BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 216 (Yee)
Hearing Date: 05/26/2011 Amended: 04/25/2011
Consultant: Brendan McCarthy Policy Vote: EU&C 11-0
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BILL SUMMARY: SB 216 requires the Public Utilities Commission to
evaluate current safety practices with regard to intrastate
natural gas transmission pipelines. The bill requires operators
of natural gas transmission pipelines to install automatic or
remote-controlled shut off valves in areas of high population
density or where pipelines cross active seismic faults.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Increased natural gas costs Likely in the low millions
over the next Various
to state agencies several years
* Public Utilities Commission Utilities Reimbursement Account.
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Federal law and general orders of the Public Utilities
Commission require the Commission to regulate natural gas
transmission, distribution, and other pipelines. Operators of
natural gas pipelines are required to develop emergency response
plans. Federal law also requires pipeline operators to provide
information to the federal Department of Transportation on the
location of gas pipelines. While federal law and Commission
orders generally give the Commission oversight responsibility
for natural gas pipelines, the scope of this oversight is
ambiguous.
SB 216 explicitly grants the Public Utilities Commission the
responsibility to regulate intrastate transmission lines,
intrastate distribution lines, intrastate gathering lines,
mobile home park distribution systems, and propane distribution
systems.
The bill requires the Public Utilities Commission to open a
proceeding, or expand an existing proceeding, to evaluate
existing safety practices for natural gas transmission lines and
determine whether additional standards should be adopted
regarding the siting of natural gas transmission lines in
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proximity to pipelines that carry water for fire suppression or
pipelines that carry other hazardous or flammable liquids.
The bill requires the Public Utilities Commission to require
operators of natural gas transmission pipelines to install
automatic or remote-controlled shut off valves on natural gas
pipelines in areas of high population density or which cross
active seismic faults. Pipeline operators are authorized under
the bill to recover the costs of these upgrades from natural gas
ratepayers.
The Public Utilities Commission indicates that it will need
about $240,000 to expand an existing proceeding to comply with
the requirements of the bill.
By requiring operators to install new valves or upgrade existing
valves at ratepayer expense, the bill will impose additional
costs on natural gas ratepayers. Currently, there are about
2,400 manually-operated valves on natural gas transmission
pipelines in the state. The average cost to upgrade such a valve
to a remote-controlled or automatic valve is about $500,000.
Depending on the number of upgrades or new values that are
installed under the bill, the costs to ratepayers could range
anywhere from the low tens of millions to several hundred
million dollars over the next few years. State agencies consume
about 1.7 percent of the natural gas used in the state. Thus,
state agencies would likely face increased natural gas costs
from the hundreds of thousands to several million dollars over
the next few years.
SB 44 (Corbett) requires the Public Utilities Commission to
establish emergency response standards that operators of natural
gas transmission and distribution lines must follow. SB 44 will
be heard in this committee.
SB 879 (Padilla) requires the Public Utilities Commission to
require natural gas utilities to account for ratepayer funds
designated for pipeline maintenance and repair in a more
transparent way. That bill will be heard in this committee.
AB 56 (Hill) requires operators of natural gas pipelines to
institute safety programs and facilities modernization programs
and requires the Public Utilities Commission to oversee those
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programs. AB 56 is in the Assembly Appropriations Committee.
The author's proposed amendments would delete the requirement
that the Public Utilities Commission to evaluate safety
procedures.
The proposed Committee amendments would give the Public
Utilities Commission oversight over the upgrading of pipeline
valves.