BILL ANALYSIS Ó
SB 1371
Page A
SENATE THIRD READING
SB 1371 (Leno)
As Amended August 22, 2014
Majority vote
SENATE VOTE :25-10
UTILITIES & COMMERCE 10-3
APPROPRIATIONS 13-4
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|Ayes:|Bonilla, Buchanan, |Ayes:|Gatto, Bocanegra, |
| |Chávez, Fong, Garcia, | |Bradford, |
| |Roger Hernández, Mullin, | |Ian Calderon, Campos, |
| |Quirk, Rendon, Skinner | |Eggman, Gomez, Holden, |
| | | |Linder, Pan, Quirk, |
| | | |Ridley-Thomas, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Patterson, Beth Gaines, |Nays:|Bigelow, Donnelly, Jones, |
| |Jones | |Wagner |
| | | | |
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SUMMARY : Requires the California Public Utilities Commission
(PUC) to open a proceeding to adopt rules and procedures that
minimize natural gas leaks from PUC-regulated gas pipeline
facilities, with the goal of reducing greenhouse gas emissions.
Specifically, this bill :
1)Directs the PUC to require gas corporations to file a report,
as soon as practicable, that includes but is not limited to a
summary of leak management practices, a list of methane leaks
in 2013 by grade, a list of open leaks that are being
monitored or repaired, and an estimate of gas loss due to
leaks.
2)Requires the PUC, when considering the rules and procedures,
to give priority to safety, reliability, and affordability of
service.
3)Requires the PUC to collaborate on the rules and procedures
with the State Air Resources Board (ARB).
4)Provides that rules and procedures apply to PUC-regulated
intrastate transmission and distribution natural gas
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pipelines.
5)Requires adopted rules and procedures to:
a) Provide for the most technologically feasible and
cost-effective avoidance, reduction, and repair of leaks
and leaking components in PUC-regulated pipeline facilities
within a reasonable time after discovery.
b) Provide for the repair of leaks as soon as reasonably
possible after discovery, consistent with established
safety requirements and the goals of reducing air pollution
and the climate change impacts of methane emissions.
c) Evaluate the operations, maintenance, and repair
practices for PUC-regulated gas pipeline facilities to
determine whether existing practices are effective at
minimizing leaks.
d) Establish and require the use of best practices for leak
surveys, patrols, leak survey technology, leak prevention,
and leak reduction, and provide that collected leak data
remains the property of the utility and is available to the
PUC and parties in commission proceedings as determined by
the PUC.
e) Establish protocols and procedures for the development
and use of metrics to quantify the volume of emissions from
leaking components, not inconsistent with existing
protocols and procedures, and for evaluating and tracking
leaks, both geographically and over time.
f) Establish reporting requirements for the owner of each
PUC-regulated gas pipeline facility on the baseline
system-wide leak rate, with reporting to both the PUC and
ARB.
g) Allow for the rules and procedures to be incorporated
into required safety plans.
h) Facilitate participation in all aspects of the
proceeding by the workforce of gas corporations and state
and federal entities with regulatory roles.
6)Requires the PUC, in order to achieve transparency and
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accountability for rate revenues and best value for
ratepayers, and consistent with its existing ratemaking
procedures, to consider all of the following concerning
natural gas leaks and emissions:
a) Provision of a sufficient workforce to reduce hazards
and emissions from leaks, including leak avoidance,
reduction, and repair.
b) Provision of revenue for all leak activities, including
any adjustment of allowance for "lost or unaccounted for"
natural gas related to actual leakage volumes.
c) Guidance regarding treatment of expenditures as being
either an item of expense or a capital investment.
d) Impacts on gas service affordability related to costs of
compliance with the adopted rules and procedures.
7)States that except as expressly so provided, this article does
not expand or in any manner alter PUC jurisdiction over the
regulation of emissions of greenhouse gases.
8)States that nothing in this article shall affect or be
interpreted to affect the existing authority of the ARB to
adopt rules and regulations related to greenhouse gas emission
reductions.
9)Makes various findings and declarations related to natural gas
pipeline safety, leakage, and methane emissions.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)One-time costs to the PUC of approximately $400,000 from the
Public Utilities Reimbursement Account (special fund) for the
required proceeding.
2)Ongoing costs to the PUC of approximately $160,000 from the
Public Utilities Reimbursement Account (fund) to perform
ongoing evaluations, audits and enforcement.
COMMENTS :
1)Natural gas regulation. The PUC is responsible for ensuring
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its regulated gas corporations comply with federal pipeline
standards for over 108,000 miles of transmission and
distribution pipeline. The commission reviews utility reports
and records, responds to public inquiries and complaints on
gas pipeline and electric safety, and investigates accidents.
The PUC focus is on safety and risk, rather than emission
reductions, as is the impetus of this bill.
2)Sources and environmental impacts of methane. Natural gas is
about 95% to 98% methane. About 40% of global methane
emissions are from natural sources (wetlands, etc.), and the
other 60% of methane emissions are due to human activities.
Methane is the second most prevalent greenhouse gas emitted in
the United States (U.S.) from human activities (at 9%, behind
carbon dioxide at 82%). Major sources of human-related
emissions are agriculture; energy production, distribution,
and use; and waste management.
The U.S. Environmental Protection Agency (EPA) states that
2012 U.S. methane emissions totaled 567 MMTCO2e<1> (million
metric tons of carbon dioxide equivalents, used to describe
the magnitude of greenhouse gas emissions or reductions<2>).
Below is a table with the top four human-related methane
emissions for 2012, with natural gas transmission/storage and
distribution shown as a subset:
---------------------------------------------------------------
|Methane emission |MMTCO2e |% of total 2012 U.S. |
|source | |anthropogenic methane |
| | |emissions (567 MMTCO2e) |
|----------------------+---------+------------------------------|
|Enteric fermentation |141 |~25% |
|(livestock) | | |
|----------------------+---------+------------------------------|
|Natural gas systems |130 |~23% |
---------------------------------------------------------------
---------------------------------------------------------------
| |Transmission/stor| |43.5 | |~7.6% |
| |age | | | | |
---------------------------
<1>
http://www.epa.gov/climatechange/ghgemissions/usinventoryreport.h
tml
<2> A reduction of 1 MMTCO2e is equivalent to 216,000 passenger
cars not driven for one year
( http://www.arb.ca.gov/cc/factsheets/1mmtconversion.pdf )
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|----+-----------------+---+-----+-----+------------------------|
| |Distribution | |26 | |~4.6% |
---------------------------------------------------------------
---------------------------------------------------------------
|Landfills |103 |~18% |
|----------------------+---------+------------------------------|
|Coal mining |56 |~10% |
---------------------------------------------------------------
Methane emissions have been shown to impact climate, air
quality, and public health.
3)Methane emissions (leaks) from natural gas pipelines. To
estimate fugitive emissions in California, the ARB collected
industry data in the one-time 2007 Natural Gas Transmission
and Distribution Survey. Survey data have not been made
public, but ARB disclosed to the Senate Energy Committee that
total fugitive emissions from the transmission and
distribution pipeline system in 2007 were 157,619 metric tons
or 4.4 MMTCO2e.<3>
Gas utilities are required to annually report emissions from
natural gas pipeline leaks to the U.S. EPA and the ARB. In
response to a data request, Southern California Gas Company
(SoCalGas) reported that in 2012, 615,453 thousand cubic feet
(MCF) was leaked to the atmosphere. This corresponds to 1% of
the Lost and Unaccounted for Fuel (LUAF) LUAF total and 0.06%
of the total 2012 throughput. Southern California Edison also
claims "reported leakage in comparison to throughput is
~0.3%." Pacific Gas and Electric Company (PG&E) reported that
distribution pipeline and residential meter leakage accounted
for 0.8 million decatherms (MMDth) out of a 16.5 MMDth of LUAF
gas - about 5% of the total LUAF gas. The percentage this is
of total throughput is unknown. Using SoCalGas and PG&E leak
data along with the Henry Hub natural gas wholesale pricing
for June 6, 2014<4> and the EIA conversions<5>, it is
estimated that SoCalGas lost about $2.9 million worth of
leaked gas, while PG&E lost $3.6 million.
4)Gas leak repair. Federal and state regulations give utilities
---------------------------
<3> As a rough estimate, this is about 0.6% of all human-related
U.S. methane emissions, using the 2009 U.S. anthropogenic
methane emissions total of 731 MMTCO2e,
<4> http://www.eia.gov/dnav/ng/hist/rngwhhdW.htm
<5> http://www.eia.gov/tools/faqs/faq.cfm?id=45&t=8
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latitude in designing leak grading and repair schemes. Many
non-hazardous leaks are allowed to persist and are sometimes
managed through venting rather than repair. PG&E and Sempra
grade leaks based not on GHG emissions, but on safety-related
factors such as percent gas-in-air, soil type and conditions,
proximity to subsurface structures, and whether the leak is
above ground or below ground. In 2013 PG&E reported 27,103
non-hazardous Grade 2 and 3 leaks in its system.
5)Not all leaks are equal. This bill provides for "the maximum
technologically feasible and cost-effective avoidance,
reduction, and repair of leaks and leaking components in those
commission-regulated gas pipeline facilities." Even with this
language, this bill may call for more extensive leak repair
than is feasible and/or necessary to confer significant
environmental and health benefits.
Analysis Prepared by : Brandon Gaytan / U. & C. / (916)
319-2083
FN: 0005265