VIA EMAIL: [email protected] March 1, …

Utilities Practice i

VIA EMAIL: [email protected]

March 1, 2012

Jeremy Routhier-James State of New York Department of Public Service Three Empire State Plaza Albany, NY 12223-1350

RE: CASE 11-G-0580 – COMPREHENSIVE MANAGEMENT AUDIT OF NATIONAL FUEL

GAS DISTRIBUTION CORPORATION

Dear Mr. Routhier-James:

Jacobs Consultancy Inc. (Jacobs) is pleased to offer its services to perform a comprehensive management audit of National Fuel Gas Distribution Corporation for The New York State Public Service Commission (Commission). Our proposal, which is structured in accordance with your Request for Proposal dated January 19, 2012, fully addresses your requirements. Jacobs confirms that all the information in this proposal is accurate. Jacobs is committed and able to perform all the work contained in this proposal, and Jacobs is in compliance with all the RFP requirements. This proposal will remain valid for 180 days after the date of this letter. In accordance with New York State’s Public Officer’s Law § 87(2) (c), we are requesting the attached proposal be treated in its entirety as confidential information. We request such exception from public disclosure until the Public Service Commission selects a winning proposal for this investigation. Public disclosure of this proposal prior to selection by the Commission would impair present or imminent contract awards for this engagement. In aligning an experienced team of consultants, Jacobs believes that the interests of the Commission will be fully met. If you require additional information or details, or if there is any matter that requires clarification, please contact me at 702-434-7361, or via email at [email protected]. Jacobs appreciates the opportunity to submit this proposal to the Commission for the proposed scope of work. Thank you for your consideration. We look forward to the privilege of working with you on this important assignment.

5995 Rogerdale Road Houston, Texas 77072 USA 832 351 6000 / 832 351 7766 Fax

Utilities Practice ii

For Jacobs Consultancy,

Salvatore D. Marano, P.E. Managing Director, Utilities Practice cc: Frank DiPalma, Jacobs Consultancy Inc.

Utilities Practice iii

Case 11-G-0580

Comprehensive Management Audit Of National Fuel Gas

Distribution Corporation

PROPOSAL

Prepared For

State of New York Department Of Public Service

Submitted By

Jacobs Consultancy Inc. 5995 Rogerdale Road Houston, Texas 77072

Telephone: 1 832 351 6000 Fax: 1 832 351 7766

March 1, 2012

Utilities Practice iv

Table of Contents I. INTRODUCTION................................................................................................................. 1

II. SCOPE AND OBJECTIVES ............................................................................................... 2 Objectives..........................................................................................................................2 Scope ................................................................................................................................3

III. APPROACH, METHODS, AND PROJECT MANAGEMENT............................................ 6 Approach ...........................................................................................................................6 Specific Deliverables .......................................................................................................16

IV. AUDIT AREAS AND ISSUES ......................................................................................... 18 Orientation.......................................................................................................................18 Audit Areas......................................................................................................................18

V. PROJECT TEAM AND RESPONSIBILITIES.................................................................. 49 Project Team ...................................................................................................................49 Project Team Members ...................................................................................................50 Project Team and Responsibilities ..................................................................................59

VI. SCHEDULE AND BUDGETS.......................................................................................... 62 Project Schedule and Budgets ........................................................................................62 Project Budget.................................................................................................................63

VII. EXPERIENCE AND QUALIFICATIONS ........................................................................ 65 Jacobs Consultancy’s Experience and Qualifications ..............................................65 Jacobs Consultancy and Jacobs Engineering Group......................................................66 Experience ......................................................................................................................69 Experience and Qualifications of Individual Consultants.................................................77

VIII. STATEMENT OF POTENTIAL CONFLICTS OF INTERESTS..................................... 78

APPENDIX A ........................................................................................................................ 79 Résumés .........................................................................................................................79

APPENDIX B ...................................................................................................................... 129 Jacobs Consultancy Terms and Conditions ..................................................................129

Utilities Practice v

Table of Figures

Figure 1 - Functional Area Inter-Relationship Diagram ......................................................................1

Figure 2 – Objective and Best Practice Criteria .................................................................................2

Figure 3 – Approach and Methodology ..............................................................................................9

Figure 4 - Jacobs Consultancy eRoom ............................................................................................14

Figure 5 - Organizational Chart ........................................................................................................50

Figure 6 – Gantt Chart......................................................................................................................62

Figure 7 - Jacobs Consultancy Inc. ..................................................................................................63

Figure 8 - Project Cost Summary .....................................................................................................64

Figure 9 – Jacobs Consulting Services ............................................................................................66

Figure 10 – Jacobs Client Sectors ...................................................................................................67

Figure 11 – State Utility Regulatory Commissions Team Members Have Worked With ..................67

Figure 12 - Jacobs Office Locations.................................................................................................68

Utilities Practice 1

I. Introduction The New York State Public Service Commission (Commission) issued, on January 19, 2012, a request for proposal (RFP) in Case 11-G-0580 – Comprehensive Management Audit of National Fuel Gas Distribution Corporation. This RFP seeks an independent consultant to perform a comprehensive management audit of the National Fuel Gas Distribution Corporation (NFGDC or the company). This proposal from Jacobs Consultancy Inc. (Jacobs) responds to the RFP seeking a consultant to perform this audit. The audit will be conducted under the provisions of Public Service Law, § 66(19). The statute allows the Commission to provide for management and operations audits of electric and gas companies at least once every five years. The statute intends such audits examine reliability and efficiency of operations in areas that include, but are not necessarily limited to construction program planning. The Commission will select the auditor, the Commission Staff will manage the work, and NFGDC will pay for the audit’s costs.

The RFP contemplates a comprehensive and thorough audit, but not one that follows the classic approach of examining utility management and operations on a functional basis, divided largely by the organizational units into which utilities then typically divided their resources. The RFP requires this audit to focus on the construction program planning, operational efficiency, and performance. The approach sought by the RFP is to examine the elements that comprise a cycle flowing from planning through resource assembly and structure, through key activity definition and structuring, through work planning and budgeting, through work performance and measurement, and back to planning through the incorporation of lessons learned by performance measurement. Jacobs proposes to conduct a comprehensive and thorough management audit and offer its expertise conducting such audits, its utility managerial and executive hands-on experience, its industry leadership, and its unique insights based on best practices-based solutions to produce process improvement recommendations, which lead to performance improvement and greater operational efficiencies.


II. Scope and Objectives

Objectives The comprehensive management audit will cover NFGDC gas distribution operations. Jacobs understands the scope and objectives of the audit and will emphasize an assessment of NFGDC’s efficiency and effectiveness in meeting its mission, particularly with respect to meeting its performance goals and the extent to which there are opportunities for improvement. The management audit will focus on the following elements for distribution and transmission operations addressed in sequential order: 1) Corporate Mission, Objectives, Goals and Planning, 2) Load Forecasting, 3) Supply Procurement, 4) System Planning, 5) Capital and O&M Budgeting, 6) Program and Project Planning and Management, 7) Work Management and 8) Performance and Results Measurement. Jacobs will focus on the scope elements and their components. Although mainly in sequential order, we recognize all elements are interdependent and require feedback loops. We also understand that these elements play a major role in the construction program feedback loop. Therefore, the audit will include an investigation of NFGDC’s construction program planning in relation to the needs of its customers for reliable service and an evaluation of the efficiency of the Company’s operations. Our proposal will identify any additional aspects of the process that we believe is necessary to provide a thorough evaluation. Our work will include a substantiated cost/benefit analysis to support our recommendations in each elemental area, recognizing that in some cases, benefits may be qualitative rather than quantitative. A final report will be prepared and all findings and recommendations will be thoroughly documented. Our objectives may include recommendations for opportunities for improvement on the following topics and any other measurable elements which may arise during the course of the audit:

1. Planning 2. Business Processes 3. Management Practices 4. Organizational Design 5. Staffing 6. Operations 7. Performance Management 8. Operational Efficiency and Productivity 9. Operational Reliability 10. Organizational Effectiveness 11. Cost Savings


12. Work Quality 13. Customer Service 14. Safety 15. Training

Therefore, our audit will be both comprehensive and thorough and will focus on the construction program planning, operational efficiency and performance of the Company, as required by the Public Service Law. Scope The comprehensive management audit will emphasize an assessment of NFGDC’s efficiency and effectiveness in meeting its mission, particularly with respect to meeting its performance goals and the extent to which there are opportunities for improvement. The audit scope will include:

• Corporate Mission, Objectives, Goals, and Planning

• Load Forecasting

• Supply Procurement

• System Planning

• Capital and O&M Budgeting

• Program and Project Planning and Management

• Work Management

• Performance and Results Measurement

These functional areas can be viewed as sequential in nature and provide a natural feedback loop which would facilitate changes and improvements that could result in improved performance. There are components of each of these areas that should interact among functional areas, providing intermediate feedback loops to permit the overall cycle to self-improve within its overall operation.


Figure 1 - Functional Area Inter-Relationship Diagram

Supply Procurement Portfolio

Risk ManagementSupply Procurement Strategies

Hedging PracticesBenchmarking

Performance and ResultsMeasurement

Management AccountabilityGoals & MetricsBenchmarking

Change ManagementCompensation & Metrics

Work Force ManagementConversion of Programs & Projects

Work Management SystemsQuality Assurance ControlEmployee Management,

Utilization & ProductivityRework and Corrective Actions

Capital and O&MBudgeting

Role of Board & Sr. ExecsExpenditures to Rates

Regional vs. CentralizedFunctions

Prioritization Methodology

Program and Project Planningand Management

Conversion of Capital and O&M PlansPriortization & Approvals

Program & Project DevelopmentContractor

Quality AssuranceCost and Progress Tracking

System PlanningAlternative Resoures

Load and Infrastructure FactorsIdentification of Major Projects

Replace/Repair Decision-MakingPlanning Processes

Cost Benefit Analysis

Load ForecastingModelsInputs

Organization & StaffingElectric Loads

State forecast Impact

Corporate Mission, Objectives,Goals and Planning

GovernanceOrganizational Structure

Budgeting GuidelinesGoals/Metrics

Policies, Procedures, ProcessesPerformance and CompensationModernization Goals & Plans

Because all these elements are interdependent and play an important role in the performance of construction programs, we will identify, select, and assess a sample of construction programs, which could include integrity management and main growth programs, capital replacement programs, new service construction programs, smart-grid integration construction programs, etc. that are completed or in progress for the purpose of identifying performance improvement opportunities. Jacobs has developed a detailed scope of work according to the parameters expressed in the RFP. As shown in table in Figure 2, for each functional area we have included an objective and certain best practices criteria against which we will evaluate the organization. As part of this work effort, we will expand these objective tables using a series of key questions, data requests, analysis, findings from similar audits and deliverables to fully asses each functional area. We have included a sample preliminary table in Figure 2 –Objective and Best Practice Criteria for each of the eight elements.


Figure 2 – Objective and Best Practice Criteria Corporate Mission, Objectives, Goals, and Planning

Objective: To assess the roles, effectiveness, and relationships of the Board of Directors and utility management in determining objectives, policy, and strategy, oversight of controls and internal audit functions, assurance of compliance with Sarbanes/Oxley and assurance of adequate controls over affiliate transactions, existence and use of relevant performance measures.

Best Practices Criteria: • Sufficient strategic objectives are established • The Board is properly organized and informed to provide sufficient direction and

oversight of senior management’s actions and plans • Board members have the requisite background and experience to provide effective

oversight • Long-range goals and the corporate plan are comprehensive and realistic • The strategic plan reflects the specific needs of ratepayers • Management exercises appropriate controls over its use of external professional

firms • Achievements and progress in meeting strategic objectives are appropriately

monitored • Comprehensive strategic and organizational tactical business plans are subject to

reasonable scrutiny and approved after adequate review • Capital and operating and maintenance budgeting processes as appropriately

integrated into the overall organizational plan • Principles of cost reduction and control are stressed as a part of the underlying

philosophy to organizational managers • Executive management’s breadth and depth of experience is commensurate with

the requirements of the overall organizational design • Staffing levels are routinely assessed in light of current and foreseeable

requirements • The specific basis, direction, and objectives of major programs are clearly defined

and carefully stated • Performance of achievement is appropriately monitored and reported throughout

the organization • Exercise of proper control over affiliate transactions. • Full compliance with the Sarbanes/Oxley Act. • Executive Management at each level is:

o involved in strategic level of operations o involved in assessing the performance of achieving objectives


o involved in assessing the performance of operations management o appropriately representative of the community being served

Load Forecasting

Objective:

To review and assess load forecasting models, assumptions, and integration of the forecast into other business areas.

Best Practices Criteria: • Formal, documented load forecasting procedures are maintained. • Load forecasts represent reasonable year-to-year accuracy. • Inclusion of energy use optimization initiatives, such as demand side management

and energy efficiency. • Load forecast(s) are integrated into other related business functions. Supply Procurement

Objective:

To review and assess supply procurement and portfolio management for mass market default customers.

Best Practices Criteria: • Formal, documented supply portfolio principles and procedures and goals are

maintained and followed. • Sound risk management strategies • Established and proven hedging practices • Demand management programs are included. • Consideration of management of local production assets. System Planning

Objective:

To review and assess the system planning process for asset management.

Best Practices Criteria: • Formal, documented system planning policies and procedures are maintained. • Cost/benefit analyses are incorporated. • Decision processes are consistent and documented. • Alternative resource mixes are considered. • Application of resource optimization methods and analytics.


Capital and O&M Budgeting

Objective:

Evaluate effectiveness of budget preparation, budget management, and control, including the roles of the Board and top management.

Best Practices Criteria: • The budget preparation process is straightforward and easy to use. • The budget process employs a top-down and bottom-up development approach. • The system is efficient and used consistently throughout the entire client

organization. • The budgeting systems are linked with other accounting and operations systems. • The budget process includes project priority examination, justifications, and

ranking. • The budget monitoring and control processes and systems compare actual

amounts to budgeted amounts and produces reports that are timely, accurate, and conducive to management by exception.

Program and Project Planning and Management

Objective:

To review project prioritization, execution, and resourcing.

Best Practices Criteria: • Contractor usage is defined by project type and other parameters to maximize the

use of and effectiveness of in-house crews. • Quality assurance programs in place to monitor in-house and contracted work

adequacy and conformance to standards and design. • The project management tools used for managing construction projects should

include planning, scheduling, and resource techniques, and have a level of detail sufficient for adequate control, including: o logical project work breakdown structures o resource considerations with some leveling capabilities o progress reporting based on the work breakdown structure o consideration of earned value techniques o modification of techniques based on specific project needs


Work Force Management

Objective:

To evaluate workforce management systems, procedures, and work planning and scheduling, and quality assurance procedures.

Best Practices Criteria: • The work management tools used for directing work activities should encompass

planning efforts, scheduling controls, resource allocation capabilities. • Actual work measurement and performance should compare favorably to targets

with variances being routinely scrutinized. • The overall organization of employee-intensive functions is efficient and effective

with clearly defined roles and responsibilities, staffing levels that are workload and service-level driven, and adequate consolidation of activities.

• Quality assurance is formalized for both internal and external work streams.

Performance and Results Measurement

Objective: To evaluate the implementation, usefulness and adequacy of performance metrics and to assess how these metrics are developed and used, including feedback and correction.

Best Practices Criteria: • Company results are benchmarked. • Existence of accountability linkages to performance levels and feedback processes. • Change management is recognized and employed.

Jacobs will develop recommendations, as needed, for implementing changes or undertaking the studies necessary to achieve performance improvements. All recommendations will be supported by benefit/cost analyses, where they can be meaningfully quantified. A more detailed approach follows for each of the elements above.


III. Approach, Methods, and Project Management

Approach Jacobs Consultancy will employ a workflow process to accomplish the comprehensive management audit of NFGDC in an efficient and concurrent approach that minimizes disruption to the Commission and the Company. Jacobs’ expertise in performing management audits and years of hands-on experience in managerial and executive roles in the utility industry will provide a wealth of opportunities and insights throughout the audit for process improvement recommendations that lead to performance improvement and greater operational efficiencies. Our team will conduct this investigation by employing a management review process consisting of three principal stages: Planning and Orientation, Technical Review, and Reporting. Project Planning and Orientation Stage

This stage involves initial on-site orientation meetings, with both the Commission and NFGDC and provides Jacobs with a thorough understanding of the Commissions expectations. This section includes preliminary interviews and document requests conducted to gain sufficient background and perspective and enable Jacobs to prepare a detailed audit work plans. At the completion of this stage, planned to be within 40 business days of contract execution, the Commission will receive a detailed final work plan. The work plan will ensure a mutual understanding of the issues and areas to be examined in the audit and will give the Commission's Staff as well as Jacobs a written guide to the audit. In addition, the work plan will function as a project management tool to show Commission Staff that we have an adequate understanding of the requirements of the contract and can allocate resources reasonably to meet the requirements of the engagement, as well as provide Commission Staff with appropriate regular performance benchmarks. Throughout the engagement, Jacobs will revise the work plan, as needed, and submit it to the Commission Project Manager for approval. Technical Review Stage

Based on the detailed work plan and schedule as determined in the Project Planning and Orientation Stage, Jacobs will analyze the various aspects of NFGDC’s system and operations using both quantitative and qualitative assessment techniques. The analysis will focus on the following areas per the RFP:

• Corporate Mission, Objectives, Goals, and Planning



• System Planning




• Work Management

• Performance and Results Management

Within the context of each element, we will be prepared to address as appropriate the generic issues of: (1) purpose, mission, planning, goals and objectives, and strategies, (2) functions processes, practices, and systems, (3) organizational design, (4) staffing, responsibilities and accountabilities, (5) cost control/cost oversight, (6) efficiency and effectiveness, (7) results and performance, and (8) opportunities for improvements, including best practices based on our past experience that are appropriate to NFGDC’s operating environment. In the Technical Review stage, particular emphasis will be given to:

• Data Sources—including, but not limited to, each utility’s policies and procedures, other relevant documents, other relevant Commission documents interviews with NFGDC's management and employees, and interviews of Commission staff.

• Evaluative Criteria—including, but not limited to, Commission Regulatory Rules and Regulations, Company Policies and Procedures, and Industry Best Practices learned through the wealth of experience and leadership of the Jacobs team.

Throughout this stage, as we compile findings and formulate conclusions and recommendations, we will identify issues of significance in advance of the initial draft report (as they are identified) that would, if adopted, improve NFGDC’s operations such as the construction program planning process.

Reporting Stage

Following the Technical stage, we will report our results in terms of findings, conclusions, and recommendations to the Commission. Jacobs will develop and prepare our draft and final reports for NFGDC in a format approved by the Commission. In the Reporting phase, we will give particular emphasis to:

• Findings—represent facts supporting strengths, weaknesses, opportunities and threats that can be directly tied to documents, interviews, or observations.

• Conclusions—summarize the findings and suggest necessary improvement actions.


• Recommendations—represent our comments regarding proposed improvements, alternative standards, or solutions. Recommendations will be well defined, and Jacobs will provide a cost/benefit analysis for implementation.

In addition to the draft and final reports, the Reporting stage also includes an ongoing process of regular investigation updates and status reports to the Commission. The status reports include a summary of completed activities, next month’s activities, project issues, and project budget status in the format approved by the Commission in the project initiation meeting. Figure 3 graphically displays the workflow process Jacobs will employ to accomplish the comprehensive management audit of NFGDC.


Figure 3 – Approach and Methodology

PRO

JEC

T IN

ITIA

TIO

N

PAH

SE

Initial Meeting with PURA

Initial meeting with the Authority to establish audit parameters and second meeting following orientation to refine Scope of Work

Initial meeting with NFGDC

Initial meeting with NFGDC to establish project logistics, conduct initial interviews, submit initial document requests and gather data

INVE

STIG

ATI

ON

& F

ACT

FIN

DI N

GPH

ASE

CO

NC

LUSI

ON

DEV

ELO

PMEN

TPH

ASE

REP

OR

TIN

GPH

ASE

Reporting

- Scheduled Meetings

- Status Reports

- Draft Final Audit Report

- Final Audit Report

General Review

- Request of Documents- Interviews with Knowledgeable Individuals- Reviews of .…

‐ Strategic and Tactical Planning‐ Business and Management Practices‐ Organizational Design/Effectiveness‐ Staffing‐ Performance Management/QA‐ Operational Reliability, Efficiency and Productivity

‐ Operational Reliability‐ Budgets and Costs‐ Safety & Training

Analysis and Conclusions

- Analyze Document Responses

- Correlate with Interview Notes

- Develop Analytical Comparisons

- Rank against Industry Practices

- Assess Adequacy Processes

- Develop Findings & Conclusions

Audit Trail

- Interview Notes - Document Requests- Document Responses- Work Papers - Project Briefings- Correspondence

Indexed copy of report with findings cross-referenced to notes, documents and work papers

Functional Area Review

‐ Corporate Mission, Objectives, Goals, and Planning

‐ Load Forecasting‐ Supply Procurement‐ System Planning‐ Capital and O&M Budgeting‐ Program and Project Planning and Management

‐Work Management‐ Performance and Results Measurement

REC

OM

MEN

DA

TIO

NS

DEV

ELO

PMEN

TPH

HSE

Recommendations

- Validate Findings

- Substantiate Conclusions

- Develop Recommendations

- Develop Cost/Benefit Analyses


Project Management Jacobs recognizes the importance of active participation with Commission Staff throughout this engagement to fully achieve the Commission’s goals and objectives. Coordination of on-site visits, which will be as numerous as required to fulfill our duties under the engagement, with the Commission Project Manager and NFGDC Project Manager, will be critical to effectively conduct the investigation and monitor in a manner that minimizes our impact on Commission Staff and NFGDC’s day-to-day work. Our project management plan will be tailored to provide for effective coordination between the Commission Project Manager, NFGDC Project Manager, and Jacobs’ Project Manager. Project Controls Any effort to deliver a quality investigation requires in-depth analysis and the participation of specialized professionals. To ensure the efficient and effective use of consultants’ time requires diligent project management. This level of management requires sound plans, clearly established responsibilities, and adequate controls. Jacobs uses the following tools for project management:

• Project Team Organization – This organization plan identifies the key project team members and their communication channels, both within the team and with the client. The key project team members include an Engagement Director, Project Manager, and several Task Leaders as noted in the Personnel section.

• Senior Project Oversight – This oversight mandates the Engagement Director, Project Manager, and supporting Task Leaders review all aspects of the work being performed, including the analysis methods, finding, conclusion and recommendation development, and report preparation. This oversight entails continuous supervision of the other team members.

• Project Work Plan – This plan provides the basis for managing an assignment of this magnitude by clearly indicating tasks, responsibilities, consultant hours, target dates, and milestones. Jacobs will prepare and submit for approval to the Commission Project Manager a detailed initial work plan within 40 business days of the Orientation Meetings. The Orientation Meetings are the preliminary meetings with the Commission Project Manager and NFGDC following contract execution. This work plan will include, at a minimum:

o Detailed approach to performing the scope of work, with emphasis on the techniques to be used for collecting and analyzing data

o Sequence of each NFGDC’s subject areas including milestones

o Methods to be used in managing the project


o Anticipated time for each task/subject area to be completed

After discussion with the Commission’s Staff, appropriate modifications to the initial draft will be made and a final draft plan will be submitted for approval

• Client Discussions – These discussions are designed to highlight key issues, facilitate project status reporting, identify next steps in the process and resolve any open issues. The Commission Project Manager will be notified in advance of meetings and copied on all correspondence with the NFGDC, unless we are otherwise directed. We expect to work through the Commission Project Manager when necessary to resolve any conflicts with NFGDC.

• Team Meetings – These meetings give team members a forum for discussing the issues being surfaced and identifying issues that transcend functional boundaries. Whenever possible, these meeting are conducted by video conferencing, net media, or conference calls, as well as face-to-face meeting.

• Working papers – Jacobs maintains copies of documents it receives and provides access to working papers and copies of any computer diskettes developed during the course of the engagement. During the term of this project, work papers will be maintained in the Jacobs eRoom. Upon completion of this engagement, Jacobs will maintain the work papers it has prepared in the course of performing its obligations under the contract for a period of no less than three years from the date of final payment under the contract, or until all litigation, if any, related to this project is completed, whichever event occurs later. We shall make such work papers available to the Commission and its Staff as requested or directed by the Commission, its Executive Director, or his designee. These items will be made available for inspection by authorized representatives during normal business hours upon reasonable notice.

Project Coordination Jacobs recognizes the imperative of working closely with the Commission Project Manager in an engagement of this nature and duration to fully achieve the Commission’s objectives. Project coordination is another one of our proposal cornerstones. We will report directly to the Commission Project Manager. All written and oral communications will be through the Commission Project Manager. If a situation is urgent, the Commission Project Manager will be notified immediately. Jacobs will be ready to discuss the project's progress with the Commission Project Manager as necessary. We plan to maintain proper project coordination with the Commission Project Manager through the following means:

• E-mail – The Commission Project Manager is copied on any correspondence with NFGDC, i.e. meetings, interview schedules, document requests, and field site


inspections. We will provide weekly e-mail progress reports once each week until the audit is complete.

• Conference Calls – We expect to have a weekly telephone conference call to review the e-mail progress reports and to provide a forum for ongoing discussion with Staff.

• Client Meetings – While onsite, we will schedule a weekly face-to-face meeting and an exit interview upon completion of on-site work.

• Interviews– We plan to coordinate interviews and meetings whenever possible to facilitate Commission Staff attendance and participation in these activities as necessary.

• Project Briefings - Monthly project briefings with the Commission Project Manager will include Jacobs’ Project Manager and the Responsible Officer as necessary. Whenever possible, we will coordinate our on-site work activities to correspond with the Project Briefings. As needed, the Commission Project Manager may contact Jacobs to request that a member of our key management team or consultants provide verbal briefings on an aspect of project activities, progress, schedules, observations, recommendations or other project issues. Briefing schedule, content and format will be according to the mutual agreement of both parties.

Commission Staff Participation Jacobs values the importance of working closely with the Commission Staff in the manner necessary to fully achieve the Commission’s goals and objectives. This has been a cornerstone in the preparation of our proposal. For this reason, we believe it is critical that at the initial meeting:

• Jacobs and the Commission Staff complete a Client Expectation Survey, which will result in the preparation of a Client Satisfaction Improvement Plan the Project Manager shares with each member of the project team. This Plan communicates the actions that we as a team and as individuals must take to exceed your expectations.

• Jacobs and the Commission Staff confirm the areas in which the Staff will actively participate during the audit - interviews, document requests, process reviews, transaction audits, project updates, draft report review, etc.

• Jacobs’ Project Manager and the Commission Project Manager establish a schedule of formal and informal project update briefings.

As part of our investigation and verification process, the Commission Project Manager will be copied on and informed of all requests for documents, interviews, and meetings. All meetings, interviews, and site work will be conducted at NFGDC’s offices.


We also understand the needs of the Commission Staff to answer questions from time to time regarding the progress and status of the project. To facilitate this communication, as well as to be kept abreast of meetings, interviews, documents collected, and project briefings etc., we propose to employ our web-based eRoom facility. The eRoom will provide the Commission Staff and Jacobs’ Team a shared, secure workplace on our server for distributed project team members to do their work and monitor the progress of the project. The eRoom will enable the Commission Staff and Jacobs to discuss issues, share information, and make decisions, all within a central location. The eRoom also provides built-in project functionality for managing content, thus enabling the integration of content and collaboration in our work process. The Commission will have access to the data, information and shared work product 24/7. An eRoom has been successfully employed for virtually every project conducted by Jacobs over the last five years including the San Bruno investigation for the California Public Utilities Commission’s Independent Review Panel and the one-year long Exelon/PSEG merger engagement for the NJBPU. For more information on our eRoom facility, visit our service provider website: http://www.documentum.com/products/glossary/eroom.htm.


Figure 4 - Jacobs Consultancy eRoom

This facility will augment, not replace, face-to-face and telephone communications. Meetings and Progress Reports We will utilize available technology to conduct meetings via videoconferencing and/or teleconferencing to the extent practical in order to achieve efficiencies throughout the life of the audit.


Entrance Conference

Upon the award of the contract, Jacobs will schedule and attend a meeting within five business days with the Commission Project Manager to discuss all pertinent items relative to the project. Intermittent Conferences

Jacobs will meet with the Commission Project Manager on a day determined by the Commission Project Manager on a weekly basis—in person, by phone, or in a written narrative by e-mail, as required by the Commission Project Manager—to review current activities and plan future actions. Jacobs will attend briefing sessions and agenda meetings as deemed necessary by the Commission Project Manager. Monthly Progress Reports

Jacobs will submit a monthly written report to the Commission Project Manager by the fifth business day following the month’s end, for any month in which work was performed. The report will consist of a general narrative providing adequate and detailed information regarding the status of the project with an explanation of any discrepancies between the approved work plan and actual progress. Key preliminary findings and issues will be disclosed in the monthly report. The monthly status report will include a summary of completed activities, next month’s activities, project issues, and project budget status in the format approved by the Commission. Our typical status report format provides the client with an update containing:

• Summary of accomplishments since the last update

• Observations regarding the work in progress

• Status of the work in progress

• Identification of any project issues, corrective action being taken, and their status

• Summary of charges

• Project schedule

• Goals between now and the next update

Jacobs will be available to present our findings from Phase 1 and Phase 2 activities in meetings with Commission Staff - to be coordinated with the Commission Project Manager - or before the Commission as required and scheduled by the Commission.


Exit Conference

When conducting on-site work, Jacobs will conduct an exit conference with Commission Staff prior to departure. These conference meetings may be held in person or via teleconference call.

Specific Deliverables Our project organization and management process will ensure that the Commission, at any given time, has access to all investigation work papers. This means that each recommendation is supported by specific conclusions, that each conclusion is backed by our findings-in-fact, and that all findings are documented by interview notes, data responses, or other work papers. Simply put, our method of indexing will allow a reader of the final report to track supporting documentation for any part of the report. Organizationally, the work papers will include:

• Facts gathered and documents obtained

• Computations and analyses performed

• Other pertinent data relating to the audit

Our Project Manager will document all interview and document requests and maintain all interview summaries, document responses and working papers. Each document will contain an index number, the source of the information, and the nature and extent of the work. In addition, the work papers will show the name of the consultant who prepared the paper and will be clearly titled and dated. Index numbers in the final reports will allow the reader to cross reference the source documents. To facilitate the management and control of documents including revisions, Jacobs will use its web-based document control facility (eRoom) for all electronic files. This facility will allow both the Commission’s and Jacobs’ team members 24/7 access to any document, briefing, and report. Access to confidential or sensitive files can be controlled on an individual basis. Draft Final Report

We will provide a draft of the final report including a summary of our work processes, findings, conclusions, and recommendations for each utility in a report format approved by the Commission. After appropriate review and authorization by the Commission Project Manager, Jacobs will release the draft report to NFGDC utility for their review. The utilities’ critique of the draft report will be confined to factual discrepancies and communicated to the Commission Project Manager. Subsequently, the Commission Project Manager will authorize the


preparation of the final report. Jacobs will prepare both a confidential and public version of the final reports. Final Report

Jacobs will provide 12 hard copies for distribution inside the Commission and 1 electronic copy on CD ROM of the confidential final report. To protect proprietary information and/or data, such as intellectual property, trade secrets, business plans and personal information, we will also provide a public version. This version will consist of a redacted reproducible copy, and a redacted electronic copy on CD ROM and will be provided to the Commission Project Manager within 10 business days of the draft report approval. This management process will ensure the Commission that each of the issues and deliverables presented in the RFP will be fully addressed.


IV. Audit Areas and Issues

Orientation Jacobs understands that the onsite audit work will begin with an orientation meeting, interviews, and document requests. The purpose of the orientation is to gain sufficient background and perspective to prepare the detailed audit work plans. Immediately following the kick-off meetings with the Commission Staff and with NFGDC, we anticipate delivering an initial document request and initial interview request. We plan to conduct high-level interviews with key representatives from each of the audit areas to gain understanding of those functional areas, general work processes and issues as part of the orientation process. Following the initial interviews and review of the document requests, we will work with the Commission Staff to make necessary modifications to the work plan to ensure that all relevant and critical areas and issues are addressed. The revised work plan will be submitted to Commission Staff for approval. Following Commission Staff approval, we will undertake the specific reviews of each of the audit areas described below. During these detailed reviews, additional document requests will be developed and additional interviews may be required and will be scheduled.

Audit Areas Jacobs proposes to divide the detailed audit work according to the RFP’s eight elements:

• Corporate Mission, Objectives, Goals and Planning



• System Planning



• Work Management

• Performance and Results Management

The following sections provide the study guidelines, the evaluation criteria, and the work activities that Jacobs will include in the work designed to formulate the detailed work plans. We have based these sections on work previously performed on similar past engagements that have addressed these eight elements. We stress that they are intended only to guide the initial project work. The detailed work plans will replace them with the specific criteria and work


activities (and supporting details) needed to respond to what the team learns in the early, critical stages of audit work. 1. Corporate Mission, Objectives, Goals and Planning

This task consists of a review of the Corporate Mission, Objectives, Goals, and Planning aspects from the perspective of the Company's Board of Directors, officers, divisional management, the organizational structure, corporate communications, and administration. As one of four utility-related segments, NFGDC is a direct subsidiary of National Fuel Gas Company (NFGC). Other direct, wholly-owned subsidiaries of NFGC include National Fuel Gas Midstream Corporation, which is engaged in pipeline gathering and storage activities in the Appalachian region of the US. These relationships require that the audit examine inter-company and affiliated transactions. One particularly critical area of focus that will be addressed in this audit deals with the many fiscal matters including: budgeting and financial methods and policies related to internal controls, auditing functions, rates and regulations, compensation, etc. as well as compliance to various Federal Acts such as the Sarbanes Oxley Act and the Energy Independence and Security Act of 2007. Another key element required by managers at all levels of the company is that of performance measures and metrics. Are there a quality set of performance measures readily available for managers to assess their performance? Is it the correct and right amount of data and information? Is there enough information to make sound business decisions? Do these metrics link back to the corporate mission, goals, and objectives? Given the volatility of markets in general and gas markets in particular, we will examine how NFGDC approaches competitive issues for entry into new markets; for example, natural gas vehicles. We will examine what new markets are being considered by the Company, how the costs for entry into those markets would be funded, and would the Company's entry into those markets serve to help or hinder competition in those new markets. This task consists of a review of the Corporate Mission, Objectives, Goals and Planning aspects from the perspective of the Company's Board of Directors, officers, divisional management, the organizational structure, corporate communications, and administration. In previous audits/assessments of other utilities we have found the following issues:


Findings in Similar Audits/Assessments: • Haphazard provision of information to the Board • Interaction with senior management • Inadequate Board involvement • Executive positions remaining vacant for long periods • Gaps in necessary experience not being addressed

Our evaluative criteria will include, but is not limited to, Commission Regulatory Rules and Regulations, Company Policies and Procedures, and Industry Best Practices learned through the wealth of experience and leadership of the Jacobs team and will focus on the construction program.

a) Evaluation Criteria

1. Are the governance, organizational structure missions, and relationships within NFGDC as they relate to the construction planning process appropriate?

2. Are organizational responsibilities for planning priorities and budgeting allocations appropriate?

3. Are the Board of Directors and Executive and Senior Management properly involved in the development of budgeting guidelines and periodic budget reviews and approvals?

4. Are there controls in place to prevent affiliate transaction abuses?

5. Are NFGDC’s financial position and the level of its rates appropriately factored into the budgeting process?

6. Does NFGDC use measurable goals, metrics, and key performance indicators to achieve the corporate mission and objectives, and is the performance process handled effectively by successive levels of management?

7. Does NFGDC comply with procedures and practices related to the scope of the audit, e.g., internal controls, Internal Audit function, and the Sarbanes Oxley Act?

8. Are management performance and compensation programs aligned with the corporate mission, objectives, and goals at all organizational levels within the corporation?

9. Does NFGDC’s approach to competitive issues for new markets consider how would the costs for entry into those markets be funded, and would the Company's entry into those markets serve to help or hinder competition in those new markets?

10. Does NFGDC affect budgeting priorities and allocations within NFGDC in a reasonable manner?


11. Are budgeting priorities and allocations for the NFGDC’s construction programs appropriate?

12. Are there strategic and tactical planning processes in place? Are they used and useful? Do these processes receive input from appropriate stakeholders? Are the strategic and tactical plans reviewed and updated periodically?

b) Work Activities

1. Assess and analyze the corporate charter(s).

2. Review and identify the role of the Board of Directors and executive team.

3. Evaluate the mission, goals and objectives and their dissemination and communication throughout the company (noting clarity, attainability, understanding and embrace by the stakeholders).

4. Assess the organizational structure and its align with the corporate mission, strategic plans, goals, and objectives to determine appropriateness, impact, and results.

5. Assess the budgeting process (i.e., capital planning, system infrastructure planning, operations and maintenance planning, etc.) from involvement at the Board of Directors level through middle management down to the operational levels.

6. Evaluate the complete internal audit process for tracking, monitoring, and reporting at all levels of the organization (noting steps from discovery to action and response as well as compliance to Federal Acts such as Sarbanes Oxley Act and Energy Independence and Security Act of 2007).

7. Evaluate resource needs and allocation as linked to strategic, tactical, and operational planning and the budgeting process.

8. Evaluate near, short, and long-term planning as related to the strategic and budgetary plans.

9. Determine performance measure management all programs for adequacy, accuracy, validity, correctness, access and reporting at all levels.

10. Determine the link between the strategic planning, goal formulation and performance tracking and reporting.

11. Review the executive compensation process and the link to performance measures and Board of Directors’ oversight.


c) Assignments

Task Leader: Carlo Ninassi Consulting Support: Frank DiPalma, Kirk Balcom, Edwin Norse

d) Potential Benefits and Costs

When determining the relationship of benefit to cost at the corporate strategic level, there is often a need to establish the current state and compare it to the desired end state. Clear intentions of where the organization is to where it desires ideally to be will aid in the cost to benefit analysis. Often the cost far outweighs the action, yet there are times when the need prevails despite the cost. When assessing the critical issues with the corporate suite, we will present the current situation and its cost benefit to that of the future end state’s cost/benefit. Taking the correct (or right) action may be costly at times (especially when considering the implementation of certain actions), but the benefits in the end act as enablers for growth and expansion. We will always pose the advantages and disadvantages of an issue especially at the corporate executive level as it is here that the leadership begins to define the organization through its actions.

2. Load Forecasting

The load forecasting function is central to determining resource requirements for system expansion, remedial reinforcements, supply procurement decisions, and system operations. As part of the overall planning and operating environment, the load forecast is a key element of a properly integrated capital planning and budgeting program. Capital resource requirement plans are based in large part on long-term aggregate forecasts of use and peak demand growth. At the area level, growth forecasts, such as number and type of customers, use, and contribution to peak, support planning for extension of distribution systems. Forecasts of operations and maintenance needs and increased customer service requirements are used in the planning processes for personnel and service support facilities. The modeling and forecast development process must be accurate and representative of current and expected market conditions and must provide bandwidths of forecast accuracy to serve in risk analysis. Forecasts often are done in isolation for operating areas and functionally and may not be consistently rolled up or coordinated from local distribution level forecasts to area, region, and corporate level requirements. Utilities today must accurately and comprehensively identify and address changing needs, supply, and market conditions in a timely and accurate manner. Effective forecasting also must incorporate and consider the impacts of demand-side management, energy efficiency, weather, and other energy requirements and developments.


Effective forecasting requires well organized, experienced personnel. Jacobs will determine where NFGDC has located forecasting responsibility and how it has coordinated forecasting needs and outputs appropriately. In previous audits/assessments of other utilities we have found the following issues: Findings From Similar Audits/Assessments: • Lack of proper balance of centralization/decentralization in the forecast structure • Lack of market analysis to support forecast parameters • Little follow-up tracking of forecast accuracy • Forecasts performed too infrequently • Input assumptions questionable • Forecast methodology inadequate • Lack of demand side management consideration • Lack of consideration of external requirements

The work efforts for this task consist of a review of the methodologies and models applied in developing the load forecast(s). We will review the input assumptions and key drivers employed in the forecast(s). We will evaluate the load forecasting organization and the extent forecasting is integrated into other operational functions. We recognize the need to avoid hindsight analysis, particularly since forecasting is, even when performed well, an uncertain venture. Our goal will be to identify any changes that may lead to potential improvements in future forecasts. Our evaluative criteria will include, but is not limited to, Commission Regulatory Rules and Regulations, Company Policies and Procedures, and Industry Best Practices learned through the wealth of experience and leadership of the Jacobs team.


1. How are models, assumptions and key drivers, and other inputs used to forecast local and system-wide load requirements?

2. Are inputs, including demand side management, energy efficiency, and other initiatives that are factors in the forecasting process?

3. Examine and evaluate organization and staffing of forecasting functions.

4. Examine the extent to which the planning for load, as well as region-specific factors, is integrated into the overall business processes and strategies.

In addition to these evaluation criteria, we will also address issues such as:

5. Is the load forecast incorporated appropriately and consistently into the rate cases?


6. Assess the accuracy of the forecast(s) and trends in accuracy.

7. Are forecast assumptions reasonable?

8. Examine the role of current technology and modern methods for data gathering in the development of the load forecasts.

9. Determine how deviations from the forecast are investigated and what corrective measures are employed to improve accuracy in future forecasts.

b) Work Activities

1. Assess the models used to forecast load and system-wide load requirements. This will involve an examination of the models used to make forecasts through a review of user documentation, interviews, reviews of inputs and outputs, and comparisons of historical forecast accuracy, and identify the reasons for any significant variances between them and actual results.

2. Review any recent changes in the forecasting processes and the reasons for each change.

3. Evaluate methods for assuring data are complete and reliable.

4. Determine how demand side management and energy efficiency, weather, and other initiatives are considered in the forecasting process.

5. Examine the methods used to forecast and bound the uncertainties associated with such programs

6. Assess the organization structure and staff competency of forecasting activities.

7. Determine if forecasts recently used in regulatory proceedings are consistent with those used internally.

8. Determine if the planning for gas load is integrated with the overall business strategy.

9. Assess the manner in which load forecasting affects various strategic initiatives or provides substantial risk to NFGDC.

10. Determine the adequacy of demographic assessment, saturation studies, customer surveys, and elasticity of demand studies and similar information used in the development of load forecasts.

11. Determine whether a management process is in effect to ensure that all planning is based upon a set of common assumptions relating to demographics, economic conditions, financial capability and other factors which significantly affect the load forecast.

12. Identify performance measurement criteria that would indicate success or failure of this area and compare against existing measurements used by NFGDC, if any.


13. Compare NFGDC’s performance to industry “best practices.”

14. Prepare a task report for this area.

c) Assignments

Task Leader: Mickey Grewal Consulting Support: Mike Rafferty

d) Potential Benefits and Costs and Impact

Forecasting is an important driver of capital improvement and has significant impacts on utility capital and operating costs. A tendency toward over-forecasting load requirements may result in commitments to capital projects in advance of realized need and may divert corporate funding away from projects that have more immediate need. Conversely under-forecasting load requirements may cause stop-gap measures to be employed as load grows more rapidly, even in isolated areas, than was expected. It can also cause tradeoffs in project execution due to limited budget levels. It is difficult, however to identify with specificity the direct impacts and develop quantifiable savings in this area because it is generally not possible to distinguish the precise changes in capital programs and operations that would result from a particular improvement in the forecast element. Without knowing that impact, it is, therefore, not possible to know what changes in future resources would result. Therefore, estimates of savings in this area are generally often less precise.

Like some functions being audited, this is also a subject where changes may result in added systems or operating costs. Given the significant long-term cost consequences that may result from marginal changes in forecasts, Jacobs will only recommend changes where it is clear that a material change in forecast accuracy will result. More costly solutions can be justified where forecasts have been consistently high and the asset portfolio is underutilized.

3. Supply Procurement

In a deregulated environment, utilities must provide for cost effective energy supply for its customers, particularly its mass market customers. It cannot depend on making up short-falls through internal sources, but must depend on the external market. How the utility contracts and hedges against price fluctuations is critical to this supply. The cost-effective supply of energy for NFGDC’s gas ratepayers is dependent on a number of factors, which include:

• Long-term energy purchase contracts

• Spot market robustness


• Transmission availability

• Gas storage and peaking

• Capacity release

• Risk management practices and strategies

Key risk management control practices include governance, control practices, and execution of the process. Policy development, oversight, hedge strategy and execution should be driven and monitored by senior NFGDC management, and the Board of Directors should approve the Risk Management Policy, and the Audit Committee of the Board should oversee and review quarterly risk reports. Proper and effective procurement controls should be in place that include trade documentation, trader authorization, financial product approval, and trade limits. Effective execution of trade control requires proper segregation of duties, appropriate software systems, reconciliation processes, trained staff and senior management support. The oversight process should ensure that an appropriate control environment exists, that industry leading practices are in place, and that senior management is committed to having an effective hedge strategy. In previous audits/assessments of other utilities we have found the following issues: Findings From Similar Audits/Assessments: • Lack of market analysis to define supply opportunities or constraints • Little follow-up tracking of performance • Gaps in risk management strategies • Hedging practices too limited • Lack of demand side management consideration • Lack of consideration of external influences • Uses of Renewable Energy

This task consists of a review of supply portfolio principles, goals, and objectives for mass market customers. This will include a review of risk management and hedging philosophies and performance benchmarking. Our evaluative criteria will include, but is not limited to, Commission Regulatory Rules and Regulations, Company Policies and Procedures, and Industry Best Practices learned through the wealth of experience and leadership of the Jacobs team.



1. Does NFGDC have appropriate supply portfolio principles, goals, and objectives for mass market default customers?

2. Does NFGDC have effective risk management strategies and practices?

3. Does NFGDC have effective supply procurement strategies, policies, processes, and methods?

4. Are financial and physical hedging practices appropriate and effective?

5. Does NFGDC’s supply procurement performance benchmark favorably with other utilities?

6. Is the role of demand management/response, energy efficiency, and migration of retail customers to competitive suppliers in the portfolio and procurement processes appropriate?


7. Do internal measurement systems address performance quality on a comprehensive, ongoing basis?

8. Does NFGDC have well defined supply procurement strategies that properly balance long-term and short-term considerations of cost and reliability of supply?

9. Is the supply procurement process sound, and integrated with strategic and operational planning processes?

b) Work Activities

1. Identify and evaluate supply portfolio principles, goals, and objectives for mass market default customers.

2. Identify and evaluate risk management strategies and practices.

3. Review supply procurement strategies, policies, processes, and methods.

4. Assess financial and physical hedging practices.

5. Determine the Board and Senior Executive Management’s role in and level of awareness of portfolio design and performance measurement.

6. Examine use of performance benchmarking with other utilities.

7. Review portfolio performance goals.

8. Evaluate portfolio oversight and controls.

9. Assess the role of demand management/response, energy efficiency, and migration of retail customers to competitive suppliers in the portfolio and procurement processes.


10. Review the organizational placement of the responsibility for supply procurement. Consider whether supply procurement strategies are adequately supported by the current organizational structure.

11. Determine whether the current mix of long-term and short-term supply arrangements were established in accordance with a well developed plan and adequately balance the consideration of cost and reliability of supply.

12. Determine whether NFGDC has reviewed and revised its supply procurement strategies to address competitive pricing and risk issues associated with current energy markets.

13. Identify performance measurement criteria that would indicate success or failure and compare against existing measurements used.

14. Evaluate whether there is a clear and definitive system of approval authority by: (a) type of commitment, (b) value of commitment, (c) level of approval required, (d) stage at which approval is required, and (e) documentation of approval.

15. Evaluate the policies and procedures that control supply procurement-related activities.

16. Examine documentation requirements concerning development and evaluation of portfolio and supply alternatives. Confirm that requirements are observed and adhered to.

17. Examine the policy and practice regarding internal audit reviews of the supply procurement functions.

18. Examine the rationale for the various capacity and storage services utilized by the utility for gas supply.

19. Examine the various peaking facilities and contracts and other peaking services utilized by the utility for gas supply

20. Examine the Company’s philosophy and approach to gas commodity purchasing.

21. Examine the Company’s strategies and programs for minimizing lost-and-unaccounted-for gas.

22. Examine the Company’s approaches to balancing for each customer class.

23. Compare performance to industry “best practices”.



c) Assignments

Task Leader: Chris Pioli Consulting Support: Mickey Grewal, Edwin Norse


This element of the audit has an above average potential for tangible financial benefits, primarily due the large financial sums involved. Procedural and control issues that may be found are not as likely to lead to quantifiable benefits, but improved hedging protocols, process changes to achieve more competitive pricing, initiatives to expand the number of bidders, steps to lessen bidders’ uncertainties, and needs for contingencies and portfolio management improvements are typical of potential benefits that can and will be quantified.

4. System Planning

System planning is the crucial second step in developing asset strategies to maintain reliable system operation through remediation and replacement of aging or poorly-performing assets and to provide to system reinforcement and expansion through development of new assets. This task consists of a review of NFGDC’s infrastructure planning and engineering functions. This will include consideration of project and planning priorities, asset condition assessment, maintenance practices, repair/replace criteria and the use of benefit/cost analyses. This will include a review of NFGDC’s focus on energy efficiency, alternate resources and conservation/load management. However, in our industry meeting these objectives are generally a challenge due to limited program funding (either capital, O&M or both), staffing, and lack of program leadership, monitoring and training. In previous audits/assessments of other utilities we have found the following issues: Findings From Similar Audits/Assessments: • Lack of proper balance of centralization/decentralization in the planning structure • Inadequate market analysis to support planning • Little follow-up tracking of goals achievement • Inadequate development of performance measures • Run to failure philosophy too widely adopted • Inadequate asset condition/inspection programs • Lack of demand side management consideration • No or limited alternatives analysis • Unclear cost/benefit analyses for projects


This audit will examine the priorities, guidance, and other instructions for evaluations, tradeoffs and decision making. Jacobs will examine the development of gas system forecasts, and how that is coordinated with demand response initiatives and energy efficiency. Our evaluative criteria will include, but is not limited to, Commission Regulatory Rules and Regulations, Company Policies and Procedures, and Industry Best Practices learned through the wealth of experience and leadership of the Jacobs team.


1. Do the infrastructure planning and engineering functions operate effectively?

2. Does NFGDC’s have appropriate priorities, guidance, and other instructions for evaluations, tradeoffs and decision making including: (1) an asset condition and management process (2) using input from the asset health review process, and (3) linking asset management decisions (e.g., predictive failure analyses) to improved reliability and performance?

3. Do NFGDC’s load forecasts encompass supporting decisions for system level and regional level infrastructure requirements?

4. Are other load and infrastructure factors, such as advanced metering infrastructure, smart grid, and energy efficiency initiative given appropriate consideration in the planning process?

5. Are the needs for major projects such as gas mains, and gas service renewals identified, developed and adequately justified?

6. Is the process and criteria for making decisions regarding replace vs. repair, including the overall construction program planning process is affective, documented and adhered to?

7. Are the planning processes for reliability vs. new business tradeoffs and regional vs. central planning dynamics appropriate?

8. Are benefit/cost analyses and risk analysis considered in the decision-making process appropriate and effective maximizing reliability and cost savings?

9. Are the specific types of benefit/cost analyses methodologies used appropriately?

10. Are tradeoffs being optimized with respect to the replacement of old technology with newer technology and the resulting effect on the useful lives and depreciation assumptions of the existing infrastructure, cash flow and system reliability?


11. To what extent do alternate options take into account mobile assets?


12. Are both static and dynamic system models quality checked for equipment parameters, load growth, and power factor accuracy?

13. Are load forecasts checked for accuracy and adjustment factors incorporated as a measure of process improvement?

14. Does the system plan effectively incorporate renewable resources?

15. Are rights-of-way and environmental constraints factored in NFGDC’s Public Affairs and Community Outreach Programs and initiatives?

16. Does the Planning Criteria take into account industry best practices when considering equipment ratings for planning, design, and operation?

b) Work Activities

1. Assess infrastructure planning and engineering functions.

2. Examine the priorities, guidance, and other instructions for evaluations, tradeoffs, and decision making, including: (1) an asset condition and management process (2) using input from the asset health review process, and (3) linking asset management decisions to improved reliability and performance

3. Examine the development of gas forecasts and infrastructure requirements.

4. Determine if other load and infrastructure factors, such as advanced metering, smart grid, and energy efficiency initiatives, are incorporated or represented in the planning process.

5. Assess the needs and criteria for identifying, developing, and justifying major projects such as gas mains and gas service renewals.

6. Review the process and criteria for making decisions regarding replace vs. repair, including how the overall construction program planning process is affected.

7. Assess the effects on planning processes for reliability vs. new business tradeoffs, and regional vs. central planning dynamics.

8. Determine the extent to which benefit/cost analyses and risk analyses are considered in the decision-making process, and perform an assessment of the specific types of benefit/cost and risk analysis methodologies.

9. Determine how tradeoffs are considered with respect to the replacement of older technology with newer technology and the resulting impact on the useful lives and depreciation assumptions of the existing infrastructure, cash flow, and system reliability.




c) Assignments

Task Leader: Mickey Grewal Consulting Support: Frank DiPalma


Our objective is to produce benefits for NFGDC and its customers, but that goal should not unduly prejudice us from recommending higher costs if there is a compelling need and clear service benefits, which could possibly be the case in this audit element. For example, if reliability becomes the paramount issue for a utility, the balance shifts and cost increases become more likely than cost benefits. Jacobs’ position is that in any case, the burden is on the consultant to fully justify the need for any added costs.

We do expect more traditional cost savings opportunities as well and will quantify the benefits, estimate implementation costs, and perform the requisite cost benefit analysis where appropriate.

5. Capital and O&M Budgeting

Budgeting is an integral part of any utility’s planning process and typically is comprised of both capital and operations and maintenance (O&M) expenditures. The capital budget process is generally used to determine a company’s long-term investments, while the O&M budget is focused on the day-to-day operations necessary for the company systems and equipment to perform their intended functions. A value of the budgeting process is the ability to rank projects so companies can invests in the highest financial rewarding projects. Since funds are not infinite for capital or O&M budgets, the utility must determine the effects of deferring any contemplated efficiency improvements or maintenance on the company’s performance. The budgeting process depends on the interrelationship with load forecasting, work management and project management to provide adequate feedback on current needs of the company. This will allow the utility to address changing requirements and market conditions.

In previous audits/assessments of other utilities we have found the following issues: Findings From Similar Audits/Assessments: • Capital constraints and prioritization weaknesses • Timeliness of managerial and accounting reports • Quality and compliance of financial reports • Inconsistency between information shared and reported to/from separate groups • Lack of linkage between top-down and bottom-up budgets • Timeliness and relevance of financial and operational reports • Lack of proper level of budget authorization • Lack of appropriately sophisticated budgeting and budget variance analysis tools


• Quality of variance reports • Timeliness of variance reports • Participation of various levels of management in the process • Lack of follow through on significant budget variances • Inability to quantify benefits of budget expenditures • Inadequate transparency and management of project contingency

This task consists of a review of the processes for budgeting both capital and O&M. We will examine the Board’s role and assess Management’s accountability. Our evaluative criteria will include, but is not limited to, Commission Regulatory Rules and Regulations, Company Policies and Procedures, and Industry Best Practices learned through the wealth of experience and leadership of the Jacobs team.


1. What are the roles of the Board of Directors, and Executive and Senior Management, and are they appropriate?

2. The processes by which the Board gets involved in the capital and O&M budgets and the timeliness of their involvement, and if the level of budget detail that the Board sees is adequate.

3. The effectiveness of the construction/capital priority setting process.

4. If incremental O&M expenses associated with new construction are factored into the budgeting process appropriately.

5. If allowed revenues/rates and financing opportunities or constraints have an adverse effect on budget levels and priorities.

6. The relationships among planned/budgeted expenditures, rate case proposed expenditures, and actual expenditures.

7. If the capital budgeting process, including project authorization, project appropriation, increase/decrease of authorization/appropriation, capital budget status reporting, validation in advance of appropriation, funding controls, and other elements of the capital budgeting process is adequate?

8. What are the budgeting guidelines, practices and procedures, including “zero–based” and other alternative methods?

9. What are the roles and relationships between regional and centralized planning and budgeting functions?


10. What is the methodology for prioritizing and determining which capital projects get approved, including an examination of modeling software for capital and O&M budgeting?

11. What management oversight and cost controls exist for the capital and O&M budgeting process, and to control and manage program and project capital costs in the near and long term, and what is the annual process for reviewing and determining whether total capital and O&M planned expenditures are adequate?

12. Are there top-down and bottom-up processes for budget development for capital/construction classifications and categories?


13. If controls are established to ensure that increases and decreases to the construction budget/expenditures are justified and appropriately approved.

14. If the ability exists to quantify benefits to the distribution system as a result of capital investments

b) Work Activities

1. Examine the appropriateness of the roles of the Board of Directors, and Executive and Senior Management.

2. Determine the processes by which the Board gets involved in the capital and O&M budgets and the timeliness of their involvement.

3. Examine if the level of budget detail that the Board sees is adequate.

4. Identify the Board’s responsibilities with regard to the budgets and determine if they following the guidelines.

5. Determine the effectiveness of the construction/capital priority setting process.

6. Examine how incremental O&M expenses associated with new construction are factored into the budgeting process appropriately.

7. Determine if allowed revenues/rates and financing opportunities or constraints have an adverse effect on budget levels and priorities.

8. Review the relationships among planned/budgeted expenditures, rate case proposed expenditures, and actual expenditures.

9. Assess the adequacy of the capital budgeting process; including project authorization, project appropriation, increase/decrease of authorization/appropriation, capital budget status reporting, validation in advance


of appropriation, funding controls, and other elements of the capital budgeting process is adequate.

10. Review budgeting guidelines, practices and procedures, including “zero–based” and other alternative methods?

11. Compare performance to industry “best practices.”


c) Assignments

Task Leader: Mike Rafferty Consulting Support: Bill Williams, Chris Pioli


Since financial resources are often limited or constrained, the process should evaluate the Company’s needs to maximize the use of these financial resources. With an integrated budgeting process, the Company can balance its financial resources between capital and O&M to meet established performance goals. The timely feedback of budget variances allows management to make timely decisions that are needed to stay competitive and manage an ever-changing environment.

6. Program and Project Planning and Management

As in the budgeting process, project and program management is an important element of being able to accommodate competing project requirements within the fiscal and resource capabilities of the organization in a cost effective manner. The long-term impact of many project management decisions often are not able to be quantified and evaluated until the project is well underway or completed. Jacobs’ emphasis will be placed on reviewing and establishing a baseline of project management capabilities and our focus will be on the management decision-making processes, its organization and control mechanisms; and whether they are sound, adhered to, logical, and responsive to changing conditions. Our assessment of program planning and management will determine if NFGDC has the appropriate project management tools, organization, processes, skills and staffing; and will evaluate changes recommended to improve the practice and enhance its results.

We have generally found the most important element of successful project and program management is adequate scope definition. Without a strong baseline key elements can become moving targets, precluding any effective control. Jacobs will focus on the scope development as derived through linkages from the other appropriate audit elements, which in this case are System Planning and Budgeting. The second most important element on the project management process is the flow of activities including: project charter, project scope,


management plan, direction and management of execution, progress monitoring, and change control. We will document the flow of activities and examine how all of the project management elements, including: scope creep, cost control, schedule adherence, and quality control are treated within that flow.

Since the RFP notes the law also states, “The audit shall include, but not be limited to, an investigation of the company’s construction program planning in relation to the needs of its customers for reliable service and an evaluation of the efficiency of the company’s operations.” We will also select a sample of specific projects or programs for a more definitive “case study” approach in order to examine how the policies, plans, and procedures actually translate into results. Our sample will be designed to include construction projects in the early stage, mid-stage, and completed. For each case study, we will examine how the various elements of the program contributed, or failed to contribute, to project success. We will identify opportunities for corrective action that were taken or missed, and how the project management program facilitated, or should have facilitated, those opportunities. As part of our sample design and selection, we will take steps to assure the sample is representative of the overall project/program management function by tracking the samples through the audit elements. Jacobs will trace, how was its need defined in load forecasting, how did its design emerge from system planning, and how did it get into the budget. This will also allow us to test the final compliance of the project with its originally defined needs.

In previous audits/assessments of other utilities we have found the following issues: Findings from Similar Audits/Assessments: • Lack of integration between planning, resource planning, construction program planning

and performance measurement • Insufficient documentation of the planning process procedures and organization • Proper balance of centralization/decentralization in the planning structure • Little follow-up tracking of goal achievement • Inadequate development of performance measures • Inadequate internal resources dedicated to planning • Inadequate support systems to facilitate development and implementation of strategic plans • Some contracting out decisions are found to be biased one way or another, because of

predilections of management, or misapprehensions about available resources • Some contracts (or even internal projects) are incorrectly structured, raising costs

unnecessarily by requiring excessive overtime, inefficient use of equipment, etc. • Some contracting agencies overestimate costs of contracts, and do not use audits or other

controls to keep contractors from expanding work (or costs) unduly • Lack of coordinated project management • Poor cost/schedule performance


This overall task consists of a review of the program and project management process, including prioritization processes, project support such as materials, equipment, transportation, quality assurance for both in-house and contractor executed projects, cost tracking and budget vs. actual variances. Our evaluative criteria will include, but is not limited to, Commission Regulatory Rules and Regulations, Company Policies and Procedures, and Industry Best Practices learned through the wealth of experience and leadership of the Jacobs team.


1. Do capital and O&M plans and budgets convert to specific programs and projects in an effective manner?

2. Are programs and projects prioritized and approved over various time horizons in a cost-effective manner? Are the program and project planning, design, estimating, engineering, costing, scheduling and execution functions performed effectively?

3. Are materials and equipment, transportation, and other logistical support planned and managed effectively for programs and projects?

4. Are tradeoffs analyzed and decisions made in order to optimize the use of in-house workforce versus contractor labor?

5. Are contractor and engineering practices appropriate?

6. Are construction contractor projects planned and managed effectively?

7. Does NFGDC have effective quality assurance and quality control at the program and project level?

8. Does NFGDC have effective contractor management, project/program management, including accountability, goals, objectives, and performance measurement?

9. Does NFGDC have an effective methodology for tracking costs, work units, and work quality for specific programs and projects?

10. Does NFGDC routinely identify typical variances between original budgeted and actual capital expenditures and work units?

11. Does NFGDC track and minimize variances in order to improve the cost control, efficiency/productivity, and work quality?


12. Does NFGDC utilize a well defined work breakdown structure to estimate, track, and monitor project performance?


13. Is the project work breakdown structure consistent between in-house, contracted projects, and the utility’s cost accounting systems?

14. Are project estimates accurate and updated on a periodic basis?

15. Are project contingency funds appropriate, consistent among projects, managed and controlled effectively?

16. Are project scope changes effectively controlled and communicated among participants?

17. Are project change orders managed and controlled effectively?

18. Are project quality control and technical requirements effectively transferred to contractors?

b) Work Activities

1. Evaluate NFGDC’s approach to project management.

2. Evaluate the quality of the project management and support organizations, including the skills and experience of the key project management staff.

3. Review how capital and O&M plans and budgets convert to specific programs and projects.

4. Evaluate how initial scope is defined and its ability to serve as a good baseline for control. Determine if there are any situations in which projects are approved and started without sound baselines for control.

5. Assess how programs and projects are prioritized and approved over various time horizons.

6. Define and review program and project planning, design, estimating, engineering, costing, scheduling, and execution.

7. Evaluate how materials and equipment, transportation and other logistical support are planned and managed for programs and projects.

8. Determine how tradeoffs are analyzed and decisions made in order to optimize the use of in-house workforce versus contractor labor?

9. Examine contractor and engineering bidding processes.

10. Evaluate how construction contractor projects are planned and managed.

11. Examine quality assurance and quality control at the program and project level.

12. Examine contractor management, project program management, including accountability, goals, objectives, and performance measurement.


13. Examine methodology for tracking and managing costs, schedule, work units, and work quality for specific programs and projects.

14. Determine if the typical variances between original and budgeted and actual capital expenditures and work units are justified.

15. Assess how NFGDC tracks and minimizes the variances in order to improve cost control, efficiency/productivity, and work quality.

16. Evaluate how the balances of the construction program (i.e., those projects that do not come under a project management approach) are managed.

17. Prepare at least three case studies of actual projects and determine how project management systems have worked, where opportunities have been taken or missed, and where improvements may be possible. Determine the degree to which the case studies are representative of broad project management performance.

18. Evaluate the flow of projects from the budgeting process into the project management function, including how project budgets are then set (in relation to what is in the capital or O&M budget), and how design intent is maintained.



c) Assignments

Task Leader: Bill Williams Consulting Support: Mike Rafferty, Frank DiPalma


The structure of project management and its clear objective of meeting cost, schedule, and quality targets make the evaluation task somewhat easier than other areas of the audit. The activities of project management have a defined desired outcome and that serves as a reasonable criterion from which to measure improvement.

As elsewhere in this audit effort, quantification of benefits is highly desirable, and it is our intention to provide such quantification in all possible cases. Similarly, implementation costs will be estimated and suitable cost benefit analysis provided as appropriate.

7. Work Management

Work management and workforce management are complementary functions that together, if employed appropriately, assure the timely and proper completion of necessary work efforts. Utilities are increasingly turning to outside contract resources to undertake both capital expansion projects and some system reinforcement/repair work efforts as the in-house


workforce continues to shrink. Quality assurance becomes a more critical function with a higher level of outsourced contract work.

Surprisingly, many utilities still do not have a comprehensive and effective work management program. An effective work management program provides a utility with benefits that can be directly related to improved performance and significant cost savings for a number of reasons: Alignment of workload with available resources and benefiting from reductions in labor costs, including:

• Proper work planning improves employee utilization, efficiency, and effectiveness.

• Effective work management supports the budgeting process and the timeframe for activities consistent with the utility’s ability to finance the work.

• Optimizing the work force for each area or function.

• Provides tools needed to benchmark efforts against other utilities.

A comprehensive work management program displays the following attributes:

• All employees are covered by an appropriate work management system.

• The program includes contractors when part of the work is outsourced.

• All employee and billed contractor time is covered by the program.

• Service level measurements exist for each work group.

• Identified workload drivers are tracked and forecasted for each work group.

• Systems have appropriate automation and are relatively “easy to use”.

• Work management information is useful for workforce planning and staffing decisions.

Upon assessing Work Management Systems, a determination of the organizational structure’s operational and functional alignment through evaluating and analyzing the roles and responsibilities of the managers, supervisors, and inspectors in the positions they are assigned is necessary. Often the operational and functional alignments do not properly align and therefore cause efficiency or ineffectiveness in the work performed. Another Work Management Systems’ area that serves a key indicator to proper structure and alignment is the employee or staff’s performance with specific focus on availability, utilization, efficiency, productivity, and effectiveness. Reviewing these key factors for positive and negative outcomes will exhibit a number of characteristics of the culture of the organization including: leadership style, management style, communication, values, beliefs, attitudes, etc.


Feedback on performance or production measures of the various work management systems is important toward growth and improvement. Evaluation of these measures to determine whether a target goal was or was not accomplished within a given range will be assessed to establish their appropriateness, accuracy, and validity. When gaps are discovered, a recommendation can and should be posed to aid in modifying the situation. This study in part will determine if the necessary feedback mechanisms are in place to foster and enhance improvement. Therefore, we have designed the work effort for this task to consist of a comprehensive and holistic review of the procedures, polices, and systems employed to specify and control projects and work efforts. We will develop a statistically justified sample of construction projects to audit form inception to completion to serve as an indicator whether the Company is following its procedures. In previous audits/assessments of other utilities we have found the following issues: Findings from Similar Audits/Assessments: • Degree of automation • Utilization and productivity trends • Job standards review period • Usefulness of performance reporting • Accuracy of job estimating • Amount of paperwork required • Lack of adequate coverage • Need for a formal productivity improvement program • Manpower forecasting as an integral budgeting component

This task consists of a review of the procedures, polices, and systems employed to specify and control projects. This will include an evaluation of the work management computerized systems employed as well as project assignment, the roles of project managers, supervisors, and inspectors. We will examine how workforce and work management systems feed back into performance improvement opportunities.

Our evaluative criteria will include, but is not limited to, Commission Regulatory Rules and Regulations, Company Policies and Procedures, and Industry Best Practices learned through the wealth of experience and leadership of the Jacobs team.


1. Are planning and execution of programs and projects converted into short-term and day-to-day work effectively?


2. Are work management systems used effectively to schedule and manage field crews, including transportation, equipment, and materials?

3. Are the roles and responsibilities of project managers, supervisors, and inspectors defined and adhered to appropriately?

4. Does NFGDC manage quality assurance and quality control effectively?

5. Does NFGDC measure and manage employee availability, utilization, efficiency, productivity and effectiveness in an appropriate manner?

6. Are work program and project schedules managed effectively on a day-to-day basis?

7. Does information about rework, failures, and repair history get translated into corrective actions, infrastructure aging analysis, and repair versus replace decisions in an effective and timely manner?

8. Do the workforce and work management systems feed back into performance improvement opportunities?


9. Does management have and use appropriate work planning and management tools and techniques?

10. Do excess work backlogs exist, and if so, does the NFGDC have plans to eliminate them?

11. Are work measurement standards valid? Does NFGDC use the measurements to manage the workforce?

12. Are work schedules practical? Are the schedules at an appropriate level of detail?

13. Are all major work groups covered by work management systems?

b) Work Activities

1. Examine how planning and execution of programs and projects are converted into short-term and day-to-day work planning and management.

2. Determine how work management systems are used to schedule and manage field crews, including transportation, equipment, and materials.

3. Assess the effectiveness of the quality control program and how it blends with the work flow and avoids checkpoints or delays that unnecessarily disrupt the work while also capturing defects early enough to minimize the need for extensive re-work.

4. Review the roles and responsibilities of project managers, supervisors, and inspectors.


5. Determine how NFGDC measures and manages employee availability, utilization, efficiency, productivity, and effectiveness.

6. Evaluate the process by which materials are procured and/or requisitioned from inventory, made available to work crews, and delivered to the work site.

7. Determine how productivity is measured and wherever compared to credible standards. Such measures should be on both a macro (collective) basis and micro (detailed tasks) basis.

8. Evaluate how work program and project schedules are managed on a day-to-day basis.

9. Determine if information about rework, failures, and repair history gets translated into corrective actions, infrastructure aging analysis, and repair versus replace decisions.

10. Determine if workforce and work management systems feed back into performance improvement opportunities?

11. Evaluate NFGDC’s contracting strategies and practices. Evaluate where contractors are utilized, how management of contractor forces complies with the same workforce management principles discussed here for NFGDC, and the relative effectiveness of contract labor.

12. Evaluate NFGDC’s resource allocation strategies to assure the fixed staff is optimally applied, and that lower cost alternates are used for unskilled work.

13. Evaluate how workforce management processes are applied in a construction project environment and linked with project or program management processes.

14. Analyze staffing trends for the past five years by functional area.

15. Analyze workforce planning and management tools.

16. Assess key work backlogs by functional area.

17. Review overtime in total, by functional area, and by job classification.



c) Assignments

Task Leader: Bill Williams Consulting Support: Mike Rafferty, Frank DiPalma


This area lends itself to quantification of benefits as well as meaningful cost-benefit analysis. We have often found that improvements to systems and tools alone may


produce what appear to be benefits, without corresponding improvements in process and related initiatives, the overall and long-term benefit may not develop. Therefore, since we approach this review on a holistic basis, our evaluation should result in tangible, measured outcomes with estimated implementation costs.

Impact on Construction Projects

As part of this review area, we will pay particular attention to the role that work management plays in successful planning, review and timely and budgetary conformance for project completions.


8. Performance and Results Management

Performance and Results Management plays critical role in the growth and advancement of any organization. This area represents the measures and the actions by which the organization uses to assess its performance. Performance related systems, techniques, and results are important and maintain a strategic place in the decision-making process at all levels of the organization, from the corporate level through the business units down to the operational level. An evaluation of the key performance metrics from these three levels will be completed to determine whether the appropriate type and kind of metrics and measures are in place. Basically, given the organizational level, what are the areas being measured and why? Is performance data sufficient and is it accurate and valid? Are the systems of collecting, monitoring tracking, and reporting adequate and user-friendly? Are the measures tailored to the people that use them appropriate at all levels of need? And is there an action associated with a measure? Do the results tie back and link to the performance process as whole?

In previous audits/assessments of other utilities we have found the following issues: Findings from Similar Audits/Assessments: • Cost/benefit analysis are inconsistently applied • Performance metrics are not linked to performance incentives • Inadequate development of performance measures • Lack of integration between planning, resource planning, construction program

planning and performance measurement • Little follow-up tracking of goal achievement

James Harrington stated, "Measurement is the first step that leads to control and eventually to improvement. If you can't measure something, you can't understand it. If you can't understand it, you can't control it. If you can't control it, you can't improve it." This statement forms the basis for performance and results management. However, we believe that this statement should be expanded and qualified in order that, to be effective any measurement system must employ the proper measurements or metrics, and the performance results must be communicated back to ensure the corrective actions or improvement opportunities are captured. This task consists of a review of the processes for feedback of performance to the corporate mission, objectives, and goals to improve processes, optimizing resource use, and accommodating changing priorities. We will examine the Board’s role and assess management’s accountability.


Our evaluative criteria will include, but is not limited to, Commission Regulatory Rules and Regulations, Company Policies and Procedures, and Industry Best Practices learned through the wealth of experience and leadership of the Jacobs team.


1. What are the processes for feedback of performance (reliability, productivity, etc.) to the corporate mission, objectives, and goals for the purpose of improving processes, redirecting resources, and changing priorities?

2. What are the roles and responsibilities of the Board of Directors in this feedback loop?

3. What is Management’s accountability for performance improvements, e.g., cost savings and productivity gains anticipated from specific capital and O&M programs and projects, and specific corporate goals?

4. What are the goals, key performance indicators, and metrics?

5. What are benchmarking studies, for identifying and developing performance targets, have been conducted?

6. What change management and continuous improvement processes are in place? And have there been any impediments that might constrain performance improvements and necessary changes?

7. Are there compensation and performance metrics? Are these metrics realistic, valid, and acted upon?

The following are additional performance measures and indicators that are to be considered to facilitate the corporate mission, objectives, and goals, including: leading indicators, metrics, key performance indicators, and other measures that will help improve performance. Including:

8. What amount of information is enough and necessary to make sound business decisions?

9. Are the key performance metrics from the corporate, business unit and operational unit level appropriate in type and kind of metrics and measures?

10. Given the organizational level, what are the areas being measured and why? An assessment of the means of collecting data for a measurement area and the systems (e.g., collecting, storing and reporting) will be evaluated to determine validity, accuracy, and correctness?

11. How are the information used and what actions are undertaken? What is the anticipated impact of key leading and lagging indicators?


12. What are the key relationships including: the link between performance metrics and compensation; cost efficiencies, safety, organizational change management, etc.?

13. How are these results treated and what type of response is imposed?

14. How is compensation linked to performance? How do the Board of Directors and Executive Management oversee this process?

15. What change management process is used by the Company? How has this impacted the growth/success of the Company (or not)?

16. How does change management and strategic goals and objectives link?

17. Who is responsible for the change management from strategic intent to operational implementation? How are performance metrics re-aligned to reflect change management initiatives?

18. What potential recommendations (as based on findings or benchmarks) will be presented that highlight enhancements and modifications to the current measure practices in addition to proposing new performance measures?

b) Work Activities

1. Assess whether NFGDC’s performance (reliability and productivity) feeds back to its corporate mission, objectives, and goals so that it can improve its processes, redirect resources, and change priorities? Determine at what point and to what extent the Board is involved in this feedback loop?

2. Are the corporate mission, organizational strategy, goals, and objectives covered by an appropriate set of performance measurements? Are there gaps in performance measures relative to its corporate mission, objectives, and goals?

3. Determine if managers are held accountable for performance improvements, e.g., cost savings and productivity gains anticipated from specific capital and O&M programs and projects, and specific corporate goals. Are compensation and performance metrics linked effectively?

4. Determine if there are impediments that tend to constrain performance improvements and necessary changes or taking action.

5. Are there change management and continuous improvement processes in place? Are they linked to performance measures? Is there a feedback loop to improve processes, consider resource needs, or incorporate changing priorities?

6. Assess whether additional performance measures or indicators are needed to facilitate the corporate mission, objectives, and goals.

7. Determine if there are additional appropriate leading indicators, metrics, and measures that will help improve performance.




c) Assignments

Task Leader: Frank DiPalma Consulting Support: Carlo Ninassi, Bill Williams, Mike Rafferty, Chris Pioli


Given the dynamic nature of the business environment these days it becomes essential that improving processes, redirecting resources, and changing priorities be monitored, tracked, and evaluated on a regular and consistent basis so that certain steps can be taken that are correct and appropriate. This is no easy task, especially when a great deal of data can be collected and stored. What amount of information is enough and necessary to make sound business decisions? Are the right people at the right levels reviewing and understanding these performance measurement outputs? And what is being done to address a measured result - whether it is positive or negative given its parameters? The benefit of having a sound set of performance metrics enables managers to know where they stand (or not); aids in quality decision making; justifies compensation or other financial recommendations and actions; tracks construction methods, safety and compliance; and enhances growth, or at least manages sustainability. The risk of ignoring the need to have a quality set of performance metrics or the many sub-systems associated with them can be costly and difficult to reverse. The benefits of maintaining a high quality performance measurement and results program far outweigh the short-term costs for anything less.


V. Project Team and Responsibilities Project Team Jacobs believes a key to success in project execution revolves around the core consulting team assembled for the project. The complementary roles of Engagement Director and Project Manager assure full and professional management coverage is given to the project and provides an escalation process for issue resolution. For this important engagement, we have assembled a very strong core team to guide and lead the project. This core team has led numerous operational audits for many utilities and is very familiar with client expectations in assignments of this type. In addition, each team member intimately knows their assigned task areas and requirements and is well aware of potential overlap and interdependence among the various tasks. Team members actively collaborate and share findings to support and/or challenge each other’s efforts in order to produce a comprehensive and cohesive result. The following project organization chart highlights the overall project management as well as the task lead and consultant support roles and clearly identifies who will lead and who will assist the Task Leader in analyzing each functional area.


Figure 5 - Organizational Chart

Project Team Members Our project team consists of Jacobs Consultancy’s Utility Practice, Rehmann, and Norse Associates. Each firm’s participants bring with them first-hand utility management experience in the areas in which they are either functioning as task leader or supporting consultant. This project team collectively has a comprehensive understanding of the managerial, technical, and financial issues faced by NFGDC. Having worked together on numerous projects, our project team has been able to demonstrate they are capable of assessing a utility’s efficiency and effectiveness with respect to meeting its performance goals and recommending meaningful opportunities for improvement. Below is a brief summary of the experience personnel that will be engaged in this project.


Salvatore D. Marano, P.E. Managing Director (project’s Engagement Director) Jacobs Consultancy Education BS, Mechanical Engineering Fairleigh Dickinson University MS, Management Science, New Jersey Institute of Technology Registered Professional Engineer, New Jersey Expert Witness

Salvatore D. Marano, P.E., has extensive knowledge, vast experience and a distinguished reputation in the energy and utility industry allows him to effectively manage the flow of information, while providing his valuable opinions and strategic insight to senior client leadership personnel. He has served as Responsible Officer on auditing efforts both domestically and internationally. Mr. Marano has managed, as Responsible Officer, the California Public Utility Board Audit of PG&E’s gas and electric distribution capital expenditures and the audit of PG&E’s Vegetation Management Program; the Diagnostic Management Audit of Connecticut Power & Light for the Department of Public Utility Control and the Audit of the Street-Lighting Financial and Physical Assets of CL&P. Mr. Marano was the Responsible Officer assisting the NJBPU’s analysis of how the Exelon-PSEG merger may or may not affect the reliability of electric and gas service and pipeline safety in the State of New Jersey, including the review of Exelon and PSEG’s emergency and security plans. Mr. Marano was Executive Advisor for the resource adequacy audit of all the electric utilities in the State of Illinois for the ICC. Provided expert testimony and testified during the hearings relating to the proposed merger of Exelon and PSEG for gas regarding safety and reliability of the gas delivery business. Provide direct testimony and cross-examination on belhalf of Peoples Gas of Chicago in support of its Accelerated Main Replacement Program ( $2. billion) from a 50-year program to a 19-year program, and support for an infrastructure recovery rider mechanism. Also submitted direct testimony and cross-examination for an implementation program to assit in the rampng up of the program from $46 million per year to over $150 million per year.


Frank T. DiPalma Director (project's Project Manager) Jacobs Consultancy Education MBA, Finance Farleigh Dickinson University BS, Mechanical Engineering New Jersey Institute of Technology Expert Witness

Frank T. DiPalma is a management consultant with over 30 years of experience. He has overall expertise in general and operations management, marketing, business development, customer service, process engineering, project management, strategic alliances, labor relations, strategic planning, supply chain management and regulatory compliance. Mr. DiPalma’s operational experience includes: working in and with large electric and gas utilities that have gone through organizational change where downsizing and process improvement were concerns. He has extensive experience working with state commissions. Recently, he was project manager for the Illinois Commerce Commission’s Workforce Adequacy Study covering the five major electric utilities in Illinois. In addition, while working for the Connecticut Department of Public Utility Control, Mr. DiPalma was the project manager for the Management Audit of Connecticut Light & Power. In addition while working for the California Public Utility Commission, he was the financial program manager for PG&E’s Vegetation Management Audit and program manager for the audit of PG&E’s electric and gas capital distribution expenditures. He was also project manager assisting in the NJBPU’s analysis of how the Exelon-PSEG merger may or may not affect the reliability of electric and gas service and pipeline safety in the State of New Jersey. Provided expert testimony for the Maryland Public Service Commission in the Electricité de France Purchase of Constellation Energy Group’s Nuclear Holdings. Served as the NJBPU’s expert electric witness testifying as to the electric systems reliability and safety both now and in a post-merger environment.


Christopher A. Pioli Director (project's Task Leader) Jacobs Consultancy Education MBA, Management, Regis University BS, Chemical Engineering Illinois Institute of Technology National Safety Council Certified Utility Safety Administrator (CUSA) Endorsement in Gas Expert Witness

Christopher A. Pioli has over 25 years of operations, consulting, and utility related experience. He has advised regulators, utilities, and financial clients in matters involving gas supply portfolio development, system planning, pipeline construction operations, maintenance, and system integrity. Conducted an independent assessment of a utility’s gas purchasing practices for manipulating, falsifying, or distorting volumetric consumption and gas prices for financial gain. The investigation covered management, rates, gas supply, accounting, and internal auditing focusing on the company’s gas supply chain processes, tools, practices, procedures, and people. Reviewed the adequacy of gas transmission and distribution asset management practices through the review of operating and maintenance processes, policies, procedures and inspection records. Assessed key operating programs including emergency preparedness, damage prevention, asset replacement, leak management, and others for compliance to regulations or industry standards, as well as leading industry practices.

Testified in a gas supply and pricing arbitration. Testified before the Massachusetts Department of Public Utilities on gas supply. Prepared written testimony on purchase gas adjustment methodology compliance.


Dr. Carlo Ninassi Group Manager (project's Task Leader) Jacobs Consultancy Education Executive Education, Strategic Management University of Pennsylvania Doctorate of Management Colorado Technical University MA, Financial Management University of Maryland BS, Microbiology University of Maryland BS, Arts & Architecture Pennsylvania State University

Dr. Carlo Ninassi, a key consultant with the Jacobs Consultancy’s Utilities Practice. Dr. Ninassi represents a knowledge center of expertise in the area of utility business strategy formulation and organizational assessment and design. This expertise has been applied in working with senior executives in the public and private sectors toward the alignment, development and implementation of initiatives to meet organizational and strategic intentions. Specifically various management tools have been employed to evaluate and implement short-term and long-range strategic plans that will have a positive and effective end state. Finally, assuring the proper and timely alignment of resource needs including financial systems, human resource systems, operational supply/value chains processes, and their related risk management, performance metrics and enhancement programs has been completed for several major clients. He has worked on numerous utility projects including: ICC’s Electric Workforce Analysis, Yankee Gas Management Audit, and CL&P Management Audit.


Michael Rafferty Group Manager (project’s Task Leader) Jacobs Consultancy Inc. Education MS, Electrical Engineering, New Jersey Institute of Technology BS, Electrical Engineering, Ohio State University Expert Witness

Michael Rafferty, has over 30 years of management consulting experience, and will be a lead consultant. Mr. Rafferty is an experienced executive, manager and consultant with an international background in management and operational audits, disaster recovery, information systems, project management, utility planning, call centers, and organizational management services. Qualifications include: management audits, benchmarking, staffing, economic studies, strategic planning studies, marketing studies, load forecasting, integrated resource planning, electric transmission and distribution planning, budget forecasts, and professional training and development. Mr. Rafferty has participated in numerous management audits, most recently for the Massachusetts PSC for Fitchburg Gas & Electric, and for the New Jersey Board of Public Utilities for PSE&G. He has participated in three merger reviews of the proposed utility mergers as denoted below in the testimony section. In 1992, Mr. Rafferty testified before an administrative law judge on behalf of the Virginia State Corporation Board in hearings related to a convenience and necessity certification for a 765kV line proposed by American Electric Power and Virginia Power. In 2005 and 2006, Mr. Rafferty prepared pre-filed testimony and surrebuttal testimony and testified before a New Jersey administrative law judge on behalf of the New Jersey Board of Public Utilities regarding the proposed Exelon-PSEG Merger. His testimony focused on customer service.

In 2010 and 2011, he prepared pre-filed testimony and surrebuttal testimony and testified before the Maryland Commission on behalf of the Maryland PSC staff regarding the FirstEnergy/AlleghenyEnergy and Exelon/Constellation Mergers, respectively. His testimony focused on reliability, budgeting, performance, and operations.


Bill Williams Group manager (project’s Task Leader) Jacobs Consultancy Inc. Education BA, Business Administration Saint Leo College

Saint Leo University, Graduate level Business courses.

Bill Williams has over 25 years of experience in the utility industry. Mr. Williams is an experienced executive with a strong background in inventory management, business process improvement, management audits, operational assessments, emergency restoration plan (ERP) reviews, management audits, workforce adequacy, storm reviews, strategic planning and performance monitoring. He is also heavily experienced in customer service, including call center analysis, materials management, budgeting, corporate strategic planning, information systems planning, maintenance management, property records, organization and staffing assessments in the manufacturing, distribution and utility industries. His career has been focused on leadership positions in operations, logistics, materials management, change management, and total quality management. Recently, he has been involved with a management audit of Fitchburg Gas and Electric and a review of the service response and communications of The Connecticut Light and Power Company and The United Illuminating Company. Mr. Williams also has participated in the merger review of both Exelon/Constellation and First Energy/Allegany. He also participated in the Illinois Commerce Commission’s Workforce Adequacy Study. In addition, he has been responsible for managing his own consulting firm. He has also been a senior consultant for Stone & Webster. Mr. Williams’ utility career started at City of Lakeland Electric and Water Department where he gained valuable insights into storm restoration efforts as well as overall utility operations.


Edwin Norse (project’s Consultant) Consultant Education B.A., University of Vermont University of Vermont, Graduate Level Courses in Business

Mr. Norse has over 40 years experience in all sectors of the utility industry, including CFO of a private utility, Assistant General Manager of a municipal utility, and assignment as a Special Master for a regulatory agency. He has an extensive background in power supply procurement, including negotiations of purchases and sales of power resources with the majority of New England Utilities, Hydro Quebec, and Ontario Hydro. He has also consulted with gas utilities and electric utility cooperatives. His executive positions have included responsibility for budgeting and capital improvements, forecasts, rating agency presentations, rates, and financial performance. He has also worked extensively in energy efficiency and renewable, including wind, hydro and biomass.


Kirk Balcom (project’s Consultant) Principal, Rehmann Education B.S. Accounting, Iowa State University Certified Internal Auditor Certified Information Systems Auditor Certified Fraud Examiner

Kirk Balcom’s Internal Auditing career began in 1976 with Consumers Energy, a $15 billion combination gas and electric utility company. Kirk was a team leader for Sarbanes-Oxley Section 404 (internal controls over financial reporting) project deliverables for the utility. He also performed operational, contract, financial, information systems, joint venture, and international auditing for the utility. His 27 years of utility experience allows him to focus on key business risks of utility operations and had often resulted in cost savings and cash recovery opportunities for Consumers Energy. Mr. Balcom’s is very familiar with the FERC chart of accounts and related accounting processes. Mr. Balcom’s joined Rehmann in 2003 and his most recent client work includes Sarbanes-Oxley compliance, risk assessment, internal controls consulting, contract compliance, internal audit, and external quality assessment work in the higher education, insurance, manufacturing, healthcare, and financial institution industries. Mr. Balcom’s is very experienced with using the Committee of Sponsoring Organizations (COSO) Internal Control-Integrated Framework to help Securities and Exchange Commission clients and other organizations assess and enhance their internal control systems. He is also very experienced with the Control Objectives for Information and related Technology (COBIT) Framework to help clients assess and enhance their information technology controls. His areas of expertise include: • Sarbanes-Oxley Project Leadership • Operational Auditing • Information Systems Auditing • Risk Assessment • Quality Assessment of Internal Audit Departments


Project Team and Responsibilities Salvatore Marano – Engagement Director

• Consulting oversight – all areas

Frank DiPalma – Project Manager

• Task Leader for

o Performance and Results Management

• Consulting support for:

o Corporate Mission, Objectives, Goals, and Planning

o Program and Project Planning and Management

Christopher Pioli – Task Leader

• Task Leader for:

o Supply Procurement


o Capital and O&M budgeting


o Performance and Results Measurement

Carlo Ninassi – Task Leader




o Performance and Results Management

Mickey Grewal – Task Leader


o Load Forecasting

o System Planning




Bill Williams - Task Leader



o Work Management



o Capital O&M Budgeting

Mike Rafferty - Task Leader


• Capital O&M Budgeting




Edwin Norse - Consultant




Kirk Balcom - Consultant



Thierry Tam – Analyst for Staff Support

Mari Carney – Administrator for Staff Support


A consulting assignment matrix which describes the person-day estimates of the individuals assigned to each area and the various subcategories of each area is presented in Section 6 Schedules and Budgets.


VI. Schedule and Budgets Project Schedule and Budgets Shown in Figure 6 is a high-level schedule of tentative project milestones. This schedule is contingent on the anticipated announcement of successful vendor on February 11, 2010. Included in the schedule is the duration of each phase/segment of the audit. Our proposed schedule is as follows:

Figure 6 – Gantt Chart


Project Budget Jacobs’ proposed not-to-exceed cost for performing the management audit of NFGDC is $442,781. This proposed cost includes all professional fees ($415,055) and expenses ($27,726) associated with performing the work and delivering the necessary draft reports described in this proposal. As indicated in the RFP, the cost for all draft reports and the cost of printing 12 hardcopies of the final report are included in our not-to-exceed cost. Additional appearances and testimony will be billed at the discounted individual hourly rates shown in Figure 7.

Figure 7 - Jacobs Consultancy Inc.

Competitive Discount Schedule for the Commission

Professional Category

Hourly Fees (US $)

Managing Director 250 Director 225 Group Manager 210 Senior Consultant 195 Analyst 125 Administrative Support 75

Our proposed cost is based on our discounted hourly rates and normal travel, lodging, and other expenses. We have estimated our travel, accommodation, subsistence and other expenses below the estimates for Total Fees. In estimating the travel expenses, we considered airfares, hotel costs, meals and subsistence, rental cars and miscellaneous out-of-pocket costs based on current travel expenses and the anticipated number of trips and days on site. Details of our proposed project cost, including hours by consultant by task, are provided in Figure 8.


Figure 8 - Project Cost Summary

Consultant Task Marano DiPalma Pioli Ninassi Grewal Williams Rafferty Balcom Norse Tam Carney TotalPreliminary, Reports, Management 44 124 107 104 68 68 68 97 97 60 95 932

Corporate Mission, Objectives, Goals and Planning 35 21 35 7 42 35 175Load Forecasting 7 56 14 14 91Supply Procurement 91 7 7 7 112System Planning 32 116 148Capital and O&M Budgeting 27 17 8 51 42 7 152

Program and Project Planning and Management 49 14 71 50 184Work Management 53 50 7 110Performance and Results Management 40 5 30 25 25 125

Total 44 314 241 177 261 275 249 139 139 95 95 2029Bill Rate/Hour $250 $225 $215 $215 $215 $210 $210 $225 $195 $125 $75

Fees $11,000 $70,650 $51,815 $38,055 $56,115 $57,750 $52,290 $31,275 $27,105 $11,875 $7,125 $415,055Expenses $2,849 $6,133 $4,356 $2,233 $2,233 $2,684 $3,212 $2,233 $1,793 $27,726

Total $13,849 $76,783 $56,171 $40,288 $58,348 $60,434 $55,502 $33,508 $28,898 $11,875 $7,125 $442,781


VII. Experience and Qualifications

Jacobs Consultancy’s Experience and Qualifications Regulators have come under ever-greater scrutiny to demonstrate strong stewardship of utilities to ensure that continued safe, reliable, and fairly-priced utility services are available. With access through our parent organization, Jacobs Engineering Group, to more than 55,000 employees including economists, advisors, financial analysts, engineers and material scientists, Jacobs Consultancy has the expertise to assist our clients in meeting the challenges of today’s market. Our geographic coverage includes over 60 offices worldwide, including a major office in New York, NY. Jacobs Consultancy has extensive management experience and a tremendous diversity of in-depth regulatory and utility industry consulting experience. We bring a number of desirable qualities to the Commission. These qualities include:

• A proven reputation for delivering practical management and technical solutions.

• Extensive utility operations management, accounting and finance, as well as business process knowledge and experience, combined with a real world understanding of the issues and business objectives facing our clients and the utility industry.

• A proven methodology for performing management, financial and technical audits and in-depth reviews.

• Highly experienced project management track record.

• Global utility operations management knowledge and experience, combined with a real world understanding of the issues and regulatory objectives confronting regulators like the Public Service Commission of New York to ensure safe, reliable service.

• “Hands-on” utility business and operations management experience.

• Proven ability to advise and complete assignments for state utility boards on a wide array of issues and communicate in understandable terms.

• A 60,000 employee organization with diverse consulting and engineering capabilities, which will be available to support and augment the Commission Staff in a timely, on-demand basis.

• A one-stop-shop for most of the skills required to support a variety of assignments.

• Utilization of a proven web-based project management tool (eRoom) for enhanced communications and document control.


• The ability to provide the “bridge” between technical issues and consumer interests.

Jacobs Consultancy and Jacobs Engineering Group Jacobs Consultancy Inc. is the wholly-owned management and technical consulting subsidiary of Jacobs Engineering Group Inc. (NYSE:JEC), one of the largest professional services firms in the world. Our consultants provide technical, economic, and management consulting services to clients in the electric, power, water, natural gas, refinery and petrochemical, and transportation sectors around the world. A selected listing of our typical services is shown below:

Figure 9 – Jacobs Consulting Services

CONSULTING SERVICES • Operational reviews and audits • Reliability reviews and benchmarking • Safety studies and audits • Business continuity audits and

assessments • Pipeline Integrity Management • Risk management strategy development • Power and natural gas market analysis

and forecasts • Litigation/expert witness assistance • Strategy consulting including planning,

diversification, and acquisition assistance• Fuel contract review

• Vegetation management audits • Rate and regulatory expertise • Partnering, alliances, and outsourcing

advice • Project development and management • Workforce analysis • Asset appraisals and valuations • Business process improvement • Management audits • Project feasibility analysis – technical

and economic • Environmental due diligence • Utility system planning

These services are provided to a broad range of clients; a sample listing of typical clients is shown below:


Figure 10 – Jacobs Client Sectors

CLIENT SECTORS • State regulatory commissions • Municipalities • Gas transmission companies • Gas distribution companies • Electric utilities • State energy conservation organizations • Universities • Energy trading/marketing firms

• Financial institutions • Legal firms • Trade associations • Foreign governments and state

controlled energy firms • Project developers – both gas and

electric

State utility regulatory commissions which our project team members have worked in connection with operational audits, testimony, and committees include the following:

Figure 11 – State Utility Regulatory Commissions Team Members Have Worked With

STATE UTILITY REGULATORY COMMISSIONS • California Public Utilities Commission • Connecticut Department of Public Utility

Control • Illinois Commerce Commission • Maine Public Utilities Commission • Missouri Public Service Commission • New Jersey Board of Public Utilities • New Mexico Public Regulation Board • New York State Public Service

Commission

• Oklahoma Corporation Commission • Ohio Public Utility Commission • Oregon Public Utility Commission • Public Utilities Commission of Texas • Tennessee Public Service Commission • Utah Division of Public Utilities • Washington Utilities and Transportation

Commission • West Virginia Public Utility Commission

Jacobs Engineering Group Inc., our parent company, is one of the world’s largest and most diverse providers of professional technical services. With annual revenues over $12 billion, we offer full-spectrum support to industrial, commercial, and government clients across multiple markets. Services include scientific and specialty consulting as well as all aspects of engineering and construction, and operations and maintenance. Our fundamental business strategy is building long-term client relationships. With more than 50 years in the industry, we have attracted and retained clients by providing superior customer value—in fact, over 80 percent of our work is repeat business from loyal clients. The


combination of a loyal client base and steady growth enables us to attract and retain the industry’s top talent. As a result of this sound business strategy, we are prospering in diverse markets, worldwide. Our website is also available for review at: http://www.jacobsconsultancy.com/consultancy.asp?id=5584 Location Our global network includes about 60 major offices in over a dozen countries. Our North America office locations are shown below:

Figure 12 - Jacobs Office Locations


Rehmann Rehmann is a collection of professional service companies committed to providing valuable business solutions. The company was founded in 1941, and currently has 57 owners and 650 employees. Rehmann operates out of 19 offices throughout the U.S. Rehmann is an integrated group of three companies that includes: Rehmann Robson

• Certified Public Accountants • Business Management Advisors • Healthcare Advisors • Human Resources Consultants • Information Technology Security • Executive Recruiters

Rehmann Financial

• A Registered Investment Advisor • Financial Planning • Wealth Management • Retirement Plan Services

Corporate Investigative Services

• Corporate Due Diligence • Global Intelligence and Analysis • Fraud and Risk Management Services • Background Investigations • Computer and Digital Forensics • Insurance Investigation and Defense

More information about our firm is available at www.rehmann.com.

Experience Jacobs Consultancy Experience California Public Utilities Commission (2010-2012)

Following the San Bruno disaster near San Francisco, Jacobs was engaged by the CPUC to serve on a Blue Ribbon Panel charged with investigating the San Bruno incident. The final report addressed a number of areas of concern that the subject utility, Pacific Gas and Electric Company is addressing.


Subsequent to completing the work of the Blue Ribbon Panel, Jacobs was further engaged by the CPUC to review PG&E’s progress on the mitigating actions expressed in their Pipeline Safety Enhancement Plan. This work is currently ongoing.

Enbridge Gas Distribution (2011)

Jacobs was engaged to assist Enbridge Gas Distribution in defining initiatives designed to create a “best in class” utility. All critical functional areas were evaluated and recommendations were made to provide cutting edge and industry best practices for potential adoption by Enbridge.

Maryland Public Utilities Commission (2011)

Jacobs recently completed a due diligence review of the proposed Exelon/Constellation Merger. The assignment included a thorough review of the operations and reliability functional areas of the current and merged utility. As part of this work, Jacobs prepared direct filed testimony, surrebuttal testimony, and stood cross-examination.

Massachusetts Public Service Commission (2010-2011)

Jacobs, at the request of the Massachusetts Department of Public Utilities (DPU), conducted an independent management audit of Fitchburg Gas and Electric Light Company (FG&E). Our review, which focused on the management practices of both FG&E and Unitil, assessed the areas of strategic planning, staffing, and workforce management, management and control, customer and public relations, and emergency preparedness and response planning. Balancing our analysis against industry best practices in each of the above focus areas, we developed 16 recommendations for improvement.

Connecticut Public Utilities Regulatory Authority (2010)

Jacobs performed a storm response audit of Connecticut Light and Power Company and United Illuminating in response to a major winter storm in March 2010. Jacobs focused its investigation in six focus areas: (1) Emergency Planning, (2) Preparedness, (3) Restoration Performance, (4) Mutual Assistance, (5) Post-Storm Activities, (6) Best Practices, and other critical issues emerging from the restoration efforts. As a result, we concluded CL&P and UI did reasonably well in their response to the March Severe Rain and Wind Storm. However, our investigation unearthed a number of improvement opportunities; specifically, Jacobs provided ten CL&P and five UI recommendations.


New Jersey Board of Public Utilities (2010-2011)

Jacobs is finalizing an in-depth management audit of Public Service Electric and Gas Company, focusing on Electric Distribution and Operations Management and includes areas such as: System Operations and Maintenance, System Reliability, System Planning, Load Management, Fuel Management, Pooling Interchange and Economic Dispatch, and Smart Grid activities. The review covers the following focus areas: external interfaces, staffing, costs, budgeting, and project execution, and includes a review of PSE&G’s advancement into renewable energy and demand reduction programs. Six specific recommendations covering operations and maintenance, load management, and system pooling are being offered.

Maryland Public Utilities Commission (2010)

Jacobs analyzed the reliability and operations areas for deficiencies and merits of the proposed acquisition of Allegheny Energy (AYE) by First Energy Corp. (FE). Combined the companies provide 24,000 MW of electricity to over 6.2 million customers in the nation's largest investor-owned electric system. Jacobs served as the Maryland Public Service Commission’s expert electric witness testifying as to the potential impact on AYE’s Potomac Edison reliability and safety in a post-merger environment in the following areas:

• Energy services and conditions of operation

• Employee impacts

• Capital and maintenance plan and budgets

• Service reliability

• Transmission reliability Specific support activities included: analysis of pre-filed materials, participation in discovery, expert analysis, expert testimony, development of cross-examination and merger conditions.

Review of Mandated Gas Safety Activities - Puget Sound Energy (2008 - 2010) Washington Utilities and Transportation Commission The focused review covered an in-depth assessment of various aspects PSE’s gas operations.

• Programs, structures, and incentives that are in-place to maintain a “culture of safety and compliance” for PSE and its contractors.


• Appropriateness and effectiveness of training provided to or required of its employees and contractor personnel for compliance with standards and procedures.

• Contracts with service providers are structured to ensure that gas facilities are installed, repaired or replaced properly, safely, and cost-effectively.

• Methods employed to track and document work for compliance.

• Effectiveness of practices related to 49 CFR 192.613 (continued surveillance).

• Adequacy of resources provided to the gas safety compliance program effectively monitor mandated safety activities and programs for compliance.

Over 100 employees were interviewed and 200 documents were reviewed. Our assessment resulted in 61 unique recommendations for improvement. PSE has developed an implementation plan for the Washington Utilities and Transportation Commission approval.

Workforce Study Analysis of Illinois Electric Utilities (2008) Illinois Commerce Commission

Jacobs recently conducted a comprehensive workforce analysis study of five electric utilities in Illinois (MidAmerican Energy Company, AmerenCILCO, AmerenCIPS, AmerenIP, and Commonwealth Edison) to determine the adequacy of the total in-house staffing in each job classification or job title critical to maintaining quality reliability and restoring service in each electric utility’s service territory. Each report shall contain a yearly detailed comparison beginning with 1995 and ending in 2006 of each electric utility’s ratios of:

• In-house workers, commonly referred to as “linemen”, to customers

• Customer service call-center employees to customers

• Meter service or repair employees to customers

The investigation also included: an assessment of asset management practices, use of technology, operational practices, system maintenance and condition, call center, safety and training. To assess workforce adequacy in each of these areas, we examined ratios of staffing levels, use of contractors, overtime, work order backlog, system reliability performance, and customer satisfaction. We then balanced our analysis with each individual utility’s outsourcing philosophy. In addition to developing final reports for each utility, five public hearings were attended.

New Jersey Board of Public Utilities (2005 - 2006)

Jacobs analyzed the problem areas, deficiencies, and merits of the proposed acquisition of PSEG by Exelon, with specific emphasis on how the proposed merger may affect New Jersey


ratepayers and the public interest. The scope of Jacobs’ assignment was to supplement the Board’s analysis of how the merger may or may not affect the reliability of electric and gas service, pipeline safety and customer care in the state of New Jersey. The evaluation and analysis addressed the electric and gas system reliability and safety, as well as customer service, both now and in a post- environment. Specifically the evaluation and analysis included:

• Electric and gas system’s capability to provide reliable distribution service

• Capital improvement planning process

• Electric and gas reliability improvement programs

• Restoration of service due to failure or emergency

• Electric, gas, and customer service organization structures

• Capital and operation and maintenance budgets adequacy

• Customer service function including information technology support systems

• Crisis management and critical facilities security programs

Integrys Energy Group, Peoples Gas Light and Coke Company, Chicago, IL Preparation of Expert Testimony for Infrastructure Replacement Acceleration Project (2008) Integrys Energy Group retained Jacobs to prepare expert testimony for Peoples Gas Light and Coke Company’s (PGL) filing with Illinois Commerce Commission for a rate mechanism to allow for an accelerated replacement of the existing low-pressure distribution system and conversion to a medium-pressure system. In the process of converting this legacy manufactured gas era system, PGL proposes to accelerate the current rate of replacing problematic cast iron and ductile pipe. Our analysis included:

• Evaluation of testimony and orders on previous related cases for multiple utilities in the United States and determination of commission policy and objectives.

• Comparison of multiple distribution system materials composition, age, and safety statistics with PGL.

• Thorough interview of PGL operations, accounting, regulatory, and management staff to assess their current operations and maintenance, construction, customer service programs, and policy objectives.

• Detailed cost and benefit analysis to determine customer savings arising from expected reductions in operations and maintenance costs due to the accelerated program.

• Preparation of a full list of customer and environmental benefits stemming from the proposed program including: enabling higher-efficiency appliances, reducing greenhouse gas emissions from leakage, enhanced technology reducing ground


disturbance, reduction in water infiltration and collection, and better coordination and reduced traffic congestion stemming from public service projects.

Maryland Public Service Commission Regulatory Review of Energy Constellation of Energy (2008)

Jacobs analyzed the potential impacts on Baltimore Gas and Electric (BGE) in connection with Electricité de France’s Purchase of Half of Constellation Energy Group’s Nuclear Holdings. We assisted the Commission's Staff in analyzing how the transaction could affect the reliability, adequacy, and safety of electric and gas service in the state of Maryland. Specific support activities include: analysis of pre-filed materials, participate in discovery, provide expert analysis, provide expert testimony, develop cross-examination, assist in brief preparation, and support settlement discussions. Management Audit of Connecticut Light and Power Connecticut Department of Public Utility Control (2003)

Jacobs conducted a Management Audit of Connecticut Light & Power Company (CL&P) for the Connecticut Department of Public Utility Control (DPUC). The objectives of this audit were to determine the broad-based business policies, practices, and procedures in place at CL&P and to evaluate the appropriate, reasonable, timely, and consistent implementation of these policies throughout the organization with respect to the business management operations of the company. The review, investigation, and analysis of the management audit included the following key functional areas of CL&P:

• Organization and Management

• Financial Systems and Controls

• Marketing

• Engineering and Operations

• Information Technology and Customer Service Operations

• Relationships with Affiliate Companies

Management Audit of Yankee Gas Services (2007 - 2008) Connecticut Department of Public Utility Commission


The diagnostic review covered all functions of Yankee including: a review of the company’s organization structure, strategic and corporate planning, gas supply, system design and planning, system operation and maintenance, asset management, accounting and tax, budget management and control, wage and salary policies, employee benefits, labor relations, process management, all aspects of customer services including meter reading, external relations and all support services provided by its parent company, Northeast Utilities. Special areas of focus during the audit were affiliate transactions and Yankee's commitment to load growth. Rehmann Consulting Experience Internal Audits and Sarbanes-Oxley Project Consumers Energy Company (latest 2003) Kirk Balcom, Principal for Rehmann, conducted internal audits for 27 years and was team lead of the financial services portion of the Sarbanes-Oxley project of Consumers Energy Company, a $15 billion combination natural gas and electric utility of parent company CMS Energy Corporation. Mr. Balcom supervised internal audits in most all areas of Consumers Energy, including operational audits that evaluated and tested the effectiveness and efficiencies of operations, and financial audits that evaluated and tested internal controls over financial reporting. Many of Mr. Balcom’s operational audits lead to cash recoveries and cost savings in operations. Examples of internal audits, pertinent to this proposal, that offered numerous control enhancement opportunities or cash recoveries included:

• Construction Management System – the system that accounts for gas main construction

• Distribution Management System – the system that accounts for gas service construction

• Construction Work In Progress System – the system that accounts for major gas construction and equipment

• Integrated Plant In-Service System – the system that accounts for in-service natural gas, real property, and natural gas personal location property

• Mass Property System – the system that accounts for in-service natural gas, personal mass property, and unitization of personal mass property

• Miscellaneous Accounts Receivable System – the system that accounts for all affiliated company transaction receivables of Consumers Energy

• Natural Gas Construction Contracts– audits of the contract administration controls of all types of natural gas construction


The Sarbanes-Oxley project included documenting and evaluating the design of internal controls over financial reporting and then testing the operating effectiveness of the controls. The following key process areas of Consumers Energy were evaluated and tested:

• Property Cycle including: fixed assets, depreciation, property taxes, construction work in progress, and reporting

• Revenue Cycle including: metering, billing, customer payments, and reporting

• Expenditure Cycle including: purchasing, receiving, disbursements, and reporting

• Financial Reporting Cycle including: journal entries, system interfaces, account reconciliation, affiliated company transactions, and reporting.

Sarbanes-Oxley Project Fremont Insurance Company (2005 - 2010) Kirk Balcom, Principal for Rehmann, conducted the Sarbanes-Oxley evaluation and testing in support of Fremont Insurance Company’s Chief Executive Officer’s and Chief Financial Officer’s assertion on the effectiveness of internal controls over financial reporting. The Committee of Sponsoring Organizations (COSO) Internal Control – Integrated Framework was used to conduct the evaluation. Entity level controls that were the responsibility of the Board of Directors and Senior Management were evaluated and tested along with process level controls that directly support internal controls over the financial statements. Key entity level management areas evaluated and tested were:

• Integrity and ethical values

• Board of Directors oversight responsibilities

• Management’s philosophy and operating style

• Organizational structure and how it supports internal control

• Financial reporting competencies

• Authority and responsibility assigned to facilitate internal control

• Human resources practices designed to facilitate internal control


Experience and Qualifications of Individual Consultants Please refer to Section 5 - Project Team Responsibilities.


VIII. Statement of Potential Conflicts of Interests Jacobs Consultancy, Inc., its principals, or its affiliates have not performed work for National Fuel Gas Distribution Corporation or its affiliates in the past five years. As to the appearance of a conflict of interest, based on a diligent search of the Company’s records, Jacobs Consultancy, Inc., its principals, or its affiliates have not performed work for the Energy Association of New York State or the New York State Independent System Operator, in the past five years. Jacobs Consultancy, Inc. is not aware of any other work performed for “other organizations associated with the utility industry in New York State” similar to the two noted above.

Utilities Practice

79

APPENDIX A Résumés

Jacobs Consultancy Inc.

• Salvatore Marano – Managing Director (project's Engagement Director)

• Frank DiPalma – Director (project’s Project Manager)

• Christopher Pioli – Director (project's Task Leader)

• Carlo Ninassi – Director (project's Task Leader)

• Bill Williams– Group Manager (project's Task Leader)

• Mike Rafferty– Group Manager (project’s Task Leader)

• Edwin Norse – Principal (project’s Consultant)

Rehmann Associates, Inc.

• Kirk Balcom – Principal (project’s Consultant)

Utilities Practice

80

Name: SALVATORE D. MARANO, P.E. Title: Managing Director Education: New Jersey Institute of Technology, Master of Science Fairleigh Dickinson University, BS in Mechanical Engineering Licensed Professional Engineer- State of New Jersey Professional Affiliations: (Current and past) American Gas Association Plastic Piping Materials Committee Distribution Construction and Maintenance Committee Distribution Engineering Committee American Society of Mechanical Engineers Gas Piping Standards Committee ASTM - Plastic Pipe Committee Western Energy Institute INGAA Foundation

Career Synopsis: A recognized utility professional engineer with extensive gas and electric utility operating and consulting experience in the areas of management, risk assessment, safety and reliability assessment, system planning, distribution and transmission engineering and field operations, economic analysis and sales/marketing management. Selected Consulting Responsibilities:

• Management Audits and Reliability Reviews – Directed a major management audit of the capital budget contributions to safety, reliability and adequacy of service for the gas and electric distribution operations of Pacific Gas & Electric, as mandated by the California Public Utilities Commission. Directed a management audit of Connecticut Light & Power for the Connecticut DPUC, including budget impacts on reliability and adequacy of service and an audit of the physical assets and cost accounting issues related to CL&Ps street-lighting assets. Directed an audit of the facilities contract for Southern California Edison. Assisted in the management audit of the Imperial Irrigation District. Audited the five-year capital expenditures for the three gas distribution companies for the State of Victoria, Australia. Directed a three-year audit of the Vegetation Management Program of PG&E for the California Public Utilities Commission, focused on safety and reliability. Directed the review of the proposed merger of Exelon and PSE&G for the NJBPU relating to reliability, safety and adequacy of service for the gas and electric delivery businesses and customer care area. Provided expert testimony relating to the gas delivery business as well as assisting with the development of briefs and possible merger conditions. Directed the stratified management audit of Yankee Gas for the Connecticut DPUC. Responsible for the workforce adequacy audit of all electric utilities in the State of Illinois. Directed the management audits of PSE&G, CL&P and UI

Utilities Practice

81

• Operational/Safety Audits and Litigation Support - Implementation of safety audit for major domestic gas distribution company. Review of Cast Iron and Ductile Iron Mains Replacement Program, risk models and budget adequacy for major international gas utility. Directed the audit of the implementation of numerous recommendations regarding policy, practices and procedures for a major international gas utility. Supported the litigation, as potential expert witness, relating to a gas explosion in London for Transco. Supported the litigation defense, as potential expert witness, for Transco against charges of “culpable corporate homicide” for a gas explosion in Scotland. Responsible Officer for the Safety and Compliance Review of Puget Sound Energy for the Washington Utilities Commission. Developed and submitted expert testimony on behalf of Peoples Gas Chicago to accelerate their cast iron and ductile iron main replacement program from 50 years to 19 years period. Developed and facilitating an implementation program to assist Peoples Gas of Chicago in its ramping up of its main replacement program (ramping from approximately $46 million per year to over $150 million per year). Directed the development of an upgrading program for Integrys of its underground gas storage facilities including an engineering report of pipe condition, conceptual design of new piping layout and cost estimates and replacement strategy. Directed the development of engineering standards and policies for Scottish & Southern Energy’s underground gas storage plants. Directing the development of a national gas grid contractual design for the country of India. Directed the development of several Integrity Management plans for major US gas distribution companies and performed several audits of plans and execution of companies programs.

• Operations Improvement- Performing operational assessment for improvement in several operating and engineering areas for major UK gas distribution company including the feasibility and cost benefit analysis for VacEx and Small hole technology and a review of distribution practices and technologies to reduce gas leakage from Cast iron and Ductile Iron joints. Directed the development of engineering standards for SSE’s underground gas storage facility in the UK. Directed the review of the project management and execution business process for large gas transmission pipeline company. Directed the review of major assets for compliance and development of an asset management strategy to support a rate case for major UK gas distribution company, Scotia Gas Networks.

• Operations Budgeting and Forecasting - Analyzed five-year projections for international client in preparation for privatization. Assessed Alliance Partner contractual relationships for construction and maintenance for international gas utilities.

• Due Diligence Reviews associated with Merger & Acquisition Activity - Reviewed operations of international gas distribution and transmission company for U.S. client in preparation of bid submittals for acquisition of privatized company. Performed critique and assessment of planning process and construction management for new gas distribution and transmission systems for major gas/electric utility. Reviewed operations of domestic gas utility for acquiring electric utility prior to merger. Reviewed operations of large domestic gas utility with multi division and multi state service territory for international acquirer. Assisted international client with formulation of business model for use in U.S. market acquisitions. Assignment included model development, formulation of contact strategy, and identification of potential target contacts and execution of plan. Provided Independent Engineering services for Italian Financial Institution for gas transmission project financing in Argentina. Conducted a technical due diligence review of over 35 energy related assets, valued at more than $3.7 billion for TAQA, a middle east investment and management group. These assets consisted of power generation plants, electric distribution companies, natural gas transmission pipelines and gas storage fields. The initial objective of performing a diagnostic technical evaluation

Utilities Practice

82

became the first phase of a two phase approach. Phase II consisted of a concentrated technical review of six power generation assets.

• Year 2000 Compliance Study - Assessment of embedded systems and components for “Y2K” vulnerability for ten international and domestic gas/electric utilities. Development of contingency and emergency plans for the potential Y2K event for two U.S. Utilities. Developed and managed eight company communications tests for Y2K event.

Professional assignments while employed within Utility organizations: Engineering

• Supervised Planning & Budgeting, Design & Measurement, and Engineering Support Services.

• Planning and development of gas transmission and distribution systems. :

Operations

• Responsible for the installation, operation and maintenance of the gas distribution system. o Managed the LNG facility, the Propane-Air production plant, and gas control center. Supervised

the demolition of manufactured gas plant. Supervised the meter repair shop, industrial customer instrumentation, and gas control crews. Supervised the skills training, fleet maintenance, warehouse and theft of service departments.

Licensure & Certification: Professional Engineer, NJ License Designated Expert Witness:

• Exelon/PSE&G Merger gas safety and reliability (New Jersey Public Utilities Commission)

• Ductile iron pipe failure (Larkhall, Scotland) for Transco

• Cast iron failure (Dundee UK) for Transco

• PE pipe failure (Washington Gas)

• Pipeline ruptures (El Paso Energy)

• Infrastructure replacement acceleration program (Integrys – Peoples Gas)


Employment History: Jacobs Consultancy Inc. 2002 - Present Managing Director

Stone & Webster Consultants 1996 - 2002 Vice President/Director

Fusion Group Limited (T.D. Williamson, Inc.) 1988 - 1995 Manager, Distribution Products

NUI Corporation (Energy Holding Company) 1985 - 1987 Vice President Operations

Elizabethtown Gas Company 1972 – 1985 General Manager, Operations Services and Special Projects Manager Manager, Construction & Maintenance Manager, System Planning, Production, and Gas Control

Consolidated Edison Company of New York 1970 - 1972 Engineer – Gas Department

Utilities Practice

84

Name: FRANK T. DiPALMA Title: Director Education: Fairleigh Dickinson University, MBA Management/Finance New Jersey Institute of Technology, BS Mechanical Engineering University of Michigan, Executive Development Program Professional Affiliations: American Gas Association —Customer Service and Utilization Committee (Past Vice Chairman)

Southern Gas Association University of West Virginia, Institute of Technology (Adjunct Professor) Institute of Electrical and Electronics Engineers (Past Member) Society of Gas Operators

Career Synopsis: An operations oriented engagement /project manager who leads teams of consultants to resolve complex business problems in energy utilities; skilled at directing, planning, and implementing approach and objectives for client’s project; experienced in engineering and operations management, process improvement, project management, construction, business development, marketing, customer service, strategic alliances, labor relations, strategic planning, change management, organization assessments and regulatory compliance. Selected Consulting Assignments: Verification and Assessment of Pacific Gas & Electric Co. Hydro Testing Program (2011) California Public Utilities Commission (2011-Present) As a result of the San Bruno explosion, California Public Utilities Commission (CPUC) requested Pacific Gas and Electric Co. (PG&E) to verify the integrity of transmission pipe installed prior to 1970. Pre-1970 pipe amounts to approximately 152 miles of various diameters of high-pressure pipe in PG&E’s system. Upon completion of the 152 miles PG&E anticipates hydro testing/replacement an additional 200 miles of transmission pipe for each of the next four years. Acting as project manager, Jacobs is presently performing the following functions for the CPUC: • Observe and report on PG&E's hydro testing practices and conformance with federal and state

regulations. • Review, analyze, and report on PG&E’s hydro testing program and maximum allowable operating

pressure (MAOP) calculations. • Review and analyze PG&E's pipe strength test calculation. • Investigate and analyze any pressures that occurred during testing. • Make recommendations for hydro testing program improvements.

Utilities Practice

85

Jacobs anticipates employing its proprietary project management control system (PMCS) to capture critical program and testing information. Energy Reliability Consulting in Connection with the Exelon - Constellation Energy Merger (2011) Maryland Public Service Commission Analyzed the potential impacts on Baltimore Gas and Electric (BGE) in connection with the Exelon and Constellation Energy merger. My role was to assist the Maryland Public Service Commission's (MDPSCs) Staff in determining if the transaction was in the public interest by assessing how it could affect the reliability, adequacy, and safety of electric and gas service in the State of Maryland. Serving as the MDPSC’s expert electric and gas witness, I testified in the following areas: • Overall electric reliability and the cost to achieve targeted reliability performance goals. • Effectiveness of the vegetation management program and other maintenance and inspection

programs. • Adequacy of funding for capital asset replacement and operations & maintenance needs. • Need for contemplated cast-iron replacement program and to re-examine service replacement policy. • Assessment of customer satisfaction surveys. • Review of supplier diversity attainment relative to goals. Specific support activities include: analysis of pre-filed materials, participate in discovery, provide expert analysis, provide expert testimony, develop cross-examination, assist in brief preparation, and support settlement discussions. Innovation Workshops (2011) Scotia Gas Networks PLC In order to prepare for the upcoming price control period, which runs from 2013 to 2021, Scotia Gas Networks (SGN) desired to drive innovation in the management of its gas transmission and distribution system. Utilizing the Innovation Funding Incentive (IFI) scheme, gas networks in the United Kingdom are encouraged to invest in innovative ideas and technologies and recover significant amounts of related costs. To maximize the value from its innovation efforts, Jacobs was requested to facilitate to innovation workshops for SGN. Conducting one workshop in Scotland and one in the South, SGN staff formulated ideas and strategies for innovation, prioritization, and implementation. Serving as project manager, Jacobs’ efforts included: • Presentation of innovative technologies and processes previously presented. • Presentation of additional technologies and processes that are being used elsewhere. • Facilitated group discussion for additional input. • Facilitated group discussion on benefits, potential ranking, and implementation barriers. Outputs from the workshops included identification of numerous innovative technologies ranging from use of the entire Vac-Ex/Coring/Small-Hole system to a coordinated asset replacement process.

Utilities Practice

86

Critical Assessment Study of Project Execution of Major Gas Pipeline Project (2011) Confidential Client Performed a Critical Assessment Study of Project Execution for the New Jersey-New York Pipeline Expansion Project. Client had already completed the FERC filing and was proceeding with the filing of environmental and non-environmental permits, right-of-way acquisition, completion of detailed design drawings, preparation of material orders and bid packages and had also performed a number of Monte Carlo analyses covering both risk and schedule aspects of the project. As project manager, coordinated a review of the risk mitigation areas already recognized and identified additional issues that may arise, which could impede permitting and construction of the project. In total, 13 risk mitigation areas and strategies already recognized were expanded, six additional risk mitigation issues were identified, and four additional project management tools were suggested. Report of the Independent Review Panel, San Bruno Explosion (2010-2011) California Public Utilities Commission On September 9, 2010, a portion of a 30-inch diameter natural gas transmission system suddenly ruptured resulting in the loss of eight lives in total destruction of 38 homes. In response to the incident, the California Public Utilities Commission (CPUC) formed an Independent Review Panel (Panel) of experts. Included in the Panel’s scope of work was to gain an understanding for the underlying reasons for the incident, delve into the complexities of how pipeline integrity management and regulatory oversight operate and to offer recommendations for actions which the operator and regulators could consider to reduce the likelihood of future incidents. Jacobs Consultancy was retained by the Panel to gather and review facts and suggest recommendations for the improvement and safe management of Pacific Gas & Electric's (PG&Es) natural gas transmission lines. Serving as project manager, over 100 document requests were submitted and almost 30 interviews were conducted. The wide ranging investigation address such items as: worker safety versus system safety, data management, threat identification, the spirit of regulatory compliance, organizational effectiveness, resource allocation, quality assurance, and the strategic integrity plan. As a result of the Panel's investigation multiple weaknesses in PG&E's management and oversight, as well as the CPUC's resources and organizational focus were identified. Management Audit of Fitchburg Gas and Light Company d/b/a Unitil (2010-2011) Massachusetts department of Public Utilities Jacobs Consultancy was asked to conduct an independent management audit of Fitchburg Gas and Electric Light Company (FG&E) d/b/a by the Massachusetts Department of Public Utilities (DPU). Serving as engagement director and project manager, the management practices of both FG&E and Unitil were assessed in the areas of strategic planning, staffing and workforce management, management and control, customer and public relations and emergency preparedness and response planning. Balancing our analysis against industry best practices in each of the above focus areas, we developed 16 recommendations for improvement.


Comprehensive Review of Asset Management Practices (2010) Scotia Gas Networks PLC Jacobs Consultancy was asked to undertake a review of Scotia Gas Networks asset management practices with respect to low-pressure holders, high-pressure storage sites, offtake/entry points, transmission reducing stations and pressure reducing stations. Served as project manager for the eight-month long United Kingdom company study. The objectives of the review were to provide assurance the company was compliant with regulatory requirements and its current standards and policies; evaluate the measures and KPIs in use for effectiveness and consistency; and compare against external companies in North America to help identify best practices or leading industry practices. In carrying out the assessment, several key themes emerged. • Availability and accuracy of asset data limits a complete asset management approach to

maintenance. • Policies and standards represent a wealth of experience and present opportunities for reduced

maintenance or associated capital design cost. • Enhanced structured approach to asset upgrade, replacement or disposal could provide long-term

value.

In total, Jacobs provided 15 recommendations to support enhanced asset management practices.

Operations and Energy Reliability Consulting in Connection with the merger of First Energy Corp. and Allegheny Energy, Inc. (2010) Maryland Public Service Commission Analyzed from a reliability and operations perspective the problem areas, deficiencies, and merits of the proposed acquisition of Allegheny Energy (AYE) by First Energy Corp. (FE). Combined, the companies provide 24,000 MW of electricity to over 6.2 million customers in the nation's largest investor-owned electric system. My role was to serve as the Maryland Public Service Commission’s expert electric witness testifying as to the potential impact on AYE’s Potomac Edison reliability and safety in a post-merger environment in the following areas: • Energy services and conditions of operation • Employee impacts • Capital and maintenance plan and budgets • Service reliability • Transmission reliability Specific support activities include: analysis of pre-filed materials, participate in discovery, provide expert analysis, provide expert testimony, develop cross examination, and developed merger conditions.


Investigation of the Service Response and Communications of The Connecticut Light and Power Company and The United Illuminating Company following the Outages from the Severe Weather (2010) Connecticut Department of Public Utility Control The Connecticut Department of Public Utility Control (DPUC) was seeking technical electric reliability expertise pertaining to Connecticut Light and Power Company (CL&P) and United Illuminating (UI) action and response to a significant severe weather power outage. The scope of this assignment entailed: analysis of pre-filed testimony, preparation of discovery requests, auditing CL&P’s and UI’s procedures, examination of the evidence, cross-examination at public hearings and providing the DPUC with a report containing conclusions, findings and recommendations to be used in drafting it’s decision. Serving as project manager, Jacobs conducted its investigation in seven focus areas: Emergency Planning, Preparedness, Restoration Performance, Mutual Assistance, Post-storm Activities, Best Practices and Other. Based on our investigation and analysis, we concluded CL&P and UI did many things well in their response to the March severe rain and wind storm. However, there were also a number of concerns or areas in need of improvement identified. In total, Jacobs Consultancy provided 10 CL&P and 5 UI recommendations, all of which were accepted by the DPUC and the companies. Develop an Economic Model and Provide Testimony for Rockford Eclipse Valve Replacement (2009-2010) South Jersey Gas Company Developed an economic model for estimating the cost of replacing approximately 70,000 Rockford Eclipse (RE) valves, currently in South Jersey’s distribution system. Provided a description of the approach South Jersey Gas will use to accomplished the RE Valve Removal Plan effectively and efficiently by making every effort to incorporate RE valve replacements in combination with planned and unplanned operations and maintenance work activities. Advanced how actual costs will be accumulated and tracked against the RE valve replacement estimate developed to assure that all RE placement costs are tracked, and that only RE replacement costs are tracked. Served as an expert witness presenting testimony for the RE valve replacement in South Jersey Gas Company's 2010 base rate case. Review of Mandated Gas Safety Activities - Puget Sound Energy (2008-2009) Washington Utilities and Transportation Commission Served as Jacobs’ project manager for the Washington Utilities and Transportation Commission (UTC) mandated gas safety audit of Puget Sound Energy (PSE). The focused review covered an in-depth assessment of various aspects PSE’s gas operations, including: • Programs, structures and incentives that are in-place to maintain a “culture of safety and compliance”

for PSE and its contractors. • Appropriateness and effectiveness of training provided to or required of its employees and contractor

personnel for compliance with standards and procedures. • Contracts with Service Providers are structured to ensure that gas facilities are installed, repaired or

replaced properly, safely and cost-effectively. • Methods employed to track and document work for compliance. • Effectiveness of practices related to 49 CFR 192.613 Continued surveillance. • Adequacy of resources provided to the gas safety compliance program effectively monitor mandated

safety activities and programs for compliance.

Utilities Practice

89

Over 100 employees were interviewed and in excess of 200 documents were reviewed. Our assessment resulted in 61 distinct recommendations for improvement, which PSE in collaboration with UTC has developed a plan to implement. Energy Reliability Consulting in Connection with the Electricité de France Purchase of Constellation Energy Group’s Nuclear Holdings (2009) Maryland Public Service Commission Analyzed the potential impacts on Baltimore Gas and Electric (BGE) in connection with Electricité de France’s purchase of half of Constellation Energy Group’s Nuclear Holdings. My role was to assist the Commission's Staff in determining if the transaction was in the public interest by assessing how it could affect the reliability, adequacy and safety of electric and gas service in the State of Maryland. Serving as the MDPSC’s expert electric and gas witness, I testified in the following areas: • Overall electric reliability performance. • Effectiveness of the vegetation management program and other maintenance and inspection

programs • Adequacy of funding for capital asset replacement and operations & maintenance needs. • Need for contemplated cast-iron replacement program. • Need to re-examine service replacement policy. • Assessment of customer satisfaction surveys. Specific support activities include: analysis of pre-filed materials, participate in discovery, provide expert analysis, provide expert testimony, develop cross examination, assist in brief preparation, and support settlement discussions. Workforce Study Analysis of Illinois Electric Utilities (2008) Illinois Commerce Commission The Illinois Commerce Commission retained Jacobs Consultancy to conduct a workforce study analysis of the five major electric utilities located in Illinois. The utilities involved included: • Commonwealth Edison (ComEd) • MidAmerican Energy Company (MEC) • Central Illinois Light Company (AmerenCILCO) • Illinois Power Company (AmerenIP) • Central Illinois Public Service Company (AmerenCIPS) Served as project manager for the comprehensive nine month long study; 120 interviews were conducted and over 600 documents were reviewed. The intent of the analysis was to determine the adequacy of in-house staffing in each job classification or job title critical to maintaining quality reliability and restoring service in each utility’s service territory. The investigation also included: an assessment of asset management practices, use of technology, operational practices, system maintenance and condition, call center, safety and training. To assess workforce adequacy in each of these areas, we examined ratios of staffing levels, use of contractors, overtime, work order backlog, system reliability performance, and

Utilities Practice

90

customer satisfaction. We then balanced our analysis with each individual's utilities outsourcing philosophy. In addition to developing final reports for each utility, five public hearings were attended. Technical Evaluation of New Connecticut Peaking Generation Units (2008) Connecticut Department of Public Utility Commission Coordinated a technical evaluation and review of 11 proposals to build 500 MW of new peaking generation units in the state of Connecticut. Our work supported a confidential prime contractor who was responsible for the overall evaluation of the proposed projects; and ultimately the Connecticut Department of Public Utility Control who was responsible for the final decision. Specific items reviewed included: land site costs, insurance, capital costs, operating costs, starting capacities, type of fuel, proximity and availability of electric and gas connections, inclusion of Nox controls, heat rate, permit schedule, and other critical path items. Management Review of the Gas Pipeline Project Management and Delivery Process (2007-2008) Confidential Client Performed a four-month long management evaluation of the company’s project management and project delivery process, from conception to through closeout. Drill down reviews was conducted of selected projects and activities. Identified issues that could be addressed immediately, as well as other critical issues requiring more in-depth consulting support. Findings were presented to senior management as well as the company’s board of directors. Key recommendations were made in the following areas: strategy, project development process, project estimates, project execution, culture, and supporting IT systems. In addition to the management evaluation, consulting support was provided for establishing the business development and quality processes as well as instituting enhanced approaches to project control and forecasting. Management Audit of Yankee Gas Services (2007-2008) Connecticut Department of Public Utility Commission Served as Jacobs’ project manager for the management audit of Yankee Gas Services Company. The diagnostic review covered all functions of Yankee including: a review of the Company’s organization structure, strategic and corporate planning, gas supply, system design and planning, system operation and maintenance, asset management, accounting and tax, budget management and control, wage and salary policies, employee benefits, labor relations, process management, all aspects of customer services including meter reading, external relations and all support services provided by its parent company Northeast Utilities. Special areas of focus during the audit were affiliate transactions and Yankee's commitment to load growth. Organization Assessment and Work Force Analysis (2006-2007) City of Atlanta, Department of Water Management Served as Jacobs’ project manager, conducting an Organization Assessment and Work Force Analysis of City of Atlanta DWM, Safety and Security Division. The Division is responsible for securing approximately 57 water management related facilities and 1400 DWM employees. The analysis covered: strategic direction, DWM expectations, ongoing operations, workforce management practices, determination of areas of strength, as well as areas of potential improvement. Work consists of reviewing DWM and

Utilities Practice

91

Division documents and conducting structured interviews with Division executives and designated stakeholders. Benchmarking was utilized to help expand horizons and to identify gaps. In addition, a workload analysis was conducted to quantify the effort associated with key services and functions. Independent Technical Due Diligence Review of Electric and Natural Gas Assets (2006) TAQA, Global Energy Company TAQA, a global energy company majority owned by the Abu Dhabi Government, employed Jacobs Consultancy to review power generation, electric distribution and gas transmission assets. These 35 assets were located in 12 countries on four continents and were valued at more than $3.7 billion. As a potential purchaser of these assets, our client was interested in: • Assessing the physical condition of the assets. • Reviewing conformance to environmental regulations. • Analyzing the adequacy of historical and estimated future capital and operations and maintenance

budgets. • Assessing planned improvements and asset growth potential and constraints. Our approach was conducted in two phases: first, performing a diagnostic technical evaluation and second, a concentrated technical review of six power generation assets. My role was to serve as the overall project manager coordinating efforts of over 25 staff from our Manchester, Glasgow, Amsterdam, Houston and Raleigh offices. Develop a Distribution Integrity Management Program (2006-2007) Delmarva Power Having developed an integrity management plan for DOT transmission pipeline and recognizing that some form of distribution integrity management was on the regulator’s horizon, Delmarva Power elected to develop a distribution integrity management program in advance of the Rules enactment. As project manager, my initial role was to determine how each transmission integrity management element might apply to distribution pipe. Then a program was written reflecting Delmarva’s operating practices, the seven elements identified in the PHMSA, Phase 1 Report and the program management plans from ASME Code for Managing Integrity of Gas Pipelines. Delmarva Power’s Distribution Integrity Management Program was presented at the 2007 AGA Operating Conference. Energy Reliability Consulting in Connection with the Exelon-PSEG Proposed Merger (2005-2006) New Jersey Board of Public Utilities Jacobs Consultancy completed 14 month engagement analyzing the problem areas, deficiencies, and merits of the proposed acquisition of PSEG by Exelon, with specific emphasis on how the proposed merger may affect New Jersey ratepayers. My role was to serve as overall project manager assisting the Board’s analysis of how the merger may or may not affect the reliability of electric and gas service and pipeline safety in the State of New Jersey. In addition I served as the NJBPU’s expert electric witness testifying as to the systems reliability and safety both now and in a post-merger environment in the following areas:

Utilities Practice

92

• Capability of the electric system to provide reliable distribution service. • Capital improvement planning process. • Reliability improvement programs. • Orderly restoration of electric service. • Distribution organization structures. • Adequacy to capital and operation and maintenance budgets. • Crisis management and critical facilities security programs. Specific support activities include: analysis of pre-filed materials, participate in discovery, provide expert analysis, provide expert testimony, develop cross examination, assist in brief preparation, developed merger conditions and support settlement discussions. Vegetation Management Program Audit of Pacific Gas & Electric (2003-2006) California Public Utilities Commission Jacobs Consultancy recently completed a multi-year independent quality assurance audit to ensure that PG&E’s tree trimming and Vegetation Management Programs comply with the orders, rules and regulations of the California Public Utilities Commission and with applicable tree-clearance standards. My role is project coordinator of the financial aspects of the project. The budget for the VM program is $140 million per year, which is the largest of any US company. Specifically, the quality assurance and audit is concerned with PG&E establishing various forward-looking programs and activities that promote vegetation management practices, public safety, and ensure compliance with statutory and regulatory requirements, including, but not limited to vegetation control performance, customer refusals, vegetation control management and recorded vegetation control costs. Develop and Audit Transmission Integrity Management Programs (2004-2007) Various Utility Clients Worked as project manager for several utility clients developing their gas Transmission Pipeline Integrity Management Program. Established the initial program framework, which was then expanded into a comprehensive program. Task assignments included: conducting a gap analysis, developing approaches to specific integrity management elements, collaborative teambuilding, and extensive knowledge transfer to client utilities. In addition several other utility clients requested audits of in-house developed Transmission Integrity Management Programs. Major areas of weakness encountered in existing programs included: program was not reflective of current operating practices, management aspects of program were not fully developed or minimized, poor documentation and minimal quality assurance practices. Focused Audit of Street Lighting Assets (2004) Department of Public Utility Control Served as Jacobs’ project manager for a focused audit of Connecticut Light & Power Company’s physical street lighting inventory; and accounting controls and records for the Connecticut Department of Utility Control. In attempting to establish the fair market value for these assets, the DPUC was concerned that the street lighting assets reflect a systematic over assignment to the street lighting rate base. This audit involved:

Utilities Practice

93

CL&P’s street lighting assets consist of over 163,000 streetlights in 142 towns with a reported net plant value of $20.4 million. Actual plant value of streetlights assets, which can be affected by accounting practices, unit cost allocations, incorrect asset records, and incorrect recording of expenses as capital. Employed a random sampling methodology to ensure appropriate sample size to meet the desired error term and confidence interval. Management Audit of Connecticut Light and Power (2003) Connecticut Department of Public Utility Commission Served as Jacobs’ project manager and lead electric analyst conducting a complete diagnostic review the major functions of Connecticut Light and Power (CL&P). The scope of the audit included: organization and management, financial systems and controls, marketing, engineering and operations, information technology, customer-service operations, and relationships with affiliate companies. Determined the broad base practices and policies in place and evaluated their appropriateness and consistent implementation throughout the organization. Reviewed the present practices and procedures in place and made 64 recommendations for modification or change to improve overall efficiency and effectiveness. Assessment of CL&P, whose revenues exceed $2.5 billion per year, included conducting 65 interviews, reviewing 200 documents and benchmarking to comparable companies. Audit of mailto:[email protected] Budget Expenditures of Pacific Gas & Electric Company (2002) California Public Utilities Commission The State of California required that a Capital Budget Audit be conducted for Pacific Gas and Electric Company. The audit was to cover all electric and gas distribution construction expenditures in the year 1999. The Construction Expenditure Budget consisted of over 10,000 projects with aggregate value exceeding $800 million. While with Stone & Webster Consultants, was lead consultant for the review of electric projects. Significant challenges included: arriving at an approach that would be statistically valid and highlighting how the expenditures contributed to the reliability, integrity and growth of the distribution systems. The project planning process, engineering specifications, and construction work quality were examined and facilities inspected against company policies and procedures, and industry practices. This project was initiated and completed in 2002. Independent Assessment of Operations and Processes (2001) Imperial Irrigation District of California The Imperial Irrigation District of California is a consumer-owned utility, which provides electricity and irrigation water to the Imperial Valley, located in the lower southeast portion of California. While with Stone and Webster, I lead the review of the Districts’ electric distribution operations and processes; analysis of electric reliability trends and outage causes; budget review; staffing levels to meet the IID mission; staffing qualifications to perform the duties assigned to them by the district; and utilization of the district physical resources.

Utilities Practice

94

Provide Litigation Support (2001) International Utility Third party litigation support was provided for a major international gas utility. Assignments included: follow-up and implementation of safety audits, analysis of plastic joint pipe failures and a review of Cast iron and Ductile Iron asset replacement approaches and surveillance techniques. Genesis for litigation support was client’s overall experience with various types of asset materials, several gas explosion incidents and regulatory concerns. Industry Assignments: Operations • Responsible for the installation, operations and maintenance of the gas distribution system.

Duties included:

Formation and administration of the strategic operating plan, including a responsive multifunctional organizational structure, efficient manpower planning, regulatory compliance programs, optimal supply and distribution methods, formation and implementation of distribution technology initiatives, and annual capital and expense budgets. Provided innovative and proactive solutions to operational and customer service challenges, managed over 400 employees and 16 locations including engineering, operations, customer service, call center, meter repair facility and training and development. Maintained effective external communications with legislative, regulatory, and industry leaders. Led the formation of a coalition of energy companies to influence statewide Department of Highway construction practices resulting in improved planning, design, scheduling, and reimbursement. Managed an operating budget for labor, materials, and services. Directed negotiations of five labor contracts establishing a five-year agreement, while achieving significant cost reductions. Increased pipe installations with no increase in employees, reduced inventory through supply chain management techniques and reduced meter reading costs due to employee innovation, improved processes and use of new technologies.

Engineering • Managed the planning, budgeting, design, measurement and engineering support services.

Duties included:

Coordinated the preparation, presentation and expenditures of the annual capital and O&M budgets. Oversaw the development of an innovative and highly functional automated mapping and facilities management system, which included Stoner distribution system analysis. Managed the regulatory compliance program including corrosion control. Sponsored teams for process re-engineering and use of new technologies. Developed and negotiated equipment servicing, performance contracting and new product development agreements. Oversaw the development and implementation of construction standards, asset management methodologies, engineering procedures and emergency manuals.

Utilities Practice

95

Quality Management/Process Improvement • Designed implemented and promoted quality activities. Duties included:

Developed and implemented a culture change effort involving over 2,500 employees who advanced their empowerment, coaching and leadership skills. Facilitated employee teams in achieving enhanced levels of customer satisfaction, continuous improvement, employee involvement, and data based decision processes. Established a process orientation by coordinating a corporate wide assessment which define processes, established performance measures, analyze benchmark comparisons, and identify gaps which highlighted a significant cost reduction opportunities. Managed an internal Baldrige assessment, which supported strong customer commitment and continuous improvement. Led a team charged with reviewing stranded electric utility assets and recommending a corporate strategy.

Technical Support and Regional Performance • Developed a technology and performance focus to improve performance, reduce costs and

improve customer service. Duties included:

Initiated and developed a comprehensive information system strategy that established cost/benefits methodology and priorities for mission critical information needs. Developed a joint venture to market a bar code activated electric and gas meter system. Employed technology to improve performance, reduce costs and strengthen customer service relationships. Managed the Public Utility Commission mandated audit. Coordinated the development of a work management system for the Electric and Gas Technical Maintenance Group, which resulted in supporting data based decisions and a reduction in staffing.

Marketing and Business Development • Coordinated marketing, business development and customer service activities. Duties

included:

Coordinated the development of the marketing strategic plan with the operating departments. Recommended corporate marketing resource allocations to insure new business profitability and the creation of revenue. Increased customer satisfaction through improved customer focus in appliance part delivery systems. Developed marketing strategies that repositioned a major customer segment resulting in increased revenues. Supervised the development of a financial model that analyzed the profitability of new business resulting in a reduction in new business expenditures. Managed the business development initiatives process, including idea generation, marketplace evaluation and company positioning. Established customer service policies and procedures and coordinated appliance repair activities. Responsible for the planning, development and implementation of the automated customer dispatch system. Supervised the creation of an industrial customer model to support sales engineers in the gas conversion market. Established a corporate strategy for dealing with the National Coalition Against Unfair Utility Practices.

Utilities Practice

96

Publications and Presentations:

• Lessons Learned and Industry Implications from San Bruno - Independent Review Panel Report, presented to the INGGA (Interstate Natural Gas Association of America) Foundation Annual Meeting, 2011.

• Report of the Independent Review Panel - Lessons Learned from the San Bruno Incident, presented to the Society of Gas Operators, 2011.

• Review of Recent Regulatory Inquiries on Emergency Preparedness and Service Restoration, presented at the Fifth Annual Summit on Emergency Preparedness and Service Restoration for Utilities, 2010.

• Building a Distribution Pipeline Integrity Management Program, presented at the American Gas Association Operating Conference, 2007.

• Got DIMP? (Distribution Pipeline Integrity Management), presented to the Society of Gas Operators, 2005.

• Utility Tree and Vegetation Management (UVM): An Introduction and Description of Successful Programs, presented at the National Association of Regulatory Utility Commissioners Summer Meeting, 2004.

• Vegetation Management-Improved Approach, presented at the Western Energy Institute Annual Conference, 2004.

• Pipeline Integrity Management Challenges, presented to the Society of Gas Operators, 2003.

• Pipeline Integrity Management – Enhanced Safety, presented to National Safety Council Annual Conference, 2002.

• Innovative Coil Pipe Trailer, paper presented by others at the American Gas Association Operating Conference, 2000.

• The Professional Engineers License, presented to West Virginia University, Institute of Technology, 1999.

• Results Achieved Using Coil Pipe, presented at the Southern Gas Association Annual Conference, 1999.

• Quality Management Experiences, presented to West Virginia University, Institute of Technology, 1998.

• Automated Mapping & Facilities Management Applications, presented at the Geospatial Information & Technology Association Conference, 1997.

• Reengineering - Increase Customer Satisfaction and Cut Costs, presented at the Management Forum Series Conference, sponsored by Scott, Madden & Associates, 1995.

• TQM and Work Management, presented at the North East Gas Council Quarterly Meeting, 1995.

Utilities Practice

97

Designated Expert Witness: • Exelon and Constellation Energy merger (Maryland Public Service Commission)

• First Energy Corp. and Allegheny Energy, Inc. merger (Maryland Public Service Commission)

• Rockford Eclipse valve replacement model (South Jersey Gas Company)

• Electricité de France purchase of Constellation Energy Group’s Nuclear Holdings (Maryland Public Service Commission)

• Exelon and PSEG merger (New Jersey Public Utilities Commission)

• Ductile iron pipe failure (Larkhall, Scotland) Employment History:

Jacobs Consultancy Inc. 2002 – Present Director Group Manager Stone & Webster Consultants 2000 – 2002 Associate Director Mountaineer Gas Company 1996 – 2000 Vice President of Operations and Engineering Public Service Electric & Gas Company 1968 – 1996 Manager of Quality Management Manager of Technical Support Manager of Regional Performance Manager of Marketing and Business Development Manager of Manpower & Cost Control District Manager Field Engineer

Utilities Practice

98

Name: CHRISTOPHER A. PIOLI Title: Director Education: Regis University, Master in Business Administration Illinois Institute of Technology, BS, Chemical Engineering Minor - Gas Engineering Special Emphasis - Economics Professional Affiliations (Past and Present): Gas Piping Technology Committee (ANSI-GPTC Z380)

- Member of Distribution Division - Damage Prevention/Emergency Response Task Group - Operations Task Group

National Safety Council American Society of Heating, Refrigeration & Air Conditioning, Past Member

- Chapter Education/Technical Committee, Past Chairperson - Chapter Newsletter, Past Editor

American Society of Quality Control Engineers, Past Member Registrations & Certifications: National Safety Council

- Certified Utility Safety Administrator (CUSA) Endorsement in Gas

Career Synopsis:

Mr. Pioli is a management consultant with a strong background in energy/utilities operations and fuel supply management with over twenty five years of operating, management, and consulting experience. He has extensive experience as a consulting project manager heading diverse teams of experts; and a diverse background in regulatory analysis, safety litigation, risk assessment, technical and economic evaluation, and process improvement. Selected Consulting Responsibilities:

• Vision and Technology team lead for the development of the gas distribution client’s vision of the 2030 utility. The study is looking at the customer of the future, gas supply and demand, system operating strategy and regulatory environment. The study will result in the development of a strategy modernization master plan.

• Project Manager to the Indian Ministry of Petroleum and Natural Gas on the development of a National Gas Grid for India. The scope of work included the forecast of gas supply and demand, development of a commercial operating framework, conceptual design of a national gas grid, capital investment, network operational philosophy, and HSE. Specific areas of interest included the comparison of the North American, UK, European and Australia regulatory frameworks of commercial practices, system safety, security and emergency response, centralized vs decentralized gas management and SCADA/communications systems, and gas quality/interchangeability.

Utilities Practice

99

• Infrastructure expert to the European Commission and the government of the Republic of Kazakhstan for a proposed Trans-Caspian Pipeline (TCP) between Kazakhstan and Azerbaijan. Assessed the rehabilitation needs of the existing gas Central Asia Centre pipeline infrastructure within Kazakhstan. Reviewed the region’s gas supply, addressed the issue of gas interchangeability, and proposed alternative pipeline supply mechanisms. Developed capital investment requirements totaling over $2 billion in new pipeline infrastructure requirement to meet a projected export of up to 30 bcm. Presented to the Ministry of Energy and Mineral Resources recommendations in capital investment and financing structure for the TCP project.

• Principal Consultant for technical due diligence to private companies and public utility commission clients involving electric and gas utility mergers and acquisitions. Reviewed the adequacy of gas transmission and distribution asset management practices through the review of operating and maintenance processes, policies, procedures and inspection records. Assessed key operating programs including emergency preparedness, damage prevention, asset replacement, leak management, and others for compliance to regulations or industry standards, as well as leading industry practices. Reviewed the development, forecasts, monitoring and control of capital and operating spending levels. Benchmarked key safety, reliability and operational performance indicators to industry and comparable companies. Asset values of the merged companies range for $14.5 to 79 billion (2005$).

• Project Manager for valuation studies. Completed pipeline and storage field studies involving assessment of the operational condition of measurement and regulator stations, bridge crossings, dehydrators and other associated pipeline and storage facilities; identification of operational, financial, and environmental risks, cost to reconstruct facilities, and cost/benefit analysis. Conducted technical due diligence reviews of pipeline assets, distribution assets, liquefied natural gas plants, and propane-air facilities for bond financing, mergers, and acquisitions.

• Technical and economic consultant to the Government of Argentina for the privatization of the gas industry. Assessed the existing gas transmission and distribution system infrastructure that lead to dividing the system into two transmission and eight distribution networks. Reviewed existing gas market load and demand and prepare a 20 year projection for each of transmission and distribution networks. Developed capital investment and operating and maintenance expenditure requirement for each of the networks. Advised the government in their establishment of a department to oversee the privatized gas industry.

• Technical and economic consultant for the feasibility of developing gas distribution system in Chile, Peru, and Abu Dhabi. Prepared 25 year gas market projections and demand forecast. Developed conceptual gas transmission and distribution designs, capital investments, organizational structures, staffing, operating & maintenance expenditures, administrative and general expenditures. Developed tariffs and rates structures, prepared financial pro forma statements and conducted sensitivity analysis.

• Project Manager and Principal Consultant for the development and auditing of pipeline integrity management programs covering 350 miles pipe in High Consequence Areas over more than 1200 miles of DOT transmission pipeline and facilities. Advised and development processes, policies and procedures for pipeline integrity program organization and management, integrity management plans, quality assessment plans, program performance plans, management of change plans, and communications plans. Similarly have prepared system design, operations, and quality control/quality assurance manuals that addressed the engineering, materials, construction, operations and

Utilities Practice

100

maintenance requirements of DOT 192 and incorporated leading industry practices. Created and tested contingency plans relating to various embedded system/process failures.

• Project Manager for financial and technical audits of electric & gas utilities. Led the audit of $834 million in capital expenditures to substantiate their contribution to electric and gas systems reliability, capacity, adequacy of service and work at the request of others. Audited a $132 millions annual vegetation management program for technical, financial and regulatory adherence to state regulations, statues and industry standards/practices. Audited the cost competitiveness of a $72 million design-build contract and assessed the project management, design-build project delivery, and strategic sourcing processes. Conducted management audits of gas, electric and combination utilities. Developed statistical sampling methodologies to audit asset databases to validate their accuracy and determine net plant value.

• Project Manager and Principal Consultant on system safety studies for distribution and transmission companies. These studies assessed company engineering and operating processes, policies, procedures, and practices from regulatory compliance and widespread industry practice. Conducted focused reviews into system design, material selection, construction methods, regulator station design and overpressure protection, threat identification and root cause analysis, prevention and mitigation actions, gas quality, operator training and emergency preparedness. Presented findings, conclusions, overall recommendations including implementation action plans, implementation benefits and barriers, and implementation of program auditing.

• Project Manager and Principal Consultant on emergency response preparedness. These projects covered organizational and employee responses to incidents involving customers and company facilities including pipeline & distribution systems, compressor stations, liquefied natural gas plants, propone/air plants, and underground storage to determine the adequacy of existing training and O&M procedures.

• Project Manager and Principal Consultant on reviews of the development and implementation of pipe replacement, risk assessment, and risk mitigation programs. The reviews identified and critiqued the key factors that correlate to system integrity and public safety; pipeline segment risk; and capital expenditures and scheduled replacement.

• Project Manager for field operations process improvement studies. These studies involved process flow charting O&M field and related office activities throughout their process life cycle for each of the company’s operating districts. Analyzed the results, prepared process improvement recommendations, estimated time savings, developed cost benefit impacts, and identified likely implementation constraints. Critiques distribution and transmission system design criteria. These critiques involved the review of load gathering methodologies, load forecasting practices (marketing, gas supply and system design), use of steady state and transient network analysis, design parameters, and system planning criteria.

• Principal Consultant on natural gas infrastructure development and privatization. Lead the technical review of lost and unaccounted-for gas, physical system separation and system operation practices. Identified capital investments necessary to provide safe reliable service and prepared implementation plan. Conducted economic feasibility of gas distribution systems. Developed the conceptual system design, network modeling, and capex and opex estimates of the pipeline and distribution system infrastructure master plans. Provided operation and maintenance budgets and estimates of staffing. Performed steady-state and transient network analysis of gas systems to assess system expansion alternatives, load growth impacts and system-component faults. Developed models using a several

Utilities Practice

101

software packages Gregg Engineering, Stoner, and GasTools. Directed the benchmarking of the proposed staffing levels, operating budgets and tariff rates with those of U.S., Canadian and European gas transmission and distribution companies.

• Lead litigation support efforts involving fatalities and the destruction of property caused by apparent cast and ductile iron main failures operator error, or third-party damage. The companies faced criminal and civil charges that could result in the loss of the utilities license to operate; a finding that the material was not fit-for-purpose requiring a huge capital investment; potential criminal prosecution of senior management; and large punitive judgments and regulatory fines.

• Lead preparation of independent expert’s reports for criminal, civil, and regulator proceedings. Investigations covered review of energy company policies, procedures, and practices; federal and state regulations; and documentation. Expert reports addressed reasonableness and prudence of main replacement, damage prevention, emergency response, operations & maintenance, leading-industry practices, gas purchasing practices, capital investment, O&M expenditures, and system monitoring issues.

• Lead litigation support effect of a pipeline company charged with negligence, strict liability and breach of expressed and implied warranty. The case involved a pipeline crossing private property, which was struck by a third-party resulting in a fatality. Our efforts focused on the issues of state one-call requirements, what constitutes excavation, and prudent operator policies, procedures and practice.

• Lead the development of gas distribution training course material covering management organization, finance, economics, marketing, forecasting, system design, gas supply risk management, operations, and maintenance of a gas distribution company.

• Served as the independent technical consultant to support the financing of the 1000 MW Santa Rita Power Plant (Facility) located in the Philippines. As part of this assignment, reviewed the Custody Transfer Measurement facility design, with regard to the measurement, sampling, analysis and calculation of quantities of natural gas supplied, the Gas Measurement Manual and Gas Sales and Purchase Agreement (GSPA) between Buyer and Seller. In the event of a conflict between the GSPA and the Gas Measurement Manual, the GPSA would prevail.

• Conducted an independent assessment of a utility’s gas purchasing practices on behalf of its General Council. The utility was accused of manipulating, falsifying, or distorting volumetric consumption and gas prices for financial gain. The investigation covered management, rates, gas supply, accounting, and internal auditing focusing on the company’s gas supply chain processes, tools, practices, procedures, and people.

• Managed unaccounted-for gas studies for natural gas companies. The studies involved the review of company procedures and practices in gas measurement, gas accounting, unmetered gas usage, leak management, and theft of service.

• Developed long-range and short-range demand forecasts of customers, peak day gas requirements, and annual gas sales employing extreme value analysis, multi-variable regression and "Monte-Carlo" risk simulation techniques.

• Assessed the economic and operational impacts of proposed Federal regulations and developed of strategic gas supply plans.

Utilities Practice

102

• Project manager on LNG plant feasibility studies. These studies involved the facility siting, code review, plant sizing, design alternatives, capex and opex schedules, staffing and training requirements, and emergency plans considerations.

• Project manager for an economic assessment of gas supply peaking alternatives. The projects entailed the development of long-range load and pricing models, capital investments, and operating and maintenance expenses. The alternative peaking supplies included liquefied natural gas, underground storage, propane/air, landfill gas, and pipeline transportation.

• Assessed and developed index pricing mechanisms for gas supply contracts. The pricing mechanism’s variations included fixed price, published indexing, inflation escalators, energy escalator, and futures derivatives.

• Reviewed gas supply and transportation contracts for investment bankers, power producers, and local distribution companies

• Developed a computerized Gas Supply Management System that assured contractual compliance of a 20 BCF gas supply portfolio. Assisted in the development of a nomination's model that maximizes economic margin.

Expert Testimony:

• Gas Supply and Pricing Arbitration – Confidential Client

• New Jersey Public Utilities Commission – (Exelon/PSE&G Merger) PUC-1874-05

• Pipeline Incident by Third Party - El Paso Pipeline

• Larkhall Explosion – Scotland UK

• Greenly House Explosion – London England

• Massachusetts Department of Public Utilities - (Gas Supply Plan) D.P.U. 93-12

• North Carolina Utilities Commission - (System Expansion) Docket No. G-9

• New Mexico Public Regulatory Commission - (PGA Methodology) Case Number 2752

Utilities Practice

103

Presentations/Papers:

• Pipeline Integrity Management of Change, NACE Regional Conference, 2006

• “Internal Auditing of Pipeline Integrity Management Programs”, AGA Gas Operations Conference and Western Regional Gas Conference, 2004

• “Challenges Facing Operations and Internal Auditing”, Western Energy Institutes Safety & System Integrity Program and Compliance Management Workshop, 2003

• “Pipeline Integrity Management – Enhanced Safety”, National Safety Council Annual Conference, 2002

• “B31.8 S Pipeline Integrity Management Standard Review”, AGA Fall Pipeline Integrity Workshop, 2002

• “Review of Integrity Management For Natural Gas Transmission Pipeline”, ANSI Technical Report, Task Group Participant/co-author, 2001

• “Assessment, Mitigation & Contingency Planning”, AGA Alliance, 1998

• “Strategies for Gas Price Risk Management”, Utility Management Development Program, 1996

• “Impact of FERC Order 636 on LDCs”, Utility Management Development Program, 1994

• “Development of a Gas Supply Management System”, Paper for Information System Management, Regis University MBA Program, 1990

• “Natural Gas Futures”, Paper for Portfolio Management, Regis University MBA Program, 1989

• “Natural Gas Vehicle Marketing Plan”, Paper for Marketing, Regis University MBA Program, 1986

• “Integrated Appliance Systems”, Natural Gas Appliance Symposium, Colorado Springs, 1986

Employment History:

Jacobs Consultancy Inc. 2002-Present Director Group Manager Stone & Webster Consultants 1990 - 2002 Associate Director Executive Consultant Consultant Colorado Springs Utilities, Gas Department 1982 - 1990 Planning & Marketing Engineering & Operations

Utilities Practice

104

Name: Dr. CARLO J. NINASSI Title: Jacobs Consultancy –Utilities Practice

Director for Strategic and Organizational Planning

Education: The Wharton School, University of Pennsylvania, Executive Education – Strategic Management

Colorado Technical University, Doctorate of Management

University of Maryland System, Masters Financial Management

Regis University, MBA Course Work

University of Maryland System, BS – Microbiology

The Pennsylvania State University, BS - Arts & Architecture

Professional Affiliations: American Gas Association (Group Associate Membership)

American Institute of Architects (AIA) Licensed in MD, DC Washington, D.C. Board of Trade

Career Synopsis:

As a key consultant with the Jacobs Consultancy’s Utilities Practice, Dr. Ninassi represents a knowledge center of expertise in the area of business strategy formulation and organizational assessment and design. This expertise has been applied in working with senior executives in the public and private sectors toward the alignment, development and implementation of initiatives to meet organizational and strategic intentions. Specifically various management tools have been employed to evaluate and implement short-term and long-range strategic plans that will have a positive and effective end state Additionally, a broad portfolio of work with executives to evaluate functional and operational processes of the organizational structure, the duties and responsibilities of its staff, and the effectiveness of corporate, business and operational level strategies is available for consideration. Finally, assuring the proper and timely alignment of resource needs including financial systems, human resource systems, operational supply/value chains processes, and their related risk management, performance metrics and enhancement programs has been completed for several major clients.

Selected Industry-Related Consulting Assignments:

Enbridge Gas Distribution Operational Risk Mitigation - Diagnostic Assessment of Selected Operational Risk – Toronto, Canada - – Initial Away Team member to assess and establish high level recommendations in approximately seven key organizational areas. This first phase covered safety, integrity and reliability related to gas distribution, transmission and storage operations provided by operating companies under Enbridge’s Gas Distribution business unit. Cape Verde II – Water and Sanitation, Hygiene (WASH) Due Diligence – Praia, Cape Verde, Africa – Initial Away Team member to assess and establish program management for a subsequent Away Team II review of the WASH program for Cape Verde. Our product was an assessment of the current WASH program with recommendations toward enhancement in support of $50M funding by the United States.

Utilities Practice

105

Peoples Gas & Light – Chicago, IL - System Modernization Program for the Accelerated Main Replacement Program for all of Chicago. Initial Project Manager for providing consulting services to access the means for implementing this billion dollar gas main replacement program. Puget Sound Energy - Safety Audit and OQ Training Assessment– Review of Mandatory Safety Activities – Working with senior executives, managers, operational staff and service providers to assess the organization’s Safety Culture and OQ Training Program(s). Illinois Commerce Commission - Management Audit of Organizational Structural Design– Ameren - Working with senior executives, managers, operational staff and service providers; an assessment of the organization’s effectiveness was completed. Spectra Energy - Design of a Cost Forecasting System– Working with senior-level executives and managers to assess their current Cost Forecasting process and re-design a new process that is more effective and efficient in considering the various factors required to support the core business of the company. Connecticut Department of Public Utility Commission Management Audit of Yankee Gas Services - Served as a Team Lead for the management audit of Yankee Gas Services Company. The diagnostic review covered all functions of Yankee including: a review of the Company’s organization structure, strategic and corporate planning, gas supply, system design and planning, system operation and maintenance, asset management, accounting and tax, budget management and control, wage and salary policies, employee benefits, labor relations, process management, all aspects of customer services including meter reading, external relations and all support services provided by its parent company Northeast Utilities. Special areas of focus during the audit were affiliate transactions and Yankee's commitment to load growth. Department of Water Management - Served as a Team Lead in conducting an Organization Assessment and Work Force Analysis of the City of Atlanta DWM, Safety and Security Division Organization Assessment and Work Force Analysis City of Atlanta. The Division is responsible for securing approximately 57 water management related facilities and 1400 DWM employees. The analysis covered: strategic direction, DWM expectations, ongoing operations, workforce management practices, determination of areas of strength, as well as areas of potential improvement. Work consists of reviewing DWM and Division documents and conducting structured interviews with Division executives and designated stakeholders. Benchmarking was utilized to help expand horizons and to identify gaps. In addition, a workload analysis was conducted to quantify the effort associated with key services and functions. Additional Consulting Assignments:

Louisiana National Guard (LA NG) - Facilitated, Developed and Implemented Strategic Initiatives – Working with senior-level Generals and Line Officers to assess, formulate and implement various strategies within the Louisiana National Guard. Developed the Strategic Implementation Methodology (SIM) for application by the LA NG. Baton Rouge, LA.

Utilities Practice

106

Florida Department of Transportation – A State-wide General Services Contract was recently awarded valued at $10 million for facilities, infrastructure and business analysis. Facilitated the implementation of Tier 4 Malcom Baldrige Quality System known as Sterling Program and developed a data base management system for District 1 – Operations Center. The State of Florida’s Highway Department. Tampa, FL. Administrative Office of the United States Courts – Completed an in depth study on the Judiciary’s electronic case filing system and its implications on its resources (i.e., the facility resource). The U.S. Federal Courts system, including Bankruptcy, District and Appeals Courts, was surveyed to assess and determine a ratio between the levels of implementation of electronic case filings to physical space while considering the Clerk of Courts Office functionality. A spatial-cost reduction model was created and a cost analysis applied to present the potential savings in physical space and financial cost-benefit. The Study’s findings and recommendations were presented and distributed throughout the Judiciary. Washington, D.C. Federal Aviation Administration - Advisor to the FAA’s ATO-E and En Route Facilities and Building Systems (EFaBs) Core Team in Developing and Implementing Strategic Initiatives –Facilitates and supports high performance team through regular sessions. The objective of the sessions is to leverage the team member’s talents; to maximize the team’s potential for delivering Quality Program Metrics, to align resources and needs of En Route system. Initiatives include formulating strategic vision, developing mission statements, applying funding prioritization models, collecting and assessing quality measures and coordinating systems development. FAA Headquarters, Washington, DC. Internal Revenue Service - Developed and Implemented Strategic Initiatives – Worked with senior-level executives and managers to assess, formulate and implement various strategies related to the Facility Resource. Initiatives included developing an extensive Resource Allocation quantitative model (called Post-of-Duty or POD) that collects, manages and measures various critical data points to determine resource type decisions, options and actions at a national level. Program recognized as Best Practice nominee by GSA. Washington, DC. Publications and Presentations:

• Doctoral Dissertation: “The Strategic Location of Facilities Based on the Determinants of Competitive Advantage for a Selected Regional Area” – Colorado Technical University, 1997

• Speaker - International Facility Management Association (IFMA) – Washington, D.C., 1999 • Speaker - Institute for Operations Research and Management Science (INFORMS) – Philadelphia, PA, 2000 • Speaker - FORBES Conference, Washington, D.C. and London, England, UK, 2001 • Speaker - CoreNet (NACORE) Conference, Nashville, TN, USA, 2001 • Speaker - Federal Real Property Association, Washington, D.C, 2005 • Speaker - Environmental Design Research Association (EDRA), “Design and Implementation of an Asset

Management Tool: The IRS Post of Duty Guidelines System”, Atlanta, GA, May 2006. • Speaker - American Institute of Architects National Convention in Los Angeles, CA, June 2006 • Publication - National Academy of Sciences, “Design and Implementation of an Asset Management Tool:

The IRS Post of Duty Guidelines System”, October 2006 • Speaker - Environmental Design Research Association (EDRA), “The Art and Science of Aligning Culture

with Workplace Strategy”, Sacramento, CA, May 2007.

Utilities Practice

107

• Speaker – National Gas Summit – “Shale Gas: Economics, Strategy, Organizational Design”, The Pennsylvania State University, November 2009.

Employment History:

Jacobs Consultancy Inc. 1997 – Present

Marymount University, School of Business Administration 1998 – Present Faculty Member (Adjunct)

VOA Planners, Inc. 1996 -1997 National Director of Strategic Planning

Colonial Pacific Mortgage Corp. 1993 – 1994 Director of Operations

ORS Program Managers 1991 -1992 Senior Associate

DNC Architects, Inc. 1985 -1990 Project Manager

University of Maryland 1982 -1985 Staff Planner

CHK Architects, Inc. 1978 – 1982 Planner

Utilities Practice

108

Name: WILLIAM M. WILLIAMS JR. Title: Group Manager Education: Saint Leo College, BA, Business Administration

Saint Leo University, Graduate level Business courses

Career Synopsis:

Mr. Williams is an experienced executive with a strong background in operations, team building, process improvements and performance monitoring. He is heavily experienced in project management, materials management, budgeting, corporate strategic planning, information systems planning, maintenance management, property records, organization and staffing assessments in the utility industries. Career focus on leadership positions in operations, logistics, materials management, changes management, and total quality.

Selected Consulting Assignments:

• Participating in a review of the Sam Bruno pipeline explosion for PG&E on behalf of the California Public Utilities Commission, with a focus on adequacy of PG&E’s Gas Emergency Plan and execution during the event in accordance with the plan.

• Participated in a due diligence review of the FirstEnergy/Allegheny Energy merger on behalf of the Maryland Public Utilities Commission. This assignment covered a thorough review of the operations and reliability functional areas and resulted in preparation of direct filed testimony.

• Participated in a management audit of Public Service Electric and Gas Company. Focus areas include electric system operations and maintenance, reliability, expansion planning, load management, fuels management, and Smart Grid.

• Participating in a Central Alberta Rural Electric Association review of operational capacity and providing specialized analysis of transmission cost allocation and feasibility of becoming a load serving agency in the Province.

• Participating in a review of Public Service New Hampshire Flue Gas Desulphurization installation that includes a due diligence report on the completed portion and on-going monitoring of the project.

• Participated as a lead consultant in a study for the City of Ocala to evaluate the city electric department’s operational efficiency and effectiveness, to evaluate the city’s full requirements contract with FMPA, and to assess quantitative and qualitative aspects for the city to remain in the electric utility business or consider selling.

• Participated in a focused management audit of Fitchburg Gas and Electric Company, a unit of Unitil. The audit covers Strategic Planning, Staffing & Workforce Management, Management & Control, Customer & Public Relations, and Emergency Preparedness & Response Planning.

• Participated in a storm response audit of Connecticut Light and Power Company and United Illuminating preparation and response to a major winter storm in March 2010.

Utilities Practice

109

• Participating in the development of energy assurance planning documents, procedures and table-top exercises for the states of North Dakota and Idaho. This assignment includes development of critical asset information, identification and assessment of vulnerabilities and development of mitigation methods for energy supply system disruptions.

• Participated as a lead consultant for an engagement to provide an independent review and comments on a series of reports prepared by PacifiCorp in response to a winter storm outage that affected up to 190,000 customers over an 8 day period. The assignment included a comprehensive analysis of the report with focus on conclusions and recommendations and the level of completeness and conformance with the terms of reference. We prepared professional opinions regarding the conclusions and recommendations contained in the report, and offered additional conclusions and recommendations with supporting rationale, analysis, and/or industry comparisons as appropriate. We were subsequently retained to review PacifiCorp’s implementation progress for the 18 recommendations in our original report.

• Participated in a study led by Jacobs Consultancy to determine the workforce adequacy of the five Illinois investor owned utilities for the Illinois Commerce Commission. This effort included a review of work practices, labor resources both internal and external, work backlog, workforce management and construction and maintenance practices.

• Participated as a lead in a distribution plant evaluation for Central Maine Power on behalf of the Maine Public Utilities Commission. This effort included a review of reliability performance, system design and planning, vegetation management and a physical condition assessment of the distribution system.

• Project Manager of a gap analysis and benchmarking project involving plant operations at ALCOA’s Rockdale, Texas. The results help to determine areas for improvement in operations and improve the plant competitiveness.

• Project Coordinator in the NJBPU service reliability focused management audits of the four New Jersey-based electric utilities. To determine the effectiveness of their response and communications during a major outage.

• Project Manager on the Bahamas Telecommunications Corporation organization and staffing study. Developed staffing requirements and organization structure, which reduced staff by 40 % and saving $62 million a year.

• Project Manager in a study of internal practice management systems for Stone & Webster Engineering Corporation

Industry Assignments: • Operations Management

o Responsible for daily power generation operation during manager absence and acted as intermediary between Division staff of 250 personnel and upper management.

o Supervised a staff of 29 maintenance and outage planning, administrative and warehousing personnel, including four supervisory personnel for an electric production division.

Utilities Practice

110

o Supervised a staff of 61 plant materials managers, administrative, production control and purchasing personnel in 7 states for a major glass manufacturer.

o Facilitated and developed the strategic planning process for a municipal utility department.

o Implemented best practice change management methodologies.

o Directed the review and rewriting of department wide policies and procedures.

o Developed performance indicators and management tracking system for glass and utility industry. o Directed training department for craft and operations personnel.

• Reliability, Management Audits and Operational Assessments

o Participated in a review of Questar Gas Company’s gas gathering and processing contracts on behalf of the Utah Division of Public Utilities. This study included arms-length determination of relationships, costs, pricing and performance over the past five years with a particular focus on cost of service rate spike experienced in 2007.

o Participated as a lead in an audit and analysis of distribution line extension costs and their derivation for Central Maine Power on behalf of the Maine Public Utilities Commission.

o Participated in a due diligence review of the proposed Exelon-PSE&G merger on behalf of the New Jersey Board of Public Utilities. This assignment covered a thorough review of the customer service functional area, including the call center, customer service centers, the customer information system, street lighting, customer billing and complaint resolution.

o Provided litigation support for PacifiCorp for a federal district court case and a Wyoming Public Utilities Commission filing relative to claimed losses due to outages suffered over a period of five years.

o Project Manager on multiple projects for JEA that resulted in approximately $2.25 million yearly saving, which included the following:

o Multi-phased cost analysis and work process improvement project involving Customer Service areas.

o Facilitating the implementation of process improvement for JEA and Duval County Tax Collector in areas of operations, facilities design, call center staffing and design, and training.

o Multi-phased work process improvement project involving staffing assessment of the Jacksonville Water and Sewer Department pre-merger.

o Cost benefits analysis project of the merger between the electric and water and sewer departments.

o Multi-phased work process improvements and staffing assessment and reassignment project involving the support staff.

o Project Manager in charge of a multi-phased Cost Analysis and Work Process Improvements project involving JEA, the Jacksonville Public Utilities Department and Duval County Tax Collector’s Office.

o Responsible for performing benchmarking study of various utilities including Transmission Pipeline Australia and Entergy Gulf States.

Utilities Practice

111

o Consultant responsible for developing Table of Organization and Equipment as part of a fleet assessment for National Grid.

o Participated in a major service quality assessment for Entergy Gulf States in the area of distribution. This included field inventory and inspection of over 8,000 distribution poles and ancillary pole mounted equipment, computer modeling to suggest potential reliability improvements and their costs and a review of capital, operations and maintenance budgets, methods and procedures.

• Maintenance and Materials Management

o Project Manager on a base line cost analysis project of a large southeastern utility materials management process. Recommended process improvements that resulted in a $1.5 million yearly saving and a onetime saving of $2.3 million.

o Managed all warehousing and inventory operations, responsible for overseeing the physical facility redesign and rearrangement planning, and executing the organizational modification at an operating municipal power plant.

o Managed a team of consultants and professional consulting engineers in establishing a comprehensive outage planning and work force management/productivity measurement and improvement program at an operating municipal power plant.

o Consultant responsible for conducting materials management portions of focused management and operations audits for Chattanooga Gas Company, U.S. Virgin Islands PSC, and Nevada Power Company.

o Provided logistical support for the preparation of 80 uniform plant maintenance procedures and associated, detailed standard time estimates.

o Managed staff of plant maintenance planner for outage efforts of an operating municipal power plant reducing outage time from seven weeks to 3 and average saving $1.3 million a year.

o Provided leadership and project management during the design of the maintenance and materials management system needed for computerization support of the plant's work force management program.

o Responsible for integration of the material management and productions control department into a single business unit with a yearly saving of $300,000.

o Lead the formation of “RAPID” parts delivery program for 216 participating utilities. Responsible for electronic data gathering, cataloging, and information integrity, which allowed utilities to lower inventories by 15%.

• Organization/Feasibility Studies

o Consultant involved in developing staffing requirements for new gas companies at the Abu Dhabi Natural Gas Distribution Company in the Emirate of Abu Dhabi and Chilquinta Gas Distribution Company in Santiago, Chile.

Utilities Practice

112

• Budgeting

o Develop 10-year forecast of O&M and Capital budgets and administered annual budget of over $74 million using business analysis of budget versus productivity.

o Set and monitored performance indicators based on financial data. Employment History:

Jacobs Consultancy 2010 Group Manager

Williams Consulting, Inc. 2000 to 2010 Principal & Consultant

Stone & Webster Management Consultants, Inc. Senior Consultant 1999 – 2000 Consultant 1995 -1999

City of Lakeland, Electric and Water Department 1984 - 1994 Assistant Plant Manager

Thatcher Glass Manufacturing Company 1976 - 1984 Corporate Materials Manager

Plant City Steel Corporation 1971 - 1976 Production Control Manager

Utilities Practice

113

Name: MICHAEL F. RAFFERTY Title: Group Manager Education: BSEE, 1974, The Ohio State University

MSEE 1984 New Jersey Institute of Technology Membership in Professional Societies: I.E.E.E. – Institute of Electrical and Electronic Engineers, Member

Working Group on Distribution Reliability Career Synopsis: An experienced executive, manager and consultant with an international background in energy efficiency, disaster recovery, information systems, project management, utility planning, financing, and organizational management services. Qualifications include load forecasting, integrated resource planning, electric transmission and distribution planning; budget forecasts; benchmarking; staffing; economic studies; strategic planning studies; marketing studies; and professional training and development. Strong team-building skills and adept at managing and motivating diverse resources Career Highlights: Operations Reviews and Audits • 2011 – Project Manager for Central Alberta Rural Electric Association review of operational capacity

and providing specialized analysis of transmission cost allocation and feasibility of becoming a load serving agency in the Province.

• 2011 - Participating in a review of the Sam Bruno pipeline explosion for PG&E on behalf of the California Public Utilities Commission, with a focus on adequacy of PG&E’s Gas Emergency Plan and execution during the event in accordance with the plan.

• 2010 – Participated in a focused management audit of Fitchburg Gas and Electric Company, a unit of Unitil. The audit covers Strategic Planning, Staffing & Workforce Management, Management & Control, Customer & Public Relations, and Emergency Preparedness & Response Planning.

• 2010 – Participated in a storm response audit of Connecticut Light and Power Company and United Illuminating preparation and response to a major winter storm in March 2010.

• 2010 – Project Manager for development of energy assurance planning documents, procedures and table-top exercises for the states of North Dakota and Idaho. This assignment includes development of critical asset information, identification and assessment of vulnerabilities and development of mitigation methods for energy supply system disruptions.

• 2010 – Participating in a management audit of Public Service Electric and Gas Company. Focus areas include electric system operations and maintenance, reliability, expansion planning, load management, fuels management, and Smart Grid.

Utilities Practice

114

• 2010 – Participated in a due diligence review of the FirstEnergy/Allegheny Energy merger on behalf of the Maryland Public Utilities Commission. This assignment covered a thorough review of the operations and reliability functional areas and resulted in preparation of direct filed testimony.

• 2009 – Project Manager for a study for the City of Ocala to evaluate the city electric department’s operational efficiency and effectiveness, to evaluate the city’s full requirements contract with FMPA, and to assess quantitative and qualitative aspects for the city to remain in the electric utility business or consider selling.

• 2009 – Project Manager for a review of Questar Gas Company’s gas gathering and processing contracts on behalf of the Utah Division of Public Utilities. This study included arms-length determination of relationships, costs, pricing and performance over the past five years with a particular focus on cost of service rate spike experienced in 2007.

• 2008 – Participated in a study led by Jacobs Consultancy to determine the workforce adequacy of the five Illinois investor owned utilities for the Illinois Commerce Commission. This effort included a review of work practices, labor resources both internal and external, work backlog, system design and condition and construction and maintenance practices.

• 2008 – Advising on a solar thermal project for Florida municipal utilities. This project is in the initial conceptual development stage.

• 2008 – Project Manager for an audit and analysis of distribution line extension costs and their derivation for Central Maine Power on behalf of the Maine Public Utilities Commission.

• 2007 – Conducted and managed two engagements on behalf of the Utah DPU: first provided assistance to the DPU in studying and resolving a customer complaint action against Rocky Mountain Power (a unit of PacifiCorp) and second, a review of prior recommendation implementation for PacifiCorp (Rocky Mountain Power).

• 2005/2006 – Conducted and managed a distribution plant evaluation for Central Maine Power on behalf of the Maine Public Utilities Commission. This effort included a review of reliability performance, system design and planning, vegetation management and a physical condition assessment of the distribution system.

• 2005/2006 – Participated in a due diligence review of the proposed Exelon-PSE&G merger on behalf of the New Jersey Board of Public Utilities. This assignment covered a thorough review of the customer service functional area and resulted in preparation of direct filed testimony.

• 2005 – Provided litigation support for PacifiCorp for a federal district court case and a Wyoming Pubic Utilities Commission filing relative to claimed losses due to outages suffered over a period of five years.

• 2002 - Participated in a study for a major west coast utility to identify technology and business changes expected in the industry and to identify areas of opportunity where they could capitalize on these changes through internal innovation and external means, including acquisition, merger and/or venture activities.

• 2001 - Conducted and managed a market analysis for a Fortune 100 company for a prototype electric transmission line inspection robot.

• 2001/ 2002 - Participated in a privatization and best practice study for the Public Works Center at Pearl Harbor, the Pacific Missile Range Facility (PMRF) at Kauai, and MCBH Hawaii for the US Navy.

Utilities Practice

115

The work effort included a diagnostic analysis, competitive gap analysis and formulation of implementation recommendations and objectives to close the competitive gap for electric, water and wastewater utility functions at the base. The work effort was expanded to include a detailed review of asset condition, capital, operations and maintenance practices and benchmarking against industry standards to help set performance standards.

• 2000 - Participated in a workforce utilization review for GPU Energy with focus on transmission and distribution maintenance activities.

• 2000 - Participated in a due diligence review for Orion Midwest Energy with focus on information resource adequacy to support the new operation.

• 2000 - Participated in a review of testimony relative to power plant re-powering project for a Midwestern utility.

• 2000 - Participated in a study to review and recommend institutional strengthening initiatives for a newly mandated public service commission in Guyana with focus on expanding and defining the regulatory relationships with the recently privatized national electric company.

• 1998/1999 - Participated in a work process and staffing change project for the Jacksonville Electric Authority covering support and customer service staff.

• 1995 - Participated in a study of internal practice management systems for Stone & Webster Engineering Corporation

• 1993 - Performed a vehicle fleet sizing and use optimization study for a major public utility authority, using a sophisticated database model covering survey and inventory analyses.

• 1992 - Responsible Officer for a confidential survey of utility perceptions of wind power in the US market for an investment bank.

• 1983/1992 - Reviewed and recommended changes in the annual construction budget for a major Mid-western electric utility for a period of ten years.

• 1991 - Managed and participated in organization and management studies for the Electricity Authority of Cyprus, Dubai Electricity Company and the Guyana Electricity Corporation.

• 1978/1983 - Developed comprehensive operations and financial forecasting models for electric utility sector analysis in Saudi Arabia, and specified and managed the implementation of a capital budget system for loan requirements tracking. Prepared long-term electric sector financial requirement forecasts. Developed standardized and uniform loan agreement and reporting procedures for electric utility borrowers including a monthly loan disbursement tracking system.

Reliability Reviews and Benchmarking • 2004 – Managed and conducted an engagement to provide an independent review and comments on

a series of reports prepared by PacifiCorp in response to a winter storm outage that affected up to 190,000 customers over an 8 day period. The assignment included a comprehensive analysis of the report with focus on conclusions and recommendations and the level of completeness and conformance with the terms of reference. We prepared professional opinions regarding the conclusions and recommendations contained in the report, and offered additional conclusions and recommendations with supporting rationale, analysis, and/or industry comparisons as appropriate.

Utilities Practice

116

• 2003 - Managed and Conducted reliability review for Eskom in South Africa to determine causal factors and develop mitigating recommendations to improve their reliability performance. This included regional workshops and focused interviews, a detailed document/report review and benchmarking Eskom against several comparable panels of electric utilities worldwide.

• 2002 - 2003. Participated in PA’s annual utility Transmission and Distribution Benchmarking program as a special advisor.

• 2002 - Managed and Conducted Reliability Certification reviews for Southern California Edison, NorthWestern Energy and Orlando Utilities Commission. 2001. Managed a Reliability Certification review for Texas Utilities Electric & Gas. 2000. Participated in a reliability certification review for the Northwestern Corp. This involved a consistency and accuracy review of reliability data collection, development and reporting, both internally and to external entities.

• 2001/2002 - Conducted a review of the expected impact of implementing a new outage management system (OMS) on reliability indices for a major East Coast electric utility as part of a Service Guarantee study in connection with their merger with another east coast utility. This involved a detailed review of outage reporting processes and data analysis to identify areas where implementing the new OMS would improve data accuracy and measuring the impact on reliability indices to provide appropriate adjustment factors for future service level requirements and/or performance based rates

• 2001 - Participated in a technical cause analysis review for a major east-coast utility related to underground distribution system failures and manhole explosions in a large city.

• 2000 -. Marketed the ‘RestorePower’ web site to utility contractors, resulting in three founding subscriptions to the site. 1999-2000. Participated in a multi-client audit of system failures experienced during a heat wave in the Northeast US. This study focused on reliability and consisted of forensic analysis of the failures and a detailed review of methods, procedures and systems covering planning, design, operations and maintenance, capital expenditures, and call center performance.

• 1999 - Participated in a Best Practices Study for BC Hydro to assess the operational efficiencies and commercial competitiveness of their engineering functions.

• 1998/1999 - Conducted benchmarking studies for several electric and gas utilities, including Entergy Gulf States and Trans Pipeline Australia to assess operational efficiency and service quality.

• 1998 - Participated in a major service quality assessment for Entergy Gulf States in the area of distribution. This included field inventory and inspection of over 8,000 distribution poles and ancillary pole mounted equipment, computer modeling to suggest potential reliability improvements and their costs and a review of capital, operations and maintenance budgets, methods and procedures.

Utility System Planning • 1993 - Evaluated purchase power contract bids and developed an integrated resource plan for a full

requirements utility. This included qualitative and quantitative analysis using computerized optimization software, including impacts of demand-side management programs.

• 1992 - Responsible Officer for a needs and timing assessment of proposed 765 kV and 500 kV transmission lines for the Virginia State Corporation Commission. This assessment included testimony at the certification hearings.

Utilities Practice

117

• 1985/1986 - Participated in a comprehensive power plant siting study for the Egyptian Electricity Authority in Cairo, Egypt. This assignment required developing a database of electric system information, including generation and transmission detailed engineering data, load, energy, customer, demographic and financial data for use in the load forecasting, system planning and financial and economic analysis portions of the project.

• 1983 - Evaluated the potential severance and condemnation costs associated with a municipal take-over of local transmission and distribution facilities.

• 1977/1985 - Conducted transmission expansion system planning studies for Fitchburg Gas and Electric Light Company, Newport Electric Corporation, for Edison Sault Electric Company, and the Egyptian Electricity Authority.

• 1977/1985 - Developed models to support load-forecasting efforts in the areas of demographics, survey analysis, and appliance end-use analysis, using both spreadsheet and database programming techniques. Prepared programs to forecast general ranges of river flow hydro generation, allocate and optimize a mix of local generating capacity and purchased power, and automate the calculation of fuel and purchased power adjustment clause revenues.

• 1977/1984 - Participated in forecasts of future energy sales and peak loads for a number of clients, employing both traditional and econometric forecasting methods.

• 1978/1983 - Developed comprehensive operations and financial forecasting models for electric utility sector analysis in Saudi Arabia. This included forecasts of electric sector long-term fuel and long-term fuel and resource requirements in the Kingdom.

• 1978/1983 - Defined generation, transmission and distribution requirements for utilities funded by the Saudi Industrial Development Fund. This included an overall review of a Kingdom-wide long-range master plan for development.

• 1973/1977 - As an Associate Engineer at American Electric Power Service Corporation, was responsible for planning of the future bulk power network including conceptual development and technical analysis of transmission systems configuration and operation for both inter-company and intra-company systems.

Training and Development • 2000/2003 - Delivered a number of internal training courses at PA Consulting Group, Inc., including

“Top Down Thinking”, “Effective Presentations” and “Selling Professional Services.” Participated in a development of a web-based training program for internal deployment covering the utility industry.

• 1994/1995 - Developed and presented a three-day training course on Geographic Information Systems fundamentals, project development and management to the Egyptian Electricity Authority under United Nations sponsorship. This course was repeated four times.

• 1994 - Developed and conducted a one-day seminar on electric transmission pricing.

• 1985/1990 - Responsible Officer and Program Director for Stone & Webster’s Utility Management Development Program, held twice annually. Was responsible for day-to-day program direction as well as curriculum selection.

Utilities Practice

118

• 1984/1992 – Lecturer in Stone & Webster’s Utility Management Development Program. This included developing and delivering numerous presentations covering Load Research, Load Forecasting, Decision Analysis, Productivity, Transmission Planning, Generation Planning, Information System Planning, Microcomputer Applications, Issues in Information Systems, and Executive Information Systems.

• 1988/1990 - Developed a middle management training program for the Guyana Electricity Corporation. Served as Training Advisor and administered the overall program. Organized and participated, as a lecturer, in a two-week Management Development Program held on-site in Guyana.

• 1988 - Lectured at the “How To Think Like a Utility Executive” training program developed for General Electric. Topics included Decision Analysis, Load Forecasting, Capacity and Transmission Planning Principles and Issues.

• 1986 - Developed and administered a system planning concepts course for the Egyptian Electricity Authority, covering generation and transmission planning, load forecasting, economic evaluation, tariff studies and finance.

• 1978/1983 - Lending Team Leader for the Saudi Industrial Development Fund with responsibility for over US$1 Billion in loan commitments and disbursements for development in the electric sector in Saudi Arabia.

• 1978/1983 - Participated in the establishment of staffing and lending policies and procedures including staff training, utilization and organization at the Saudi Industrial Development Fund.

Business Continuity Audits and Assessments • 1999 - Project Manager for Year 2000 Program Audits for the City of San Antonio, Texas and the San

Antonio Water System.

• 1999 - Consultant on a Year 2000 review audit for a major Canadian electric utility.

• 1999 - Information Technology Consultant on a Year 2000 contingency planning study for a major water and sewer utility.

• 1999 - Contingency Planning Expert and project lead for a large metropolitan gas distribution utility.

• 1999 - Contingency Planning Expert and project lead for an international government-owned telecommunications utility.

• 1998 - Project Manager on Concord Management, Inc.’s Year 2000 audit.

Information Systems • 2001 - Participated in development of a request for proposal for a major west coast gas utility for

developing new and replacement applications for map and gas distribution facilities and conversion of existing CADD-based drawing files to a GIS platform.

• 1995 - Participated in a GIS feasibility study for Yankee Energy Corporation.

• 1993/1994 - Engaged as database integration specialist to the Egyptian Electricity Authority, under United Nations funding, for a comprehensive Geographical Information System development covering

Utilities Practice

119

the EEA’s high voltage transmission system working in an Intergraph MicroStation and Oracle environment.

• 1992/1994 - Developed specification and functional design, vendor pre-selection bid evaluation of an Executive Information System for the Jordan Electricity Authority.

• 1988/1991 - Directed and participated in strategic information system planning studies for El Paso Electric Company, the Egyptian Electricity Authority, Dubai Electricity Company, Stone & Webster Engineering Corporation, and the Jordan Electricity Authority using structured analysis techniques.

• 1989 - Developed a United Nations Project Document for the Jordan Electric Authority covering information system needs.

• 1985/1993 - Designed and assembled a power system technical database for the Egyptian Electricity Authority to support system-planning activities. This included functional design of the database elements, the logical and physical design of the database, its creation, and development of interface routines for planning applications and to support management information reporting needs.

• 1985/1992 - Responsible for managing two major information systems projects for the Egyptian Electricity Authority amounting to over US$1 Million.

Publications and Presentations:

• “Geographic Information Systems – Applications in System Planning,” M.F. Rafferty, published in the United Nations Journal, 1998.

• “UNDP/EEA GIS Training Program,” M.F. Rafferty, presented several times at the United Nations, 1994-1998

• “Issues in Transmission Pricing,” F.E. Depenbrock and M.F. Rafferty, presented at the Stone & Webster Summer Seminar, 1993.

• “A Field Report on EMF,” M.F. Rafferty, presented at the Transmission & Wheeling Conference, Denver, November 1991.

• “Transmission System Engineering Fundamentals,” M.F. Rafferty and J.S. Baylor, presented at the Infocast Conference Transmission: Issues for Project Developers, Washington, October 1991

• “Transmission; Can We Build It?” M.F. Rafferty, presented at the Transmission & Wheeling Conference, Denver, November 1990.

• “Information Systems Planning, Concepts and Approaches,” M.F. Rafferty and J.R. Wappner, presented at the 1990 APPA/TVPPA Accounting, Finance, Rates and Information Systems Workshop, Nashville, September 1990.

• “Energy Planning Information System Requirements – A Case Study,” M.F. Rafferty and Dr. Yehia Abu Alam, presented at the Training Course on Energy Data Bases for Energy Planning, The World Bank, Sophia Antipolis, France, March 1990.

• “Issues in Transmission Access and Wheeling,” F.E. Depenbrock and M.F. Rafferty, presented at the Stone & Webster Summer Seminar, 1988.

• “Effects of Deregulation and Competition,” M.F. Rafferty, presented at the Stone & Webster Plant Services Seminar, 1988.

Utilities Practice

120

Employment History:

Jacobs Consultancy 2010 - present

Williams Consulting, Inc. 2003 - 2010

PA Consulting Group, Inc. 2000 - 2003

Stone & Webster Management Consultants, Inc. 1998 - 2000

T&L Computer Systems, Inc. 1997 - 1999

Advanced Systems Group International, Inc. 1994 - 1997

Stone & Webster Management Consultants, Inc. 1978 - 1994

American Electric Power Service Corporation 1973 - 1977

Utilities Practice

121

Name: NARINDER “MICKEY” GREWAL, P.E. Title: Group Manager Education: Computer Career Program (Computer Science), DePaul University, Chicago, IL 1998

Master of Applied Sciences in Mechanical Engineering, University of Windsor, Canada1988

Bachelors of Engineering in Mechanical Engineering, Punjab University, India 1984

Career Synopsis: Over 19 years of industry experience in natural gas network modeling, facilities planning and supply planning, engineering design and gas control. My responsibilities included advising the corporation on reinforcing the distribution and transmission infrastructure that serves ~2.1 million customers; special projects involving fluid flow and hydraulic expertise. Design experience includes pipelines; meter stations, compressor stations, tank farms, gathering systems, C&I and pressure regulations facilities. Selected Consulting Assignments: Universal Pegasus International - Senior Project Manager (2008 to 2010) Responsible for overseeing project design teams, preparing bid packages and proposals for various pipeline projects, assisting with business development effort, feasibility and flow studies, managing design schedule and costs, and recruiting. Epstein-Nicor Engineering, LLC - Senior Technical Lead (2006 to 2008) Responsible for station design and hydraulic analysis. Designed gathering line launchers/receivers, regulators, heaters, meter set, etc. Lead hydraulic analysis projects & support business development efforts in offering system planning services. Nicor Service - Senior Risk and Business Analyst (2004 to 2006) Responsible for new energy product development and coordinating efforts between marketing, IT, Sales, Call Center, Operations, Contractors, Risk Management, Accounting & legal departments. Developed new energy products: surge protection services, variable rate, fixed price and hybrid energy products. Successfully negotiated vendor contracts for gas supply, billing, & loyalty programs. Performed economic analysis for various products. Nicor Gas - System Planning and Forecasting Manager (1994 - 2004) Responsible for maintaining & sizing 30,000 miles of distribution model using SynerGEE Gas – with 300,000+ pipe segments and 2,400+ valves & regulators. Coordinating efforts between station design; pipeline design; sales & new business; real estate; environmental; gas supply and gas control departments. Developing alternatives and cost estimates for power plant projects, compressor station revisions, pipeline expansion, and other third party consulting projects. Developing short-term and long-term growth modeling techniques to handle growth rate of 30,000 to 37,000 customers per year. Peak day capacity planning and transient modeling of the transmission system. Perform purge and pipeline

Utilities Practice

122

rupture analysis. Led a team of 8 engineers and 2 technical assistants. Designed and developed an application to estimate lost gas due to third party damage to facilities and provided expert witness testimony. Introduced Artificial Intelligence techniques in predicting loads and state of the system using Neural Network models. Stoner Associate (now Advantica) - Client Services Engineer (1991 - 1994) Provided customer support and training for software users --extensive customer contact involved. Worked on consulting projects that involved transient and steady state analysis. Advised clients on optimizing gas distribution & transmission systems. Performed software quality assurance, testing and documentation. Union Gas Ltd. - Transmission Planning Engineer Provided economic engineering solutions to meet company transmission needs. Performed transient and steady-state system capacity studies. Developed an optimal pipeline reinforcement program - capital expense of $400+ million. Performed detail compressor modeling studies to cut fuel costs. Prepared studies for OEB/NEB filings. Atomic Energy of Canada Ltd. - Engineer Responsible for writing a transient heat transfer and fluid flow code that was used to model thermal hydraulics of nuclear reactor heat exchanger. Employment History: Jacobs Consultancy 2011 – Present Group Manager Universal Pegasus International Senior Project Manager 2008 to 2010 Epstein-Nicor Engineering, LLC 2006 to 2008 Senior Technical Lead Nicor Gas Senior Risk and Business Analyst 2004 – 2006 System Planning and Forecasting Manager 1994 - 2004 Stoner Associate (now Advantica) 1991 - 1994 Client Services Engineer

Utilities Practice

123

Name: EDWIN NORSE Title: Principal, Norse Associates

Career Synopsis:

Mr. Norse has over 40 years experience in all sectors of the utility industry, including CFO of a private utility, Assistant General Manager of a municipal utility, and assignment as a Special Master for a regulatory agency. He has an extensive background in power supply procurement, including negotiations of purchases and sales of power resources with the majority of New England utilities, Hydro Quebec and Ontario Hydro. He has also consulted with gas utilities and electric utility cooperatives. His executive positions have included responsibility for budgeting and capital improvements, forecasts, rating agency presentations, rates, and financial performance. He has also worked extensively in energy efficiency and renewable, including wind, hydro and biomass. Selected Consulting Responsibilities:

Norse Associates

• Consultation on Strategic Planning issues for a reliability council. • Consultation on financial and power supply matters for an electric cooperative. • Initiation of a consulting firm that specializes in valuation, negotiation for purchase or sale of assets,

strategies involving business expansion or mergers, and business recovery. • Various utility consulting works in power supply, financial issues, rating agency presentations, rates,

and expert testimony. • Valuation/Negotiation services for a client relative to acquisition of a publishing business. • Valuation/Inquiry relative to an oil acquisition/divestiture. • 5 Year Plan/Valuation of Assets/Lease of Excess Capacity for small Catholic college reorganization. • Assistance with financial and planning issues for a retail energy services company • Work outs with three universities. Special Master (Appointment by Vermont Public Service Board as Special Master for oversight during the probationary period of 1999 – 2002 of Citizens Utilities as set forth in Orders in Dockets # 5841/5859)

• Probationary elements included all facets of accounting, both FERC and GAAP, oversight of evolution and correction of systems to supply consistent and accurate managerial and regulatory accounting information, oversight of an audit of the entirety of the transmission and distribution assets, underlying assumptions relating to least cost planning, subsidiary systems relating to demand sight management activities and At 248/250 reviews [Public Service Board and Regional Environmental planning processes], as well as Capital Budgeting processes and accounting; hiring and supervision of experts in various fields of accounting and engineering, as required.

Utilities Practice

124

Green Mountain Power Corporation (GMP) (an electric utility serving about 1/3 of Vermont with 83,000 customers and $276 million in assets, $179 million in revenues)

• Responsible for the financial performance of GMP. • Independent auditor, regulatory and rating agency relationship responsibility as it related to the

finances of GMP during this period. • Responsibility for all controller and treasury functions, including budgets, forecasting, plant, general

accounting, financial systems, etc. • Initiated and achieved securing “A” ratings for GMP from Standard & Poor’s, Moody’s, and Duff &

Phelps in middle to late 1980’s. • Maintenance, with occasional review and change of all commercial and investment banking

relationships, including lines of credit, debt, preferred, and equity issuances, etc. • Coordinated and led over $36 million of issuances of equity, $7 million of preferred, and $81 million of

debt securities in the market. • Ten years in which utility consistently earned equal to its allowed rate of return, and achieved lowest

rates of any major investor-owned electric utility serving New England. Green Mountain Energy Resources & Green Mountain Propane Gas (start up and subsidiary operations of GMP)

• GMER – secured initial investment capital and partnership for this retail start up. • GMPG – Operating Officer responsible for its return to profitability and ultimate sale. • Mountain Energy – treasurer of wind energy subsidiary. Burlington Electric Department, Assistant General Manager

• Oversight of all financial, power supply, customer service, general service, credit, stores and inventory functions, and the operations in absence of General Manager.

• Responsible for power purchases and sales. • $70 million financing of J.C. McNeil wood/oil/gas fired unit and wood supply evolution. • Negotiations with Ontario’s Hydro and most New England utilities for joint ownership and power

contracts. • Responsible for all revenue requirements, including rate applications through a three step process of

Commission, City Governance and Vermont Public Service Board. Burlington Electric Department, Administrative Assistant

• Responsible for rates, financial planning, intra-utility functions, power supply planning and various functions. During this period, assisted in maintaining rates below other investor utilities in Vermont.

Utilities Practice

125

Employment History:

Norse Associates Principal 1999 - Present

Special Master 1999 – 2003 Green Mountain Power Corporation (GMP) 1984 -1998 Vice President, Chief Financial Officer and Treasurer

Burlington Electric Department 1975 -1983 Assistant General Manager Administrative Assistant 1970 -1975

Utilities Practice

126

Name: KIRK S. BALCOM Title: Principal, CIA, CISA, CFE Education: B.S. Accounting, Iowa State University Membership in Professional Societies: Institute of Internal Auditors Information Systems Audit & Control Association

Association of Certified Fraud Examiners

Career Synopsis: Professional consultant with 35 years experience in evaluating internal controls. Areas of expertise include Sarbanes-Oxley, operational auditing, information systems auditing, risk assessments, service organization controls, and quality assessments of Internal Audit Departments. Expertise spans numerous industries with 27 years in the utility industry. Performed operational, financial, joint venture, and international auditing for the utility. Experienced in using the Committee of Sponsoring Organization’s (COSO) Internal Control-Integrated Framework and the Control Objectives for Information and related Technology (COBIT) Framework to evaluate and document internal controls. Internal audit reports and other communications have a clear focus on business risks. Selected Consulting Responsibilities: Sarbanes-Oxley, Internal Audits, Risk Assessments & Service Organization Controls Exams

• 2008/2011 – Principal in Charge of Rehmann’s Service Organization Controls (SOC) Practice that attests to service organization internal controls that affect their user organizations internal controls over financial reporting (SOC 1) and attests to internal controls over security, availability, processing integrity, confidentiality, and privacy of service organization operations (SOC 2 and SOC 3).

• 2009/2011 – Principal in Charge of internal audits at Ferris State University. These internal audits cover all areas of university operations.

• 2004/2011 – Principal in Charge of risk assessments and start up internal audit consulting at Allegiance Health Systems. These risk assessments coved all areas of health systems operations.

• 2004/2011 – Principal in Charge of Sarbanes-Oxley external financial reporting evaluations for Caraco Pharmaceutical Company’s, a generic drug manufacturer, assertion on the effectiveness of internal controls over financial reporting.

• 2005/2010 – Principal in Charge of Sarbanes-Oxley documentation for Fremont Insurance Company’s senior management’s assertion on the effectiveness of internal controls over financial reporting.

• 2008/2010 – Principal in Charge of the Committee of Sponsoring Organizations (COSO) risk assessments for Demmer Corporation, a large manufacturing firm.

Utilities Practice

127

• 2008/2009– Principal in Charge of External Quality Assessments of Internal Audit Departments of Wolverine World Wide and JSJ Corporation that assessed their Internal Audit Department’s compliance with the International Standards for the Professional Practice of Internal Auditing.

• 2003 – Team leader for Sarbanes-Oxley documentation for Consumers Energy Company, a $15 billion combination natural gas and electric utility, and subsidiary of CMS Energy Corporation. Responsibilities focused on all systems that provided financial reporting support.

• 1999/2003 – Supervised information technology and financial audits of Consumers Energy Company.

• 1998/1999 – Lead International Auditor for CMS Enterprises Company, a non-regulated company of parent company CMS Energy Corporation. International audits were located in Australia, Chile, Argentina, and Morocco.

• 1987/1998 – Supervised operational internal audits for Consumers Energy Company. These audits resulted in cash recoveries and cost savings for numerous natural gas and electric utility operations.

• 1980-1987 – Lead auditor for application system audits for Consumers Energy Company. These audits covered the numerous applications that impacted internal controls over financial reporting.

• 1978/1979 – Team member of the Foreign Corrupt Practices Act internal controls documentation project for Consumers Energy. This documentation covered all operations of Consumers Energy Company and its subsidiaries.

• 1977 – Team member of natural gas and electric utility distribution financial audits for Consumers Energy Company.

• 1976 – Team member for Electric Utility Generating Plant financial audits for Consumers Energy Company.

Recent Publications and Presentations: • “Internal Auditing,” K.S. Balcom presented to the Association of Government Accountants, 2011.

• “Service Organization Controls,” K.S. Balcom presented to the Audit and Assurance Group of Rehmann Robson, 2011.

• “Service Organization Control Reports Updated Reporting Standards,” K.S.Balcom published article in Business Wisdom Delivered, A Rehmann Publication, 2011.

• “Internal Audit Reporting,” K.S. Balcom presented to the Institute of Internal Auditors, 2010.

• “Internal Controls – What Do They Look Like,” K.S. Balcom presented to Michigan Association of County Administrators Organization, 2010.

• “Service Organizations Internal Controls,” K.S.Balcom published article in Business Wisdom Delivered, A Rehmann Publication, 2010.

• “Evaluating Internal Controls – The Auditor’s Point of View,” K.S.Balcom presented to the Michigan Association of Certified Public Accountants, 2008.

Utilities Practice

128

Employment History:

Rehmann 2003 - present

Consumers Energy Company 1976 - 2003

Utilities Practice

129

APPENDIX B

Jacobs Consultancy Terms and Conditions

Jacobs Consultancy Inc. Form 500-C March 2008

The proposal to which this document is attached is subject to the following terms and conditions, together with all documents referenced therein or attached thereto hereinafter referred to as the “Agreement”: 1. Warranty of Services. We warrant that our services will be performed in accordance with generally accepted standards in the industry for a one (1) year period after completion. We make no other warranties or guarantees, express, implied, statutory or otherwise. Warranties of merchantability and fitness for the particular purpose are specifically excluded. If any of our services are found to be deficient within the one-year period following their completion, we will provide the additional services (within the scope of the original services provided) necessary to correct the deficiency at no cost to you, provided that we are advised of such deficiency in a timely manner within such one-year period. Our services will be deemed completed when we deliver our Work Product (defined below). This provision of additional services constitutes our sole liability and is your exclusive remedy with respect to any deficient services; and we shall have no liability for costs related to repair, replacement, addition or deletion of equipment or facilities, regardless of cause, including the fault, breach of contract, tort (including concurrent or sole and exclusive negligence), strict liability or otherwise. 2. Mutual Indemnity. We agree to defend, indemnify and hold you harmless from claims by third parties for personal injury (including our employees) to the extent caused by our negligence, violation of law, or wilful misconduct while in your offices or on property which you own or which is under your control. The reports, studies, opinions, analyses, evaluations, recommendations, sketches, calculations, deliverables, or other services (Work Product) furnished under or related to this Agreement are for your sole use and benefit. There are no intended third party beneficiaries. We agree to defend and indemnify you from claims that the Work Product violates the patent rights, copyrights, or other intellectual property rights of any third party. As consideration for our providing the Work Product, you agree to defend, indemnify, and hold us harmless from claims by third parties for personal injury (including death), property damage, fines, penalties or other liabilities arising from or related to the Work Product including claims based on failure to discover, detect, or warn you, government agencies, or the public of any danger, hazard, or unsafe condition. For third party claims against you arising from or related to the Work Product, you hereby waive claims against, and covenant not to sue us for indemnity, contribution or subrogation. This contractual indemnity shall apply regardless of whether the indemnitor is a party to the action or a non-party; and regardless of the indemnitor’s immunity from suit, whether granted by statute or other law, by judgment or via a release of liability obtained from the third-party; and regardless of whether the rules of liability under any applicable law or regulation allocate liability differently than as agreed to herein. 3. Limitation on Liability. You agree that our total liability (per occurrence and in the aggregate) to you arising out of or related to our services shall not exceed 25% of the monies actually paid to us under or pursuant to this Agreement, regardless of whether the loss or damage is a result of breach of contract, warranty, tort (including negligence), strict liability or otherwise. We agree to waive and release each other from all liability, claims, demands, and causes of action for contingent, consequential, and other indirect damages, including but not limited to: loss of revenue or profit, loss of use, loss of product, operating costs or business interruption losses, or other similar damages (whether such damages are characterized as direct or indirect), and regardless of cause, including breach of contract, tort (including sole or concurrent negligence), strict liability or otherwise.

Utilities Practice

130

4. Intellectual Property Rights. All original works prepared by us under this Agreement, including copyrightable material, shall become your sole and exclusive property when delivered, provided that our Work Product is not intended for publication, promotion, or advertisement, and is not to be relied upon by third parties including financial institutions or investors, or the public, for any purpose whatsoever, and any use, publication, or promotion of our Work Product or disclosure to third parties, or the public, shall be at your sole risk and liability. We agree to execute all documents and to take all steps requested by you to perfect your ownership rights. We retain intellectual property rights in all pre-existing documents, data, software, and other intellectual property which may be used or relied upon in preparing the original works delivered under this Agreement. This is not a software development agreement, and you will not acquire any right or interest in any computer software. When the Work Product is a report or study, we will provide one copy as part of the quoted fee. Any additional copies will be furnished at our standard rates. 5. Confidentiality. We agree that any information or data furnished by you and marked or stamped as proprietary shall be safeguarded and maintained in confidence, and made available only to our employees, agents, and sub-consultants, who have a need-to-know. Any report, study, analysis, correspondence or other Work Product prepared by us based on your confidential information shall be safeguarded the same as the original confidential information. We agree not to use your confidential information other than to perform our services under this Agreement. The above obligations shall terminate five (5) years from date of completion of our services or termination of this Agreement. The above obligations shall not apply to any information or data which (1) was known to us prior to disclosure by you; (2) is subsequently acquired by us from a third party who is not under an obligation of confidentiality to you; (3) is developed independently by us without reference to or reliance upon your confidential information; (4) is or becomes available to the public; or (5) is required to be disclosed by operation of law. We agree to promptly return all of your confidential information including all copies upon completion of our services, or earlier upon request, provided that we may retain one complete copy for our records. Nothing in this clause shall preclude or restrict us from using or utilizing the experience, know-how, or expertise gained while working for you. 6. Delays. We will be excused from any delays in performing our services to the extent such delay is caused by occurrences beyond our reasonable control, including but not limited to, acts of God or the public enemy; compliance with any order or request of any governmental authority; fires, floods, explosion, accidents; riots, or strikes; or any causes, whether or not of the same class or kind as those specifically named above, which are not within our reasonable control. If a force majeure event occurs, we shall be entitled to reasonable cost and schedule relief. 7. Change Management. Changes to the services requested by you will be subject to mutual agreement and reasonable adjustment in the compensation and schedule. 8. Received Data. In preparing our Work Product we shall have the right to rely upon the accuracy and completeness of any information or data we receive from you either directly or through your agents, employees or contractors. 9. Choice of Law. This agreement shall be interpreted and governed in all respects by the laws of the State of Texas, regardless of its conflicts of laws principles. 10. Choice of Forum. Disputes that are not resolved through settlement discussions between our two companies, shall be resolved by recourse to any U.S. Federal or State court of competent jurisdiction, provided that if you are not domiciled in the United States, or the matter giving rise to the dispute occurred outside the United States, then as an alternative you may elect binding Arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with said Rules. The place of the arbitration and all related proceedings shall be London, England or other neutral country acceptable to both of us. All proceedings shall be conducted in English. Arbitrator costs and fees, administrative expenses, and other charges imposed by the ICC shall be shared equally. For disputes outside of the United States, the International Court of Arbitration of the International Chamber of Commerce shall be the exclusive forum for dispute

Utilities Practice

131

resolution. You agree not to initiate litigation or dispute resolution proceedings in any other court, forum, or venue. 11. Export Control. The U.S. Government prohibits U.S. companies or their subsidiaries from exporting, re-export, or transhipping information, services, or technology to certain embargoed or sanctioned countries. You agree not to export, re-export, or tranship any of the Work Product provided by us, to any embargoed or sanctioned country, or alternatively to obtain all necessary approvals and licenses from the U.S. Government for such export, re-export or transhipment. 12. Payment and Taxes. All payments shall be due, and paid in full by you immediately upon invoice. Past due invoices shall bear interest at a rate of 1½ % per month. We may, without liability of any kind, stop work in the event any payment becomes past due. All payments shall be made free and clear of, and without reduction for or on account of, any present or future income taxes, value added taxes (VAT), stamp, consumption, or other taxes, levies, imports, duties, charges, fees, deductions, withholdings, restrictions or conditions of any nature whatsoever now or hereafter imposed, levied, collected, withheld or assessed by any governmental entity or authority other than the Government of the United States, or a State or local government within the United States. To the extent any tax or withholding is imposed by a governmental entity or authority other than the Government of the United States, or a State or local government within the United States, you agree to adjust our payments such that the net amount actually paid equals to the prices stated in our proposal. 13. Cancellation. Both you and we shall have the right to cancel this Agreement at any time with ten (10) days’ prior written notice to the other and without liability except for your obligation to pay for services rendered prior to the time of cancellation, plus termination costs such as travel or returning or destroying documents. 14. Severability. If any provision in this Agreement is held to be unenforceable or invalid by a court of competent jurisdiction, the parties agree to negotiate an equitable adjustment to such provision with a view toward retaining the purpose of the provision. In any event the validity and enforceability of the remaining provisions shall not be affected. 15. Notice. We shall be permitted to attach the following statement to all Work Product.

DISCLAIMER “This document, and the opinions, analysis, evaluations, or recommendations contained herein are for the sole use and benefit of the contracting parties. There are no intended third party beneficiaries, and Jacobs Engineering Group Inc., (and its affiliates) shall have no liability whatsoever to third parties for any defect, deficiency, error, omission in any statement contained in or in any way related to this document or the services provided. Neither the Work Product nor any information contained therein or otherwise supplied by Jacobs Consultancy Inc. in connection with the study and the Services released by _____________ shall be used in connection with any proxy, proxy statement, proxy soliciting materials, prospectus, Securities Registration Statement or similar document without the express written consent of Jacobs Consultancy Inc."

16. Entire Agreement. Services furnished or provided pursuant to this Agreement, including services deemed to be outside the scope of this Agreement, such as services performed prior to the effective date hereof, or performed on a voluntary basis, shall be deemed to have been performed under this Agreement. This Agreement constitutes the entire agreement between the parties relating to the services, and supersedes any previous agreement or understandings. Printed terms and conditions contained in purchase orders issued to us by you with respect to the services shall be of no force and effect and shall be superseded by the terms and conditions of this Agreement.