Risk Assessment & Mitigation Workshop: 2019 RAMP Requirements Overview

1. 2019 preliminary Ramp workshopmarch 5, 2019

2. Opening Remarks & Safety Moment

3. Agenda

4. Overview of Workshop Requirements & risk assessment methodology

5. Overview of Pre-RAMP Workshop • Pre-Workshop Requirements • The Settlement Agreement requires the utilities to show the following (at least 14 days) in advance of this workshop: • Preliminary list of Risk Assessment and Mitigation Phase (RAMP) risks • Safety Risk Score for each risk in the Enterprise Risk Registry (ERR); and • the Multi-Attribute Value Function (MAVF or Risk Quantification) for the top 40% of risks in the ERR with a Safety Risk Score greater than zero • Purpose • The intent of this Pre-RAMP Workshop is to gather input from stakeholders to inform the determination of the final list of risks to be included in the 2019 RAMP filing.   • Consistent with the Settlement Agreement, the rationale for taking or disregarding input during the Pre-RAMP Workshop will be addressed in the 2019 RAMP Report of SoCalGas and SDG&E. 

6. RAMP Risk Assessment Methodology SDG&E/SCG host workshop to solicit feedback on RAMP risks Compute a Safety Score for all Enterprise Risk Registry risks Compute MAVF scores using Reliability and Financial attributes for the top 40% of risks with a Safety Score greater than zero SoCalGas and SDG&E to make final determination of RAMP risks Multi-Attribute Value Function (MAVF)1 • The 2016 RAMP primarily relied on subject matter expertise. • The 2019 RAMP will apply a probabilistic Multi-Attribute Value Function (MAVF) to determine which risks to include in RAMP and calculate a basis for mitigation effectiveness. • There must be a minimum weight of 40% for the safety attribute in the MAVF unless the Utilities can justify a lower weight based on their respective analyses. (D.18-12-014, OP 2). 1 MAVF: a tool for combining potential consequences of the occurrence of a risk event and creating a single measurement of value.

7. Preliminary RAMP Risks

8. Summary of Assessments for the Enterprise Risk Registry Conduct safety assessment for all Enterprise Risk Registry risks Conduct a reliability and financial assessment for risks in the top 40% of risks with a safety score greater than zero

9. SDG&E Preliminary RAMP Risks Wildfires involving SDG&E Equipment (including Third Party Pole Attachments) Catastrophic wildfire resulting in fatalities, property destruction, and a multi-billion dollar liability Contractor Safety The risk of a safety event, caused by a contractor or subcontractor not following safety standards and/or procedures, which results in injuries and/or fatalities Employee Safety Risk of conditions and practices that threaten employee safety, caused by non‐adherence to Company safety policies, procedures, and programs, which results in severe injuries or fatalities Electric Infrastructure Integrity Asset failure or an asset no longer complying with the latest engineering standards, which results in a safety environmental, or reliability incident Customer and Public Safety The risk of customer safety incidents, caused by not adhering to Company policy/procedure which result in fatality/injuries and facility damage Medium Pressure Gas Pipeline Incident† Damage caused by a medium pressure pipeline (MAOP at or lower than 60 psig) failure event resulting in significant consequences including injuries or fatalities Third Party Dig-In on a Medium Pressure Pipeline Dig-in on a medium pressure pipeline (MAOP at or lower than 60 psig) caused by third party activities resulting in catastrophic consequences High Pressure Gas Pipeline Incident† The risk of damage caused by a high pressure pipeline (MAOP greater than 60 psig) failure event resulting in catastrophic consequences Third Party Dig-In on a High Pressure Pipeline Dig-in on a high pressure line (MAOP greater than 60 psig), caused by third party activities resulting in catastrophic consequences Cyber Security Incident resulting in disruptions to electric or gas operations and/or damage or disruption to Company operations, reputation, or disclosure of sensitive customer or Company data Top 40% of risks with a Safety Risk Score greater than zero † Excluding Dig-ins

10. SoCalGas Preliminary RAMP Risks Medium Pressure Gas Pipeline Incident† Damage caused by a medium pressure pipeline (MAOP at or lower than 60 psig) failure event resulting in significant consequences including injuries or fatalities Employee Safety Risk of conditions and practices that threaten employee safety, caused by non‐adherence to Company safety policies, procedures, and programs, which results in severe injuries or fatalities Contractor Safety The risk of a safety event, caused by a contractor or subcontractor not following safety standards and/or procedures, which results in injuries and/or fatalities Customer and Public Safety The risk of customer safety incidents, caused by not adhering to Company policy/procedure which result in fatality/injuries and facility damage High Pressure Gas Pipeline Incident † The risk of damage caused by a high pressure pipeline (MAOP greater than 60 psig) failure event resulting in catastrophic consequences Third Party Dig-In on a Medium Pressure Pipeline Dig-in on a medium pressure pipeline (MAOP at or lower than 60 psig) caused by third party activities resulting in catastrophic consequences Third Party Dig-In on a High Pressure Pipeline Dig-in on a high pressure line (MAOP greater than 60 psig), caused by third party activities resulting in catastrophic consequences Storage Well Integrity Event Uncontrolled releases of gas, caused by storage well structural integrity issues, resulting in public injuries, deliverability issues, impacts to company reputation, and extensive customer impacts Cyber Security Incident resulting in disruptions to electric or gas operations and/or damage or disruption to Company operations, reputation, or disclosure of sensitive customer or Company data † Excluding Dig-ins Top 40% of risks with a Safety Risk Score greater than zero

11. SDG&E RAMP Risks & Quantification Note: D.18-12-014 (and the Settlement Agreement included therein) permits the utilities to adjust their MAVFs over time. These risk scores are based on SDG&E’s and SoCalGas’ current MAVF and may evolve prior to filing. In the event adjustments are made, they will be addressed in the 2019 RAMP filing. All calculations are derived through the prescriptive analysis and parameters of D.18-12-014 and must be interpreted within that context.

12. SoCalGas RAMP Risks & Quantification Note: D.18-12-014 (and the Settlement Agreement included therein) permits the utilities to adjust their MAVFs over time. These risk scores are based on SDG&E’s and SoCalGas’ current MAVF and may evolve prior to filing. In the event adjustments are made, they will be addressed in the 2019 RAMP filing. All calculations are derived through the prescriptive analysis and parameters of D.18-12-014 and must be interpreted within that context.

13. Additional Risks in the 2018 ERR Note: D.18-12-014 (and the Settlement Agreement included therein) permits the utilities to adjust their MAVFs over time. These risk scores are based on SDG&E’s and SoCalGas’ current MAVF and may evolve prior to filing. In the event adjustments are made, they will be addressed in the 2019 RAMP filing. All calculations are derived through the prescriptive analysis and parameters of D.18-12-014 and must be interpreted within that context.

14. Risk quantification overview

15. Risk Quantification Framework 15

16. Risk Quantification Framework Safety Index Reliability Index

17. Risk quantification example:SCG High pressure gas(excluding dig-in)

18. Risk QuantificationSCG High Pressure Gas (Excl. Dig-In) • Methodology • National Data • At SoCalGas, High Pressure Gas Incidents are rare and only focusing on internal events is insufficient to grasp full risk • Pipeline and Hazardous Material Safety Administration (PHMSA) • Department of Transportation • Publicly available data source • Includes incidents from various sources, conditions, etc. • Data filtered to incidents from similar functions (e.g. gas utility versus offshore wellheads) • Determined incident rate • Estimated distribution of consequences • Applied number of SCG miles • Performed Monte Carlo. 10,000 runs, probabilistic occurrence and consequence.

19. Risk QuantificationSCG High Pressure Gas (Excl. Dig-In) Data Source: PHMSA data

20. Risk QuantificationSCG High Pressure Gas (Excl. Dig-In) Data Source: PHMSA data

21. Risk QuantificationSCG High Pressure Gas (Excl. Dig-In) Data

22. Risk QuantificationSCG High Pressure Gas (Excl. Dig-In) Model Output Run 10,000 times

23. Risk QuantificationSCG High Pressure Gas (Excl. Dig-In) Model Output

24. Risk QuantificationSCG High Pressure Gas (Excl. Dig-In) Summary / Risk Quantification Framework Safety: 0.15 safety units Reliability: 3.32 meters Financial: $1.05M Reliability Score = (0 * 25%) + (3.32 / 75000) * 25% + (0 * 25%) + (0 * 25%) = 0.00001 Risk Score (RS) = (0.15 / 6) * 60% + (0.00001 * 20%) + ($1.05 / $1000) * 20% = 0.015

25. Risk quantification example:SDG&E Employee safety

26. Risk QuantificationSDG&E Employee Safety • Methodology • National Data • Bureau of Labor Statistics • Fatalities, Injuries, # of employees per NAICS code • Determined incident rate • Estimated distribution of consequences • Applied number of SDG&E employees • Performed Monte Carlo. 10,000 runs, probabilistic occurrence and consequence.

27. Incident Rate- Fatality Risk QuantificationSDG&E Employee Safety

28. Risk QuantificationSDG&E Employee Safety Source: US Department of Labor- OSHA Enforcement Data

29. Risk QuantificationSDG&E Employee Safety • Assumptions • Total Employee Split - 75% Electric, 25% Gas • Electric - Serious Injuries are 1.3% of total recordable incidences • Gas - Serious Injuries are 0.5% of total recordable incidences • NAICS 2211 Electric Power Generation, Transmission, and Distribution • NAICS 2212 Natural Gas Distribution

30. Risk QuantificationSDG&E Employee Safety Expected Value 0.53

31. Risk QuantificationSDG&E Employee Safety Summary / Risk Quantification Framework Safety: 0.53 safety units Reliability: 0 meters Financial: $1M Reliability Score = (0 * 25%) + (0) * 25% + (0 * 25%) + (0 * 25%) = 0 Risk Score (RS) = (0.53 / 6) * 60% + (0 * 20%) + ($1 / $1000) * 20% = 0.054

32. Q&A / wrap-up