OGE Energy : PUD 2021-00164 - Direct Testimony of Kandace Smith

BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA

IN THE MATTER OF THE APPLICATION OF	)
OKLAHOMA GAS AND ELECTRIC COMPANY	)
FOR AN ORDER OF THE COMMISSION	) CAUSE NO. PUD 202100164
AUTHORIZING APPLICANT TO MODIFY ITS	)
RATES, CHARGES, AND TARIFFS FOR RETAIL	)
ELECTRIC SERVICE IN OKLAHOMA	)

Direct Testimony

of

Kandace Smith

on behalf of

Oklahoma Gas and Electric Company

December 30, 2021

Direct Testimony of Kandace Smith	Page 1 of 27
Cause No. PUD 202100164

Kandace Smith

Direct Testimony

1. Q. Please state your name and business address.
2. A. My name is Kandace Smith. My business address is 321 North Harvey, Oklahoma City,

3	Oklahoma 73102.
4

1. Q. By whom are you employed and in what capacity?
2. A. I am employed by Oklahoma Gas and Electric Company ("OG&E" or "Company") as the

7	Manager of Grid Modernization.
8

1. Q. Please summarize your educational background and professional qualifications.
2. A. I received a Bachelor of Science in Electrical Engineering from Oklahoma Christian

11	University and a Master of Business Administration from Oklahoma Christian University.
12	I have been employed by OG&E since 2003 and have held various positions within the
13	organization including most recently Grid Innovation Manager and my current position,
14	Manager Grid Modernization. Prior to the Grid Innovation Manager role, I served as a
15	Product Innovation Manager, Manager of Business Relationship Management and
16	Requirements, Manager of Energy Operations, Eastern Region Engineer, Senior
17	Distribution Network Engineer, Distribution Planning Engineer, and Distribution
18	Engineer.
19

1. Q. Please describe your current role and responsibilities.
2. A. My primary duties as Manager of Grid Modernization include leading a cross-functional

22	modeling and planning team to develop the Grid Modernization Plan in Arkansas and the
23	Oklahoma Grid Enhancement Plan ("OGE Plan") in Oklahoma. This includes developing
24	and maintaining the multi-year plan and forecast as well as developing each year's Annual
25	Investment Plan. My responsibilities also include creating and maintaining the cost-benefit
26	optimization model and ensuring planned project cost and benefits are accurate. While I
27	am responsible for the modeling and planning of our grid enhancement plan, I also sit on
28	the OGE Plan steering team and coordinate with the execution team to provide support and

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Cause No. PUD 202100164

1	direction on scope, benefits, and costs as the plan moves into the design and execution
2	phases.
3

1. Q. Have you testified previously before this Commission?
2. A. Yes. I have previously filed testimony on behalf of OG&E in Cause No. PUD 202000021.

6	I have also filed testimony on behalf of the Company before the Arkansas Public Service
7	Commission.
8

1. Q. What is the purpose of your testimony?
2. A. The purpose of my testimony is to present the Grid Enhancement projects completed to

11	date and requested for inclusion in base rates. In doing so, I will first provide a brief
12	background of the Grid Enhancement Mechanism (GEM) and the OGE Plan. Then, I will
13	describe how the projects completed to date, were chosen, are necessary, beneficial to
14	customers, prudently incurred and reasonable.
15	I will describe additional investments that have been identified to address severe
16	storms such as that experienced in October 2020. After the October 2020 ice storm, OG&E
17	identified a series of projects to further harden its system and make its grid more resilient
18	to weather related storms. While these "Weather Hardening" projects are separate from
19	those originally included in the OGE Plan, I explain how they are complimentary in nature
20	and should also be included in the Grid Enhancement Mechanism ("GEM") going forward.
21	Finally, per the terms of the settlement in Cause No. PUD 202000021, Order No.
22	715188, I will address the cost benefit analysis performed to prioritize projects and inform
23	our decision to move forward with the OGE plan. I will also introduce the work of 1898 &
24	Co., the engineering firm OG&E retained to perform a cost benefit analysis ("CBA") on a
25	project by project basis, using a revenue requirement model, and showing results without
26	the use of the Department of Energy's longstanding Interruption Cost Estimate Calculator
27	("ICE" or "ICE model").
28

1. Q. What is OG&E seeking in this case with regard to Grid Enhancement?
2. A. OG&E is seeking four outcomes related to Grid Enhancement. First, OG&E is requesting
3. that the Commission make a finding of prudence related to the completed Grid

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Cause No. PUD 202100164

1	Enhancement projects including both projects in the GEM and those that were excluded
2	from the GEM. Second, OG&E is requesting that the current GEM be extended through
3	end of 2024. Third, OG&E seeks to expand the GEM to include Weather Hardening
4	projects.
5
6	The Grid Enhancement Mechanism

1. Q. What is the approved Grid Enhancement Mechanism ("GEM")?
2. A. In Cause No. PUD 202000021, the Commission authorized the GEM. The GEM is a cost

9	recovery mechanism only and does not address the prudency of the Grid Enhancement
10	projects. All prudence determinations regarding the Grid Enhancement projects, currently
11	in service, are being addressed in this base rate case. All cost recovery through the GEM
12	is subject to true-up and refund if the Commission determines that a project was not
13	prudently undertaken.
14

1. Q. What were the limitations for the approved Grid Enhancement Mechanism?
2. A. The GEM approved in Cause No. PUD 202000021, is limited to investments in Grid

17	Automation, Communication Systems, and Technology Platforms that have been placed in
18	service in 2020 and 2021. Cost recovery is capped at $7,000,000 annually.
19

1. Q. Was there an approved list of projects for the Grid Enhancement Mechanism?
2. A. Yes. A list of the Grid Enhancement Mechanism investments for 2020 and 2021 was

22	submitted to the stipulating parties for review. After review, some projects were removed
23	from the list based on agreements between OG&E and the parties.
24

1. Q. How does the Grid Enhancement Mechanism work?
2. A. The GEM cost recovery request is filed quarterly. This includes submitting reports for the
3. projects placed in service along with the associated revenue requirements and billing

28	factors to the stipulating parties by the 15th day of the month following quarter end. All
29	parties have 30 days to object to any project or calculation. The cost recovery does not
30	begin until the Public Utility Division ("PUD") has reviewed the reports and approved the
31	updated billing factors.
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	Cause No. PUD 202100164

1 Q. Are there customers excluded from cost recovery through the Grid Enhancement

2Mechanism?

1. A. Yes. Customers that qualify for LIHEAP and Senior Citizen discounts are exempt from
2. the GEM. Also, Power and Light and Large Power and Light Service Level 1 and 2

5	customers are exempt from cost recovery.
6
7	OG&E Grid Enhancement Plan

1. Q. Please generally describe the OGE Plan introduced in Cause No. PUD 202000021.
2. A. The OGE Plan is a five-year asset deployment plan designed with the objective of making

10	our grid more reliable, resilient, flexible, and efficient, while focusing on affordability and
11	improving customer experiences. The plan is focused on upgrading aging physical
12	infrastructure while also modernizing key grid technologies, operational platforms, and
13	communications systems, as well as planning tools and processes. It is comprised of
14	strategic, data-driven, investments that will modernize and optimize our system while
15	providing benefits to customers for years to come. It is focused on the upgrade and
16	replacement of aging and poor performing equipment, hardware, and other assets to
17	improve reliability, resilience, and safety. It also involves the installation of new
18	technology, equipment, and communication systems that will create an efficient,
19	automated grid with improved visibility and control of the system.
20

1. Q. What are the four categories of investments?
2. A. The four categories of investments are grid resiliency, grid automation, communications

23	systems, and technology platforms and applications.
24
25	• Grid Resiliencyinvestments build the foundation for the circuits and substations
26	which supports the Grid Automation capabilities. These investments are focused
27	on proactive replacement of deteriorated, poor performing, and outdated assets.
28	This work improves the durability of a distribution line or substation, increasing its
29	ability to sustain extreme conditions and reducing the probability of a customer
30	experiencing an outage. This means for example, avoiding outages associated with
31	deteriorated infrastructure such as poles. If a pole has weakened, it might perform
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