase..................................................................................... 47 (iii) Public Safety and Environmental .......................................................... 48 (a) Pumping Plant Improvement .......................................................................... 48 (b) Environmental Risk........................................................................................ 50 (c) Oil Minders ..................................................................................................... 51 (d) Vented Manhole Cover................................................................................... 52 (e) Street Light Isolation Transformers................................................................ 53 (iv) Storm Hardening and Response............................................................. 55 (a) Osmose (C Truss) ........................................................................................... 55 (b) Autoloop Reliability....................................................................................... 56 (c) No. 4 and No. 6 Self Supporting Wire............................................................ 57 (d) 3 Phase Gang Switch Replacement................................................................. 57 (e) Overhead Feeder Reliability ........................................................................... 58 (f) Rear-Lot Pole Elimination .............................................................................. 58 (g) Enhanced 4kV Grid Monitoring ..................................................................... 59 (h) 4 kV Underground Reliability ........................................................................ 60 (i) Overhead Secondary Reliability Program ...................................................... 61 (j) ATS Installation USS reliability XW ............................................................. 61 (k) Transformer Purchase..................................................................................... 61 (v) Advanced Technology........................................................................... 62 (a) Secondary Visualization Model...................................................................... 62 (b) Distribution Control Center Upgrades............................................................ 63 (c) SCADA Systems............................................................................................. 64 (vi) Process Improvement............................................................................. 65 (vii) Security .................................................................................................. 65 (viii) Staff’s Global Adjustment of S&TO Capital Programs ........................ 66 (ix) Staff’s Revised Reporting Requirements............................................... 71 2. Production..............................................................................................................73 a) The Company’s Presentation .........................................................................