BILL ANALYSIS Ó AB 578 Page 1 ASSEMBLY THIRD READING AB 578 (Hill) As Amended January 12, 2012 Majority vote UTILITIES & COMMERCE 11-2 APPROPRIATIONS 12-5 ----------------------------------------------------------------- |Ayes:|Bradford, Fletcher, |Ayes:|Fuentes, Blumenfield. | | |Buchanan, Fong, Fuentes, | |Bradford, Charles | | |Perea, Wieckowski, Ma, | |Calderon, Campos, | | |Nestande, Skinner, | |Chesbro, Gatto, Hall, | | |Swanson | |Hill, Ammiano, Mitchell, | | | | |Solorio | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Beth Gaines, Knight |Nays:|Harkey, Donnelly, | | | | |Nielsen, Norby, Wagner | ----------------------------------------------------------------- SUMMARY : Requires the California Public Utilities Commission (PUC) to implement those recommendations of the National Transportation Safety Board (NTSB) regarding natural gas pipeline safety that the PUC determines are appropriate. Specifically, this bill : 1)Requires the PUC, beginning January 1, 2012, to determine if implementation of NTSB recommendations issued in a pipeline accident report and regarding natural gas pipeline safety are appropriate or whether less costly and equally effective alternatives exist. 2)Requires the PUC, if it determines either that a recommendation is not appropriate or that there is no feasible alternative, to state its reasons in writing on the record of a proceeding. 3)Requires the PUC, if it determines a recommendation is appropriate, to issue orders and adopt rules for implementation as soon as practicable. 4)Requires the PUC to detail actions taken regarding NTSB recommendations in the PUC's annual report to the Legislature AB 578 Page 2 and to authorize recovery in rates for utilities' costs related to implementation of recommendations. FISCAL EFFECT : According to the Assembly Appropriations Committee, annual special fund costs of up to $130,000 to PUC for two half-time positions (administrative law judge and regulatory analyst) to coordinate evaluation of NTSB recommendations and feasible alternatives. According to information provided by the author's office, relevant NTSB accident reports issued over the past 11 years included 64 recommendations, with 32 recommendations coming from the board's report on the San Bruno pipeline explosion. COMMENTS : According to the author, "recent natural gas pipeline accidents in California have received attention throughout the country. The most visible was that in San Bruno in late 2010, but natural gas accidents in Cupertino and Roseville at the end of last year highlight exactly how pervasive our problems are. These problems, however, are not new, have been documented, and could have been mitigated for more than a decade had our state regulatory paid closer attention to them and required utilities to follow the prescribed solutions." NTSB safety recommendations: In response to the San Bruno explosion, last year NTSB issued recommendations to the U.S. Secretary of Transportation, the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA), the Governor of the State of California, PUC, Pacific Gas & Electric Company (PG&E), and the American Gas Association and the Interstate Natural Gas Association of America. PUC actions to date have been consistent with the preliminary and final recommendations of NTSB. PUC instituted Rulemaking 11-02-019 to examine regulatory changes and other actions that PUC regulated gas transmission operators PG&E, Southern California Gas Company (SoCalGas), San Diego Gas & Electric Company (SDG&E), and Southwest Gas Corporation (SWGC) needed to take to improve the safety of their systems. In addition, PUC has taken action to reform its own regulatory oversight function. For example, PUC has appointed an Independent Review Panel to look at both PG&E and PUC actions leading up to San Bruno. The Independent Panel's report was critical of both PG&E and PUC. AB 578 Page 3 According to a recent press release, PG&E reports their progress on fulfilling NTSB recommendations - some of which have already been completed. These include: verification of maximum allowable operation pressure on 1,600 miles of pipelines; updated their emergency response plans; implemented a data management system to ensure that PG&E records are traceable, verifiable and complete; notifications provided to customers living within 2,000 feet of a transmission pipeline; installation of automated valves; and, the filing of their Pipeline Safety Enhancement Plan which details planned improvements over the next few years. Analysis Prepared by : DaVina Flemings / U. & C. / (916) 319-2083 FN: 0003056