BILL NUMBER: SB 705 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 13, 2011
INTRODUCED BY Senator Leno
FEBRUARY 18, 2011
An act to amend Sections 328 and 328.2 of, and to amend the
heading of Chapter 2.2 (commencing with Section 328) of Part 1 of
Division 1 of, and to add Sections 329 and 329.2 to, the
Public Utilities Code, relating to natural gas.
LEGISLATIVE COUNSEL'S DIGEST
SB 705, as amended, Leno. Natural gas: service and safety.
Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including gas corporations, as
defined. Existing law authorizes the commission to fix the rates and
charges for every public utility, and requires that those rates and
charges be just and reasonable. The Public Utilities Act authorizes
the commission to ascertain and fix just and reasonable standards,
classifications, regulations, practices, measurements, or services to
be furnished, imposed, observed, and followed by specified public
utilities, including gas corporations.
This bill would require each gas corporation that
provides basic gas service to develop and implement a policy for the
safe operation and maintenance of its gas plant, as defined,
sufficient to prevent accidents, explosions, fires, and dangerous
conditions, and to protect the public and its employees. The bill
would require that the policy have priority over cost minimization
considerations and be consistent with best practices in the gas
industry and with federal pipeline safety statutes and regulations.
The bill would require the commission to approve or revise and
improve the policy by June 30, 2012. The bill would require that all
revenues received by the gas corporation that are authorized by the
commission for service and safety purposes, in furtherance of the
policy, be expended by the gas corporation only for the purposes
authorized by the commission. The bill would require the commission
to authorize a gas corporation to recover sufficient revenues and
employee staffing to provide for prompt provision of service
consistent with the policy in its distribution rate
revise existing provisions relative to restructuring of the natural
gas industry to declare that it is the policy of the state t
o place safety of the public and gas corporation employees as
the top priority and require the commission to require
that the distribution rate of a gas corporation include sufficient
revenues and employee staffing to provide for prompt provision of
service to the public consistent with this policy. The bill would
require each gas corporation to develop a service and safety plan, as
specified, for the safe and reliable operation of its gas plant, as
defined, and would require the commission to accept, modify, or
reject the plan by December 31, 2012. The bill would require that the
plan be periodically reviewed and updated. The bill would require
that the commission ensure that each gas corporation have sufficient
revenues to effectively implement the service and safety plan while
preventing ratepayers from directly or indirectly subsidizing
unreasonable or imprudent actions by gas corporations, as specified.
The bill would require that all revenues received by a gas
corporation that are authorized by the commission for implementation
of the safety policy, or development and implementation of
the service and safety plan, be expended only for the purposes
authorized by the commission. The bill would require the commission
to dedicate sufficient resources to effectively oversee the
implementation of the service and safety plan approved by the
commission .
Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the
commission is a crime.
Because the provisions of this bill would be a part of the act and
because a violation of an order or decision of the commission
implementing its requirements would be a crime, the bill would impose
a state-mandated local program by creating a new crime.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The heading of Chapter 2.2 (commencing with Section
328) of Part 1 of Division 1 of the Public Utilities Code is amended
to read:
CHAPTER 2.2. NATURAL GAS SAFETY AND SERVICE
SEC. 2. Section 328 of the Public Utilities Code is amended to
read:
328. The Legislature finds and declares all of the following:
(a) In order to ensure that all core customers of a gas
corporation continue to receive safe basic gas service, each existing
gas corporation shall continue to provide this essential service.
(b) (1) Each gas corporation that provides basic gas service shall
develop and implement a policy for the safe operation and
maintenance of its gas plant sufficient to prevent accidents,
explosions, fires, and dangerous conditions, and to protect the
public and its employees. The policy shall have priority over cost
minimization considerations and shall be consistent with best
practices in the gas industry and with federal pipeline safety
statutes (Chapter 601 (commencing with Section 60101) of Subtitle
VIII of Title 49 of the United States Code) and the regulations
adopted by the United States Department of Transportation pursuant to
those statutes.
(2) The commission shall approve or revise and approve the policy
developed and implemented by each gas corporation pursuant to
paragraph (1) by June 30, 2012.
(c) (1)
(b) A customer shall not be required to pay separate
fees for utilizing services that protect public or customer safety.
(2) All revenues received by the gas corporation that are
authorized by the commission for service and safety purposes, in
furtherance of the policy developed and implemented by the gas
corporation and approved by the commission pursuant to subdivision
(b), shall be expended by the gas corporation only for the purposes
authorized by the commission.
(d) The commission and gas corporation shall provide opportunities
for full and on-going participation by public utility employees in
the development and implementation of service and safety policy, with
the objective of developing an industrywide culture of safety that
will prevent accidents, explosions, fires, and dangerous conditions
for the protection of the public and gas corporation employees.
(c) It is the policy of the state that the commission and each gas
corporation place safety of the public and gas corporation employees
as the top priority.
SEC. 3. Section 328.2 of the Public Utilities Code is amended to
read:
328.2. (a) The commission shall require each gas corporation to
provide bundled basic gas service to all core customers in its
service territory unless the customer chooses or contracts to have
natural gas purchased and supplied by another entity.
(b) A public utility gas corporation shall continue to be the
exclusive provider of revenue cycle services to all customers in its
service territory, except that an entity purchasing and supplying
natural gas under the commission's existing core aggregation program
may perform billing and collection services for its customers under
the same terms as currently authorized by the commission, and except
that a supplier of natural gas to noncore customers may perform
billing and collection for natural gas supply for its customers.
(c) The gas corporation shall continue to calculate its charges
for services provided by that corporation. If the commission
establishes credits to be provided by the gas corporation to core
aggregation or noncore customers who obtain billing or collection
services from entities other than the gas corporation, the credit
shall be equal to the billing and collection services costs actually
avoided by the gas corporation.
(d) The commission shall require the distribution rate to continue
to include after-meter services and shall authorize sufficient
revenues and employee staffing to provide for prompt provision of
these services to the public, consistent with the policy developed
and implemented by the gas corporation and approved by the commission
pursuant to subdivision (b) (c) of
Section 382.
SEC. 4. Section 329 is added to the
Public Utilities Code , to read:
329. (a) (1) Each gas corporation shall develop a service and
safety plan for the safe and reliable operation of its gas plant that
implements the policy of paragraph (c) of Section 328.
(2) By December 31, 2012, the commission shall review and accept,
modify, or reject the plan for each gas corporation as part of a
proceeding that includes a hearing.
(3) Each gas corporation shall implement its approved plan.
(4) The commission shall require each gas corporation to
periodically review and update the plan, and the commission shall
review and accept, modify, or reject an updated plan at regular
intervals thereafter. The commission shall, pursuant to Section
1701.1, determine whether a proceeding on a proposed update to a plan
requires a hearing, consistent with subdivision (d).
(b) The service and safety plan developed and implemented pursuant
to subdivision (a) shall be consistent with best practices in the
gas industry and with federal pipeline safety statutes (Chapter 601
(commencing with Section 60101) of Subtitle VIII of Title 49 of the
United States Code) and the regulations adopted by the United States
Department of Transportation pursuant to those statutes.
(c) The service and safety plan developed and implemented pursuant
to subdivision (a) shall set forth how the gas corporation will
implement the policy established in paragraph (c) of Section 328 and
achieve each of the following:
(1) Identify and minimize hazards and systemic risks in order to
prevent accidents, explosions, fires, and dangerous conditions and
protect the public and its employees.
(2) Identify the safety-related systems that will be deployed to
eliminate or minimize hazards, including adequate documentation of
gas plant history and capability.
(3) Provide adequate storage and transportation capacity to
reliably and safely deliver gas to all customers consistent with
rules authorized by the commission governing core and noncore
reliability and curtailment, including provisions for expansion,
replacement, preventive maintenance, and reactive maintenance and
repair of gas plant.
(4) Provide for effective patrol and inspection of the gas plant
to detect leaks and other compromised facility conditions and to
effect timely repairs.
(5) Provide for appropriate and effective system controls, with
respect to both equipment and personnel procedures, to limit the
damage from accidents, explosions, fires, and dangerous conditions.
(6) Provide timely response to customer and employee reports of
leaks and other hazardous conditions and emergency events, including
disconnection, reconnection, and pilot-lighting procedures.
(7) Include appropriate protocols for determining maximum
allowable operating pressures on relevant pipeline segments,
including all necessary documentation affecting the calculation of
maximum allowable operating pressures.
(8) Prepare for, prevent, or minimize damage from, and respond to,
earthquakes and other major events.
(9) Exceed the minimum standards for safe design, construction,
installation, operation, and maintenance of gas transmission and
distribution facilities prescribed by regulations issued by the
United States Department of Transportation in Part 192 of Title 49 of
the Code of Federal Regulations.
(10) Ensure an adequate number of properly trained gas corporation
employees to carry out the plan.
(11) Any additional matter that the commission determines should
be included in the plan.
(d) The commission and gas corporation shall provide opportunities
for full and on-going participation by gas corporation employees in
the development and implementation of the service and safety plan,
with the objective of developing an industry-wide culture of safety
that will prevent accidents, explosions, fires, and dangerous
conditions for the protection of the public and gas corporation
employees.
SEC. 5. Section 329.2 is added to the
Public Utilities Code , to read:
329.2. (a) The commission shall take all reasonable and
appropriate actions necessary to carry out the policy of paragraph
(c) of Section 328 consistent with the principle of just and
reasonable cost-based rates.
(b) The commission shall ensure that each gas corporation has
sufficient revenues to effectively implement the service and safety
plan required by Section 329. In implementing this section, the
commission shall prevent ratepayers from directly or indirectly
subsidizing unreasonable or imprudent actions by gas corporations,
including both of the following:
(1) The commission shall not allow the recovery, directly or
indirectly, of expenses from ratepayers that are incurred by the gas
corporation for any of the following:
(A) Data gathering or evaluation proximately caused by inadequate
historical compliance with any applicable state or federal standards
for record-keeping or by the utility's failure to observe reasonable
record-keeping and data maintenance practices.
(B) Inspection work, including retrofitting and smart pigging,
proximately caused by unreasonable reliance on faulty records or
inadequate data concerning pipeline characteristics.
(C) Maintenance work proximately caused by deferred maintenance or
other activities forecast and authorized in prior rate cases.
(2) In any proceeding addressing the gas corporation's recovery of
expenses or capital investments in pipeline reliability, including
installation of new transmission pipeline valves or other pressure
control systems and the replacement of transmission pipes, the
commission shall ensure that:
(A) The investment is supported by a cost versus benefit analysis
that considers alternatives to promote safety of the pipeline system.
(B) The adopted ratemaking fairly accounts for any prior failure
by the gas corporation to carry out its obligation to safely
construct, operate, and maintain its gas plant.
(c) All revenues received by the gas corporation that are
authorized by the commission for implementation of the safety policy,
or for the development and implementation of the service and safety
plan, shall be expended by the gas corporation only for the purposes
authorized by the commission. The commission shall enact appropriate
rules to ensure that moneys are appropriately spent on authorized
activities or returned to ratepayers.
(d) The commission shall dedicate sufficient resources to
effectively oversee the implementation of the service and safety plan
approved by the commission pursuant to Section 329, including
reviewing documentation, and timely inspections, repairs, and
responses to abate or address hazardous conditions. The commission's
budget shall reflect the commission's judgment about sufficient
resources.
SEC. 4. SEC. 6. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.