BILL ANALYSIS �
AB 56
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ASSEMBLY THIRD READING
AB 56 (Hill)
As Amended May 27, 2011
Majority vote
UTILITIES & COMMERCE 9-0
APPROPRIATIONS 17-0
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|Ayes:|Bradford, Buchanan, Fong, |Ayes:|Fuentes, Harkey, |
| |Furutani, Roger | |Blumenfield, Bradford, |
| |Hern�ndez, Huffman, Ma, | |Charles Calderon, Campos, |
| |Skinner, Swanson | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Implements numerous safety-related measures regarding
the operation of natural gas pipeline facilities regulated by
the Public Utilities Commission (PUC). Specifically, this bill:
1)Requires a gas corporation to file semiannual reports with the
PUC and the Division of Ratepayer Advocates describing how the
utility is spending moneys that the PUC has authorized to be
collected from ratepayers to reimburse the utility for public
safety activities.
2)Requires the PUC, in consultation with the PUC's Division of
Ratepayer Advocates, to align ratemaking policies, practices,
and incentives to better reflect safety concerns and ensure
ongoing commitments to public safety.
3)States that if the PUC authorizes a gas corporation to recover
expenses incurred for public safety, the bill requires the PUC
to require the gas corporation to establish and maintain a
balancing account to record the difference between the
approved revenue requirements for public safety and the actual
expenditures made by the utility.
4)Requires a gas corporation to return moneys approved for
expenditure for public safety by the PUC to the balancing
account, if those funds are not expended within a reasonable
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period of time after the PUC grants approval of the public
safety expenditure, as determined by the PUC.
5)Requires the PUC to consider the safety record of a
PUC-regulated gas corporation in setting a reasonable rate of
return.
6)Designates the PUC as the state authority responsible for
development, submission, and administration of a state
pipeline safety program certification for natural gas
pipelines.
7)Requires the PUC to adopt and enforce safety standards
compatible with federal law for PUC-regulated gas pipeline
facilities, as defined, to accomplish specified results.
8)Requires the owner or operator of a PUC-regulated natural gas
pipeline to make an annual performance measure report to the
PUC concerning the condition of PUC-regulated gas pipeline
facilities. The performance measure report shall include the
total number of anomalies identified as a result of safety
assessments, the total number of conditions repaired, and the
actual anomalies needing repair that are identified by the
pipeline owner or operator during the inspections, the
conditions requiring repair, and any other information the PUC
determines is necessary to evaluate the safety and performance
of the pipeline facilities. The annual performance measure
reports shall be made publicly available on the Internet to
the extent that doing so does not create a public safety risk
(the PUC shall consult with Department of Homeland Security in
determining what information is made publicly available).
9)Requires the owner or operator of a PUC-regulated natural gas
pipeline to prioritize safety oversight in areas near
specified earthquake fault zones.
10)Requires the owner or operator of PUC-regulated gas pipeline
facilities to conduct outreach and public education relative
to excavation dangers and the availability of the one-call
notification program in order to reduce dangerous incidences
caused by third-party excavations.
11)Requires the PUC, in consultation with the San Bruno Fire
Independent Review Panel, to develop minimum criteria and
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standards for the installation of sectionalized block valves
and automated and remote shutoff valves, taking into
consideration weather-related and outside forces, operating
pressure, the rate of potential release of natural gas, the
potential for ignition of the gas, and accessibility.
12)Requires the PUC to establish a timeline by which the owner
or operator of a PUC-regulated gas pipeline facility shall
meet the minimum criteria and standards established by the
PUC.
13)Requires the owner or operator of all PUC-regulated gas
pipeline facilities that are in a designated locations to
establish a maximum allowable operating pressure for the
facility and thorough documentation including drawings,
specifications, testing and maintenance regards, demonstrating
that the maximum allowable operating pressure has been
accurately established based on the weakest pipeline section
or component.
14)Requires owners and operators of PUC-regulated gas pipeline
facilities to complete modernization programs to upgrade key
facilities located in high consequence areas by 2022.
15)Requires the PUC to adopt and enforce a one-call notification
program for the state consistent.
16)Requires the PUC to track safety, reliability, and facility
integrity-related projects and activities for which a
PUC-regulated gas corporation requested compensation to
determine if the project or activity was undertaken and
completed. PUC shall require any gas corporation that fails to
undertake or complete safety, reliability, and facility
integrity-related projects and activities for which PUC
granted recovery in rates to promptly make a public filing as
to the justification for failing to undertake or complete the
proposed project or activity.
17)Requires PUC-regulated gas corporations to demonstrate to the
PUC that proposed rates are sufficient to fund projects
necessary to maintain safe and reliable service; and that if
previously approved safety-related projects are proposed to be
reprioritized, the reprioritization is based on sound risk
management principles.
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18)Requires that, if rate recovery is sought for safety-related
projects or activities, that an adequate safety assessment has
been undertaken on gas pipeline facilities.
19)Requires the owners of intrastate transmission lines to
provide the State Fire Marshal and the chief fire official of
the applicable local government with instructions on how to
access and utilize the National Pipeline Mapping System
developed by the U.S. Department of Transportation Pipeline
and Material Safety Administration to improve local response
capabilities for pipeline emergencies.
20)Requires the owner or operator of PUC-regulated gas pipeline
facilities to conduct outreach and public education relative
to excavation dangers and the availability of the one-call
notification program in order to reduce dangerous incidences
caused by third-party excavations.
21)Requires the PUC to report to the Legislature on the status
of establishing the compatible emergency response standards on
or before January 1, 2013.
FISCAL EFFECT : According to Assembly Appropriations Committee,
ongoing costs of about $900,000 ($630,000 Public Utilities
Reimbursement Account and $270,000 federal funds) for six
utility engineer positions and associated travel-related and
training costs. (The PUC indicates it would need two positions
to increase the number of annual gas-related safety audits to
ensure the new safety standards and procedures established are
properly addressed and enforced. An additional four positions
would be needed-two to enforce the One-call Notification Program
and two to track proposed safety-, reliability-, and
integrity-related projects for which the gas utilities seek
compensation.)
COMMENTS : On September 9, 2010, in San Bruno, California, an
explosion in a natural gas transmission pipeline owned by PG&E
killed eight people, injured numerous people, and destroyed 37
homes. The cause of the explosion is unknown. The PUC is
working closely with the National Transportation Safety Board
(NTSB) to investigate the cause of the San Bruno explosion.
According to the author, this bill is intended to ensure that
California develops new regulations and standards for the safe
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and reliable operation of natural gas pipelines in the state.
Since the accident occurred, the PUC has:
1)Established a San Bruno Fire Independent Review panel of
experts to study and investigate the San Bruno explosion and
make recommendations to the PUC on how best to prevent similar
accidents.
2)Opened a proceeding to set new rules for the safe and reliable
operation of natural gas pipelines in California, provide the
public with the Independent Review Panel's expert
recommendations, develop and adopt safety related changes to
the PUC's regulation of natural gas transmission pipelines,
including requirements for construction, shut-off values,
maintenance, inspections, operation, record retention,
ratemaking, and the application of penalties, and perform
other elements included in this bill.
3)Required PG&E to provide semi-annual Gas Transmission and
Storage Safety Reports to the PUC to track PG&E's gas
transmission and storage capital expenditure projects;
operations and maintenance activities, and compliance with
Federal pipeline requirements.
4)Issued a proposed decision requiring all California natural
gas transmission operators to develop and file Natural Gas
Transmission Pipeline Comprehensive Pressure Testing
Implementation Plans to achieve orderly and cost effectively
replacing or testing all natural gas transmission pipelines
that have not been pressure tested. The Proposed Decision
issued provides guidance on determining the maximum allowable
operating pressure to pipeline operators in the state and
begins the process of evaluating older pipelines that have
been previously exempt from pressure testing requirements.
The first opportunity the PUC's Commissioners have to vote on
this proposal is June 9, 2011.
Analysis Prepared by : Sue Kateley / U. & C. / (916) 319-2083
FN: 0001085
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