BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1456 (Hill) - Gas corporations: safety performance standards:
rate incentive program.
Amended: May 25, 2012 Policy Vote: E,U&C 9-0
Urgency: No Mandate: No
Hearing Date: August 6, 2012 Consultant:
Bob Franzoia
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1456 would require the Public Utilities
Commission (commission) to perform an analysis of benchmark data
and adopt safety performance standards for pipeline safety and
reliability and require the commission to evaluate a gas
corporation's safety performance based on those standards. This
bill would authorize the commission to implement a rate
incentive program that could contain penalties based on safety
performance.
Fiscal Impact: Up to $418,000 in 2013-14 from the Public
Utilities Reimbursement Account for a rulemaking to revise the
utilities' rate case plan.
Up to $267,000 annually from the Public Utilities
Reimbursement Account to conduct an initial analysis and
then subsequent updating of benchmark data, define
performance metrics and performance standards, and develop
rates based on safety.
Background: The National Transportation Safety Board, which has
primary jurisdiction for investigating pipeline failures, issued
its Pipeline Accident Report on the San Bruno tragedy in August,
2011 and found that:
Because PG&E, as the operator of its pipeline system, and the
CPUC, as the pipeline safety regulator within the state of
California, have not incorporated the use of effective and
meaningful metrics as part of their performance-based pipeline
safety management programs, neither PG&E nor the CPUC is able to
effectively evaluate or assess the integrity of PG&E's pipeline
system.
AB 1456 (Hill)
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The commission has created incentive programs for energy
efficiency, system reliability, customer service and worker
safety.
Proposed Law: This bill adds Public Utilities Code 960, to read:
960. (a) The commission shall perform an analysis of benchmark
data and adopt safety performance standards for pipeline safety
and reliability.
(b) The commission shall evaluate a gas corporation's safety
performance based on the safety performance standards adopted
pursuant to subdivision (a) and may implement a rate incentive
program. The rate incentive program may contain penalties based
on safety performance.
Related Legislation: AB 56 (Hill) Chapter 519/20011 implements
safety related measures relating to the operation of natural gas
pipeline facilities regulated by the commission.
SB 705 (Leno) Chapter 522/2011 requires gas corporations to
develop a safety plan for the safe and reliable operation of gas
pipeline facilities.
Staff Comments: It is estimated the commission would require one
senior utilities engineer specialist ($156,335) and one public
utilities regulatory analyst ($110,392) permanently and one
administrative law judge ($151,281) for a limited term to
implement the provisions of this bill.
In July 2011, the commission established a Risk Assessment Unit
to research, develop, and propose tools to improve pipeline
safety and oversight in the state and announced it was
augmenting its pipeline inspector team by five staff (this would
result in a total of
nine new staff positions; four in the unit, and five pipeline
inspectors). The unit is to focus on performance in natural gas
safety. Some of the work of this unit may assist the commission
in implementing the provisions of this bill resulting in a
reduction in non-proceeding related costs.
AB 1456 (Hill)
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