PACIFIC GAS AND ELECTRIC COMPANY SAFETY …docs.cpuc.ca.gov/PublishedDocs/SupDoc/I1508019/1165/210041129.pdf · pacific gas and electric company safety culture and governance oii

Investigation: 15-08-019 U-39M Exhibit No.: Date: February 23, 2018 Witness(es): Various

PACIFIC GAS AND ELECTRIC COMPANY

SAFETY CULTURE AND GOVERNANCE OII

REBUTTAL TESTIMONY

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PACIFIC GAS AND ELECTRIC COMPANY SAFETY CULTURE AND GOVERNANCE OII

REBUTTAL TESTIMONY

TABLE OF CONTENTS

Chapter Title Witness 1 INTRODUCTION [NO REBUTTAL TESTIMONY] Nickolas Stavropoulos

2 NORTHSTAR RECOMMENDATIONS John Higgins

ATTACHMENT 2A

ERRATA TO APPENDIX 2-A

3 THE ONE PG&E OCCUPATIONAL HEALTH AND

SAFETY PLAN AND NORTHSTAR DATA REQUEST 144

Todd Hohn

ATTACHMENT

3A ERRATA TO PREPARED TESTIMONY AND APPENDIX 3-A

4 BOARD OF DIRECTORS Linda Y. H. Cheng

ATTACHMENT 4A

BIOGRAPHIES OF THE DIRECTORS

5 PG&E’S CORRECTIVE ACTION PROGRAM Gary R. Close

Attachment 5A TRAITS OF HEALTHY NUCLEAR SAFETY CULTURE – INPO, REVISION 1, DATED APRIL 2013

6 SAFETY INCIDENTS [NO REBUTTAL

TESTIMONY] Todd Hohn


CHAPTER 1

INTRODUCTION

[NO REBUTTAL TESTIMONY]


CHAPTER 2

NORTHSTAR RECOMMENDATIONS

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PACIFIC GAS AND ELECTRIC COMPANYCHAPTER 2

NORTHSTAR RECOMMENDATIONS

TABLE OF CONTENTS

A. Introduction....................................................................................................... 2-1

B. PG&E, the Commission, and Parties Have Aligned Interests........................... 2-2

C. NorthStar Recommendations ........................................................................... 2-3

1. NorthStar’s Report and Recommendations................................................ 2-3

2. Additional Actions Beyond NorthStar’s Recommendations........................ 2-5

a. Cost of Capital and Performance Based Ratemaking ......................... 2-6

b. Safety Metrics...................................................................................... 2-7

3. PG&E’s Implementation Plans and Premier Survey .................................. 2-8

4. Executive Compensation ........................................................................... 2-9

5. Periodic Audits ......................................................................................... 2-11

D. Errata.............................................................................................................. 2-12

E. Conclusion...................................................................................................... 2-12

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PACIFIC GAS AND ELECTRIC COMPANY1

CHAPTER 22

NORTHSTAR RECOMMENDATIONS3

A. Introduction4

Q 1 Please state your name and title and the purpose of this testimony.5

A 1 My name is John Higgins. I am Vice President of Safety and Health and the 6

Chief Safety Officer at Pacific Gas and Electric Company (PG&E). The 7

purpose of this testimony is to respond to the prepared testimony submitted 8

on February 16, 2018, by the Office of Ratepayer Advocates (ORA), Office 9

of the Safety Advocate (OSA), and The Utility Reform Network (TURN) with 10

respect to Questions 1 through 3 of the Assigned Commissioner’s Ruling 11

(ACR) dated November 17, 2017. These questions pertain to the 12

67 recommendations in the NorthStar Report.13

Q 2 Does PG&E have concerns with ORA’s testimony?14

A 2 No, PG&E supports ORA’s testimony. PG&E appreciates ORA’s careful 15

review of PG&E’s opening testimony and supports its recommendations, 16

which are consistent with PG&E’s own proposals and are respectful of the 17

need to preserve resources and not litigate issues in multiple proceedings.18

Q 3 Does PG&E have concerns with OSA’s testimony?19

A 3 PG&E supports much of OSA’s testimony, particularly its recommendations 20

about leveraging the work currently occurring in the California Public Utilities 21

Commission’s (CPUC or Commission) Safety Model Assessment 22

Proceeding (SMAP) and its concerns about unintended consequences 23

resulting from premature adoption of safety metrics or performance-based 24

ratemaking (PBR) initiatives.125

Q 4 Does PG&E have concerns with TURN’s testimony?26

A 4 Yes, PG&E’s concerns with TURN’s testimony are two-fold. First, PG&E 27

opposes TURN’s recommendation to litigate in this proceeding certain 28

issues that are currently pending in the SMAP or that have been expressly 29

directed by prior CPUC decisions to be addressed in other proceedings, 30

such as the General Rate Case (GRC). TURN’s recommendation, 31

1 OSA Testimony, pp. 2-6 to 2-7, 2-11 to 2-12.

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if adopted, would be wasteful of limited Commission and party resources, 1

could produce potentially inconsistent results, and are in conflict with prior 2

CPUC directives. Second, PG&E opposes TURN’s recommendation that 3

the Commission direct PG&E to increase its weighting of safety in the 4

Long-Term Incentive Program (LTIP) to 50 percent, as this recommendation 5

is both unsupported by any evidence and goes beyond the appropriate 6

scope of this proceeding.7

B. PG&E, the Commission, and Parties Have Aligned Interests8

Before addressing the specific issues raised in the intervenors’ 9

testimony, it is worth highlighting that all of the stakeholders—PG&E, the 10

Commission, and other parties—have aligned interests in this proceeding. 11

In the Order Instituting Investigation (OII), the Commission stated that the 12

purpose of this proceeding was to determine whether PG&E’s:13

organizational culture and governance prioritize safety and adequately 14direct resources to promote accountability and achieve safety goals and 15standards.216

Toward that end, the Commission’s Safety and Enforcement Division 17

(SED) selected NorthStar Consulting Group to perform an assessment of 18

PG&E’s and PG&E Corporation’s:19

organizational culture, governance, policies, practices, and 20accountability metrics in relation to PG&E’s record of operations, 21including its record of safety incidents, and to produce a report on the 22issues and questions contained in the OII.323

As described in my opening testimony, the NorthStar Report was the 24

result of 13 months of intensive effort, which included “unfettered access” to 25

PG&E’s personnel and executives, including the Board of Directors, as well 26

as PG&E’s responses to about 900 data requests and more than 250 27

interviews.4 Upon receipt of the NorthStar Report, PG&E immediately 28

reviewed each of the Report’s 67 recommendations and determined 29

whether they were already addressed in PG&E’s in-progress safety plan, 30

and if not, how best to incorporate them.31

2 OII, p. 2.3 NorthStar Report, p. I-1.4 PG&E Testimony, pp. 2-4 to 2-5.

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In our opening testimony, PG&E agreed with all 61 of the NorthStar 1

recommendations directed at PG&E, supported the six recommendations 2

directed at the Commission, and provided 51 detailed implementation 3

plans—including key deliverables and clear timelines—to address the 4

recommendations.5 In addition to the 51 implementation plans, PG&E went 5

beyond the NorthStar recommendations and included the One PG&E 6

Occupational Health and Safety Plan (Plan) that provides a comprehensive 7

view for improving employee and contractor safety over the next five years.68

This plan also includes a description of PG&E’s plans for an enterprise-wide 9

approach to Safety Management Systems (SMS) implementation in support 10

of public, employee and contractor safety.11

No party opposes PG&E’s implementation plans or takes issue with the 12

overall elements of the Plan. While PG&E and parties may disagree about 13

specific issues—such as the appropriate forum for litigating safety metrics to 14

be applied to PG&E—we are fundamentally aligned about the purpose of 15

this proceeding: to ensure PG&E continues on its path to improve its safety 16

programs, safety culture, and safety performance.17

C. NorthStar Recommendations18

1. NorthStar’s Report and Recommendations19

Q 5 In response to ACR Question 1, you stated that PG&E supports adoption of 20

all 61 NorthStar recommendations directed at PG&E, as well as the 21

six recommendations directed at the Commission,7 and you recommended 22

that the Commission monitor implementation through PG&E’s submission of 23

an annual report to the SED.8 Does any party disagree with your position?24

A 5 As stated above, no party opposes PG&E’s implementation plans to comply 25

with NorthStar’s recommendations. In addition, ORA specifically supports 26

“PG&E’s recommendation that the CPUC monitor PG&E’s implementation 27

through the submission of an annual report by PG&E to the SED.”9 OSA is 28

5 Implementation Plans are provided in Appendix 2-A of PG&E’s opening testimony.6 PG&E’s One Plan is provided in Appendix 3-A of PG&E’s opening testimony.7 PG&E Testimony, p. 2-1.8 PG&E Testimony, pp. 2-2 and 2-20 to 2-21.9 ORA Testimony, p. 4.

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silent on this point. In contrast, TURN recommends that the Commission 1

“adopt performance metrics and targets in this proceeding and hold PG&E 2

accountable to those targets.”103

Q 6 Do you agree with TURN’s recommendation?4

A 6 No, PG&E believes that using this proceeding to identify safety metrics and 5

targets is duplicative, and therefore wasteful of limited resources, to ongoing 6

efforts in the SMAP. As ORA recognizes, “a list of safety-related metrics 7

consistent among all major investor owned utilities (IOUs) is currently being8

developed” in the SMAP.11 OSA concurs that it is “currently actively 9

seeking to address these metrics concerns in the Commission’s SMAP 10

Proceeding (A.15-05-002) Metrics Working Group.”12 Accordingly, “OSA 11

believes the best path to the development of these metrics is to continue the 12

work of the Technical Working Group under a clarified guidance of the 13

SMAP Scoping Memo, with participation of both CPUC and utility staff.”1314

PG&E agrees with ORA and OSA that the SMAP is the proper 15

proceeding to develop key safety metrics to be applied to all utilities. That 16

said, PG&E also agrees with TURN that accountability mechanisms are 17

important.14 While standard safety metrics are being worked out in the 18

SMAP,15 the detailed deliverables and timelines set forth in PG&E’s 19

51 implementation plans provide a robust mechanism for the Commission to 20

measure PG&E's progress toward improvements in PG&E’s safety culture 21

and performance.22

Q 7 Does OSA have any additional recommendations regarding safety metrics?23

A 7 Yes, OSA suggests that:24

since this proceeding, I.15-08-019, is focused on organizational culture 25at PG&E, this proceeding may be the most appropriate proceeding to 26

10 TURN Testimony, p. 4.11 ORA Testimony, p. 3.12 OSA Testimony, p. 2-5.13 OSA Testimony, p. 2-12.14 TURN Testimony, p. 4.15 On February 22, 2018, the SED and Energy Division conducted a workshop on residual

issues in the SMAP which included, among other items, a discussion on safety performance metrics being developed by the SMAP technical working group.

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address organizational, safety culture, and public safety metrics at 1PG&E, particularly if they are not adopted in the SMAP proceeding.162

PG&E would point out that its implementation plans to comply with 3

NorthStar’s recommendations already address organizational culture. 4

Specifically, the implementation plans to address NorthStar 5

recommendation VIII-3 and IX-2 include specific measures to assess 6

organization culture related to safety.177

2. Additional Actions Beyond NorthStar’s Recommendations8

Q 8 In response to ACR Question 2, you stated that, in addition to the 9

recommendations in the NorthStar Report, PG&E recommends that the 10

Commission review the sustainability and effectiveness of the NorthStar 11

recommendations and PG&E’s actions in ongoing regulatory proceedings 12

such as the Risk Assessment and Mitigation Phase and/or GRC 13

proceedings.18 Does any party disagree with your position?14

A 8 The only party to propose additional actions is TURN. ORA expressly:15

agrees with PG&E’s recommendation that the CPUC…review the 16sustainability and effectiveness of PG&E’s actions in ongoing 17proceedings such as the Risk Assessment Mitigation Phase (RAMP) 18or GRCs.1919

OSA is silent on this point. In contrast, TURN recommends that the 20

Commission: (1) order “that the issue of a conditional return on equity 21

related to PG&E’s safety performance will be considered in PG&E’s next 22

Cost of Capital proceeding…or its TY 2020 GRC”; (2) “establish safety 23

performance metrics in the proceeding, and to set targets for those metrics 24

to hold PG&E accountable”; and (3) hold “additional workshops…in this 25

proceeding to discuss potential metrics to be used and annual targets to be 26

adopted, using the latest S-MAP metrics as a starting point, followed by 27

post-workshop comments.”2028

Q 9 Do you agree with TURN’s recommendations?29

A 9 No. PG&E disagrees with all three of TURN’s recommendations.30

16 OSA Testimony, p. 2-15.17 PG&E Testimony, pp. App2A-48 to 50 and App2A-66 to 67.18 PG&E Testimony, pp. 2-2 and 2-21.19 ORA Testimony, p. 4.20 TURN Testimony, p. 6.

2-6

a. Cost of Capital and Performance Based Ratemaking1

Q 10 Do you agree with TURN’s recommendation that:2

the Commission…order that the issue of a conditional return on equity 3related to PG&E’s safety performance will be considered in PG&E’s next 4Cost of Capital proceeding…or its TY 2020 GRC proceeding?215

A 10 No, I believe TURN may be mixing up two distinct concepts. First, TURN 6

appears to be responding to language in the May 8, 2017 Scoping Memo 7

asking:8

should some portion of return on equity for PG&E be dependent on 9making progress as defined by the Commission in this proceeding?2210

In Decision (D.) 17-07-005, the Commission granted a petition for 11

modification of the California IOUs’ cost of capital decisions, but specifically 12

kept the proceeding open:13

to provide a possible venue in which to consider the modification of 14PG&E’s cost of capital based on the report issued consistent [with] 15I.15-08-019 Ordering Paragraph 4, on the extent to which PG&E’s 16organization and governance promote a safety culture.2317

As discussed above, NorthStar conducted a thorough examination of 18

the extent to which PG&E’s organization and governance promote a safety 19

culture, and it proposed 61 specific recommendations directed at PG&E and 20

six directed at the Commission. In our opening testimony, PG&E fully 21

supported all of the recommendations in the NorthStar Report and provided 22

detailed implementation plans to address the recommendations. Based on 23

PG&E's reports and any audits the CPUC conducts, the Commission can 24

verify PG&E's implementation. To the extent PG&E fails to comply with the 25

implementation plans set forth its opening testimony, it would be possible for 26

the Commission to consider modifying PG&E’s cost of capital. However, 27

nothing in the NorthStar Report, D.17-07-005, or the May 8, 2017 Scoping 28

Memo supports TURN’s recommendation that PG&E be required to litigate a 29

conditional return on equity related to PG&E’s safety performance based on 30

metrics that have yet to be established.31

21 TURN Testimony, p. 6.22 Scoping Memo dated May 8, 2017, p. 5.23 D.17-07-005, p. 11 (emphasis added).

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The second concept that TURN seems to be relying upon is NorthStar’s 1

“critical recommendation” (F-8) that the Commission consider a PBR 2

mechanism that includes a safety element.24 In my opening testimony, 3

I recommended that, to the extent the Commission is interested in pursuing 4

a PBR mechanism for just PG&E, the proper forum would be PG&E’s 2020 5

GRC, where mechanisms such as variable adders based on safety 6

performance could be considered in light of all relevant factors.25 The PBR 7

mechanism has nothing to do, however, with conditional return on equity.8

Notably, while OSA “supports accountability and generally supports the 9

motive behind incentivizing safety…” it also notes that:10

the Commission should keep in mind that it has experienced several 11instances in which well-intended PBR initiatives resulted in unintended 12or undesired behaviors and outcomes.2613

b. Safety Metrics14

Q 11 Do you agree with TURN’s recommendation that the Commission “establish 15

safety performance metrics in the proceeding, and to set targets for those 16

metrics to hold PG&E accountable”; and hold “additional workshops…in this 17

proceeding to discuss potential metrics to be used and annual targets to be 18

adopted, using the latest S-MAP metrics as a starting point, followed by 19

post-workshop comments?”2720

A 11 No, as stated above, Commission staff, California IOUs, and other 21

stakeholders are working collaboratively in the SMAP to identify and define 22

safety metrics for use by the Commission to consistently monitor utility 23

safety performance. The advantage of leveraging the SMAP process is that 24

it will enable the Commission to implement NorthStar’s critical 25

recommendation F-6 around:26

meaningful, consistent routine reporting of safety performance and 27metrics to the CPUC (all major California Investor-Owned Utilities 28(IOUs)).2829

24 NorthStar Report, p. I-10.25 PG&E Testimony, pp. 2-3 and 2-23.26 OSA Testimony p. 2-6.27 TURN Testimony, p. 6.28 NorthStar Report p. I-10.

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In the meantime, measuring PG&E's performance for the execution of 1

PG&E’s 51 implementation plans will ensure that progress is made while 2

industry safety metrics mature and all parties gain valuable experience, 3

especially with new leading indicators.294

3. PG&E’s Implementation Plans and Premier Survey5

Q 12 In response to ACR Question 3 and 3.1, you provided detailed 6

implementation plans for complying with NorthStar’s recommendations, 7

including milestones and completion timelines.30 Does any party disagree 8

with your position?9

A 12 No party expresses disagreement with PG&E’s position on this topic. 10

However, in its testimony, OSA criticizes the Premier Survey, which PG&E 11

uses as a key tool to measure safety culture, as reflected in PG&E’s 12

implementation plans to comply with NorthStar recommendations IX-113

and IX-2.3114

Q 13 Do you agree with OSA’s criticisms that PG&E’s Premier Survey consists15

only of “positive and quite general assertions of what should be the practice 16

with which employees can only agree or disagree” instead of “a multi-value 17

Likert scale” which OSA believes “would allow stronger or weaker 18

expression of agreement or disagreement”?3219

A 13 No, I do not. PG&E’s Premier Survey uses several different 5-point Likert 20

scales (primarily strongly agree, agree, neither agree or disagree, disagree, 21

strongly disagree). This scale provides employees with the opportunity to 22

provide a stronger or weaker expression of agreement or disagreement as 23

recommended by OSA.24

Q 14 Do you agree with OSA’s assertion that the Premier Survey includes only 25

positive and quite general assertions?26

29 PG&E Testimony, Appendix 2-A.30 PG&E Testimony, pp. 2-2 to 2-3, 2-21 to 2-22, and Appendix 2-A; see also PG&E

Testimony, Chapter 3, for details regarding PG&E’s prioritization process.31 OSA Testimony, pp. 2-2 to 2-3.32 OSA Testimony, p. 2-3.

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A 14 No, I do not. The 2016 Premier Survey contained 64 questions, including 1

26 of which PG&E was able to benchmark employee responses against 2

other utilities and/or high performing companies.3

4. Executive Compensation4

Q 15 In response to ACR Questions 3.2 and 3.3, you recommended that further 5

discussion regarding NorthStar’s recommendations pertaining to 6

compensation should be evaluated in the context of PG&E’s GRC, where 7

compensation issues have historically been addressed in a holistic 8

manner.33 Does any party disagree with your position?9

A 15 The only party to disagree with PG&E’s position is TURN. ORA supports 10

PG&E’s position, stating:11

as noted in PG&E’s testimony, in PG&E’s 2017 GRC decision, the 12CPUC has directed PG&E to address the linkage between 13compensation and safety in its 2020 GRC application.3414

ORA also agrees that “issues related to compensation have historically15

been addressed in GRCs” and:16

recommends the consideration of the Short Term Incentive Plan (STIP) 17and LTIP metrics in the 2020 GRC to allow them to be considered in a 18comprehensive manner by all relevant parties.3519

OSA is silent on this issue.20

In contrast, TURN argues that “discussions about executive 21

compensation should not be delayed until the GRC.”36 TURN argues that:22

[w]hile…the dollar amounts of executive compensation and how they 23relate to rates should be discussed in the GRC, the structure and design 24of executive incentive compensation as it relates to safety performance 25can and should be addressed in this proceeding.3726


A 16 No, I do not agree. As stated in my opening testimony, in PG&E’s 2017 28

GRC decision, the Commission expressly ordered PG&E to address how 29

safety is considered in employee compensation as part of its 2020 GRC:30

33 PG&E Testimony, pp. 2-3, 2-22 to 2-23.34 ORA Testimony, p. 2, citing D.17-05-013, pp. 176-177.35 ORA Testimony, p. 3.36 TURN Testimony, p. 7.37 TURN Testimony, p. 7.

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We will require PG&E to provide additional information as part of its next 1GRC application in order to help the Commission and the parties to gain 2a better understanding, at the outset of the proceeding, of whether and 3how safety policies, practices and performance are considered in the 4total compensation that is paid to non-represented employees and 5executives. This information shall also include information about the 6governance and level of engagement by PG&E’s Board in influencing 7the variable compensation programs of PG&E.388

I believe it would be duplicative, wasteful of resources, and in conflict 9

with of the Commission’s prior decision to litigate this same issue in this 10

proceeding.11

Q 17 Does TURN have any specific recommendations regarding compensation?12

A 17 Yes, TURN recommends that:13

the Commission direct PG&E to increase the weighting of safety in LTIP 14to at least 50%, consistent with PG&E’s short-term incentive program15and that the Commission direct PG&E to remove subjective metrics from16both the LTIP and STIP and only include safety metrics that are both 17objective and auditable.3918

Q 18 Do you agree with TURN’s recommendations?19

A 18 No, I do not agree with TURN’s proposal to increase the weighting of the 20

safety metric in LTIP to 50 percent. As PG&E Witness Cheng stated in her 21

opening testimony, at the December 2017 meetings of the PG&E 22

Corporation Safety and Nuclear Oversight Committees, each Committee’s 23

members considered design of LTIP awards and approved increasing the 24

weighing of safety metrics for the 2018 LTIP award, to more closely align 25

safety performance and executive compensation.40 At the Compensation 26

Committee’s meeting in February 2018, the weighting of the safety metric in 27

LTIP was approved to be increased from 5 percent to 10 percent. Based on 28

PG&E’s benchmarking, this safety weighting for LTIP is industry leading.4129

There is no basis to require PG&E to increase this value even further. In 30

any event, as stated earlier, the appropriate forum to consider TURN's 31

38 PG&E Testimony, p. 2-14, quoting D.17-05-013, p. 174.39 TURN Testimony, p. 8.40 PG&E Testimony, p. 4-6.41 Based on benchmarking conducted by PG&E, 84 percent of peer companies (21 of 25)

do not include any safety measure in their LTIP. Of the four companies that do include a safety measure in their LTIP, three have a safety weighting of 5 percent or less.

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proposal is the GRC where safety and compensation can be reviewed 1

comprehensively as directed by the Commission.2

TURN recommends that PG&E remove metrics from STIP and LTIP 3

which are not auditable. PG&E has no objection to this. Consistent with 4

historical practices, PG&E’s STIP and LTIP have been auditable for the last 5

several years. PG&E believes that allowing for metrics that may have a 6

subjective component may be appropriate as long as there is a clear 7

framework and external review of the results. PG&E agreed with 8

NorthStar’s recommendation VII-1,42 and PG&E has not included metrics 9

which involve employee surveys or near hit/CAP reporting as part of its STIP 10

or LTIP since 2012.11

5. Periodic Audits 12

Q 19 Does TURN have any other objections to your testimony?13

A 19 Yes, in my testimony, I pointed out that NorthStar identified 14

five recommendations specifically directed at the Commission, including 15

performing “periodic audits of the safety programs and culture at PG&E and 16

potentially the other major California IOUs.”43 I stated that, while PG&E 17

supports all of these recommendations, implementation of the periodic audit 18

proposal “would also benefit from some form of public process so that 19

stakeholder input can be considered.”4420

TURN criticizes this statement and:21

urges the Commission to conclude in this proceeding that the 22Commission will conduct periodic audits of PG&E’s safety programs, 23safety culture, and safety performance going forward.4524

Similarly, OSA states that it believes the effectiveness of a SMS: 25

would be highly dependent upon whether the Commission implemented 26a program to audit or assess utility SMS component implementation and 27performance.4628

Q 20 Do you agree with TURN’s criticisms or OSA’s statement?29

42 See PG&E Opening Testimony, Appendix 2-A, p. App2A-36.43 PG&E Testimony, p. 2-7.44 PG&E Testimony, pp. 2-7 to 2-8.45 TURN Testimony, p. 9.46 OSA Testimony, p. 2-8.

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A 20 PG&E supports the recommendation for the Commission to conduct periodic 1

audits of PG&E’s safety culture and programs as a mechanism for learning 2

and continuous improvement.3

D. Errata4

Q 21 Is there anything else you wish to address in this Rebuttal Testimony?5

A 21 Attached to my Rebuttal testimony is Attachment 2A which contains a6

correction log and redlined corrections to Appendix 2-A attached to my 7

Prepared Testimony submitted on January 8, 2018. PG&E is separately 8

submitting its Prepared Testimony with Errata.9

E. Conclusion10

Q 22 Do you have any final comments regarding the parties’ testimony?11

A 22 As I stated in my opening testimony, PG&E appreciates NorthStar’s 12

comprehensive and thoughtful Report, as well as the careful review by ORA, 13

OSA, and TURN of PG&E’s opening testimony and implementation plans. 14

PG&E believes that all parties to this proceeding are aligned in our ultimate 15

objective: to improve PG&E’s safety programs, safety culture, and safety 16

performance going forward.17

Q 23 Does this conclude your rebuttal testimony?18

A 23 Yes, it does.19


CHAPTER 2

ATTACHMENT 2A

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App2A-28a

5. Budgeting and Spending: VI-2

Safety Culture and Governance OII (I. 15-08-019) Safety Assessment Recommendations

Implementation Plan

A Reference ID VI-2B Recommendation VI-2: Develop business case support and a record of management

approval for safety initiatives in accordance with PG&E’s Project Approval Procedure.

III-4: Clearly define and articulate any new initiatives to improve safetyculture. Perform cost-benefit analyses of these initiatives and identify performance measures. Corporate Safety recently produced an analysis of lost work days that might sserve as a starting point for the thought process and analytics involved.

C Key Term Definitions

An Initiative is a unique undertaking purposed with the design and implementation of strategic changes to organizations and processes. Best practices are codified in Change Leadership and process design principles. Primary constraints are leadership bandwidth, subject matter expertise and stakeholder adoption capacity. A Project is a unique undertaking purposed with designing and constructing equipment, facilities or software and associated processes. Best practices are codified by the Project Management Institute. Primary constraints are capital and time.

D Implementation Plan

PG&E’s project approval procedure is designed for project governance as opposed to initiative governance (see Key Terms section for definitions).

This proposal applies to initiatives impacting occupational health and safety risks. PG&E proposes designing and implementing a separate Safety Initiative Business Case that utilizes Session D of the integrated planning process as the approval review committee. The scope and scale of items brought to Session D for approval are those with material impacts to the stated risks. Items not expected to have these impacts would not be brought to Session D for approval.

Corporate Safety and Health will design a template modeled after PG&E’s Project Approval process and include the template and record of management approval within Session D. Initiatives will be scored using the same risk spend efficiency framework used during the RAMP process and results of that scoring will be a part of the Session D material that is reviewed and approved by senior leadership.

Implementation will follow the 2018 integrated planning calendar for the occupational health and safety risks (employee, motor vehicle, and contractor safety risks).

Formatted: Font: Bold, Underline

Formatted: Font: Bold, Underline

2-AtchA-2

App2A-28a

E Implementation Timeline

Date Milestone Feb. 2018 Template and Guidance /Procedure complete Apr. 2018 Session D complete

F Implementation Status

In Progress

2-AtchA-3

App2A-46

7. Training: VIII-2


Implementation Plan

A Reference ID VIII-2

B Recommendation Profile training participants so that individuals in office-based organizations generally do not receive field-oriented safety training ahead of field or organization.


Profiled: Training assigned through a learner group and governed by Profile Approvers. Assignment decisions are based on regulatory requirements and internal policy. Leader Assigned: Training that is viewed as discretionary and is assigned by the leader to the employee directly. Workflow Approval: A systematic control to see if an individual is profiled or leader assigned before the employee is allowed to register for training. If they are not, a request will route to their appropriate level of leadership for approval before they can register.


Fully leverage My Learning 2.0 profile capabilities to make sure impacted audiences receive training at the most appropriate time.

Initiate additional control points in the system to govern registration for non-profiled employees.

Annually provide Profile Approvers with a list of courses targeted to field employees.


Date Milestone Dec. 20172018 Complete 2018 profile audit to determine

if profiles are consistent with intent. Notification issued to all profile leads where profile appears to be inconsistent with intent.

Dec. 2018 Implement workflow Approval for training registration. This control point will ensure those who are not profiled have gone through the appropriate delegation of authority before they are allowed to register for training. Additional system driven control points needed to allow for closed registration scenarios where only those profiled by their LOB Profile Approver designees can attend. Timing is dependent on IT funding approval.

2-AtchA-4

App2A-46

2-AtchA-5

App2A-103

10. Contractor Safety: XI-5


Implementation Plan

A Reference ID XI-5B Recommendation Update LOB contractor safety procedures to clarify responsibilities and

reflect current organizations and processes. Include guidelines regarding the frequency of field observations.


N/A


Scope Interpretation This recommendation is specific to each LOB contractor oversight procedure and their language around how and when to perform field safety observations on their contractors. Scope Considerations The 13 18 LOB oversight procedures will be updated to reflect the current organization structure, adding standard guidelines regarding the clarification of responsibilities and determining the frequency of field safety observations. Corporate Contractor Safety will establish standard guidelines and have each LOB incorporate them into their procedures. Corporate Safety and LOB leadership will drive this requirement to the procedure owners to ensure they are prioritized. Project Execution Strategy Contractor Safety will establish the observation frequency guidelines standard language for each procedure. Due February 28th, 2018. Corporate Contractor Safety will coordinate with the LOB contractor safety procedure owners to incorporating the observation frequency guidelines into their procedures. Each revision will be published in the PG&E Guidance Document Library. Due June 31st, 2018. Additionally, Corporate Contractor Safety will then assess LOB compliance in accordance with their procedure updates.


Date Milestone Dec. 2017 Assess each LOB procedure to determine which plans

require revision to include further guidelines for observation frequencies and project schedule.

Feb. 2018 Develop guidelines with LOB stakeholders collectively Mar. 2018 Communicate guidelines Jun. 2018 Finalize procedure revisions and publish


In Progress

2-AtchA-6

App2A-103

2-AtchA-7

App2A-23

3. Organization: IV-2


Implementation Plan

A Reference ID IV-2 B Recommendation The Corporate Safety Officer (COOCSO) should report to the COO of

the Utility and to the NOS Committee of the Board in the same manner that the head of Internal Audit reports to the Audit Committee of the Board in most public companies. (It is NorthStar’s understanding that this has been implemented.)


N/A


The Corporate Safety Officer reports to the PG&E (Utility) COO. The charters of the PG&E Corporation Safety and Nuclear Oversight Committee (formerly the NOS Committee until 9/2017) and the Utility Safety and Nuclear Oversight Committee document how the Corporate Safety Officer reports to the SNO Committees.


Date Milestone Mar. 2017 Organization changes including VP and Corp Safety

Officer reporting to the COO May 2017 Nuclear Operating and Safety Committee charter

reflects COO reporting structure. (Same provisions included in Utility Safety and Nuclear Oversight Committee Charter upon adoption in September 2017)


Complete

G Assessment of Completion and Sustainability of PG&E’s Implementation Plan

Completion: The Corporate Safety Officer’s reporting relationship to the Utility COO is reflected in the Utility’s internal systems (e.g., Who’s Who).

Sustainability: The Safety and Nuclear Oversight Committee charters are posted on the PG&E Corporation and Utility website, in the Corporate Governance section (link).

2-AtchA-8


CHAPTER 3

THE ONE PG&E OCCUPATIONAL HEALTH AND SAFETY PLAN

AND NORTHSTAR DATA REQUEST 144

3-i


THE ONE PG&E OCCUPATIONAL HEALTH AND SAFETY PLAN AND NORTHSTAR DATA REQUEST 144

TABLE OF CONTENTS

A. Introduction....................................................................................................... 3-1

B. The One PG&E Occupational Health and Safety Plan ..................................... 3-1

C. Cost Effectiveness............................................................................................ 3-3

D. Board Qualifications and Executive Compensation in the Plan ........................ 3-5

E. Safety Metrics................................................................................................... 3-6

F. Errata................................................................................................................ 3-6

G. Conclusion........................................................................................................ 3-6

3-1


CHAPTER 32

THE ONE PG&E OCCUPATIONAL HEALTH AND SAFETY PLAN 3

AND NORTHSTAR DATA REQUEST 1444

A. Introduction5


A 1 My name is Todd Hohn. I am the Senior Director of Safety and Health at 7

PG&E. The purpose of this testimony is to respond to the prepared 8

testimony submitted on February 16, 2018, by the Office of Ratepayer 9

Advocates (ORA), Office of the Safety Advocate (OSA), and The Utility 10

Reform Network (TURN) with respect to Questions 4 to 7.3 of the Assigned 11

Commissioner’s Ruling (ACR) dated November 17, 2017. These questions 12

pertain to two topics: the “One PG&E Occupational Health and Safety Plan”13

(Plan), and NorthStar Data Request 144.14


A 2 No, ORA’s testimony does not appear to raise any issues with my opening 16

testimony.17


A 3 Yes, in this rebuttal testimony, I will address OSA’s apparent 19

misunderstanding of PG&E’s Enterprise Safety Management System (SMS), 20

as well as its concern about cost-benefit analyses of safety programs.21


A 4 Yes, in this rebuttal testimony, I will address TURN’s recommendations 23

regarding: (1) developing a prioritization mechanism similar to risk spend 24

efficiency to ensure safety initiatives are cost effective; and (2) including the 25

Board of Directors qualifications and Long-Term Incentive Plan metrics in 26

the “One PG&E Occupational Health and Safety Plan.”27

B. The One PG&E Occupational Health and Safety Plan28

Q 5 In response to ACR Question 4, you stated that almost all of the 29

61 NorthStar recommendations directed at PG&E are addressed in or 30

complemented by the Plan.1 Does any party disagree with your position?31

1 PG&E Testimony, pp. 3-1 to 3-2.

3-2

A 5 No party expresses disagreement with PG&E’s position on this topic.1

Q 6 Does any party raise any concerns about the Plan?2

A 6 Yes, OSA states that:3

it did notice a general reliance on having a pipeline SMS as the 4company’s main effort to support its ongoing efforts to enhance its 5present safety culture,6

and indicates that:7

having a general reliance on a pipeline SMS is of concern, as doing so 8may not provide for safety aspects that would be applicable to each 9LOB.210

Q 7 Do you agree with OSA’s concerns?11

A 7 No, PG&E believes that OSA misunderstands its testimony related to SMS. 12

As stated in my opening testimony:13

Asset management plans and other elements of public safety are 14currently addressed by each operational [line of business] LOB, but will 15be unified across the enterprise under the Enterprise Safety 16Management System.317

The Enterprise SMS provides a systematic approach to managing 18

PG&E’s business processes and includes five key elements:419

1) Safety Culture;20

2) Asset Management;21

3) Occupational Safety and Health;22

4) Process Safety; and23

5) Environmental Management.24

The Enterprise SMS:25

will establish a common framework across the entire enterprise for 26driving performance…we plan to utilize independent standards to guide 27our efforts and measure our progress.528

In the Plan, PG&E referenced the SMS in Gas Operations— known as 29

PG&E’s Gas Safety Excellence program, with API 1173 a key element of the 30

safety culture part of that program—as an example of the kind of SMS that 31

PG&E has successfully implemented and that “will inform the development 32

2 OSA Testimony, pp. 2-2 to 2-3.3 PG&E Testimony, p. 3-9 (emphasis added).4 PG&E Testimony, p. App3A-4, Figure 2.5 PG&E Testimony, p. 1-6.

3-3

of PG&E’s enterprise-wide system.” Contrary to OSA’s apparent 1

understanding, PG&E is not relying on the Gas Operations (pipeline) SMS 2

or API 1173 as the Company’s “main effort” to support safety culture. The 3

following table provides a summary of the various Standards used to guide 4

PG&E’s Enterprise SMS well beyond Gas Operations.5

TABLE 3-1MAJOR SMS STANDARDS

Line No. Major SMS Standards Area of Focus

1 ISO 55001 Asset management2 PAS 55 Asset management3 ANSI-Z10 Occupational health and safety management4 ISO 9001 Quality management5 ISO 14001/RC 14001 Environmental management6 API 1173 Pipeline safety management7 ISO 27001.1 Information security management

Additional standards that relate to safety culture, or other dimensions of 6

the Enterprise SMS, will be explored and considered as the Enterprise SMS7

develops and is implemented.8

C. Cost Effectiveness9

Q 8 In response to ACR Question 5, you stated that PG&E prioritized actions for 10

implementation by benchmarking and assessing which programs and 11

initiatives would provide the maximum benefit towards accomplishment of 12

PG&E’s 5-year health and safety objectives.6 Does any party disagree with 13

your position?14

A 8 No, however, PG&E’s testimony could be clearer with regard to all of its 15

considerations when evaluating health and safety initiatives. TURN states:16

While achieving maximum benefit is a worthwhile goal, it needs to be 17considered in tandem with cost-effectiveness and affordability since 18resources are limited.719

Accordingly, TURN recommends:20

6 PG&E Testimony, p. 3-2.7 TURN Testimony, p. 10.

3-4

that the Commission order PG&E to adopt a measure similar to risk 1spend efficiency, which would enable PG&E to prioritize programs and 2actions based on both overall benefits and cost-effectiveness.83


A 9 PG&E agrees that cost-effectiveness is a factor in selecting safety programs 5

and actions, and disagrees that additional Commission action beyond 6

adoption of the NorthStar recommendations is required to reinforce its 7

importance in the prioritization process. While PG&E prioritizes actions to 8

maximize benefit, it does so in tandem with considerations of cost 9

effectiveness and affordability. As described in PG&E’s implementation plan 10

(Budgeting and Spending, VI-3):11

PG&E will leverage lessons learned through the RAMP and S-MAP 12processes to quantitatively evaluate the risk reduction potential of 13management-initiated safety programs…[and] will evaluate the 14prioritized management-initiated safety programs in light of operational 15constraints such as overall feasibility, cost, and other factors to establish 16the final list of approved management-initiated safety programs.917

PG&E’s development of a prioritization mechanism based on the 18

risk-spend efficiency calculation is in progress and on track for initial 19

implementation in support of the 2019-20 integrated planning cycle.20

Q 10 Does any other party express concerns about cost-effectiveness?21

A 10 Yes, OSA notes that the NorthStar Report “recommends that 22

PG&E…perform cost-benefit [CB] analyses” of any new safety culture 23

initiatives, and states that it “has concerns that this CB effort could 24

subsequently lead to biased performance measures and assessments.”1025

OSA recommends that:26

the Commission allow the safety culture development process to 27proceed for several years before looking at any formal CB analysis of 28the process.1129

Q 11 Does you agree with OSA’s recommendation?30

A 11 It depends on what OSA means when it refers to a “formal CB analysis.” 31

As described above, PG&E’s budgeting and spending implementation plan 32

will assess management-initiated safety programs based on overall 33

8 TURN Testimony, p. 10.9 PG&E Testimony, Appendix 2-A, p. App2A-30.10 OSA Testimony, p. 2-8.11 Id., p. 2-9.

3-5

feasibility, cost, and other factors. In addition, as stated in PG&E’s opening 1

testimony, PG&E recommends that the:2

Commission review the sustainability and effectiveness of PG&E’s 3actions [with respect to the NorthStar Report’s recommendations] in 4ongoing regulatory proceedings such as RAMP and GRC. 12.5

That said, PG&E agrees with OSA that “there are few quick-fixes”13 with 6

respect to safety culture, and safety programs may take time to yield 7

meaningful results. PG&E’s goal is to be mindful of cost-effectiveness while 8

giving programs adequate time to be successful.9

D. Board Qualifications and Executive Compensation in the Plan10

Q 12 In response to ACR Question 6, you stated that six of NorthStar’s 11

recommendations are not expressly addressed in PG&E’s One Health and 12

Safety Plan: two pertain to qualifications for Board of Directors that are not 13

appropriate for inclusion in a safety plan, and four pertain to operator 14

qualifications or portfolio planning and management systems that are better 15

addressed in other operating plans.14 Does any party disagree with your 16

position?17

A 12 Yes, TURN recommends that the Commission:18

direct PG&E to include both Board member qualifications and long-term 19incentive compensation as part of The One PG&E Safety Plan.1520

Q 13 Do you agree with TURN’s position?21

A 13 No, I do not. The Plan, which is appended as Appendix 3-A to my opening 22

testimony, is an integrated plan focused on employee and contractor 23

occupational health and safety, including interim milestone dates to achieve 24

PG&E’s 5-year occupational safety goals. As a safety professional, I believe 25

it would be inappropriate to include governance issues such as Director 26

qualifications, as well as compensation issues that are revisited every year, 27

in a long-term occupational safety plan. 1628

12 PG&E Testimony, p. 2-2.13 OSA Testimony, p. 1-2.14 PG&E Testimony, p. 3-2.15 TURN Testimony, p. 11.16 See also Rebuttal Testimony of Linda Cheng which describes the Board’s role and

Rebuttal Testimony of John Higgins which addresses long-term incentive compensation for participating employees.

3-6

E. Safety Metrics1

Q 14 In response to ACR Questions 7.1 through 7.3, you stated that nearly all of 2

the safety initiatives described in PG&E’s response to Data Request 144 3

related to concerns in the NorthStar Report and have largely been 4

incorporated into PG&E’s operations. Does any party disagree with your 5

position?6

A 14 The only party to address this issue is TURN, who does not seem to oppose 7

the testimony itself but reiterates its recommendation that “additional 8

workshops be held in this proceeding to discuss potential metrics to be used 9

and annual targets to be adopted, using the latest S-MAP metrics as a 10

starting point, followed by post-workshop comments.”1711


A 15 No, as Mr. Higgins states in his Rebuttal Testimony, PG&E believes that 13

establishing a new forum for discussing safety metrics is duplicative to the 14

SMAP process and may be a source of potential conflict.15

F. Errata16

Q 16 Is there anything else you wish to address in this Rebuttal Testimony?17

A 16 Attached to my Rebuttal testimony is Attachment 3A which contains a 18

correction log and redlined corrections to my Prepared Testimony 19

(Chapter 3 and Appendix 3-A) submitted on January 8, 2018. PG&E is 20

separately submitting its Prepared Testimony with Errata.21

G. Conclusion22



17 TURN Testimony, p. 12.


CHAPTER 3

ATTACHMENT 3A

ERRATA TO PREPARED TESTIMONY AND APPENDIX 3-A

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TABLE 3-1 SUMMARY OF THE CURRENT STATUS OF NORTHSTAR DATA REQUEST 144 INITIATIVES

Line No. Current Status

Number of DR 144 Initiatives

1 Complete/Incorporated Into Operational Processes(a) 50 2 Complete/Discontinued or Replaced(b) 310 3 In-Progress(c) 103

_______________

(a) Initiative has been completed and any associated process changes areincorporated into current practices.

(b) Initiative has been completed and subsequent process and system changeshave replaced the initiative’s objective.

(c) Initiative is in progress.

A. Question 7.2: Are Any of These Initiatives Being Prioritized and Evaluated 1

for Effectiveness and if So, How?2

To the extent that most of these initiatives are incorporated into operational 3

processes or in-progress, the resources to support their completion and 4

sustainability are allocated through the IPP. How this process took place in 5

2017 is described in Sections C-2 and E of this testimony. Additionally, the 6

concept of risk spend efficiency, which reflects the mitigation benefits measured 7

in a risk reduction value, relative to its cost, was introduced as part of PG&E’s 8

2017 RAMP filing. This process will continue to evolve in future IPPs. 9

Examples of completed initiatives that have been incorporated into 10

operational processes include: 11

The 2012 change in discipline policy remains in effect;12

The percentage of the Short-Term Incentive Plan tied to safety performance13

increased from 15 percent in 2011 to 50 percent in 2015, where it has14

remained through 2017;15

The 24/7 Nurse Report Line remains the primary avenue for employees to16

report work-related discomfort or injury; and17

Near-Hit sharing is encouraged through the Corrective Action Program18

(CAP) system rather than a separate system.19

20

3-AtchA-2

6. Determine Appropriate Metrics and Measurements to Assess ProgressTowards Goal Achievement

For each some of the eight focus areas, PG&E established key performance indicators that are statistically correlated to PG&E’s safety goals. A list of these measures is included in the detailed discussion of each focus area in the One PG&E Occupational Safety and Health Plan by Focus Area section as well as in Attachment A.

The Plan will be assessed on a continual basis through various governance forums (e.g. SNO, BPR, Enterprise Safety Committee, LOB Safety Councils) and annually as part of the Integrated Planning Process. Additionally, there are executive sponsors identified for each focus area. The role of the sponsors include removing barriers for the corporate safety program leads and connecting them to LOB resources where necessary.

7. Establish Budget, Staffing, and Resource Requirements

Following the Integrated Planning Process, the approved Corporate Safety & Health department budget for 2018 expense is $25.8 million. The budget for 2018 capital is $0.2 million. The Plan also incorporates Corporate Items expense. Year-to-date actuals are shown in Table 4, as final 2018 budgets for Corporate Items are not yet finalized.

The budget includes the necessary headcount and resources required for 2018 to execute on the Plan. The major drivers of this expense are headcount of the Safety & Health department personnel.

Safety personnel qualifications and requirements are currently being evaluated through review and assessment of job responsibilities, skills and qualifications, or assessment required to demonstrate competency. To sustain improved safety performance, PG&E needs to ensure the right individuals – with the necessary training and skills – are in the appropriate roles. The implementation plan to achieve the appropriate professional certifications will be established and communicated in 2018.

Please refer to Tables 2, 3, and 4 for details of the budget, distributed by the Plan’s focusareas.

3-AtchA-3


CHAPTER 4

BOARD OF DIRECTORS

4-i


BOARD OF DIRECTORS

TABLE OF CONTENTS

A. Introduction....................................................................................................... 4-1

A. Board of Directors............................................................................................. 4-2

1. Documentation of Board Actions in Response to NorthStar Report........... 4-2

2. Board Recruitment and Replacement ........................................................ 4-2

3. Evidence of Board Direction in Response to NorthStar Report.................. 4-4

4. Other Issues Raised by TURN................................................................... 4-4

5. Chief Safety Officer Role............................................................................ 4-5

B. Conclusion........................................................................................................ 4-6

4-1


CHAPTER 42

BOARD OF DIRECTORS3

A. Introduction4


A 1 My name is Linda Y.H. Cheng. I am the Vice President, Corporate 6

Governance and Corporate Secretary of both Pacific Gas and Electric 7

Company (PG&E) and PG&E Corporation. The purpose of this testimony is 8

to respond to the prepared testimony submitted on February 16, 2018, by 9

the Office of Ratepayer Advocates (ORA), Office of the Safety Advocate10

(OSA), and The Utility Reform Network (TURN) with respect to 11

Questions 7.4 through 9 of the Assigned Commissioner’s Ruling (ACR) 12

dated November 17, 2017. These questions pertain to the Boards of 13

Directors of PG&E and PG&E Corporation as they relate to the14

recommendations in the NorthStar Report.15


A 2 No, ORA’s testimony does not raise any issues with my opening testimony.17


A 3 No, OSA’s testimony does not raise any issues with my opening testimony, 19

although it does include commentary about one NorthStar recommendation.20


A 4 Yes, PG&E is concerned that TURN appears unaware of the depth of safety 22

experience among many current members of the PG&E Corporation and 23

PG&E Boards (together, the Boards), as well as the recent addition in 24

May 2017 of a new Director with safety experience in the public sector.25

TURN also appears to lack understanding of the role that Directors play in 26

publicly held companies.27

4-2

A. Board of Directors1

1. Documentation of Board Actions in Response to NorthStar Report2

Q 5 In response to ACR Question 7.4, you provided documentation of specific 3

Board actions or initiatives taken in response to the NorthStar Report.14

Does any party raise any issues with this documentation?5

A 5 No party raises any issue with the documentation of the many actions taken 6

by the Boards either in direct response to the NorthStar Report or that 7

address findings in the NorthStar Report. 8

2. Board Recruitment and Replacement9

Q 6 In response to ACR Question 8, you described PG&E’s plan for recruiting 10

and replacing Board members, including PG&E’s efforts to increase 11

safety experience and education.2 Does any party raise any issues with 12

PG&E’s efforts?13

A 6 Yes, TURN is the only party to raise an issue, commenting that “PG&E has 14

not shown that it has implemented” NorthStar’s recommendation that PG&E 15

“add Independent Directors to the Board who have experience with safety, 16

perhaps in another industry such as aviation.”317

Q 7 Do you agree with TURN’s criticism?18

A 7 No, I respectfully disagree with TURN’s criticism, which appears to reflect 19

a lack of understanding about the significant safety expertise of PG&E’s 20

Directors. 21

As stated in the NorthStar Report, three independent Directors were 22

added to the Boards prior to NorthStar’s review: Fred J. Fowler (2012),23

Richard C. Kelly (2013), and Anne Shen Smith (2015), all of whom “have 24

prior experience in the utility industry.”425

1 PG&E Testimony, pp. 4-7 to 4-9, and Appendices 4-A to 4-D.2 PG&E Testimony, pp. 4-2 and 4-9 to 4-10.3 TURN Testimony, p. 13.4 NorthStar Report, p. III-7. Biographies of all PG&E’s and PG&E Corporation’s current

Directors are attached hereto as Attachment 4A. These biographies are in draft form and are subject to further refinements. The final versions of these biographies will be included in PG&E’s 2018 Proxy Statement which is scheduled to be filed with the Securities and Exchange Commission in mid-April 2018.

4-3

Mr. Fowler is retired Chairman of the Board of Spectra Energy Partners, 1

LP, which owns natural gas transmission and storage assets; as well as 2

past President and Chief Executive Officer (CEO) of Spectra Energy 3

Corporation, a natural gas gathering and processing, transmission and 4

storage, and distribution company. Mr. Fowler has 50 years of experience 5

in the energy business, beginning his career at Conoco in 1968.6

Mr. Kelly is retired Chairman and CEO of Xcel Energy, Inc., and 7

currently serves or has served on the boards of numerous utilities and utility 8

associations, including the Edison Electric Institute and Electric Power 9

Research Institute. Mr. Kelly also has experience in the transportation 10

sector, having served as a director of Canadian Pacific Railway from 11

2006-2014.12

Ms. Smith served as Chairman and CEO of Southern California Gas 13

Company (SoCalGas) from 2012 to 2014, and held various other executive 14

positions over her nearly 40-year career at SoCalGas, including as their 15

Vice President of Environment and Safety.16

The utility and safety experience of Messrs. Fowler and Kelly and 17

Ms. Smith enhanced the Board-level safety expertise already provided by 18

Dr. Richard A. Meserve, who joined PG&E and PG&E Corporation’s Board 19

in 2006. Dr. Meserve served as former Chairman of the Nuclear Regulatory 20

Commission and a former director of Duke Energy Corporation.21

In addition, in May 2017, Jeh C. Johnson was elected to PG&E and 22

PG&E Corporation’s Boards. Secretary Johnson brings safety expertise 23

gained while serving in the public sector, including as United States (U.S.) 24

Secretary of Homeland Security during President Barack Obama’s 25

administration and as General Counsel of both the U.S. Department of 26

Defense and the U.S. Department of the Air Force. Mr. Johnson also serves 27

4-4

on the Board of Directors of Lockheed Martin Corporation, a global security 1

and aerospace company.52

Contrary to TURN’s suggestion, the background, experience, and skills 3

of these Directors demonstrate that PG&E has indeed implemented 4

NorthStar’s recommendation to add Independent Directors to the Board who 5

have experience with safety.6

3. Evidence of Board Direction in Response to NorthStar Report7

Q 8 In response to ACR Question 9, you referenced the documentation that you 8

provided in response to ACR Question 7.4. Does any party raise any issues 9

with that documentation?10

A 8 No, as stated in response to Question 7.4, above, no party raises any issue 11

with this documentation of the many actions taken by the Boards, either in 12

direct response to the NorthStar Report, or that address findings in the 13

NorthStar Report.14

4. Other Issues Raised by TURN15

Q 9 Does TURN raise any other issues related to the Boards?16

A 9 Yes, TURN takes issue with the lack of guidance from the Board about the 17

five incidents referenced in ACR Question 14.6 TURN cites this as an 18

illustration of:19

the need for the Board of Directors to take a more active role in setting 20safety direction and providing guidance.721

Q 10 Do you agree with TURN’s criticism?22

A 10 No, the level of Board engagement described by PG&E Witness Todd Hohn 23

in Chapter 6 of PG&E’s opening testimony is consistent with the oversight 24

nature of a board of directors’ responsibilities.25

5 Secretary Johnson voluntarily resigned from the PG&E Board in December 2017, just prior to joining the Lockheed Martin Corporation Board of Directors, but he continues to serve on the PG&E Corporation Board and therefore continues to oversee safety and other issues at PG&E. The Federal Power Act and associated Federal Energy Regulatory Commission (FERC) regulations preclude Secretary Johnson from serving as director of both PG&E and Lockheed Martin Corporation unless FERC pre-approves the interlock.

6 TURN Testimony, p. 14.7 TURN Testimony, p. 14.

4-5

Boards of directors typically delegate management of day-to-day 1

operations to Officers appointed by the boards. As such, the PG&E 2

Corporation and PG&E Boards do not discuss every PG&E safety incident, 3

but instead obtain information about discrete, select incidents in the context 4

of the Boards’ general oversight of the companies’ safety and compliance 5

program, and the Boards’ review of safety metrics designed to drive 6

improvements in safety performance.7

Rather than using Board skills and capabilities to review many individual 8

incidents with management, the Boards focus on overseeing the corporate 9

safety function, reviewing PG&E’s 5-Year Health and Safety Plan, focusing 10

on increasing the efficacy of safety metrics, and establishing a plan to 11

develop expertise in topics relevant to the Boards’ oversight role (such as, 12

for example, understanding safety in high-risk operations, understanding 13

safety culture, the role of governance in driving positive change in safety 14

culture, and understanding catastrophic failure and mitigation strategies to 15

create a resilient culture of recovery). Discussions between the Boards and16

Officers generally are at a policy and directional level, to help spot issues 17

and drive programmatic change to improve safety performance and culture.18

5. Chief Safety Officer Role19

Q 11 Does any other party raise any other issues regarding the Boards?20

A 11 Yes, while OSA does not take issue with PG&E’s testimony regarding the 21

role of the Boards, it does take issue with NorthStar’s recommendation that 22

PG&E “appoint a Corporate Safety Officer who has both operations and 23

professional safety experience,” arguing that safety culture “should not 24

depend on the skills of a single culture ‘czar’” and therefore recommends 25

“the Commission allow PG&E discretion whether it wants, as it has had, a 26

single safety officer.”827

Q 12 Do you agree with OSA’s recommendation?28

A 12 PG&E and PG&E Corporation believe that the current structure for 29

executive-level oversight of safety is effective and appropriate, and the 30

current structure includes a Corporate Safety Officer who has both 31

operations and professional safety experience. However, PG&E agrees 32

8 OSA Testimony, pp. 2-9 to 2-10.

4-6

with OSA’s general comment that safety culture should not depend on the 1

skills of a single person. At PG&E and PG&E Corporation, responsibility for 2

instilling and promoting a strong safety culture is the responsibility of 3

everyone, whether they are Board members, Officers, or other employees.4

B. Conclusion5


A 13 Yes, it does.7


CHAPTER 4

ATTACHMENT 4A

BIOGRAPHIES OF THE DIRECTORS

Lewis ChewAge: 55Director Since: September 2009Current Board Committees: Audit (Chair); Compliance and Public Policy; ExecutiveCurrent Position: Executive Vice President and Chief Financial Officer of Dolby Laboratories, Inc. (audio, video, and voice technologies) since June 2012

Prior Positions:

Mr. Chew previously was Senior Vice President, Finance and Chief Financial Officer of National Semiconductor Corporation (design, manufacturing, and sale of semiconductor products) (2001 to 2011). Before that, he was a Partner and certified public accountant at KPMG, LLP (accounting firm), where he served mainly technology and financial institution clients.

Experience, Skills, and Expertise:

As an executive of a large business customer in the Utility’s service area, Mr. Chew brings insights from a customer’s perspective to the Board. He has specific financial expertise and executive management and leadership skills gained from serving as a chief financial officer of other large public companies and as an audit partner at KPMG, LLP. He also has experience managing and overseeing all financial functions at a large public company, as well as information technology, manufacturing and supply chain, global facilities, investor relations, business planning, corporate controllership, strategic planning, business development, worldwide operations finance, and global internal audit functions.

Fred J. FowlerAge: 72Director Since: March 2012Current Board Committees: Finance; Safety and Nuclear OversightCurrent Position: Retired Chairman of the Board, Spectra Energy Partners, LP (master limited partnership that owns natural gas transmission and storage assets)Other Current Public Company Boards: Encana Corporation (natural gas producer) since 2010 (serves on corporate responsibility, environment, health

and safety committee, and human resources and compensation committee); DCP Midstream Partners, LP (master limited partnership that owns, operates, acquires, and develops midstream energy assets) since 2015 (serves on audit committee)

Prior Positions:

In addition to serving as Chairman of the Board of Spectra Energy Partners, LP (2008 to 2013), Mr. Fowler was President and CEO of Spectra Energy Corp (natural gas gathering and processing, transmission and storage, and distribution company) (2006 to 2008) and served as a director of that company. Before that, he held various executive positions with Duke Energy Corporation (gas and electric energy company) and its subsidiaries and predecessor companies, including President and COO of Duke Energy.

Prior Public Board Service During the Past Five Years:

Spectra Energy Partners, LP (2008 to 2017)

Other Board Experience:

Mr. Fowler is the former Chairman of the Board of the Interstate Natural Gas Association of America and a former director of the Gas Research Institute, the Gas Technology Institute, and the Institute of Nuclear Power Operations.


Mr. Fowler brings extensive knowledge and over 45 years of experience in natural gas and gas liquids production, transportation, and marketing, and electricity generation, transmission, distribution, and safety. He brings leadership, management, and business skills developed as an executive and a director of numerous public and privately held companies.

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Jeh C. JohnsonAge: 60Director Since: May 2017 (PG&E Corporation); May 2017 through December 2017 (Utility)Current Board Committees: Compliance and Public Policy; Safety and Nuclear Oversight (PG&E Corporation only)Current Position: Partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP (Paul, Weiss) (international law firm) since January 2017

Other Current Public Company Boards: Lockheed Martin Corporation (global aerospace, defense, security, and advanced technologies) since January 2018; (serves on classified business and security committee and ethics and sustainability committee)

Prior Positions:

Secretary Johnson has served in three Senate-confirmed presidential appointments. Before rejoining Paul, Weiss, he served as U.S. Secretary of Homeland Security (December 2013 to January 2017). Secretary Johnson previously served as General Counsel of the U.S. Department of Defense (2009 to 2012), as General Counsel of the U.S. Department of the Air Force (1998 to 2001), and as an Assistant U.S. Attorney in the Southern District of New York (1989 to 1991). Prior to and between his periods of public service, Secretary Johnson was in private practice at Paul, Weiss (2013, 2001 to 2009, 1992 to 1998, and 1984 to 1988).


Secretary Johnson currently serves as a director of the Center for a New American Security, and the Drum Major Institute, and a member of the Council of Foreign Relations. He has previously served as a trustee, director, and governor of Adelphi University, the New York Hall of Science, the Legal Aid Society, the Film Society of Lincoln Center, the New York Community Trust, the City Bar Fund, the Roosevelt Institute, the National Institute of Military Justice, the Federal Bar Council, the Fund for Modern Courts, Vera Institute of Justice, and the Lawyers’ Committee for Civil Rights Under Law. He also previously chaired the Judiciary Committee of the New York City Bar Association, and served as a member of the Executive Committee of New York City Bar. .


Secretary Johnson brings extensive leadership, legal, and management skills developed while serving in the public sector and as legal counsel to large public companies and their boards of directors. His specific experience includes crisis and risk management, cybersecurity and other security and safety matters, disaster response, critical infrastructure protection, federal and state policy issues, and regulatory matters. He has a proven track record of navigating through complex and challenging issues in both his public service career and his private law practice.

Richard C. KellyAge: 71Director Since: June 2013Current Board Committees: Nominating and Governance (Chair); Audit; Compensation; Executive Current Position: Non-executive Chair of PG&E Corporation

Prior Positions:

Mr. Kelly served as Chairman and CEO of Xcel Energy Inc. (utility supplier of electric power and natural gas service operating in eight Western and Midwestern states) from 2005 to 2011. He also served in various executive positions at Xcel Energy, including President, COO, and Chief Financial Officer. Before the merger forming Xcel Energy Inc. in 2000, he held a variety of finance-related positions at predecessor companies New Century Energies and Public Service of Colorado.

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Canadian Pacific Railway (transcontinental railway in Canada and the United States) (2006 to 2014)


Mr. Kelly is former Chairman of the Edison Electric Institute, a former board member of the Electric Power Research Institute and the Nuclear Energy Institute, and a former member of the National Petroleum Council and the National Advisory Council of the National Renewable Energy Laboratory. Mr. Kelly previously served as a director of BrightSource Energy, Inc. (solar thermal technology). He currently serves on the Board of Trustees of Regis University.


Mr. Kelly brings over 40 years of diverse energy experience and leadership as a utility industry executive. His specific expertise includes finance, mergers and acquisitions, utility operations, safety, clean energy, and nuclear and renewable power.

Roger H. KimmelAge: 71Director Since: January 2009Current Board Committees: Compliance and Public Policy (Chair); Finance; Nominating and Governance; Executive Current Position: Vice Chairman of Rothschild Inc. (international investment banking firm) since January 2001Other Current Public Company Boards: Endo International plc (global

specialty healthcare company) since May 2007 (non-executive Chairman of the Board; serves on nominating and governance committee (chair), audit committee, compensation committee, and operations committee.

Prior Positions:

Mr. Kimmel previously was a partner in the international law firm of Latham & Watkins LLP, where his practice focused on mergers and acquisitions, capital markets, and corporate governance matters.


Schiff Nutrition International, Inc. (vitamins and nutritional supplements company) (1996 to 2012)


Mr. Kimmel has also served on the boards of a variety of privately held companies. He was Chairman of the Board of Trustees of the University of Virginia Law School Foundation from 2009 to June 2015, and was a member of the Board of Trustees of the Riverdale Country School from 2010 to 2016.


Mr. Kimmel’s investment banking work includes cross-border and domestic public company mergers and acquisitions, capital market transactions, corporate governance, and advising special committees of boards of directors. He brings business, finance, and legal skills, as well as leadership and problem-solving skills developed as an executive and a director of, and legal counsel to, other large public companies. His specific expertise includes corporate transactions, finance, investment banking, international business, corporate governance, and legal matters.

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Richard A. MeserveAge: 73Director Since: December 2006Current Board Committees: Safety and Nuclear Oversight (Chair); Compliance and Public Policy; Nominating and Governance; ExecutiveCurrent Position: President Emeritus, Carnegie Institution of Washington (not-for-profit scientific research institution); Senior Of Counsel to the international law firm of Covington & Burling LLP since April 2004; consultant on nuclear matters

Prior Positions:

Prior to serving as President of the Carnegie Institution of Washington (2003 to 2014), Dr. Meserve was Chairman of the U.S. Nuclear Regulatory Commission. He previously was a partner of Covington & Burling LLP. He also served as a member of the Blue Ribbon Commission on America’s Nuclear Future (chartered by the U.S. Secretary of Energy) (2010 to 2012), as legal counsel to President Carter’s science and technology advisor, and as a law clerk to Justice Harry A. Blackmun of the U.S. Supreme Court.


Duke Energy Corporation (gas and electric energy company) (2015 to 2016)


Dr. Meserve has been a director of Tri Alpha Energy, Inc. (development of clean fusion energy technology) since 2012. He also serves on the Council and Trust of the American Academy of Arts and Sciences, the board of trustees of the Carnegie Institution of Washington, and the board of directors of the Kavli Foundation.


Dr. Meserve brings technical, legal, regulatory, public policy, and safety expertise in numerous areas, including nuclear power, energy policy, and climate change, as well as leadership and business skills developed as an executive and a director of, and an advisor to, national and international scientific, research, and legal organizations. He currently is co-chairman of the U.S. Department of Energy’s Nuclear Energy Advisory Committee and Chairman of the International Nuclear Safety Group, which is chartered by the International Atomic Energy Agency.

Forrest E. MillerAge: 65Director Since: February 2009; Non-Executive Chair of Pacific Gas and Electric Company.Current Board Committees: Compensation (Chair); Audit; ExecutiveCurrent Position: Retired Group President-Corporate Strategy and Development of AT&T Inc. (communications holding company)

Prior Positions:

Prior to serving as Group President-Corporate Strategy and Development of AT&T Inc. (2007 to 2012), Mr. Miller served as Group President of AT&T Corp., the Global Enterprise division of AT&T Inc., and held a variety of executive positions at SBC Communications (communications holding company) and its predecessor Pacific Telesis Group.


Mr. Miller currently serves as a member of the board of the Baylor Health Care System Foundation in Dallas, Texas.

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Mr. Miller brings strategic management, leadership, and business skills developed as an executive of other large public companies in both regulated and competitive markets, as well as specific expertise in a number of areas, including strategic planning, business development, corporate finance, audit, mergers and acquisitions, government and regulatory affairs, and human resources.

Eric D. MullinsAge: 55Director Since: September 2016Current Board Committees: Audit; Safety and Nuclear OversightCurrent Position: Co-CEO of Lime Rock Resources, L. P. (private equity investment firm that acquires, operates, and improves oil and natural gas properties in the U.S.) since 2005Other Current Public Company Boards: Anadarko Petroleum Company

(independent oil and natural gas exploration and production company) since May 2012 (serves on audit committee (chair) and executive committee)

Prior Positions:

Prior to co-founding Lime Rock Resources, L.P. in 2005, Mr. Mullins served as a managing director in the investment banking division of Goldman Sachs & Co., where he led numerous financing, structuring, and strategic advisory transactions for public and private oil and gas exploration and production companies in the division’s Natural Resources Group.


Mr. Mullins currently serves as a member of the Baylor College of Medicine Board of Trustees.


Mr. Mullins brings operational, business development, and mergers and acquisition experience in the energy sector, as well as director and audit committee experience from his other public company board service. He also brings strategic management, leadership, and corporate financial expertise developed as an executive in the investment banking industry working with both public and private companies in the natural resources and utilities sector.

Rosendo G. ParraAge: 58Director Since: September 2009Current Board Committees: Compensation; Nominating and Governance; Safety and Nuclear OversightCurrent Position: Retired executive of Dell Inc. (international information technology company); co-founder and Partner of Daylight Partners (technology-focused venture capital firm) since December 2007

Prior Positions:

Mr. Parra previously held various executive and senior management positions at Dell Inc., includingSenior Vice President for the Home and Small Business Group and Senior Vice President and General Manager, Dell Americas. In those roles, he led Dell Inc.’s activities in the Americas, including marketing, sales, manufacturing, logistics/distribution, call center operations, and services to all customer segments in the Americas.


Brinker International (casual restaurant dining company) (2004 to 2015); NII Holdings, Inc. (mobile communications services in Latin America) (2008 to 2015)


Mr. Parra brings business management, leadership, and problem-solving skills developed as an executive and a director of other large public companies, and specific experience in various areas, including technology, product development, manufacturing, sales, marketing, and customer service.

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Barbara L. RamboAge: 65Director Since: January 2005Current Board Committees: Finance (Chair); Compensation; Nominating and Governance; ExecutiveCurrent Position: CEO of Taconic Management Services (management consulting company) since October 2009

Prior Positions:

Ms. Rambo has held various executive positions with companies in the financial services and technology sectors. Prior to joining Taconic Management Services, she was CEO, Vice Chair, and a director of Nietech Corporation (consumer payments technology company) (2002 to 2009). She previously was CEO of Open Close Technologies (financial services technology company) (2000 to 2002). Ms. Rambo assumed that position after holding a number of executive positions at Bank of America, including head of National Commercial Banking.


West Marine, Inc. (boating specialty retailer) (2009 to 2017) (independent board chair); International Rectifier Corporation (power management technologies) (2009 to 2015)


Ms. Rambo currently serves as a director of MUFG Union Bank, N.A. and MUFG Americas Holdings Corporation (Mitsubishi UFJ Financial Group - corporate, commercial, and retail banking, wealth management, investment banking). Ms. Rambo previously served on the boards of UnionBanCal Corporation (2007 to 2009), and Gymboree Corporation (1996 to 2007).


Ms. Rambo brings leadership and business skills developed as an executive and a director of other large public companies, with a focus on the financial services and technology sectors, and specific experience in corporate finance, capital markets, sales and marketing, operations, and executive management.

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Anne Shen SmithAge: 64Director Since: February 2015Current Board Committees: Compliance and Public Policy; Finance; Safety and Nuclear OversightCurrent Position: Retired Chairman and CEO of Southern California Gas Company (natural gas utility subsidiary of Sempra Energy serving southern California and portions of central California)

Prior Positions:

Prior to serving as Chairman and CEO of Southern California Gas Company (SoCalGas) (2012 to 2014) and President of SoCalGas (2012), Ms. Smith held various executive positions at that company, including COO (2010 to 2012), Senior Vice President – Customer Services (2004 to 2010), and Vice President of Environment and Safety. She also served as Senior Vice President – Customer Services of San Diego Gas & Electric Company (natural gas and electric utility subsidiary of Sempra Energy serving San Diego County, California and a portion of Orange County, California) during her tenure in that position for SoCalGas (2004 to 2010).


Southern California Gas Company (2012 to 2014)


Ms. Smith served as a board member of the American Gas Association, the Southern California Leadership Council, the UC Davis Energy Efficiency Center, Asian Americans Advancing Justice – Los Angeles, the California League of Conservation Voters Education Fund, and Coalition for Clean Air.


Ms. Smith brings over 38 years of diverse energy experience and leadership as a utility industry executive. Her specific expertise includes utility operations, safety, environmental policy, strategic planning, customer service, external affairs, and information technology.

Nickolas StavropoulosAge: 60Director Since: August 2015 (Utility)Current Board Committees: Executive (Utility)Current Position: President and COO, Pacific Gas and Electric Company

Prior Positions:

Prior to serving as President and COO of the Utility, Mr. Stavropoulos was the Utility’s President, Gas (August 2015 to February 2017) and Executive Vice President, Gas Operations (June 2011 to August 2015). In his role as President, Gas, Mr. Stavropoulos led all aspects of the Utility’s gas transmission and distribution operations, including planning, engineering, maintenance and construction, and emergency response, as well as enterprise-wide IT, physical and cyber security, safety, health and environmental, supply chain, and transportation/fleet/real estate organizations. Before joining the Utility, Mr. Stavropoulos served as Executive Vice President and COO of National Grid (2007 to 2011) (multinational electricity and gas utility), where he was responsible for all aspects of its U.S. gas distribution business. Prior to that role, Mr. Stavropoulos was President of KeySpan Energy Delivery, where he led the company’s gas distribution group, field operations, and sales and marketing teams. He has also held several senior leadership roles at Colonial Gas Company and Boston Gas.


Dynamics Research Corporation (US. government services, information technology, and management consulting firm) (2005 to 2014)

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Mr. Stavropoulos is a member of the Board of Directors of the National Safety Council (2017 to present), Gas Technology Institute (2016 to present), and American Gas Association (2015 to present). He has served on the Board of Trustees of Bentley University since 2009.


Mr. Stavropoulos brings over 35 years of energy industry operations leadership, as well as detailed knowledge of the U.S. natural gas sector. He has extensive executive management, business, and leadership experience in areas such as safety, utility operations, information technology, regulatory affairs, strategic planning, supply chain, finance, sales, business development, and marketing.

Geisha J. WilliamsAge: 56Director Since: May 2017 (PG&E Corporation); August 2015 (Utility)Current Board Committees: ExecutiveCurrent Position: CEO and President, PG&E Corporation

Prior Positions:

Prior to serving as CEO and President of PG&E Corporation, Ms. Williams was the Utility’s President, Electric (August 2015 to February 2017) and Executive Vice President, Electric Operations (June 2011 to August 2015). In her role as President, Electric, Ms. Williams led all aspects of the Utility’s electric business, including power generation, nuclear operations, transmission, distribution, and substation operations, asset management and strategy, and energy procurement, as well as the enterprise-wide customer care organization. Ms. Williams previously served as the Utility’s Senior Vice President, Energy Delivery (December 2007 to May 2011). Before joining the Utility, Ms. Williams held officer-level positions leading electric distribution at Florida Power and Light Company (electric utility serving customers in Florida), as well as a variety of positions of increasing responsibility in customer service, marketing, external affairs, and electric operations at that company.


Ms. Williams currently serves as a director of the Edison Electric Institute and the Institute of Nuclear Power Operations, trustee of the University of Miami and the California Academy of Sciences, and as director of the Center for Energy Workforce Development.


Ms. Williams brings over 30 years of utility experience, as well as deep knowledge of the Utility’s electric operations business. She has extensive executive leadership, business and management experience in areas such as utility operations, customer service, marketing, safety, strategy and planning, and external and community affairs, gained from her numerous leadership roles at both the Utility and at another large utility.

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CHAPTER 5

PG&E’S CORRECTIVE ACTION PROGRAM

5-i


PG&E’S CORRECTIVE ACTION PROGRAM

TABLE OF CONTENTS

A. Introduction....................................................................................................... 5-1

B. PG&E’s CAP .................................................................................................... 5-1

1. Enterprise-Wide Deployment of CAP......................................................... 5-1

2. Electric Operations’ Deployment of CAP.................................................... 5-1

3. Lessons Learned From CAP...................................................................... 5-2

4. Results from CAP ...................................................................................... 5-2

C. Conclusion........................................................................................................ 5-3

5-1


CHAPTER 52

PG&E’S CORRECTIVE ACTION PROGRAM3

A. Introduction4


A 1 My name is Gary R. Close. I am Director of the Enterprise Corrective Action 6

Program (CAP) at Pacific Gas and Electric Company (PG&E). The purpose 7

of this testimony is to respond to the prepared testimony submitted on 8

February 16, 2018, by the Office of Ratepayer Advocates (ORA), Office of 9

the Safety Advocate (OSA), and The Utility Reform Network (TURN) with 10

respect to Questions 10 through 13 of the Assigned Commissioner’s Ruling 11

(ACR) dated November 17, 2017. These questions pertain to PG&E’s CAP.12


A 2 No, ORA’s testimony does not raise any issues with my opening testimony.14


A 3 I would like to respond to OSA’s testimony by clarifying the role that CAP 16

plays in contributing to a healthy safety culture.17


A 4 No, TURN’s testimony does not raise any issues with my opening testimony.19

B. PG&E’s CAP20

1. Enterprise-Wide Deployment of CAP21

Q 5 In response to ACR Question 10, you stated that, as of June 2017, CAP has 22

been deployed to all lines of business (LOB) within PG&E.1 Does any party 23

disagree with your position?24

A 5 No party raises an issue with this testimony.25

2. Electric Operations’ Deployment of CAP26

Q 6 In response to ACR Question 11, you described how CAP was deployed to 27

Electric Operations in November 2016, and that PG&E has evaluated 28

1 PG&E Testimony, pp. 5-1 and 5-3 to 5-5.

5-2

Electric Operations’ transition to CAP and identified additional improvements 1

planned for 2018.2 Does any party disagree with your position?2

A 6 No party raises any issue with this testimony.3

3. Lessons Learned From CAP4

Q 7 In response to ACR Question 12, you described how “lessons learned” from 5

CAP are shared across LOBs.3 Does any party disagree with your 6

position?7

A 7 No party raises any issue with this testimony.8

4. Results from CAP 9

Q 8 In response to ACR Question 13, you described how resources being 10

devoted to CAP are showing results in terms of safety performance, new 11

policies or additional training for field employees and contractors. Does any 12

party disagree with your position?13

A 8 No party raises any issue with this testimony. OSA does argue, however, 14

that it is:15

premature to conclude that the recent enterprise-wide deployment of 16PG&E’s CAP across its LOBs will have the desired effect on safety 17culture and its ability to operate safely.418

Q 9 Do you agree with OSA’s argument?19

A 9 Given that CAP has only been available enterprise-wide at PG&E since 20

June 2017, I agree that it is premature to reach conclusions about the full 21

impact of the program on PG&E’s safety culture. As I stated in my opening 22

testimony, “it is still early for meaningful metrics.”5 That said, I provided 23

evidence in my opening testimony of positive impacts within three CAP24

focus areas: (1) issue submission and assessment; (2) issue resolution; 25

and (3) issue recurrence prevention.626

2 PG&E Testimony, pp. 5-1 and 5-5 to 5-6.3 PG&E Testimony, pp. 5-1 and 5-6 to 5-8.4 OSA Testimony, p. 1-4.5 PG&E Testimony, p. 5-2.6 PG&E Testimony, pp. 5-8 to 5-16; see also Appendix 5-A through 5-L.

5-3

In its testimony, OSA cites to a report by the Institute of Nuclear Power 1

Operations (INPO) called, “Principles for a Strong Safety Culture.”7 A more 2

recent version of that INPO report, now titled, “Traits of a Healthy Nuclear 3

Safety Culture,” is attached hereto as Attachment 5A. In the report, INPO 4

identifies “a corrective action program with a low threshold for identifying 5

issues” as an essential trait of a healthy nuclear safety program.6

Learning from the nuclear industry’s experience, PG&E believes a CAP 7

is an essential trait of an enterprise-wide healthy safety culture. While CAP 8

will not be the sole driver of safety results, PG&E believes CAP will 9

contribute to the overall success of PG&E’s safety culture.10

C. Conclusion11



7 OSA Testimony, p. 2-9, FN.25.


CHAPTER 5

ATTACHMENT 5A

TRAITS OF A HEALTHY NUCLEAR SAFETY CULTURE – INPO

REVISION 1, DATED APRIL 2013

Document

INPO 12–012April 2013

Traits of aHealthy Nuclear Safety Culture

Revision 1

OPEN DISTRIBUTION

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OPEN DISTRIBUTION: Copyright © 2012, 2013 by the Institute of Nuclear Power Operations. Not for sale or commercial use. All other rights reserved.

NOTICE: This information was prepared in connection with work sponsored by the Institute of Nuclear Power Operations (INPO). Neither INPO, INPO members, INPO participants, nor any person acting on behalf of them (a) makes any warranty or representation, expressed or implied, with respect to the accuracy, completeness, or usefulness of the information contained in this document, or that the use of any information, apparatus, method, or process disclosed in this document may not infringe on privately owned rights, or (b) assumes any liabilities with respect to the use of, or for damages resulting from the use of any information, apparatus, method, or process disclosed in this document.

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INPO 12-012, Revision 1

TABLE OF CONTENTS

Section Page

INTRODUCTION .......................................................................................3

BACKGROUND .........................................................................................5

THE TRAITS AND THEIR ATTRIBUTES ...............................................9

Individual Commitment to Safety ..........................................................9

Personal Accountability ...................................................................9

Questioning Attitude ......................................................................10

Effective Safety Communication ...................................................12

Management Commitment to Safety ...................................................15

Leadership Safety Values and Actions ..........................................15

Decision-Making............................................................................19

Respectful Work Environment ......................................................20

Management Systems ..........................................................................23

Continuous Learning ......................................................................23

Problem Identification and Resolution ..........................................25

Environment for Raising Concerns ................................................27

Work Processes ..............................................................................29

TABLE – INPO PRINCIPLES TO TRAITS.............................................31

ACKNOWLEDGEMENTS .......................................................................33

1

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2

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INTRODUCTION

Traits of a Healthy Nuclear Safety Culture builds on the knowledge and experience gained since the publication of Principles of a Strong Nuclear Safety Culture in 2004. The change in the title reflects the commercial nuclear industry alignment of its own terminology with that used by the U.S. Nuclear Regulatory Commission. This document was developed through a collaborative effort by U.S. industry personnel and the staff of the Institute of Nuclear Power Operations (INPO), with input from representatives of various regulatory agencies, the public, and the nuclear industry worldwide. Traits of a Healthy Nuclear Safety Culture reflects an alignment in two sets of terms that have been used to describe nuclear safety culture: INPO and the industry defined safety culture in leadership terms of principles and attributes, and the U.S. Nuclear Regulatory Commission defined safety culture in regulatory terms of components and aspects. Whereas each set of terms served its special function, the result created confusion within operating organizations as to the essential elements of a healthy safety culture.

Traits of a Healthy Nuclear Safety Culture describes the essential traits and attributes of a healthy nuclear safety culture, with the goal of creating a framework for open discussion and continuing evolution of safety culture throughout the commercial nuclear energy industry. For the purposes of this document, a trait is defined as a pattern of thinking, feeling, and behaving such that safety is emphasized over competing priorities. Experience has shown that the personal and organizational traits described in this document are present in a positive safety culture and that shortfalls in these traits and attributes contribute significantly to plant events.

Rather than prescribing a specific program or implementation method, this document describes the basic traits. These traits and attributes, when embraced, will be reflected in the values, assumptions, behaviors, beliefs, and norms of an organization and its members. Ideally, the traits will describe what it is like to work at a nuclear facility and how things are done there. Traits appear in boldface. The attributes clarify the intent of the traits. Every nuclear organization has many important behaviors and actions specified within its procedures, processes, written standards, and expectations. This document highlights some of these behaviors and actions that are most critical to creating and maintaining a healthy nuclear safety culture. The behaviors and actions contained herein are representative and should not be considered comprehensive; as such, this document is not intended to be used as a checklist. It is encouraged that this document be considered for inclusion and use in self-assessments, root cause analyses, and training content, as appropriate.

Utility managers are encouraged to make in-depth comparisons between these traits and their day-to-day policies and practices and to use any differences as a basis for improvements.

In addition to the traits and attributes, two addendums are available. Addendum I:Behaviors and Actions That Support a Healthy Nuclear Safety Culture by Organizational Level describes nuclear safety behaviors and actions that contribute to a healthy nuclear safety culture by organizational level executive/senior manager, manager, supervisor,

3

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and individual contributor. Supplemental workers are included in the individual contributor level. Addendum II: Cross-References provides cross-references from INPO 12-012, Traits of a Healthy Nuclear Safety Culture, to the previous Principles of a Strong Nuclear Safety Culture, the U.S. Nuclear Regulatory Commission operating reactor assessment program cross-cutting area components, and the International Atomic Energy Agency safety culture characteristics. This cross-reference can help individuals understand how the framework was developed and can be useful in change management efforts in this important area.

4

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BACKGROUND

Watershed events over the years have influenced the safety culture at U.S. commercial nuclear power plants. The industry had its first significant wake-up call in 1979 as a result of the accident at Three Mile Island Nuclear Station. Many fundamental problems involving hardware, procedures, training, and attitudes toward safety and regulation contributed to the event.

In 1986, the Chernobyl Nuclear Power Plant accident in the Ukraine was a stark reminder of the hazards of nuclear technology. This accident resulted from many of the same weaknesses that had led to the Three Mile Island accident. In addition, it highlighted the importance of maintaining design configuration, plant status control, line authority for reactor safety, and cultural attributes related to safety.

Response from industry and regulatory organizations to both these events was sweeping. Improvements were made in standards, hardware, emergency procedures, processes, training (including simulators), emergency preparedness, design and configuration control, testing, human performance, and attitudes toward safety.

The 2002 discovery of degradation of the Davis-Besse Nuclear Power Station reactor vessel head highlighted problems that develop when the safety environment at a plant receives insufficient attention.

Most recently, the 2011 nuclear accident at the Fukushima Daiichi power plant in Japanillustrates the importance of thoroughly assessing possible nuclear safety impacts of a hypothetical, yet credible, extreme external event. It also highlights the importance ofemergency response command and control, training, and resource availability for such an event.

A theme common in these events is that, over time, problems crept in, often related to or a direct result of the plant culture. Had these problems been recognized, challenged, and resolved, the events could have been prevented or their severity lessened. The series of decisions and actions that resulted in these events can usually be traced to the shared assumptions, values, and beliefs of the organization.

These events and the notion that culture is a key ingredient in the overall success of the plant form the basis for this document.

Organizational culture is the shared basic assumptions that are developed in an organization as it learns and copes with problems. The basic assumptions that have worked well enough to be considered valid are taught to new members of the organization as the correct way to perceive, think, act, and feel. Culture is the sum total of a group’s learning. Culture is for the group what character and personality are for the individual.

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In addition to a healthy organizational culture, each nuclear station, because of the special characteristics and unique hazards of the technology—radioactive byproducts, concentration of energy in the reactor core, and decay heat—needs a healthy safety culture.

Nuclear safety culture is defined as the core values and behaviors resulting from a collective commitment by leaders and individuals to emphasize safety over competing goals to ensure protection of people and the environment.

This updated definition was developed to apply broadly across all industries that use nuclear technologies. For the commercial nuclear power industry, nuclear safety remains the overriding priority. Although the same traits apply to radiological safety, industrial safety, security, and environmental safety, nuclear safety is the first value adopted at a nuclear station and is never abandoned.

Nuclear safety is a collective responsibility. The concept of nuclear safety culture applies to every employee in the nuclear organization, from the board of directors to the individual contributor. No one in the organization is exempt from the obligation to ensure safety first.

The performance of individuals and organizations can be monitored and trended and, therefore, may serve as an indicator of the health of an organization’s safety culture. However, the health of a facility’s safety culture could lie anywhere along a broad continuum, depending on the degree to which the attributes of safety culture are embraced. Even though safety culture is somewhat of an intangible concept, it is possible to determine whether a station tends toward one end of the continuum or the other.

Commercial nuclear power plants are designed, built, and operated to produce electricity. Safety, production, and cost control are necessary goals for the operation of such a plant. These outcomes are quite complementary, and most plants today achieve high levels of safety, impressive production records, and competitive costs, reinforced by decisions and actions made with a long-term view. This perspective keeps safety as the overriding priority for each plant and for each individual associated with it.

Nuclear safety culture is a leadership responsibility. Experience has shown that leaders in organizations with a healthy safety culture foster safety culture through activities such as the following:

Leaders reinforce safety culture at every opportunity. The health of safetyculture is not taken for granted.

Leaders frequently measure the health of safety culture with a focus on trendsrather than absolute values.

Leaders communicate what constitutes a healthy safety culture and ensureeveryone understands his or her role in its promotion.

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Leaders recognize that safety culture is not all or nothing but is, rather, constantly moving along a continuum. As a result, there is a comfort in discussing safety culture within the organization as well as with outside groups, such as regulatory agencies.

The traits described in this document are divided into three categories that are similar to the three categories of safety culture in International Nuclear Safety Advisory Group (INSAG)-4, Safety Culture. The categories and their primary traits are as follows:

Individual Commitment to Safety— Personal Accountability

— Questioning Attitude

— Effective Safety Communication

Management Commitment to Safety— Leadership Safety Values and Actions

— Decision-Making

— Respectful Work Environment

Management Systems

— Continuous Learning

— Problem Identification and Resolution

— Environment for Raising Concerns — Work Processes

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THE TRAITS AND THEIR ATTRIBUTES

Individual Commitment to Safety

PA. Personal Accountability

All individuals take personal responsibility for safety. Responsibility and authority for nuclear safety are well defined and clearly understood. Reporting relationships, positional authority, and team responsibilities emphasize the overriding importance of nuclear safety.

Attributes:

PA.1 Standards: Individuals understand the importance of adherence to nuclear standards. All levels of the organization exercise accountability for shortfalls in meeting standards.

Behavior Examples:

a. Individuals encourage each other to adhere to high standards.

b. Individuals demonstrate a proper focus on nuclear safety andreinforce this focus through peer coaching and discussions.

c. Individuals hold themselves personally accountable for modelingnuclear safety behaviors.

d. Individuals across the organization apply nuclear safety standardsconsistently.

e. Individuals actively solicit and are open to feedback.

f. Individuals help supplemental personnel understand and practiceexpected behaviors and actions.

PA.2 Job Ownership: Individuals understand and demonstrate personal responsibility for the behaviors and work practices that support nuclear safety.

Behavior Examples:

a. Individuals understand their personal responsibility to foster aprofessional environment, encourage teamwork, and identifychallenges to nuclear safety.

b. Individuals understand their personal responsibility to raise nuclearsafety issues, including those identified by others.

c. Individuals take ownership for the preparation and execution ofassigned work activities.

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d. Individuals actively participate in prejob briefings, understandingtheir responsibility to raise nuclear safety concerns before workbegins.

e. Individuals ensure that they are trained and qualified to performassigned work.

f. Individuals understand the objective of the work activity, their rolein the activity, and their personal responsibility for safelyaccomplishing the overall objective.

PA.3 Teamwork: Individuals and work groups communicate and coordinate their activities within and across organizational boundaries to ensure nuclear safety is maintained.

Behavior Examples:

a. Individuals demonstrate a strong sense of collaboration andcooperation in connection with projects and operational activities.

b. Individuals work as a team to provide peer-checks, verifycertifications and training, ensure detailed safety practices, activelypeer coach new personnel, and share tools and publications.

c. Individuals strive to meet commitments.

QA. Questioning Attitude

Individuals avoid complacency and continuously challenge existing conditions and activities in order to identify discrepancies that might result in error or inappropriate action. All employees are watchful for assumptions, anomalies, values, conditions, or activities that can have an undesirable effect on plant safety.

Attributes:

QA.1 Nuclear is Recognized as Special and Unique: Individuals understand that complex technologies can fail in unpredictable ways.

Behavior Examples:

a. The organization ensures that activities that could affect reactivityare conducted with particular care, caution, and oversight.

b. Individuals recognize the special characteristics and uniquehazards of nuclear technology, including radioactive byproducts,concentration of energy in the core, and decay heat.

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c. Individuals recognize the particular importance of featuresdesigned to maintain critical safety functions, such as core andspent fuel cooling.

d. Executives and senior managers ask probing questions tounderstand the implications and consequences of anomalies inplant conditions.

e. Executives and senior managers challenge managers to ensuredegraded conditions are fully understood and appropriatelyresolved, especially those involving equipment important tonuclear safety.

QA.2 Challenge the Unknown: Individuals stop when faced with uncertain conditions. Risks are evaluated and managed before proceeding.

Behavior Examples:

a. Leaders reinforce expectations that individuals take the time to dothe job right the first time, seek guidance when unsure, and stop ifan unexpected condition or equipment response is encountered.

b. Individuals maintain a questioning attitude during prejob briefingsand job-site reviews1 to identify and resolve unexpectedconditions.

c. Individuals challenge unanticipated test results rather thanrationalizing them. For example, abnormal indications are notautomatically attributed to indication problems but are thoroughlyinvestigated before activities are allowed to continue.

d. Individuals communicate unexpected plant responses andconditions to the control room.

e. Individuals stop work activities when confronted with anunexpected condition, communicate with supervisors, and resolvethe condition prior to continuing work activities. Whenappropriate, individuals consult system and equipment experts.

f. If a procedure or work document is unclear or cannot be performedas written, individuals stop work until the issue is resolved.

QA.3 Challenge Assumptions: Individuals challenge assumptions and offer opposing views when they think something is not correct.

1 Job-site review: An action performed by an individual or group to improve situational awareness at the job site; also known as two-minute drill, timeout, two-minute rule, take-a-minute, and two-minute timeout.

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Behavior Examples:

a. Leaders solicit challenges to assumptions when evaluating nuclearsafety issues.

b. Individual contributors ask questions to fully understand the basesof operational and management decisions that appear to becontrary to nuclear safety.

c. Managers question assumptions, decisions, and justifications thatdo not appear to consider impacts to nuclear safety sufficiently.

QA.4 Avoid Complacency: Individuals recognize and plan for the possibility of mistakes, latent problems, and inherent risk, even while expecting successful outcomes.

Behavior Examples:

a. The organization is aware that latent conditions can exist,addresses them as they are discovered, and considers the extents ofthe conditions and their causes.

b. Prior to authorizing work, individuals verify procedureprerequisites are met rather than assuming they are met based ongeneral plant conditions.

c. Individual contributors perform a thorough review of the work siteand the planned activity every time work is performed rather thanrelying on past successes and assumed conditions.

d. Leaders ensure specific contingency actions are discussed andunderstood during job planning and prejob briefings.

e. Individuals consider potential undesired consequences of theiractions prior to performing work and implement appropriate errorreduction tools.

CO. Effective Safety Communication

Communications maintain a focus on safety. Safety communication is broad and includes plant-level communication, job-related communication, worker-level communication, equipment labeling, operating experience, and documentation. Leaders use formal and informal communication to convey the importance of safety. The flow of information up the organization is considered to be as important as the flow of information down the organization.

Attributes:

CO.1 Work Process Communications: Individuals incorporate safety communications in work activities.

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Behavior Examples:

a. Communications within work groups are timely, frequent, andaccurate.

b. Work groups and supervisors communicate work statuses withother work groups and supervisors during the performance of theirwork activities.

c. Individuals communicate with each other such that everyone hasthe information necessary to accomplish work activities safely andeffectively.

d. Communications during shift turnovers and prejob briefingsprovide information necessary to support nuclear safety.

e. Work groups integrate nuclear safety messages into daily activitiesand meetings.

CO.2 Bases for Decisions: Leaders ensure that the bases for operational and organizational decisions are communicated in a timely manner.

Behavior Examples:

a. Leaders promptly communicate expected outcomes, potentialproblems, planned contingencies, and abort criteria for importantoperational decisions.

b. Leaders share information on a wide range of issues withindividuals and periodically verify their understanding of theinformation.

c. Leaders take steps to avoid unintended or conflicting messages thatmay be conveyed by operational decisions.

d. Leaders encourage individuals to ask questions if they do notunderstand the basis of an operational or management decision.

e. Executives and senior managers communicate the reasons forresource allocation decisions, including the nuclear safetyimplications of those decisions.

CO.3 Free Flow of Information: Individuals communicate openly and candidly, both up, down, and across the organization and with oversight, audit, and regulatory organizations.

Behavior Examples:

a. Leaders encourage the free flow of information.

b. Individuals share information openly and candidly.

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c. Leaders respond to individuals in an open, honest, andnondefensive manner.

d. Individuals provide complete, accurate, and forthright informationto oversight, audit, and regulatory organizations.

e. Leaders actively solicit feedback, listen to concerns, andcommunicate openly with all individuals.

f. Leaders candidly communicate the results of monitoring andassessments throughout the organization and with independentoversight organizations.

CO.4 Expectations: Leaders frequently communicate and reinforce the expectation that nuclear safety is the organization’s overriding priority.

Behavior Examples:

a. Executives and senior managers communicate expectationsregarding nuclear safety so that individuals understand that safetyis the highest priority.

b. Executives and senior managers implement a strategy of frequentcommunication using a variety of tools to reinforce that nuclearsafety is the overriding priority.

c. Executives and senior managers reinforce the importance ofnuclear safety by clearly communicating its relationship tostrategic issues, including budget, workforce planning, equipmentreliability, and business plans.

d. Leaders communicate desired nuclear safety behaviors toindividuals, providing examples of how behaviors positively ornegatively affect nuclear safety.

e. Leaders routinely verify that communications on the importance ofnuclear safety have been heard and understood.

f. Leaders ensure supplemental personnel understand expectedbehaviors and actions necessary to maintain nuclear safety.

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Management Commitment to Safety

LA. Leadership Safety Values and Actions

Leaders demonstrate a commitment to safety in their decisions and behaviors. Executive and senior managers are the leading advocates of nuclear safety and demonstrate their commitment both in word and action. The nuclear safety message is communicated frequently and consistently, occasionally as a stand-alone theme. Leaders throughout the nuclear organization set an example for safety. Corporate policies emphasize the overriding importance of nuclear safety.

Attributes

LA.1 Resources: Leaders ensure that personnel, equipment, procedures, and other resources are available and adequate to support nuclear safety.

Behavior Examples:

a. Managers ensure staffing levels are consistent with the demandsrelated to maintaining safety and reliability.

b. Managers ensure sufficient qualified personnel are available tomaintain work hours within working hour guidelines during allmodes of operation.

c. Managers ensure facilities are available and are regularlymaintained, including physical improvements, simulator fidelity,and emergency facilities.

d. Leaders ensure tools, equipment, procedures, and other resourcematerials are available to support successful work performance,including risk management tools and emergency equipment.

e. Executives and senior managers ensure sufficient corporateresources are allocated to the nuclear organization for short- andlong-term safe and reliable operation.

f. Executives and senior managers ensure a rigorous evaluation of thenuclear safety implications of deferred work.

LA.2 Field Presence: Leaders are commonly seen in working areas of the plant observing, coaching, and reinforcing standards and expectations. Deviations from standards and expectations are corrected promptly.

Behavior Examples:

a. Senior managers ensure supervisory and management oversight ofwork activities, including contractors and supplemental personnel,such that nuclear safety is supported.

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b. Leaders from all levels in the organization are involved inoverseeing work activities.

c. Managers and supervisors practice visible leadership in the fieldand during safety-significant evolutions by “placing eyes on theproblem,” coaching, mentoring, reinforcing standards, andreinforcing positive decision-making practices and behaviors.

d. Managers and supervisors discuss their observations in detail withthe group they observed and provide useful feedback about how toimprove individual performance.

e. Managers encourage informal leaders to model safe behaviors andhigh standards of accountability.

LA.3 Incentives, Sanctions, and Rewards: Leaders ensure incentives, sanctions, and rewards are aligned with nuclear safety policies and reinforce behaviors and outcomes that reflect safety as the overriding priority.

Behavior Examples:

a. Managers ensure disciplinary actions are appropriate, consistent,and support both nuclear safety and a safety-conscious workenvironment.

b. Managers reward individuals who identify and raise issues thataffect nuclear safety.

c. Leaders foster an environment that promotes accountability andhold individuals accountable for their actions.

d. Managers consider the potential chilling effects of disciplinaryactions and other potentially adverse personnel actions and takecompensatory actions when appropriate.

e. Leaders publicly praise behaviors that reflect a positive safetyculture.

LA.4 Strategic Commitment to Safety: Leaders ensure plant priorities are aligned to reflect nuclear safety as the overriding priority.

Behavior Examples:

a. Executives and senior managers reinforce nuclear safety as theoverriding priority.

b. Managers develop and implement cost and schedule goals in amanner that reinforces the importance of nuclear safety.

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c. Managers ensure production requirements are established,communicated, and put into practice in a manner that reinforcesnuclear safety.

d. Executives and senior managers use information from independentoversight organizations to establish priorities that align withnuclear safety.

e. Executives and senior managers establish strategic and businessplans that reflect the importance of nuclear safety over production.

f. Executives and senior managers ensure corporate priorities arealigned with nuclear safety.

LA.5 Change Management: Leaders use a systematic process for evaluatingand implementing change so that nuclear safety remains the overriding priority.

Behavior Examples:

a. When making decisions related to major changes, managers use asystematic process for planning, coordinating, and evaluating thesafety impacts and potential negative effects on the willingness ofindividuals to raise safety concerns. This includes decisionsconcerning changes to organizational structure and functions,leadership, policies, programs, procedures, and resources.

b. Executives and senior managers ensure nuclear safety ismaintained when planning, communicating, and executing majorchanges.

c. Managers maintain a clear focus on nuclear safety whenimplementing the change management process, to avoid significantunintended consequences.

d. Managers ensure that individuals understand the importance of,and their role in, the change management process.

e. Managers anticipate, manage, and communicate the effects ofimpending changes.

f. Managers and supervisors actively monitor and address potentialdistractions from nuclear safety during periods of change.

LA.6 Roles, Responsibilities, and Authorities: Leaders clearly define roles, responsibilities, and authorities to ensure nuclear safety.

Behavior Examples:

a. Leaders ensure roles, responsibilities, and authorities are clearlydefined, understood, and documented.

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b. Managers appropriately delegate responsibility and authority topromote ownership and accountability.

c. Executives and senior managers ensure both corporate managerswho support the nuclear organization and managers at the stationunderstand their respective roles and responsibilities.

d. Recommendations and feedback from corporate governance,review boards, and independent oversight organizations do notoverride senior managers’ ultimate responsibility for decisions thataffect nuclear safety.

LA.7 Constant Examination: Leaders ensure that nuclear safety is constantly scrutinized through a variety of monitoring techniques, including assessments of nuclear safety culture.

Behavior Examples:

a. Executives and senior managers ensure that board members andmembers of independent oversight organizations meet with leadersand individual contributors in their work environments to developan understanding of the status of the organization’s safety culture.

b. Executives and senior managers obtain outside perspectives ofnuclear safety through the selection of qualified, criticalindependent safety review board members with diversebackgrounds and perspectives.

c. Executives and senior managers use a variety of monitoringtools—including employee surveys, independent and self-assessments, external safety review board member feedback, andemployee concern investigations—to regularly monitor stationnuclear safety culture.

d. Leaders support and participate in candid assessments ofworkplace attitudes and nuclear safety culture and act on issuesthat affect trust in management or detract from a positive nuclearsafety culture.

LA.8 Leader Behaviors: Leaders exhibit behaviors that set the standard forsafety.

Behavior Examples:

a. Leaders “walk the talk,” modeling the correct behaviors, especiallywhen resolving apparent conflicts between nuclear safety andproduction.

b. Leaders act promptly when a nuclear safety issue is raised toensure it is understood and appropriately addressed.

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c. Leaders maintain high standards of personal conduct that promoteall aspects of a positive nuclear safety culture.

d. Leaders demonstrate interest in plant operations and actively seekout the opinions and concerns of workers at all levels.

e. Leaders encourage personnel to challenge unsafe behavior andunsafe conditions, and they support personnel who stop plantactivities for safety reasons.

f. Leaders motivate others to practice positive nuclear safety culturebehaviors.

DM. Decision-Making

Decisions that support or affect nuclear safety are systematic, rigorous, and thorough. Operators are vested with the authority and understand the expectation, when faced with unexpected or uncertain conditions, to place the plant in a safe condition. Senior leaders support and reinforce conservative decisions.

Attributes:

DM.1 Consistent Process: Individuals use a consistent, systematic approach to make decisions. Risk insights are incorporated as appropriate.

Behavior Examples:

a. The organization establishes a well-defined decision-makingprocess, with variations allowed for the complexity of the issuebeing decided.

b. Individuals demonstrate an understanding of the decision-makingprocess and use it consistently.

c. Leaders seek inputs from different work groups or organizations asappropriate when making safety- or risk-significant decisions.

d. When previous operational decisions are called into question bynew facts, leaders reevaluate these decisions to ensure they remainappropriate.

e. The organization uses the results of effectiveness reviews toimprove future decisions.

DM.2 Conservative Bias: Individuals use decision-making practices that emphasize prudent choices over those that are simply allowable. Aproposed action is determined to be safe in order to proceed, rather than unsafe in order to stop.

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Behavior Examples:

a. Managers ensure that conservative assumptions are used when determining whether emergent or unscheduled work can be conducted safely.

b. Leaders take a conservative approach to decision-making, particularly when information is incomplete or conditions are unusual.

c. Leaders consider long-term consequences when determining how to resolve emergent concerns.

d. Managers take timely action to address degraded conditions commensurate with their safety significance.

e. Executives and senior managers reinforce the expectation that the reactor will be shut down when procedurally required, when the margin for safe operation has degraded unacceptably, or when the condition of the reactor is uncertain. Managers implement this expectation.

f. Individuals do not rationalize assumptions for the sake of completing a task.

DM.3 Accountability for Decisions: Single-point accountability is maintained for nuclear safety decisions.

Behavior Examples:

a. The on-shift licensed operators have the authority and responsibility to place the plant in a safe condition when faced with unexpected or uncertain conditions.

b. A designated, on-shift licensed senior reactor operator has the authority and responsibility to determine equipment operability.

c. Managers maintain single-point accountability for important safety decisions.

d. The organization ensures that important nuclear safety decisions are made by the correct person at the lowest appropriate level.

WE. Respectful Work Environment

Trust and respect permeate the organization. A high level of trust is established in the organization, fostered, in part, through timely and accurate communication. Differing professional opinions are encouraged, discussed, and resolved in a timely manner. Employees are informed of steps taken in response to their concerns.

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Attributes:

WE.1 Respect is Evident: Everyone is treated with dignity and respect.

Behavior Examples:

a. The organization regards individuals and their professional capabilities and experiences as its most valuable asset.

b. Individuals at all levels of the organization treat each other with dignity and respect.

c. Individuals treat each other with respect within and between work groups.

d. Individuals do not demonstrate or tolerate bullying or humiliating behaviors.

e. Leaders monitor for behaviors that can have a negative impact on the work environment and address them promptly.

f. Leaders ensure policies and expectations are enforced fairly and consistently for individuals at all levels of the organization.

g. Individuals treat decision-makers with respect, even when they disagree with a decision.

h. Leaders ensure facilities are conducive to a productive work environment and housekeeping is maintained.

WE.2 Opinions are Valued: Individuals are encouraged to voice concerns, provide suggestions, and raise questions. Differing opinions are respected.

Behavior Examples:

a. The organization encourages individuals to offer ideas, concerns, suggestions, differing opinions, and questions to help identify and solve problems.

b. Leaders are receptive to ideas, concerns, suggestions, differing opinions, and questions.

c. The organization promotes robust discussions, recognizing that differing opinions are a natural result of differences in expertise and experience.

d. Individuals value the insights and perspectives provided by quality assurance, the employee concerns program, and independent oversight organization personnel.

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WE.3 High Level of Trust: Trust is fostered among individuals and work groups throughout the organization.

Behavior Examples:

a. Leaders promote collaboration among work groups.

b. Leaders respond to questions and concerns in an open and honest manner.

c. Leaders, sensitive to the negative impact of a lack of information, share important information in an open, honest, and timely manner such that trust is maintained.

d. Leaders ensure that plant status and important work milestones are communicated throughout the organization.

e. Leaders acknowledge positive performance and address negative performance promptly and directly with the individual involved. Confidentiality is maintained as appropriate.

f. Leaders welcome performance feedback from throughout the organization and modify their behavior when appropriate.

WE.4 Conflict Resolution: Fair and objective methods are used to resolve conflicts.

Behavior Examples:

a. The organization implements processes to ensure fair and objective resolution of conflicts and differing views.

b. Leaders ensure conflicts are resolved in a balanced, equitable, and consistent manner, even when outside of defined processes.

c. Individuals have confidence that conflicts will be resolved respectfully and professionally.

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Management Systems

CL. Continuous Learning

Opportunities to learn about ways to ensure safety are sought out and implemented. Operating experience is highly valued, and the capacity to learn from experience is well developed. Training, self-assessments, and benchmarking are used to stimulate learning and improve performance. Nuclear safety is kept under constant scrutiny through a variety of monitoring techniques, some of which provide an independent “fresh look.”

Attributes:

CL.1 Operating Experience: The organization systematically and effectively collects, evaluates, and implements relevant internal and external operating experience in a timely manner.

Behavior Examples:

a. A process is in place to ensure a thorough review of operating experience provided by internal and external sources.

b. Operating experience is implemented and institutionalizedeffectively through changes to station processes, procedures, equipment, and training programs.

c. Operating experience is used to understand equipment, operational, and industry challenges and to adopt new ideas to improve performance.

d. Operating experience is used to support daily work functions, with emphasis on the possibility that “it could happen here.”

e. Station operating experience is shared in a timely manner.

CL.2 Self-Assessment: The organization routinely conducts self-critical and objective assessments of its programs and practices.

Behavior Examples:

a. Independent and self- assessments, including nuclear safety culture assessments, are thorough and effective and are used as a basis for improvements.

b. The organization values the insights and perspectives assessmentsprovide.

c. Self-assessments are performed on a variety of topics, including the self-assessment process itself.

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d. Self-assessments are performed at a regular frequency and provide objective, comprehensive, and self-critical information that drive corrective actions.

e. Targeted self-assessments are performed when a more thorough understanding of an issue is required.

f. A balanced approach of self-assessments and independent oversight is used and periodically adjusted based on changing needs.

g. Self-assessment teams include individual contributors and leaders from within the organization and from external organizations when appropriate.

CL.3 Benchmarking: The organization learns from other organizations to continuously improve knowledge, skills, and safety performance.

Behavior Examples:

a. The organization uses benchmarking as an avenue for acquiring innovative ideas to improve nuclear safety.

b. The organization participates in benchmarking activities with other nuclear and nonnuclear facilities.

c. The organization seeks out best practices by using benchmarking to understand how others perform the same functions.

d. The organization uses benchmarking to compare station standards to the industry and to make adjustments to improve performance.

e. Individual contributors are actively involved in benchmarking.

CL.4 Training: The organization provides training and ensures knowledge transfer to maintain a knowledgeable, technically competent workforce and instill nuclear safety values.

Behavior Examples:

a. The organization fosters an environment in which individuals value and seek continuous learning opportunities.

b. Individuals, including supplemental workers, are adequately trained to ensure technical competency and an understanding of standards and work requirements.

c. Individuals master reactor and power plant fundamentals to establish a solid foundation for sound decisions and behaviors.

d. The organization develops and effectively implements knowledge transfer and knowledge retention strategies.

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e. Knowledge transfer and knowledge retention strategies are applied to capture the knowledge and skill of experienced individuals to advance the knowledge and skill of less experienced individuals.

f. Leadership and management skills are systematically developed.

g. Training is developed and continuously improved using input and feedback from individual contributors and subject-matter experts.

h. Executives obtain the training necessary to understand basic plant operation and the relationships between major functions and organizations.

PI. Problem Identification and Resolution

Issues potentially impacting safety are promptly identified, fully evaluated, and promptly addressed and corrected commensurate with their significance. Identification and resolution of a broad spectrum of problems, including organizational issues, are used to strengthen safety and improve performance.

Attributes:

PI.1 Identification: The organization implements a corrective action program with a low threshold for identifying issues. Individuals identify issues completely, accurately, and in a timely manner in accordance with the program.

Behavior Examples:

a. Individuals recognize deviations from standards.

b. Individuals understand how to enter issues into the corrective action program.

c. Individuals ensure that issues, problems, degraded conditions, and near misses are promptly reported and documented in the corrective action program at a low threshold.

d. Individuals describe the issues entered in the corrective action program in sufficient detail to ensure they can be appropriately prioritized, trended, and assigned for resolution.

PI.2 Evaluation: The organization thoroughly evaluates problems to ensure that resolutions address causes and extents of conditions commensurate with their safety significance.

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Behavior Examples:

a. Issues are properly classified, prioritized, and evaluated according to their safety significance.

b. Operability and reportability determinations are developed when appropriate.

c. Apparent and root cause investigations identify primary and contributing causal factors as required.

d. Extent-of-condition and extent-of-cause evaluations are completed in a timely manner, commensurate with the safety significance of the issue.

e. Issues are investigated thoroughly according to their safety significance.

f. Root cause analyses are rigorously applied to identify and correct the fundamental cause of significant issues.

g. The underlying organizational and safety culture contributors to issues are evaluated thoroughly and are given the necessary time and resources to be clearly understood.

h. Cause analyses identify and understand the bases for decisions that contributed to issues.

i. Managers conduct effectiveness reviews of significant corrective actions to ensure that the resolution addressed the causes effectively.

PI.3 Resolution: The organization takes effective corrective actions to address issues in a timely manner commensurate with their safety significance.

Behavior Examples:

a. Corrective actions are completed in a timely manner.

b. Deferrals of corrective actions are minimized. When required, due dates are extended using an established process that appropriately considers safety significance.

c. Appropriate interim corrective actions are taken to mitigate issues while more fundamental causes are being assessed.

d. Corrective actions resolve and correct the identified issues, including causes and extents of conditions.

e. Corrective actions prevent the recurrence of significant conditions adverse to quality.

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f. Trends in safety performance indicators are acted on to resolve problems early.

PI.4 Trending: The organization periodically analyzes information from the corrective action program and other assessments in the aggregate to identify programmatic and common cause issues.

Behavior Examples:

a. The organization develops indicators that monitor both equipment and organizational performance, including safety culture.

b. Managers use indicators that provide an accurate representation of performance and early indications of declining trends.

c. Managers routinely challenge the organization’s understanding of declining trends.

d. Organizational and departmental trend reviews are completed in a timely manner in accordance with program expectations.

RC. Environment for Raising Concerns

A safety-conscious work environment (SCWE) is maintained where personnel feel free to raise safety concerns without fear of retaliation, intimidation, harassment, or discrimination. The station creates, maintains, and evaluates policies and processes that allow personnel to raise concerns freely.

Attributes:

RC.1 SCWE Policy: The organization effectively implements a policy that supports individuals’ rights and responsibilities to raise safety concerns and does not tolerate harassment, intimidation, retaliation, or discrimination for doing so.

Behavior Examples:

a. Individuals feel free to raise nuclear safety concerns without fear of retribution, with confidence that their concerns will be addressed.

b. Executives and senior managers set and reinforce expectations for establishing and maintaining a safety-conscious work environment.

c. Policies and procedures reinforce that individuals have the right and responsibility to raise nuclear safety concerns.

d. Policies and procedures define the responsibilities of leaders to create an environment in which individuals feel free to raise safety concerns.

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e. Policies and procedures establish the expectation that leaders will respond in a respectful manner and provide timely feedback to the individual raising the concern.

f. Leaders are trained to take ownership when receiving and responding to concerns, recognizing confidentiality if appropriate, and ensuring they are adequately addressed in a timely manner.

g. Individuals are trained that behaviors or actions that could prevent concerns from being raised, including harassment, intimidation, retaliation, or discrimination, will not be tolerated and are violations of law and policy.

h. All claims of retaliation are investigated and any necessary corrective actions are taken in a timely manner, including actions to mitigate any potential chilling effect.

RC.2 Alternate Process for Raising Concerns: The organization effectivelyimplements a process for raising and resolving concerns that is independent of line management influence. Safety issues may be raised in confidence and are resolved in a timely and effective manner.

Behavior Examples:

a. Executives establish, support, and promote the use of alternative processes for raising concerns and ensure corrective actions are taken.

b. Leaders understand their role in supporting alternate processes forraising concerns.

c. Processes for raising concerns or resolving differing professional opinions that are alternatives to the corrective action program and operate outside the influence of the management chain are communicated and accessible to individuals.

d. Alternative processes are independent, include an option to raise concerns confidentially, and ensure these concerns are appropriately resolved in a timely manner.

e. Individuals receive feedback in a timely manner.

f. Individuals have confidence that issues raised will be appropriately resolved.

g. Individuals assigned to respond to concerns have the appropriate competencies.

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WP. Work Processes

The process of planning and controlling work activities is implemented so that safety is maintained. Work management is a deliberate process in which work is identified, selected, planned, scheduled, executed, closed, and critiqued. The entire organization is involved in and fully supports the process.

Attributes:

WP.1 Work Management: The organization implements a process of planning, controlling, and executing work activities such that nuclear safety is the overriding priority. The work process includes the identification and management of risk commensurate to the work.

Behavior Examples:

a. Work is effectively planned and executed by incorporating risk insights, job-site conditions, and the need for coordination with different groups or job activities.

b. The work process appropriately prioritizes work and incorporates contingency plans, compensatory actions, and abort criteria as needed.

c. Leaders consider the impact of changes to the work scope and the need to keep personnel apprised of the work status.

d. The work process ensures individuals are aware of the plant status, the nuclear safety risks associated with work in the field, and other parallel station activities.

e. Insights from probabilistic risk assessments are considered in daily work activities and change processes.

f. Work activities are coordinated to address conflicting or changing priorities across the whole spectrum of activities contributing to nuclear safety.

g. The work process limits temporary modifications.

WP.2 Design Margins: The organization operates and maintains equipment within design margins. Margins are carefully guarded and changed only through a systematic and rigorous process. Special attention is placed on maintaining fission product barriers, defense-in-depth, and safety-related equipment.

Behavior Examples:

a. The work process supports nuclear safety and the maintenance of design margins by minimizing long-standing equipment issues,

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preventive maintenance deferrals, and maintenance and engineering backlogs.

b. The work process ensures focus on maintaining fission product barriers, defense-in-depth, and safety-related equipment.

c. Design and operating margins are carefully guarded and changed only with great thought and care.

d. Safety-related equipment is operated and maintained well within design requirements.

WP.3 Documentation: The organization creates and maintains complete, accurate, and up-to-date documentation.

Behavior Examples:

a. Plant activities are governed by comprehensive, high-quality programs, processes, and procedures.

b. Design documentation, procedures, and work packages are complete, thorough, accurate, and current.

c. Components are labeled clearly, consistently, and accurately.

d. The backlog of document changes is understood, prioritized, and actively managed to ensure quality.

WP.4 Procedure Adherence: Individuals follow processes, procedures, and work instructions.

Behavior Examples:

a. Individuals follow procedures.

b. Individuals understand and use human error reduction techniques.

c. Individuals review procedures and instructions prior to work to validate that they are appropriate for the scope of work and that required changes are completed prior to implementation.

d. Individuals manipulate plant equipment only when appropriately authorized and directed by approved plant procedures or work instructions.

e. Individuals ensure the statuses of work activities are properly documented.

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The table below is from Traits of a Healthy Nuclear Safety Culture Addendum II: Cross-References.

TABLE

INPO PRINCIPLES TO TRAITS

INPO Principle TraitEveryone is personally responsible for nuclear safety.

Personal Accountability

Leaders demonstrate commitment to safety.

Leadership Safety Values and Actions

Trust permeates the organization. Effective Safety Communication

Respectful Work Environment

Environment for Raising Concerns

Decision-making reflects safety first. Decision-Making

Nuclear technology is recognized as special and unique.

Work Processes

A questioning attitude is cultivated. Questioning Attitude

Organizational learning is embraced. Continuous Learning

Problem Identification and Resolution

Nuclear safety undergoes constant examination.

Continuous Learning

Problem Identification and Resolution

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ACKNOWLEDGEMENTS

The following individuals participated in advisory groups that developed the traits and attributes in this document.

Jeffrey B. ArchieSenior Vice President and Chief Nuclear Officer South Carolina Electric & Gas Company

Ronald A. BarnesDirector, Nuclear Regulatory AffairsArizona Public Service Company

Elizabeth BeswickNuclear Professionalism Consultant Nuclear GenerationEDF Energy

Susan BrissetteManager, Management System DepartmentBruce Power

Annick CarninoDirectorEnergy Strategists Consultancy Limited

Conrad DubeProject ManagerWANO Paris Center

Randall K. EdingtonExecutive Vice President and Chief Nuclear OfficerArizona Public Service Company

Edwin J. EilolaDirector, Nuclear OversightPSEG Nuclear LLC

Jose Manuel Diaz FranciscoCommunication and Safety CoordinatorElectronuclear

David F. GarchowVice President, Plant Technical SupportInstitute of Nuclear Power Operations

Billie Garde, Esq.PartnerClifford & Garde, LLP

Ronald GastonLicensing ManagerExelon Corporation

Pierre Francois GestSenior Safety Officer Operational Safety Section International Atomic Energy Agency

Edward D. HalpinSenior Vice President and Chief Nuclear OfficerPacific Gas and Electric Company

Jun HamadaGeneral Manager & Group LeaderJapan Nuclear Technology Institute

Lori HayesManager, Corporate Nuclear OversightProgress Energy, Inc.

Albert R. HochevarDeputy Director, OR Team LeadersInstitute of Nuclear Power Operations

Tom HoughtonSenior Director, Safety Focused RegulationNuclear Energy Institute

William R. IllingSenior Program ManagerInstitute of Nuclear Power Operations

Bernard JeanninSafety Standards AdvisorSafety and Security CoordinationInternational Atomic Energy Agency

Molly KeefeHuman Factors SpecialistOffice of Nuclear Reactor RegulationU.S. Nuclear Regulatory Commission

Anne KerhoasSenior Safety Specialist Division of Nuclear Installation SafetyDepartment of Nuclear Safety and Security International Atomic Energy Agency

G. Kenneth Koves, Ph.D.Principal Program ManagerInstitute of Nuclear Power Operations

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Johann KritzingerCorporate Consultant: Human PerformanceNuclear Operating UnitEskom Holdings SOC Ltd

Valérie LagrangeSafety Management & Human Factors AdvisorNuclear Operation Division Electricité de France

James E. LynchVice President, AssistanceInstitute of Nuclear Power Operations

Kamishan MartinHuman Factors EngineerOffice of Nuclear Reactor RegulationU.S. Nuclear Regulatory Commission

Stephanie Morrow, Ph.D.Human Factors AnalystOffice of Nuclear Regulatory ResearchU.S. Nuclear Regulatory Commission

Kevin J. MulliganVice President, Operations SupportEntergy Nuclear

Michael J. PacilioPresident and Chief Nuclear Officer Exelon NuclearExelon Corporation

Ray PowellChief, Technical Support and Assessment Branch Region IU.S. Nuclear Regulatory Commission

Gregory RolinaResearcherMines ParisTech

Eric RueschSenior Reactor InspectorRegion IV U.S. Nuclear Regulatory Commission

Philip K. RussellTeam LeaderInstitute of Nuclear Power Operations

Jack RutkowskiReactor InspectorRegion IIIU.S. Nuclear Regulatory Commission

Undine ShoopChief, Health Physics and Human Performance BranchOffice of Nuclear Reactor RegulationU.S. Nuclear Regulatory Commission

Diane SierackiSenior Safety Culture Program Manager Office of Enforcement U.S. Nuclear Regulatory Commission

James SliderSenior Director, Safety Focused RegulationNuclear Energy Institute

Preston D. SwaffordExecutive Vice President and Chief Nuclear OfficerTennessee Valley Authority

Carin SylvanderHuman Performance, RQH and Safety CultureVattenfall AB; Ringhals NPP

Alexandra TudorEngineer, Performance Monitoring SectionSafety and Compliance DepartmentCNE Cernavoda, S.N. Nuclearelectrica

Eduard VolkovDirectorPrognoz - Obninsk Science Research Center

Andrew J. VomastekFleet Manager, Dominion Nuclear Employee Concerns ProgramsDominion Generation

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CHAPTER 6

SAFETY INCIDENTS

[NO REBUTTAL TESTIMONY]

Documents

PACIFIC GAS AND ELECTRIC COMPANY SAFETY …docs.cpuc.ca.gov/PublishedDocs/SupDoc/I1508019/1165/210041129.pdf · pacific gas and electric company safety culture and governance oii