OPERATIONS CAPITAL. The Operations Capital program for the test years is divided into two categories:

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1 Filed: September 0, 00 EB-00-0 Tab Schedule Page of OPERATIONS CAPITAL.0 INTRODUCTION Operations Capital funds enhancements and replacements to the facilities required to operate the Hydro One Transmission system within the requirements established by the reliability authorities, operating agreements and the market rules. The process to develop capital investments for Operations assets is discussed in Exhibit A, Tab, Schedule. 0 The planned investments enable Hydro One Transmission to meet its operations-related regulatory obligations as a transmitter and align with Hydro One Transmission s vision as a leading transmission company by employing best in breed operating systems and equipment that provide adequate monitoring and control to maintain customer reliability at required levels, and maintain public and worker safety. 0 Operations capital investments are required to sustain assets that are at their end of life or need major refurbishment and to implement, enhance and modify the physical infrastructure, systems and tools necessary for transmission operations. These investments deliver improvements to transmission system performance in the form of reduced outage duration, improved system utilization and improved information to customers. The Operations Capital program for the test years is divided into two categories: Grid Operations Control Facilities, which funds enhancements to, and replacement of, the computer tools and systems that support the transmission operating functions at the Ontario Grid Control Centre (OGCC) and the back-up centres.

2 Updated: February, 00 EB-00-0 Tab Schedule Page of Operating Infrastructure, which funds enhancements or modifications to the physical infrastructure outside of the control centres, required for the operation of the transmission system. The required funding for the test years, along with the spending levels for the bridge and historic years is provided in Table for each of these categories. 0 Description Table Operations Capital ($ Millions) Historic Years Bridge Year Test Years Grid Operations Control Facilities Operating Infrastructure Amalgamation of TOCS Total Total Operations Capital expenditures increased significantly in 00 due to a major facilities upgrade of the Grid Operations Control Facilities at the OGCC, largely to upgrade the Network Management System ( NMS ). The 00 expenditures are forecast to decline as a result of the completion of the NMS upgrade, but will remain above historical levels due to a continued need for replacement and enhancement of other OGCC systems as desired in Section.0. Operations Capital expenditures will increase again in 00 due to the initiation of an Operating Infrastructure project to provide a Wide Area telecommunication network for protection and control of the grid, as discussed in Section.0.

3 Filed: September 0, 00 EB-00-0 Tab Schedule Page of A brief description of the primary systems used to manage Hydro One Transmission s system is provided in Section.0 below. This is followed by the description and details of, and the year-to-year changes in, the two individual Operations Capital investment categories..0 DESCRIPTION OF THE SYSTEMS AND TOOLS 0 Hydro One Transmission operates and controls the entire Hydro One Transmission system from the OGCC. Backup facilities are also provided at separate locations in the event that the OGCC is unavailable. A suite of systems and tools is used to aid in the monitoring and control of the transmission system, the planning and scheduling of transmission equipment outages, and the provision of transmission system performance information. Hydro One Transmission has been proactive in assessing and implementing technologies to improve the operation of the transmission system. The primary systems used in the monitoring and control of the transmission system are: 0 The Network Management System ( NMS ) is the transmission network monitoring and control tool which performs the following functions, data acquisition, supervisory control, real-time and study mode network analysis, and training simulation. It provides the real time voltage and loading on the transmission system as well as monitoring and control of the status of the switches and breakers connecting the equipment to form the integrated network for the purpose of safe and reliable operation of the transmission system. The NMS also provides predictive assessment tools which help in providing situational awareness to the operator. Operations Support Tools enable the integration of outage management, utility work protection code and electronic logging functions, each of which is described below:

4 Filed: September 0, 00 EB-00-0 Tab Schedule Page of 0 0 a. Network Outage Management System ( NOMS ) is the transmission outage management tool that is used for planning, scheduling, assessing and executing transmission outages and for transmitting outage requests, via a direct communication link, to the Independent Electricity System Operator (IESO) for approval. b. The Utility Work Protection Code System is used by all Hydro One Transmission personnel requiring the establishment of guaranteed safe conditions for work. This system contains the necessary information to support the development of Work Protection packages. c. Electronic Logging is the system of record for control room operations using the NMS, including operator actions such as opening and closing breakers, and system telemetry. Electronic logging provides system data for asset management and system planning. The Transmission and Station Operating Diagrams are used by field crews and, to a lesser extent, by the OGCC to provide detailed information on the configuration of the transmission system and the connectivity of the transmission station equipment. This information is essential in ensuring the safe and reliable operation of the transmission system. The Provincial Mobile Radio System is the means by which both the OGCC and the field operations centres maintain continuous contact with field crews. It is designed to be reliable in the event of a widespread blackout and capable of accessing all remote locations where field crews would be dispatched. The OGCC Integrated Voice System is designed to allow OGCC Operations to effectively manage voice communications between the OGCC, IESO, transmission connected customers and field staff. This system provides the interface to multiple communication media, such as the public telephone network, public cell phone network and Hydro One Transmission s provincial mobile radio system.

5 Updated: February, 00 EB-00-0 Tab Schedule Page of The OGCC Emergency Services Information System provides verified up-to-date contact numbers for all emergency response services (e.g. police, fire, ambulance, ministry of environment, gas utilities, etc.) across the Province. This system is designed to enable OGCC staff to efficiently contact emergency personnel..0 GRID OPERATIONS CONTROL FACILITIES. Overview 0 Grid Operations Control Facilities provide critical capabilities to support transmission operations at OGCC and the back-up centres. This program funds enhancements to, and capital sustainment of, the computer tools and systems that support the control room and back office transmission operating functions. 0 The Operations Capital projects for the Grid Operations Control Facilities are provided in Table below. Table Grid Operations Control Facilities Capital Projects ($ Millions) Historic Years Bridge Description Year Test Years NMS Upgrade Tx Operating Facilities Sustainment NMS Enhancements Operations Support Tools (NOMS, UWPC, Electronic Logging) Miscellaneous Projects* Total *Includes OGCC Historical Information Management

6 Filed: September 0, 00 EB-00-0 Tab Schedule Page of During 00 and 00, the major capital investment is the NMS Upgrade, which is required due to the need for end of life replacement of both hardware and software, and the requirement to comply with North American Electric Reliability Council s (NERC) Cyber Security standards. The decrease in 00 expenditures reflects the completion of the NMS Upgrade.. NMS Upgrade 0 This investment upgrades the NMS software and associated server hardware currently in service at the Ontario Grid Control Centre and the backup centres. In addition, this investment provides computer room HVAC and power supply upgrades for the secure computing facilities. The NMS is the mission critical operating tool used for monitoring and control of the Hydro One Transmission System. The reliable operation of the Ontario Power System is dependent on the continued availability and high performance of the NMS. 0 The NMS must be upgraded due to the impending end of life of software and hardware components. As of April 00, the current application software, Areva Energy Management System (EMS)., is two releases out of date. As of 00 it will reach end of life and will no longer be supported by the vendor. In addition, the software upgrade will provide compliance with NERC Cyber Security requirements. The server hardware has been in continuous operation since 00, and is therefore reaching end of life between 00 and 0. In addition, the server hardware is not compatible with the required software upgrade. The Investment Summary Document for the NMS Upgrade is filed under Exhibit D, Tab, Schedule.

7 Filed: September 0, 00 EB-00-0 Tab Schedule Page of. Transmission Operating Facilities Sustainment This investment provides capital sustainment of the computer tools and systems that support the Control Room and back office transmission operating functions at the OGCC and the back-up centres. 0 This investment funds separate projects that provide proactive replacement of the transmission operating facilities including the Control Room telephone system, NMS workstations and, Control Room display wallboards. During test years 00 and 00, substantial portions of these facilities will be reaching end of life.. NMS Enhancements 0 This investment is designed to strengthen the existing NMS applications to provide better information on the status and condition of field equipment, better information on the power system and to automate routine tasks. In addition, during 00 and 00, new NMS applications will be implemented to improve the reliability and control of the Hydro One Transmission system... NMS Enhancements to Existing Applications During 00 and 00, the existing Command Sequence Switching (CSS) application will be improved by providing automated entry and execution of switching orders with some inter-switch checking of alarms and next-steps consequences (for example, closing into a ground or tripping load). This will reduce the workload in the control room and improve the accuracy of operation. The Breaker Duty Cycle (BDC) application currently monitors and controls the number times that breakers can be operated in order to protect the power system. During 00

8 Filed: September 0, 00 EB-00-0 Tab Schedule Page of and 00, the BDC application will be improved by incorporating information from the online short circuit program and real-time information from the intelligent electronic devices to assemble better information on the utilization of breakers. 0 The Dynamic Cable Ratings (DCR) application will use measured cable temperatures to calculate real time ratings for underground cables, in order to prevent damage. It will do so by guarding against overload conditions which could damage the equipment and/or shorten equipment life. Replacement of these underground cables in urban areas would be extremely difficult and would take a long time to repair or replace should a failure occur. In addition, monitoring actual cable power flows against real-time ratings will optimize the use of the cables by permitting operation close to the cable s design capability... NMS Enhancements - New Applications The E-terra Vision application will provide enhanced situational awareness to controllers by providing an improved wide area view of power systems beyond the Ontario control area. This will help to provide operator awareness of power flows outside Ontario in order to improve reliability. 0 The Network Neighbourhood application will provide a graphical interface to display the network connectivity of the system bus, thereby improving controller s awareness of the transmission system configurations. The Intelligent Alarm processor will provide intelligent processing of alarms provided to transmission operators. Significant enhancement of the NMS Alarming processing will ensure that controllers receive pre-filtered, clear and precise event information. This will

9 Filed: September 0, 00 EB-00-0 Tab Schedule Page of help to ensure critical alarms are not missed and avoid controller error during periods of high activity.. Operations Support Tools This capital investment provides for the replacement of the existing NOMS, Utility Work Protection Code and Electronic Logging with an integrated solution. 0 NOMS is a tool used for planning, scheduling, assessing and implementing transmission outages. The tool is also used for communicating outages to the IESO for approval. The proposed changes to NOMS will improve the reliability, operability and maintainability of this key system. The enhanced NOMS system will bundle all of the planning tools in a complete solution, thereby streamlining the planning process. The UWPC provides documentation of work protection packages. The centralized system will streamline the effort to ensure the accuracy of the work permits and switching orders an important contribution to the provision of a safe working area to employees. 0 Electronic Logging provides a detailed record of control room operations using the NMS, including operator actions such as opening and closing breakers and system telemetry. The electronic logging function is the system of record for transmission system operations and is needed for good utility practice. This investment will integrate the electronic log with the centralized system. During 00, Hydro One Transmission defined user requirements, selected software vendors and began system development. During 00, planned accomplishments include system installation, user acceptance testing and end user training.

10 Filed: September 0, 00 EB-00-0 Tab Schedule Page 0 of. Miscellaneous Projects- OGCC Historical Information Management 0 The NMS contains a large quantity of data on the historical performance of the transmission system assets, such as response times to outages, customer supply performance and outage causes. This data is extremely valuable for identifying and prioritizing transmission system investments. Extracting the data from the existing databases involves a large amount of manual effort and time delays. This is costly and severely hinders the discovery process needed to identify all the asset and performance issues. This investment will provide long-term archiving of transmission operations data as well as data mining and analysis capabilities to improve system planning and asset investment decisions. This project aligns with the scope and infrastructure plans of the Cornerstone project. It is expected to proceed with Cornerstone Phase which is scheduled for OPERATING INFRASTRUCTURE 0 This program funds enhancements or modifications to the physical infrastructure required for the operation of the Transmission System. The infrastructure includes operational telemetry, distance to fault locators, overhead and underground circuit monitoring devices, programmable synchrocheck relays, and weather monitoring facilities. The spending requirement for this program is driven by the discrete set projects undertaken in any given year. The 00 and 00 funding levels are mainly attributable to two new projects: an ongoing program for the sustainment of hub sites and a project to provide wide area network telecommunication capacity for business efficiency benefits.

11 Filed: September 0, 00 EB-00-0 Tab Schedule Page of. Hub-Site End of Life Replacement The telemetry and control of the grid is routed from the approximately 0 switchyards to the OGCC through gateways systems located at about hub sites across the province. These gateway systems were installed in 00 and are reaching end of life due to both capacity and obsolescence. As the new stations have been built and new equipment placed into service at existing stations the telemetry required has increased the utilization of many gateways such that they are at or near capacity. Furthermore vendor support for the version of software and the hardware in these systems is ending in The upgrading of these systems account for spending of $.0 million in 00 and $.0 million in 00, and will reduce the cost of the NERC Cyber Security Compliance program by an equivalent $ million. Additional detail for this program is provided in the Investment Summary Documents in Exhibit D, Tab, Schedule.. Telecom Wide Area Network 0 Hydro One Transmission has an extensive network of Fibre Optic cable installed onto its transmission system for the purpose of providing extremely high reliability telecommunication for the protection and control of the Grid. Hydro One Transmission is presently examining the value of using this infrastructure to meet other telecommunication needs related to improving business efficiency and possibly some Smart Grid technologies. Hydro One Transmission has offices at many of its transmission sites but these sites are in remote locations not well served by commercial telecommunications providers. It is sensible to use the fibre optic infrastructure that exists at these sites to enable efficiency-improving business computer tools to function effectively. The plan is to begin building a new telecommunication Wide Area Network

12 Filed: September 0, 00 EB-00-0 Tab Schedule Page of (WAN) on the same infrastructure used for Grid Protection and Control with physical isolation that will ensure Cyber Security requirements are in no way compromised. Spending on this project accounts for $.0 million in 00. Additional detail for this program is provided in the Investment Summary Documents in Exhibit D, Tab, Schedule.. Other Miscellaneous Projects 0 A number of other smaller projects totaling $0. million in 00 and $. million in 00 make up the balance of the Operating Infrastructure expenditures. The three most significant of these projects are briefly described below. Telecommunication Performance Improvement: This investment ($0. million in 00) will fund improvements to Hydro One Transmission s grid control network to resolve telecommunication reliability and performance problems, and will provide for additional telecommunication facilities such that the IESO real time data performance standards are fully met. 0 Telemetry Expansion: This investment ($. million in 00) is required to split critical alarms which are bundled (a legacy issue in almost all of Hydro One Transmission s stations) and to provide more detailed monitoring of station equipment for use by operators at the OGCC or field staff. This will enable more immediate identification of the cause of an alarm and the appropriate response. For work efficiency, this program is integrated to the RTU replacement program discussed in, Tab, Schedule. Fault Location: This investment ($0. million in 00) will fund facilities required to transmit fault location measurements from the station to the control room operators

13 Filed: September 0, 00 EB-00-0 Tab Schedule Page of immediately via telecommunications. Monitoring devices are provided in most stations which have the ability to measure the fault location on transmission lines emanating from the station. This information is presently communicated verbally to the OGCC by protection and control staff once they have arrived at the station and interrogated the devices. This investment will allow for much faster determination of the location of the problem and consequently faster restoration. Priority is given to long circuits in remote locations as these have both the longest travel times and the higher rates of faults.

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