SERVICES OF HEATH AND ASSOCIATES, INC.

Heath and Associates, Inc., offers a variety of services to address the needs of our clients. Management reports, studies, and consulting services can be prepared to address any aspect of utility operations. Engineering design and construction management services can be prepared for any type of natural gas system facility. Engineering analysis of existing/future operations or complex troubleshooting of system deficiencies can be addressed by our experienced staff. Heath and Associates offers our clients natural gas purchasing assistance related to analyzing gas supply needs, contract portfolio analysis, and monthly purchasing assistance to insure that clients obtain their supply at the most competitive prices.

MANAGEMENT ASSISTANCE REPORTS

Cost of Service Rate Study

A detailed cost of service study will include allocating the operating and maintenance expenses and the cost of gas supply to each classification of retail customer. Financial statements for the previous years will be reviewed. Cost of administration, debt service, etc., will also be allocated to each rate classification. A financial model will be created to analyze various scenarios. The model can be used to evaluate changes in the number of customers, consumption patterns, weather sensitivity, and the proposed rates among other variables. Considering the impact to each customer classification, a rate adjustment may be recommended. Appropriate data will be analyzed and alternatives will be presented to management. Final results will be effectively communicated and graphically presented in the Cost of Service Rate Study Report.

Expansion Planning Study

Expansion planning studies include identification of areas of expected growth, preliminary system layout and construction costs, forecast of new customer connections, and an economic analysis of each targeted area. Potential expansion areas are examined on an individual project-by-project basis. Recommendations are summarized and capital spending plans developed to address the client's planning and budgeting needs.

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Natural Gas Supply and Load Studies

The usage characteristics of a system are developed and correlated to climatological data to establish load requirements. Future load requirements as a result of system expansion and the connection of new customers are incorporated into the forecasting horizon. The load characteristics developed assist the client with daily dispatching, monthly purchasing requirements, and annual budgeting. An analysis of the system's gas supply contract and peak shaving facilities is conducted to determine optimum levels of peaking service and establish interstate/intrastate pipeline contract limits/options.

Distribution System Flow Analysis

The transmission and distribution system can be modeled with computer software to analyze the pressures and capabilities of any segment of the system. Loads are assigned to nodes within the network of pipelines by reviewing client sales records. The model is verified by incorporating historical operating conditions. The computer model enables the system to be optimized and the effect of future expansion/loads can be predicted.

Cast Iron System Maintenance and Replacement

Cast iron system maintenance and replacement studies address the ongoing maintenance and safety concerns of operating distribution systems containing cast and ductile iron pipe. Heath and Associates identifies the condition of the client's cast iron system piping by researching records and developing statistical operating histories. The cast iron piping is categorized, evaluated, and ranked to develop recommendations regarding maintenance or replacement. Replacement cost and construction methods are addressed and capital improvement plans are developed.

Comprehensive Planning Study

A comprehensive planning study (or master plan) can be developed incorporating the cost of service rate analysis, expansion planning, natural gas supply and load study, and system distribution flow analysis. The comprehensive planning study can also address system operating statistics, record keeping, organization and compliance requirements, suggest a marketing plan, and develop a gas purchasing policy. The comprehensive planning study, basically, can be tailored to include and address any aspect of the operation and management of the system.

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ENGINEERING

Detailed Engineering Design and Specifications for Construction Projects

Engineering design and specifications can be developed addressing any type of natural gas distribution or transmission facility. Detailed specifications for material standards and installation methods along with contract documents for public bidding can be developed for each project. Our services include design, bidding, permitting, construction management, verification of invoices, and overall project management.

Construction Manuals

Manuals reflect up-to-date rules and regulations by Department of Transportation and state commissions. Manuals address material specification and construction procedures and practices for both steel and polyethylene pipeline construction. Construction safety procedures are included in the manuals.

Specifications for the Design and Installation of Propane Air/Peak-Shaving Facility

The economic feasibility of peak-shaving is determined and a review of the distribution system establishes the optimum location of the Propane/Air and LNG plants. Design, specifications, and construction management of peak-shaving facilities are available.

System Optimization Analysis Study

Analysis of the existing system identifies ways to obtain greater operating efficiency. This analysis forms the basis of recommendations for upgrading the system and presents the developed data for demonstrating more efficient operation.

Construction Management Service

All phases of gas industry construction management are available including design, specifications, permitting, mapping, fabrication drawings, contract development, project inspection, and new or expanding facility startup.

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GAS PURCHASING SERVICE

Heath and Associates administers a natural gas purchasing pool that provides full service gas purchasing assistance to our clients. The purchasing service includes:

Heath and Associates can alternatively assist clients in analyzing system needs and in preparing an RFP to select gas suppliers and/or aggregators, negotiate long term gas supply contracts, give advice on futures hedging/fixed price contracts, manage capacity release contracts, and acquire specialty gas supply services such as peaking or storage supplies.

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DOT COMPLIANCE SERVICES

Operations and Maintenance Plans

All natural gas utilities are required to have Operations and Maintenance plans. Heath and Associates develops operation and maintenance plans for clients which meet all Department of Transportation/Office of Pipeline Safety and State Utility Commission requirements. Plan manuals developed by Heath and Associates guide client personnel in the areas of reporting, system design, operations and maintenance procedures, and record keeping.

Plans contain generic minimum compliance requirements and are customized to the client's system. Procedures for responding to emergencies and abnormal operating conditions are included in the operations and maintenance plan. The manuals address material for construction, construction specifications and procedures, and the testing and rating of new facilities. The manuals aid clients in scheduling maintenance, identifying reporting requirements and deadlines, and creating appropriate forms and formats to keep records.

Integrity Management Programs

Heath and Associates can provide operators with detailed Integrity Management Programs for transmission pipelines. Heath and Associates has invested many hours in the development of a core or master IMP Manual that can be used as a basis for developing a customized plan for a specific operator. The master IMP contains process development and critical planning guidance, detailed procedures and forms, recordkeeping and documentation aids, and a cross-reference to Subpart O of Part 192, ASME B31.8S, NACE RP502, and PHMSA Inspection Protocols. The master IMP addresses all sixteen elements required by Part 192.911. Heath and Associates can assist operators in upgrading current IMPs as well as implementing pipeline integrity assessments and compliance mandated activities. Heath and Associates Integrity Management Programs are currently in use in six states and have successfully passed inspections from PHMSA and/or State Utility Commissions.

Heath and Associates is currently working with the American Public Gas Association’s Security and Integrity Foundation to develop a Model Integrity Management Program for distribution system operators. Heath and Associates offers services to distribution systems that are developing and preparing to implementing IMPs for their distribution pipeline systems. The Distribution Integrity Management Plan Rule (Part 192, Subpart P) is expected to be finalized in the second half of 2009, and we are prepared to immediately assist operators with the new compliance requirements.

Public Awareness Plans

All natural gas utilities are required to have a written Public Awareness Plan.  Heath and Associates, Inc., offers consulting services to gas utilities to help develop and implement Public Awareness Plans.  Heath and Associates has developed sample distribution materials, forms, guidelines, and generic justification language to aid operators in Public Awareness implementation activities. We can provide a comprehensive written plan or provide supplemental consulting assistance to aid operators enhance their existing plans.

Operator Qualification Plans

All natural gas utilities are required to have an Operator Qualification Plan.   Heath and Associates, Inc., offers consulting services to gas utilities to help develop and implement Operator Qualification Plans.  Heath and Associates has established key alliances with Safety and Compliance Evaluation, Inc. and Energy Worldnet, Inc. to incorporate packaged plans, database management systems, and training and qualification programs.  The combination of Heath and Associates' operational and regulatory compliance experience along with the packaged OQ plans and management systems enable Heath and Associates to provide comprehensive solutions to assist gas utilities with Operator Qualification activities.

Operator Qualification

Heath and Associates offers training and testing/qualification of gas system and contract operating personnel.  Heath and Associates offers several OQ schools which cover many of the covered tasks associated with Operations and Maintenance, Corrosion, and Construction.  Customized training and evaluation for operating personnel can be developed.  Heath and Associates also assists operators in the development of tests and evaluation criteria and with OQ plan modifications.

Safety Evaluations Study / Compliance Audits

On-site field inspections and a comprehensive review of safety and maintenance records are performed to identify safety concerns of client system. Safe, desirable operating functions are defined for each system. Existing operating policies are monitored and reviewed for safety and adequacy.  An analysis of these practices is made and recommendations for necessary changes to bring the client's system into compliance are detailed.  Specific review of operating procedures or facilities identified by client or DOT/OPS inspector will also be addressed in a system study.

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OTHER SERVICES

Mapping Services

Gas utilities are required by the Department of Transportation/Office of Pipeline Safety to have and maintain system maps. Transmission pipeline operators are required to maintain and submit maps to DOT as per requirements of the National Pipeline Mapping System guidelines.  Heath and Associates provides system mapping services using AutoCAD and other formats to create a comprehensive record of the utility's facilities that are compliant with the DOT/OPS requirements.

Mapping services include a layout of the roads, landmarks, and distribution pipelines as well as schematic and detailed drawings of the system facilities. Drawing layers can be created to address cathodic protection surveys, critical valve maintenance, emergency valve isolation, and leak survey histories. Maps can be provided in different sizes and customized to aid in system compliance record keeping.  Background layers such as aerial photos, topographic and geologic maps can be incorporated into the system maps.

Expert Witness

Heath and Associates' registered professional engineers have experience and are recognized as expert witnesses at several state utility commissions. Testimony can be provided related to expansion projects, rates, construction issues, safety, and other areas of expertise.

Natural Gas Marketing Plan

Heath and Associates can conduct a review of a gas system's marketing plan and ongoing efforts.  Informal or formal assistance in upgrading the marketing efforts or prioritizing these tasks can be provided.  A comprehensive marketing plan can be developed that addresses traditional marketing efforts, potential marketing identification, and the marketing/implementation of new technologies such as Natural Gas Vehicles, distributed generation using microturbines or fuel cells, and natural gas cooling.

Customized Preventive Maintenance Program

This program identifies preventive maintenance needs and schedules required maintenance tasks. Additional tasks, defined by the client company, will also be addressed.

Customized Service Training and Needs

Customized engineering or management oriented consulting services are tailored to address specific client requests. A training program, which is prescribed by the client on any natural gas distribution subject matter, can be defined and delivered to the client's staff.

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