BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 56|
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THIRD READING
Bill No: AB 56
Author: Hill (D)
Amended: 8/30/11 in Senate
Vote: 21
SENATE ENERGY, UTILITIES & COMMUNIC. COMM. : 8-3, 07/05/11
AYES: Padilla, Corbett, De Le�n, DeSaulnier, Pavley,
Rubio, Simitian, Wright
NOES: Fuller, Berryhill, Strickland
SENATE APPROPRIATIONS COMMITTEE : 6-3, 08/25/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Emmerson, Runner
ASSEMBLY FLOOR : 54-21, 06/02/11 - See last page for vote
SUBJECT : Gas corporations: rate recovery and
expenditure: intrastate
pipeline safety
SOURCE : Author
DIGEST : This bill implements numerous safety-related
measures regarding the operation of natural gas pipeline
facilities regulated by the Public Utilities Commission
(PUC).
ANALYSIS : Federal Law and general orders of the PUC
requires the PUC to regulate gas transmission, distribution
and gathering pipeline facilities which include gas
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corporations, master-metered mobile home parks, and propane
operators.
Federal law also requires gas corporations to provide
information to the federal Department of Transportation on
the location of gas pipelines. While federal law and PUC
orders generally give the PUC oversight responsibility for
natural gas pipelines, the scope of this oversight is
ambiguous.
This bill:
1.Requires natural gas corporations to develop and submit
to the PUC a plan for the comprehensive testing of the
operator's natural gas transmission system.
2.Requires natural gas corporations to report annually to
the PUC on safety issues.
3.Requires a gas corporation to demonstrate in its rate
cases that proposed rates will be sufficient to maintain
safe and reliable service in a cost-effective manner and
restricts a gas corporation from recovering any fine or
penalty in rates.
4.Requires natural gas corporations to meet annually with
local fire departments to review emergency response
plans.
5.Requires the PUC to require natural gas corporations 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, provided the PUC
determines that those valves are necessary to protect
public safety. Natural gas corporations are authorized
under the bill to recover the costs of these upgrades
from natural gas ratepayers.
6.Requires natural gas corporations to use "balancing
accounts" to ensure that funds allocated for safety are
used properly.
Background
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San Bruno Tragedy - On the evening of September 9, 2010 a
30-inch natural gas transmission line ruptured in a
residential neighborhood in the City of San Bruno. The
rupture caused an explosion and fire which took the lives
of eight people and injured dozens more; destroyed 37 homes
and damaged dozens more. Gas service was also disrupted
for 300 customers.
The pipeline in question is owned and operated by Pacific
Gas & Electric (PG&E) and originally built in 1948. In
1956 it was relocated and rebuilt to accommodate new
housing development. The National Transportation Safety
Board (NTSB), in conjunction with the PUC was on scene
within 24 hours to investigate the cause of the explosion.
Although preliminary elements of the investigation have
been detailed, a final report on causation is not expected
until at least the fall.
Regulatory Action - The NTSB has principal jurisdiction
over the investigation into San Bruno and is expected to
release its final report on causation later this summer.
Preliminary findings have been released and the NTSB has
"identified both the material and the fabrication welds of
the section of pipeline that failed did not meet either:
(1) the engineering consensus standards applicable to
natural gas transmission pipelines at the time, or (2) the
PG&E specifications in effect at the time of construction."
It has also been determined that PG&E has inadequate
records and knowledge of its aging gas pipeline
infrastructure to allow the utility or the PUC to make
informed and sound decisions on the steps necessary to
operate a safe and reliable natural gas system.
Complacency appears to be a significant factor. PG&E
records had incorrectly characterized fundamental aspects
of the line that ruptured but piping engineers for the
utility were aware that the segment was double-submerged
arc welded rather than seamless. The inadequacy of records
is also the result of a "grandfathering" or exemption under
federal law from pressure test requirements for pipelines
placed in service before 1970. Federal regulations allowed
pipeline operators to operate a segment at the highest
actual operating pressure of the segment during the
five-year period between July 1, 1965 and June 30, 1970.
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As a consequence, the NTSB recommended that PG&E obtain
"traceable, verifiable, and complete" records and, with
reliably accurate data, calculate a dependable pressure
level for pipe operation. PG&E has been unable to meet
that recommendation for hundreds of miles of its
transmission pipelines most of which were laid prior to
1970. Southern California Gas and San Diego Gas & Electric
are under the same orders and have also been unable to
produce records for a significant portion of its pipelines
as well, especially for the older vintage pipelines.
In response the PUC has ordered all California gas
transmission operators to develop and file for PUC
consideration a Natural Gas Transmission Pipeline
Comprehensive Pressure Testing Implementation Plan to
achieve the goal of orderly and cost effectively replacing
or testing all natural gas transmission pipeline that have
not been pressure tested.
The PUC has also started a penalty consideration phase into
whether PG&E's gas transmission pipeline recordkeeping was
unsafe, whether it violated the law, and if so whether
deficient PG&E recordkeeping caused or contributed to the
pipeline rupture in San Bruno.
Independent Review Panel - On September 23, 2010, the PUC
created an Independent Review Panel 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 panel released its findings on June 9 and concluded
that the pipeline rupture was "a consequence of multiple
weaknesses in PG&E's management and oversight of the safety
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of its gas transmission system," and that the PUC "did not
have the resources to monitor PG&E's performance in
pipeline integrity management adequately or the
organizational focus that would have elevated concerns
about PG&E's performance in a meaningful way."
Comments
According to the author's office, the purpose of this bill
is to ensure that California develops new regulations and
standards for the safe and reliable operation of natural
gas pipelines in the state. The author represents the
community of San Bruno and has witnessed first-hand the
life-changing tragedy of the San Bruno explosion. The
author believes that the Legislature has the opportunity
and the obligation to take every step possible to ensure
that the lessons of this tragedy are well learned and that
the circumstances are not repeated.
The author further reports that federal and state hearings
and investigations have revealed serious flaws in existing
regulations and in how the state oversees the owner and
operators of natural gas pipelines in California. This
bill seeks to address some of the deficiencies in the
regulation of natural gas transmission pipelines that have
been discovered in community meetings, and NTSB and PUC
investigations. The bill seeks to ensure that the PUC is
regulating the industry adequately; that utilities
companies are operating safely and that there is increased
accountability and transparency in how California manages
its pipeline infrastructure.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
PUC oversight $390 $780 $780
Special*
Ratepayer impacts to stateunknown costs, likely in the low
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millions Various
agencies
* PUC Utilities Reimbursement Account
SUPPORT : (Unable to verify at time of writing)
Pacific Gas and Electric Company (if amended)
OPPOSITION : (Unable to verify at time of writing)
San Diego Gas and Electric (unless amended)
Southern California Gas Company (unless amended)
ASSEMBLY FLOOR : 54-21, 06/02/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer,
Fong, Fuentes, Furutani, Galgiani, Gatto, Gordon, Harkey,
Hayashi, Roger Hern�ndez, Hill, Huber, Hueso, Huffman,
Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning,
Pan, Perea, V. Manuel P�rez, Portantino, Skinner,
Solorio, Swanson, Torres, Wieckowski, Williams, Yamada,
John A. P�rez
NOES: Conway, Cook, Donnelly, Garrick, Grove, Hagman,
Halderman, Jeffries, Jones, Knight, Logue, Mansoor,
Miller, Morrell, Nielsen, Norby, Olsen, Silva, Smyth,
Valadao, Wagner
NO VOTE RECORDED: Fletcher, Beth Gaines, Gorell, Hall,
Nestande
RM:nl 8/30/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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