BILL NUMBER: AB 56 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 18, 2011
AMENDED IN ASSEMBLY MARCH 16, 2011
AMENDED IN ASSEMBLY FEBRUARY 23, 2011
INTRODUCED BY Assembly Member Hill
DECEMBER 6, 2010
An act to add Sections 746 and 770.5 ,
770.5, and 770.6 to the Public Utilities Code, relating to
public utilities gas corporations .
LEGISLATIVE COUNSEL'S DIGEST
AB 56, as amended, Hill. Public utilities:
Gas corporations: rate recovery and expenditure: intrastate
pipeline safety.
(1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities. Existing law authorizes
the commission to fix the rates and charges for every public utility,
and requires that those rates and charges be just and reasonable.
This bill would prohibit a public utility
gas corporation from recovering any fine or penalty in any rate
approved by the commission. The bill would require a public
utility gas corporation to file
quarterly semiannual reports with the commission
and the Division of Ratepayer Advocates describing how the
public utility is spending ratepayer funds
approved for expenditure by the commission moneys that
the commission has authorized to be collected from ratepayers to
reimburse the utility for public safety activities . The bill
would require the commission , in consultation with the
commission's Division of Ratepayer Advocates, to work
to align ratemaking policies, practices, and incentives to
better reflect safety concerns and ensure ongoing commitments to
public safety. If the commission authorizes a gas corporation to
recover expenses incurred for public safety, the bill would require
the commission to require the gas corporation to establish and
maintain a balancing account to record the difference between the
approved revenue requirements for public safety and the actual
expenditures made by the utility. The bill would require
a public utility to return ratepayer funds a
gas corporation to return moneys approved for expenditure for
public safety by the commission to ratepayers
the balancing account , if those funds are not expended within
a reasonable period of time after the commission grants approval of
the public safety expenditure, as determined by the commission. The
bill would require the commission to consider the safety record of
the public utility a gas corporation in
determining what constitutes a reasonable rate of return for the
public utility.
(2) The Public Utilities Act authorizes the commission to
ascertain and fix just and reasonable standards, classifications,
regulations, practices, measurements, or service to be furnished,
imposed, observed, and followed by specified public utilities,
including gas corporations, as defined.
Existing federal law requires the United States Department of
Transportation Pipeline and Hazardous Materials Safety Administration
(PHMSA) to adopt minimum safety standards for pipeline
transportation and for pipeline facilities, including an interstate
gas pipeline facility and intrastate gas pipeline facility, as
defined. Existing law authorizes the Secretary of Transportation to
prescribe or enforce safety standards and practices for an intrastate
pipeline facility or intrastate pipeline transportation to the
extent that the safety standards and practices are regulated by a
state authority that submits to the secretary annually a
certification for the facilities and transportation or alternatively
authorizes the secretary to make an agreement with a state authority
authorizing it to take necessary action to meet certain pipeline
safety requirements. Existing law prohibits a state authority from
adopting or continuing in force safety standards for interstate
pipeline facilities or interstate pipeline transportation. Existing
law authorizes a state authority that has submitted a current
certification to adopt additional or more stringent safety standards
for intrastate pipeline facilities and intrastate pipeline
transportation only if those standards are compatible with the
minimum standards prescribed by PHMSA.
This bill would designate the commission as the state authority
responsible for development, submission, and administration of a
state pipeline safety program certification for natural gas
pipelines. The bill would require the commission to adopt and enforce
compatible safety standards, as defined, for commission-regulated
gas pipeline facilities, as defined, to accomplish specified results.
The bill would require the commission to track proposed
repairs safety, reliability, and facility
integrity-related projects and activities for which a gas
corporation requested compensation in any rate request that was
granted by the commission in order to determine if the
repairs are made project or activity was undertaken
and completed and to require any gas corporation that fails to
make repairs undertake or complete safety,
reliability, and facility integrity-related projects and activities
for which the commission granted recovery in rates to promptly
make a public filing as to the justification for failing to
make the approved repairs undertake or complete the
proposed project or activity . The bill would prohibit a gas
corporation from recovering in rates any uninsured expense resulting
from a fire, explosion, or other catastrophic event involving a
commission-regulated gas pipeline facility that resulted
from negligence by the utility when that event results
from acts or omissions engaged in or directed by any officer or
employee of the gas corporation with either the intent to cause harm,
or with knowledge that harm was substantially certain to result
.
The bill would require the commission, by July 1, 2012, to open an
appropriate proceeding or expand the scope of an existing proceeding
to establish compatible emergency response standards, as defined,
that owners or operators of certain commission-regulated gas pipeline
facilities, as defined, would be required to follow. The standards
would require owners or operators of intrastate transmission and
distribution lines to implement emergency response plans, with
specified requirements, that are compatible with PHMSA's regulations
concerning emergency plans. The bill would require the owners of
intrastate transmission lines to provide the State Fire Marshal and
the chief fire official of the applicable local government with
instructions on how to access and utilize the National Pipeline
Mapping System developed by PHMSA to improve local response
capabilities for pipeline emergencies. The bill would require the
commission to report to the Legislature on the status of establishing
the compatible emergency response standards on or before January 1,
2013.
(3) Under existing law, a violation of the Public Utilities Act or
any order, decision, rule, direction, demand, or requirement of the
commission is a crime.
Because the provisions of this bill would be a part of the act and
because a violation of an order or decision of the commission
implementing its requirements would be a crime, the bill would impose
a state-mandated local program by creating a new crime.
(4) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 746 is added to the Public Utilities Code, to
read:
746. (a) A public utility gas corporation
shall not recover any fine or penalty in any rate approved by
the commission.
(b) A public utility shall file quarterly
gas corporation shall file semiannual reports with the
commission and the Division of Ratepayer Advocates describing how the
public utility is spending ratepayer funds approved for
expenditure by the commission. utility is spending
moneys that the commission has authorized to be collected from
ratepayers to reimburse the utility for public safety activities.
(c) The commission shall work in conjunction
, in consultation with the Division of Ratepayer Advocates
, shall work to align ratemaking policies, practices, and
incentives to better reflect safety concerns and ensure ongoing
commitments to public safety.
(d) A public utility shall return ratepayer funds
If the commission authorizes a gas corporation to
recover expenses incurred for public safety, the commission shall
require the gas corporation to establish and maintain a balancing
account to record the difference between the approved revenue
requirements for public safety and the actual expenditures made by
the utility. A gas corporation shall return moneys approved for
expenditure for public safety by the commission, to
ratepayers the balancing account, if those funds
are not expended within a reasonable period of time after the
commission grants approval of the public safety expenditure, as
determined by the commission.
(e) In determining what constitutes a reasonable rate of return,
the commission shall consider the safety record of the
public utility gas corporation .
SEC. 2. Section 770.5 is added to the Public Utilities Code, to
read:
770.5. (a) For purposes of this section the following terms have
the following meanings:
(1) "Class 1 location," "class 2 location," "class 3 location,"
and "class 4 location" have those meanings as defined in the
regulations adopted by the United States Department of Transportation
pursuant to Chapter 601 (commencing with Section 60101) of Subtitle
VIII of Title 49 of the United States Code (49 C.F.R. 192.5, as
adopted January 1, 2011, or a successor regulation).
(1)
(2) "Commission-regulated gas pipeline facility" means
an intrastate gas pipeline facility, as defined in Section 60101 of
Title 49 of the United States Code and in the regulations
adopted by the Department of Transportation (49 C.F.R. 192.3, as
adopted October 1, 2010, or a successor regulation) , that
transports natural gas and is subject to the regulatory authority of
the commission, including a pipeline that the commission, pursuant to
subsection (c) of Section 717 of Title 15 of the United States Code,
has certified to the Federal Energy Regulatory Commission as being
subject to the regulatory jurisdiction of the commission over rates
and service. "Commission-regulated gas pipeline facility" does not
include those pipelines that are excluded from regulation by the
Federal Energy Regulatory Commission pursuant to subsection (b) of
Section 717 of Title 15 of the United States Code because they are
facilities used for the distribution of natural gas.
(2)
(3) "Compatible safety standards" means additional or
more stringent safety standards for commission-regulated gas pipeline
facilities that are compatible with the minimum safety standards
adopted by the Department of Transportation pursuant to Chapter 601
(commencing with Section 60101) of Subtitle VIII of Title 49 of the
United States Code and which the commission is authorized to adopt
pursuant to subsection (c) of Section 60104 of that chapter.
(4) "High consequence area" has the same meaning as defined in the
regulations adopted by the United States Department of
Transportation pursuant to Chapter 601 (commencing with Section
60101) of Subtitle VIII of Title 49 of the United States Code (49
C.F.R. 192.903, as adopted January 1, 2011, or a successor
regulation).
(b) The commission shall be the state authority responsible for
the development, submission, and administration of a state pipeline
safety program certification for natural gas pipelines pursuant to
Chapter 601 (commencing with Section 60101) of Subtitle VIII of Title
49 of the United States Code.
(c) The commission shall adopt and enforce compatible safety
standards for commission-regulated gas pipeline facilities to
accomplish all of the following:
(1) Require the owner or operator to make an annual performance
measure report to the commission concerning all
the condition of commission-regulated gas pipeline
facilities. The performance measure report shall include the total
number of anomalies identified as a result of safety assessments, the
total number of conditions repaired, and the actual anomalies
needing repair that are identified by the pipeline owner or operator
during the inspections and inspections,
the conditions requiring repair , and any other
information the commission determines is necessary to evaluate the
safety and performance of the pipeline facilities . The annual
performance measure reports shall be made publicly available on
the Internet to the extent that doing so does not create a
public safety risk. The commission shall consult with the federal
Department of Homeland Security in determining what information may
be made available without creating a public safety risk.
(2) Require the owner or operator to evaluate the integrity of all
commission-regulated gas pipeline facilities outside high
consequence areas and to include this evaluation as part of their
safety assessment reports.
(3) Require the owner or operator of commission-regulated gas
pipeline facilities to develop and to implement, by January 1, 2012,
a continuing public education program pursuant to Section 60116 of
Title 49 of the United States Code. The owner or operator, to the
extent that doing so does not create a public safety risk, shall
provide detailed, customized information on pipeline locations and
emergency response plans, as well as enhanced annual emergency
response training.
(4) Require the owner or operator of commission-regulated gas
pipeline facilities to provide information regarding the pipeline
system to state and local emergency responders, including the
business name, address, and emergency contact information of whom to
contact if an event occurs, accurate maps of facility locations, the
owner or operator's emergency response plan, and any other
information the commission determines should be supplied to state and
local emergency responders.
(5)
(3) Require the owner or operator of
commission-regulated gas pipeline facilities to conduct outreach and
public education relative to excavation dangers and the availability
of the one-call notification program in order to reduce dangerous
incidences caused by third-party excavations.
(6)
(4) Require the owner or operator of
commission-regulated gas pipeline facilities to prioritize those
facilities that, because of their proximity to seismic
active areas, should be subject to the highest level of safety
oversight. The commission shall develop protocol to ensure that
pipelines that are located in seismic active areas and in populated
areas, including those pipelines located within a Class 3 or Class 4
high consequence area, receive the highest priority and are designed
with the highest level of safety. In adopting and enforcing
compatible safety standards pursuant to this paragraph, the
commission shall consult with seismic experts and shall publish maps
of known and active seismic faults on which owners and operators will
rely to address risks.
(7) Require the owner or operator of commission-regulated gas
pipeline facilities to comply with minimum standards established by
the commission, in consultation with the independent review panel
investigating the San Bruno natural gas pipeline explosion of 2010,
to install automatic or remote shutoff valves, unless technically
unfeasible, according to the following timelines:
(A) On all new commission-regulated gas pipeline facilities or any
facility being replaced beginning January 1, 2012.
(B) On all facilities within 10 miles of a high-risk seismic fault
by January 1, 2014.
(C) On all facilities within 10 miles of a Class 3 or Class 4 high
consequence area by January 1, 2017.
(8) Require the
owner or operator of commission-regulated gas pipeline facilities to
maintain a record of tests on all pipelines to substantiate their
current maximum allowable operating pressure. If complete records are
not available, the owner or operator shall reduce the maximum
operating pressure and report the condition to the commission. Before
restoring the pipeline pressure to its maximum operating pressure
the facility shall be inspected using the most effective and
appropriate inspection technology. proximity to an
earthquake fault zone delineated by the State Geologist pursuant to
the Alquist-Priolo Earthquake Fault Zoning Act (Chapter 7.5
(commencing with Section 2621) of Division 2 of the Public
Resources Code), should be subject to heightened safety oversight.
The commission shall develop protocol to ensure the safety of those
pipelines that are located in an earthquake fault zone and in a high
consequence area.
(5) The commission, in consultation with the independent review
panel appointed to investigate the San Bruno natural gas pipeline
explosion of 2010, shall develop minimum criteria and standards for
the installation of sectionalized block valves and automated and
remote shutoff valves, taking into consideration weather-related and
outside faces, operating pressure, the rate of potential release of
natural gas, the potential for ignition of the gas, and
accessibility. The commission shall establish a timeline by which the
owner or operator of a commission-regulated gas pipeline facility
shall meet the minimum criteria and standards established by the
commission, unless technically unfeasible, for each of the following:
(A) Each commission-regulated gas pipeline facility that is first
placed in service or replaced.
(B) Each commission-regulated gas pipeline facility that traverses
an earthquake fault zone designated by the State Geologist pursuant
to the Alquist-Priolo Earthquake Fault Zoning Act (Chapter 7.5
(commencing with Section 2621) of Division 2 of the Public Resources
Code).
(C) Each commission-regulated gas pipeline facility that is in a
class 3 location, class 4 location, or high consequence area.
(6) Require the owner or operator of all commission-regulated gas
pipeline facilities that are in a class 3 location, class 4 location,
or high consequence area to establish a maximum allowable operating
pressure for the facility. The maximum allowable operating pressure
shall be established by conducting a hydrostatic pressure test,
unless the commission determines that the owner or operator has
adequately established a maximum allowable operating pressure using
either of the following:
(A) Prior hydrostatic testing.
(B) Thorough documentation, including as-built drawings, alignment
sheets and specifications, design, construction, testing, and
maintenance records, demonstrating that the maximum allowable
operating pressure has been accurately established based on the
weakest pipeline section or facility component.
(9)
(7) Require owners and operators of
commission-regulated gas pipeline facilities to complete, by January
1, 2022, a modernization program to upgrade key facilities located in
heavily populated and other critical high
consequence areas. The commission shall consult with owners and
operators and interested stakeholders in developing the program
requirements and schedule. The program shall contain criteria for
prioritizing critical gas pipeline facilities and ensure that all
upgraded facilities can accommodate state-of-the-art inspections,
including internal corrosion inspection methods. It is the
intent of the Legislature that st ate agencies expedite
any necessary permit work or approval that is necessary for any
demolition, construction, repair, replacement, inspection, or testing
activity that may be required pursuant to this paragraph.
(d) The commission shall adopt and enforce a one-call notification
program for the state consistent with the requirements adopted by
the Department of Transportation pursuant to Chapter 601 (commencing
with Section 60101) of Subtitle VIII of Title 49 of the United States
Code.
(e) The commission shall track proposed repairs
safety, reliability, and facility integrity-related projects
and activities for which a gas corporation requested
compensation in any rate request that was granted by the commission
in order to determine if the repairs are made
project or activity was undertaken and completed . The
commission shall require any gas corporation that fails to
make repairs undertake or complete safety,
reliability, and facility integrity-related projects and activities
for which the commission granted recovery in rates to promptly
make a public filing as to the justification for failing to
make the approved repairs undertake or complete the
proposed project or activity .
(f) In its general rate case, a gas corporation shall demonstrate,
to the satisfaction of the commission, each of the following:
(1) That its proposed rates will be sufficient to enable the gas
corporation to fund those projects and activities necessary to
maintain safe and reliable service and to meet federal and state
safety requirements in a cost-effective manner.
(2) If rate recovery was previously approved by the commission for
safety-related projects or activities, and the gas corporation seeks
to reprioritize use of the moneys for other safety-related projects
or activities, that the reprioritization is based on sound risk
management principles.
(3) If rate recovery is sought for safety-related projects or
activities, that an adequate safety assessment has been undertaken on
the gas pipeline facilities on which the projects or activities are
to be undertaken so that the projects and activities can be
undertaken in a thorough, yet cost-effective, manner without
incurring cost overruns.
(4) That any settlement agreement filed in the case that
encompasses safety-related projects or activities identifies those
projects and activities with specificity and allocates funding for
those projects and activities on a project-by-project, or
activity-by-activity basis.
(f)
(g) A gas corporation shall not recover in rates any
uninsured expense resulting from a fire, explosion, or other
catastrophic event involving a commission-regulated gas pipeline
facility that resulted from negligence by the utility
when that event results from acts or omissions engaged
in or directed by any officer or employee of the gas corporation
with either the intent to cause harm, or with knowledge that harm was
substantially certain to result .
SEC. 3. Section 770.6 is added to the
Public Utilities Code , to read:
770.6. (a) For purposes of this section, the following terms have
the following meanings:
(1) "Commission-regulated gas pipeline facility" has the same
meaning as defined in Section 770.5.
(2) "Compatible emergency response standards" means emergency
response standards that are applicable to intrastate transmission and
distribution lines that are in addition to, or more stringent than,
the minimum safety standards adopted by the United States Department
of Transportation pursuant to Chapter 601 (commencing with Section
60101) of Subtitle VIII of Title 49 of the United States Code and
that the commission is authorized to adopt pursuant to Section 60104
(c) of that chapter.
(b) On or before July 1, 2012, the commission shall open an
appropriate proceeding or expand the scope of an existing proceeding
to establish compatible emergency response standards that owners or
operators of commission-regulated gas pipeline facilities shall be
required to follow for intrastate transmission and distribution
lines. The commission shall establish the standards to ensure that
intrastate transmission and distribution lines have emergency
response plans that adequately prepare them for a natural disaster or
malfunction that could cause injury to human life or property, with
the purpose of minimizing the occurrence of both.
(c) The commission shall establish the compatible emergency
response standards in consultation with the California Emergency
Management Agency and members of California's first responder
community, including, but not limited to, members of the California
Fire Chiefs Association.
(d) The compatible emergency response standards shall require
owners or operators of intrastate transmission and distribution lines
to implement emergency response plans that are compatible with the
United States Department of Transportation Pipeline and Hazardous
Materials Safety Administration's regulations concerning emergency
plans contained in Section 192.615 of Title 49 of the Code of Federal
Regulations, and those plans shall include, but not be limited to,
all of the following requirements:
(1) Emergency shutdown and pressure reduction shall be utilized
whenever deemed necessary and appropriate by the owners or operators
to minimize hazards to life or property. An owner or operator shall
notify appropriate first responders of emergency shutdown and
pressure reduction.
(2) During an emergency response effort, the incident commander
may direct coordination between first responders and owners or
operators to ensure timely and ongoing communication on decisions for
emergency shutdown and pressure reduction.
(3) Owners or operators of intrastate transmission and
distribution lines shall establish and maintain liaison with
appropriate fire, police, and other public officials to do all of the
following:
(A) Learn the responsibility and resources of each government
organization that may respond to a gas pipeline emergency, including,
but not limited to, the role of the incident commander in an
emergency.
(B) Acquaint the officials with the owner's or operator's ability
in responding to a gas pipeline emergency.
(C) Identify the types of gas pipeline emergencies of which the
owner or operator notifies the officials.
(D) Plan how the owner or operator and officials can engage in
mutual assistance to minimize hazards to life or property, or both.
(E) Identify and update information on individual personnel
responsible for the liaison with the appropriate first responder
organizations.
(4) Owners and operators of intrastate transmission lines shall
provide the State Fire Marshal and the chief fire official of the
applicable city, county, city and county, or fire protection district
with instructions on how to access and utilize the National Pipeline
Mapping System developed by the United States Department of
Transportation, Pipeline and Hazardous Materials Safety
Administration, utilizing data submitted pursuant to Section 60132 of
Title 49 of the United States Code, to improve local response
capabilities for pipeline emergencies.
(e) (1) The commission shall report to the Legislature on the
status of establishing the compatible emergency response standards on
or before January 1, 2013.
(2) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
SEC. 3. SEC. 4. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.