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Resolution No. 86691 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 RESOLUTION NO. 8669 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A GAS SYSTEM MAINTENANCE AGREEMENT BY AND BETWEEN THE CITY OF VERNON AND PETRELLI UTILITIES, INC. WHEREAS, the maintenance of the City's gas system is of vital importance and must be provided by a contractor who is willing and able to provide such services on a reliable basis; and WHEREAS, Petrelli Utilities, Inc. ( "Petrelli ") is performing maintenance services on Vernon's electric system pursuant to Resolution No. 8314 adopted by the City Council of the City of Vernon on November 19, 2003, and is familiar with the City's transmission and distribution facilities; and WHEREAS, the City's Light and Power Department believes that Petrelli is the only vendor that can provide the necessary gas maintenance services to the City meeting the City's specifications and requirements; and WHEREAS, on February 16, 2005, the Finance Committee considered the recommendation of Bruce V. Malkenhorst, Director of 20 Finance, dated January 27, 2005, that an agreement with Petrelli to 21 provide for the maintenance -of Vernon's gas system be approved and 22 executed; and 23 WHEREAS, the City Council of the City of Vernon has 24 determined that, pursuant to the provisions of subsection (a) of 25 Section 2.27 of the Vernon City Code, it is in the public interest and 26 necessity to enter into a contract with Petrelli setting forth the 27 terms and conditions for the maintenance of all gas transmission and 28 distribution facilities that are owned by the City to enhance services 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 provided to the Vernon community. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the recitals contained hereinabove are true and correct. SECTION 2: The City Council of the City of Vernon hereby approves the Gas System Maintenance Agreement with Petrelli Utilities, Inc., a copy of which is attached hereto as Exhibit A and incorporated by reference. SECTION 3: The City Council of the City of Vernon hereby authorizes the Mayor to execute said Agreement for, and on behalf of, the City of Vernon and the City Clerk is hereby authorized to attest thereto. SECTION 4: The City Council of the City of Vernon hereby directs the City Clerk, or his designee, to send one fully executed Agreement to: Petrelli Utilities, Inc. Attn. Sal Petrelli, President 11615 Davenport Road Agua Dulce, CA 91390 SECTION 5: The City Clerk of the City of Vernon shall certify to the passage of this Resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 2nd day of March, 2005. ATTEST: BRUCE V. MALKENHORST, City Clerk 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ss COUNTY OF LOS ANGELES I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution N 8669, was duly adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Wednesday, March 2, 2005, and thereafter was duly signed by the Mayor of the City of Vernon. (SEAL) 3 BRUCE V. MALKENHORST, City Clerk EXHIBIT A GAS SUPPLY SYSTEM MAINTENANCE AGREEMENT By and Between PETRELLI UTILITIES, INC. AND IRE CITY OF VERNON This Gas Supply System Maintenance Agreement (this "Maintenance Agreement") is made, entered into and executed in duplicate originals, either copy of which may be considered and used as the original hereof for all purposes, as of this 2adday of FAY, 2005 in the City of Vernon, County of Los Angeles, California March BY AND BETWEEN AND THE CITY OF VERNON, a California municipal corporation (hereinafter referred to as "COV") 4305 Santa Fe Avenue Vernon, CA 90058 PETRELLI UTILITIES, INC., a California corporation (hereinafter referred to as "PETRELLI") 11615 Davenport Road Agua Dulce, CA 91390 P.O. Box 801148 Santa Clarita, CA 91380 COV and PETRELLI are each also referred to individually as a "Party" and both of which are also referred to collectively as "Parties ". All initially capitalized terms used in this Maintenance Agreement shall have the definitions ascribed to them in Exhibit "A" attached hereto and incorporated herein by this reference. 1. Scope of Services. During the Term of this Maintenance Agreement, upon receipt of the appropriate Work Authorization, PETRELLI shall provide all Services and maintain COV's Gas Supply System in a safe and reliable condition. Such Services shall include, but not be limited to, performing (a) Gas Supply System Start-up Services ( "Start-up Services "), (b) Routine Maintenance Services, and (c) Additional Services as may be requested by COV from time to time, including, without limitation, (i) Emergency Services; (ii) Return to Operation Services; (iii) Initiation Services, and (iv) Major Work. The Services shall also include construction on COV's Gas Supply System. All Services to be provided hereunder (except for Emergency Services) shall be performed only pursuant to approved Work Authorizations and will be scheduled with COV. 1.1 Start -up Services. Start-up Services will be performed separately for each of the Transmission and Distribution Systems as further described in this Maintenance Agreement. For informational purposes only, COV has attached hereto as Exhibit "1.1" a Gas Supply System Transmission and Distribution Systems Schematic for purposes of PETRELLI's use in providing Start-up Services. COV makes no representation or warranty as to the accuracy 01910/0001 116160.3 or completeness of such schematic, which is to be used for reference purposes for determination of the sections for which Start-up Services are required. 1.1.1 Transmission System. The Start -up Services to be provided for the Transmission System are described in Exhibit "1.1.1 ". The Transmission System will be placed into service at one time, in its entirety. The Transmission System is designed such that each customer will have bi- directional sources of gas supply and can effectively be isolated from the balance of the operational Gas Supply System. Within 14 calendar days following PETRELLI's receipt of COV's request for Start-up Services for the Transmission System, PETRELLI will deliver to COV a proposed start-up plan. The start-up plan will include a work plan, cost estimate, and schedule for performing the Start-up Services. The cost estimate will be in accordance with the Service Rate Schedule set forth in Exhibit 7.1. COV shall review and approve (or request revisions to) the proposed start-up plan within 14 calendar days following receipt. Following COV's approval of the start-up plan, and within 60 calendar days of PETRELLI's receipt of COV's initial request for Transmission System Start-up Services (which will be set forth in a Work Authorization), PETRELLI I shall perform the Transmission System Start-up Services. 1.1.2 Distribution System. The Distribution System will be placed into operation by COV as customer demand warrants or otherwise as requested. COV will direct PETRELLI to effect start-up of the Distribution System in sections or segments when and as determined by COV. Each section or segment will be placed in service such that a given customer will have bi- directional sources of gas supply and can be effectively isolated from the balance of the operational Distribution System. The Start-up Services to be provided by PETRELLI for the Distribution System are described in Exhibit "1.1.2 ". Within 14 calendar days following PETRELLI's receipt of COV's request for Start-up Services for any segment of the Distribution System, PETRELLI will deliver to COV a proposed start-up plan. The start-up plan will include a work plan, cost estimate, and schedule for performing the Start-up Services on the identified segment. The cost estimate shall be in accordance with the Service Rate Schedule set forth in Exhibit "7.1 ". COV shall review and approve (or request revisions to) the proposed start-up plan within 14 calendar days following receipt. Following COV's approval of the start-up plan, and within 60 calendar days of PETRELLI's receipt of COV's initial request for any segment of the Distribution System Start-up Services (which will be set forth in a Work Authorization), PETRELLI shall perform the Distribution System Start-up Services for such segment. 1.2 Routine Maintenance Services. Each year, PETRELLI shall prepare a draft Routine Maintenance Plan for performing Routine Maintenance Services and submit the plan to COV for review not later than the first day of May. COV will review the Routine Maintenance Plan with PETRELLI with the expectation of having the plan completed and approved by COV's City Council prior to the commencement of COV's fiscal year on July 1d. The annual Routine Maintenance Plan shall include and describe such tasks, actions and events either directly requested by COV or identified by PETRELLI as typical and necessary to properly maintain the COV Gas Supply System to ensure its effective and safe operation. The Routine Maintenance Plan shall include routine maintenance tasks, a schedule for performing the identified tasks, and a budget for the identified tasks, as further described in Exhibit "1.2 ". Further, the Routine Maintenance Plan shall be consistent with the draft COV Operations, 2 01910!0001 116160.3 Inspection and Maintenance Plan, a copy of which is attached hereto as Exhibit "1.2.A ". After the Routine Maintenance Plan has been approved, Routine Maintenance Services will be completed under pre - approved standing Work Authorizations specifically established for these activities. PETRELLI and COV will collaborate in establishing a number of standing Work Authorizations for Routine Maintenance Services. In addition, PETRELLI shall deliver to COV an updated and revised list of maintenance tasks, proposed timing for the tasks, and budget throughout the year as required to ensure that at all times the Routine Maintenance Plan complies with all applicable CFR Requirements and all other applicable laws and regulations. The Routine Maintenance Plan shall be subject to requested changes by COV that may be delivered to PETRELLI from time to time during the year. COV's requested changes shall be made within 30 calendar days after COV's delivery of the notice requesting the change. 1.3 Scheduling of Routine Maintenance Services. All Routine Maintenance Services will be scheduled and completed at PETRELLI's convenience, within the time frames established within the Routine Maintenance Plan. Minor performance deviations or schedule deviations from the Routine Maintenance Plan that have no material adverse effect on COV or its customers shall be permitted. It for any reason, PETRELLI does not provide Routine Maintenance Services within 30 calendar days of the time frame established in the Routine Maintenance Plan or such shorter period of time as may be required by US DOT, such failure shall not be deemed to be a "minor deviation ". In such event, COV may, at its option, obtain the Routine Maintenance Services from another source, including a third party contractor or COV personnel, and the reasonable cost of obtaining the Routine Maintenance Services from such other source, plus an administrative charge of 5 %, shall be credited against the next fees payable hereunder. 1.4 Additional Services. From time to time during the Term of this Maintenance Agreement, COV may request PETRELLI to provide Additional Services, including, but not limited to, (a) the Services described in Exhibit "1.4" attached hereto and incorporated herein by this reference, (b) Emergency Services, (c) Initiation Services, (d) Return to Operations Services, (e) Major Work; and (f) such additional services as may reasonably be requested by COV from time to time. Additional Services shall be requested and authorized by means of a Work Authorization, except for Emergency Services, which shall be initiated by PETRELLI as soon as possible after PETRELLI becomes aware of the need for Emergency Services or is requested by COV to perform Emergency Services. Such Emergency Services shall be provided pursuant to a pre- assigned Work Authorization number. PETRELLI shall seek COV's approval for the Emergency Services at the start of the next business day after the Emergency Services were initiated. Additional Services that are not time sensitive shall be scheduled at times mutually agreeable to COV and PETRELLI. COV may, at its option, obtain Services from another source, including a third party contractor or COV personnel, and the reasonable cost of obtaining such Services from such other source, plus an administrative charge of 5 %, shall be credited against the next fees payable hereunder if PETRELLI does not provide Services within the following time frames: 1.4.1 Non - emergency, non -time sensitive Additional Services within 30 calendar days after receipt of the Work Authorization. 3 01910/0001 1161603 1.4.2 Emergency Services within 24 hours after receipt of notification of the public safety issue by any party. request. of gas services. 1.4.3 Initiation Services within 7 calendar days after receipt of 1.4.4 Return to Operation Services within 48 hours after interruption 1.4.5 PETRELLI shall respond to emergency calls, troubleshooting calls, or service calls after Normal Working Hours within one hour after the call is placed by COV. PETRELLI shall provide a weekly list of the dedicated staff that will be available to respond to such calls. The list will be due by 8:00 a.m. every Monday morning throughout the term of this Maintenance Agreement and will show the staff's name, primary phone number and alternate phone number. 2. Obligations of PETRELLI. 2.1 General Obligations. PETRELLI shall make all modifications, extensions, additions and improvements in and to COV's Gas Supply System as shall from time to time be required or necessary to serve in a safe and reliable manner the natural gas requirements of COV and its customers, both present and future. All of such Services shall be performed pursuant to Work Authorizations. 2.2 Labor, Equipment, Offices. PETRELLI shall, pursuant to Work Authorizations, furnish all labor, supervision and services and, in the event not furnished by COV, transportation, equipment, materials, supplies and tools of whatsoever kind or nature as shall from time to time be required or necessary to carry out the terms and provisions of this Maintenance Agreement. Before purchasing materials or supplies PETRELLI shall check with COV to determine if such materials or supplies are available from COV. COV shall compensate PETRELLI for such materials and supplies in accordance with Exhibit "7.1 ". PETRELLI shall also maintain office and field staffs, and construction and operations headquarters within the city limits of COV, as shall be required or necessary to meet the needs and requirements of COV and its customers, both present and future. If requested by COV to establish these offices, COV will reimburse PETRELLI for its costs. COV may, at its election, provide use of a city -owned building(s), structure(s) and/or a storage yard on city -owned property for use by PETRELLI in connection with the Services performed under this Maintenance Agreement. 2.3 Vehicles. PETRELLI will provide the vehicles needed to perform the Services and shall bill COV for the use of such vehicles pursuant to the hourly or monthly rates for such vehicles set forth in the attached Exhibit "7.1 ". 2.4 Response to Requests. Upon receipt of a Work Authorization, PETRELLI shall carry out troubleshooting activities, including responding to customer calls and complaints, traveling to various sites in COV, assessing and estimating failures or damages, safely restoring service as quickly as possible, and reporting on system and equipment status. 01910/0001 1161603 4 2.5 Interruption of Gas Services. PETRELLI will be responsible for notifying and making any and all arrangements with COV's customers due to any service interruption which will be caused in the Services to be provided hereunder. Notwithstanding anything to the contrary set forth herein, in the event of any interruption of gas service that is not cured by a return to service within 48 hours after the interruption, COV shall have the rights set forth in Section 1.4 above. 2.6 Compliance with Laws. All Services provided hereunder shall comply with CFR Requirements, other applicable laws and regulations, and all guidelines and requirements of governmental and quasi - governmental agencies having jurisdiction over the Gas Supply System and the Services provided hereunder, including, without limitation, US DOT OPS and, to the extent applicable, the PUC. 2.7 Level of Services. All work shall be performed in accordance with COV's standards, codes, ordinances, rules, regulations and operating procedures. Where no such applicable code, ordinance, rule, regulation or operating procedure exists, PETRELLI shall perform work in accordance with good and prudent utility practice. PETRELLI shall use reasonable efforts to perform all Services requested hereunder. PETRELLI agrees that it shall provide services and maintain COV's Gas Supply System for and on behalf of COV, subject to and in accordance with good utility practice and in accordance with the terms and provisions of this Maintenance Agreement and direction given by COV's authorized representatives. PETRELLI shall also respond to COV's requirements for any and all city purposes and of all COV customers, both present and future, of COV's Gas Supply System and shall provide safe, proper, efficient and reliable Services as provided under good utility practice. 2.8 PETRELLI to Provide Notice to COV. During the performance of its Services, PETRELLI shall reasonably determine if, in PETRELLI's professional opinion, elements of COV's Gas Supply System require repair, replacement or alteration. PETRELLI shall, within 7 calendar days after the performance of the Routine Maintenance Services, provide written notification of these observations, along with a recommended course of action; provided, however, that if PETRELLI identifies an Emergency Situation and is unable to provide immediate oral notification to COV, PETRELLI will take all necessary corrective action and will be fully reimbursed for all repairs, replacements and alterations that it makes to COV's Gas Supply System with respect to the Emergency Situation, regardless of whether COV specifically authorized such Services. COV will be informed of the Emergency Situation as soon as practical, which may occur after completion. PETRELLI shall be obligated to follow prudent utility practice and act as a professional utility company would under similar circumstances. Any recommendation of PETRELLI that relates to safety or the protection of persons or property shall be given orally and delivered in writing to the COV contact person for Operational Matters (in the manner and to the person as set forth in Section 15) and to any person identified as the authorized representative to receive notices in accordance with Section 14, in written form and identified in capital letters as being an "URGENT SAFETY RECOMMENDATION". Further, PETRELLI's response to an Emergency Situation shall be consistent with the draft COV Gas Emergency Operating Plan, a copy of which is attached hereto as Exhibit "2.3 ". 2.9 Reporting Requirements. 01910(0001 116160.3 2.9.1 Routine Reporting. PETRELLI will submit to COV current accountings and reports, as well as maintenance and inspection schedules, with sufficient supporting data covering activities engaged in and work performed by PETRELLI. The maintenance schedules shall identify the location and valve numbers inspected. PETRELLI shall maintain a system database to track and report inspection results and corresponding repairs and corrections. The accountings, reports, and maintenance and inspection schedules shall be provided every thirty days, on the first business day (Monday through Thursday) of each month throughout the term of this Maintenance Agreement. Such report shall describe the Routine Maintenance Services performed in the previous month (including type, location, and date of the Services), along with any budget or schedule variances. The report shall include and be consistent with the various inspection forms contained within the draft COV Operations, Inspection and Maintenance Plan, a copy of which is attached hereto as Exhibit "1.2.A ". 2.9.2 Emergency Reporting. Emergency reporting shall be in accordance with Section 1.4. 2.9.3 Regulatory Reporting. COV shall be responsible for submitting reports or making any required filings with governmental agencies having jurisdiction over COV and the Gas Supply System. From time to time, COV may request PETRELLI's assistance in preparing such reports. Within 30 calendar days after request by COV, PETRELLI shall, during the Term of this Maintenance Agreement and thereafter, as to Services provided during the Term, provide COV with all records, certifications, reports, schedules or other documents as necessary to support COV's reporting requirements and obligations to governmental and regulatory agencies. Except as otherwise required by law or as consented to in writing by COV, PETRELLI shall not be obligated to, and shall not, file any reports or send copies of any records to any governmental agency in respect to COV's Gas Supply System. 2.10 Right to Stop Services. PETRELLI may stop any Services if it encounters a Pre - Existing Environmental Liability. PETRELLI shall immediately notify COV of any discovery by PETRELLI of a Pre- Existing Environmental Liability. Such notification shall be oral, followed by a written notice delivered to the COV contact person for Operational Matters (in the manner and to the person as set forth in Section 15) and to any person identified as the authorized representative to receive notices in accordance with Section 14, in written form and identified in capital letters as being an "URGENT SAFETY ISSUE. ". PETRELLI, with the concurrence of COV, may elect to resume work if PETRELLI has reasonably determined that it may complete such Services without affecting-or being affected by the Pre- Existing Environmental Liability. 2.11 Performance Bond. Intentionally deleted. 2.12 Personnel/Workforce. 2.12.1 Employees. To perform the foregoing Services, PETRELLI shall provide a minimum level of employee staffing and said staff shall be dedicated to perform services on COV's Gas Supply System. The employee staffing is as follows: 6 01910/0001 116160.3 Quantity Classification 1 Gas Superintendent 2 Welders/Pipefitters 2 Operator/Helper 1 Clerk/Secretary 1 CPM &R (Cathodic Protection, Measurement and Regulations) Total 7 2.12.2 Subcontractors. PETRELLI may supplement this level of staffing with pre - approval by COV, to the extent necessary to perform the Services: PETRELLI shall not increase or decrease this level of staffing by adding or deleting full -time employees without the prior written approval of COV. If COV wishes to increase or decrease the scope of the Services to be provided hereunder, COV shall be permitted to do so upon providing 4 months written notice to PETRELLI. PETRELLI may also supplement this level of staffing through the use of subcontractors, if pre- approved by COV, to the extent necessary to perform the Services. To the extent subcontractors are authorized, PETRELLI may bill COV an administrative fee of 5% of its cost for such subcontractors with prior written consent of COV. Any contract personnel or subcontractors employed by PETRELLI will be supervised by PETRELLI supervisory or management personnel. 2.12.3 COV Approval. PETRELLI shall consult with COV and COV shall have the right to consult with PETRELLI relating to the qualifications of the employees and subcontractors who will be assigned and dedicated to provide Services. 2.13 No Conflict. PETRELLI shall not accept or bid for any work for any of COV's customers, unless COV provides, in its sole discretion, advance written consent and agrees that such work shall not constitute a conflict of interest. 3. Independent Contractor PETRELLI shall provide Services to COV as an independent contractor, not as an employee of COV. PETRELLI shall not have or claim any right arising from employee status. 4. COV's Responsibilities For COV's Gas Supply System 4.1 Filing Reports. For all purposes, COV is the owner and operator of COV's Gas Supply System and has the obligation to file all applicable reports with any federal or state agencies. 4.2 Payment of Fees/Processing of Permits. The COV Gas Department or other applicable department will pay for all applicable COV fees and expedite all applicable COV permits needed for PETRELLI's performance of all Services. 7 01910/0001 1161603 • 5. Ownership Of Data, Information And Documentation COV shall provide to PETRELLI, without representation or warranty as to accuracy or completeness, copies of all COV Gas Supply System pipeline records at any time after the Execution Date of this Maintenance Agreement and before PETRELLI shall be required to perform any Gas Supply System Start-up (or any other) Services hereunder. All data and information developed or obtained by PETRELLI regarding COV's Gas Supply System while rendering Services under this Maintenance Agreement (with the exception of the data and information set forth in the last sentence of this paragraph) shall be the sole property of COV and shall be provided to COV within 30 calendar days following PETRELLI's development or receipt thereof (except for information and documents provide to PETRELLI by COV). PETRELLI may keep copies of such data, information and documentation as necessary (i) to perform Services hereunder, (ii) to maintain the safe and reliable service of its own gas system, and (iii) for historical purposes. Provided further, that PET'RELLI shall be prohibited from disclosing the data, information and/or documentation to any third party except in response to a subpoena or for purposes of litigation between PETRELLI and COV or between PETRELLI and any other party pertaining to this Maintenance Agreement or the Services provided hereunder. Notwithstanding the foregoing, however, PETRELLI shall maintain ownership rights to all data and information in its possession prior to the Execution Date of this Maintenance Agreement. 6. Reliance on PETRELLI; Warranty 6.1 Standard of Services. COV is entering into this Maintenance Agreement in reliance on PETRELLI's special and unique abilities with respect to performing the Services. PETRELLI accepts the relationship of trust and confidence established between COV and PETRELLI by this Maintenance Agreement. PETRELLI shall furnish its best efforts, skill, judgment, and abilities in performing the Services in the manner of a professional and prudent company with experience in the Services to be performed hereunder, using prudent utility practice. PETRELLI shall perform the Services (a) in accordance with the terms of this Agreement; (b) with sufficient and skilled personnel and support; (c) with the highest standards of care, skill, and competence in the industry; and (d) in compliance and in conformance with all applicable laws. PETRELLI shall have the duty to promptly report or fix any Leaks or other problems with COV's Gas Supply System or any part of it that would be discovered by a prudent utility company using best efforts and skills. 6.2 Non - Liability. Except as set forth above, PETRELLI shall not have any liability to COV arising out of the construction of COV's Gas Supply System including, but not limited to, construction defects or any incident which is the result of inaccuracies in the Gas Supply System's as -built drawings. 6.3 Warranty. PETRELLI warrants that the Services which are provided hereunder will be performed in compliance with applicable CFR Requirements, all other legal requirements, and the terms of this Agreement. PETRELLI warrants that the equipment will operate properly, that the personnel will have been properly trained in the use of it, and the personnel will have performed the work with the highest level of skill and knowledge of such workers in the industry. 8 01910/0001 1161603 7. Fees For Services 7.1 Time and Materials. PETRELLI shall be paid on a time and materials basis in accordance with (a) PETRELLI's customary rates which are set forth in Exhibit "7.1" attached hereto and incorporated herein (the "Basic Rates "), and (b) cost of materials plus 5% (provided, however, that if costs of materials are discounted as a result of quantity purchases, rebates, or other reasons, the cost charged to COV shall take into account any such discounts on a dollar for dollar basis). Fees for use of equipment and vehicles are set forth in Exhibit "7.1 ". Accurate records of labor and materials shall be maintained by PETRELLI and provided to COV as set forth in Section 8 below. 7.2 Increase in Basic Rates. The Basic Rates set forth in Exhibit "7.1" may only be increased during the term of this Agreement to the extent PETRELLI's costs rise under the Agreement between PETRELLI and Local Union No. 47 AFL -CIO International Brotherhood of Electric Workers. To the extent the Basic Rates are increased and agreed upon by COV pursuant to this Section 7.2, PETRELLI shall revise Exhibit "7.1 ", and the revised Exhibit "7.1" shall become part of this Agreement as if originally attached on the effective date of this Agreement. 7.3 PETRELLI to Pay for Services. COV shall only pay PETRELLI for the Services performed under this Maintenance Agreement pursuant to the fees set forth in Exhibit "7.1 ". PETRELLI shall be responsible for paying the salaries of its own employees and subcontractors, as well as payment for all relevant holidays, vacation time and other benefits. COV will not be responsible, in any way, for the payment of the salaries or benefits for PETRELLI's employees or subcontractors. 8. Billing And Payment PETRELLI shall submit a monthly invoice to COV setting forth an itemization of the amount due for Services rendered and an itemization of amounts due for materials. The monthly statement shall include accounting data of sufficient detail and clarity to enable COV to validate and, if necessary, audit the expenses and costs provided for in such statement, and shall, at a minimum, list the Services provided, the title of the person providing the Services, that person's hourly rate and the number of hours charged for the specific Service, as well as a list of material purchased (with invoices). Any reimbursable expenses shall also be documented, including, without limitation, rental or purchase of equipment, mileage, and travel expenses. Such expenses shall be reimbursed by COV in accordance with its standard reimbursement amounts, requirements, and procedures. COV shall pay the full amount of approved invoices within thirty (30) calendar days after receipt. Any sums billed, not disputed in written form setting forth specified exceptions and unpaid after thirty (30) calendar days from the date of rendering, shall be subject to a late payment charge equal to the lesser of one and one -half percent (1V2/0) or the maximum rate permitted by law, for each month or fraction thereof past due. Any amounts subject to such written exception by COV which are later determined to be valid, or such part as is later determined to be valid, shall be subject to the late charge. 9 01910/0001 116160.3 9. Tenn Of Agreement 9.1 Effective Date, This Maintenance Agreement is effective and in full force and effect as of the Execution Date, and COV shall have the right to request Transmission System Start-up Services or Distribution System Start-up Services at any time within the first 365 calendar days after the Execution Date, with the date of COV's request that PETRELLI provide Transmission Start -up Services or Distribution System Start-up Services being referred to as the "Effective Date". PETRELLI shall not be obligated to perform any other Services until the occurrence of the Effective Date of this Maintenance Agreement. If COV has not requested the Transmission or Distribution Start-up Services within 365 calendar days after the Execution Date, or such later date as the parties may mutually agree upon in writing, then this Maintenance Agreement shall terminate automatically, and without either Party having any further obligation or liability to the other. COV may request that PETRELLI perform Distribution Start-up Services at any time and from time to time after the Effective Date. PETRELLI will provide Start-up Services (either Transmission or Distribution, as applicable) within 60 calendar days following its receipt of COV's written request issued in compliance with the terms of this Section 9.1. 9.2 Term. This Maintenance Agreement shall be effective for a term of five years from its Effective Date, unless terminated earlier in accordance with specific sections of the Maintenance Agreement. COV shall have the option to extend the term of this Agreement for an additional five years by providing to PETRELLI notice of COV's exercise of such option at least ninety (90) days prior to the expiration of the existing Term. If the option is exercised, all references to Term set forth herein shall mean the initial five year term plus the additional five year period. 9.3 Services Following Termination. PETRELLI, at its discretion, may complete any Services it was providing as of the termination date, but which were not yet completed, as long as completion is reasonably expected to occur within 7 calendar days thereafter, and shall complete any Services it was providing as of the termination date at the request of COV. 10. Termination, Default, And Remedies 10.1 Termination Without Cause. This Maintenance Agreement may be terminated by COV for its convenience, with or without cause, upon thirty (30) calendar days prior written notice. In such event, COV shall pay to PETRELLI (a) all fees earned by it prior to the effective date of the termination notice, plus compensation for (a) necessary work performed during the 21 calendar day notice period and authorized in the termination notice, and (b) all costs reasonably and necessarily incurred by PETRELLI in effectuating the termination. 10.2 Default by PETRELLI. COV shall notify PETRELLI in writing if COV, in good faith, determines that it has reasonable cause to believe PETRELLI is acting negligently in completing any Services, is not acting in accordance with the CFR Requirements, or has defaulted under any of its other covenants hereunder. Such notice shall describe the alleged default. If PETRELLI fails to correct such problem within seven (7) calendar days after receipt of said notice, or if the problem is not capable of being corrected in such time, then if PETRELLI 10 01910/0001 1161603 fails to commence taking corrective actions within said period and diligently pursue them to completion, COV may commence the dispute resolution procedure described in Section 32 below. Following the conclusion of the dispute resolution procedure, if COV, in good faith, determines that the result or cure is not acceptable, COV may terminate this Maintenance Agreement upon twenty -three (23) calendar days written notice. Nothing set forth herein affects PETRELLI's liability for, and COV's right to recover damages (including, without limitation, attorneys' fees and costs, fines, penalties, or other costs resulting from an order by an enforcement agency from PETRELLI) in the event of PETRELLI's negligence, failure to perform in accordance with the CFR Requirements, default, or wrongful acts or omissions. COV may not terminate this Maintenance Agreement under this Section 10.2 without first invoking the dispute resolution procedure. 10.3 Failure of COV to Perform. If COV fails or refuses to accept PETRELLI's recommendation regarding the repair of a defect in the construction of COV's Gas Supply System which PETRELLI believes may exist, or fails or refuses to accept any other reasonable and appropriate course of action recommended by PETRELLI with respect to any Services that PETRELLI believes should be provided hereunder, and if the Parties are unable to agree upon a mutually satisfactory course of action within sixty (60) calendar days after PETRELLI sends written notice of such to COV, then either Party may commence the dispute resolution procedure described in Section 32 below. It following the conclusion of the dispute resolution procedure, either party, in good faith, determines that the result or cure is not acceptable, that parry may terminate this Maintenance Agreement upon thirty (30) calendar days written notice to the other party. In the event of a termination under this Section 10.3, the performance bond shall not be forfeited. Neither party may terminate this Maintenance Agreement under this Section 10.3 without first invoking the dispute resolution procedure. 10.4 Non - Payment by COV. If COV fails to pay invoices more than sixty (60) calendar days following written notice of delinquency (excluding invoices which COV has disputed in writing), in addition to any other remedy, PETRELLI may suspend performance of all Services hereunder without liability to COV until payment of all nondisputed invoices is made in full. If COV fails to pay invoices more than thirty (30) calendar days following a second written notice of delinquency (excluding invoices which COV has disputed in writing), PETRELLI may terminate this Maintenance Agreement. In the event of a termination under this Section 10.4, the performance bond shall not be forfeited. 10.5 Termination by PETRELLI. Intentionally deleted. 10.6 Conduct Upon Termination. Upon termination or the expiration of this Maintenance Agreement, PETRELLI shall have no further obligation to provide Services to COV. Upon termination, PETRELLI shall render a final bill for Services to COV within thirty (30) calendar days of the date of tennination, and COV shall pay PETRELLI for all fees earned and expenses incurred prior to the date of termination or pursuant to Section 9.3, in accordance with Section 8. 11 01910/0001 116160.3 11. No Duty To Third Parties Nothing in this Maintenance Agreement shall create a right of action for breach of a duty to, violation of any standards of care with reference to, or otherwise create any liability to any person not a party to this Maintenance Agreement. No other party shall be a third party beneficiary to this Maintenance Agreement. 12. Insurance. 12.1 Required Insurance. PETRELLI shall procure and maintain in full force and effect during the Term of this Maintenance Agreement, the insurance in the amounts specified below. COV shall reimburse PETRELLI or pay directly the costs of such insurance premiums. 12.1.1 Commercial General Liability (including personal injury, bodily injury (employee exclusions deleted), contractual liability (covering the indemnity contained in Section 13), broad form property damage, owner's protective liability, operations premises liability, explosion, collapse and underground property damage, and cross- liability coverage, written in an "occurrence" form, with limits of $5,000,000 each occurrence. 12.1.2 Automobile Liability Insurance covering all owned, hired and non -owned vehicles with a combined single limit of not less than $5,000,000 each occurrence. The deductible shall not exceed $1,000. 12.1.3 Workers' Compensation and Employer's Liability Insurance as required by law with a limit of liability of at least $1,000,000 each occurrence/aggregate. 12.1.4 All Risk Property insurance covering PETRELLI's property. 12.1.5 Umbrella/Excess Liability coverage with a limit of not less than $4,000,000 over the primary insurance limits stated above. 12.2 Requirements for Policies. The above - described insurance (except for Workers' Compensation) shall name COV as an additional named insured, shall be primary, non contributing, and without recourse to any insurance or self - insurance maintained by COV and provide at least thirty (30) calendar days prior written notice of any material adverse change or cancellation. The coverages set forth above shall waive all rights of subrogation against COV. 12.3 Certificate of Insurance. PETRELLI shall deliver to COV a certificate of insurance evidencing the required insurance before any Services are commenced after the Effective Date and periodically thereafter as may be required to show the coverage continues in effect. In addition to the standard certificate of insurance, proof of insurance, if requested by COV, for each policy shall require a notarized letter from the underwriter or carrier certifying that the coverage and statements in the standard certificate of insurance (attached thereto) are true and correct and that the signatory is an officer authorized to so certify. Alternatively, a copy of each policy certified by an officer of the underwriter or carrier and notarized may be provided as proof of insurance. 12 01910/0001 116160.3 12.4 No Affect On Liability. This Section 12 does not limit or expand PETRELLI's liability under this Maintenance Agreement, and it is not affected by any other section of this Maintenance Agreement unless specifically referenced in such section. 13. Indemnity And Liability 13.1 PETRELLI shall indemnify, defend and hold harmless COV, its elected officials, staff, employees, contractors, representatives, and agents from and against (a) any and all liabilities, claims, suits, actions, demands, damages, losses and expenses, including but not limited to attorney's fees and expenses, judgments, settlements, and penalties of every kind, and (b) injuries to person or damage to property (collectively, "Claims ") related to or arising out of PETRELLI's (either directly or through its officers, agents, employees, consultants, subcontractors, or representatives) negligent or wrongful acts, errors, or omissions, the performance (or nonperformance) of the Services, or the violation of any term of this Maintenance Agreement. The foregoing indemnity shall not apply to Claims to the extent that they arise from willful misconduct of COV, its elected officials, staff, employees, contractors, representatives, or agents. This indemnity shall survive the termination of this Maintenance Agreement. 14. Authorized Representatives Within thirty (30) calendar days after the Effective Date of this Maintenance Agreement, each Party shall designate by written notice to the other Party a representative who is authorized to act on its behalf in the implementation of this Maintenance Agreement and with respect to those matters contained herein which are the function and responsibilities of the authorized representatives, only if different from representatives designated in Section 15, "Notices ". Either Party may at any time change the designation of its authorized representative by written notice to the other Party. 15. Notices Any notice, demand, information, invoice, report, or item otherwise required, authorized, or provided for in this Maintenance Agreement, unless otherwise specified herein, shall be in writing and shall be deemed properly given if delivered in person, sent by telecopy during normal business hours with a confirmation copy mailed on the same business date, sent by United States Mail, First Class postage prepaid, or sent by reputable overnight courier, prepaid. If sent by telecopy, notice shall be deemed received when the telecopy is sent, and if sent by mail, personal delivery, or overnight courier, notice shall be deemed received on the date of delivery or failure to accept delivery. To PETRELLI: 13 01910/0001 116160.3 PETRELLI UTILITIES, INC., 11615 Davenport Road Agua Dulce, CA 91390 Attn: Sal Petrelli or To COV: For Official Notices & Contract Matters: Attention: Bruce Malkenhorst Title: City Administrator Telephone: 323/583 -8811 Telecopy: 213/581 -7924 P.O. Box 801148 Santa Clarita, CA 91380 Attn: Sal Petrelli City of Vernon 4305 Santa Fe Avenue Vernon, California 90058 For Operational Matters: Attention: Carlos Fandino Title: Systems Manager Telephone: 323/583 -8811 X573 Telecopy: 323/826 -1425 Either Party may, at any time, by notice to the other Party, designate different or additional persons or different addresses for the giving of notices hereunder. 16. Force Majeure Neither Party shall be considered to be in default in the performance of any of its obligations under this Maintenance Agreement (other than obligations of said Party to pay costs and expenses) when a failure of performance shall be due to an uncontrollable force. The term "uncontrollable force" shall mean any cause beyond the control of the Party affected, including but not restricted to flood, earthquake, storm, fire, lightening, epidemic, war, riot, civil disturbance or disobedience, labor dispute, labor or material shortage, sabotage, restraint by court order or public authority, and action or nonaction by or inability to obtain the necessary authorization or approvals from any governmental agency or authority, which by exercise of due diligence such Party could not reasonably have been expected to avoid and which by exercise of due diligence it has been unable to overcome. Nothing contained herein shall be construed so as to require either Party to settle any strike or labor dispute in which it may be involved. If PETRELLI notifies COV that it will be unable to perform Services hereunder as a result of a un "uncontrollable force ", COV may, at its option, use its own staff or other contractors to perform such services or otherwise replace the Services from another source, including a third party contractor or COV personnel, and the reasonable cost of obtaining such Services from such other source, shall be credited against the next fees payable hereunder. Either Party rendered unable to fulfill any of its obligations under this Maintenance Agreement by reason of an uncontrollable force shall give prompt written notice of such fact to the other Party and shall exercise due diligence to remove such inability with all reasonable dispatch. 17. Successors In Interest This Maintenance Agreement shall be binding on, and inure to the benefit of each Party's successors in interest, including their heirs, legates, assignees and legal representatives. Without the prior written consent of COV, which shall not be unreasonably withheld, 14 01910/0001 116160.3 Without the prior written consent of COV, which shall not be unreasonably withheld, conditioned or delayed, PETRELLI shall not assign its obligations under this Maintenance Agreement, except to an affiliate, by merger, through a sale of its stock or assets or sale of substantially all its distribution facilities. 18. Waiver Any waiver at any time by either Party of its rights with respect to a default under this Maintenance Agreement, or with respect to any other matters arising in connection with this Maintenance Agreement, shall not be deemed a waiver with respect to any subsequent default or other matter. 19. No Partnership Nothing contained in this Maintenance Agreement shall be construed to create an association, trust, partnership, or joint venture or impose a°trust or partnership duty, obligation, or liability on or with regard to either Party. 20. Amendment All changes or modifications to this Maintenance Agreement shall be in a writing which states it is an amendment to this Maintenance Agreement and is signed by both Parties. This Maintenance Agreement shall not be modified through course of dealing, usage or trade. 21. Governing Law This Maintenance Agreement shall be construed and interpreted according to, and the rights of the Parties shall be governed by, the laws of the State of California. 22. Entire Agreement This Maintenance Agreement constitutes the complete and final expression of the agreement of the Parties and is intended as a complete and exclusive statement of the terms of their agreements and supersedes all prior and contemporaneous offers, promises, representations, negotiations, discussion, communications and agreements which may have been made in connection with the subject matter hereof. This Maintenance Agreement includes exhibits A, 1.1, 1.1.1, 1.1.2, 1.2, 1.2.A, 1.4, and 7.1, each of which is hereby incorporated herein by reference. 23. Severability If any of the provisions of this Maintenance Agreement are determined by a court of competent jurisdiction to be invalid or unenforceable, such provisions shall be limited to the extent required to make them valid and enforceable, and if necessary, they shall be severed from this Maintenance Agreement. Any such provisions shall not affect the remainder of this Maintenance Agreement, which shall remain in full force and effect. 01910/0001 1161603 15 24. Authority The signatories hereto represent that they are authorized to enter into this Maintenance Agreement on behalf of the Party for whom they sign. 25. Attorneys' Fees In the event any action is brought to enforce the terms of this Maintenance Agreement, the prevailing Party shall be entitled to recover its reasonable attorney's fees (whether of salaried employees of such party or of outside counsel) and costs in addition to such other relief as the Party may be awarded. 26. Counterparts This Maintenance Agreement may be executed in any number of counterparts, each of which shall constitute an original but all of which together shall constitute but one and the same instrument. 27. Headings All section and paragraph headings and captions are solely for convenience and shall not affect the interpretation of this Maintenance Agreement. 28. Survival Where the context permits, the representations, warranties, agreements and indemnities contained in this Maintenance Agreement shall survive the termination. 29. No Interpretation of Ambiguities Against Drafting Party This Agreement has been negotiated at arm's length between persons knowledgeable in the matters dealt with herein. In addition, each Party has been represented by experienced and knowledgeable legal counsel. Accordingly, the Parties agree that any rule of law, statute, legal decision, or common law principles of similar effect, that would require interpretation of any ambiguities in this Agreement against the Party that has drafted it, is of no application and is hereby expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intentions of the Parties. 30. Agents Unless the context clearly indicates otherwise, the names "COV" and "PETRELLI" shall include each Party's contractors and their directors, officers, officials, star employees and agents. 31. Purchase Orders COV may issue purchase orders, work orders or any similar document to order Services hereunder. Such orders shall be only for COV's convenience, however, and shall be given effect 16 01910/0001 116160.3 only as authorizing specific Services. Such orders shall not alter, add to, vary, contradict or amend this Maintenance Agreement. 32. Dispute Resolution 32.1 Senior Management Negotiation. Prior to terminating this Maintenance Agreement for cause or filing any formal claim, proceeding in arbitration or litigation, the aggrieved party shall provide a written Notice of Dispute to the other party. Within 10 calendar days following receipt of the Notice of Dispute, senior management of each Party shall meet and employ best efforts to arrive at an amicable and equitable solution or settlement to avoid a claim or litigation. For purposes of this Maintenance Agreement, the senior management assigned to meet to resolve the issue shall be a person with the authority to commit the Party to a resolution. If the dispute is not resolved within 7 calendar days after the first meeting between senior management following the delivery of the Notice of Dispute, or if a Party refuses to meet within the 10 calendar day period following receipt of the Notice of Dispute, either party may submit the matter to binding arbitration to be held before a panel of three arbitrators in accordance with the procedures set forth below. 32.2 Arbitration as Sole Procedure. All disputes arising out of or related to this Maintenance Agreement, the conduct of either Party in connection with this Maintenance Agreement, and the relationship and rights of the Parties in connection with this Maintenance Agreement, whether characterized as breach of contract, tort, or otherwise (except for those requesting injunctive relief) shall be determined by binding arbitration in accordance with the terms of this Section 32. The submittal of all matters to arbitration in accordance with the terms of this Section 32 is the sole and exclusive method, means and procedure to resolve any and all claims, disputes or disagreements arising under this Maintenance Agreement, except for claims by either party which seek injunctive relief; which claims shall be resolved by suit filed in the Superior Court of Los Angeles County, California, the decision of which court shall be subject to appeal pursuant to applicable law. The parties hereby irrevocably waive any and all rights to the contrary and shall at all times conduct themselves in accordance with the terms of this Section 32, relying on arbitration as the sole means of resolution of disputes. 32.3 JAMS. Arbitration of all matters required to be arbitrated hereunder shall take place before a panel of three retired judges of the Superior Court of the State of California (the "Arbitrators ") under the auspices of Judicial Arbitration & Mediation Services, Inc. ( "JAMS "). Such arbitration shall be initiated by the Parties, or either of them, within ten (10) calendar days after either Party sends notice of a demand to arbitrate (the "Arbitration Notice ") to the other Party and to JAMS, which Arbitration Notice is not to be given until the procedures set forth in Section 32.1 have been followed. The Arbitration Notice shall contain a description of the subject matter of the arbitration, the dispute with respect thereto, the amount involved, if any, and the remedy or determination sought. 32.4 Selection of Arbitrators. Each Party shall select a retired judge from the JAMS panel, and the two selected judges shall mutually agree on the third retired judge from the JAMS panel. If one of the Parties does not select a retired judge from the JAMS panel within 14 calendar days after receipt of the Arbitration Notice, JAMS will select the second judge, and the judge selected by JAMS and the judge selected by the other Party will select the third judge for 17 01910/0001 116160.3 32.7 Continuation of Work and Payments. Unless required to stop work by COV, PETRELLI shall be required to continue to provide all Services during the dispute resolution process. In the event of a monetary dispute, COV shall continue to pay all undisputed amounts on the basis otherwise due and payable during the dispute resolution process. IN WITNESS WHEREOF, the Parties have executed this Maintenance Agreement as of the dates below their signatures. City of Vernon, a California Petrelli Utilities, Inc., Municipal Corporation a Cali • • e 'a Co a oration By By Leonis C. Malburg, Mayor Date: March 7, 2005 ATTEST: By: Bruce V. Malkenhorst, City Clerk APPROVED AS TO FORM: Eric T. Fresch, C y ttorney 19 01910/0001 116160.3 Alp it Name & Title: Sal Petrelli, President Date: 3-1-05- By: Name & Title: Cindy Petrelli, Secretary Date: 3 _ 1- 05 Additional Services Arbitrator CFR Requirements COV's Gas Supply System Distribution System Distribution System Start-up Services Effective Date Emergency Services Emergency Situation Execution Date 01910/0001 116160.3 EXHIBIT A DEFINITIONS Those Services described in Section 1.4 and applicable exhibits, and such other additional Services which may be requested from time to time by COV. An arbitrator meeting the criteria set forth in Section 32.3. Requirements applicable to the Services to be provided hereunder pursuant to Title 49 of the Code of Federal Regulations, and as enforced by US DOT, Office of Pipeline Services. All facilities now or hereafter owned by COV for providing gas service in the COV including, but not limited to, supply lines (supply lines are defined as COV's facility between the metering station and the regulator station), transmission lines, distribution lines, service lines, regulator stations, meter set assemblies, cathodic and corrosion protection and monitoring systems, system isolation valving, and other related appurtenances. The COV system comprised of approximately 44 miles of 6 -inch diameter medium density polyethylene pipe as described in Exhibit "1.1 ". As described in Section 1.1.2 of this Maintenance Agreement and its applicable exhibits. The date on which COV delivers to PETRELLI a written request that PETRELLI provide Gas Supply System Start-up Services. Those Services required in the event of a gas leak, fire, explosion, or the sight, sound, or smell of leaking gas, or other events that could create a situation of imminent public safety or emergency, with the possibility of harm to persons or property, or as otherwise may be defined by CFR Requirements. Includes all repairs, replacements and alterations that PETRELLI makes to COV's Gas Supply System with respect to an Emergency Situation. An unsafe condition which PETRELLI in good faith believes requires immediate response in order to protect persons or property from inuninent danger or harm. The date on which each Party has signed this Maintenance Agreement and delivered a copy to the other; stipulated to be the date identified in the first paragraph of the Maintenance A -1 Gas Supply System Gas Supply System Start-up Services Gas Supply System Transmission and Distribution Systems Schematic Initiation Services Maintenance Agreement Major Work Normal Working Hours Notice of Dispute Pre - Existing Environmental Liability Return to Operation Services Routine Maintenance Budget 01910/0001 116160.3 Agreement. See definition of " COV's Gas Supply System ". Those tasks, activities, actions, and events necessary to cause COV's Gas Supply System to be made operable and available to . deliver natural gas service to COV customers, as further described in Section 1 of this Maintenance Agreement and its applicable exhibits. As described in Exhibit "1.1 ". Services that must be provided by PETRELLI in order to add a new customer to COV's Distribution System. This Gas Supply System Maintenance Agreement. Major modifications, extensions, additions, and improvements, including large maintenance jobs. Large maintenance jobs are defined as those estimated in advance to take more than 5 crew days. Hours between 7:30 a.m. and 3:30 p.m., Monday through Friday, excluding holidays. Notice that one Party is to send to another prior to terminating this Maintenance Agreement for cause or filing any formal claim, proceeding in arbitration or litigation. Pre - existing conditions at any work site, the release or spill of any pre - existing hazardous materials or waste that occurred prior to the date the Services are commenced, or the management and disposal of any contaminated soils or groundwater, hazardous or non - hazardous, removed from the ground prior to the date the Services are commenced. Services that must be provided by PETRELLI after the completion of Emergency Services in order to allow COV to provide its services to its customer. The budget proposed by PETRELLI and approved by COV for Services to be provided pursuant to the approved Routine Maintenance Plan for the year. A -2 Routine Maintenance Plan Routine Maintenance Services Service Rate Schedule Services Start-up Services Term of Maintenance Agreement Transmission System Transmission System Start-up Services US DOT Work Authorization 01910/0001 1161603 PETRELLI's annual plan to be submitted to COV for performing those Services recommended by PETRELLI and COV and approved by COV to be performed on a routine basis during the upcoming year. The Routine Maintenance Plan may be updated from time to time by PETRELLI's recommendations approved by COV, and by changes requested by COV. The Routine Maintenance Plan will include the identified tasks, a schedule for completions of the tasks, and a budget. Those Services set forth in the Routine Maintenance Plan as agreed to by the Parties as being the tasks to be accomplished by PETRELLI during the applicable year, as further described in Section 1.2 and its applicable exhibits. The base rate for Services to be provided hereunder, as set forth in Exhibit 7.1. All of the Routine Maintenance Services, Additional Services, Start-up Services, Emergency Services, Initiation Services, and Return to Operation Services to be provided by PETRELLI under the terms of this Maintenance Agreement. See definition of "Gas Supply System Start-up Services ". Five years from the Effective Date, unless terminated earlier or extended by the Parties in accordance with the terms of the Maintenance Agreement. The COV system comprised of approximately 7 miles of 10 -inch diameter high pressure steel pipe as described in Exhibit "1.1 ". As described in Section 1.1.1 of this Maintenance Agreement and its applicable exhibits. United States Department of Transportation. A written work order, signed by an authorized representative of COV, delivered by COV to PETRELLI requesting specified Services, including a description of the Services requested and a requested time frame for performance of such Services, and a cost estimate. A -3 EXHIBIT 1.1 GAS SUPPLY SYSTEM TRANSMISSION AND DISTRIBUTION SYSTEMS SCHEMATIC [To be attached.] 01910/0001 116160.3 89; ;2 gggl a a CITY OF VERN( 8 3 .8 8 a a 8 a 9 8 a a b 8 8 8 8 8 a 3 0 0 0 0 0 Q0 8 3 8 i f- • 0 z w w -J 0 0 0 0 EXHIBIT 1.1.1 TRANSMISSION SYSTEM START -UP SERVICES Following are those tasks and activities that may be required to be performed by PETRELLI in order to start up the Transmission System. PETRELLI shall perform any of the following tasks upon receipt of a Work Authorization: 1. Review US DOT Certification Report, Recommendations 2. Perform Transmission System Inspection / Walk -down 3. Develop Inspection Findings Report, Recommendations 4. Effect / Implement COV Approved Findings as may be required: o Camera Transmission System o "Pig" System o Perform Leak Survey, Leak and Strength Testing o Cathodic Protection Inspection o Exercise Isolation Valves o Perform Meter Calibrations o Energize Rectifiers, other electrical o Implement "One Call" System o Other Miscellaneous 5. Submit for review the proposed "Gas Handling Procedure" 6. N2 Purge Transmission System 7. Charge Transmission System 8. Initiate Gas Handling Operations o Pressure Control Operations o Fire Control Operations. 01910/0001 116160.3 EXHIBIT 1.1.2 DISTRIBUTION SYSTEM START -UP SERVICES Following are those tasks and activities that may be required to be performed by PETRELLI in order to start up individual Distribution System Segments. PETRELLI shall perform any of the following tasks upon receipt of a Work Authorization: 1. Review US DOT Certification Report, Recommendations 2. Perform Distribution System Inspection / Walk -down 3. Develop Inspection Findings Report, Recommendations 4. Effect / Implement COV Approved Findings as may be required: o Camera Distribution System Segment o "Polly Pig" Segment o Perform Segment Leak Survey, Leak and Strength Testing, Repair o Exercise Valves o Perform Meter Calibrations o Implement "One Call" System o Other Miscellaneous 5. Submit for review the proposed "Gas Handling Procedure" 6. N2 Purge Distribution System Segment 7. Charge Distribution System Segment 8. Initiate Gas Handling Operations o Pressure Control Operations 1.1.2 -1 01910/0001 1161603 EXHIBIT 1.2 ROUTINE MAINTENANCE PLAN Routine Maintenance Tasks The routine maintenance tasks to be incorporated into the Routine Maintenance Plan may include, but are not necessarily limited to, the following: o Pipeline Patrols o Switching o Replacement of minor components o Minor modifications and additions o Leak Surveys o Leak Repairs o Valve Inspections o Regulator Station Inspection o Meter Calibrations, Instrument inspections, Chart Replacement o Cathodic Protection Inspection o Preventive Maintenance o Preventive Damage Protection o System Alterations o Take gas leakage readings as requested by COV to provide operational data o Install valves, lines, both steel and plastic, meters and other facilities on the Transmission and Distribution Systems as required for repairs, replacements, new customers and system expansion. Upon request of COV, PETRELLI shall remove underground facilities no longer needed and perform other work on underground systems, as required and requested by COV o Other routine work normally required on gas utility systems The Routine Maintenance Plan will further identify those planned activities that may require action by or the support of COV or other third -party entities. These may include the obtaining of permits, street closures, traffic control or other activities. Routine Maintenance Plan Schedule The Routine Maintenance Plan will include a proposed schedule detailing and stating dates for planned periodic events (quarterly inspections, bi -annual calibrations, etc) along with planned specific time- sensitive or resource constrained events (planned system alterations requiring a customer to be off -line, street closures, etc.). Budget The annual Routine Maintenance Plan will include a proposed budget detailing all estimated costs associated with performing the Routine Maintenance Services. The budget should include the estimated costs associated with performing the Routine Maintenance Services, and a nominal 1.2 - 1 01910/0001 116160.3 contingency for un- foreseen activities when performing planned routine maintenance tasks, such as crew size adjustments, nominal overtime and instrument or meter replacement. In addition, the budget shall contain contingency line -items contemplating and anticipating the occurrence of one or more significant unplanned (non- routine maintenance) or emergency maintenance events. Such contingency events might include a night time line break emergency, a Code 2 and/or Code 3 event (as defined by US DOT), and/or a new customer interconnection or return to service. 1.2 -2 01910/0001 116160.3 EXHIBIT 1.2.A DRAFT COV OPERATIONS, INSPECTION AND MAINTENANCE PLAN [To be attached.] 1.2.A -1 01910/0001 116160.3 OPERATIONS, INSPECTION AND MAINTENANCE PLANS CITY of VERNON LIGHT AND POWER DEPARTMENT GAS DIVISION January 17, 2004 TABLE OF CONTENTS PAGE NO. POLICY STATEMENT 1 DESCRIPTION OF SYSTEM 2 INSTALLATION OF METERS, REGULATORS, PLASTIC SERVICE LINES AND MAINS 3 Location and Protection of Meters, Regulators and Service Valves 3 Customer Meters and Regulators Location 3 Protection of Meters and Regulators 3 Location of Service Valves 4 Plastic Gas Line Installation 4 Depth 4 Support and Backfill 4 Protection Against Strain 4 Location of Service Tap 4 Compression Fittings 5 Direct Buried Plastic Gas Lines 5 Inserted Plastic Service Lines 5 Installation of New Service Lines Not Placed Into Service 6 Joining Plastic Pipe 6 Tapping of Pipelines Under Pressure 6 Purging of Pipelines 7 Safety Precautions During Purging 8 CORROSION CONTROL 8 General 8 External Corrosion Control 8 Examination of Buried Pipelines When Exposed 8 Protective Coating 9 Cathodic Protection 9 Monitoring 10 Electrical Isolation 10 Test Stations 11 Atmospheric Corrosion 11 Remedial Measures 11 Corrosion Control Records 12 Revised: January 17, 2005 i City of Vemon — Gas Division TEST REQUIREMENTS 12 Distribution Pipeline Pressure Testing 12 Transmission Pipeline Pressure Testing 12 OPERATIONS 13 Investigation of Failures /Safety - Related Conditions 13 Maximum Allowable Operating Pressure 15 Odorization 15 Welding of High Stress and Low Stress Level Pipe 15 MAINTENANCE 16 Vernon Gas Facilities 16 Line Markers 16 Patrolling Transmission and Distribution Lines 16 Leakage Surveys and Procedures 17 Transmission Pipeline Record Keeping 17 Test Requirements for Reinstating Service Lines 18 Abandonments or Inactivation of Facilities 18 Critical Valves 18 Prevention of Accidental Ignition 18 Receiving Stations 19 Pressure Regulator Inspection and Testing 19 Pressure Recording 20 Pressure Limiting 20 APPENDIX 22 Revised: January 17, 2005 ii City of Vemon - Gas Division CITY OF VERNON LIGHT AND POWER DEPARTMENT — GAS DIVISION (323) 583 -8811 POLICY STATEMENT It is the policy of the City of Vernon Light and Power Department to operate and maintain the gas system in a manner that maximizes safety and service to its customers. Consistent with this policy and pursuant to Sections 192.13, 192.603 and 192.703 of Title 49 of the code of Federal Regulations, these Operations, Inspection and Maintenance Plans are hereby adopted. Note: All Contractor's employed by the City of Vernon to perform work covered by these plans shall adhere to these plans. If a certain unforeseen operation /procedure comes in question, that issue shall be brought to the attention of the City of Vernon's Gas Systems Superintendent for resolution except as noted in this manual. Revised: January 17, 2005 -1 - City of Vemon — Gas Division GAS DIVISION DESCRIPTION OF SYSTEM The City of Vernon (Vemon) obtains its natural gas from various sources. The gas is odorized and delivered to Vernon by the Southern California Gas Company. Vernon provides gas availability to approximately 900 customers within the City's service area. Gas is delivered to the City at two receiving stations: Gas Station 1, located on Downey Road at Fruitland Avenue and Gas Station 2, located on Bandini Avenue at Downey Road. Vernon's transmission system has a design pressure of 650 pounds per square inch and comprises approximately 20,000 feet of 10 -inch steel main. The transmission system operating pressure will be the same as the SoCalGas line 765, estimated to be between 400 psig and 500 psig. Vemon's distribution system comprises approximately 245,000 feet of 6 -inch PE with a design pressure of 60 psig and which operates between 50 psig and 55 psig. The transmission system and distribution system collectively are referred to as the Vernon Gas Facilities. Revised: January 17, 2005 - 2 - City of Vemon — Gas Division CITY OF VERNON GAS DIVISION I. INSTALLATION OF METERS, REGULATORS, PLASTIC SERVICE LINES AND MAINS A. Location and Protection of Meters, Regulators and Service Valves 1. Customer Meters and Regulators Location Install meter and service regulators in a readily accessible location. Protect the meters and regulators from corrosion and other damage. Install meters outside whenever possible. If a regulator is installed in a building, it should be installed as close as practical to the point of service entering the building. The regulator must be vented to the outside. Upstream regulator in a series must be located out the building when feasible or located in a separate metering building. When a meter is installed inside a building it must be located in a ventilated place. It must be more than 3 feet from anv source of ignition. 2. Protection of Meters and Regulators The outside terminal of each service regulator vent and relief vent must be: D rain and insect resistant; Revised: January 17, 2005 > located where gas from the vent can escape freely into the atmosphere. Vent it 3 feet or more away from the nearest opening into a building; and D protected from water damage in areas where flooding may occur. All meters and regulators must be installed so as to minimize stresses upon connecting piping. Install protective posts where meter sets are vulnerable to damage from vehicular traffic. Each regulator that is designed to release gas in its operation must be vented to the outside atmosphere at least 3 feet from the nearest opening into a building. - 3 - City of Vemon — Gas Division • 3. Location of Service Valves D Relation to Regulator or Meter. Each service -line valve must be installed upstream of the regulator. > Valves. Each service line must have a shutoff valve in a readily accessible location. D Underground Valves. Each underground service -line valve must be located in a covered durable curb box that allows ready operation of the valve. 4. Regulation Requirements for Large Demand Meters Anytime a regulator is installed that has larger than 2" pipe connection, a redundant means of overpressure protection (opp) must be installed to protect the customer's equipment. B. Plastic Gas Line Installation 1. Depth Each buried plastic main line must be installed with at least 30 _inches of cover. Each buried plastic service line must be installed with at least 18 inches of cover. Where an underground structure prevents installation at these depths, the gas line must be protected by a steel casing or pipe. 2. Support and Backfill Each plastic gas line must be properly supported on undisturbed or well- compacted soil. Material used for backfill must be free of materials that could damage the pipe. 3. Protection Against Strain Each plastic gas line must be installed so as to minimize strain to the piping and external loading. 4. Location of Service Tap Revised: January 17, 2005 Each service tap should be located at the top of the main or, if that is not practical, at the side of the main. - 4 - City of Vemon - Gas Division 5. Compression Fittings Each compression type fitting used in the installation of a plastic gas line must be designed and installed to effectively sustain the longitudinal pullout or thrust forces caused by contraction or expansion of the piping, or by anticipated external or internal loading. 6. Direct Buried Plastic Gas Lines All plastic gas lines must be installed below ground. The portion of the plastic service line that terminates above ground must be protected against deterioration and external damage by a steel riser. Plastic must not be used to support external loads. In laying plastic gas pipe, there should be adequate slack (snaking) in the pipe to prevent pullout due to thermal contraction. A No. 10 AWG tracer wire will be installed with each plastic gas main. The ends of the tracer wire will terminate in a valve box. A No. 10 AWG tracer wire will be installed with each plastic service. One end of the tracer wire shall be connected to the riser; the other end will terminate at the main. If a main line tracer wire is present, connect the service tracer wire to the main line wire with a split bolt connector. 7. Inserted Plastic Service Lines a) The existing line must be blown out with air and all edges deburred. Revised: January 17, 2005 b) Extend the inserted PE piping 2 feet past the end of the existing service line and check for any gouges or scratches that exceed 10% of the wall thickness. If any are present, discard the pipe, re -ream and blow out the casing, and reinsert the service with new PE pipe. c) If the existing riser is used, install the service head adapter taking care not to rotate or twist the inserted poly pipe. Attach the PE service line to the butt- tapping tee using the appropriate fusion procedure (socket or electro). If the tee is not pullout resistant, a new tee shall be installed according to standards (See C -11). - 5 - City of Vernon — Gas Division e) On sidewall tees, slip a protective sleeve over the main end of the service line, fuse the service line to the tee and slide the protective sleeve up over the tapping tee outlet and secure in place with tape. f) Bond across all removed sections of the steel service line using No. 14 AWG wire. 8. Installation of New Service Lines Not Placed Into Service Each service line that is not placed in- service upon completion of installation must have the service stop turned off and a plug securely installed in the top of the stop. The plug is not to be removed until the meter is installed. 9. Joining Plastic Pipe a) Joining Procedures Qualification No person may make a plastic pipe joint unless that person has been qualified under the applicable joining procedure. The specimen joint must be visually examined during and after assembly and found to have the same appearance as a joint or photographs of a joint that is acceptable under the applicable joining procedure and tested in accordance with the following: 1) Butt Fusions Cut the specimen into three strips, each of which are visually examined and found to be free of voids or discontinuities on the cut surfaces of the joint. Next deform each strip by bending and torquing, and if failure occurs, it must not initiate in the joint area. All persons must be requalified under this procedure if, during any 12 -month period, that person does not make any joints under that procedure or if 3 joints or 3 percent of the joints made, whichever is greater, are found unacceptable by pressure tests or visual inspection. 10. Tapping of Pipelines Under Pressure Revised: January 17, 2005 Main or service connections to a pipeline under pressure will be performed by, or under the direct supervision of, an employee qualified to perform the task. The crew make -up may include employees in lower classifications to assist in the operation. - 6 - City of Vemon — Gas Division 11. Purging of Pipelines Revised: January 17, 2005 Prior to putting a pipeline into service, all air shall be displaced with gas. This air purging operation is to be performed by introducing gas into one end of the pipeline and venting the air out of the other end. The flow of gas being introduced shall be continuous and controlled at a moderately rapid rate. If gas cannot be supplied in sufficient quantity to prevent the formation of a hazardous mixture of gas and air, a slug of inert gas must be released into the line before the gas. Prior to removing a gas - filled pipeline from service, it shall be first disconnected from all sources of gas and thoroughly purged. This gas purging operation is to be performed by introducing air into one end of the pipeline and venting the gas out of the other end. The flow of air being introduced shall be continuous and controlled at a moderately rapid rate. If air cannot be supplied in sufficient quantity to prevent the formation of a hazardous mixture of gas and air, a slug of inert gas must be released into the line before the air. When all gas has been removed, both ends of the abandoned pipeline segment will be sealed. When purging or blowing gas through polyethylene pipe, significant static electrical charges may build on the pipe. Discharge of this static electricity can vary from unpleasant physical shocks to possible ignition of gas -air mixtures. a) Static electric charges must be removed by grounding the pipe whenever plastic pipe is squeezed and during hot - tapping, purging and emergency repair operations. The pipe must be grounded at the point of squeeze by wrapping these areas with wet soapy rags. Rags shall be made out of burlap or other non- synthetic material. Bind the rags with one end of bare #10 or #14 wire first and then attach the other end to a metallic object, which is grounded by burying in earth. The squeezer should be in contact with the rags or wire. Keep the rags wet with soap solution. Squeezers used on 1/2" or larger pipe and metal tools used for cutting or tapping the pipe must be grounded directly to the shovel or rod with a ground. Attach one end of the cable to the tool first and then attach the other end to the shovel or rod, which is buried in wet earth. If gas is blowing before wet rags can be applied, douse the pipe with soapy water solution and apply soapy rags immediately to prevent redevelopment of a charge. DON'T TOUCH the pipe during or immediately after a purge except in areas covered by the grounded wet soapy rags. - 7 - City of Vemon — Gas Division Body static electrical charges should be dissipated by contacting the ground before touching the pipe. 12. Safety Precautions During Purging While purging, precautions shall be taken to avoid the accidental ignition of any potentially hazardous gas -air mixture. Such precautions shall include: a) The work site shall be roped off or barricaded to exclude all unauthorized persons. b) No smoking shall be allowed at or near the job site. c) Prohibit the use of any equipment that could cause a static electricity spark. d) Provide a dry chemical fire extinguisher, manned by an employee who will remain outside the protected work area and available to extinguish fire or help workers out of the area. 11. CORROSION CONTROL A. General All metallic gas piping will be protected from corrosion. All newly installed metallic pipelines will be cathodically protected within one year after completion of construction. Design, installation, operation and maintenance of cathodic protection systems shall be performed by or under the direction of qualified personnel. Cathodic protection systems shall be installed in accordance with established standards. B. External Corrosion Control 1. Examination of Buried Pipelines When Exposed Whenever a buried steel gas line is exposed, the exposed portion will be examined for evidence of external corrosion. If external corrosion is found, a qualified technician will be called to the job site to measure the remaining wall thickness of the pipe. a) If the area of corrosion is small, the pipe may be repaired with a stainless steel clamp. If the pitting is closely grouped or the remaining wall thickness is less than 30 percent of the nominal wall thickness, the corroded section of pipe must be replaced. Revised: January 17, 2005 City of Vemon — Gas Division c) The condition of the steel pipe and the remedial measures taken must be recorded in the space provided on the front of the SERVICE ORDER FORM (See Appendix Sheet No. Al). 2. Protective Coating AO newly installed steel pipes will be supplied with a high quality protective coating. Field joints will receive a protective coating at least equal to the factory- coated pipe. During installation, extreme care shall be taken to ensure that the coating is not damaged in any way. 3. Cathodic Protection For all steel pipelines, the level of protection provided by each cathodic protection system shall be in accordance with one or more of the following criteria: a) A negative (cathodic) voltage of at least 0.85 volt is measured between the structure surface and a saturated copper- copper sulfate reference electrode contacting the electrolyte. Determination of this voltage is to be made with the protective current applied. A minimum negative (cathodic) voltage shift of 300 millivolts produced by the application of protective current. The voltage shift is measured between the structure surface and a saturated copper- copper sulfate reference electrode contacting the electrolyte. This criterion of voltage shift applies to structures not in contact with dissimilar metals. A minimum negative (cathodic) polarization voltage shift of 100 millivolts measured between the structure surface and a saturated copper- copper sulfate reference electrode contacting the electrolyte. This polarization voltage shift is to be determined by interrupting the protective current and measuring the polarization decay. When the current is initially interrupted, an immediate voltage shift will occur. The voltage reading after the immediate shift shall be used as the base reading from which to measure polarization decay. Revised: January 17, 2005 9' City of Vemon — Gas Division 4. Monitoring a) All steel gas pipelines that are under cathodic protection shall be tested at least once each calendar year, but with intervals not to exceed 15 months, to determine whether the protective levels are in accordance with requirements. Separately protected service lines or sections of protected mains, not exceeding 100 feet in length, may be surveyed on a sampling basis. At least 10 percent of such structures, distributed throughout the system, will be surveyed each calendar year. Surveys shall be scheduled to ensure that all such structures are surveyed at least once in a 10 -year period. Rectifiers shall be checked at intervals not exceeding 2 months, and adjustments made as necessary to ensure proper operation. Survey results shall be recorded on the CATHODIC PROTECTION RECTIFIER STATION REPORT. c) Immediate remedial action will be taken to correct any deficiencies indicated in monitoring of cathodic protection systems. Pipe to soil survey results shall be recorded on the CATHODIC PROTECTION REPORT. 5. Electrical Isolation Revised: January 17, 2005 All cathodically protected pipelines shall be electrically isolated from other metallic structures to ensure effective protection. a) Service lines shall be electrically isolated from the customer's on -site piping by installation of insulating fittings, at the meter set, in accordance with the following: Individual Meters: > House Meters — 150 CFH to 250 CFH class single meter sets will be insulated with an insulated bushing, insulated stop or insulated union above stop. > Larger Meters will be insulated with an insulated union or an insulated stop. > All class 175 CFH to 250 CFH curb meters will have an insulated bushing or insulated union as preferred in curb box installations. -10 - City of Vemon — Gas Division Manifolds: ➢ All multiple gas meter sets will be insulated with an insulating union. The insulating union may be installed either ahead of the regulator or between the regulator and the meter manifold. Preferred location is just above the stop. When conditions dictate, areas of the distribution system may be isolated electrically to facilitate monitoring of protection levels. This shall be accomplished by the installation of flange insulators at area - perimeter valves or by non - conducting (plastic) pipe sections. Flange installation shall be performed as specified on Standard No. 8- H -065A. On occasion, monitoring surveys may reveal the existence of so called "shorts" caused by physical contact between the protected pipeline and some other metallic substructure. All such contacts will be cleared by physical separation and installation of an insulating material between the two structures. 6. Test Stations Test stations sufficient to monitor the adequacy of cathodic protection systems will be provided. Test lead wires shall be connected to pipelines by "Cadwelding" or other methods conforming to Section 192.471 of Title 49, Code of Federal Regulations. C. Atmospheric Corrosion Above ground pipe, including meters, regulators and receiving stations, must be inspected for atmospheric corrosion once each calendar year, but with intervals not exceeding three years. Remedial action must be taken if atmospheric corrosion is found. D. Remedial Measures Steel pipelines will be replaced where general corrosion pitting exists to such an extent that the remaining wall thickness is less than 30 percent of the nominal wall thickness or where pitting is so closely grouped as to affect the strength of the pipe. Where pitting is localized and to the degree that leakage might result, such affected sections of pipelines will be repaired or replaced. Revised: January 17, 2005 -11 - City of Vemon — Gas Division Whenever steel pipe is removed for any reason, the internal surface must be examined for evidence of corrosion. If internal corrosion is found, the adjacent pipe must be investigated to determine the extent of intemal corrosion. E. Corrosion Control Records System maps, showing the location of all cathodically protected pipelines and survey reports, necessary to demonstrate the adequacy of Cathodic Protection systems will be maintained. All such maps and reports will be filed in the Gas System Superintendent's Office and will be retained for as long as the pipeline remains in service. III. TEST REQUIREMENTS A. Distribution Pipeline Pressure Testing All main and service connections will be tested before being put in operation. This shall be done with soapsuds while the section is pressurized to 100 psig with air. In the case of the tie -in connections, the soapsuds test will be made with the pressure in the distribution system. In those cases where a service is connected to a pressurized main, the joints in the service are to be tested by soapsuds with the service pressurized by air to 100 psig prior to the tapping of the main. Leaks in joints disclosed by the soapsuds testing will be repaired. In addition to the soapsuds testing, a standup test with air at a minimum of 100 psig will be performed on all mains and services prior to energizing. The duration of the test must be adequate to insure discovery of all potentially hazardous Teaks in the segment being tested. Any leaks disclosed by the standup test will be located and repaired. B. Transmission Pipeline Pressure Testing All services, fittings and components tied directly to our transmission line, will be tested with a procedure that will ensure discovery of all potentially hazardous leaks in the segment being tested. If during this test the segment is to be stressed to 20% or more of the Specified Minimum Yield Strength (SYMS), and natural gas, inert gas, or air is the test medium. The segment will be leak tested with soap at a pressure between 100 psig and the pressure required to produce a hoop stress of 20% of the SYMS, this pressure will be maintained at or above the test pressure for at least 1 hour. Revised: January 17, 2005 - 12 - City of Vemon — Gas Division IV. OPERATIONS A. Investigation of Failures /Safety - Related Conditions All failures that result in a hazardous leak or a major unscheduled interruption of service will be thoroughly investigated. Such investigation will be conducted by the Resource and Project Planning Manager and/or Gas Systems Superintendent. An analysis of the failure will be performed to determine the cause. For material- defect failures, analysis may include: testing of material samples by the manufacturer, a testing laboratory or division personnel. In the event that the failure was due to a construction defect, investigative efforts will be directed toward determining whether the cause was procedural or of a workmanship nature. All failure investigations will result in a remedial action that will prevent a recurrence. In addition to established City accident reporting requirements, the Department of Transportation, Office of Pipeline Safety, will be notified, by telephone, of any leak that: 1. Caused a death or a personal injury requiring hospitalization. 2. Resulted in gas igniting. 3. Caused estimated damage to the property of the City, or others, or both, of a total of $5,000 or more. Such notification shall be made at the earliest practicable moment following the occurrence and shall include: 1. The location of the leak. 2. The time of the leak- caused incident. 3. The fatalities and personal injuries, if any. 4. All other significant facts that is relevant to the cause or extent of the damages. In addition, Form 7100.1 (see Appendix, C49 or C50) shall be completed and sent to the following address below not more than 30 days after the incident was discovered. Revised: January 17, 2005 - 13 - City of Vernon — Gas Division In the event that a safety related condition (see below for definition) is not corrected in accordance with existing safety standards within five days of the Utilities Department Supervisor being notified of it or within ten days of initial discovery, a "Safety- Relation Condition Report" must be filed, in a letter form, no later than ten working days after initial discovery of said condition with: Information Resources Manager Office of Pipeline Safety Research and Special Programs Administration U.S. Department of Transportation Room 8417 400 Seventh Street, S.W. Washington, D.C. 20590 The report shall be titled ! "Safety- Related Condition Report" and the following information must be included: D Name and principal address of operator. D Date of report. D Name, job title and business telephone number of person submitting the report. D Name, job title and business telephone number of person who determined that the condition exists. Date condition was discovered and date condition was first determined to exist. D Location of condition, with reference to nearest street address, offshore platform, survey station number, milepost, landmark, or name of pipeline, as appropriate. D Description of the condition, including circumstances leading to its discovery and any significant effects of the condition on safety. D The corrective action taken (including reduction of pressure or shutdown) before the report is submitted and the planned follow -up future corrective action, including the anticipated schedule for starting and concluding such action. "Safety Related Conditions" are defined as follows: D Unintended movement or abnormal loading by environmental causes, such as an earthquake, landslide, or flood that impairs the serviceability of a pipeline that contains natural gas. D A leak in a pipeline that constitutes an emergency. Revised: January 17, 2005 - 14 - City of Vemon — Gas Division B. Maximum Allowable Operating Pressure No segment of the transmission system will be operated at a pressure in excess of 650 psig. No segment of the distribution system will be operated at a pressure in excess of 60 psig. Although no increase in the MAOP is currently contemplated, recognition is hereby made of the requirements of Subpart K- Uprating, should such an increase be necessary in the future. C. Odorization To ensure that an adequate concentration of odorant is present throughout the Vernon Gas Facilities, tests will be conducted at least once in a three -month period at each of the 2 -test locations. The method of testing will be by the use of an "Odormeter", which determines the concentration of combustible gas in the air at which the odorant is readily detectable by a person with a normal sense of smell. Odorant levels are considered adequate when detected at concentrations of combustible gas in air, below .8 percent. In the event that the odorant is not detectable when so tested, the SoCalGas Company will be notified promptly of such odorant -level inadequacy. Results of "Odormeter" tests will be reported on the MINIMUM GAS ODORANT LEVELS form. D. Welding of High Stress and Low Stress Level Pipe 1. No person may weld on the Vernon Gas Facilities unless that person has been qualified under Pipeline Safety Regulation Part 192 and API 1104, Section 3 or 6, 229 (C) 1. a) The process is manual shielded metallic arc. b) Each welder must requalify each calendar year with not more than 15 months between each requalifying test. c) Each welder within the preceding six calendar months the welder has had one weld tested and found acceptable under Section 3 or 6 of A.P.I Standard 1104. 2. The welding operation must be protected from weather conditions that would impair the quality of the complete weld. 3. All welding surfaces must be clean and free of any material that would be detrimental to the weld. The pipe and /or component must be aligned to provide the most favorable condition for making the root bead. This alignment must be maintained until completion of the root bead. Revised: January 17, 2005 - 15 - City of Vemon — Gas Division 4. Welding shall be performed with the axis of the work in a fixed position. 5. When the pipe axis is horizontal, the direction of welding shall be vertical downhill. V. MAINTENANCE A. Vernon Gas Facilities 1. Line Markers a) Buried Distribution Pipelines A line marker must be placed and maintained as close as practical over each buried Vernon Gas Facilities main at each crossing of a railroad. Line markers must also be placed wherever necessary to identify the location of mains to reduce the possibility of damage or interference. b) Distribution Pipelines Above Ground Line markers must be placed and maintained along each section of a main that is located above ground in an area accessible to the public. c) Markers The following must be written legibly on a background of sharply contrasting color on each line marker. 1) The word "WARNING ", "CAUTION ", or "DANGER" followed by the words "CITY OF VERNON GAS PIPELINE ". Letters must be at least one inch high with one - quarter inch stroke. The telephone number for the Control Center (323) 585 -5192 must be on each line marker. 2. Patrolling Transmission and Distribution Lines All transmission and distribution mains in the Vernon Gas Facilities which are located in places or on structures where anticipated physical movement or external loading could cause failure or leakage, such as bridges, overpasses, railroad crossings, etc., will be patrolled at intervals not exceeding 4% months but at least four times each calendar year. Revised: January 17, 2005 a) The methods of patrolling include walking, driving or flying. -16 - City of Vemon — Gas Division 3. Leakage Surveys and Procedures Leakage surveys, utilizing gas detection instruments (F.I. Unit, CGI, etc.), will be conducted in accordance with the following: a) In (Class Location 3) principal business districts, leakage detection surveys will be conducted at least (1) once each calendar year not to exceed 15 months. Facilities surveyed will include: mains, services and other locations where indications of leakage could be detected; such as manholes, vaults, meter boxes and pavement joints. b) All distribution system mains and services, outside of the principal business districts, will be surveyed at time intervals not exceeding 5 years, as dictated by system conditions. All transmission system main and services will be surveyed at least (1) once each calendar year not to exceed 15 months. All survey -leak indications will be classified and repair priorities established. Data necessary to register all reported leaks, document repair or reclassification and annual report information will be entered on the GAS LEAK RECORD. Leakage surveys are conducted to ensure the safe operation of the system and as a valuable source of information for planning replacements. All survey leak indications are plotted on a map, and by visual inspection segments of the system are selected for replacement evaluation. Such evaluation includes a review of maintenance records and leak repair history. This data forms the basis of a PROPOSAL FOR REPLACEMENT OF LEAKING GAS MAIN, which is submitted to the Engineering Division for further evaluation. 4. Transmission Pipeline Record Keeping Each repair made to pipe including pipe- to-pipe connection will be retained for as long as the pipe remaining in service. The date, location, and description of each repair. Each repair made to parts of the pipeline system other than pipe will be retained for at least five years the date, location, and description of each repair. Repairs generated by survey, patrols, inspection, or test will be retained for five years or until the next survey, patrol, inspection, or test is completed, whichever is longer. Revised: January 17, 2005 -17 - City of Vemon — Gas Division 5. Test Requirements for Reinstating Service Lines Prior to reinstating any service line that has been temporarily disconnected from the main, such service line will be tested, from the point of disconnection to the service stop. The line shall be in the same manner as a new service line. Any leaks found in the test shall be repaired before the line is placed into service. 6. Abandonments or Inactivation of Facilities a) All distribution pipelines to be abandoned will be disconnected from all sources of gas, and purged. A pipeline need not be purged when the volume of gas is so small that there is no potential hazard. All ends of abandoned mains shall be plugged. b) When service is to be temporarily discontinued a mechanical device that will prevent the flow of gas must be installed in the meter assembly. Where service to a customer is discontinued by removal of the gas meter, the service stop will be turned off and plugged to prevent the flow of gas should the stop be turned on. All steel service lines that are inactive and for which there is no planned use will be disconnected at the main and abandoned in place. Service risers will be removed so that no portion of the abandoned service remains above ground. 7. Critical Valves Critical valves, the use of which may be necessary for the safe operation of the Vernon Gas Facilities, under nominal or emergency conditions, will be inspected to ensure that they are operable. Operational inspection of all system critical valves will be performed once a calendar year, not to exceed 15 months. 8. Prevention of Accidental Ignition When venting gas into the air, precautions shall be taken to avoid the accidental ignition of any potentially hazardous gas -air mixture. Such precautions shall include: Revised: January 17, 2005 The work site roped off or barricaded to exclude all unauthorized persons. > No smoking at or near the job site. > Use approved flashlights and lighting equipment. - 18 - City of Vemon — Gas Division > Fire retardant coveralls when required (NOMEX). > Fresh air breathing equipment where required. > Any equipment that could cause a static electricity spark shall be turned off. ➢ Dry chemical fire extinguisher,' manned by an employee who will remain outside the protected work area and available to extinguish fire or help workers out of the area. B. Receiving Stations 1. Pressure Regulator Inspection and Testing Pressure regulating valves at gas receiving stations shall be inspected annually and tested to ensure that gas is delivered to the distribution system at pressures and in quantities adequate to satisfy variations in demand, with a high level of reliability. Inspection and testing of receiving station pressure regulators includes: Revised: January 17, 2005 a) Checking the valve assembly, and adjusting as necessary, to ensure that they are seating properly. b) Inspection and replacement, as required, of the linkage between the valve and diaphragm. c) Testing of the diaphragm for leakage. Where any indication of diaphragm leakage is present they will be replaced. In addition to regulators, the following inspection and testing of receiving station equipment will be performed. a) All station equipment and piping will be visually inspected for defects and surveyed for leaks, with a combustible gas indicator. b) Minimum and maximum station send out pressure settings will be verified. c) All station valves will be inspected, operated and lubricated as necessary. d) All pressure controller components will be inspected to ensure they are in good operating condition. A RECEIVING STATION INSPECTION REPORT will be filled out to record all inspections, tests and repairs performed. -19 - City of Vemon - Gas Division 2. Pressure Recording System pressure shall be continually monitored to ensure that operating pressures throughout the Vernon Gas Facilities are maintained within established minimum and maximum limits, consistent with safety and reliability. Pressure records (charts) will be maintained showing SoCalGas delivery pressure and the City's send out pressure, for each receiving station. Distribution system pressures will be monitored and recorded at each pressure transmitter station. Transmission system pressures will be monitored and recorded at each pressure transmitter station. All pressure charts will clearly indicate the location and date covered by the record. Charts will be reviewed, on a weekly basis, by operations and engineering personnel to ensure that system pressures are in conformance with reliability and safety criteria. Pressure -chart records shall be retained, as necessary, to evaluate system operations. 3. Pressure Limiting To protect the Vernon Gas Facilities from excessive pressure, relief valves, at each receiving station, will be inspected and tested, annually. Such inspections and tests shall include: Revised: January 17, 2005 > Visual inspection to detect any defects in condition. > Operation of relief valve and adjustment, as necessary, for conformance to 60 psig set point, and 650 psig set point. > Visual inspection to ensure that the valve, between the City's discharge manifold and the relief valve, is open and secured against being closed by unauthorized person(s). > A determination of the adequacy of relief capacity. Such determination shall be made by reviewing the relief valve capacity calculations. All inadequacies, so identified, will be corrected promptly. All inspection and testing of pressure relief valves shall be recorded on the RECEIVING STATION INSPECTION REPORT. - 20 - City of Vemon — Gas Division APPENDIX APPENDIX Service Order Al Service History Order - Customer Request/Work Order A3 Gas Odorant Levels Report A4 Load Survey A5 GAS LEAK PROCEDURES Gas Leak Classification and Action Criteria B1 Gas Leak Record B2 Gas Main Replacement Proposal B3 Gas Valve Maintenance, Inspection and Procedure B4 Gas Valve Maintenance Inspection Report 85 Receiving Station Inspection Report B6 Patrolling Report B7 Safety - Related Condition Report B8 OPERATIONS, MAINTENANCE AND INSTALLATION PROCEDURES Description of Heat Fusion Tools C2 Butt Fusion Procedures C5 Electro Fusion Procedures C7 Main Installation Procedures C10 Service Installation Procedures C11 Additional Topics C12 Training Evaluation and Certification Tests (Fusion) C13 Procedure Joint Appearance C15 Leakage Survey Procedures C17 Pipeline Damage Prevention Procedure C18 Inspection, Location and Markout Procedures C19 Atmospheric Corrosion Control Procedure C22 Procedure for Measuring Odorant Levels in Gas C24 Miscellaneous Procedures for Cathodic Protection C25 Cathodic Gas Meter Repair Request C28 Qualified Welding Procedures C29 Welding Diagram (Alignment of Offsets) C34 Procedure for Scheduled Gas System Shutdown and Restoration of Service C35 Gas Service Installation /Repair Standards C37 Procedure for Inspection of Damaged Gas Lines C40 Procedure for Insulating Gas Meters C41 Procedure for Investigating Gas Odor Complaints C42 Utility Service Codes (Gas) C44 Residential Gas Meter Location Standard Detail, Left C45 Residential Gas Meter Location Standard Detail, Right C46 Multiple Gas Meter Location Standard Detail, Left C47 Multiple Gas Meter Location Standard Detail, Right C48 Incident Report, Form 7100.1 C49 Incident Report, Form 7100.2 C -50 Revised: January 17, 2005 - 22 - City of Vemon — Gas Division Al LOCATION: CONTACT: S.O. # G WORK DESCRIPTION: S.O. BY: BLOCK BK: Pg: B.O.M. # PROBLEM: DATE: ACCOUNT: ?AI l0, PE FUSION BY: REMARKS: ODORANT LEVEL: (Circle) BY. NONE SLIGHT HEAVY STARTED BY: DATE: COMPLETED BY: DATE: CHECKED BY: DATE: A2 (cont. x DATE AND HOURS TOTAL NAME HOURS 1 MATERIAL WHICH LEAK OCCURRED CAUSE OF LEAK CORROSION OUTSIDE FORCE CONST. CONST. MATERIAL YEAR NATURAL DEFECT DEFECT OTHER INST TYPE & PIPE SIZE COMPONENT OR JOINT OTHER (SPECIFY) MAIN SERV MAIN SERV MAIN SERV HAND OR MACHINE SIZE DEPTH LOCATION BASE & DEPTH SURFACE & DEPTH BORED: INDICATE TYPE AND SIZE O CONCRETE 1ROUGH O ASPHALT CHECK CIRCLE O CURB & GUTTER FINISH O GRAVEL COMPACTED BY BASEROCK O HAND 0 RE-USED O OTHER QUANTITY SIZE O MACHINE 0 RE -NEWED ITEM QUANTITY SIZE ITEM REMARKS: To: Charge # Labor: From: Approved By: Date: Charge # Parts: Account # Owner Tenant Building Address Billing Address Location Check Issued By Address Main Size Service Size Phone# Deposit $ Additional Information: Kind Date Receipt No. Action Required: Meter # Reading B.P. M.L. Action Taken: Work Order Costs Parts: Equipment: Labor: Other: TOTAL: EQUIPMENT USED: ENTER TOTAL NUMBER OF HOURS FOR EACH PIECE OF EQUIPMENT Completed By: Completion Date: New Meter # New Meter Read Unit # Unit Description Unit Hours I �QI 7RENI OVA Street: ❑ AC ❑ Concrete Saw Cutting Total Lin. Ft.: Thickness: Sq. Ft. Removed: Slurry Total Yards Concrete Sidewalk Area: Lin. Ft. Saw Cut: Sidewalk: sq. ft. Driveway: sq. ft. Curb & Gutter: lin. ft. Data Entered By: Date: DATE TESTED BY PERCENT ( %) OF COMBUSTIBLE GAS AT WHICH ODORANT IS READILY DETECTABLE f CITY OF VERNON CUSTOMER'S REQUEST FOR NATURAL GAS SERVICE LOAD SURVEY A5 Date ADDRESS CROSS STREET COMPANY CONTACT PHONE FAX MINIMUM PRESSURE AT POINT OF SERVICE EXISTING MAIN SIZE KIND Total ESTIMATED MONTHLY FLOW JAN FEB MAR APR FEB MAR APR MAY JUN JULY AUG SEPT If you are planning to increase your Toad within three years, please provide information: COMMENTS ALTERNATE FUEL CAPABILITY YES NO n GAS LEAK PROCEDURES CODE DEFINITION PRIORITY OF LEAK REPAIR EXAMPLES 1 A leak that represents an existing or probable hazard to persons or property and requires immediate repair or continuous action until the conditions are no longer hazardous. Requires immediate action to protect life and property and continues action until the conditions are no longer hazardous. The immediate action in some instances may require one or more of the following: a. Implementation of the Emergency Gas Operating Plan. b. Evacuating premises. c. Blocking off an area. d. Rerouting traffic. e. Eliminating sources of ignition. f. Venting the area, or g. Stopping the flow of gas by closing valves or other means. h. Notifying Police and Fire Departments. Leaks Requiring Immediate Action: 1. Any leak which, in the judgment of qualified personnel at the scene, is regarded as an immediate hazard. 2. Escaping gas that has ignited. 3. Any indication of gas, which has migrated into or under a building or a tunnel. 4. Any reading at the outside wall of a building or where gas would likely migrate to an outside wall due to surface condition or cover and /or subsurface structures of a building. 5. Any reading of 80% LEL or greater in a confined space. 6. Any reading of 80% LE1 or greater in small substructures not associated with gas facilities where gas would likely migrate to the outside wall of a building. 7. Any leak that can be seen, heard, or felt, and which is in a location that may endanger the general public or property. 2 A leak that is recognized as being non- hazardous at the time of detection but justifies scheduled repair based on probable future hazard. Leaks should be repaired or reclassified within (1) calendar year from the date reported. In determining the repair priority, criteria such as the following should be considered: a. Amount and migration of gas. b. Proximity of gas to building and subsurface structures. c. Extent of pavement. d. Soil type and conditions, such as: moisture and natural venting. Code 2 leak may justify repair within 5 working days from the day the leak was detected. Others will justify repair within 30 days, or reevaluated at least once every 6 months until cleared. Leaks Requiring Action Within: 1. Any leak which in the judgment of qualified personnel at the scene is of sufficient magnitude to justify schedule repair. 2. Any reading of 40% LEL or greater under a sidewalk in a wall -to -wall paved area that does not qualify as a Code 1 leak. 3. Any reading of 100% LEL or greater under a street in a wall -to -wall paved area that does not qualify as a Code 1 leak. 4. Any reading less than 80% LEL in small substructures not associated with gas facilities where gas would likely migrate creating a probable future hazard. 5. Any reading between 20% LEL and 80% LEL in a confined space. 3 A leak that is nonhazardous at the time of detection and can reasonably be expected to remain nonhazardous. These leaks should be repaired or reclassified prior to the next scheduled survey, or within 15 months of the reporting date, whichever occurs first, until the leak is regraded or no longer results in a reading. 1. Any reading of less than 80% LEL in small gas associated substructures as small meter boxes or gas valve boxes. 2. Any reading of leakage under a street in areas without wall - to-wall paving where it is unlikely the gas could migrate to the outside wall of a building. 3. Any reading of less than 20% LEL in a confined space. 966 iON}IN[ J3HJC 01 SV'ld B3 CITY OF VERNON - GAS DIVISION PROPOSAL FOR REPLACEMENT OF LEAKING GAS MAIN Field Recommendation By: (See sketch on reverse) LEAK REPAIR HISTORY Date Location Repair Main Condition Found PRESENT LEAK STATUS ENGINEERING REVIEW AND RECOMMENDATIONS B4 CITY OF VERNON GAS DIVISION VALVE OPERATIONAL INSPECTION AND PROCEDURES A. Verify or correct location measurements as shown on backside of Gas Valve Maintenance Record (GVMR) card. (See Example, Figure 1). B. Inspect valve box sleeve for proper positioning over valve. C. Inspect condition of valve box and lid and correct (GAS) marking on lid. D. Before Operating: 1. Consult distribution map to determine DEAD END VALVE and check the GVMR cared to verify that it is so indicated. 2. Determine if valve is a "NON -LURE" type from GVMR card. 3. Lubricate all non -lube valves as necessary. Care should be exercised so as not to over lubricate. E. Operating: 1. Using a "T" handle valve wrench, rotate the valve through one complete operation, i.e. close and reopen. 2. DEAD END VALVES should be operated only to the extent of verifying the operability of the valve, but without the possibility of interrupting the gas supply. F. Fill in Inspection and Field Service portion of the GVMR card. G. Any deficiencies that cannot be corrected by the inspector shall be reported to the Gas System Superintendent for repair. B5 FIGURE 1 GAS VALVE MAINTENANCE INSPECTION REPORT Designation Location Date Time Valve Make Type Size Condition: Operates Satisfactorily Needed Maintenance Replaced Lubricated? Yes No Repair made and /or items replaced: Inspector Designation Location Date Time Valve Make Type Size Condition: Operates Satisfactorily Needed Maintenance Replaced Lubricated? Yes No Repair made and /or items replaced: Inspector Designation Location Date Time Valve Make Type Size Condition: Operates Satisfactorily Needed Maintenance Replaced Lubricated? Yes No Repair made and /or items replaced: Inspector B6 CITY OF VERNON - GAS DIVISION RECEIVING STATION INSPECTION REPORT STATION NO. I. GENERAL STATION INSPECTION: Combustible Gas Indicator Readings ( %L.E.L.) In Control Structure In Valve Pit on Regulator Manifold of Other Piping Repairs Required: Repairs Made: Send Out Pressure Settings: Minimum PSIG Maximum PSIG Pressure Controller Inspected and Condition Found: II. REGULATING VALVE INSPECTION: Reg. 1 (Ref.192.739) Reg. 2 Reg. 3 Reg. 4 Repairs Required: Repairs Made: III. PRESSURE RELIEF VALVE INSPECTION: (Ref. 192.743) Inspection Performed Serial No. Relief Pressure Setting PSIG Repairs Required: Repairs Made: IV. ATMOSPHERIC CORROSION CONTROL INSPECTION: Areas Inspected Pipe Fittings Regulator Corrosion Noted: Yes ❑ No ❑ Support Other Method Utilized to Determine Adequacy of Valve Capacity (see attached sheets): Inspection Performed By: Date: CITY OF VERNON — GAS DIVISION QUARTERLY SUPPLEMENTAL PIPELINE PATROL DATE LOCATION B7 Pipeline Marker Intact YES ❑ Method of Leak Test (Jw, Flame Ionization Pak, etc.): NO ❑ N/A ❑ Referred To: N/A Completed By: Operator's Name: B8 CITY OF VERNON — GAS DIVISION SAFETY- RELATED CONDITION REPORT Street Address: City: State: Zip: Reporting Party: Job Title: Bus. Phone: ( ) Determining Person: Job Title: Bus. Phone: ( ) Date Condition Discovered: Date Condition Determined to Exist: Location of Condition: City: State: Zip: Specific Location: Natural Gas LNG Liquid Description of Condition: Corrective Action Taken: EXIT 1.4 ADDITIONAL SERVICES Miscellaneous Additional Services Additional Services (which from time to time are also referred to as Technical Field Support) may include, but are not necessarily limited to, the following services, tasks and activities: Additional Services will be procured by COV from PETRELLI on an as- needed basis. COV will issue a Work Authorization to PETRELLI to effect the Additional Services task upon receipt and approval of a task cost estimate. From time to time, COV may request PETRELLI's assistance and support on other tasks or activities related to COV's management of the Gas Supply System. COV will make a formal request for such services in advance, with services to be executed upon PETRELLI receipt of a Work Authorization and at the rates and per the teens of this Agreement. Fees for Additional Services The Additional Services shall be shall be charged per the Service Rate Schedule on Exhibit "7.1" of this Maintenance Agreement. Types of Additional Services The Additional Services may include some the following: Gas Analysis Services - Btu Content PETRELLI can perform the complete function of analyzing the Btu content of natural gas at various locations in the City of Vernon. Vernon's sample cylinders will be collected on a regular basis (weekly, monthly, etc.) and brought to PETRELLPs facilities for analysis. Analyses may be reported in two formats, with and without correction factors. Turnaround time for each sample is four (4) calendar days from the point of collection. Regulator Station Maintenance: External inspections —. External Regulator Station inspections will include: o Vault Gas Leak Test o Station Condition Check o Inlet Pressure Check o District Pressure Check o Stop Valve Inspection o Regulator Operating Pressure Test o Regulator Lockup Test o Diaphragm Leak Test o Control Piping Check o Pilot and Instrument Filter Inspection o Relief Valve Operation o Regulator Seat and Plunger Inspection o Mainline Filter and Screen Inspection o Deodorizer and Charcoal Filter Check 1.4 - 1 01910/0001 116160.3 o Recording Pressure Gauge Test o Valve Position Check o Leak Test Internal inspections — Internal Regulator Stations inspections will include: o Regulator Inner Valves and Expansible Elements Inspection o Diaphragm Leakage Test o Diaphragm Inspection or Replacement o Pilot and Instrument Filters Field Calibration for Displacement Meters: o Field meter accuracy test performed on medium to large displacement meters to ensure measurement accuracy per utility standards. o Accuracy test performed. o Accuracy tolerance within California Public Utilities Commission (CPUC) approved standards. o Inspection of parts and replacement if necessary. o Adjustments made on diaphragm meters. o Follow -up Accuracy tests conducted. Replacement Meter Set Installation: Instrument Calibration - Field inspection of Base Pressure Indexes (BPI) and Emcorector includes: o Inspection o Accuracy Check o Mechanical Inspection o Pressure Arm Installation o Correct Rocker Lever Bind Recording Devices — Chart Maintenance: Collection and Change out of Recording Charts for Billing and Area Pressure Recording. o Periodic Inspection of Charts o Periodic Change -Out of Chart papers o Data Reduction / Accounting Services (additional Technician service charge) Engineering Testing and Analysis Capability: PETRELLI is capable of providing a variety of mechanical and chemical tests: In addition to standard ASTM tests, the PETRELLI will also handle an array of customized tests unique to the needs of gas distribution. For each job, PETRELLI will determine the extent to which pre -work is necessary to prepare the object or site for testing. Some jobs may require customized machining of a part, thus adding to the time and cost required to do the test. Mechanical and Combustion Testing Capability: 1.4 -2 01910/0001 116160.3 PETRELLI has extensive capability in providing mechanical and combustion testing services. Such services available to COV as Additional Services include the following: o Paint, Coating and Adhesive Testing - includes accelerated weathering, application characteristics, cathodic disbondment, and comparative corrosion characteristics. o Metallurgical and Failure Analysis - includes macro and micro hardness, SEM analysis, EDX elemental analysis, sample mounting and polishing, microscopic examination and photography. o Environmental Simulation - using large and small environmental chambers, salt fog cabinet, and weather - ometer with UV (xenon arc) and water spray. o Flow Measurement - includes leak measurement, air flow velocity, and ultrasonic water flow. o Material Physical Properties Determination - includes tensile, yield, compression, force, moment and force application, torque and stress/strain. o New Product and System Component Qualification Testing - includes regulators, meters, valves, gasket materials, etc. o Strength and Leak Testing - includes burst and sustained pressure testing of system components with hydrostatic pressures of up to 9,000 psig. o Air Pollution Control Device Testing - includes NOx, CO, CO2, 02 and total hydrocarbons from IC engines, gas turbines, boilers, heaters, etc. o Dimensional Metrology - using calipers, gages, thread gages, etc. Polyethylene Testing: PETRELLI has extensive capability for supporting the maintenance and new customer interconnection with COV's plastic (polyethylene) Distribution System. Such services available to COV as Additional Services include the following: o Surface Tension of Water Samples o Electrical Conductivity of Water Samples o Melt Index per ASTM D-1238 o Density per ASTM D -1505 o Quick Burst Test (to 6" IPS pipe size) per ASTM D -1599 o Dead Weight Testing - 2,000, 5,000 and 10,000 hours (2" IPS sample only) o Impact Testing per ASTM D -2244 to 500 ftllbs o Elevated Temperature Testing - 80 C & 60 C per ASTM D -1598 to 12" o PS pipe size o Tensile Elongation (2" IPS pipe size only) o Tensile Elongation D -638 to 6" IPS pipe sizes o Ring Tensile per ASTM D -2290 o Compressive Shear Test o 3 -point Bend Test to —10% bend ratio o 4 -point Bend Test to -6% bend ratio o Strip Examination o Bend Back Test o Crushed Ring Test o Environmental Stress Crack Resistance per ASTM F -1248 o Electrofusion pipe and fittings per ASTM F -1055 o Electronic Testing/Electrofusion Fittings. Non - destructive full load testing all sizes o Differential Scanning Calorimetry o Optical Microscopy - with photographic capabilities 1.4 -3 01910/0001 116160.3 o Stereo Microscopy o Microtome o Scanning Electron Microscopy/EDAX o Fourier Transform Infrared Spectroscopy o Ovality /Out -of -Round Measurement o and Controlled Cycle Testing o Rubber, Composites, Component Testing o X -ray Analysis -with photographic capabilities New or Replacement Facilities PETRELLI is willing and capable, at the request of COV, of performing new or replacement equipment and facilities services, including regulator and meter upgrades, second services installations, installation of new or replacement of abandoned service lines etc, at the rates and per the terms of this Agreement. Emergency Services Emergency Services will be provided on an as- needed basis. Emergency Services will be performed and charged at the rates and per the terms of this Agreement. 1.4 -4 01910,0001 116160.3 EXHIBIT 2.3 DRAFT COV GAS EMERGENCY OPERATING PLAN [To be attached.] 2.3 -1 01910/0001 1161603 GAS EMERGENCY OPERATING PLAN CITY of VERNON LIGHT AND POWER DEPARTMENT GAS DIVISION January 17, 2005 TABLE of CONTENTS PAGE NO. FORWARD OBJECTIVE II SECTION 1 (GENERAL) OPERATIONS CENTER 1 LOCATIONS of EMERGENCY PLAN MANUALS 2 ACTION TO BE TAKEN 3 DUTIES of CITY PERSONNEL 6 PROTECTING PEOPLE AND P 8 EMERGENCY PLAN REVISION PRO ._ E g. E ... ,, 9 SECTION II (CITY PERSONNE PHONE INFORMATION) CITY MANAGEMENT (CIVIC CENTER)....:_ 1 SUPERVISORY PERSONNEL ADDRESS AND TELEPHONE LIST 2 SECTION III (TURN -OFF AND TURN -ON PROCEDURES) INSTRUCTIONS FOR TURNING OFF METERS DURING GAS EMERGENCY 1 INSTRUCTIONS FOR TURNING ON METERS DURING GAS EMERGENCY 2 EMERGENCY GAS TURN OFF LISTING 3 GAS TURN OFF NOTIFICATION TAG 4 TURN OFF AND TURN ON TAGS 5 CRITICAL ISOLATION VALVES 6 VERNON EMERGENCY ISOLATION AND SHUTDOWN PROCEDURES 7 EXAMPLES 22 SECTION IV (EMERGENCY OUTSIDE ASSISTANCE REQUESTING OUTSIDE ASSISTANCE 1 EMERGENCY EMPLOYMENT RECORD 2 LOCAL FIRMS TO CALL FOR ASSISTANCE 3 TELEPHONE NUMBERS 4 SECTION V (EMERGENCY LOAD SHEDING PLAN) GAS UTILITY EMERGENCY LOAD SHEDDING PLAN 1 EMERGENCY LIST A 3 EMERGENCY LIST B 5 SHORTAGE of SUPPLY AND INTERRUPTION of DELIVERY 7 SECTION VI (MAINTENANCE FOR A CLASS 3 LOCATION) MAINTENANCE FOR A CLASS 3 LOCATION 1 FORWARD The following is a general plan for turning off and re- establishing gas service to customers in the event of an interruption in servi = ". T• • use I, a a Id be effective for restoring service to several hundred or even tho fan s •f ust Vernon has had no experien '` widespread interruption of gas service, but in conferring with utilities who have, there are no two service restorations that can be handled alike. This would preclude writing one procedure suitable to balndle all emergencies. There are too many variables, such as time of year, time of day, number of customers affected, available manpower, location, extent of damage, meter locations, and many more. It follows then that for a plan to be effective, when considering the many variables, it must be flexible in scope so that the judgement of the person in charge will not be impeded by the difficulties arising from any emergency situation. Revised: January 17, 2005 i City of Vemon — Gas Division OBJECTIVE The objective is to make the system safe, repair damage and safely restore service following an accidental interruption or natu is in the WItelfleriod of time, depending upon the number of customers affected. Whe a arge nu er oficustomers are involved, people from other utilities and local plumbing firms may be-requ`s -d help restore service. In the event of a natural disaster, such as a • uake, s ice restoration may be purposely delayed because of serious damage to t a city acitifies, or when there is no urgent need for total service restoration because of extensive property ddamage. Any emergency restoration operation must be consistent with the maximum safety for the public and employees. Revised: January 17, 2005 ii City of Vemon — Gas Division SECTION 1 GENERAL OPERATIONS CENTER The Control Center (C.C.) at the Vernon Power Plant at 2715 E. 50th Street will serve as the Operations Center during an erne : - . Radio fa = , ich presently exist, for routine daily functions of the Light and Power 1 part ent nd Community Services and Public Works are capable of handling commune do an r racy as well. General assembly rooms of these two divisions can be utilized pit ct'boi City and outside personnel. In addition to the Operations Center, an Emergency Operating Center (EOC) is located in the basement of the Civic Center at 4305 Santa Fe Avenue. The EOC is a protected area with complete facilities to function under extreme emergency conditions for a minimum period of two weeks. Facilities include communications, emergency power generators, an independent water source and food supplies. The communications room is equipped with complete facilities for radio, telephone and wireline communications for public safety, public works, public utility and administrative functions. Communications channels are also provided to adjacent communities and higher levels of government. Thus, the EOC is a direct line of communications between police, fire, govemmental officials and the gas utility. Revised: January 15, 2005 1 -1 City of Vernon — Gas Division LOCATIONS of EMERGENCY PLAN MANUALS Emergency Plan Manuals shall be available at the following locations: ➢ Bulk Power Manager's Office, C 3 and Fe Avenue, Third Floor ➢ Emergency Operations Center Civic Center, 43 Santa Fe Avenue, Third Floor ➢ Gas Systems Superintendent's Office, "Civic Center, 4305 Santa Fe Avenue, Third Floor ➢ Vernon Power Plant, 2715 E. 50th Street, Vernon Control Center ➢ On Call Supervisor ➢ On Call Gas Personnel Revised: January 15, 2005 I - 2 City of Vemon — Gas Division ACTION TO BE TAKEN The City of Vernon will respond promptly to all emergency incidents. Below are some of the types of emergency incidents > Earthquake > Flood > Fire > Industrial or transportation accident involving natural gas. > Vandalism or damage to underground facilities. > Natural gas detected inside or near a building. The first notification of an emergency situation will more than likely be accomplished by: > A call to the Fire Department or Police Department. If it is natural gas related, the call will be routed to the Control Center. > All natural gas related telephone calls would be received at the Control Center, 2715 E. 50th Street. > If the Control Center at the Power Plant becomes inoperable, there is an alternate location to receive natural gas related calls at 4305 S. Santa Fe Avenue in the basement EOC Upon being alerted to an emergency situation, a communicator /dispatcher will carry out procedures already established, though not necessarily in the order shown: 1. Dispatch Customer Service personnel to determine the problem. 1.1 Note: The first person who responds to an emergency incident must check for the migration of natural gas in and around the foundation of buildings using a C.G.I. See page (C-42) in our Operations and Maintenance Plan Title Procedure for Investigating Gas Odor Complaints. 2. Notify standby call- person. 3. Notify Gas Systems Superintendent (GSS). 4. Notify Bulk Power Manager (BPM). 5. Notify Generation Operations Manager (GOM). 6. Notify City Administrator. Revised: January 15, 2005 1- 3 City of Vemon — Gas Division • • Gas service crews are available on a 24 -hour basis. During normal working hours the Control Center is notified for crew dispatching. During swing and graveyard shifts, calls are received by the Control Center and Customer Service units are dispatched to investigate the problem. If the Customer Service unit identifies the problem as a gas leak requiring immediate repair, a Gas Division On -Call person (Standby) is dispatched to the scene by the Control Center. When a high or low pressurega s seem arm ~is ire ived from a monitoring station, the Control Center will dispatch an er p -e fr t hest lished list of personnel qualified to respond to gas receiving sta tar to investigate t and /or restore the system. If line breakage occurred, additional manpower will be ca ed in to make repairs. If a fire or explosion is located near or directly involves a pipeline, the Fire Department will notify Control Center for a Customer Service person or a Gas Division person to respond to the scene and shut down the affected section of pipeline. The City of Vernon receives its gas supply at two (2) separate locations from the Southern California Gas Company. One location is on the south side of the City, Fruitland and Downey Road. The second one is located on the north side at Bandini Boulevard and Downey Road. It is unlikely that a situation will occur that will disable both receiving stations, but, if this does happen, the same procedure can apply in restoring service for a large outage or a small one. The only difference would be the number of people needed and the length of the outage. If a situation occurs when one receiving station is out of service, it is possible to supply the City's needs from one source. This would depend upon the time of year and the demand or load. Careful monitoring of pressure at the extreme limits of the system will be necessary. Putting into operation the "Emergency Load Shedding Plan" at this time may forestall any disruption of service. This plan may be put into effect at the discretion of the Generation Operations Manager (GOM) and in his absence the Bulk Power Manager (BPM) or the Gas Systems Superintendent (GSS). The BPM will assume responsibility for all field operations and will (depending upon the extent of the outage) put into action any portion, or all, of the em ergency plan. He will assess damage to the system and notify the appropriate people. He may request outside assistance and investigate all accidental digins and pipe failures. In the event of a pipe failure, he shall furnish the Engineering Division of Community Services with samples of the pipe for laboratory analysis for the purpose of determining the cause and to minimize reoccurrence. In shutting down an area, the affected area can be isolated by vaiving off the system so that as few services as possible will be shut down. See Shut Down Procedure for Isolation Areas A, B, C, D, E, F, G and H. A map showing meter areas and instruction on which valve to operate and their location is located in the Control Center. After an area has been shut down and isolated and repairs are being made, we verify the number of services that have been interrupted. The BPM or GSS shall determine the crew make -up for turn-off and turn -on operations and see that proper equipment and tools are issued. Extra main valve wrenches and bars may be needed and are available in the General Shop at the Community Services and Public Works. Other necessary materials include: ➢ Identification badges for outside assistance personnel. ➢ Tum -Off Notification Tags. (Section III-5) ➢ Red and Green (for turn -off, turn -on) Stickers. (Section III -6) Revised: January 15, 2005 I - 4 City of Vemon — Gas Division ➢ Maps ➢ Emergency Plan Manuals. Five (5) copies located in the Operations Office, City Hall (CH), third floor at 4305 S. Santa Fe Avenue under the control of the BPM. Other locations as described in Section 1, page 2. Revised: January 15, 2005 1- 5 City of Vemon — Gas Division GENERATION OPEATION MANAGER OR BULK POWER MANAGER: D Assume overall responsibility for emergency operations. D Notify City Administrator. ➢ Notify all Department Head a. Community Services b. Finance c. Fire d. Health e. Other Utilities f. Police > Notify communications media (Section V -1). BULK POWER MANAGER AND GAS SYSTEMS: D If the EOC is used, acquire qualified personnel to operate center. > Notify Department of Transportation. ➢ Assume Director of Light and Power duty in his absence. GAS SYSTEMS SUPERINTENDENT: > Curtail industrial and commercial customers. ➢ Assist Customer Service in answering difficult questions. > Assist BPM as requested. > Notify field personnel. > Supervise repair of broken mains, services, etc. > Establish schedule necessary for 24 -hour operations. ➢ Assist BPM in instructing any outside assistance, if required. ➢ Assist in valving off and isolating affected area. > Coordinate turn -off and turn-on procedures. D Assist in instructing outside assistance. Revised: January 15, 2005 I - 6 City of Vemon — Gas Division CHIEF OF POLICE: > Assist in gaining entrance to locked residences or buildings for gas tum -off and turn -on. > Provide personnel for traffic control and cordoning off danger areas. FIRE CHIEF: • Provide personnel for fire fight cord fling off danger areas. DIRECTOR OF COMMUNITY SERVICES AND PUBLIC WORIKS: ➢ Make available City vehicles as needed. > Assist in tum -off operations if needed. PURCHASING: > Notify stores personnel. > Provide food and lodging, if needed, for outside personnel. CUSTOMER SERVICE MANAGER: > Provide computer printouts of addresses and meter numbers in effected area. ➢ Provide personnel for time keeping of outside personnel needed. GAS SYSTEMS SUPERINTENDENT: > Notify Customer Service personnel. > Provide personnel for tum -off, tum -on operation as requested by RPPM. > Answer questions from general public. PERSONNEL: > Acquire outside assistance as requested by Director of Light and Power. > Establish applicable rates to be used when hiring outside personnel. Revised: January 15, 2005 I - 7 City of Vemon — Gas Division PROTECTING PEOPLE AND PROPERTY The primary responsibility of the utility is to take actions directed toward protecting people first and then property. The first Emergency Services unit the Vernon Control Center with tan sses f a catastrophic disaster will provide ion to include: 1. Need for medical assistance, ambulance and/or coroner, etc. 2. Number of injured. 3. Need for additional rescue equipment. 4. Estimated extent of damage in area. 5. Need for traffic control. If a fire explosion occurs, the Fire Department will handle the evacuation of citizens and cordon off the required area. To protect people and property, the effected area can be isolated by vaiving off the system. Revised: January 15, 2005 1- 8 City of Vemon — Gas Division EMERGENCY PLAN REVISION PROCEDURE The BPM and GSS will be responsible for the Emergency Plan revisions. The Plan will be updated at no more than ones ii a als All suggested revisions to the Plan should be forwarded to the BPM for approval . It is requested that areas of the Plan involving other departments and requiring changes hsitleadcesses, telephone numbers, etc., be forwarded to the BPM. Revised: January 15, 2005 1- 9 City of Vemon — Gas Division SECTION 11 CITY PERSONNEL ADDRESS AND TELEPHONE INFORMATION CITY MANAGEMENT (CIVIC CENTER) Bruce Malkenhorst City Administrator A 215 or 260 Manuel Garcia Kevin Wilson Generation Operations Mgr./ 242 MGS Project Manager Director of Community Services 245 & Water Martha Valenzuela Office Manager 226 Steven Parker Fire Chief 280 Sol Benudiz Acting Chief of Police 114 Lewis Pozzebon Director of Environmental Health 229 Revised: January 17, 2005 11 -1 City of Vemon — Gas Division SUPERVISORY PERSONNEL ADDRESS AND TELEPHONE LIST Manuel Garcia Generation Oprati Mgr. /MGS Protect a 3-583 811, Ext. 242 Daniel Garcia Bulk Power Manager (C) 323 - 583 -8811, Ext. 312 (H) David Taylor Gas Systems Superintendent (C) 323- 583 -8811, Ext. 339 (H) (310) 631 -7337 11249 Holme Avenue Lynwood, CA 90602 Vacant Field Supervisor Vacant Meter & Regulator Technician Vacant Construction Technician Revised: January 17, 2005 II - 2 City of Vemon — Gas Division SECTION III TURN -OFF AND TURN -ON PROCEDURES INSTRUCTIONS FOR TURNING OFF METERS DURING GAS EMERGENCY 1. Contact customers, if possible, and explain very briefly why the services are being turned off. te �� 2. Turn off meter at servi ground level. Where m Iti : ti each meter are to be tumed o1 located ahead of the regulator normally near encountered service stop and stops ahead of 3. If no one is at home, turn meter(s) off and leave the customer a notification tag (see Section III -7). Place one on the front door knob. 4. Inside meters: There are a few gas meters within the City that are inaccessible for turn- off and turn -on. If an outage occurs in a section of the City where a person is unable to gain access, the following procedures will be followed: a. Notify the immediate person in charge: b. Contact Customer Service (there may be a key available). c. Contact the Police Department to have an officer stand by or assist in entering the premises. 5. After meter has been tumed off, place a red sticker on top of the meter (Section III -8). TURN -ON The turn -on phase should begin immediately after all repairs and the turn -off phase has been completed. This will involve: 1. Determining the number of qualified people needed for the turn -on operation. 2. Notifying other utilities and local plumbing firms if outside help is needed (Section IV -3). 3. Arranging shift schedule. The turn -on procedure will be somewhat more complicated. Only a qualified person will be allowed to handle this function. Revised: January 17, 2005 III -1 City of Vemon — Gas Division INSTRUCTIONS FOR TURNING ON METERS DURING GAS EMERGENCY 1. Contact customer and explain that you are ready to turn on the gas. 2. Proceed to meter location Ch cthemete number with that recorded on your order at the time of the turn-off. If not e same, chea address to make sure you have the right order. If meter is not the same, note correct lumber on order.) 3. Turn on service stop ahead of the regulator. (On multiple -meter installations, make sure that all individual meter stops are off prior to turning the service stop on.) Tum the meter stop slowly allowing gas to gradually fill the meter compartments and piping. There will be a slight movement of the test hand when the meter is turned on. If the test hand continues to move at a rate that can be observed easily, turn off meter, and check all appliances immediately. Should you fail to find the cause of the gas flow, the meter must be left off and the condition reported to supervision to arrange for a clock test. 4. Purge the service through the meter tee. Purge house piping by lighting the burners on a non- automatic appliance. The purging can be considered completed when all of the four surface range bumers will burn with a flame of blue and stable appearance and the surface pilot remains lighted in a stable condition. In the event that a gas range is not available, the gas water heater should be lit to allow for purging. CAUTION: Never attempt to purge lines into a confined space such as an oven, the combustion chamber of an automatic water heater or furnance, or any type of appliance where the burners are concealed. 5. Relight all automatic appliances. Be sure to follow the instructions printed on the tag affixed to the appliance. If instructions are inadequate, and you are not familiar with the appliance, leave appliance off and report circumstances to the customer and supervisor. 6. When service has been restored, indicate time and date, and initial on the computer order. Then place a green sticker on the meter next to the red sticker that was affixed during the turn -off operation (Section III -5). If unable to restore, state why and status of job. If customer is not at home, leave a tag on doorknob. Revised: January 17, 2005 III - 2 City of Vemon — Gas Division SERVICE ROUTE ADDRESS MATE! A•' TIME/DATE --- INITIALS EMERGENCY GAS TURN OFF LISTING (EXAMPLE ONLY Revised: January 17, 2005 111 - 3 City of Vemon — Gas Division GAS TURN OFF NOTIFICATION TAG CITY OF VERNON LIGHT AND POWER UTILITIES SERVICE YOUR GAS IS SHUT OFF Because of required construction work, it has been necessary for us to shut off your gas supply in your absence. Immediately upon your return, please call the following number: (323) 583 -8811 Our serviceman will promptly restore service and relight your appliance pilots. Thank you. Revised: January 17, 2005 111 - 4 City of Vernon — Gas Division TURN OFF AND TURN ON TAGS RED GREEN OFF ON This type of sticker, colored fluorescent red and green, will be used to mark gas meters during the turn- off /turn -on operation. These are self- sticking. Revised: January 17, 2005 III - 5 City of Vemon — Gas Division CRITICAL ISOLATION VALVES Specific areas of the City may be shut down and isolated by area in an emergency by closing isolation valves. In the H.P. rttribution System, the 'V as and corresponding valves are identified by Isolation Areas A' B, ,DF, Q, an H. In the H.P. Transmission System, the corresponding valves are ident' ed by I lation.; reas 1, 2 and 3 in the Instructions and Map of each area located in the Project IC rdtnator's o c at the Control Center. Specific areas of the City may be shut down and isolated by area in an emergency by closing predefined isolation valves. See Isolation and Shutdown Procedures, Instructions and Maps III -7 through III -21. Revised: January 17, 2005 111- 6 City of Vemon — Gas Division VERNON EMERGENCY ISOLATION AND SHUTDOWN PROCEDURES 1. Purpose - To provide a guideline for isolation and shutdown procedures the City of Vernon may utilize during n, e 2. Type of Response - V o v It mp o o or more of the following methods to isolate and /or shutdown a se n of t H '. ra smission or Distribution System during an emergency: A. Pinching near an emergency incident site. B. Closing of the nearest main line valve. C. Isolation and /or shutdown of an affected isolation area. D. Shutdown the H.P. Distribution System. 3. Response Criteria A. Pinching: 1) May be employed when there is a localized incident. 2) Can be performed on polyethylene pipe. B. Closing of Valves: 1) May be used to shutdown small sections of the system. 2) May be employed when pinching is inappropriate. C. Shutdown a Isolation Area: 1) May be performed in the event of multiple line breaks. 2) May be implemented when the number of incidents exceed the City's ability to mitigate an incident locally. D. Shutdown a H.P. Transmission or Distribution System: 1) Will be used when maintaining safety warrants, the large -scale disruption of our gas system. 4. Isolation Area - Are areas within our H.P. Transmission or Distribution System can be physically shutdown by closing isolation valves in the event of an emergency. A. Each isolation area has predefined valves that can be used to isolate an area quickly. These valves are identified as critical valves. B. Critical valves are marked as such. They are inspected and operated on a maintenance schedule at least (1) once each calendar year. Records are to be kept on file (GPS) or hard copy, maps, master index, that identify the location of each critical valve within that area, the kind, size, and status open or close. The records are to be maintained and updated yearly. Revised: January 17, 2005 111- 7 City of Vernon — Gas Division C. Isolation area boundaries should be evaluated on a five -year cycle for accuracy and impact to an adjacent area in the case of an emergency. D. The locations of schools, City Power Plant, cogeneration customers, etc., should be tracked and be quickly identifiable in the event of an emergency. Revised: January 17, 2005 111 8 City of Vemon — Gas Division • 1 2 3 4 5 Downey Road south ofRegulator Station Fruitland) Downey Road north f e latar Station (Er Bandini Boulev tion land) andini) E Bandini Boulevard east ofgulatorStation ( Bandini) F Bandini Boulevard west. of Bridge (Los Angeles River) D 68.32.5 63.28.5 1 +73.1 6.65.0 61.77.4 Bandini Boulevard east of Bridge (Los Angeles River) 77 +75.0 7 26th Street east of Downey Road (Common) E &F 80 +43.0 Soto Street north of Vernon Avenue (Common) A &D 33 +49.8 9 Santa Fe Avenue north of Vernon Avenue (Common) C & D 34 +45.1 10 Vernon Avenue west of Soto Street (Common) A &C 57.48.1 11 46th Street west of Soto Street (Common) A &C 16.32.3 12 Leonis Boulevard west of Soto Street (Common) A &C 15.95.8 13 50th Street west of Soto Street (Common) A &C 7.40.6 14 Fruitland Avenue west of Soto Street (Common) A &C 31 +05.3 15 Soto Street south of Fruitland Avenue (Common) A &B 67 +87.6 16 Boyle Avenue south of Fruitland Avenue (Common) A &B 33.53.2 17 Alcoa Avenue south of Fruitland Avenue (Common) A &B 34.60.2 18 Downey Road south of Fruitland Avenue B 71.74.8 19 District Boulevard east of Downey Road G 2 +55.4 20 Charter Street east of Downey Road 2.16.8 21 District Boulevard east of Atlantic Avenue (Common) G &H 0 +99.8 22 Atlantic Boulevard south of District Boulevard G &H 1 +75.0 23 Fruitland Avenue west of Downey Road A 76.75.5 24 50th Street west of Downey Road A 52.61.8 25 Leonis Boulevard west of Downey Road A 61.23.5 26 Packers Street west of Downey Road A 10.80.0 27 Vernon Avenue west of Downey Road 103.34.0 Revised: January 17, 2005 III - 9 City of Vemon — Gas Division A- D- 8/31.50* A -E- 10/57.30* A- C- 11/16.32* oto Street f=Wernon Avenue. of Soto Street. it of Seto Street. A- C- 12/15.95* Leon's Boulevard west of Soto Street. A- C- 13/7.40* 50th Street west of Soto Street. A -C- 14/30.40* Fruitland Avenue west of Soto Street. A- B- 15/68.80* Soto Street south of Fruitland Avenue. A- B- 16/33.90* Boyle Avenue south of Fruitland Avenue. A -B- 17/34.50* Alcoa Avenue south of Fruitland Avenue. A- 22/76.78 Fruitland Avenue west of Downey Road. A- 23/52.63 50"' Street west of Downey Road. A- 24/61.24 Leonis Boulevard west of Downey Road. A- 25/10.80 Packers Street west of Downey Road. A- 26/103.17 Vernon Avenue west of Downey Road. Revised: January 17, 2005 III -10 City of Vemon — Gas Division A- B- 15/68.80* A -B- 16/33.90* A -B- 17/34.50* o Street nth f Fruitland Avenue. ra:Avenu of Fruitland Avenue. southlaf Fruitland Avenue. B- 18/70.75 Downey Road south of Fruitland Avenue. Revised: January 17, 2005 111 -11 City of Vemon — Gas Division C -D- 9/33.90* A- C- 10/57.50* A -C -11 /16.32* a to Fe Av oe I, of Vernon Avenue. of Soto Street. of Soto Street. A- C- 12/15.95* LeoniaBoulevard west of Soto Street. A -C- 13/7.40* 50th Street west of Soto Street. A- C- 14/30.40* Fruitland Avenue west of Soto Street. :his valve 1s also3part f mother tsoli Revised: January 17, 2005 HI -12 City of Vemon — Gas Division D- 5/61.80 A- D- 8/31.50* C -D- 9/33.90* Area "D ' eu andini oulavardAvest of Bridge (Los Angeles River). tn' ernon Avenue. r(ta'Fe Avenue nosh of Vernon Avenue. arts this vaive Is also art of anotter la it Revised: January 17, 2005 111 -13 City of Vernon — Gas Division E- 3/00.61 dini t of Regulator Station (Bandini). E- 6/78 +30 E- F- 7/32.90'` ISO Area "E" Note- ridin rd ast of Bridge (Los Angeles River). wney Road. CU 0' another isolati, Revised: January 17, 2005 10 - 14 City of Vemon — Gas Division dini Bo A of Regulator Station (Bandini). wney Road. Revised: January 17, 2005 111 - 15 City of Vemon — Gas Division G- 19/7.30 G- 20/2.20 rict E3oul ,, of Downey Road. rter`re . st of Downey Road. 'M ns ti11S Yaiu is also dart of ar ia;isoiation ar Revised: January 17, 2005 11I -16 City of Vemon — Gas Division G- H- 21/71.90* "H" bas is tome District of Atlantic Boulevard. Revised: January 17, 2005 III -17 City of Vernon — Gas Division S -7 S -6 S-5 S-4 District Boulevard east of 50th Street 50th Street west of Giffo Loma Vista Ave S -3 e norm enue District Boulevard east of Maywood Avenue Fruitland Avenue west of Alcoa Avenue 3 64 + 25.0 3 3 3 2 17 + 45.5 13 + 91.0 9 + 00.9 55 + 15.5 S -2 Fruitland Avenue west of Boyle Avenue 2 33 + 88.0 S -1 Fruitland Avenue west of Seville Avenue 2 17 + 56.69 S -W Santa Fe Avenue north of 51st Street 2 64 + 66.15 W -1 N -W N -1 Santa Fe Avenue north of 48th Street 2 38th Street east of Santa Fe Avenue 2 37th Street west of Seville Avenue 2 43 + 80.0 30 + 10.7 49 + 83.4 N -2 Bandini Boulevard west of Sierra Pine (east of Bandini Bridge) 2 77 + 00.0 N -3 Bandini Boulevard west of Downey Road 2 104 + 12.0 N-4 N -5 Bandini Boulevard west of Indiana Avenue (east of Bandini Bridge) east of Downey Road Bandini Boulevard east of Indiana Avenue 18 +65.0 39 +65.7 N -6 Bandini Boulevard west of Bonnie Beach Boulevard 60 + 35.0 N -7 Bandini Boulevard west of Ayers Avenue 1 81 +45 Revised: January 17, 2005 III -18 City of Vernon — Gas Division N-4 18 + 65 andini t of Indiana Avenue Revised: January 17, 2005 iii -19 City of Vemon — Gas Division N -3 104 + 12.0 'Sandini Sou of Downey Road S -3 55+ 15.5 land Avenue west of Alcoa Avenue Revised: January 17, 2005 111 - 20 City of Vemon — Gas Division S-4 9 +00.9 E is rict Boule rar , of Maywood Avenue Revised: January 17, 2005 III- 21 City of Vemon — Gas Division Revised: January 17, 2005 EXAMPLES III - 22 City of Vemon - Gas Division SECTION IV EMERGENCY OUTSIDE ASSISTANCE REQUESTING OUTSIDE ASSISTANCE TBD : has stated emergency. Names and telephone telepnplIel,n i Local plumbing companies have Names and telephone numbersf a willingness to assist Vemon, if possible, during an i rs of co 0-Make are shown in Section IV-4. at they can provide personnel, if needed. own its Section IV -3. It is essential that local plumbing companies ;know in specific detail the type of work their people will be expected to perform, thus enabling them to dispatch properly trained personnel. Requests for emergency workers by titles can result in confusion since there is a lack of uniformity in the use of such titles. In such requests for additional personnel, it would be desirable to request: 1. A supervisor for each ten (10) workers. 2. The workers come with radio- equipped vehicles, including the supervisor's vehicle. A portable 2 -way radio (on the same frequency) should also be requested. 3. The workers be uniformed, if possible, and have identification badges. 4. The workers be equipped with their own hand tools. Revised: January 17, 2005 IV - 1 City of Vemon — Gas Division EMERGENCY EMPLOYMENT RECORD If outside assistance is needed, it will and equipment used (see Section 1' be in the form of actual costs inc rf overhead. In any event, costsor and Power. be necessary to maintain accurate records of man -hours has stated that reimbursement will firms will charge actual costs plus be approved by the Director of Light It may be necessary to provide food through Purchasing. Revised: January 17, 2005 and lodging to outside personnel. This will be handled IV - 2 City of Vemon — Gas Division LOCAL FIRMS TO CALL FOR ASSISTANCE NAME ADDRESS CITY PHONE Revised: January 17, 2005 IV - 3 City of Vernon — Gas Division TELEPHONE NUMBERS EXAMPLES This is a list of TED event of emergency gas curtail en ne numbers for contacts to be made in the Name,Ie, Location Office Phone *Initial contact and normal communications contact. Manned 24 hours per day. Revised: January 17, 2005 IV - 4 City of Vemon — Gas Division EMERGENCY EMPLOYMENT ■ z MIDDLE INITIAL cn I -J � ■ w 0 -J 0 2 < ■ BASE RATE REPRESENT EMPLOYER k k <0 <0 < < SIGNED: (CITY SUPERVISOR) 4r A <0 fa < <a FOR UTILITY USE ONLY _ _ _ VEHICLE HOURS @ TOTAL AMOUNT $ APPROVED: City of Vemon — Gas Division January 17, 2005 SECTION V EMERGENCY LOAD SHEDDING PLAN GAS UTILITY EMERGENCY LOAD SHEDDING PLAN 1. Scope This plan covers a sho made, which would red could deliver to the City consumption rate of natural gas for a predictable period of time. rr s supp i ly the effects of a disaster, natural or man - ofVgas that Southern California Gas Company pe of m a rgency, the City may be required to limit its 2. Status If an emergency develops which would require Southern California Gas Company to curtail delivery of gas to firm customers, Vernon would be expected to comply with the same basis of priority as used on the Southern California Gas Company system. For instance: residential, small commercial, large commercial and firm industrial (i.e., residential customers would be the last to be turned off). This emergency procedure covers the situation wherein Southem California Gas Company may request the City to limit consumption of natural gas to a specified level for a specified period, or "until further notice ". 3. EMERGENCY OPERATING PROCEDURE A. Basic Plan The basic plan uses two lists (attached): List A - The 14 largest industrial consumers will be asked to cut their loads to a minimum. (Section V -3) List B - The 16 largest commercial consumers will be asked to cut their loads to a minimum. (Section V -5) The curtailment of usage by List A would result in a 21 % load reduction. The curtailment of usage by List B would result in an additional load reduction of 11%. The application of these curtailment lists will depend upon the situation, on gas allotments by Southern California Gas Company and the predicted duration of the curtailment. The plan selected will be determined by the Generation Operations Manager and in his absence by the Bulk Power Manager. B. Notification at Start of Emergency 1. General Notification Revised: January 17, 2005 Phone a. City Administrator (323) 583 -8811 b. Generation Operations Manager (323) 583 -8811 V -1 City of Vemon — Gas Division d. Director of Community Services e. Communications Center (includes Pfan ire Phone (323) 583 -8811 (323) 583 -8811 Call the customer. Tell him the circumstances, including start time and predicted duration. Ask him to cut his plant Toad to a minimum. Tell him you will notify him when the emergency is over. C. Notification at End of Emergency 1. CaII the General Notification List (B.1). 2. If applicable, call Lists A and B. Revised: January 17, 2005 V - 2 City of Vemon — Gas Division EMERGENCY UST A CUSTOMER ANNUAL PHONE CONTACT SERVICE THERMSA <., NUMBER,- PERSON Revised: January 17, 2005 V - 3 City of Vemon — Gas Division TITLE EMERGENCY LIST A (coNrD) CUSTOMER ANNUAL PHONE CONTACT SERVICE TH-- E. RAS Na, NUMBER <,4 PERSON Revised: January 17, 2005 V - 4 City of Vemon - Gas Division TITLE EMERGENCY LIST B CUSTOMER ANNUAL PHONE CONTACT SERVICE THERMS r NUMBER PERSON Revised: January 17, 2005 V - 5 City of Vemon — Gas Division TITLE EMERGENCY LIST B (coNrD) CUSTOMER ANNUAL PHONE CONTACT SERVICE THERM NUMBER PERSON Revised: January 17, 2005 V - 6 City of Vemon — Gas Division TITLE SHORTAGE of SUPPLY AND INTERRUPTION of DELIVERY A. GENERAL The City will make reas its customers, but not guara liable for interruption short occasioned thereby. efforts tc eeontin tit intu eliver continuous and sufficient utility service to ty or sufficiency of supply. The City will not be tcietcy of utility supply or any loss or damage B. INTERRUIPTION of DELIVERY 1. When interruptions occur, the City will endeavor to reestablish service with the shortest possible delay consistent with the safety of its customers and the general public. 2. The City will have the right to suspend service temporarily for the purpose of making repairs or improvements to the system. When the City finds it necessary to schedule an interruption to its service, it will, where feasible, notify all customers to be affected of the approximate time and the anticipated duration of the interruption. The City will endeavor to schedule interruptions at hours that will be least inconvenient to the customers and consistent with economical utility operations. C. SHORTAGE of SUPPLY 1 During times of threatened or actual shortage of supply, the City will apportion the available supply among its customers in accordance with the Emergency Load Shedding Plans, incorporated herein by reference, on file in the Utilities Department. With due regard for public health and safety, these plans will provide for shortages caused by insufficient supply or natural or man -made events which reduce the capacity of the City's suppliers and the City is requested top limit the level of delivery to its customers of some specified period of time of "until further notice ". The City Administrator is authorized to adjust the Emergency Load Shedding Plans to reflect changes in personnel, distribution systems, utility services, or other factors, when, in his or her opinion, such adjustments will lead to better protection of the public health, safety, and general welfare. Revised: January 17, 2005 V - 7 City of Vemon — Gas Division SECTION VI MAINTENANCE FOR A CLASS 3 LOCATION a *Note: First repair option if feasible, remove the section of line Revised: January 17, 2005 VI - 1 City of Vemon — Gas Division INTEN 'OR A CL SS L a..IAT#ON 192.705 Transmission Lines - Patrolling: At highway and railroad, 4Y2 months at least four times a calendar year. All Lines operating at 60 PSI and over. All other places 7'/Z months at least two times a year. 192.721 Distribution Systems - Patrolling: (In business district) 4'4 months at least four times a calendars r. ill tines operating: a m.0 PSI. 192.706 Transmission Lines ' - ,eaage'Surveys: least (1) once each calendar year but not exceeding a 5-month nterva 192.723 Distribution Systems Leakag Surveeys::In business district, at least one time each calendar year biknOi exceeding a 15 month interval. 192.709 Transmission Lines - Record Keeping: Each repair made including pipe -to -pipe connections must be retained for as long as the pipe remains in service. Each repair made to parts of the pipeline other than the pipe must be retained for five years. The date, location and description of each repair. However, repairs generated by patrols, survey and inspections, the records are retained for five years or the next patrol, survey, inspection, or test is completed. Whichever is longer. 192.715* Transmission Line - Permanent Field Repair Welds: Install a full encirclement welded split sleeve of appropriate design. 192.717* Transmission Lines - Permanent Field Repair of Leaks: Install a full encirclement welded split sleeve or appropriate design. If leak is due to corrosion, repair can be a fillet weld over the pit area. A steel plate patch with rounded comers of the same or greater thickness than the pipe. 192.719 Transmission Lines - Testing of Repairs: If a segment of transmission line is repaired by cutting the damaged portion of the pipe as a cylinder, the replacement pipe must be tested to the pressure required for a new line installed in the same location. This test may be made on the pipe before it is installed. The welds can be visually inspected and approved by a qualified inspector (see 192.241). 192.707 Line Markers for Mains and Transmission Lines: Mains in Class 3 locations don't require pipeline marker if the operator has a Damage Prevention Program in effect (see 192.614). Transmission lines in Class 3 location after March 20, 1996, pipeline markers are required. The letters will be at least one -inch high and one - quarter inch stroke. The information on marker should read: "WARNING" CALL BEFORE YOU DIG" BURIED H.P. NATURAL GAS LINES THE CITY OF VERNON (323) 583 -8811 These markers shall be installed and maintained at each public and railroad crossing and whenever necessary to identify the location transmission line to reduce the possibility of damage. 192.739 Pressure Limiting and Regulating Stations: Inspection and testing each pressure limiting station and pressure regulating station must be inspected at intervals not to exceed 15 months but at least once each calendar year. Inspections and test to determine the station is 1) in good mechanical condition, 2) adequacy of capacity and reliability of operation for which it was installed and 3) set to function at the correct pressure and properly installed and protected from dirt, liquids or other conditions that could prevent proper operation. 192.741 Pressure Limiting and Regulating Station: Telemetering or recording gauges. Each distribution system supplied by more one than (1) district pressure regulating station must be equipped with telemetering or pressure recording gauges to indicate the gas pressure in the district. *Note: First repair option if feasible, remove the section of line Revised: January 17, 2005 VI - 1 City of Vemon — Gas Division AiNTENA CE QR ACLAS L�CATI ©N „ 192.743 Pressure Limiting and Regulating Stations: Testing of relief devices, pressure relief device (except ruptured discs), must be tested at intervals not to exceed 15 months, but once each calendar year to determine that they have the capacity to limit the •ressure on the facilities the are connected, to the desired maximum • ressure. 192.745 Valve Maintenance — Transmissionines • ch transmission line valve that might be required during a emergen., must be inspected, partially operated at intervals not exceedin • 1 ffi m • t -but at le st o °nc ea h calendar ear. 192.747 Valve Mainten e 1 y ibut , Systems Each valve, the use of which may be necessary for tlae e.op ation of :a tem.tbust be checked and serviced at intervals not exceeding 15 months, but at least once each calendar year. 192.749 Vault Maintenance: Each vault housing pressure regulating and pressure limiting equipment and having an internal volume of 200 cubic feet or more must be inspected (1) once each calendar year to determine that it is in good physical condition and is properly ventilated, leakage free and does not present a hazard to the public safety. 192.751 Prevention of Accidental Ignition: We must minimize the danger of accidental ignition of gas in any structure or area where the presence of gas constitutes a hazard of fire or explosion. When working in a gaseous atmosphere: 1) Post waming signs and fire extinguishers near the area, 2) Protect public and property, 3) Eliminate all sources of ignition and 4) Utilize safety equipment: A. Fire retardant coveralls, B. Fresh air breathing equipment and C. Intrinsically safe flashlights and lighting equipment. Revised: January 17, 2005 VI - 2 City of Vemon — Gas Division - EXHIBIT 7.1 SERVICE RATES SCHEDULE RATES THROUGH DECEMBER 31, 2005 A. HOURLY LABOR RATES PER CLASSIFICATION CLASSIFICATION STRAIGHT TIME DOUBLE TIME (1) GAS SUPERINTENDANT $94.00 $178.00 (2) WELDER/PIPEFITTERS $88.00 $166.00 (1) CP & M &R $88.00 $166.00 (2) OPERATORS/HELPERS $78.00 $146.00 (1) SECRETARY $47.00 $70.50 ALL ON -CALL PERSONNEL WILL ALSO RECEIVE 2 HOURS PER DAY STRAIGHT TIME FOR BEING ON CALL EXCEPT ON HOLIDAYS WHERE IT WILL BE 3 HOURS TO BE ON -CALL. B. MONTHLY EQUIPMENT RATES EQUIPMENT RATES (1) F -350 FLATBED $1,680.00 (2) F -350 SERVICE TRUCKS COMPLETE $3,820.00 each WITH WELDING EQUIPMENT, AIR COMPRESSOR & TOOLS (1) CAT 420 BACKHOE COMPLETE WITH BREAKER & COMPACTION PLATE $4,285.00 (1) CAT 224E ROLLER $2,180.00 (1) CAT 928 LOADER $5,240.00 (1) INTERNATIONAL 4700 6 YARD DUMP $1,820.00 (1) F -750 2500 GALLON WATER TRUCK $1,960.00 (2) ARROW BOARDS $325.00 each ALL FUEL FOR THE ABOVE TRUCKS WILL BE PROVIDED BY THE CITY OF VERNON AS REQUESTED. 7.1 -1 K �Y EXHIBIT 7.1 (CONTINUED) C. MATERIALS AND SUPPLIES WHEN PETRELLI PROVIDES MATERIAL AND SUPPLIES AS REQUIRED FOR EVERYDAY OPERATION, THE CITY OF VERNON WILL COMPENSATE PETRELLI FOR ALL EXPENSES INCURRED TO MAINTAIN THE GAS SYSTEM. PETRELLI WILL BILL THE CITY OF VERNON A 5% MARKUP FOR THE EXPENSES INCURRED WHICH THE CITY WILL REIMBURSE. GAS SUPPLY SYSTEM MAINTENANCE AGREEMENT By and Between PETRELLI UTILITIES, INC. AND THE CITY OF VERNON This Gas Supply System Maintenance Agreement (this "Maintenance Agreement ") is made, entered into and executed in duplicate originals, either copy of which may be considered and used as the original hereof for all purposes, as of this 2nd day ofd, 2005 in the City of Vernon, County of Los Angeles, California March BY AND BETWEEN AND THE CITY OF VERNON, a California municipal corporation (hereinafter referred to as "COV") 4305 Santa Fe Avenue Vernon, CA 90058 PETRELLI UTILITIES, INC., a California corporation (hereinafter referred to as "PETRELLI ") 11615 Davenport Road Agua Dulce, CA 91390 P.O. Box 801148 Santa Clarita, CA 91380 COV and PETRELLI are each also referred to individually as a "Party" and both of which are also referred to collectively as "Parties ". All initially capitalized terms used in this Maintenance Agreement shall have the definitions ascribed to them in Exhibit "A" attached hereto and incorporated herein by this reference. 1. Scope of Services. During the Term of this Maintenance Agreement, upon receipt of the appropriate Work Authorization, PETRELLI shall provide all Services and maintain COV's Gas Supply System in a safe and reliable condition. Such Services shall include, but not be limited to, performing (a) Gas Supply System Start-up Services ( "Start-up Services "), (b) Routine Maintenance Services, and (c) Additional Services as may be requested by COV from time to time, including, without limitation, (i) Emergency Services; (ii) Return to Operation Services; (iii) Initiation Services, and (iv) Major Work. The Services shall also include construction on COV's Gas Supply System. All Services to be provided hereunder (except for Emergency Services) shall be performed only pursuant to approved Work Authorizations and will be scheduled with COV. 1.1 Start-up Services. Start-up Services will be performed separately for each of the Transmission and Distribution Systems as further described in this Maintenance Agreement. For informational purposes only, COV has attached hereto as Exhibit "1.1" a Gas Supply System Transmission and Distribution Systems Schematic for purposes of PETRELLI's use in providing Start-up Services. COV makes no representation or warranty as to the accuracy 01910/0001 116160.3 or completeness of such schematic, which is to be used for reference purposes for determination of the sections for which Start-up Services are required. 1.1.1 Transmission System. The Start-up Services to be provided for the Transmission System are described in Exhibit "1.1.1 ". The Transmission System will be placed into service at one time, in its entirety. The Transmission System is designed such that each customer will have bi- directional sources of gas supply and can effectively be isolated from the balance of the operational Gas Supply System. Within 14 calendar days following PETRELLI's receipt of COV's request for Start -up Services for the Transmission System, PETRELLI will deliver to COV a proposed start-up plan. The start-up plan will include a work plan, cost estimate, and schedule for performing the Start-up Services. The cost estimate will be in accordance with the Service Rate Schedule set forth in Exhibit 7.1. COV shall review and approve (or request revisions to) the proposed start-up plan within 14 calendar days following receipt. Following COV's approval of the start-up plan, and within 60 calendar days of PETRELLI's receipt of COV's initial request for Transmission System Start-up Services (which will be set forth in a Work Authorization), PETRELLI shall perform the Transmission System Start-up Services. 1.1.2 Distribution System. The Distribution System will be placed into operation by COV as customer demand warrants or otherwise as requested. COV will direct PETRELLI to effect start-up of the Distribution System in sections or segments when and as determined by COV. Each section or segment will be placed in service such that a given customer will have bi- directional sources of gas supply and can be effectively isolated from the balance of the operational Distribution System. The Start-up Services to be provided by PETRELLI for the Distribution System are described in Exhibit "1.1.2 ". Within 14 calendar days following PETRELLI's receipt of COV's request for Start-up Services for any segment of the Distribution System, PETRELLI will deliver to COV a proposed start-up plan. The start -up plan will include a work plan, cost estimate, and schedule for performing the Start-up Services on the identified segment. The cost estimate shall be in accordance with the Service Rate Schedule set forth in Exhibit "7.1 ". COV shall review and approve (or request revisions to) the proposed start-up plan within 14 calendar days following receipt. Following COV's approval of the start-up plan, and within 60 calendar days of PETRELLI's receipt of COV's initial request for any segment of the Distribution System Start-up Services (which will be set forth in a Work Authorization), PETRELLI shall perform the Distribution System Start-up Services for such segment. 1.2 Routine Maintenance Services. Each year, PETRELLI shall prepare a draft Routine Maintenance Plan for performing Routine Maintenance Services and submit the plan to COV for review not later than the first day of May. COV will review the Routine Maintenance Plan with PETRELLI with the expectation of having the plan completed and approved by COV's City Council prior to the commencement of COV's fiscal year on July 1st. The annual Routine Maintenance Plan shall include and describe such tasks, actions and events either directly requested by COV or identified by PETRELLI as typical and necessary to properly maintain the COV Gas Supply System to ensure its effective and safe operation. The Routine Maintenance Plan shall include routine maintenance tasks, a schedule for performing the identified tasks, and a budget for the identified tasks, as further described in Exhibit "1.2 ". Further, the Routine Maintenance Plan shall be consistent with the draft COV Operations, 2 01910/0001 116160.3 Inspection and Maintenance Plan, a copy of which is attached hereto as Exhibit "1.2.A ". After the Routine Maintenance Plan has been approved, Routine Maintenance Services will be completed under pre - approved standing Work Authorizations specifically established for these activities. PETRELLI and COV will collaborate in establishing a number of standing Work Authorizations for Routine Maintenance Services. In addition, PETRELLI shall deliver to COV an updated and revised list of maintenance tasks, proposed timing for the tasks, and budget throughout the year as required to ensure that at all times the Routine Maintenance Plan complies with all applicable CFR Requirements and all other applicable laws and regulations. The Routine Maintenance Plan shall be subject to requested changes by COV that may be delivered to PETRELLI from time to time during the year. COV's requested changes shall be made within 30 calendar days after COV's delivery of the notice requesting the change. 1.3 Scheduling of Routine Maintenance Services. All Routine Maintenance Services will be scheduled and completed at PETRELLI's convenience, within the time frames established within the Routine Maintenance Plan. Minor performance deviations or schedule deviations from the Routine Maintenance Plan that have no material adverse effect on COV or its customers shall be permitted. If, for any reason, PETRELLI does not provide Routine Maintenance Services within 30 calendar days of the time frame established in the Routine Maintenance Plan or such shorter period of time as may be required by US DOT, such failure shall not be deemed to be a "minor deviation ". In such event, COV may, at its option, obtain the Routine Maintenance Services from another source, including a third party contractor or COV personnel, and the reasonable cost of obtaining the Routine Maintenance Services from such other source, plus an administrative charge of 5 %, shall be credited against the next fees payable hereunder. 1.4 Additional Services. From time to time during the Term of this Maintenance Agreement, COV may request PETRELLI to provide Additional Services, including, but not limited to, (a) the Services described in Exhibit "1.4" attached hereto and incorporated herein by this reference, (b) Emergency Services, (c) Initiation Services, (d) Return to Operations Services, (e) Major Work; and (f) such additional services as may reasonably be requested by COV from time to time. Additional Services shall be requested and authorized by means of a Work Authorization, except for Emergency Services, which shall be initiated by PETRELLI as soon as possible after PETRELLI becomes aware of the need for Emergency Services or is requested by COV to perform Emergency Services. Such Emergency Services shall be provided pursuant to a pre - assigned Work Authorization number. PETRELLI shall seek COV's approval for the Emergency Services at the start of the next business day after the Emergency Services were initiated. Additional Services that are not time sensitive shall be scheduled at times mutually agreeable to COV and PETRELLI. COV may, at its option, obtain Services from another source, including a third party contractor or COV personnel, and the reasonable cost of obtaining such Services from such other source, plus an administrative charge of 5 %, shall be credited against the next fees payable hereunder if PETRELLI does not provide Services within the following time frames: 1.4.1 Non - emergency, non -time sensitive Additional Services within 30 calendar days after receipt of the Work Authorization. 3 01910/0001 116160.3 1.4.2 Emergency Services within 24 hours after receipt of notification of the public safety issue by any party. request. of gas services. 1.4.3 Initiation Services within 7 calendar days after receipt of 1.4.4 Return to Operation Services within 48 hours after interruption 1.4.5 PETRELLI shall respond to emergency calls, troubleshooting calls, or service calls after Normal Working Hours within one hour after the call is placed by COV. PETRELLI shall provide a weekly list of the dedicated staff that will be available to respond to such calls. The list will be due by 8:00 a.m, every Monday morning throughout the term of this Maintenance Agreement and will show the staffs name, primary phone number and alternate phone number. 2. Obligations of PETRELLI. 2.1 General Obligations. PETRELLI shall make all modifications, extensions, additions and improvements in and to COV's Gas Supply System as shall from time to time be required or necessary to serve in a safe and reliable manner the natural gas requirements of COV and its customers, both present and future. All of such Services shall be performed pursuant to Work Authorizations. 2.2 Labor, Equipment, Offices. PETRELLI shall, pursuant to Work Authorizations, furnish all labor, supervision and services and, in the event not furnished by COV, transportation, equipment, materials, supplies and tools of whatsoever kind or nature as shall from time to time be required or necessary to carry out the terms and provisions of this Maintenance Agreement. Before purchasing materials or supplies PETRELLI shall check with COV to determine if such materials or supplies are available from COV. COV shall compensate PETRELLI for such materials and supplies in accordance with Exhibit "7.1 ". PETRELLI shall also maintain office and field staffs, and construction and operations headquarters within the city limits of COV, as shall be required or necessary to meet the needs and requirements of COV and its customers, both present and future. If requested by COV to establish these offices, COV will reimburse PETRELLI for its costs. COV may, at its election, provide use of a city -owned building(s), structure(s) and/or a storage yard on city -owned property for use by PETRELLI in connection with the Services performed under this Maintenance Agreement. 2.3 Vehicles. PETRELLI will provide the vehicles needed to perform the Services and shall bill COV for the use of such vehicles pursuant to the hourly or monthly rates for such vehicles set forth in the attached Exhibit "7.1 ". 2.4 Response to Requests. Upon receipt of a Work Authorization, PETRELLI shall carry out troubleshooting activities, including responding to customer calls and complaints, traveling to various sites in COV, assessing and estimating failures or damages, safely restoring service as quickly as possible, and reporting on system and equipment status. 4 01910/0001 116160.3 2.5 Interruption of Gas Services. PETRELLI will be responsible for notifying and making any and all arrangements with COV's customers due to any service interruption which will be caused in the Services to be provided hereunder. Notwithstanding anything to the contrary set forth herein, in the event of any interruption of gas service that is not cured by a return to service within 48 hours after the interruption, COV shall have the rights set forth in Section 1.4 above. 2.6 Compliance with Laws. All Services provided hereunder shall comply with CFR Requirements, other applicable laws and regulations, and all guidelines and requirements of governmental and quasi - governmental agencies having jurisdiction over the Gas Supply System and the Services provided hereunder, including, without limitation, US DOT OPS and, to the extent applicable, the PUC. 2.7 Level of Services. All work shall be performed in accordance with COV's standards, codes, ordinances, rules, regulations and operating procedures. Where no such applicable code, ordinance, rule, regulation or operating procedure exists, PETRELLI shall perform work in accordance with good and prudent utility practice. PETRELLI shall use reasonable efforts to perform all Services requested hereunder. PETRELLI agrees that it shall provide services and maintain COV's Gas Supply System for and on behalf of COV, subject to and in accordance with good utility practice and in accordance with the terms and provisions of this Maintenance Agreement and direction given by COV's authorized representatives. PETRELLI shall also respond to COV's requirements for any and all city purposes and of all COV customers, both present and future, of COV's Gas Supply System and shall provide safe, proper, efficient and reliable Services as provided under good utility practice. 2.8 PETRELLI to Provide Notice to COV. During the performance of its Services, PETRELLI shall reasonably determine if, in PETRELLI's professional opinion, elements of COV's Gas Supply System require repair, replacement or alteration. PETRELLI shall, within 7 calendar days after the performance of the Routine Maintenance Services, provide written notification of these observations, along with a recommended course of action; provided, however, that if PETRELLI identifies an Emergency Situation and is unable to provide immediate oral notification to COV, PETRELLI will take all necessary corrective action and will be fully reimbursed for all repairs, replacements and alterations that it makes to COV's Gas Supply System with respect to the Emergency Situation, regardless of whether COV specifically authorized such Services. COV will be informed of the Emergency Situation as soon as practical, which may occur after completion. PETRELLI shall be obligated to follow prudent utility practice and act as a professional utility company would under similar circumstances. Any recommendation of PETRELLI that relates to safety or the protection of persons or property shall be given orally and delivered in writing to the COV contact person for Operational Matters (in the manner and to the person as set forth in Section 15) and to any person identified as the authorized representative to receive notices in accordance with Section 14, in written form and identified in capital letters as being an "URGENT SAFETY RECOMMENDATION". Further, PETRELLI's response to an Emergency Situation shall be consistent with the draft COV Gas Emergency Operating Plan, a copy of which is attached hereto as Exhibit "2.3 ". 2.9 Reporting Requirements. 01910/0001 116160.3 5 2.9.1 Routine Reporting. PETRELLI will submit to COV current accountings and reports, as well as maintenance and inspection schedules, with sufficient supporting data covering activities engaged in and work performed by PETRELLI. The maintenance schedules shall identify the location and valve numbers inspected. PETRELLI shall maintain a system database to track and report inspection results and corresponding repairs and corrections. The accountings, reports, and maintenance and inspection schedules shall be provided every thirty days, on the first business day (Monday through Thursday) of each month throughout the term of this Maintenance Agreement. Such report shall describe the Routine Maintenance Services performed in the previous month (including type, location, and date of the Services), along with any budget or schedule variances. The report shall include and be consistent with the various inspection forms contained within the draft COV Operations, Inspection and Maintenance Plan, a copy of which is attached hereto as Exhibit "1.2.A ". 2.9.2 Emergency Reporting. Emergency reporting shall be in accordance with Section 1.4. 2.9.3 Regulatory Reporting. COV shall be responsible for submitting reports or making any required filings with governmental agencies having jurisdiction over COV and the Gas Supply System. From time to time, COV may request PETRELLI's assistance in preparing such reports. Within 30 calendar days after request by COV, PETRELLI shall, during the Term of this Maintenance Agreement and thereafter, as to Services provided during the Term, provide COV with all records, certifications, reports, schedules or other documents as necessary to support COV's reporting requirements and obligations to governmental and regulatory agencies. Except as otherwise required by law or as consented to in writing by COV, PETRELLI shall not be obligated to, and shall not, file any reports or send copies of any records to any governmental agency in respect to COV's Gas Supply System. 2.10 Right to Stop Services. PETRELLI may stop any Services if it encounters a Pre - Existing Environmental Liability. PETRELLI shall immediately notify COV of any discovery by PETRELLI of a Pre - Existing Environmental Liability. Such notification shall be oral, followed by a written notice delivered to the COV contact person for Operational Matters (in the manner and to the person as set forth in Section 15) and to any person identified as the authorized representative to receive notices in accordance with Section 14, in written form and identified in capital letters as being an "URGENT SAFETY ISSUE. ". PETRELLI, with the concurrence of COV, may elect to resume work if PETRELLI has reasonably determined that it may complete such Services without affecting or being affected by the Pre - Existing Environmental Liability. 2.11 Performance Bond. Intentionally deleted. 2.12 Personnel/Workforce. 2.12.1 Employees. To perform the foregoing Services, PETRELLI shall provide a minimum level of employee staffing and said staff shall be dedicated to perform services on COV's Gas Supply System. The employee staffing is as follows: 6 01910/0001 116160.3 Quantity Classification 1 Gas Superintendent 2 Welders/Pipefitters 2 Operator/Helper 1 Clerk/Secretary 1 CPM &R (Cathodic Protection, Measurement and Regulations) Total 7 2.12.2 Subcontractors. PETRELLI may supplement this level of staffing with pre- approval by COV, to the extent necessary to perform the Services. PETRELLI shall not increase or decrease this level of staffing by adding or deleting full -time employees without the prior written approval of COV. If COV wishes to increase or decrease the scope of the Services to be provided hereunder, COV shall be permitted to do so upon providing 4 months written notice to PETRELLI. PETRELLI may also supplement this level of staffing through the use of subcontractors, if pre - approved by COV, to the extent necessary to perform the Services. To the extent subcontractors are authorized, PETRELLI may bill COV an administrative fee of 5% of its cost for such subcontractors with prior written consent of COV. Any contract personnel or subcontractors employed by PETRELLI will be supervised by PETRELLI supervisory or management personnel. 2.123 COV Approval. PETRELLI shall consult with COV and COV shall have the right to consult with PETRELLI relating to the qualifications of the employees and subcontractors who will be assigned and dedicated to provide Services. 2.13 No Conflict. PETRELLI shall not accept or bid for any work for any of COV' s customers, unless COV provides, in its sole discretion, advance written consent and agrees that such work shall not constitute a conflict of interest. 3. Independent Contractor PETRELLI shall provide Services to COV as an independent contractor, not as an employee of COV. PETRELLI shall not have or claim any right arising from employee status. 4. COV's Responsibilities For COV's Gas Supply System 4.1 Filing Reports. For all purposes, COV is the owner and operator of COV's Gas Supply System and has the obligation to file all applicable reports with any federal or state agencies. 4.2 Payment of Fees/Processing of Permits. The COV Gas Department or other applicable department will pay for all applicable COV fees and expedite all applicable COV permits needed for PETRELLI's performance of all Services. 7 01910/0001 116160.3 5. Ownership Of Data, Information And Documentation COV shall provide to PETRELLI, without representation or warranty as to accuracy or completeness, copies of all COV Gas Supply System pipeline records at any time after the Execution Date of this Maintenance Agreement and before PETRELLI shall be required to perform any Gas Supply System Start-up (or any other) Services hereunder. All data and information developed or obtained by PETRELLI regarding COV's Gas Supply System while rendering Services under this Maintenance Agreement (with the exception of the data and information set forth in the last sentence of this paragraph) shall be the sole property of COV and shall be provided to COV within 30 calendar days following PETRELLI's development or receipt thereof (except for information and documents provide to PETRELLI by COV). PETRELLI may keep copies of such data, information and documentation as necessary (i) to perform Services hereunder, (ii) to maintain the safe and reliable service of its own gas system, and (iii) for historical purposes. Provided further, that PETRELLI shall be prohibited from disclosing the data, information and /or documentation to any third party except in response to a subpoena or for purposes of litigation between PETRELLI and COV or between PETRELLI and any other party pertaining to this Maintenance Agreement or the Services provided hereunder. Notwithstanding the foregoing, however, PETRELLI shall maintain ownership rights to all data and information in its possession prior to the Execution Date of this Maintenance Agreement. 6. Reliance on PETRELLI; Warranty 6.1 Standard of Services. COV is entering into this Maintenance Agreement in reliance on PETRELLI's special and unique abilities with respect to performing the Services. PETRELLI accepts the relationship of trust and confidence established between COV and PETRELLI by this Maintenance Agreement. PETRELLI shall furnish its best efforts, skill, judgment, and abilities in performing the Services in the manner of a professional and prudent company with experience in the Services to be performed hereunder, using prudent utility practice. PETRELLI shall perform the Services (a) in accordance with the terms of this Agreement; (b) with sufficient and skilled personnel and support; (c) with the highest standards of care, skill, and competence in the industry; and (d) in compliance and in conformance with all applicable laws. PETRELLI shall have the duty to promptly report or fix any leaks or other problems with COV's Gas Supply System or any part of it that would be discovered by a prudent utility company using best efforts and skills. 6.2 Non - Liability. Except as set forth above, PETRELLI shall not have any liability to COV arising out of the construction of COV's Gas Supply System including, but not limited to, construction defects or any incident which is the result of inaccuracies in the Gas Supply System's as -built drawings. 6.3 Warranty. PETRELLI warrants that the Services which are provided hereunder will be performed in compliance with applicable CFR Requirements, all other legal requirements, and the terms of this Agreement. PETRELLI warrants that the equipment will operate properly, that the personnel will have been properly trained in the use of it, and the personnel will have performed the work with the highest level of skill and knowledge of such workers in the industry. 8 01910/0001 116160.3 7. Fees For Services 7.1 Time and Materials. PETRELLI shall be paid on a time and materials basis in accordance with (a) PETRELLI's customary rates which are set forth in Exhibit "7.1" attached hereto and incorporated herein (the `Basic Rates "), and (b) cost of materials plus 5% (provided, however, that if costs of materials are discounted as a result of quantity purchases, rebates, or other reasons, the cost charged to COV shall take into account any such discounts on a dollar for dollar basis). Fees for use of equipment and vehicles are set forth in Exhibit "7.1 ". Accurate records of labor and materials shall be maintained by PETRELLI and provided to COV as set forth in Section 8 below. 7.2 Increase in Basic Rates. The Basic Rates set forth in Exhibit "7.1" may only be increased during the term of this Agreement to the extent PETRELLI's costs rise under the Agreement between PETRELLI and Local Union No. 47 AFL -CIO International Brotherhood of Electric Workers. To the extent the Basic Rates are increased and agreed upon by COV pursuant to this Section 7.2, PETRELLI shall revise Exhibit "7.1 ", and the revised Exhibit "7.1" shall become part of this Agreement as if originally attached on the effective date of this Agreement. 7.3 PETRELLI to Pay for Services. COV shall only pay PETRELLI for the Services performed under this Maintenance Agreement pursuant to the fees set forth in Exhibit "7.1 ". PETRELLI shall be responsible for paying the salaries of its own employees and subcontractors, as well as payment for all relevant holidays, vacation time and other benefits. COV will not be responsible, in any way, for the payment of the salaries or benefits for PETRELLI's employees or subcontractors. 8. Billing And Payment PETRELLI shall submit a monthly invoice to COV setting forth an itemization of the amount due for Services rendered and an itemization of amounts due for materials. The monthly statement shall include accounting data of sufficient detail and clarity to enable COV to validate and, if necessary, audit the expenses and costs provided for in such statement, and shall, at a minimum, list the Services provided, the title of the person providing the Services, that person's hourly rate and the number of hours charged for the specific Service, as well as a list of material purchased (with invoices). Any reimbursable expenses shall also be documented, including, without limitation, rental or purchase of equipment, mileage, and travel expenses. Such expenses shall be reimbursed by COV in accordance with its standard reimbursement amounts, requirements, and procedures. COV shall pay the full amount of approved invoices within thirty (30) calendar days after receipt. Any sums billed, not disputed in written form setting forth specified exceptions and unpaid after thirty (30) calendar days from the date of rendering, shall be subject to a late payment charge equal to the lesser of one and one -half percent (1'/2 %) or the maximum rate permitted by law, for each month or fraction thereof past due. Any amounts subject to such written exception by COV which are later determined to be valid, or such part as is later determined to be valid, shall be subject to the late charge. 9 01910/0001 116160.3 9. Term Of Agreement 9.1 Effective Date. This Maintenance Agreement is effective and in full force and effect as of the Execution Date, and COV shall have the right to request Transmission System Start-up Services or Distribution System Start-up Services at any time within the first 365 calendar days after the Execution Date, with the date of COV's request that PETRELLI provide Transmission Start-up Services or Distribution System Start-up Services being referred to as the "Effective Date ". PETRELLI shall not be obligated to perform any other Services until the occurrence of the Effective Date of this Maintenance Agreement. If COV has not requested the Transmission or Distribution Start-up Services within 365 calendar days after the Execution Date, or such later date as the parties may mutually agree upon in writing, then this Maintenance Agreement shall terminate automatically, and without either Party having any further obligation or liability to the other. COV may request that PETRELLI perform Distribution Start-up Services at any time and from time to time after the Effective Date. PETRELLI will provide Start-up Services (either Transmission or Distribution, as applicable) within 60 calendar days following its receipt of COV' s written request issued in compliance with the terms of this Section 9.1. 9.2 Term. This Maintenance Agreement shall be effective for a term of five years from its Effective Date, unless terminated earlier in accordance with specific sections of the Maintenance Agreement. COV shall have the option to extend the term of this Agreement for an additional five years by providing to PETRELLI notice of COV's exercise of such option at least ninety (90) days prior to the expiration of the existing Term. If the option is exercised, all references to Term set forth herein shall mean the initial five year term plus the additional five year period. 9.3 Services Following Termination. PETRELLI, at its discretion, may complete any Services it was providing as of the termination date, but which were not yet completed, as long as completion is reasonably expected to occur within 7 calendar days thereafter, and shall complete any Services it was providing as of the termination date at the request of COV. 10. Termination, Default, And Remedies 10,1 Termination Without Cause. This Maintenance Agreement may be terminated by COV for its convenience, with or without cause, upon thirty (30) calendar days prior written notice. In such event, COV shall pay to PETRELLI (a) all fees earned by it prior to the effective date of the termination notice, plus compensation for (a) necessary work performed during the 21 calendar day notice period and authorized in the termination notice, and (b) all costs reasonably and necessarily incurred by PETRELLI in effectuating the termination. 10.2 Default by PETRELLI. COV shall notify PETRELLI in writing if COV, in good faith, determines that it has reasonable cause to believe PETRELLI is acting negligently in completing any Services, is not acting in accordance with the CFR Requirements, or has defaulted under any of its other covenants hereunder. Such notice shall describe the alleged default. If PETRELLI fails to correct such problem within seven (7) calendar days after receipt of said notice, or if the problem is not capable of being corrected in such time, then if PETRELLI 10 01910/0001 116160.3 fails to commence taking corrective actions within said period and diligently pursue them to completion, COV may commence the dispute resolution procedure described in Section 32 below. Following the conclusion of the dispute resolution procedure, if COV, in good faith, determines that the result or cure is not acceptable, COV may terminate this Maintenance Agreement upon twenty -three (23) calendar days written notice. Nothing set forth herein affects PETRELLI's liability for, and COV's right to recover damages (including, without limitation, attorneys' fees and costs, fines, penalties, or other costs resulting from an order by an enforcement agency from PETRELLI) in the event of PETRELLI's negligence, failure to perform in accordance with the CFR Requirements, default, or wrongful acts or omissions. COV may not terminate this Maintenance Agreement under this Section 10.2 without first invoking the dispute resolution procedure. 10.3 Failure of COV to Perform. If COV fails or refuses to accept PETRELLI's recommendation regarding the repair of a defect in the construction of COV's Gas Supply System which PETRELLI believes may exist, or fails or refuses to accept any other reasonable and appropriate course of action recommended by PETRELLI with respect to any Services that PETRELLI believes should be provided hereunder, and if the Parties are unable to agree upon a mutually satisfactory course of action within sixty (60) calendar days after PETRELLI sends written notice of such to COV, then either Party may commence the dispute resolution procedure described in Section 32 below. If, following the conclusion of the dispute resolution procedure, either party, in good faith, determines that the result or cure is not acceptable, that party may terminate this Maintenance Agreement upon thirty (30) calendar days written notice to the other party. In the event of a termination under this Section 10.3, the performance bond shall not be forfeited. Neither party may terminate this Maintenance Agreement under this Section 10.3 without first invoking the dispute resolution procedure. 10.4 Non - Payment by COV. ff COV fails to pay invoices more than sixty (60) calendar days following written notice of delinquency (excluding invoices which COV has disputed in writing), in addition to any other remedy, PETRELLI may suspend performance of all Services hereunder without liability to COV until payment of all nondisputed invoices is made in full. If COV fails to pay invoices more than thirty (30) calendar days following a second written notice of delinquency (excluding invoices which COV has disputed in writing), PETRELLI may terminate this Maintenance Agreement. In the event of a termination under this Section 10.4, the performance bond shall not be forfeited. 10.5 Termination by PETRELLI. Intentionally deleted. 10.6 Conduct Upon Termination. Upon termination or the expiration of this Maintenance Agreement, PETRELLI shall have no further obligation to provide Services to COV. Upon termination, PETRELLI shall render a final bill for Services to COV within thirty (30) calendar days of the date of termination, and COV shall pay PETRELLI for all fees earned and expenses incurred prior to the date of termination or pursuant to Section 9.3, in accordance with Section 8. 11 01910/0001 116160.3 11. No Duty To Third Parties Nothing in this Maintenance Agreement shall create a right of action for breach of a duty to, violation of any standards of care with reference to, or otherwise create any liability to any person not a party to this Maintenance Agreement. No other party shall be a third party beneficiary to this Maintenance Agreement. 12. Insurance. 12.1 Required Insurance. PETRELLI shall procure and maintain in full force and effect during the Term of this Maintenance Agreement, the insurance in the amounts specified below. COV shall reimburse PETRELLI or pay directly the costs of such insurance premiums. 12.1.1 Commercial General Liability (including personal injury, bodily injury (employee exclusions deleted), contractual liability (covering the indemnity contained in Section 13), broad form property damage, owner's protective liability, operations premises liability, explosion, collapse and underground property damage, and cross - liability coverage, written in an "occurrence" form, with limits of $5,000,000 each occurrence. 12.1.2 Automobile Liability Insurance covering all owned, hired and non -owned vehicles with a combined single limit of not less than $5,000,000 each occurrence. The deductible shall not exceed $1,000. 12.1.3 Workers' Compensation and Employer's Liability Insurance as required by law with a limit of liability of at least $1,000,000 each occurrence /aggregate. 12.1.4 All Risk Property insurance covering PETRELLI's property. 12.1.5 Umbrella/Excess Liability coverage with a limit of not less than $4,000,000 over the primary insurance limits stated above. 12.2 Requirements for Policies. The above - described insurance (except for Workers' Compensation) shall name COV as an additional named insured, shall be primary, non contributing, and without recourse to any insurance or self - insurance maintained by COV and provide at least thirty (30) calendar days prior written notice of any material adverse change or cancellation. The coverages set forth above shall waive all rights of subrogation against COV. 12.3 Certificate of Insurance. PETRELLI shall deliver to COV a certificate of insurance evidencing the required insurance before any Services are commenced after the Effective Date and periodically thereafter as may be required to show the coverage continues in effect. In addition to the standard certificate of insurance, proof of insurance, if requested by COV, for each policy shall require a notarized letter from the underwriter or carrier certifying that the coverage and statements in the standard certificate of insurance (attached thereto) are true and correct and that the signatory is an officer authorized to so certify. Alternatively, a copy of each policy certified by an officer of the underwriter or carrier and notarized may be provided as proof of insurance. 12 01910/0001 116160.3 12.4 No Affect On Liability. This Section 12 does not limit or expand PETRELLI's liability under this Maintenance Agreement, and it is not affected by any other section of this Maintenance Agreement unless specifically referenced in such section. 13. Indemnity And Liability 13.1 PETRELLI shall indemnify, defend and hold harmless COV, its elected officials, staff, employees, contractors, representatives, and agents from and against (a) any and all liabilities, claims, suits, actions, demands, damages, losses and expenses, including but not limited to attorney's fees and expenses, judgments, settlements, and penalties of every kind, and (b) injuries to person or damage to property (collectively, "Claims ") related to or arising out of PETRELLI's (either directly or through its officers, agents, employees, consultants, subcontractors, or representatives) negligent or wrongful acts, errors, or omissions, the performance (or nonperformance) of the Services, or the violation of any term of this Maintenance Agreement. The foregoing indemnity shall not apply to Claims to the extent that they arise from willful misconduct of COV, its elected officials, staff, employees, contractors, representatives, or agents. This indemnity shall survive the termination of this Maintenance Agreement. 14. Authorized Representatives Within thirty (30) calendar days after the Effective Date of this Maintenance Agreement, each Party shall designate by written notice to the other Party a representative who is authorized to act on its behalf in the implementation of this Maintenance Agreement and with respect to those matters contained herein which are the function and responsibilities of the authorized representatives, only if different from representatives designated in Section 15, "Notices ". Either Party may at any time change the designation of its authorized representative by written notice to the other Party. 15. Notices Any notice, demand, information, invoice, report, or item otherwise required, authorized, or provided for iri this Maintenance Agreement, unless otherwise specified herein, shall be in writing and shall be deemed properly given if delivered in person, sent by telecopy during normal business hours with a confirmation copy mailed on the same business date, sent by United States Mail, First Class postage prepaid, or sent by reputable overnight courier, prepaid. If sent by telecopy, notice shall be deemed received when the telecopy is sent, and if sent by mail, personal delivery, or overnight courier, notice shall be deemed received on the date of delivery or failure to accept delivery. To PETRELLI: 13 01910/0001 116160.3 PETRELLI UTILITIES, INC., 11615 Davenport Road Agua Dulce, CA 91390 Attn: Sal Petrelli or To COV: For Official Notices & Contract Matters: Attention: Bruce Malkenhorst Title: City Administrator Telephone: 323/583 -8811 Telecopy: 213/581-7924 P.O. Box 801148 Santa Clarita, CA 91380 Attn: Sal Petrelli City of Vernon 4305 Santa Fe Avenue Vernon, California 90058 For Operational Matters: Attention: Carlos Fandino Title: Systems Manager Telephone: 323/583 -8811 X573 Telecopy: 323/826 -1425 Either Party may, at any time, by notice to the other Party, designate different or additional persons or different addresses for the giving of notices hereunder. 16. Force Majeure Neither Party shall be considered to be in default in the performance of any of its obligations under this Maintenance Agreement (other than obligations of said Party to pay costs and expenses) when a failure of performance shall be due to an uncontrollable force. The term "uncontrollable force" shall mean any cause beyond the control of the Party affected, including but not restricted to flood, earthquake, storm, fire, lightening, epidemic, war, riot, civil disturbance or disobedience, labor dispute, labor or material shortage, sabotage, restraint by court order or public authority, and action or nonaction by or inability to obtain the necessary authorization or approvals from any governmental agency or authority, which by exercise of due diligence such Party could not reasonably have been expected to avoid and which by exercise of due diligence it has been unable to overcome. Nothing contained herein shall be construed so as to require either Party to settle any strike or labor dispute in which it may be involved. If PETRELLI notifies COV that it will be unable to perform Services hereunder as a result of a un "uncontrollable force ", COV may, at its option, use its own staff or other contractors to perform such services or otherwise replace the Services from another source, including a third party contractor or COV personnel, and the reasonable cost of obtaining such Services from such other source, shall be credited against the next fees payable hereunder. Either Party rendered unable to fulfill any of its obligations under this Maintenance Agreement by reason of an uncontrollable force shall give prompt written notice of such fact to the other Party and shall exercise due diligence to remove such inability with all reasonable dispatch. 17. Successors In Interest This Maintenance Agreement shall be binding on, and inure to the benefit of, each Party's successors in interest, including their heirs, legates, assignees and legal representatives. Without the prior written consent of COV, which shall not be unreasonably withheld, 14 01910/0001 116160.3 Without the prior written consent of COV, which shall not be unreasonably withheld, conditioned or delayed, PETRELLI shall not assign its obligations under this Maintenance Agreement, except to an affiliate, by merger, through a sale of its stock or assets or sale of substantially all its distribution facilities. 18. Waiver Any waiver at any time by either Party of its rights with respect to a default under this Maintenance Agreement, or with respect to any other matters arising in connection with this Maintenance Agreement, shall not be deemed a waiver with respect to any subsequent default or other matter. 19. No Partnership Nothing contained in this Maintenance Agreement shall be construed to create an association, trust, partnership, or joint venture or impose a trust or partnership duty, obligation, or liability on or with regard to either Party. 20. Amendment All changes or modifications to this Maintenance Agreement shall be in a writing which states it is an amendment to this Maintenance Agreement and is signed by both Parties. This Maintenance Agreement shall not be modified through course of dealing, usage or trade. 21. Governing Law This Maintenance Agreement shall be construed and interpreted according to, and the rights of the Parties shall be governed by, the laws of the State of California. 22. Entire Agreement This Maintenance Agreement constitutes the complete and final expression of the agreement of the Parties and is intended as a complete and exclusive statement of the terms of their agreements and supersedes all prior and contemporaneous offers, promises, representations, negotiations, discussion, communications and agreements which may have been made in connection with the subject matter hereof. This Maintenance Agreement includes exhibits A, 1.1, 1.1.1, 1.1.2, 1.2, 1.2.A, 1.4, and 7.1, each of which is hereby incorporated herein by reference. 23. Severability If any of the provisions of this Maintenance Agreement are determined by a court of competent jurisdiction to be invalid or unenforceable, such provisions shall be limited to the extent required to make them valid and enforceable, and if necessary, they shall be severed from this Maintenance Agreement. Any such provisions shall not affect the remainder of this Maintenance Agreement, which shall remain in full force and effect. 15 01910/0001 116160.3 24. Authority The signatories hereto represent that they are authorized to enter into this Maintenance Agreement on behalf of the Party for whom they sign. 25. Attorneys' Fees In the event any action is brought to enforce the terms of this Maintenance Agreement, the prevailing Party shall be entitled to recover its reasonable attorney's fees (whether of salaried employees of such party or of outside counsel) and costs in addition to such other relief as the Party may be awarded. 26. Counterparts This Maintenance Agreement may be executed in any number of counterparts, each of which shall constitute an original but all of which together shall constitute but one and the same instrument. 27. Headings All section and paragraph headings and captions are solely for convenience and shall not affect the interpretation of this Maintenance Agreement. 28. Survival Where the context permits, the representations, warranties, agreements and indemnities contained in this Maintenance Agreement shall survive the termination. 29. No Interpretation of Ambiguities Against Drafting Party This Agreement has been negotiated at arm's length between persons knowledgeable in the matters dealt with herein. In addition, each Party has been represented by experienced and knowledgeable legal counsel. Accordingly, the Parties agree that any rule of law, statute, legal decision, or common law principles of similar effect, that would require interpretation of any ambiguities in this Agreement against the Party that has drafted it, is of no application and is hereby expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intentions of the Parties. 30. Agents Unless the context clearly indicates otherwise, the names "COV" and "PETRELLI" shall include each Party's contractors and their directors, officers, officials, staff, employees and agents. 31. Purchase Orders COV may issue purchase orders, work orders or any similar document to order Services hereunder. Such orders shall be only for COV's convenience, however, and shall be given effect 16 01910/0001 116160.3 only as authorizing specific Services. Such orders shall not alter, add to, vary, contradict or amend this Maintenance Agreement. 32. Dispute Resolution 32.1 Senior Management Negotiation. Prior to terminating this Maintenance Agreement for cause or filing any formal claim, proceeding in arbitration or litigation, the aggrieved party shall provide a written Notice of Dispute to the other party. Within 10 calendar days following receipt of the Notice of Dispute, senior management of each Party shall meet and employ best efforts to arrive at an amicable and equitable solution or settlement to avoid a claim or litigation. For purposes of this Maintenance Agreement, the senior management assigned to meet to resolve the issue shall be a person with the authority to commit the Party to a resolution. If the dispute is not resolved within 7 calendar days after the first meeting between senior management following the delivery of the Notice of Dispute, or if a Party refuses to meet within the 10 calendar day period following receipt of the Notice of Dispute, either party may submit the matter to binding arbitration to be held before a panel of three arbitrators in accordance with the procedures set forth below. 32.2 Arbitration as Sole Procedure, All disputes arising out of or related to this Maintenance Agreement, the conduct of either Party in connection with this Maintenance Agreement, and the relationship and rights of the Parties in connection with this Maintenance Agreement, whether characterized as breach of contract, tort, or otherwise (except for those requesting injunctive relief) shall be determined by binding arbitration in accordance with the terms of this Section 32. The submittal of all matters to arbitration in accordance with the terms of this Section 32 is the sole and exclusive method, means and procedure to resolve any and all claims, disputes or disagreements arising under this Maintenance Agreement, except for claims by either party which seek injunctive relief, which claims shall be resolved by suit filed in the Superior Court of Los Angeles County, California, the decision of which court shall be subject to appeal pursuant to applicable law. The parties hereby irrevocably waive any and all rights to the contrary and shall at all times conduct themselves in accordance with the terms of this Section 32, relying on arbitration as the sole means of resolution of disputes. 32.3 JAMS. Arbitration of all matters required to be arbitrated hereunder shall take place before a panel of three retired judges of the Superior Court of the State of California (the "Arbitrators ") under the auspices of Judicial Arbitration & Mediation Services, Inc. ( "JAMS "). Such arbitration shall be initiated by the Parties, or either of them, within ten (10) calendar days after either Party sends notice of a demand to arbitrate (the "Arbitration Notice ") to the other Party and to JAMS, which Arbitration Notice is not to be given until the procedures set forth in Section 32.1 have been followed. The Arbitration Notice shall contain a description of the subject matter of the arbitration, the dispute with respect thereto, the amount involved, if any, and the remedy or determination sought. 32.4 Selection of Arbitrators. Each Party shall select a retired judge from the JAMS panel, and the two selected judges shall mutually agree on the third retired judge from the JAMS panel. If one of the Parties does not select a retired judge from the JAMS panel within 14 calendar days after receipt of the Arbitration Notice, JAMS will select the second judge, and the judge selected by JAMS and the judge selected by the other Party will select the third judge for 17 01910/0001 116160.3 the panel. The third judge is to be selected within 10 calendar days following the selection of the first two judges. The three judges will together serve as the Arbitrators. In the event of any subsequent vacancies or inabilities to perform among the Arbitrators appointed, the Arbitrators involved shall be replaced in accordance with the provisions of this Section 32 as if such replacement was an initial appointment to be made under this Section 32 within the time constraints set forth in this Section 32, measured from the date of notice of such vacancy or inability to the person or persons required to make such appointment, with all the attendant consequences of failure to act timely if such appointment person is a party hereto. 32.5 The Decision. The arbitration shall be conducted in Los Angeles, California. Any party may be represented by counsel or other authorized representative. In rendering a decision(s), the Arbitrators shall determine the rights and obligations of the parties according to the substantive and procedural laws of the State of California and the terms of this Maintenance Agreement. The decision of the Arbitrators shall be based on the evidence introduced at the hearing, and shall be based on, and accompanied by, a written statement of decision explaining the factual and legal basis for the decision as to each of the principal controverted issues. The agreement of two of the three Arbitrators as to the resolution of the dispute shall be a conclusive resolution. The Arbitrators shall deliver the written decision to the Parties within 30 calendar days following the date of the selection of the last of the Arbitrators. The decision shall be conclusive and binding, and it may thereafter be confirmed as a judgment by the Superior Court of the State of California, subject only to challenge on the grounds set forth in the California Code of Civil Procedure Section 1286.2. The validity and enforceability of the decision of the Arbitrators is to be determined exclusively by the California courts. 32.6 Payment of Arbitrators. The Arbitrators may, in their discretion, require one Party to pay all or a percentage in excess of 50% of the cost of the arbitration (including the cost of the Arbitrators), based on the relative merits of each Party's position on the issues. If the Arbitrators do not award the cost of arbitration, each Party shall pay for the services of its appointed Arbitrator, and for one -half of the cost of the third Arbitrator. 18 01910/0001 116160.3 32.7 Continuation of Work and Payments. Unless required to stop work by COV, PETRELLI shall be required to continue to provide all Services during the dispute resolution process. In the event of a monetary dispute, COV shall continue to pay all undisputed amounts on the basis otherwise due and payable during the dispute resolution process. IN WITNESS WHEREOF, the Parties have executed this Maintenance Agreement as of the dates below their signatures. City of Vernon, a California Petrelli Utilities, Inc., Municipal Corporation a Califo i is Corporation B Date: ATTEST Citrkc eonis C. Malburg, Mayor March 2, 2005 B Name & Title: Salyetrelli, President Date: 5 " / - 0:5 _at glA By: y (� Bruce V. Malkenhorst, City Clerk APPROVED AS TO FORM: Eric T. Fresch, City Attorne 01910/0001 116160.3 19 Name & Title: Cindy Petrelli, Secretary Date: 3- 51-- 45T Additional Services Arbitrator CFR Requirements COV' s Gas Supply System Distribution System Distribution System Start-up Services Effective Date Emergency Services Emergency Situation Execution Date 01910/0001 116160.3 EXHIBIT A DEFINITIONS Those Services described in Section 1.4 and applicable exhibits, and such other additional Services which may be requested from time to time by COV. An arbitrator meeting the criteria set forth in Section 32.3. Requirements applicable to the Services to be provided hereunder pursuant to Title 49 of the Code of Federal Regulations, and as enforced by US DOT, Office of Pipeline Services. All facilities now or hereafter owned by COV for providing gas service in the COV including, but not limited to, supply lines (supply lines are defined as COV' s facility between the metering station and the regulator station), transmission lines, distribution lines, service lines, regulator stations, meter set assemblies, cathodic and corrosion protection and monitoring systems, system isolation valving, and other related appurtenances. The COV system comprised of approximately 44 miles of 6-inch diameter medium density polyethylene pipe as described in Exhibit "1.1 ". As described in Section 1.1.2 of this Maintenance Agreement and its applicable exhibits. The date on which COV delivers to PETRELLI a written request that PETRELLI provide Gas Supply System Start-up Services. Those Services required in the event of a gas leak, fire, explosion, or the sight, sound, or smell of leaking gas, or other events that could create a situation of imminent public safety or emergency, with the possibility of harm to persons or property, or as otherwise may be defined by CFR Requirements. Includes all repairs, replacements and alterations that PETRELLI makes to COV's Gas Supply System with respect to an Emergency Situation. An unsafe condition which PETRELLI in good faith believes requires immediate response in order to protect persons or property from imminent danger or harm. The date on which each Party has signed this Maintenance Agreement and delivered a copy to the other; stipulated to be the date identified in the first paragraph of the Maintenance A -1 Gas Supply System Gas Supply System Start-up Services Gas Supply System Transmission and Distribution Systems Schematic Initiation Services Maintenance Agreement Major Work Normal Working Hours Notice of Dispute Pre - Existing Environmental Liability Return to Operation Services Routine Maintenance Budget 01910/0001 116160.3 Agreement. See definition of "COV's Gas Supply System ". Those tasks, activities, actions, and events necessary to cause COV's Gas Supply System to be made operable and available to deliver natural gas service to COV customers, as further described in Section 1 of this Maintenance Agreement and its applicable exhibits. As described in Exhibit "1.1 ". Services that must be provided by PETRELLI in order to add a new customer to COV's Distribution System. This Gas Supply System Maintenance Agreement. Major modifications, extensions, additions, and improvements, including large maintenance jobs. Large maintenance jobs are defined as those estimated in advance to take more than 5 crew days. Hours between 7:30 a.m. and 3:30 p.m., Monday through Friday, excluding holidays. Notice that one Party is to send to another prior to terminating this Maintenance Agreement for cause or filing any formal claim, proceeding in arbitration or litigation. Pre - existing conditions at any work site, the release or spill of any pre- existing hazardous materials or waste that occurred prior to the date the Services are commenced, or the management and disposal of any contaminated soils or groundwater, hazardous or non- hazardous, removed from the ground prior to the date the Services are commenced. Services that must be provided by PETRELLI after the completion of Emergency Services in order to allow COV to provide its services to its customer. The budget proposed by PETRELLI and approved by COV for Services to be provided pursuant to the approved Routine Maintenance Plan for the year. A -2 Routine Maintenance Plan Routine Maintenance Services Service Rate Schedule Services Start -up Services Term of Maintenance Agreement Transmission System Transmission System Start-up Services US DOT Work Authorization 01910/0001 116160.3 PETRELLI's annual plan to be submitted to COV for performing those Services recommended by PETRELLI and COV and approved by COV to be performed on a routine basis during the upcoming year. The Routine Maintenance Plan may be updated from time to time by PETRELLI's recommendations approved by COV, and by changes requested by COV. The Routine Maintenance Plan will include the identified tasks, a schedule for completions of the tasks, and a budget. Those Services set forth in the Routine Maintenance Plan as agreed to by the Parties as being the tasks to be accomplished by PETRELLI during the applicable year, as further described in Section 1.2 and its applicable exhibits. The base rate for Services to be provided hereunder, as set forth in Exhibit 7.1. All of the Routine Maintenance Services, Additional Services, Start-up Services, Emergency Services, Initiation Services, and Return to Operation Services to be provided by PETRELLI under the terms of this Maintenance Agreement. See definition of "Gas Supply System Start-up Services ". Five years from the Effective Date, unless terminated earlier or extended by the Parties in accordance with the terms of the Maintenance Agreement. The COV system comprised of approximately 7 miles of 10 -inch diameter high pressure steel pipe as described in Exhibit "1.1 ". As described in Section 1.1.1 of this Maintenance Agreement and its applicable exhibits. United States Department of Transportation. A written work order, signed by an authorized representative of COV, delivered by COV to PETRELLI requesting specified Services, including a description of the Services requested and a requested time frame for performance of such Services, and a cost estimate. A -3 EXHIBIT 1.1 GAS SUPPLY SYSTEM TRANSMISSION AND DISTRIBUTION SYSTEMS SCHEMATIC [To be attached.] 01910/0001 116160.3 EXHIBIT 1.1.1 TRANSMISSION SYSTEM START -UP SERVICES Following are those tasks and activities that may be required to be performed by PETRELLI in order to start up the Transmission System. PETRELLI shall perform any of the following tasks upon receipt of a Work Authorization: 1. Review US DOT Certification Report, Recommendations 2. Perform Transmission System Inspection / Walk -down 3. Develop Inspection Findings Report, Recommendations 4. Effect / Implement COV Approved Findings as may be required: o Camera Transmission System o "Pig" System o Perform Leak Survey, Leak and Strength Testing o Cathodic Protection Inspection o Exercise Isolation Valves o Perform Meter Calibrations o Energize Rectifiers, other electrical o Implement "One Call" System o Other Miscellaneous 5. Submit for review the proposed "Gas Handling Procedure" 6. N2 Purge. Transmission System 7. Charge Transmission System 8. Initiate Gas Handling Operations o Pressure Control Operations o Fire Control Operations. 01910/0001 116160.3 EXHIBIT 1.1,2 DISTRIBUTION SYSTEM START -UP SERVICES Following are those tasks and activities that may be required to be performed by PETRELLI in order to start up individual Distribution System Segments. PETRELLI shall perform any of the following tasks upon receipt of a Work Authorization: 1. Review US DOT Certification Report, Recommendations 2. Perform Distribution System Inspection / Walk -down 3. Develop Inspection Findings Report, Recommendations 4. Effect / Implement COV Approved Findings as may be required: o Camera Distribution System Segment o "Polly Pig" Segment o Perform Segment Leak Survey, Leak and Strength Testing, Repair o Exercise Valves o Perform Meter Calibrations o Implement "One Call" System o Other Miscellaneous 5. Submit for review the proposed "Gas Handling Procedure" 6. N2 Purge Distribution System Segment 7. Charge Distribution System Segment 8. Initiate Gas Handling Operations o Pressure Control Operations 1.1.2 - 1 01910/0001 116160.3 EXHIBIT 1.2 ROUTINE MAINTENANCE PLAN Routine Maintenance Tasks The routine maintenance tasks to be incorporated into the Routine Maintenance Plan may include, but are not necessarily limited to, the following: o Pipeline Patrols o Switching o Replacement of minor components o Minor modifications and additions o Leak Surveys o Leak Repairs o Valve Inspections o Regulator Station Inspection o Meter Calibrations, Instrument inspections, Chart Replacement o Cathodic Protection Inspection o Preventive Maintenance o Preventive Damage Protection o System Alterations o Take gas leakage readings as requested by COV to provide operational data o Install valves, lines, both steel and plastic, meters and other facilities on the Transmission and Distribution Systems as required for repairs, replacements, new customers and system expansion. Upon request of COV, PETRELLI shall remove underground facilities no longer needed and perform other work on underground systems, as required and requested by COV o Other routine work normally required on gas utility systems The Routine Maintenance Plan will further identify those planned activities that may require action by or the support of COV or other third-party entities. These may include the obtaining of permits, street closures, traffic control or other activities. Routine Maintenance Plan Schedule The Routine Maintenance Plan will include a proposed schedule detailing and stating dates for planned periodic events (quarterly inspections, bi -annual calibrations, etc) along with planned specific time - sensitive or resource constrained events (planned system alterations requiring a customer to be off -line, street closures, etc.). Budget The annual Routine Maintenance Plan will include a proposed budget detailing all estimated costs associated with performing the Routine Maintenance Services. The budget should include the estimated costs associated with performing the Routine Maintenance Services, and a nominal 1.2 - 1 01910/0001 116160.3 contingency for un- foreseen activities when performing planned routine maintenance tasks, such as crew size adjustments, nominal overtime and instrument or meter replacement. In addition, the budget shall contain contingency line -items contemplating and anticipating the occurrence of one or more significant unplanned (non- routine maintenance) or emergency maintenance events. Such contingency events might include a night time line break emergency, a Code 2 and /or Code 3 event (as defined by US DOT), and /or a new customer interconnection or return to service. 1.2 - 2 01910/0001 116160.3 EXHIBIT 1.2.A DRAFT COV OPERATIONS, INSPECTION AND MAINTENANCE PLAN [To be attached.] 1.2.A -1 01910/0001 116160.3 EXHIBIT 1.4 ADDITIONAL SERVICES Miscellaneous Additional Services Additional Services (which from time to time are also referred to as Technical Field Support) may include, but are not necessarily limited to, the following services, tasks and activities: Additional Services will be procured by COV from PETRELLI on an as- needed basis. COV will issue a Work Authorization to PETRELLI to effect the Additional Services task upon receipt and approval of a task cost estimate. From time to time, COV may request PETRELLI's assistance and support on other tasks or activities related to COV's management of the Gas Supply System. COV will make a formal request for such services in advance, with services to be executed upon PETRELLI receipt of a Work Authorization and at the rates and per the terms of this Agreement. Fees for Additional Services The Additional Services shall be shall be charged per the Service Rate Schedule on Exhibit "7.1" of this Maintenance Agreement. Types of Additional Services The Additional Services may include some the following: Gas Analysis Services - Btu Content PETRELLI can perform the complete function of analyzing the Btu content of natural gas at various locations in the City of Vernon. Vernon's sample cylinders will be collected on a regular basis (weekly, monthly, etc.) and brought to PETRELLI's facilities for analysis. Analyses may be reported in two formats, with and without correction factors. Turnaround time for each sample is four (4) calendar days from the point of collection. Regulator Station Maintenance: External inspections —. External Regulator Station inspections will include: o Vault Gas Leak Test o Station Condition Check o Inlet Pressure Check o District Pressure Check o Stop Valve Inspection o Regulator Operating Pressure Test o Regulator Lockup Test o Diaphragm Leak Test o Control Piping Check o Pilot and Instrument Filter Inspection o Relief Valve Operation o Regulator Seat and Plunger Inspection o Mainline Filter and Screen Inspection o Deodorizer and Charcoal Filter Check 1.4 - 1 01910/0001 116160.3 o Recording Pressure Gauge Test o Valve Position Check o Leak Test Internal inspections — Internal Regulator Stations inspections will include: o Regulator Inner Valves and Expansible Elements Inspection o Diaphragm Leakage Test o Diaphragm Inspection or Replacement o Pilot and Instrument Filters Field Calibration for Displacement Meters: o Field meter accuracy test performed on medium to large displacement meters to ensure measurement accuracy per utility standards. o Accuracy test performed. o Accuracy tolerance within California Public Utilities Commission (CPUC) approved standards. o Inspection of parts and replacement if necessary. o Adjustments made on diaphragm meters. o Follow -up Accuracy tests conducted. Replacement Meter Set Installation: Instrument Calibration - Field inspection of Base Pressure Indexes (BPI) and Emcorector includes: o Inspection o Accuracy Check o Mechanical Inspection o Pressure Arm Installation o Correct Rocker Lever Bind Recording Devices — Chart Maintenance: Collection and Change out of Recording Charts for Billing and Area Pressure Recording. o Periodic Inspection of Charts o Periodic Change -Out of Chart papers o Data Reduction / Accounting Services (additional Technician service charge) Engineering Testing and Analysis Capability: PETRELLI is capable of providing a variety of mechanical and chemical tests. In addition to standard ASTM tests, the PETRELLI will also handle an array of customized tests unique to the needs of gas distribution. For each job, PETRELLI will determine the extent to which pre -work is necessary to prepare the object or site for testing. Some jobs may require customized machining of a part, thus adding to the time and cost required to do the test. Mechanical and Combustion Testing Capability: 1.4 -2 01910/0001 116160.3 PETRELLI has extensive capability in providing mechanical and combustion testing services. Such services available to COV as Additional Services include the following: o Paint, Coating and Adhesive Testing - includes accelerated weathering, application characteristics, cathodic disbondment, and comparative corrosion characteristics. a Metallurgical and Failure Analysis - includes macro and micro hardness, SEM analysis, EDX elemental analysis, sample mounting and polishing, microscopic examination and photography. o Environmental Simulation - using large and small environmental chambers, salt fog cabinet, and weather - ometer with UV (xenon arc) and water spray. o Flow Measurement - includes leak measurement, air flow velocity, and ultrasonic water flow. o Material Physical Properties Determination - includes tensile, yield, compression, force, moment and force application, torque and stress /strain. o New Product and System Component Qualification Testing - includes regulators, meters, valves, gasket materials, etc. o Strength and Leak Testing - includes burst and sustained pressure testing of system components with hydrostatic pressures of up to 9,000 psig. o Air Pollution Control Device Testing - includes NOx, CO, CO2, 02 and total hydrocarbons from IC engines, gas turbines, boilers, heaters, etc. o Dimensional Metrology - using calipers, gages, thread gages, etc. Polyethylene Testing: PETRELLI has extensive capability for supporting the maintenance and new customer interconnection with COV's plastic (polyethylene) Distribution System. Such services available to COV as Additional Services include the following: o Surface Tension of Water Samples o Electrical Conductivity of Water Samples o Melt Index per ASTM D -1238 o Density per ASTM D -1505 o Quick Burst Test (to 6" IPS pipe size) per ASTM D -1599 o Dead Weight Testing - 2,000, 5,000 and 10,000 hours (2" IPS sample only) o Impact Testing per ASTM D -2244 to 500 ft/lbs o Elevated Temperature Testing - 80 C & 60 C per ASTM D -1598 to 12" o PS pipe size o Tensile Elongation (2" IPS pipe size only) o Tensile Elongation D -638 to 6" IPS pipe sizes o Ring Tensile per ASTM D -2290 o Compressive Shear Test o 3 -point Bend Test to --'10% bend ratio o 4 -point Bend Test to —6% bend ratio o Strip Examination o Bend Back Test o Crushed Ring Test o Environmental Stress Crack Resistance per ASTM F -1248 o Electrofusion pipe and fittings per ASTM F -1055 o Electronic Testing/Electrofusion Fittings. Non- destructive full load testing all sizes o Differential Scanning Calorimetry o Optical Microscopy - with photographic capabilities 1.4 -3 01910/0001 116160.3 o Stereo Microscopy o Microtome o Scanning Electron Microscopy/EDAX o Fourier Transform Infrared Spectroscopy o Ovality /Out -of -Round Measurement o and Controlled Cycle Testing o Rubber, Composites, Component Testing o X -ray Analysis -with photographic capabilities New or Replacement Facilities PETRELLI is willing and capable, at the request of COV, of performing new or replacement equipment and facilities services, including regulator and meter upgrades, second services installations, installation of new or replacement of abandoned service lines etc, at the rates and per the terms of this Agreement. Emergency Services Emergency Services will be provided on an as- needed basis. Emergency Services will be performed and charged at the rates and per the terms of this Agreement. 1.4 - 4 01910/0001 116160.3 EXHIBIT 2.3 DRAFT COV GAS EMERGENCY OPERATING PLAN [To he attached.] 2.3 -1 01910/0001 116160.3 EXHIBIT 7.1 SERVICE RATES SCHEDULE RATES THROUGH DECEMBER 31, 2005 A. HOURLY LABOR RATES PER CLASSIFICATION CLASSIFICATION STRAIGHT TIME DOUBLE TIME (1) GAS SUPERINTENDANT $94.00 $178.00 (2) WELDER/PIPEFITTERS $88.00 $166.00 (1) CP & M &R $88.00 $166.00 (2) OPERATORS /HELPERS $78.00 $146.00 (1) SECRETARY $47.00 $70.50 ALL ON -CALL PERSONNEL WILL ALSO RECEIVE 2 HOURS PER DAY STRAIGHT TIME FOR BEING ON CALL EXCEPT ON HOLIDAYS WHERE IT WILL BE 3 HOURS TO BE ON -CALL. B. MONTHLY EQUIPMENT RATES EQUIPMENT RATES (1) F -350 FLATBED $1,680.00 (2) F -350 SERVICE TRUCKS COMPLETE $3,820.00 each WITH WELDING EQUIPMENT, AIR COMPRESSOR & TOOLS (1) CAT 420 BACKHOE COMPLETE WITH BREAKER & COMPACTION PLATE $4,285.00 (1) CAT 224E ROLLER $2,180.00 (1) CAT 928 LOADER $5,240.00 (1) INTERNATIONAL 4700 6 YARD DUMP $1,820.00 (1) F -750 2500 GALLON WATER TRUCK $1,960.00 (2) ARROW BOARDS $325.00 each ALL FUEL FOR THE ABOVE TRUCKS WILL BE PROVIDED BY THE CITY OF VERNON AS REQUESTED. EXHIBIT 7.1 (CONTINUED) C. MATERIALS AND SUPPLIES WHEN PETRELLI PROVIDES MATERIAL AND SUPPLIES AS REQUIRED FOR EVERYDAY OPERATION, THE CITY OF VERNON WILL COMPENSATE PETRELLI FOR ALL EXPENSES INCURRED TO MAINTAIN THE GAS SYSTEM. PETRELLI WILL BILL THE CITY OF VERNON A 5% MARKUP FOR THE EXPENSES INCURRED WHICH THE CITY WILL REIMBURSE. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 9268 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON TERMINATING THE GAS SYSTEM MAINTENANCE AGREEMENT WITH PETRELLI UTILITIES, INC. AND REPEALING ALL RESOLUTIONS OR PARTS OF RESOLUTIONS IN CONFLICT THEREWITH WHEREAS, on March 2, 2005, the City Council of the City of Vernon adopted Resolution No. 8669 approving a Gas System Maintenance Agreement (the "Agreement ") with Petrelli Utilities, Inc. ( "Petrelli "); and WHEREAS, on February 14, 2007, the City received a letter from Petrelli requesting termination of its Agreement with the City; and WHEREAS, the City and Petrelli desire to terminate the Agreement with Petrelli effective April 4, 2007; and WHEREAS, the maintenance of Vernon's gas system is of paramount importance; and WHEREAS, the City desires to authorize the Director of the Vernon Municipal Gas Department to negotiate an agreement with a vendor to continue maintenance of the gas system. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the recitals contained hereinabove are true and correct. SECTION 2: The City Council of the City of Vernon hereby terminates the Agreement with Petrelli effective April 4, 2007, and authorizes the Director of the Vernon Municipal Gas Department, or 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 his designee, to take all steps necessary and appropriate to negotiate an agreement with another vendor to provide the gas maintenance services to the City's gas system. Once the negotiations have been completed, the City Attorney shall submit the final agreement to the City Council for its approval. SECTION 3: The Acting City Clerk of the City of Vernon shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 5th day of March, 2007. ATTAST : ////f �. MAN'?ELA GIRON, Ac ing City Clerk 2 HILARIO GONZA ES Mayor Pro -Tem 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ss COUNTY OF LOS ANGELES I, MANUELA GIRON, Acting City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 9268, was duly adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Monday, March 5, 2007, and thereafter was duly signed by the Mayor Pro -Tem of the City of Vernon. (SEAL) MAN , Acyting City Clerk MANUELA GIRO CITY ATTORNEY'S OFFICE INTER - DEPARTMENT MEMORANDUM DATE: August 8, 2007 TO: Nelly Giron FROM: Judy Lehr RE: PRIVILEGED AND CONFIDENTIAL THIS MATERIAL IS SUBJECT TO THE ATTORNEY - CLIENT AND /OR THE ATTORNEY WORK PRODUCT PRIVILEGES. DO NOT DISCLOSE THE CONTENTS HEREOF. DO NOT FILE WITH PUBLICLY ACCESSIBLE RECORDS. Petrelli Utilities, Inc. Agreement Resolution No. 8669 Dear Nelly: Attached is Exhibit 1.1 for the above - referenced matter. Please note Exhibits 1.2A and 2.3 which were listed on your email of August 30, 2005 were never received. JH:em Enclosures sY6•6q .11g eirt c74 cue iv.„0;1:(44-4 • | 8 § ( 4 @ ; )/NlaaA 30 LLD UNtr NU 51.1 , NO 11RE DWG. N0. 50. NO e yg¢ ■ C' - - 5, \ . 050 -D -P -100 1 IS SSfEY MAP: 6 - 8 10- GS CCT44BMON NNN 02476 I TO 7 �.��:.i�...u•� /+ , �.� ®.+ 8. Om .• \V\ ® 050 -0 -P -100 2 GS 015106 NIP: 10' SIEFil 0 8 5 0 5 191811 60 4 MM 02477 I TO 2 GSD -0 -P -100 3 VALVE 4: STATION PIS.; 6. 2.0. GAS 0157. MOP 02476 1 10 5 I050 -0 -2 -100 4 LOCATION P15.; 6" PE GAS DISTRIBUTION MOP G2479 t i0 19 Aj - " . " ^ �::' •SON GSD -D -P -101 I i0 1 8444740 DISTRICT REGULATOR STATION . - C2461 1 TO 5 Imo,.., GSD -D -P -002 1 TO 1 F81W0 DISRIC REGULATOR STATION 02481 0 5 c "ate^' 050 -0 -2 -103 170 1 64140141 BRIDGE. 08055140 02463 1 TO 3 '¢ 050 -0 -2 -104 1 TO 1 MLV 77 +00 02484 1 TO 5 F 02346 1 TO 3 DOWNEY ROAD: LEONIS BLVO.' TO FRUITLAND AVE 024136 1 OF 1 {� I _ _ I I �'av Q J I °.. 02404 3 OF 3 52ND STREET; 5444TH. FE AVE. TO PACIFIC BLVD. 02488 I TO 4 G'i J 17 .'".1 , - �l 0 L .5 \ m.. LOS `ANGELES RIVER "`\ Iil ,..: ,.:: .:;__ I:. titi. !pr.- _ „_. I • L �.— --- i;1. —�"� m — — -- \ �' ..,,, �---�- J (' ��� � ...: ���� 1, ,,,,,t SOS .. ,..„..u..,._......,,, ._ , -; r;i __ t_ Ir te.. \ L 5g ..,,,,,,,,,../:., 40 0 -- REGUUiOR 1�1r =• - . _jr_ \ C`) - PROJECT SITE • Iv � A- '- ' " CITY OF VERNON 1 MALBUR0 8 N. 00NZALES µ.,. 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