1‘ f V “‘11.“:‘Nl‘l M H H “W ‘1 i L 1 1“ H i A II J 11' i‘ [V \ I“ !' U N W " — — 114 495 THS 1‘1 H 0310K E518“?! METHBD OE GAEWLRWO 69878 BF RURAL ELEWRIG msmma “HEB BY MBIENGIHELA W!" P!“ Millie SERVE! 68m“? Tflfisis ma Men: 0; a. E. on m wan»! nor-ILA 1937 “nails Quick Estimate Method of Calculating Costs of Rural. Electric Distribution Lines By Monongahela West Penn Public Service Company Thesis for Degree of E E. Onni William Egtila 1937 II ’ a "t ‘-a Thhfii QUICK ESTIMATE METHOD OF CALCULATING COSTS OF RURAL ELECTRIC DISTRIBUTION LINES BY MONONGABEIA WEST PENN PUBLIC SERVICE COMPANY The purpose of this thesis is to show the development, the use, and the results of the use of the Quick Estimate Method of Calculating Rural Electric Distribution Line Costs by the Monongahela West Penn Public Service Company. As the use of electric service grew out of the luxury class into the necessity class and spread over city and town, it was only natural for the farmer to becomeinterested in securing electric service. It was also apparent to the companies who supplied elec- tric service that the cost of supplying service to the rural areas would be ”much greater than the cost of supplying service within city and town because the area involved was greater, and the houses more scattered. The demand for electric service in rural areas of the Monongahela West Penn Public Service Company increased to such an extent that special rural rates were established. These rates were partially based on the cost of extending electric distribution lines to the rural area where service is desired. With the establishment of the rural rates and the attendant publicity given these rates, demands for electric service in rural areas increased daily. Costs of extending electric distribution lines into rural areas were determined after detailed engineering investigations were side. The demands for electric service in rural areas were received faster than the engineers could make the necessary investigations. thus it was apparent\ that either the engineering staff had to be 105402 increased or some quicker method of calculating costs of rural electric distribution lines had to be used. In order to save the increased cost that additional engineering personnel would entail, it was decided to change the method of determining the costs involved. Various difficulties were at once apparent when consideration was given to the establishment of some short-cut method of determining rural electric distribution line costs. These apparent difficulties were (1) the lack of engineering experience in the men who met sell rural electric service, (2) the various types of customers to be served, and (3) the lack of uniformity in the terrain of the territory to be served. The rates for rural service which have been established include financial clauses as follows: Plan a - Customers guarantee 1% of the cost of the extension per month. Rule 15 - Customers deposit the difference between the cost of the extension and the estimated three years' revenue to be received from the customers with the company, with provisions for refund. At the time rural rates were added to the Monongahela Nest Penn Public Service rate structure, a clause was included in the rural rate to permit the determination of electric distribution costs by using average costs. A study was Jude of a large number of rural electric distri- bution lines which had been constructed in order to determine average costs and to determine in what respects the lines were similar relative to OOItIe This study revealed the fact that each line cost could be broken up into the following group costs: 1. Right of Way Cost 2. Line Cost 3. Customer Cost h. Engineering and Supervision Cost 5. Administration Cost. Thus it was seen that by developing some simple method of determining these group costs, the men who had to sell the rural distribution lines could calculate the total cost of the lines, thereby eliminating the need for a detailed engineering investigation. The short-cut method of determining costs of rural electric distribution lines was developed in this manner: 1. Right of Way Cost. This is the cost of securing, recording and filing . the agreement with the property owner which permits the installation of poles, guys and wires on or over the property involved. The average cost per right of way agreement was found to be $10.00. 2. Line Cost. This is the cost of clearing right of way, poles and fixtures, primary conductors and insulators, and primary line fuse cut-outs installed. The average cost per foot of 2300 volt, single-phase line was found to be 17.3{3 for a 6900 volt, single- phase line, 17.14%. 3. Customer Cost. This is the cost of transformers and protective equipment, secondary conductors, service conductors and meters. ‘ There was found to be a wide divergence in the average cost per customer of the lines of one voltage class which had been constructed. Chart No. I shows these averages together with an ”estimated average” curve. The average cost per customer for all of the above mentioned rural distribution lines was 81.6.90 and the average number of customers per mile was 8.8. nierefore thismaybeusedas one pointonaourvetobedeveloped to show average costs per customer at various watcher densities. The following costs were calculated to be used in the development of the above mentioned curve 8 1% 1m Transformer installed - $69.00 1 Span of 2 #6 secondary installed 10.00 2- Wire service and meter installed 16.00. Rural specifications permit 1500' of secondary in each direction from the transformer. Voltages for rural service may be 5% high to 10% low. The following assumptions were made: 1. Customers have minim load requirements which can be served by two-wire secondaries and services. 2. laminae of three customers served from one pole. 3. Maximum of seven customers served from one 1% m transformer. All possible costs of construction were calculated for the various possibilities at various customer densities and these costs were averaged for each customer density. These sverages were plotted and Curve No. II was made. Curve No. II indicates that the average cost per customer at different customer densities is a reverse curve. Electrical World of 14-11-31, ”Basing Rates on Cost Allocations", shorts curves for kilowatt hour consumption per customer for 5, 10, 20, 140 and 150 customers per mile at varying costs per kilowatt hour. These curves ' show that as the customer density decreases, the kilowatt hour consumption per customer increases for the some cost per kilowatt hour. It is also true that on rural line extensions where minimm guarantees by customers are high the kilowatt hour consumption is high. Thus, to adequately supply custaurs loads where the customer density is low, more transformer capacity and larger secondaries are necessary than are required where the mtomer density is greater. Therefore, it is believed logical to use a unit cost per customer for one customer per mile, which is equivalent to the cost of installing a 5 EVA transformer and service and meter of sufficient sise to care for an electric range or similar load. The cost is estimated to be $132.00. Thus a second point is secured for the curve to be developed on customer unit costs. If it were necessary to construct a mile of line to serve two customers, those two customers may be served from the same pole or they may be served from different poles. If it is assured that each customer has an electric range or similar load and that No. b. secondary is used, it will be necessary to provide separate trans- formers for each customer if the service drops are located more than five spans apart. Thus, there are 17 possibilities that two transformers will be required and 6 possibilities where the cost will vary between the cost of installing two transformers and two service drops and meters and the cost of installing one transformer and two service drops and meters. The average cost per customer for these various possibilities is $126.15. The same reasoning may be followed out for a mile of line to serve three customers. Under these conditions the minimum monthly guarantees will still be high enough for the customer to operate an electric range or similar load without exceeding his minimum bill. Therefore, range or similar loads were assmned for each of the three cus- tomers. The average cost per custuer of the various construction possibilities is 31114.4;6. The same reasoning can be used for four customers per mile, assuming range or similar loads, because the minimum guarantee is still high enough to warrant the customer“ use of such equipment. The average cost per customer 1. *1w ewe These three additional average costs per customer supply three more points on the curve to be drawn for customer unit costs. Curve No. II, which was drawn to show costs per cus- tomer under minimum load conditions, indicates an in- crease in slope from 1 to )4 customers per mile, and a decrease in slope after )4 customers per mile. It is also true that as the customer density per mile increases, the minimum monthly guarantee decreases, and the use of electric ranges or other similar equipment does not receive the some economic backing which is possible where minimum guarantees are high. Therefore, the curve to be drawn for customer unit costs must approach the curve for average cost per customer under minimum load requirements. The curve must also include or be very close to the average cost per customer of rural distribution lines which have been constructed. This curve must always be above the cost of an average service and meter, estimated at $21.00, because each customer must have a service drop and meter. Therefore, it is believed logical to draw a curve. between the calculated average cost for )4 customers per mile and the average cost as calculated from rural dis- tribution lines which have been constructed by gradually decreasing the slope of the curve. After the curve reached a density of 9 customers per mile, a slope of MO was chosen as an arbitrary slope to a density of 10 customers per mile, after which a slope of 3/10 was chosen to a density of 11 customers per mile. A slope of 1/10 was chosen after 11 customers per mile and when this slope reached 835.00 at 15 customers per mile, a horizontal line was drawn beyond 15 customers per mile. Chart No. III. The curve for customer unit costs as developed on Chart No. III was plotted on IV and the average cost per customer as determined from each of the rural distribution lines which have been constructed, was plotted in accordance with the calculated customer density as a means of checking the developed curve for customer unit costs. Chart No. IV indicates that out of 26 averages plotted, 6 are above the developed curve and 20 are below. Thus it appears that the developed curve is above the average. The assumptions made to determine unit costs at customer densities of 1, 2, 3 and )4. customers per mile are believed correct for Plan B extensions, but will not hold true for Rule 15 extensions because the financial deposits made by the customers on Rule 15 extensions may be considered as payments for the privilege of having city minimum bills, and therefore Rule 15 does not provide the incentive for heavy loads which Plan B provides because of its guarantee clause. At the present time there are 131 rum lines, 90, or 69% of which are Plan B, and 141, or 31%, are Rule 15. Assuming that minimum loads will be used by customers on Rule 15 extensions and maximum loads by customers on Plan H extensions, the customer unit cost curve as‘developed on Chart No. III should be reduced by 31% of the dif- ference between that curve and the curve for average costs on minimum loads, and the reminder of the curve should be developed similarly to Chart No. III (Chart v). Chart No. VI was plotted as a comparison between the revised customer unit cost curve (Chart No. V) and the average costs per customer of lines which have been con- structed. This chart shows 18 of the averages below the unit cost curve and 8 above. Thus the revised unit cost curve is not an average of previously constructed lines, but it can be seen that it is not far above the average. A comparison was mde between the areas underneath the two curves shown on Chart No. VII. These curves are Revised Unit Cost Curve and Curve of Averages of Previously Con- structed Lines. This comparison shows that the Revised Unit Cost Curve has h.65% more area than the other curve. As this is really a small item, it is believed the Revised Curve is a good average, and can be used successmlly in calculating customer costs. 1... Engineering and Supervision Cost. This is the cost of providing the necessary engineering and supervision. Engineering and supervision costs may be obtained by increasing the percentages given in Accounting Order No. 149 by 2%. These percentages would then be: Work Orders less than 31000 9% (Minimum #10) a ' ‘1000 to 32000 8% ' ' $2000 to $5000 7% ' " *5000 1'0 310.0(1) 5% ' " ”0.000 to 325.000 3% -10- $50.00 should be added for each railroad crossing. The 2% is added to take care of such charges as staking lines, investigation of difficulties in construction, etc. 5. Administration Cost. This cost is definitely set at 13% in accordance with existing Accounting Orders. The short-cut method of calculating costs of rural distribution lines is applied in the following manner: A Rural Line Solicitor, the sen who sells rural electric distribution lines, after receiving a request for electric service from a group of prospective customers, notifies the Division Engineer of the number of customers to be served, the location of the line to be constructed, and notes any umsual condition of which he my be aware. The Division Engineer, after receiving such a notifi- cation, consults his maps and other records as to the location of the proposed line in order to determine whether voltage conditions are such that the additional load may be added without detrimental effect to present customers, and whether any conflicts with Signal Wire Companies exist in that area. After he has determined that the prospective load may be added to the present system without producing any detrimental Condition, and that there are no general conflicts with Signal Companies in the general area to be served, he notifies the Solicitor that he my use Quick Estimate Method of determining the cost of the proposed rural extension. The Solicitor, after receiving permission from the Division Engineer to use Quick Estimate Method, measures the length of the proposed line in the field by using an automobile speedometer if he thinks the line should be built along the road, or by pacing if he thinks that the line should be constructed away from the road. While measuring the length of the proposed line, he also deter- mines as closely as possible the number of properties to be crossed, and prepares a pencil sketch showing the approximate location and the names of the prospective customers . Then by putting this information on Form ”A" he can calculate the cost of the! proposed rural distri- bution line. After the Solicitor has determined this cost he consults the customers and notifies them of the amount of guarantee which they must contract for, or the amount of money which met be deposited before construction of the proposed line can be started. If the prospective customers agree to tales service, the Solicitor has “Application for Service” cards signed by the customers, and also has right of way agreements signed by those customers whose property must be crossed. On his return to the office 'he notifies the Division Engineer that contracts for the proposed line have been signed, and gives him a copy of the ”Form A" which he filled out in the field and a sketch of the proposed line showing the names and approximate locations of the cus- tomers to be served. -12.. The Division Engineer prepares a Work Order and Sketch for executive approval, so that construction may be started as soon as possible. This Work Order and Sketch are prepared from the information given by the Solicitor.- While waiting for executive approval, the Division Engineer inspects the location of the proposed line in the field, stakes out the route of the line, prepares a sketch to show the electrical layout of the rural distri- bution line, and a bill of material needed to construct the line. These are turned over to the Construction Superintendent. After the Work Order has been given executive approval, the Construction Superintendent starts construction of the line in accordance with the Division Engineer's sketch and bill of mterial. me use of the Quick Estimate Method is limited to those locations where voltage conditions on the present distribution system are such that the connection of additional load will not be detrimental to present service conditions and that satisfactory service can be rendered to the prospective customers. lhere voltage conditions are such that rural load cannot be added because of its detrimntal effect, these conditions mst be improved or plans for the improvement made and approved before the use of Quick Estimate Method can be authorised. Where the proposed rural distribution line is so located that the construction of a new substation is necessary, this cost must be determined by the Division Engineer before he can authorise the use of Quick Estimate Method. file use of Quick Estimate Method is also limited to those locations where there will be no conflicts with Telephone, Telegraph, or Signal Company lines. This limitation is necessary because where -13- \ such conflicts do exist an engineering investigation is necessary in order to determine what construction will be the most economical and least hazardous to all concerned. And in practically all cases it has been found that where conflicts do occur it is necessary to ‘ construct the line to more rigid specifications than the specifications of regular rural construction. Other electric companies have used a Quick Estimte Method for calculating electric distribution extensions in rural comnunities which consists of a flat charge for a unit length of line, and a unit cost for each customer to be served. This method has proved to be very satisfactory and accurate in those territories where the average else of farm is 140 acres or more, because it is usually necessary to install a transformer for each customer to be served. The territory served by the Monongahela West Penn Public Service Company is largely mountainous and the rural customers do not have farms which average 140 acres. Rural customers are usually found in groups rather than singly, as is the case where farms are larger in area and the territory more level. Hence one transformer installation usually serves a group of customers rather than just one customer. The Quick Estimte herein described has been in use since 1951 and has proved more accurate and more successful than was believed possible when the method was first developed. The actual construction cost of all the lines which were con- structed after having been financed on the basis of the Quick Estimate Method has been 1.51% greater than the cost as estimated by this method. If this percentage had been as such as 10%, the method would have been considered as accurate as could be hoped for. 9—..— The large saving which has occurred due to the use of the Quick Estimate Method has been in the time saved by the engineers, which has been eetinated as '.many thousands of dollars". In addition to this saving there has been an improvement in our rural public relations due to the fact that the Solicitor can quote costs to prospective customers in a very reasonable length of time , and the delay betseen the time when a prospective customer asks for electric service and the Solicitor informs him of the necessary financing, has been brought to a minimum. 00 'e K0131]... Y. N. .(CUFHZL 8 5585‘! C1 59 N 8 E555? nurrrL . u--. 0".” s l' " 2 E“ 69 ES‘.‘ 8- FLUFFEL r Efi JFFEL & KL ') fSSE‘ & i'! -- KEU“ RURAL LINE EZ‘Z'FTF‘Z'? IO}? JGICK ESTELATE Title Location Survey Requested By Date Survey No. Date Prepared Date Submitted Estimate No._____ FIELD DATA Primary Voltage . Length of proposed primary on present poles ft. Length of new pole line____ft.__mi. No. of proposed customers Number of right of way agreements . _. CALCULATIONS I A - Right of Way Cost - fl (1) No. of R/W Agreements @ 310.00 -.- 3 B - Line Costs - (2) ft. of primary on present poles @ '-' (3) ft. of new pole line 0 :- Tom 8 C - Customer Cost - No. of Customers ( ) : Few Pole Lfne ( )Mi. ()4) Number of Customers 9 (From Curve) 3 3 Customers per mile. D - TOTAL OF A, B, and C. E - Engineering and Supervision Cost - 1 % of 8 " ll of 8 3 0 Of : = % of f 3 Railroad Crossings @ $55.00 '-'-' (5) TOTALM 3 F - Injury and Damage Cost - (6) NewPole Line __ mi. @ $10.00 = s o - TOTAL OF D, E, and F. 8 H - Administration Cost 3 (7) 5% of (G) 8* in __ I - TOTAL COST (9 a: H) 8 Automobile No. Used Prepared By“ . 5-- 76.510 FLA/V Os L3 5 ES LL pFEL ESSER Ci 'EUFFEL 5 «a #‘, “Q ”'Yfiz'fiufifituij Mfi;tjify1[tfifl:jmm:i m ‘ 'ZXVWW‘ *