DISTRIBUTION OPERATIONS AND MAINTENANCE

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1 EB Filed: 00 Aug Page of DISTRIBUTION OPERATIONS AND MAINTENANCE PREVENTIVE MAINTENANCE Preventive Maintenance is intended to maintain or improve customer service reliability, extend equipment life and ensure employee and public safety. Preventive Maintenance represents the work required to enable THESL s distribution assets to function as specified and to promote continued reliable system performance. This work entails the inspection and overhaul of distribution assets, and replacement of specific components at fixed intervals. Preventive Maintenance is described in this tab, and its program requirements are prescribed in THESL s annual Plant Maintenance Manual. Preventive Maintenance is derived from RCM II, which is designed to determine the optimal maintenance tasks for the assets within their operating context. Optimal in this sense means the least costly maintenance tasks that satisfy reliability, safety and environmental requirements. As all preventive maintenance programs are derived from RCM analyses, each program represents the most cost-effective alternative for maintaining a specific class of assets. A more frequent maintenance cycle would lead to over-maintaining of assets, and could actually induce failures; a less frequent cycle would lead to more costly failures over time and over the population of the asset. 0 DISCUSSION Distribution assets and their components are subject to deterioration and failure over time. Appropriate maintenance practices increases the probability that assets will continue to operate as expected over their expected lives and help protect against major equipment failures and associated reliability problems. Maintenance programs are designed to reflect the fact that asset integrity is influenced by factors such as condition, design, location, age and equipment utilization. Asset deterioration usually manifests itself as a decline in equipment performance, which can negatively impact supply to customers.

2 EB Filed: 00 Aug Page of THESL maintenance crews are responsible for carrying out, capturing data on and reporting back on various Preventive Maintenance activities as outlined in THESL s Plant Maintenance Manual. The following paragraphs discuss some of the types of equipment and activities that are addressed under preventative maintenance. A comprehensive explanation of all activities is contained in the Plant Maintenance Manual. Overhead/Underground Distribution Compact Radial Vaults are inspected twice a year and an inspection checklist is completed to identify any deficiencies. A thermograph is taken of all elbows to identify hot spots and is reported on the checklist. A determination is made as to whether these vaults require power washing and, if so, arrangements are made to schedule this activity. 0 Network Protectors are overhauled every three years for those with 0/0V supply and every five years for those with 0/V supply (the differing maintenance frequencies are due to different mean times between failures for the failure modes assessed during the RCM analysis for each protector type). A checklist is completed to verify that the protector was cleaned, relays were replaced, and a function test is performed to verify that loads are picked up automatically. Finally, a protector card is signed and placed on the front door of the protector to clearly identify completion of the maintenance. Three-Phase Gang-Operated Switches are maintained every three years to ensure safe and reliable operation during routine and emergency switching. A Certified Power Lineperson completes a checklist identifying the physical and mechanical condition and verifies the correct blade alignment, blade penetration, travel stops and arc interrupter operation. The switches are then lubricated for efficient operation. Asbestos inspection is performed to identify areas of the plant that contain material that is considered harmful if it becomes friable. THESL is committed to the prevention of illness

3 EB Filed: 00 Aug Page of and injury through the provision and maintenance of healthy and safe working conditions on its premises and due diligence in its inspection activities. THESL endeavors to provide a hazard-free environment and to minimize risks by adherence to all relevant legislation, and where appropriate, through the development and implementation of additional internal standards, programs and procedures. The asbestos inspection is mainly to re-examine high risk locations for the presence of friable asbestos and record the findings for future followup work. When friable asbestos is discovered the work is issued to a contractor for immediate removal. All non-friable asbestos locations are recorded for future removal. The network inspection and maintenance program is typically performed in two stages. Initially, inspection and documenting of deficiencies is conducted. Any minor deficiencies are usually repaired during this inspection. Major deficiencies are documented in the Inspection Report for follow-up repairs in the same year as the inspection. Critical deficiencies that pose a safety hazard or impact system reliability are corrected as soon as possible. 0 Stations THESL Substations use several different types of Circuit Breakers such as Magnetic Air, Air Blast, Vacuum, Sulfur-hexaflouride ( SF ), and Oil. Maintenance cycles vary from three to eight years depending on the type of breaker that each substation contains. These units are inspected for leaks, and tests are performed to ensure that they are functioning properly in order to maintain a reliable flow of power to downstream customers. Carbon dioxide ( CO ) and FM00 (Waterless Fire Protection) fire protection inspections are performed every six months to ensure that the intended functions are maintained, and items such as alarms, sensors, and manual electric dischargers are all operating properly.

4 EB Filed: 00 Aug Page of Power transformer and Primary Load Break Switches ( LBSs ) are used to supply the primary load of a power transformer at Municipal Stations with capacity less than MVA or at customers locations. On the. kv system some LBSs are installed in outdoor enclosures while others are installed in exposed structures. At a customer location, LBSs can be. kv,. kv or kv Load Interrupter Switches ( LISs ). The work to maintain these devices includes cleaning insulators, contacts and gears; checking alignment; and performing operational tests. Stations are another location where friable asbestos can be found. Stations are inspected to identify and record high-risk locations for future follow-up work. 0 External Contracts As is detailed in Exhibit C, Tab, THESL engages a number of external agencies to perform preventive maintenance tasks for several programs. External contractors are engaged to provide these services due to the seasonal nature of the work, and the specialized expertise and equipment required. As an example, insulator washing is required for only two, six-week periods each year. Equipping a THESL crew with a wash truck that only operates twelve weeks per year is not cost-effective because the truck will remain idle for the remaining 0 weeks of the year. As a second example, external forestry contractors are hired for their expertise and experience in tree-trimming services. Until now the tree-trimming (forestry) program followed a three-year pruning cycle to trim trees in close proximity to overhead lines. This program is aimed at improving reliability by reducing forced outages caused by tree contact. Analysing feeder reliability data for tree contacts in previous years determines the pruning cycle. The feeders having the poorest reliability due to vegetation contacts were given the highest priority for trimming. In 00, THESL engaged the services of Davies Consulting Inc. to develop a more sophisticated tree trimming model. This model was delivered in June 00 and is being used to obtain market

5 EB Filed: 00 Aug Page of pricing and terms for tree trimming work in the years 00 and beyond. This new tree trimming model is designed to optimize the trimming cycle for each individual feeder. The washing of porcelain insulators on. kv overhead line poles takes place in areas where insulators experience extraordinary contamination. Regular pressure washing every six months is performed using clean water to remove contaminants that accumulate over time. Dirt, salt and hydrocarbon deposits, when combined with moisture, reduce insulation levels across line insulators and lead to current leakage (tracking) which can increase over time. This contamination can overcome the minimum insulation requirement of the insulator and lead to a flash-over. This insulation failure will trip the upstream protective device and cause a forced outage, which ultimately affects reliability. 0 CO cleaning of pad-mounted switchgear reduces the risk of tracking and, ultimately, switch failure. Switches that are found to be dirty can be cleaned while still energized using CO pellets. Carbon Dioxide is blasted against the switches, releasing the dirt, cleaning the switch, and then evaporating into the atmosphere. Pressure washing and vacuuming out submersible (underground) transformer vaults keep drains from plugging and prevent exposure of transformers to water, salt, contaminants and other debris. This allows transformers to cool properly and prevents premature rusting. Table : 00 to 0 Preventive Maintenance Cost ($ Millions) Preventive Maintenance Costs 00 Historical 00Bridge 00Test 00Test 0Test OH/UG Distribution Assets..... Stations Assets External Contracts Total Preventive Maintenance * Columns may not total due to rounding

6 EB Filed: 00 Aug Page of The total preventive maintenance program cost increased by $. M from 00 to 00. This increase is primarily attributable to the addition of a one-time, asbestos audit program and a more aggressive vegetation management program. The asbestos audit accounted for about $00,000 of the increased costs from 00 to 00. The Ministry of Labour imposed the asbestos audit program requirement to identify and document all sources of friable asbestos within THESL facilities by the end of 00. From 00 to 00, external contract costs increased by about $. M primarily due to increased vegetation management program costs. This cost addresses increased tree-related outages, which are described in additional detail at Exhibit B, Tab, Schedule. Going forward, the new tree trimming model is expected to optimize the trimming program resulting in reliability improvement due to reduced tree-related outages while maintaining annual spending. The Preventive Maintenance program is expected to remain constant though out the test years The cost increases shown in Table are primarily due to the expected inflation for internal labour, vehicles and materials. External contractor costs are expected to follow inflationary trends throughout the period.

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