BILL ANALYSIS Ó 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 1694 - Fuentes Hearing Date:
June 11, 2012 A
As Amended: April 25, 2012 FISCAL B
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DESCRIPTION
Current law permits mobilehome park (MHP) owners constructed
prior to 1997 to provide gas and electric service to MHP tenants
and requires, in this instance, that the MHP owner (the
master-meter) charge the same rate for gas and electric service
that would be applicable if the tenant received service from an
investor-owned utility (IOU).
Current law defines a propane distribution system as one that
serves ten or more customers, within a citywide area, an
apartment house, a condominium, a cluster of homes, a shopping
center, a combination of any of the above, a MHP with two or
more customers, or any system if a portion of the system is
located in a public place, which is connected to a tank or
tanks, for the purpose of distribution of propane to the end
customers.
Current law charges the Department of Housing and Community
Development (HCD) with inspecting MHPs including the inspection
of gas and electric infrastructure.
Current law requires the California Public Utilities Commission
(CPUC) to conduct an initial inspection of the natural gas
distribution infrastructure in MHPs in which the distribution
system is not owned by an IOU and for propane distribution
systems of propane suppliers. If the MHP or propane supplier is
in compliance at the initial inspection, the CPUC must inspect
the MHP or propane supplier every five years thereafter.
Inspections are required once every five years for propane
distribution systems with less than 100 customers, once every
three years for systems with 100 or more but less than 200
customers, and once every two years for systems with 200 or more
customers.
This bill permits the CPUC to inspect MHPs and propane suppliers
at least once very seven years utilizing a risk-based assessment
schedule.
BACKGROUND
Mobilehome Parks - The state of California has approximately
4,800 mobile home parks with over 340,000 residents.
Approximately 88% of the state's 4,800 parks are more than 40
years old and many are likely to have an outdated gas and/or
electrical infrastructure that is both a problem for tenants
with modern appliances and a public safety concern. Most parks
are "master metered," meaning that the MHP owner is the utility,
receiving service through a single meter. The electricity is
then distributed to tenants who are billed by the MHP owner
based on usage or the service costs are split proportionately.
Propane Distribution Systems - The CPUC assumed jurisdiction
over the safety of master-metered propane distribution systems
in January 1995. A propane system operator can be a gas
utility, a municipality, an individual or supplier operating a
propane system in a housing project, apartment complex,
condominium, mobile home park, shopping center, etc. If there is
no designated person responsible for compliance, then the person
making a sale of propane gas to the customer is the propane
system operator. The CPUC's Utilities Safety Branch administers
the propane safety program similar to its Mobilehome Park Safety
Program, scheduling each jurisdictional system for a safety
audit at least once every five years, to assure compliance with
the federal pipeline safety regulations.
Independent Review Panel - In the aftermath of the explosion of
a natural gas transmission pipeline in San Bruno the CPUC
created an Independent Review Panel (IRP) of experts to conduct
a comprehensive study and investigation of the September 9,
2010, explosion and fire. The CPUC directed the panel to make a
technical assessment of the events, determine the root causes,
and offer recommendations for action by the CPUC to best ensure
such an accident is not repeated elsewhere. The CPUC encouraged
the panel to make such recommendations as necessary. Such
recommendations could include changes to design, construction,
operation, maintenance, and replacement of natural gas
facilities, management practices at PG&E in the areas of
pipeline integrity and public safety, regulatory changes by the
CPUC itself, and statutory changes to be recommended by the
CPUC.
The IRP released its findings on June 8, 2011. The CPUC
reported that relatively fewer of the CPUC's scarce staff
resources were focused on the transmission pipeline systems
within the state relative to the small operator audits and that
no such intervals are required for other types of systems.
Specifically:
Under California law, the CPUC must inspect all 3,200+ MHP
and propane gas distribution systems at least once every
five years, and in some cases more often. As a result, the
CPUC commits substantial pipeline safety inspection
resources on these systems. In 2008, the CPUC spent 43% of
its inspection days on these facilities. Large private
distribution systems took up another 40% and only 17% of
inspection days were spent on transmission pipelines. In
our interviews, the CPUC staff indicated it would prefer to
spend more time on integrity management and transmission
lines, but is hampered from doing so by California mobile
home park and propane requirements, which focus limited
resources elsewhere.
The panel recommended a risk-based inspection regime that would
provide the CPUC with needed flexibility in how it allocates
inspection resources.
CPUC Inspection Staff - The CPUC reports that it has doubled the
size of its natural gas inspection staff since September 2010
and created a dedicated Risk Assessment unit in September, 2011.
The unit will provide the necessary data and analysis to
develop a risk-based inspection and auditing schedule as called
for in the IRP and does not anticipate any additional costs
associated with implementation of a risk-based inspection
schedule.
COMMENTS
1. Author's Purpose . The author reports that AB 1694 would
codify the IRP recommendation in order to assist the CPUC
as it takes proactive steps to ensure public safety.
Switching to a risk-based regime for MHP natural gas and
propane system inspections would ensure that responsible
system operators would be subject to less frequent
inspections, freeing up staff resources to ensure that
those system operators whose systems are determined to be
at higher risk would be inspected more frequently. This
inspection regime, in turn, would ensure that problems are
identified and resolved faster.
2. Impact of Inspection Frequency . As introduced this
measure followed the IRP recommendation exactly by
eliminating any specified interval for inspections in both
MHPs and propane systems. The bill was amended in the
Assembly to require an inspection at least every seven
years thus deviating from the panel's risk-based
recommendation. The result is that the CPUC will be
permitted to add a maximum of two years to the inspection
cycle for MHPs and two to five years for propane systems
depending on the size unless the system conditions warrant
more frequent review.
In its analysis of the bill, the CPUC recommended an
inspection at least once every ten years. The basis for
these intervals - five, seven or ten years, is not known.
ASSEMBLY VOTES
Assembly Floor (73-0)
Assembly Appropriations Committee (17-0)
Assembly Utilities and Commerce Committee
(14-0)
POSITIONS
Sponsor:
California Public Utilities Commission
Support:
California State Association of Electrical Workers
California State Pipe Trades Council
Coalition of California Utility Employees
Division of Ratepayer Advocates
Western Manufactured Housing Communities Association
Western Propane Gas Association
Oppose:
None on file
Kellie Smith
AB 1694 Analysis
Hearing Date: June 11, 2012