Safety Policy Division Staff Evaluation Report on PG&E's 2020 Risk
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Safety Policy Division Staff Evaluation Report on PG&E’s 2020 Risk Assessment and Mitigation Phase (RAMP) Application (A.) 20-06-012 Report Prepared by: Wendy Al-Mukdad, P.E. (E18855), Steven Haine P.E. (CH6322), Fred Hanes P.E. (M37319), Alex Pineda, Junaid Rahman, Arnold Son, Ben Turner, and David Van Dyken with assistance from Jeremy Battis, Emma Johnston and Joan Weber, P.E. (C 70063), and oversight from Director Danjel Bout, PhD. November 25, 2020 1 Table of Contents Executive Summary ............................................................................................................... 3 Background and Introduction ................................................................................................ 6 Explanation of terms ............................................................................................................. 7 Scope and Methodology of Evaluation ................................................................................... 8 Key Differences between 2020 RAMP and 2017 RAMP ......................................................... 10 PG&E’s Risk Selection Process .............................................................................................. 12 Compliance of PG&E 2020 RAMP with S-MAP Settlement Agreement................................... 13 EVALUATION OF INDIVIDUAL RISK CHAPTERS ...................................................................... 19 Chapter 6: Pandemic ........................................................................................................... 19 RAMP Risk (Ch. 7): Loss of Containment on Gas Transmission Pipeline ................................. 22 RAMP Risk (Ch. 8): Loss of Containment on Gas Distribution Main or Service ........................ 29 RAMP Risk (Ch. 9): Large Overpressure Event Downstream of Gas Measurement and Control Facility ................................................................................................................................ 37 RAMP Risk (Ch. 10): Wildfire ................................................................................................ 44 RAMP Risk (Ch. 11): Failure of Electric Distribution Overhead Assets .................................... 73 RAMP Risk (Ch. 12): Failure of Electric Distribution Network Assets ...................................... 84 RAMP Risk (Ch. 13): Large Uncontrolled Water Release ........................................................ 93 RAMP Risk (Ch. 14): Real Estate and Facilities .................................................................... 100 RAMP Risk (Ch. 15): Third Party Safety Incident ................................................................. 106 RAMP Risk (Ch. 16): Employee Safety Incident ................................................................... 112 RAMP Risk (Ch. 17): Contractor Safety Incident .................................................................. 120 RAMP Risk (Ch.18): Motor Vehicle Safety Incident .............................................................. 125 Other Safety Risks (Ch. 19) ................................................................................................. 130 Cross Cutting Factors (Ch. 20) ............................................................................................ 136 Conclusions ....................................................................................................................... 140 Appendices 1 - 4 ................................................................................................................ 149 2 Executive Summary The Pacific Gas and Electric Company (PG&Es) Risk Assessment and Mitigation Phase (RAMP) Report provides an initial quantitative and probabilistic assessment of its top 12 safety risks, plans to mitigate these risks, and estimates of costs associated with the proposed mitigations. The mitigation plans and cost estimates are informed by Risk Spend Efficiency (RSE) calculations and alternative mitigations. The Commission’s Safety Policy Division (SPD) is required to review and evaluate PG&E’s RAMP Report. Parties will be given an opportunity to file comments to PG&E’s RAMP Report and SPD’s evaluation report. The RAMP filing and comment process will form the basis of PG&E’s assessment and proposed mitigations for its safety risks in the Test Year 2023 General Rate Case (TY 2023 GRC) filing. This report summarizes the results of the SPD’s staff evaluation of PG&E’s 2020 RAMP Application, (A.)20-06-012. The 2020 PG&E RAMP application was filed in connection with PG&E’s upcoming Test Year (TY) 2023 General Rate Case (GRC), covering proposed expenditures from years 2023 to 2026. This is the first PG&E RAMP application filed pursuant to the terms of the Settlement Agreement adopted through Decision (D.)18- 12-015, in the Safety Model Assessment Phase (S-MAP) proceeding (A.15-05-002 et al). The S-MAP Settlement Agreement specifies the use of a multi-attribute value function (MAVF) to evaluate and rank potential risk events. The MAVF captures the safety, reliability, and financial impact of these risk events. The MAVF is then used to calculate the risk scores for the risk events in PG&E’s Enterprise Risk Register. The Settlement Agreement calls for using a minimum of 40 percent weight on the safety component of the MAVF. PG&E raised the safety weight to 50 percent, significantly impacting costs that PG&E proposed to mitigate safety risks such as serious injuries and fatalities.1 Since PG&E’s last RAMP filed in 2017, several catastrophic wildfires of unprecedented scale in California’s recent history ravaged large parts of the state. These wildfires had a drastic impact on the 2020 PG&E RAMP. In the 2017 RAMP, the wildfire risk was ranked fifth out of the 22 risks, just behind employee safety risks. In the 2020 RAMP, wildfires are the top risk with a score almost 26 times higher than the next highest risk score. Table 1 shows the risk names, the likelihood scores, the potential consequence scores, and the risk scores of the 12 twelve risks included in the 2020 RAMP: 1 TURN identified a cost of $100 Million per fatality mitigated in its informal comments contained in Appendix 4 of this report. 3 TABLE 1: RAMP Risks Ordered by Multi-Attribute Risk Score LoRE Risk Score CoRE RAMP Risks (Events/Yr) 24,343 443 55 Ch 10: Wildfire 944 3,417 0.3 Ch 15: Third-Party Safety Incident 526 24,834 0.02 Ch 11: Failure of Electrical Overhead Assets 289 1.9 155 Ch 07: Loss of Containment on Gas Trans Pipeline 99 29,590 0.003 Ch 08: Loss of Containment on Gas Dist. Main or Service 97 8.2 12 Ch 14: Real Estate & Facilities Failure 94 185 0.5 Ch 17: Contractor Safety Incident 90 603 0.15 Ch 16: Employee Safety Incident 70 0.015 4,739 Ch 13: Large Uncontrolled Water Release 16.6 713 0.02 Ch 18: Motor Vehicle Safety Incident Ch 09: Large Over-Pressure Event Downstream of Gas 13 5.6 2 Measurement & Control Facility 7 10.2 0.6 Ch 12: Failure of Network Assets PG&E’s strategy for risk modeling, analysis and mitigation is oriented towards reducing the potential for catastrophic risk events and the consequences of those events. This risk-averse preference is captured through a non-linear scaling function that assigns more weight to higher potential consequences. The non-linear scaling function is then used in conjunction with the MAVF to calculate risk scores for PG&E’s top safety risks. The 2020 RAMP showed marked improvements in risk modeling rigor, data quality, and transparency over previous rate cases. Some of the improvements resulted from PG&E simply complying with the terms of S-MAP Settlement Agreement, while other improvements are the result of PG&E’s own initiatives. Overall, PG&E’s methodology in the 2020 RAMP Report conforms to the steps outlined in the Settlement Agreement. However, SPD found there is significant room for improvement in the areas of granularity and calculating RSEs for controls. With respect to granularity, given the highly variable environments and conditions within PG&E’s territory, risk analysis should be substantially more granular in many instances. Specifically, SPD staff finds that wildfire risk tranches should be much less 4 expansive. Given the diverse environments and conditions covered by the over 99,000 overhead circuit miles, staff finds it unreasonable to assume a homogeneous risk profile across the tranches used for this RAMP Report and particularly for the three highest Multi-Attribute Risk Scored (MARS) wildfire HFTD2 tranches. SPD staff also had this concern with the analysis of risks associated with large overpressure events downstream of gas measurement and control facilities, third party safety incidents, and others. These issues are discussed at length in each applicable risk chapter. Based on this analysis, staff concludes PG&E should continue to strive for a deeper level of granularity to better prioritize and evaluate mitigations with high risk reduction benefits. An essential element of the S-MAP Settlement Agreement is the requirement for the utilities to provide RSE calculations for all mitigations in the RAMP filings. This is intended to enable the Commission and parties to compare the cost-effectiveness of a utility applicants’ different mitigations in rate cases. Failing to calculate an RSE for controls leaves the Commission without a benchmarks against which proposed mitigations could be judged. PG&E only provided RSEs for a fraction of the controls described in this RAMP Report. SPD recommends PG&E and all IOUs provide RSE calculations for controls and mitigations