QUALITY MANAGEMENT AGA – BEST PRACTICE ROUNDTABLE Sara Peralta, Director – Quality & Improvement Philadelphia February, 2013

2 PRESENTATION AGENDA Pacific Gas & Electric (PG&E) System Overview Quality Movement PG&E’s Vision & Top 10 Priorities Organizational/Business Structure Organizational Overview Key Processes & Asset Families Gas Safety Excellence (PAS 55) Quality Program Deep Dive Corrective Action Program Procedures Quality Control

3 SYSTEM OVERVIEW PG&E’s system is comprised of: ● ~ 42,000 miles of natural gas distribution pipelines ● ~ 5,700 miles of gas transmission pipelines ( w/~ 1000 miles of High Consequence Areas) ● ~ 42 miles of gas gathering pipelines The entire transmission, distribution and gathering network serves ~ 4.4 million gas customers

4 SAFETY QUALITY The National Transportation Safety Board determines that one of the probable causes of the accident was the Pacific Gas and Electric Company's (PG&E) (1) inadequate quality assurance and quality control in 1956 during its Line 132 relocation project… It’s all about Safety. Out of tragedy should come change …

5 QUALITY MOVEMENT (b)(8) Each operator shall prepare a manual of written procedures for conducting operations and maintenance which must include procedures for periodically reviewing the work done by operator personnel to determine the effectiveness and adequacy of the procedures and modifying the procedures when deficiencies are found Gas Transmission ANPRM NTSB’s 2011 “Most Wanted List” – Safety Management Systems – Independent inspections for transmission construction CPUC 2012 Gas Safety Plan o Perform targeted and random field checks of facilities o Promote continuous improvement in work quality o Will develop/utilize risk-based safety programs

6 TOP 10 GAS OPERATION PRIORITIES 1. Build a culture that puts public and personal safety first 2. Establish a clear organizational structure 3. Engage workforce and recruit talent 4. Rebuild integrity management process 5. Develop accurate asset knowledge 6. Achieve full regulatory compliance (rebuild trust) 7. Create and implement consistent standards, work methods and procedures 8. Establish an investment planning function 9. Improve gas transmission system control and build distribution control system 10. Revamp Quality Assurance/Quality Control capability

7 ORGANIZATIONAL/BUSINESS STRUCTURE

Gas Operations Org Structure

9 Q&I PROGRAM ELEMENTS & FOCUS AREAS Quality & Improvement Sara Peralta Advisory Corrective Action Program Quality Control Manager QC Focus Areas: Construction Damage Prevention Leak Repair Leak Survey Quality Control Manager QC Focus Areas: Corrosion Control Field Services Metering Regulation Maint Valve Maint Quality Engineering & Improvement Manager Assessment Employee Feedback Investigations Lessons Learned Observations Quality Systems Manager Information Systems Metrics & Reporting Procedures Quality Records Mgmt Quality Training Audit Supervisor Auditing (23)(13) (16) (5) (6)

10 Backbone Transmission Regulator Station Upstream Fire Valve Downstream Fire Valve Emergency Zone Valve Distribution Feeder Main ≥20% SMYS Distribution Main Tee Excess Flow Valve Curb Valve Service Riser M Residential or Commercial Customer NOT DRAWN TO SCALE Regulator C Compressor Station Storage Transmission Pipe Distribution Services Measurement & Control Distribution Mains Not included in gas asset system M Meter Gathering Lines Cathodic Protection Station Protection M Meter Interconnecting Pipeline Interconnect M Turbine & Ultrasonic Metered Customers S Odorizer Separator Distribution Feeder Main <20% SMYS Local Transmission Meter Master Meter Regulator CNG/LNG Compression & Processing Gas Asset Families Customer Connected Equipment GCUST HPR ~ ~ ~ Storage Reservoirs Well Processing S C PG&E’s GAS ASSET FAMILIES

11 KEY GAS PROCESSES ProcessProcess OwnerProcess Champion 1Damage PreventionJohn HigginsRoland Trevino 2Corrective Action ProgramSara PeraltaJane Yura 3aLeak Management (Survey)Steve ReddingKevin Knapp 3bLeak Management (Repair)Jodie KubotaKevin Knapp 4aEmergency Response (IR)Rod WilliamsKevin Knapp 4bEmergency Response (Make Safe)Rich YamaguchiKevin Knapp 5Class Location / HCA DeterminationJoe MedinaSumeet Singh 6Instrumentation & RegulationRoss LeverettKevin Knapp 7CorrosionBennie BarnesRoland Trevino 8As-BuiltRobert HenleySumeet Singh 9WeldingPierre BigrasKirk Johnson 10Non-Destructive ExaminationPeter KennyKirk Johnson 11Right Of Way Management / PatrolsMike FalkKirk Johnson 12Materials ManagementMichael RitterSumeet Singh 13Construct Distribution FacilitiesJon Little (interim)Kevin Knapp 14Work Requested Others / Public Works CoordinationJeff GravelleJesus Soto 15New BusinessSini JacobMel Christopher

12 GAS SAFETY EXCELLENCE VISION PG&E’s goal is to become the safest gas utility in the nation:  Nurture a safety-first culture  Understand and know our assets and their condition  Continuously assess, re-assess risks, and adjust our risk management plans  Design safety into our process and asset management systems  Safely operate our system and respond appropriately to emergencies  Embed continuous improvement in all that we do

13 PAS 55: QUALITY in ASSET MANAGEMENT PAS 55 was developed in 2004 as the first publicly available specification for optimized management of physical assets. There has been broad adoption in utilities, transport, mining, process and manufacturing industries worldwide. The International Standards Organization (ISO) has now accepted PAS 55 as the basis for development of the new ISO series of international standards.

CORRECTIVE ACTION PROGRAM & PROCEDURES

15 CORRECTIVE ACTION PROGRAM (CAP) CAP is a program that: Captures incidents (events that have already happened) and potential incidents (events that haven’t happened but are identified as a risk); Analyzes incidents & potential risks; Recommends corrective actions to address issue and prevent future recurrence; Recommends preventive actions to prevent occurrence in first place; and Continuously assesses effectiveness; monitors trends; and communicates results.

16 CAP in GAS OPERATIONS 16 2 Advisory Recommendations Employee Feedback 13 Observation Results 7 Lessons Learned CAP: Issues into CAP system Assign risk-based significance level Perform causal evaluation (root cause analysis, etc..) Identify corrective/preventive actions Track actions to completion Monitor, trend, assess effectiveness Quality Control Issues Improvements Assessment Results Incident Investigations Reduced Risk Increased Safety Improved Compliance Audit Findings

17 PROCEDURES A major areas of anticipated improvement through CAP is in the area of improvements to PG&E’s guidance documents (policies, standards, procedures) External factors:  Updated technology / tools  Regulatory changes  CAP improvements Standards Prioritization Doc Development Implementation Planning Implementation Sustainability

QUALITY CONTROL

19 QUALITY CONTROL (QC) GENERAL QC PROGRAM FRAMEWORK Define regulations, policies, standards, work procedures governing the work Develop a risk-based scorecard Identify the population of completed work Perform real time or after-the-fact field assessments on a random sampling basis Communicate findings Adjust the sampling based on findings Develop local or system corrective actions for any findings as appropriate

QC PROGRAMSTATUSDESCRIPTION Field Services Operational since the 1990’s Performs in field quality control reviews of Gas Service Rep completed tags including customer appliance inspections and leak investigations Leak Survey Operational since 2009 Measures the quality of leak survey maintenance process including whether any Grade 1’s were missed Leak Repair Operational since 2009 Evaluates completed leak repairs for the presence of gas 90 days post-repair Locate & Mark (L&M) Operational since 2011 Validates and scores completed L&M tags including “No Conflict” tags Transmission Construction Actively under development Will focus primarily on measuring the quality of transmission construction work performed by PG&E employees and contractors as the work is being performed Distribution Construction (Re-Dig) Actively under development Will focus primarily on short cycle distribution installation and leak repair work performed by PG&E employees and contractors after the work has been completed Pipeline Patrol Actively under development Will perform quality control field inspections behind patrol activities including corrective action documentation, follow-up, and completion Metering Actively under development Pilot planned for 2 nd quarter. System-wide rollout by end of Corrosion ControlFutureDevelopment starting in Regulation Maintenance FutureDevelopment starting in Valve Maintenance FutureDevelopment starting in 2013.

21 QC RESULTS QC Program Assessments Completed YTD Results (pass rate) Comments Locate & Mark45177% System wide pass rate was <40% a year ago Leak Survey20870% Started measuring end-to-end process in July (52% pass rate) Previously only measuring performance on missed Grade 1 leaks (3 so far this year) QC process updated to include zero’d out leaks Leak Repair87197% A-forms38290% Started 2012 with 81% pass rate, last two month2 have achieved 100% Field Services58198%

22 QC RESULTS & TRENDS

23 QC RESULTS & TRENDS CONT.. Locate & Mark QC - % Assessments Passed What you observe, focus on, emphasize, etc.. will improve. If you want to improve it, measure it.

24 DISTRIBUTION CONSTRUCTION (Re-Dig) PROGRAM GOAL: To implement a QC Re-Dig program that is statistically valid with a primary focus on gas distribution short cycle new installation and repair work performed by PG&E employees and contractors.

25 RE-DIG SCORECARD LIST Pre Job Package quality Backfill material/Compaction Placement of sleeves, casing bushings, and overall “as left” condition Quality of Wrap installation Weld appearance Stab depths Locating wire continuity Proper material including EFV's installation/repair method used Accuracy of Measurements to property lines/building/landmarks As Built drawings/information for fittings, offsets and material types Completed Job package quality Job close out and documentation

26 RE-DIG PILOT RESULTS 52 Re-Digs performed Overall pass rate was 48% Top Findings: Documentation Issues Process Adherence Handling of pre-1972 wrap Equipment Calibration Workmanship Locating wire issues Primer not used when necessary Fittings not properly installed Pilot surfaced several areas of procedural conflict/confusion targeted for resolution

27 PG&E’s BELIEF “.. Quality management includes the activities and processes that an organization uses to achieve quality. These include formulating policy, setting objectives, planning, quality control, quality assurance, performance monitoring, and quality improvement. Achieving quality is critical to gas transmission pipeline design, construction, and operations. PHMSA recognizes that pipeline operators strive to achieve quality, but our experience has shown varying degrees of success in accomplishing this objective among pipeline operators. PHMSA believes that an ordered and structured approach to quality management can help pipeline operators achieve a more consistent state of quality and thus improve pipeline safety. PHMSA is considering whether and how to impose requirements related to QMS…” 1 1 Department of Transportation, Pipeline and Hazardous Materials Safety Administration, 49 CFR Part 192, [Docket No. PHMSA ] RIN 2137-AE72, Pipeline Safety: Safety of Gas Transmission Pipelines

28 THANK YOU!!