Raising the Bar on Safety

In 2006, we began implementing a "Zero In On Safety" strategy, which continues today. It includes tools, initiatives and information to help employees identify, evaluate and control hazards and safety issues, and improve overall safety performance in a proactive manner. More recently, we also adopted a formal set of core policies and practices known as the "Rules to Live By"—essential requirements and work practices that, when followed rigorously, help protect against the potential for injury and the loss of life.

PG&E’s Rules to Live By

1. We will protect and ensure public safety while working and driving.
2. We will wear appropriate life-saving personal protective equipment.
3. We will follow all Electrical Safety, Testing and Grounding Rules.
4. We will follow all Clearance and Energy Lock-out Rules.
5. We will follow all Confined Space Rules.
6. We will follow all Suspended Loads Rules.
7. We will follow all Safety at Heights Rules.

In 2009, we enhanced the Zero In On Safety strategy in a number of ways:

1. We increased our emphasis on the critical role that employee feedback plays in identifying and resolving potential problems, underscoring our expectation that all employees feel empowered to speak up, stop a job and proactively address safety issues.
2. We improved our rigorous, formal root-cause investigation process, which will assist us in preventing recurrences of incidents.
3. We adopted new measures in advance of regulatory requirements to further protect employees from the dangers of arc flashes. This included requiring employees with regular exposure to energized electrical equipment to wear PG&E-approved flame-resistant clothing.
4. We continued to use and refine an "observation-based" safety program, with field audits designed to identify and correct potential safety issues before they occur. In 2009, we tripled the number of audits compared to 2008. This program will be expanded again in 2010.

We also continued to recognize organizations within the company for excellent safety and health performance with the Shermer L. Sibley Safety and Health Award. To be considered for the award, an organization must demonstrate excellent performance in the current year and a sustained improvement over the last three years.

We set aggressive safety targets in 2009, aiming to achieve a 15 percent reduction from a 2008 baseline for the company's OSHA Recordable Rate, Lost Workday Case Rate and Motor Vehicle Incident Rate.

We exceeded the 15 percent reduction target in all three areas. Additionally, we exceeded the stretch target of 25 percent in two of three areas, reducing our OSHA Recordable Rate by 26 percent and our Lost Workday Case Rate by 36 percent. The Lost Workday Case Rate is a particularly important measure because it indicates the severity of injuries sustained by our employees. We also successfully reduced our total number of Lost Workdays by more than 10 percent. The table below provides complete safety statistics for 2007 through 2009.

Safety Results for 2007 through 2009 (Utility)

¹ Total Lost Workdays is an internal PG&E metric that counts the number of workdays lost in the current year due to occupational injury or illness for all years of injury (current and all prior years). The number of workdays lost due to occupational injury or illness that occurred in the current year are as follows: 2007: 7,053; 2008: 5,801; 2009: 3,757.

² Total Lost Workday Cases is the number of nonfatal occupational injury and illness cases that (1) satisfy OSHA requirements for recordability, (2) occur in the current year and (3) result in at least one day away from work.

³ The Lost Workday Case Rate measures how frequently new Lost Workday Cases occur for every 200,000 hours worked, or for approximately every 100 employees.

⁴ Total OSHA Recordables is the number of injuries and illnesses that meet OSHA requirements for recordability, i.e., (1) are work-related, (2) are new cases and (3) meet one or more OSHA general recording criteria.

⁵ The OSHA Recordable Rate measures how frequently recordable occupational injuries and illnesses occur for every 200,000 hours worked, or for approximately every 100 employees.

The safe operation of our large fleet of vehicles is essential to achieving the company's employee and public safety goals. Our employees drove 124 million miles in company vehicles in 2009, highlighting the need for us to continue our motor vehicle safety program with an increased emphasis on, and enhanced curriculum for, driver training. Through 2009, 8,000 employees successfully completed a formal, one-day driver training program, which involves two hours of classroom instruction and six hours of behind-the-wheel training. Other activities included improved tracking and reporting, and ensuring all company vehicles have a 1-800 "Am I Driving Safely?" decal affixed to the back of the vehicle.

These combined motor vehicle safety programs resulted in a nearly 18 percent reduction in our vehicle incident rate last year, exceeding our 15 percent reduction target. The following table provides motor vehicle safety statistics for 2007 through 2009.

Motor Vehicle Safety Statistics (Utility)

¹ Total Motor Vehicle Incidents is an internal PG&E metric counting motor vehicle incidents that could have been reasonably prevented by our driver.

² The Motor Vehicle Incident Rate measures how frequently motor vehicle incidents occur for every 1,000,000 miles driven.

Preparing for and understanding how to effectively manage emergencies is vital to PG&E's overall safety goals and is critical to our business operations. As a result, we place an emphasis on ensuring that employees are trained and equipped to do so promptly and effectively.

For example, PG&E continues to enhance its life-safety program, which includes fire drills and earthquake exercises, and establishes designated Floor Wardens and Emergency Team members led by a life-safety director across numerous buildings. Employee volunteers complete training on a variety of topics, including first aid, the use of automatic external defibrillators (AEDs), CPR, protection against blood-borne pathogens and proper use of fire extinguishers.

The courses allow team members to maintain a two-year certification for first aid and CPR/AED, and team-based exercises enable employees to work through various emergency situations together. In 2009, more than 370 employees participated in these courses in our corporate headquarters. Moving forward, we will continue to expand our Emergency Team member training to additional company locations.

Creating a safe environment for customers and communities is a fundamental priority for PG&E. We work to achieve this goal through PG&E's comprehensive Public Safety Information Program, which focuses on increasing awareness about the safe and proper use of gas and electricity, as well as helping to keep those working around utility lines safe from harm. PG&E distributes user-friendly, engaging educational materials to customers in multiple languages. Organizations such as our insurance carrier and peer utilities cite our public safety information program as one of the leading programs in the country.

Examples of our programs and 2009 activities include:

1. SafeKids School Safety Program. Over the past decade, PG&E has provided free safety education materials to teachers in more than 85 percent of the schools in our service area. The program has reached 28,000 educators across the service area, resulting in requests for nearly 300,000 safety booklets and posters.
2. Contractor and Agricultural Worker Outreach. PG&E provides safety training materials to contractors and agricultural workers throughout our service area. These materials include bilingual brochures, posters and videos. Over the past eight years, PG&E, in partnership with employers, has provided more than 225,000 construction employees and 110,000 agricultural workers with these materials. In addition, PG&E works with trade associations and safety groups statewide to distribute safety information directly to their members.
3. First Responder Program. PG&E has provided comprehensive safety education materials to fire and police departments since 2004. Last year, we enhanced the program by creating a half-day class on responding to gas and electric emergencies, reaching nearly 200 participants.
4. Emergency Preparedness. PG&E works closely with non-profit organizations such as the Red Cross, as well as local city emergency preparedness councils and community emergency response teams, to explain how to prepare for an earthquake, how and when to shut off utilities and the importance of keeping a well-stocked emergency kit.