Gas Operations Overview2011 Supplier Conference

Bill HayesVice PresidentGas Distribution Maintenance & Construction

October 27, 2011

ContentsCompany Profile San BrunoRestoring Customer ConfidenceMAOP ValidationHydro-testingPipeline Safety Enhancement PlanEmergency Preparedness & ResponseKey Areas of Focus

Company ProfilePacific Gas and Electric Company, one of the largest combination natural gas and electric utilities in the United States.

• The company provides natural gas and electric service to approximately 15 million people throughout a 70,000-square-mile service area in northern and central California.

Gas Transmission Statistics• Approx. 6,700 miles of gas transmission

pipeline operating above (> 60 psig)• 5,780 mile of gas transmission pipe,

DOT • Approx. 42,000 miles of gas distribution

pipe• 4.3 million natural gas customer

accounts• Deliver 970 BCF/year (2.6 BCF/daily

average)

San Bruno TragedyPG&E

NTSB InvestigationCPUC OII/OIRPG&E ReputationCustomer Trust Lessons Learned

Pipeline IndustryIncreased RegulationsIncreased OversightNew Technologies

Restoring Customer ConfidenceRecords SearchMAOP ValidationRewriting of Integrity Management ProgramsBuilding and Integrating effective databasesIncreased Benchmarking Technology ImprovementsRe-OrganizationStrength Testing

MAOP Validation • Goal is to validate the Maximum Allowable Operating Pressure (MAOP) for all

sections of PG&E gas transmission pipelines in California. • Program consists of three phases:

Phase 1 -- Strength Test Records Verification (January- March 2011) Phase 2 -- MAOP Validation of HCA pipeline segments without prior strength test (April- August 2011)Phase 3 -- MAOP Validation of all remaining pipelines (September Q2 2013)

• Through this program, located and reviewed in excess of 1.8 million documents to date and provided over 100 GB of data to the CPUC

• Through this effort, PG&E will establish the ability to integrate critical gas transmission information into a component based Geographic Information System (GIS) and enhance data capabilities to enable sound engineering decisions.

2011 Hydro-testing

PG&E committed to hydro-testing 152 miles of gas transmission pipe in 2011.Pipeline Characteristics:

Pipeline segments located within Class 3 or 4 and Class 1 & 2

HCA’s without verifiable pressure test records

118 miles pre-1962: Same vintage as San Bruno pipe, 24”-36”

diameter, DSAW pipe

34 miles pre-1974: Recorded as seamless greater than 24”

99 separate test sections

Hydrostatic Test Mileage Breakdown

* Data in Miles as of October 14, 2011

Scheduled for Hydrostatic Test

Hydrostatic Test Completed and Tied-In

Records Verified

TOTAL: 152 PRIORITY 1 MILES

118.1 MILES

Hydrostatic Test Completed and Tie-In

Underway

(Planned with Other Work in 2012)

Pipeline Safety Enhancement Plan (PSEP)

PG&E Proposed a Multi-Phase Program • Phase 1 2011-2014, • Phase 2 would begin 2015

Pipeline Modernization• Strength Testing• Pipeline Replacements• ILI Upgrades and Inspections• Engineering Condition Assessments and Fatigue Analyses

Valve Automation• RCV/ASV Valve Installation & Automation• SCADA Enhancements

Records Integration• MAOP Validation• Gas Transmission Asset Management

Interim Safety Measures• Pressure Reductions• Increased Leak Surveys & Patrols

PSEP, Phase 1 Scope

Work Streams 2011 2012 2013 2014 Phase 1

Strength Testing* 170 miles** 185 miles 204

miles158

miles 783

Pipeline Replacements 0.3 miles 39 miles 64 miles 82 miles 186

ILI Upgrades -- 78 miles 121 miles -- 199

In-line Inspections -- -- 78 miles 156 miles 234

Valve Automation 29 valves 46 valves 90

valves63

valves 228

Records Integration

Data Validation, MAOP Calculations, Integrated Asset & Work Management

Interim Safety Measures Pressure Reductions, Leak Surveys, Aerial Patrols

Over 1,200 miles of pipe upgraded & 228 valves automated 2011-2014

* Mileage reflects actual miles pressure tested** 2011 estimated strength test miles as of August. Total may change due to records validation efforts

PSEP Phase 1 Costs

DRAFTForecast Costs in $MM

Shareholder Funded Costs

2011 2012-2014Cost Categories Expense* Capital ExpensePipeline Modernization $123 $895 $285Valve Automation $2 $120 $9Records Integration $56 $96 $127Interim Safety Measures -- -- $3Program Management $1 $20 $11

Contingency $39 $237 $92Sub tot. Implementation Plan

$222 $1,368 $527

PG&E Proposes 2011-2014 Implementation Plan Costs of $2.2 B

External SupportIn 2011, Gas Maintenance and Construction will have outsourced

over 1million hours of work, equal to over 488 FTEs

Types of work outsourced include:

Construction

Engineering

Staff Support

Emergency Preparedness &Response

Broaden first responder and customer outreach activities to promote publicawareness and confidence in safety of gas transmission facilities.

Provided first responders with online access showing the location of gas transmission pipelines and shut-off valves. Launch of an updated joint PG&E/first responder exercise program for improved

coordination with external agencies related to gas and electric incidents.

Expanded public safety program and outreach.

• 2.3 million letters were sent out customers and tenants located within 2,000’

of a gas transmission pipeline.

• Electronic access to GT pipelines

Six Mobile Command Vehicles for use throughout the Service Territory.

Key Areas of Focus Moving Forward

Increased focus on Employee and Public SafetyHighest Quality in WorkmanshipAdherence to Operator QualificationsAccurate and Timely Documentation Supplier QualityPartnership with key stakeholders