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10th Annual
Supplier Conference December 4th, 2015
Welcome 2015 Supplier Conference
Ben Moglen
Director, Supply Chain Strategy & Operations
December 4, 2015
In the Event of an Emergency
• If we have an earthquake, we will all duck and cover.
• Emergency evacuation assembly point is the parking lot through the two side emergency exits.
• Those certified in CPR/First Aid, please raise your hands.
• AED machines are located at the front desk.
• Calvin Chac will notify the front desk.
• Cindy Silveira will meet emergency personnel at the main lobby.
2015 Award Winners
Award Winner
2015 Supplier of the Year Barnard Pipeline Inc.
Small Business Supplier of the Year Mesa Associates, Inc.
Responsible Supplier of the Year Altec Industries
Safety Supplier of the Year Chicago Bridge & Iron Company
Generation Supplier of the Year Syblon Reid
Electric T&D Supplier of the Year McFarland Cascade
Gas Operations Supplier of the Year Barnard Pipeline Inc.
Corporate Supplier of the Year Verizon Wireless
Gold Shovel Standard Program Supplier Conference
Aaron Rezendez
Supervisor, Public Awareness
December 4, 2015
Gold Shovel Standard
Background
In August 2014 we announced a first-of-its-kind excavation safety initiative
• Designed to reduce dig-ins
• Enhance employee and public safety
• Starting in 2016, excavators must be Gold Shovel Standard certified to perform excavation work on behalf of PG&E.
• To become Gold Shovel Standard Certified
• Create a Dig-in Prevention Policy:
• Leadership Commitment
• Training Program covering California’s One Call Law and Cal/OSHA requirements
• Corrective Action Process
• Employee Acknowledgement and Accountability Commitment
• Performance:
• Maintain no more than two (2) dig-ins over a rolling 12 month period.
Gold Shovel Standard
Structure and Governance
• Policy Committee- Dig-In Prevention Policy developed and supported by peers
• Accu-Bore
• ARB, Inc.
• Michels Corporation
• Canus Corporation
• Coastal Paving, Inc.
• West Valley Construction Company, Inc.
• Review Committee- Internal leadership to approve certifications and provided general governance
• Steering Committee- Corporate Officers to execute program effectiveness
Gold Shovel Standard Effectiveness
• 222 Gold Shovel Certified companies
• 37% Reduction in 2nd Party Dig-ins since inception
Gold Shovel Standard
Universal Acceptance
Honor your current Gold Shovel Certification
Gold Shovel Standard integrates with other systems
Integration with systems
Thank you.
Contractor Safety Overview
Diane Thurman,
Director, Standards and Program (SH&E)
Mike Meko,
Director, Nuclear Supply Chain
Kern Power Plant Fatal Injury
Contractor fell from an elevated
lift while working on the
demolition of a fuel storage tank
One fatality
CPUC - Kern Order Instituting
Investigation (OII) resulted
Kern Power Plant Serious
Injuries
The flying debris from an
explosion / implosion during the
demolition of the Plant sent
shrapnel into a group of onlookers
One man was seriously injured and
four other people were injured
San Bruno Gas
Explosion
A 30-inch (76 cm) diameter
steel natural gas pipeline
exploded into flames
Eight deaths
$1.4B penalties
A Few Unforgettable Events
9 SEP
2010
19 JUN
2012
3 AUG
2013
PG&E’s Contractor Safety Journey
2015
CPUC
Agreement
Transition
from PICS to
ISNetworld
(ISN)
Includes all
Prime
Medium/High
risk service
suppliers by
the end of
the year
2014
Enterprise-wide
implementation
with all
portfolios
Focus on Prime
suppliers
providing High
Risk services
2013
Pilot Year
with Power
Generation
2016
Program
expands to
include all
sub-
contractors
that provide
Medium/High
risk services
Must be pre-
qualified in
ISN by the
end of 2016
Program Defined: Four Elements of the Contractor Safety Program
.
. .
Contractor
Pre-
Qualification
Contract
Terms
Post Job:
Evaluation of
Safety
Performance
Jobsite
Contractor
Oversight
Qualifies
contractors to
work for PG&E
that meet
Sourcing, LOB
and Safety
standard
Clearly
communicates
contract terms
that hold
contractors
accountable for
safety
Enhances the
Company’s
site specific
safety
Evaluates
Contractor
Safety
Performance
• Risk determination based on Scope of Work
• Contractor’s work that meet PG&E’s definition of “High” and “Medium” risk proceed to next step
• Assess contractor based on standardized performance criteria or “Acceptance Criteria”
• Contractor’s rating based against industry classification
• Assign a grade as “A” and “B” (Approved) or “C” and “F” (Not Approved)
• Verify contractor performance criteria on an annual basis
• Sourcing informs LoB that a contractor has not met pre-qualification criteria with 2 options:
• (1) Contractors will no longer be allowed to do business with PG&E
• (2) Establish a formal Governance Process to monitor the safety performance of the contractor
Contractor Pre-Qualification Process
Third-Party
Administrator
Governance
Process
Supplier
Risk Rating
• Pre-Qualification Process
• Roles & Responsibilities
• Third-Party Administrator
• Governance Process
• Contract Terms: Clearly communicates contract terms that hold contractors accountable for safety
• Standardized reporting protocols for incident notifications and required timely causal or root-cause analysis and corrective actions with due dates
• Align PG&E safety standards or best practices with contractors’ work
• Enhances the Company’s site specific safety
• Evaluation of Safety Performance: Evaluates Contractor Safety Performance
Contractor Safety Program Processes
Contract Terms
Contractor
Oversight
And
Post Job
Evaluation
Contractor Safety
Prequalification
Sub-Contractors Our required goal for 2016 is enrollment of sub-contractors.
It is the Prime Contractor’s responsibility to: List all Sub-Contractors performing work on PG&E projects.
Evaluate ALL Sub-Contractor Safety Risk Level (Low, Medium, or High).
Facilitating registration of ALL Sub-Contractors identified as Medium and High in ISNetworld (http://www.isnetworld.com).
Review and verification of Safety Performance to ensure we have the best in the industry performing services on PG&E Assets
Contractor Oversight Contractors are required to maintain effective oversight of work
crews.
Changes in project work scope require evaluation ensuring
compliance with contractor safety agreement and if necessary
addition of modifications to existing measures.
Each Line of Business will develop and approve contractor
oversight procedures by end of 2015, and will implement their
contractor oversight procedures by end of 2016.
Incorporate enhanced standard contract terms to address contractor safety into all existing
contracts that have high or medium risk contractor safety tasks included the scope of work.
Change Orders
2015 Supplier Conference
GENERATION OVERVIEW
Nuclear & Power Generation
Michael L. Jones
Vice President, Power Generation
ITEMS TO DISCUSS
19
•What we Value
•2015 Successes: DCPP, HBPP and Hydro
•2016 and Beyond – Work and Future
Opportunities: DCPP, HBPP and Hydro
WHAT WE VALUE
20
•Safety
•Collaboration
•Reliability
•Quality Work & Work Products
•On plan and on budget
•Total Cost of Ownership and First Cost
•Supplier Diversity
2015 SUCCESSES – DIABLO CANYON
21
•1R19/2R19 refueling outage preparation and execution
•Snubber Replacement Program
•Turbine Maintenance including a rotor replacement
•Implementation of an Integrated Services Supplier (ISS) contract: Engineering,
Construction, Maintenance, Outage and Project services bundled under a
single Contract valued at $50MM in 2015
•Contract for the U2 Main Generator Stator Upgrade: Phase 1 to be Design and
Manufacturing, Phase 2 to be Installation.
•Fukushima FLEX strategy support
•Completion of ISFSI Loading Campaign of 8 casks
•Physical Security Enhancements
•Cyber Security Project kickoff
•Supplier Diversity Performance at 27.3% out of a 22.9% EOY Target
•Fuel Handling Bridge Crane Upgrades
Diablo Canyon Low Pressure Turbine Swap
2015 SUCCESSES – HUMBOLT BAY
DECOMMISSIONING
23
•Recipient of The Shermer L. Sibley Safety & Health Award, PG&E’s
highest safety award.
•Completed Reactor Pressure Vessel Segmentation and Removal
•Demolition of Liquid Radwaste Building to Grade
•Started Cutter Soil Mix (CSM) wall construction
•Spent Fuel Pool (liner removed, surfaces coated, and water drained)
•HBPP #3 Refueling Building systems and components removal achieved
“Open Air Demolition” status
•Implemented Earned Value Management system for CB&I work scope
•Completed 50% of Discharge Canal remediation
•Submitted HBPP Final End State Permit to California Coastal Commission
•Hosted IAEA R2D2 Workshop at HBPP on Final Status Surveys
2015 SUCCESSES – HUMBOLT BAY
DECOMMISSIONING
24 Reactor Pressure Vessel Segmentation, Horizontal Saw Fixture
2015 SUCCESSES – HUMBOLT BAY
DECOMMISSIONING
25
BG-50 and BG-40 CSM Wall installation
around Unit 3 Building
CSM Wall Batch Plant and Unit
3 Building
Discharge Canal
2015 SUCCESSES – HYDRO
26
•Recipient of the Margaret Mooney Award for Innovation for the Helms
Rotor Replacement Project
•Generator Rewind Bundle: Comprised of 8 projects totaling $23M in
base spend and another $20M in optional Work. Benefits include over
$7M in cost savings and 30% supplier diversity commitment.
•Helms Pumped Storage Plant Rotors Replacement Project – 3 new
400 MW units replaced on schedule and under budget
•Commissioned 2 units at Rock Creek Powerhouse totaling 120 MW
•Developed Outage Management Planning through 2020
•Created new Planning Organization to Partner with Project Execution
•Awarded Fall Canal capital improvements project
Helms Pumped Storage Rotor Replacement Project
2016 and Beyond – Work and Future
Opportunities
28
2016 FUTURE OPPORTUNITIES – DIABLO CANYON
29
•Reverse Osmosis Water Filtration System
•Capital Facility Improvements
•Cranes and Fuel Handling
•Chemistry Upgrades
•Intake Equipment, Pumps & Motors
•More than 40 Facilities Maintenance Contracts with
individual Contractors available for bundling under the
ISS in 2016
2016 FUTURE OPPORTUNITIES – HYDRO
30
Exciter Bundle Buy (2016-2020) • 23 Units in one procurement: $10M -$12M in equipment cost
• Standardized Scope of Work: Replace existing exciters with either full
static or pilot excitation
• Packaged Services: Equipment design, fabrication, delivery, support to
installation & commissioning, spare parts, training (Does not include
installation)
Governor Bundle Buy (2016-2020) • 23 Units in one procurement: $5M -$7M in equipment cost
• Standardized Scope of Work: Replace existing digital controls or replace
mechanical controls with digital controls
• Packaged Services: Equipment design, fabrication, delivery, support to
installation & commissioning, spare parts, training (Does NOT include
installation)
2016 FUTURE OPPORTUNITIES – HYDRO
31
BREAK
Supply Chain Responsibility: Building a Diverse, Sustainable and Ethical Supply Chain
2015 Supplier Conference
Joan Kerr
Director, Supply Chain Responsibility
The Year(s) of the Prime
Ethical Supply Chain
Leadership
Environmental
Leadership
Supplier Diversity
Leadership
PG&E Supplier Requirements:
Supply Chain Responsibility
It’s a Shared Commitment
PG&E
Prime
Suppliers
Diverse
Businesses
Supplier Diversity
more than 40% attributed to
Prime Suppliers
Direct DBE60%
Subcontracting30%
Business Solution
Partnerships / VARs
10-20%
Prime Supplier Program
40%+
Supplier Diversity Results Breakdown
PG&E spent $2.1 billion with DBEs in 2014
Environmental Sustainability
PG&E’s supplier participation in
industry sustainability
benchmarking for 4th consecutive
year
PG&E recognized as the top contributor
to supply chain sustainability in the
utility sector
100%
Supplier Ethics & Code of Conduct
Ethical Supply Chain
Economic Vitality
Better Business Solutions
Customer Satisfaction
Sales Enablement
67% of our top suppliers signed acceptance YTD
All. In.
Supply Chain Responsibility
Supplier Quality Assurance
Jim Adamson
Director, Supplier Quality Assurance
Engaging With Suppliers
How Supplier Quality partners with you to achieve the requirements:
Safe, Reliable, and Affordable Material To assure material functions safely, Quality requirements are based on Design specs.
Reliability of Transmission/Distribution systems is dependent on quality materials
Quality enables affordability through reduced scrap, rework, & production expediting
Qualify New Suppliers, Manufacturing Sites, and Material QMS Audit Program surveys potential suppliers for ability to meet our requirements
QMS Program routinely audits current supplier sites for compliance to maintain our QSL
SQA Program conducts material qualifications for new designs and process changes
Supplier Change Control Requests (SCR) Process supplier change requests that affect fit, form, or function of procured material
This includes change in manufacturing site location, change in sub-suppliers, a two year
break in production, and changes to key manufacturing equipment.
We perform site qualification and PPQP (PG&E Part Qualification Plan)
Engaging With Suppliers
How Supplier Quality partners with you to achieve the requirements:
Supplier Corrective Action Request (SCAR) Warning and “containment” if there is a material problem
Corrective action (SCAR) that identifies and corrects discrete and systemic
problems
Timely Return Material Authorization (RMA) number when PG&E needs to return
discrepant material
Receiving Inspection & Issue Resolution
Standardized plan and contacts for timely onsite material sorting by supplier
Documented results for material sorting and proper re-identification of material
inspected
Material Quality & KPI Metrics Supplier trends safety incidences (Near Hit, Event) and proactively addresses
required improvements
Supplier’s trends internal quality rejects for Receiving, In-Process, Final Inspection,
& PG&E identified
Supplier’s Corrective Action Program documents the improvement plan for all non-
conformances
Rating our Suppliers
How We Rate Suppliers:
DPPM: At or below requirement each month
Audits / SCARs: Adequate, timely response with no repeated issues
Qualifications & Change Control (SCR) : Adequate, timely &
transparent
Communication: Proactive notification of significant quality events
Scorecard Impact on Sourcing:
Future allocations are dependent on the supplier’s score.
If requirements are not maintained it may lead to supplier probation
and the product line being diverted to alternate suppliers that are
meeting the requirements.
Requirements
PG&E Audit for compliance
to ISO 9001 or equivalent
Record Retention
Qualification Process
Sub-Supplier Control
Change Management
Notification
Post Qualification reporting
http://www.pge.com/en/b2b/purc
hasing/suppliers/index.page
T&Cs in Purchase Order
Supplier Qualification Manual
45
Jim Adamson
Director
Randy Roberts
Electric / Hydro / Solar
SQA Manager
SQA Engineer
Matthew
SQA Engineer
Arden
SQA Engineer
Derrick
SQA Engineer Minh
SQA Engineer Curtis
SQA Engineer Lenny
Ashikur Khan
Gas
SQA Manager
SQA Engineer
Rigo
SQA Engineer
Antonio
SQA Engineer
Leo
SQA Engineer John
SQA Engineer Jerome
SQA Engineer Sidney
Kevin Tasselmyer
QMS Audits & Compliance SQA Manager
QMS Expert
Gene
QMS Auditor
David
QMS Auditor Jim
QMS Auditor Alxious Bailey
Quality Records, Clerks (Pilar,
Roxanne, Yasmin)
Ramon Ware
QC Inspection SQA Manager
Source Inspector Principle
Paul
Source Inspector
Rick
Source Inspector Parmjit
Source Inspector Tom
Source Inspector Scott
Receiving Inspectors Ariel,
Jaclyn, Lois, Marshall, Peter, Ray
Contracted Inspection Services
Director
Admin
Key
35 2015 SQA Staff
9 Contracted Services
Supplier Quality Assurance
Material Quality
• 92% Reduction in Material Defects
• Strong 1st Decile performance in Benchmarking
• Rated as Utility Industry Leader for Supplier Quality Programs
Value to LOB
• Qualified supply of nine new material technologies
• Quality programs assure material is 99.84% defect free
• $24M (50% YoY) of PG&E cost eliminated
Suppliers
• Supplier Mentoring - Worst to Best • Invested in automated equipment & new advanced facilities
• Three achieved Zero DPPM & up to 10 months in a row
Sourcing
• Improved Security of Supply – added 10 suppliers globally
• New scorecard algorithm for enhanced annual business review
• Driving the industry to one standard through benchmarking
Results of Supplier Quality Programs
Best in Class Performance & Improving
19,507
5,593
2,459
393
4,196
1,887
889
2,456 2,126
919 1,017 955
1,959
- -
1,621
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2012 2013 2014 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 YTD
All DPPM
DPPM 12 Mo Average
99.84% Defect Free
4th – 20,800
3rd – 10,100
1st – 4,200
Performance Benchmark
Quartiles
2nd – 6,000
2,500
Driving the Industry to One
Standard Through Benchmarking
Sourcing • Sourcing Cost as a % of Managed Spend
• Sourcing Effectiveness (Savings as % of Managed Spend)
• Hard Saving (Tier I/II as a % of Spend)
• Return on Investment (ROI)
• Accounts Payable – AP personnel cost as a % of
Managed Spend
• Non-competitively bid spend as a % of managed spend
Warehousing • Bundle Fill Rate
• Number of Active Suppliers or Active Suppliers Per $1M
Spend
• Total lines per material handler
• Warehouse cost per line
• Inventory Turns
• Materials returned to inventory – count & dollar amount
(Material Utilization)
Supplier Diversity • % of Supplier Diversity Spend
SQA • % Defective parts per million (DPPM)
Safety • Contractor Safety – DART rate
• Contractor Safety –Lost Work Day Rate (LWDC)
Workforce Composition • Number of employees per $1B of Managed Spend
Benchmarking Metrics
49
SAP Qualified Supplier List (QSL)
• Access to approved sites & products
• Audit schedule for site re-qualification
• Tracking of QMS non-conformances
• 1,100+ Suppliers & Sub-Suppliers
• 85 Site Audits in 2015 - BIC
50
Vision for Material Quality - 2016
5,252
2,131 1,800 1,650
9,735
5,013
2,000 1,750
0
3,000
6,000
9,000
2012 2013 2014 2015 2016
Actual & Forecasted 2016 Objective
Gas Electric
2. SQA department ISO9001 Certification 2016 - Q1
3. Number of MC Ranked Critical Increases 2016 - Q1
4. Supplier Change Control System (eSCR) 2016 - Q4
1. DPPM 19,507
Supplier Change Request System
Supplier submits
eSCR
SQA receive process,deg
n change, recall
Engineering approves /
rejects
M&C/GC approves /
rejects
MH approves rejects
Sourcing approves
rejects
SQA responds w/ qualification requirement
SAP holds Record of
change
eSCR
Web interface with SAP
1. Change Manufacturing Process or Design
2. Transfer production
3. Material Recall
• Documentation
complete, drives weekly
X Functional meetings
• Requires new tools, work
procedures, added steps
• Purge cost, use old design first
• Record even without MC change
• Record of Material Recall
• Confirmation change
meets spec / std
• Meets design intent &
system capable
• Require new PO or affect
Project Schedule?
Question & Answers
Safety
Reliability
Affordability
Team Work is the Enabler
Electric Overview
Tom Wright Director, Substation Maintenance & Construction
December 4, 2015
Electric Organization
Electric Business & Performance Management (Strategic Direction & Coordination, Work Planning, Continuous Improvement, Metrics &
Governance)
Transmission Operations
• Construction of new transmission & substation assets in accordance with California Independent System Operator (CAISO)
• Consolidated Grid Operations
• Line & Substation Maintenance
• Transmission System Automation
Distribution Operations
• Customer Service Delivery, Restoration & Operations, Overhead / Underground Construction, Maintenance, Estimating, Customer Interface
Catastrophic Emergency Preparedness
• Enterprise Infrastructure Risk Mitigation
• Logistics & Mutual Aid
• Asset Damage Modeling
Asset Management (System Data Capture)
Asset Management • System Safety
• Asset Strategy
• Operational Risk and Compliance
• Central Engineering and Standards
Exe
cu
tio
n
Work Type Orientation
President
Electric
Geisha Williams
Electric Strategy & Asset
Management
• System Safety
• Reliability Strategy
• Asset Strategy
• Operational Risk & Compliance
• Central Engineering, Mapping & Standards
• Know our
customers,
provide them with
simple/proactive
service.
• 6.1 Million
Residential
customers served,
11,000 large
commercial &
industrial, &
360,000 small &
medium business
customers
• 12 Energy
Efficiency savings
programs
• 10 million meters
read, deployed >9
million SmartMeters
Dir
ectio
n
Power Generation &
Nuclear
Power Generation • Provides
approximately 5,400 MW Capacity of Utility Owned Generation through our Hydro, Fossil & Renewable Power Plants
Nuclear
• Diablo Canyon Power Plant: leading nuclear power plant in the country; only operational nuclear plant in California
• Two reactors totaling 1,100 MWe producing ~18,000 GWh of electricity.
Energy Policy & Procurement
• Manages the electric and gas portfolio to ensure reliable energy supply while reducing costs and risk
• Provides safe, reliable, and reasonably priced electricity and natural gas to our customers in an environmentally sensitive manner
• Monitor future policies and market structures to benefit customers and protect interests of shareholders
Electric Strategy
& Asset
Management
Pat Hogan
Customer Care
Laurie
Giammona
Electric Transmission &
Distribution Operations
Greg Kiraly
Electric Business
& Performance
Management
Bill Arndt
Energy Policy &
Procurement
Fong Wan
Power
Generation &
Nuclear
Ed Halpin
55
T&D Overview: Electric System
Electric T&D consists of:
• Transmission lines, substations and the distribution system:
‒ 860 substations
‒ 3,200 main line cables
‒ 1.0 million transformers
‒ 2.4 million poles (including towers)
Smart Grid functionality restores the balance Hydro Power Plants
Nuclear Power Plants
Natural Gas Generators
Distribution
Substations
Solar Farms / Power Plants
Wind Farms
Transmission Lines
Utility-scale StorageUtility-scale Storage
Distributed StorageDistributed Storage
Plug-in Electric
Vehicles
Rooftop Solar
Smart
Meters
Smart Grid functionality restores the balance Hydro Power Plants
Nuclear Power Plants
Natural Gas Generators
Distribution
Substations
Solar Farms / Power Plants
Wind Farms
Transmission Lines
Utility-scale StorageUtility-scale Storage
Distributed StorageDistributed Storage
Plug-in Electric
Vehicles
Rooftop Solar
Customers
Smart
Meters
Electric T&D Network
56
‒ 5.4 million electric customers
‒ 70,000 square mile service area
‒ 18,600 miles of transmission lines
‒ 143,000 miles of distribution lines
Electric T&D
SVP Electric Distribution Operations – Greg Kiraly
VP Transmission Operations – Gregg Lemler
Central Coast Region Electric
Ben Almario
San Jose/De Anza
Mission
Peninsula
Central Coast
Los Padres
Restoration & Control Mark Quinlan
Bay Area Region
Central Coast Region
Northern Region
Central Valley Region
Dispatch
GC Electric Chris Baker
Bay Area Northern
Central Coast Central Valley
Bay Area Electric
Andy Dashner
San Francisco
East Bay
Diablo
North Bay
Electric Distribution Business Operations
Jessica LaPonsey
Work & Program Mgmt
Work Methods & Training/Qlty Mgmt
Project & Contract Mgmt
Performance Mgmt
State Infrastructure Projects
Central Valley Region Electric
Jeff Deal
Stockton
Yosemite
Fresno
Kern
Northern Region Electric
Tony Mar
Humboldt
North Valley
South Valley
Sacramento/Sierra
Customer Service Delivery
Mike Kress
Central (RMC)
Service Planning North
Service Planning South
Performance & Compliance
Transmission Lines M&C
Robert Cupp
T-Line Maint–North
T-Line Maint –South
T-Line Constr–South
T-Line Constr–North
Substations M&C
Tom Wright
Bay Area
North Coast
North Valley
South Valley
Central Coast
Subst Const Inspections
Work Management
Transmission Business Operations
Vanita Chhabra
Transmission Portfolio Management
Work & Resource Management
Work Methods & Procedures
Contract Management
Compliance & Quality
57
Electric Transmission and Distribution – Delivering Today and Enabling Tomorrow
Integrated Planning Workforce Strategy Optimized Technology Continuous Improvement
Customers Enhance technology choice
& flexibility
Increase customer
satisfaction
For our
Optimize
capital and
expense spend
Drive
continuous
improvement
mindset
Safe
First quartile public & workforce safety performance
Continue to meet
compliance
obligations
Reliable
First quartile
reliability
Effective
response to
catastrophic
emergencies
Support a flexible electric resource portfolio
Clean Affordable
Grid of Things
58
What is NERC CIP?
Critical Infrastructure Protection
o A series of Reliability Standards designed to protect physical and cyber assets critical to The Electric Grid.
Purpose o Grid Reliability, Operability, and Security
Examples of NERC CIP facilities / assets
o Grid Control Centers o Transmission Substations o Servers o Relays o Controllers / Printers
Cyber Attacks by U.S. Adversaries o In 2014, the Director of the NSA (National Security Agency), Michael Rogers,
stated publicly what has always been known privately…
“China, as well as, one or two other countries “is capable of
launching cyber-attacks to shut down the Electric Grid and other critical infrastructures in the United States”
59
Why is There a Need for Critical Infrastructure Protection?
Increased Cyber Warfare Nation-States
– Advanced Persistent Threat (APT)
• Espionage Cyber Attacks
• Based Disruption Cyber Attacks
• Destruction Cyber Attacks
60
Why is Critical Infrastructure Protection Needed?
National Cyber and Physical Incident Trending Industrial Control Incidents Reported to DHS ICS-CERT 2014
PG&E: In the Month of October 2014
• 7.5 Million suspicious e-mails sent to our network
• Over 600 suspicious cyber events
• 11 cyber espionage events
61
Electrification
Technology declining costs & improving capabilities
• Smart grid technology has been rolled out at an increasing number of utilities
Energy efficiency continues to improve with new technology
• Steady lifecycle upgrades to newer appliances yielding reduction in energy needs with no loss of lifestyle changes
Visible Trends Underlying Trends
Visible and Underlying Industry Trends
Renewable Resource Penetration
Distributed Generation
• PG&E territory ideal for rooftop solar - 30% of nationwide rooftop solar in PG&E service territory and growing significantly
– As of Q1 2013, 1361 MW of DG is currently installed in our service territory, a 27% increase from the previous year
• Increasing number of DG developers are moving downstream from Transmission wholesale into Distribution wholesale DG market
Transmission
• Large number of generation interconnects to meet RPS requirements
• Continuing high RPS requirements may push up customer costs
Utility business model of shared costs across customers is coming under increasing pressure
• Factors such as DG penetration is starting to lead to an inequitable distribution of costs among customers
• Desire to reduce GHG levels is leading to electrification of:
– Transportation - Scooters, Cars, Caltrain, High Speed Rail, Port of Oakland
– Heating and Cooling - Residential, Commercial and Industrial Buildings
– Pumping - Diesel Pumps
Transmission Competition
• FERC Order 1000 removed incumbent Right of First Refusal for certain transmission (ET) projects
• CAISO Tariff codifies structure of ET competition in CA
• Multiple new entrants interested in developing ET projects in CA
• New entrants advocating to expand scope of ET projects open to competition
62
Electric Financial Profile: Expense 2015-2020
• 2016 reduction of $385M or -22% from 2015 driven by the new Cost Model change; support organizations will manage their own budget and not be included in core LOB standard rates, increasing visibility and accountability
• Total expense increases from $1.34B in 2016 to $1.57B in 2020; an increase of $230M or 17%, primarily driven by:
• $72M in Customer Care due to an increase across Customer Operations, Services, and CES
• $62M in Electric Distribution due to increase in overhead and underground maintenance work
• $48M in Nuclear Generation due to double refueling outages
• $31M in Power Generation due to Hydro
63
Electric Financial Profile: Capital 2015-2020
• 2016 budget flat to 2015 irrespective of the new Cost Model change due to support organization costs that are not included in core LOB standard rates allocated back as overheads for rate base and revenue requirements
• expense = reduction in budget due to support costs removed and not allocated back as overheads
• capital = budgets relatively flat due to support costs allocated back as overheads
• Total capital increases from $3.26B in 2016 to $3.587B in 2020; an increase of $313M or 10%, primarily driven by:
• $315M in Electric Distribution due to new “Grid of Things” investments such as energy storage, Smart Grid VVO, and sensors
• $57M in Electric Transmission due to Capacity, Competitive Trans Projects and HSR
• Partially offset by reduction in Generation ($68M) primarily due to Hydro
64
Gas Operations Overview 2015 Supplier Conference
Kcammee Vreman
Director
Project Governance and Controls
December 4, 2015
Contents
• About Gas Operations
• PG&E Gas System Profile
• Gas System and Gas Operations
• Operation Plan
• Supplier Opportunity
• Q&A
About Gas Operations
Gas Operations is on a mission to become the safest, most reliable gas
company in the U.S. As a whole, Gas Operations is responsible for all aspects
of PG&E’s gas distribution and transmission operations, including planning,
engineering, maintenance and construction, restoration and emergency
response.
Gas Operations
Asset & Risk Management Financial & Resource
Management Engineering, Construction,
and Operations
• Asset Knowledge
Management
• Integrity Management
• Standards and
Procedures
• Technology R&D and
Innovation
• Training &
Implementation
• Contract Management
• Investment Planning
• Quality Assurance &
Quality Control
• Risk Management
• Strategy & Process
Excellence
• Workforce Strategy &
Resource Management
• Engineering & Design
• Major Projects &
Programs
• Gas T&D Operations
• Gas T&D Construction
• Gas Systems
Operations
• Process Safety
Management
PG&E’s Gas Infrastructure
Includes:
6,700 miles of transmission
pipeline operating above 60
psig
42,000 miles of gas
distribution mains
Deliver 2.3 BCF each day on
average
4.3 million natural gas
customer accounts
Gas Training Facility in
Winters
PG&E Gas System Profile
Gas Operations Key Focus Areas
• Execute critical gas work
• Complete regulatory and legal proceedings as soon as possible
Resolve Gas Issues
• Multi-year planning
• Continuous Improvement
• Corrective Action Program (CAP)
Position the Company for Success
• Drive quality at all levels
• Strengthen local presence
Partner Effectively
Asset Classes
• Transmission Pipeline
• Distribution Mains
• Distribution Services
• Compression and
Processing
• Measurement and
Control
• Customer Connected
Equipment
• Storage
• CNG/LNG
Regulatory Update
General Rate Case –CPUC final decision issued August 14, 2015
Gas Transmission Rate Case – filed December 19, 2013
(Decision Pending)
“Our plan to invest in 21st century infrastructure will serve
customers by helping PG&E become one of the safest and
most reliable gas utilities in the country. Our detailed filing
identifies the risks, sets clear priorities, and lays out the
work that needs to be done to modernize our system to
meet some of the strictest safety standards in the nation.”
--Nick Stavropoulos, Executive Vice President of PG&E for Gas
Operations
Work Category 2015 YTD Complete
2015 EOY Forecast 2015-17*
Trans’n. Pipe Replacement
13.7 miles 14.1 miles 60 miles
Strength Testing 62.1 miles 72.8 miles 510 miles
Dist’n. Main Replacement
21.6 miles 27 miles 75 miles
Plastic Main Replacement
45.9 miles 52.5 miles 130 miles
ILI Upgrades 35.4 miles 70 miles 530 miles
ILI Analysis 250.4 miles 268 miles 1000 miles
Valve Auto 23 valves 27 valves 120 valves
Station 54 projects 75 projects 250 projects
Gas System Operational Plan
*Amounts reflect planning estimates and are subject to change
Operational Plan ILI Cont.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2005 2010 2015 2020 2025
% P
igg
ab
le
Year
Accelerating ILI
upgrade work
Developments in Traditional ILI technology +
use of Non-Traditional ILI will increase
piggable mileage. Per the 2013
Piggability Study,
12.1% of the system
was identified for
Non-Traditional ILI
73
Utilization of CNG & LNG
Line 300B Rupture in Bakersfield
Rupture Site
Damaged Joint of
Pipe Removed
Ground wetness is
spray from rupture
3
Valve Automation Edgewood
Supplier Opportunity Contractors will continue to play a critical role in how PG&E plans to meet its commitments
2015 Spend by Work Breakdown
Structure
66%
5%
5%
8%
14%
1%
Construction
Engineering
Environmental
Materials
PM / CM &Support
All Other
Supplier Opportunity
Contracted services will continue to span PG&E’s service area.
2015 Regional Spend 11%
35%
24%
30% Bay
Ctr Cst
Ctr Vly
North
Supplier Opportunity
Improve Quality
Work Safely and Share Best Practices
Drive Operating Efficiencies
Alleviate Capacity Constraints
Promote Supplier Diversity
Q&A
December 4th, 2015 Yusuf Ezzy Senior Manager, SuperFit IT
Information Technology Leading the Way to a SuperFit, Digital Utility
For Internal Discussion Purposes Only
“PG&E” and “IT”….
…really???
For Internal Discussion Purposes Only
Cybersecurity
The Digital Utility through SuperFit IT
The “Digital Utility” is about digitizing everything we do along PG&E’s value
chain, from Dynamic Energy Resources, to “smarter” grids and pipelines, to effective
field operations, to empowering more sophisticated customers, to optimizing the
back office, and more.
Intelligent Back Office
Automated SmartGrid/ Pipelines
Dynamic Portfolio Planning Prosumer Asset
Optimization
Mobile Workforce
Optimization
Dynamic Portfolio Planning
Automated SmartGrid/Pipelines
• All eyes across the enterprise are on IT to deliver
Houston…we have a Challenge
• This means new technology and new spend
• IT will need help to realize the vision
Let’s Not Forget…
Safe
Reliable Affordable
…Digital Utility
How Can Our Suppliers Help?
Safe
Reliable Affordable
• Cybersecurity we want safe,
secure products and services for us
and our customers
• Help us enhance PG&E’s focus on
Safety. Eg Gas detection leak
technology, mapping / asset
management technologies
• More effective screening and
background checks of resources
coming to work at PG&E
How Can Our Suppliers Help?
Safe
Reliable Affordable
• Stop selling to us without showing us
the value. No bells and whistles
please!
• Offer better, more cost-effective ways
to manage contract resources
• Always keep the frame of reference of
reducing spend for our customers
• Help us reduce time-to-market for
technology programs/projects
How Can Our Suppliers Help?
Safe
Reliable Affordable
• PG&E is becoming more of a
technology company
• Direct linkage between reliability of
your products and services with
reliability of PG&E’s products and
services
• We are looking for stable, tested
solutions
Thank you
Moderator: Ben Moglen
Director, Supply Chain Strategy & Operations
Supplier Panel 2015 Award Winners
2015 Supplier Panel
Dale Lappe
Program Manager Kevin Comerford
Vice President of Sales
Greg Cederstrom
President John Wilpert
Director of Operations
Closing 2015 Supplier Conference
Gun Shim
Vice President, Supply Chain Management
