corporate ehs audit program

1. Corporate EHS Audit Program EEI Audit Roundtable – October 2008

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3. 3 Facts about Duke Energy Fortune 500 $50 billion in assets 3.9 million customers 150+ years of service Dow Jones Sustainability Index Traded on NYSE as DUK Duke Energy is recognized by Dow Jones for its commitment to serve our customers in a responsible manner. Duke Energy is recognized by Dow Jones for its commitment to serve our customers in a responsible manner.

4. 4 U.S. Regulated & Non-Regulated Businesses Regulated business cover 5 states: North Carolina, South Carolina, Indiana, Ohio and Kentucky 47,000 square miles of service area 28,000 MW of regulated generating capacity Commercial Power: This segment has approximately 8,100 megawatts of unregulated generation, primarily in the Midwest. Regulated business cover 5 states: North Carolina, South Carolina, Indiana, Ohio and Kentucky 47,000 square miles of service area 28,000 MW of regulated generating capacity Commercial Power: This segment has approximately 8,100 megawatts of unregulated generation, primarily in the Midwest.

5. 5 Latin American Assets Duke Energy International: This segment has approximately 4,000 megawatts of generation, primarily in Latin America. About 75 percent of this capacity is hydroelectric, and approximately 90 percent is either currently contracted or receives a system capacity payment. Crescent Resources is an effective 50-50 joint venture with Morgan Stanley Real Estate Fund. Crescent manages land holdings and develops high-quality commercial, residential and multi-family real estate projects in 10 states, primarily in the Southeast and Southwest.Duke Energy International: This segment has approximately 4,000 megawatts of generation, primarily in Latin America. About 75 percent of this capacity is hydroelectric, and approximately 90 percent is either currently contracted or receives a system capacity payment. Crescent Resources is an effective 50-50 joint venture with Morgan Stanley Real Estate Fund. Crescent manages land holdings and develops high-quality commercial, residential and multi-family real estate projects in 10 states, primarily in the Southeast and Southwest.

6. 6 EHS Policy “…values the health and safety of our employees, contractors, customers and communities… …establishes principles to fulfill our commitment to people and the environment…” The EHS Policy clearly articulates the company’s values for the health and safety of our employees, contractors, customers and communities and our commitment to protecting the environment and responsibly managing natural resources. Our EHS Policy also establishes 5 principles around Accountability, Stewardship, Standards, Performance and Communication. The EHS Management System…The EHS Policy clearly articulates the company’s values for the health and safety of our employees, contractors, customers and communities and our commitment to protecting the environment and responsibly managing natural resources. Our EHS Policy also establishes 5 principles around Accountability, Stewardship, Standards, Performance and Communication. The EHS Management System…

7. 7 EHS Management System Architecture The EHS Management System establishes standards to direct Duke Energy in implementing the EHS Policy. The Management System provides a common framework that connects business planning, implementation, measurement and performance improvement, for a total of 9 elements. The element we are most interested in this am is Element 9: The EHS Management System establishes standards to direct Duke Energy in implementing the EHS Policy. The Management System provides a common framework that connects business planning, implementation, measurement and performance improvement, for a total of 9 elements. The element we are most interested in this am is Element 9:

8. 8 Element 9: Assessment and Management System Review Conduct assessments to determine EHS compliance and assure management systems are in place and working effectively. Review EHS management systems periodically to assure they are effectively managing risks and opportunities.

9. 9 The 2 organizations within Duke Energy that play a lead role to implement the standards related to Element 9 are Audit Services and Corporate EHS. Audit Services carries out DE’s internal audit function. They role includes ensuring compliance with the EHS management system. Within Corporate EHS exists EHS Auditing & Assessments. While our group’s primary focus is conducting compliance audits, we also drive compliance with the EHS Management System. Obviously, there is plenty of communications and coordination between the 2 groups, as a effectively implemented EHS management system supports and ensures EHS compliance. EHS Policy is responsible for the development of the corporation’s federal policies and programs relating to issues such as climate change, renewables, environmental technologies, mercury, water and solid waste.The 2 organizations within Duke Energy that play a lead role to implement the standards related to Element 9 are Audit Services and Corporate EHS. Audit Services carries out DE’s internal audit function. They role includes ensuring compliance with the EHS management system. Within Corporate EHS exists EHS Auditing & Assessments. While our group’s primary focus is conducting compliance audits, we also drive compliance with the EHS Management System. Obviously, there is plenty of communications and coordination between the 2 groups, as a effectively implemented EHS management system supports and ensures EHS compliance. EHS Policy is responsible for the development of the corporation’s federal policies and programs relating to issues such as climate change, renewables, environmental technologies, mercury, water and solid waste.

10. 10 EHS Compliance Audit Program EHS Auditing & Assessments Manager 4 Lead Auditors 90+ EHS Professionals Contract auditors

11. 11 EHS Compliance Audit Program Scope All Duke Energy facilities and operations, owned or operated Regulated and non-regulated Does not include Latin American entities Objectives Ensure compliance with internal EHS standards and applicable laws and regulations Promote EHS awareness, safe behavior and environmental stewardship among employees Apprise management of corporate EHS performance Acknowledge and share successful EHS technologies and innovations across the corporation Build and sustain a culture of continuous EHS improvement Does not include Latin American entities. However, we might provide auditors upon request by the EHS managing director for that business segment.Does not include Latin American entities. However, we might provide auditors upon request by the EHS managing director for that business segment.

12. 12 EHS Compliance Audit Program Audit Types Review chart that outlines differences, e.g. who conducts, ACP, scheduling, etc. Review chart that outlines differences, e.g. who conducts, ACP, scheduling, etc.

13. 13 EHS Compliance Audit Program Review chart that outlines differences, e.g. who conducts, ACP, scheduling, etc. Review chart that outlines differences, e.g. who conducts, ACP, scheduling, etc.

14. 14 EHS Compliance Audit Program Components Scheduling Audit Team Protocols

15. 15 EHS Compliance Audit Program Date of last audit % of corrective actions closed from previous audit Recent regulatory action FRP facility Total incident case rate Lost workday case rate Restricted workday case rate Date of last audit % of corrective actions closed from previous audit Recent regulatory action FRP facility Total incident case rate Lost workday case rate Restricted workday case rate

16. 16 EHS Compliance Audit Program Pool of trained and qualified subject matter experts Participation is part of job accountabilities – Annual Performance Review Professional development opportunities by allowing EHS professionals around the company to participate on audit teams as apprentices. Pool of trained and qualified subject matter experts Participation is part of job accountabilities – Annual Performance Review Professional development opportunities by allowing EHS professionals around the company to participate on audit teams as apprentices.

17. 17 EHS Compliance Audit Program Site Visit Pre-visit activities 3 – 5 Days Partnership with site management/EHS support Short-term resolutions during site visits Post-Site Visit Resolve open issues Draft & final reports Data management & tracking Pre-visit activities: Site notification, Site-Specific Training, audit questionnaire, team meeting, logistics, advance reviewing of permits, programs. Data management and tracking applies to formal and external audits. Pre-visit activities: Site notification, Site-Specific Training, audit questionnaire, team meeting, logistics, advance reviewing of permits, programs. Data management and tracking applies to formal and external audits.

18. 18 EHS Compliance Audit Program Data Management & Tracking Software platform Knowledge Management System Essential Systems and Services Resolution Tracking 30, 60, 90-day closure window Automatic reminders Closure letter KMS (Knowledge Management Systems) Auditor Resolution Tracker ESS (Essential Systems and Services) Customized to Duke requirements Web basedKMS (Knowledge Management Systems) Auditor Resolution Tracker ESS (Essential Systems and Services) Customized to Duke requirements Web based

19. 19 EHS Compliance Audit Program Program Evaluation Objective-based criteria Questionnaires Site management Audit Lead Audit Team External Audits Program Objectives 1: Ensure compliance with internal EHS standards and applicable laws and regulations Completed planned audits. Reduction in the number of noncompliance findings. Reduction in findings severity Reduction in the number of repeat findings Percentage of findings closed on time. Newly acquired facilities receive priority for a potential audit Facilities audited no less than once every five years. Program Objective 2: Promote EHS awareness, safe behavior and environmental stewardship among employees Utilization of cross-departmental auditors Employee interaction (interviewed) during audits Auditors receiving applicable training Program Objective 3: Apprise management of corporate EHS performance Issuance of EHS performance reports to management and Legal. EHS integrated in business plans and budgets Program Objective 4: Acknowledge and share successful EHS technologies and innovations across the corporation Issuance of information exchange reports focusing on key lessons learned Good practices identified and/or recommended Utilization of cross-departmental auditors Program Objective 5: Build and sustain a culture of continuous EHS improvement Solicitation of feedback from customers Third-party audits completed Audit program evaluations conducted Audit program performance measures established and targets met Audit program improvement initiatives completed Overall improvement in corporate EHS performance Quarterly/Annual reports to management include a summary of efforts, past due items and performance on achieving objectives.Program Objectives 1: Ensure compliance with internal EHS standards and applicable laws and regulations Completed planned audits. Reduction in the number of noncompliance findings. Reduction in findings severity Reduction in the number of repeat findings Percentage of findings closed on time. Newly acquired facilities receive priority for a potential audit Facilities audited no less than once every five years. Program Objective 2: Promote EHS awareness, safe behavior and environmental stewardship among employees Utilization of cross-departmental auditors Employee interaction (interviewed) during audits Auditors receiving applicable training Program Objective 3: Apprise management of corporate EHS performance Issuance of EHS performance reports to management and Legal. EHS integrated in business plans and budgets Program Objective 4: Acknowledge and share successful EHS technologies and innovations across the corporation Issuance of information exchange reports focusing on key lessons learned Good practices identified and/or recommended Utilization of cross-departmental auditors Program Objective 5: Build and sustain a culture of continuous EHS improvement Solicitation of feedback from customers Third-party audits completed Audit program evaluations conducted Audit program performance measures established and targets met Audit program improvement initiatives completed Overall improvement in corporate EHS performance Quarterly/Annual reports to management include a summary of efforts, past due items and performance on achieving objectives.

20. 20 EHS Compliance Audit Program Audit Closure Verification Target > 5% of findings from previous year Randomly select sites Randomly select findings Audit Closure Verification Approach Lead auditor site visit Effective corrective action implemented? Does corrective action match audit report? Is further action needed? Program Objectives 1: Ensure compliance with internal EHS standards and applicable laws and regulations Completed planned audits. Reduction in the number of noncompliance findings. Reduction in findings severity Reduction in the number of repeat findings Percentage of findings closed on time. Newly acquired facilities receive priority for a potential audit Facilities audited no less than once every five years. Program Objective 2: Promote EHS awareness, safe behavior and environmental stewardship among employees Utilization of cross-departmental auditors Employee interaction (interviewed) during audits Auditors receiving applicable training Program Objective 3: Apprise management of corporate EHS performance Issuance of EHS performance reports to management and Legal. EHS integrated in business plans and budgets Program Objective 4: Acknowledge and share successful EHS technologies and innovations across the corporation Issuance of information exchange reports focusing on key lessons learned Good practices identified and/or recommended Utilization of cross-departmental auditors Program Objective 5: Build and sustain a culture of continuous EHS improvement Solicitation of feedback from customers Third-party audits completed Audit program evaluations conducted Audit program performance measures established and targets met Audit program improvement initiatives completed Overall improvement in corporate EHS performance Program Objectives 1: Ensure compliance with internal EHS standards and applicable laws and regulations Completed planned audits. Reduction in the number of noncompliance findings. Reduction in findings severity Reduction in the number of repeat findings Percentage of findings closed on time. Newly acquired facilities receive priority for a potential audit Facilities audited no less than once every five years. Program Objective 2: Promote EHS awareness, safe behavior and environmental stewardship among employees Utilization of cross-departmental auditors Employee interaction (interviewed) during audits Auditors receiving applicable training Program Objective 3: Apprise management of corporate EHS performance Issuance of EHS performance reports to management and Legal. EHS integrated in business plans and budgets Program Objective 4: Acknowledge and share successful EHS technologies and innovations across the corporation Issuance of information exchange reports focusing on key lessons learned Good practices identified and/or recommended Utilization of cross-departmental auditors Program Objective 5: Build and sustain a culture of continuous EHS improvement Solicitation of feedback from customers Third-party audits completed Audit program evaluations conducted Audit program performance measures established and targets met Audit program improvement initiatives completed Overall improvement in corporate EHS performance

21. 21 EHS Compliance Audit Program

22. 22 2007 EHS Compliance Audit Program Summary 26 Audits Conducted 691 Findings Identified 886 Corrective Actions Identified 882 Corrective Actions Completed Safety (Fire Extinguishers, Chemical Storage, Obstructed electrical boxes, Improper use of ladders) Health (HAZCOM: Container Labeling, MSDS; Shower/Eye Wash, Certification/Storage of Respiratory PPE; Methylene Chloride) Waste (Missing Manifest, Drum Labels, Waste Characterization, Collection/Storage) Water (SPCC Plans, Records/Reports, Inspections/Reviews, Sampling/QA Methodology) Air (Records and Reports, Permit Conditions, QA/QC Manuals, Refrigerants) Safety (Fire Extinguishers, Chemical Storage, Obstructed electrical boxes, Improper use of ladders) Health (HAZCOM: Container Labeling, MSDS; Shower/Eye Wash, Certification/Storage of Respiratory PPE; Methylene Chloride) Waste (Missing Manifest, Drum Labels, Waste Characterization, Collection/Storage) Water (SPCC Plans, Records/Reports, Inspections/Reviews, Sampling/QA Methodology) Air (Records and Reports, Permit Conditions, QA/QC Manuals, Refrigerants)

23. 23 Duke Energy Corporate EHS Audit Program Wrap Up