BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 1694|
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                                    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).  
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          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 

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          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 

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          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


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           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

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