BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1694| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ CONSENT Bill No: AB 1694 Author: Fuentes (D) Amended: 4/25/12 in Assembly Vote: 21 SENATE ENERGY, UTILITIES & COMMUNIC. COMM. : 13-0, 6/11/12 AYES: Padilla, Fuller, Berryhill, Corbett, De León, DeSaulnier, Emmerson, Kehoe, Pavley, Rubio, Simitian, Strickland, Wright SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 73-0, 5/10/12 (Consent) - See last page for vote SUBJECT : Gas pipeline safety inspections SOURCE : Public Utilities Commission DIGEST : This bill permits the California Public Utilities Commission (PUC) to inspect mobilehome parks (MHPs) and propane suppliers at least once every seven years utilizing a risk-based assessment schedule. ANALYSIS : Existing law permits MHPs 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). CONTINUED AB 1694 Page 2 Existing 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. Existing law charges the Department of Housing and Community Development (HCD) with inspecting MHPs including the inspection of gas and electric infrastructure. Existing law requires the PUC 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 PUC 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 PUC to inspect MHPs and propane suppliers at least once every seven years utilizing a risk-based assessment schedule. This bill requires that if the operator demonstrates compliance with the initial inspection, additional inspections be made at least once every seven years pursuant to a risk-based inspection schedule adopted by the commission. 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 CONTINUED AB 1694 Page 3 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 PUC 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 PUC'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 PUC created an Independent Review Panel (IRP) of experts to conduct a comprehensive study and investigation of the September 9, 2010, explosion and fire. The PUC directed the panel to make a technical assessment of the events, determine the root causes, and offer recommendations for action by the PUC to best ensure such an accident is not repeated elsewhere. The PUC 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 PUC itself, and statutory changes to be recommended by the PUC. The IRP released its findings on June 8, 2011. The PUC reported that relatively fewer of the PUC's scarce staff resources were focused on the transmission pipeline systems within the state relative to the small operator audits and CONTINUED AB 1694 Page 4 that no such intervals are required for other types of systems. Specifically: Under California law, the PUC 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 PUC commits substantial pipeline safety inspection resources on these systems. In 2008, the PUC 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 PUC 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 PUC with needed flexibility in how it allocates inspection resources. PUC Inspection Staff . The PUC 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 6/26/12) Public Utilities Commission (source) 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 CONTINUED AB 1694 Page 5 ASSEMBLY FLOOR : 73-0, 5/10/12 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Conway, Davis, Dickinson, Donnelly, Eng, Feuer, Fong, Fuentes, Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, Pan, Perea, Portantino, Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Cook, Fletcher, Furutani, Jeffries, Norby, Olsen, V. Manuel Pérez RM:n 6/26/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED