1. Western Regional Gas Conference Anthony Tetto Senior Utility Consultant Loss Control

2. A E G I S

3. Complacency, Short-Cuts-Failure to Follow Procedures A Deadly Combination

4. The Following Incidents Are Not Typical! The vast majority of the time gas company employees do their jobs properly, nothing happens and there is nothing to talk about. The following examples occurred when gas company employees lost respect for natural gas, became complacent or did not follow procedures. These are difficult “Lessons Learned”, but if we don’t learn from history we may be destined to repeat past mistakes.

5. A contractor working on a highway reconstruction project struck the service line to a house, causing the service line to separate from a compression coupling near the gas main. The gas company was called at 11:15 am; a serviceman arrived on the scene at 11:45 and immediately called for a crew. Thinking the gas was venting out into the street, he sat in his truck for 20 minutes until the crew arrived. Although the damage location was only 32 feet from the incident site, no attempt was made to check nearby buildings with a combustible gas indicator for the presence of migrating gas. Incident (2004) Company Retention $5M

6. Cont’d. The leaking gas migrated to the house where an explosion occurred killing an elderly woman and severely burning 3 children, the explosion occurred at 1:00 pm. The children received burns to over 45% of their bodies with most of the burns occurring in the facial areas. In the settlement the contractor also paid more than $15,000,000.00 in claims. AEGIS Incurred $15 Million Incident (2004) Company Retention $5M

7. First Responder failed to recognize the gravity of the situation and made the assumption that the pulled line was leaking in only one place.  The First Responder’s main job on a reported gas leak is to determine “Where is the gas?” and “Is it affecting people or property?” The appropriate way of determining this is with a combustible gas indicator (CGI) – Test Don’t Guess! The first priority must always be focused on Public Safety What Happened?

8. Veteran gas company meter technicians were assigned to test the flow rate and prove the accuracy of a large meter serving a local elementary school during the summer vacation period. The meter was located inside the school’s boiler room and needed to be taken out of service. They attempted to turn on the by-pass valve and even with their largest pipe wrench it would not turn. They decided to use another plug valve they found in the truck and change the by-pass valve “on the fly”. Incident (2002) Company Retention $200K

9. Cont’d. While the valve was being changed, a large amount of gas was allowed to escape into the boiler room where it was ignited by the school’s water heater. The explosion injured the company employees, four school employees and caused extensive property damage. AEGIS Incurred $3.5 Million Incident (2002) Company Retention $200K

10. The two meter technicians both had over 20 years of experience with the company. The fact that employees are experienced means nothing if they become complacent on the job site. Experience sometimes includes the use of shortcuts that have worked in the past, and often employed in similar work circumstances with good results. Shortcuts soon become normal operating procedures and accepted work practices. What Happened?

11. An explosion and fire destroyed a mobile home severely burning its occupants a man and his wife. The husband spent 44 days in the hospital undergoing 6 surgical treatments and his wife spent 77 days and underwent 12 surgeries. Incident (2004) Company Retention $1M

12. Cont’d. The cause of the leak was attributed to natural gas leaking from an open fuel line below the mobile home. The open fuel line was the work of a plumber hired to move the gas line. Not being “viable”  having sufficient assets or insurance coverage  he was not named as a defendant in the case. That left the local gas company as the sole defendant with the plaintiff only alleging that the gas was improperly odorized (no readily detectable odor). Incident (2004) Company Retention $1M

13. Cont’d. Since the gas company performed and documented an odor-level test immediately after the incident, which indicated that the gas was readily detectable at levels 3 times the federal requirement, it was believed that the allegation would be difficult to prove. Incident (2004) Cont’d. Company Retention $1M

14. Cont’d. During the trial, the odor meter used to conduct the test was introduced as evidence. When it was shown to the jury, its flexible tubing, which transports gas samples from the source into the instrument, had a distinct odor of gas; it should have borne no odor. The tubing, not being made of material intended for use with the instrument, retained odorant molecules  thus the smell. Incident (1996) Cont’d. Company Retention $1M

15. Cont’d. The plaintiff argued this nullified the company’s odor readings taken immediately after the incident. The jury originally found for the plaintiff and awarded $6,500,000.00. Based on the improbability of a successful appeal, the utility accepted a negotiated settlement of $4,100,000.00 AEGIS Incurred $3.1 Million Incident (1996) Cont’d. Company Retention $1M

16. The concept of proper operation, calibration and normal maintenance of test instrumentation consistent with their manufacturers’ recommendations cannot be over emphasized  not only for odor meters, but combustible gas indicators, flame ionization instruments, carbon monoxide detectors, oxygen level instruments and other safety and hazard detection instruments. Calibration and training in the proper operation and maintenance of these instruments is essential. The instrument is only as good as the operator who uses it. What Happened?

17. Training programs, safety meetings and peer supervisory reviews are a few of the options that can be utilized to ensure established work practices are followed, thereby reducing the hazards associated with using shortcuts or allowing complacency to interfere with good judgment. Field visits on a frequent basis We must NEVER lose respect for natural gas. Complacency can kill. What Can You Do?

19. Gas Explosion

20. Company Employees on Job When It Happened.

21. Complacency?

22. Lessons Learned Experience is good but could be a double edge sword “It can’t happen to me” syndrome Field visits and safety audits can’t be replaced Take corrective action Lead by example

23. AEGIS Insurance Services, Inc. AEGIS Insurance Services, Inc. Thank You

25. A contractor working on a highway reconstruction project struck the service line to a house, causing the service line to separate from a compression coupling near the gas main. The gas company was called at 11:15 am; a serviceman arrived on the scene at 11:45 and immediately called for a crew. Thinking the gas was venting out into the street, he sat in his truck for 20 minutes until the crew arrived. Although the damage location was only 32 feet from the incident site, no attempt was made to check nearby buildings with a combustible gas indicator for the presence of migrating gas. Incident (2004) Company Retention $5M

26. Utility Mutual Insurance Company (member owned) Formed in 1975 by 22 gas utilities Electric Utilities began joining in 1977 490 members – 88% utilities and related energy AEGIS Background Information

30. Third-Party Premises 24% Gas Transmission 5% Gas Distribution 60% Gas-Oil Production/Exploration 3% LPG 3% Other 5% 84% of all reported incidents Distribution of Reported Gas Utility Claims

31. Mains 52% Meter 4% Other 6% Regulators 2% Worksite 2% Relief Valve 2% (Data Not Available) 10% Service Lines 22% Explosion or Fire 95% Other 4% Vehicle Accident 1% Gas Distribution System 60% Gas Distribution System Loss Types & Components Affected

32. Gas Distribution System Activity or circumstance causing explosion or fire on mains *100% of claims due to Material Failure in this category were due to corrosion.

33. Gas Distribution System Activity or circumstance causing explosion or fire on service lines *100% of claims due to Operator Error in this category were Installation/Construction related.

34. Gas Distribution System Contributing factors causing explosion or fire during construction activities

35. Electric Distribution OH 78% Third-Party Premises Gas Claims by Object

36. Third Party Premises Types of loss involving a water heater

37. Third Party Premises Sources contributing to explosion or fire involving a water heater

38. Third Party Premises Types of loss involving furnaces, boilers and other heaters

39. Overhead (OH) Electric Distribution System Losses and Equipment Involved

40. Other 8% From Construction Equipment 1% From Roof 9% From Tower 6% Sailboat Mast 5% From Aerial Lift 1% From Platform 1% From Aircraft 2% From Electrical Device Failure 1% From Tree 12% From Mast or Pole 10% From Crane 18% From Ladder 12% From "Down" or Sagging Wires 14% Electric Contact 74% Overhead (OH) Electric Distribution System Sources of Electric Contact

41. Overhead (OH) Electric Distribution System Activity or circumstance causing electric contact

42. Underground (UG) Electric Distribution System Types of loss

43. Underground (UG) Electric Distribution System Activity or circumstance causing electric contact

44. Overhead (OH) Electric Transmission System Types of loss

45. Distribution of Electric Utility Claims Trending 3 recent five-year periods

46. Distribution of Reported Gas Utility Claims Trending 3 recent five-year periods

47. Allegation: Gas company did not warn the customer of an installation that did not meet NFPA 54 (National Fuel Gas Code) Why was the gas company involved? $2 Million AWARD

48. Allegation: Gas company did not warn the customer that the water heater did not meet the 18” rule. They failed to recognize the improper installation of the furnace. Why was the gas company involved? $15 Million AWARD

50. Allegation: Gas company failed to follow its own procedures for operating bypass valves and monitoring pressures. Why was the gas company involved? $22 Million AWARD

51. Allegation: Gas company failed to follow their own procedures. Why was the gas company involved? $1.8 Million AWARD

58. Inspection Programs Poles:  Formal inspection program and procedures  Detailed and specific inspection form  Inspections conducted by qualified individuals  Inspectors are trained  Ensure corrective and follow-up action  Documentation and records retention  Trending analyses re: pole conditions

59. Inspection Programs Tree trimming:  Formal inspection program and procedures  What criteria are used to determine the program’s structure?  Trimming conducted by qualified individuals  Audit work performed  Documentation and records retention  Trending analyses re: trimming cycle

60. OVERHEAD DISTRIBUTION

64. 2 Lives $3.2 Million 2 Lives $3.2 Million AWARD

69. $2.6 Million AWARD

70. UNDERGROUND DISTRIBUTION

71. Open padmounted equipment Holes in equipment Vandalism “Dig-ins” Claims Underground Equipment

74. Substations The NESC, section 110A1 states, “metal fences,...shall have a height not less than 7 feet overall and shall be grounded in accordance with section 9 of the code.”  Formal inspection program & procedures  Detailed & specific inspection form  Inspections conducted by qualified individuals  Inspectors are trained  Ensure corrective & follow-up action Inspection Programs

75. Substations cont’d.: Documentation & records retention Trending analyses re: problems found Conformance with ANSI Z535 sign standard Vegetation control Ground erosion Gaps between the gate sections Inspection Programs

79. Distribution System Substations Public Safety Awareness Programs Pole Inspections and Treatment Electric Utility Operations

80. Customer Premise Practices Public Safety Awareness Programs Odorization Program Damage Prevention Program Gas Utility Operations

81. What have we learned? Corporate philosophy Financial support  Maintenance programs  Equipment and system upgrades Trained, properly equipped and qualified personnel Pride and ownership in the work performed Accountability Lessons Learned

83. What have we learned? Inspection programs  OH power lines  Leak detection  UG facilities  Corrosion management  Substations  Support structures Beyond the meter response  Utility person responsible once inside the house  Potential liability for the company  Know your company’s philosophy UG damage prevention program  Participate in the state One-Call system  Provide training and information to contractors, locators and homeowners Lessons Learned

85. What have we learned? First Responder Training  Company personnel  Firefighters, police and EMS personnel Public Safety Awareness Programs  Reporting Gas Odors  Carbon monoxide awareness  Flammable ignition awareness  Scalding from excessively hot water  Downed utility lines  Padmounted equipment  Overhead power line hazards  Substation hazards Environmental Monitoring and Control Lessons Learned

86. Computer Analyze Data Redirect the Workforce Better Utilize Budget Dollars Positive Financial Impact System Reliability Trending and Analysis

87. Allegations Claim Values Damage Pain and Suffering Share Incident Information

88. Pay me now…or…Pay me later.

89. Can a utility company and its employees prevent third party claims? Yes No Don’t know Question?

90. Why not?

91. Our employees Our management Our customers The general public We Can Effect Behavioral Change

92. AEGIS Insurance Services, Inc. AEGIS Insurance Services, Inc. Thank You