BILL ANALYSIS �
AB 1456
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1456 (Hill)
As Amended August 21, 2012
Majority vote
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|ASSEMBLY: |78-0 |(May 30, 2013) |SENATE: |34-0 |(August 22, |
| | | | | |2012) |
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Original Committee Reference: U. & C.
SUMMARY : Requires the California Public Utilities Commission
(PUC) with regard to natural gas pipeline safety to:
1)Perform an analysis of benchmark data and adopt safety
performance metrics.
2)Consider specified principles when adopting safety performance
metrics:
a) Each safety performance metric shall be designed to be
an indicator of safety performance, reevaluated within a
useful timeframe, and that the data inputs to the metric
are verifiable. The adopted set of safety performance
metrics shall be robust enough to serve as a useful
indicator of pipeline safety.
3)Evaluate a regulated gas corporation's safety performance
based on the standards adopted per 1) above. The PUC is
further authorized to implement a rate incentive program that
may contain penalties based on a gas corporation's
performance.
The Senate amendments specify principles the PUC should consider
when adopting safety performance metrics.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version passed by the Senate.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
AB 1456
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Background : The impetus of this bill stems from the September
9, 2010, explosion and fire
that occurred in the City of San Bruno. A 30-inch natural gas
transmission pipeline, owned and operated by Pacific Gas and
Electric Company (PG&E), ruptured and caused an explosion and
fire which claimed the lives of eight people and injured dozens
more; destroyed 37 homes and damaged dozens more. Natural gas
pipeline accidents in California, particularly the explosion in
the City of San Bruno, have called for a re-evaluation of
pipeline safety in the Legislature and regulatory enforcement
agencies.
The investigation : The National Transportation and Safety Board
(NTSB) had principal
jurisdiction over the investigation into the San Bruno explosion
and released its final report on the causation last year. NTSB
determined that the probable cause of the accident was PG&E: 1)
inadequate quality assurance and quality control in 1956 during
its Line 132 relocation project, which allowed the installation
of a substandard and poorly welded pipe section with a visible
seam weld flaw that, over time grew to a critical size, causing
the pipeline to rupture during a pressure increase stemming from
poorly planned electrical work at the Milpitas Terminal; and, 2)
inadequate pipeline integrity management program, which failed
to detect and repair or remove the defective pipe section.
The report notes that contributing to the accident were PUC's
and the U.S. Department of Transportation's exemptions of
existing pipelines from the regulatory requirement for pressure
testing, which likely would have detected the installation
defects. Also contributing to the accident was PUC's failure to
detect the inadequacies of PG&E's pipeline integrity management
program.
Furthermore, contributing to the severity of the accident were
the lack of either automatic
shutoff valves or remote control valves on the line and PG&E's
flawed emergency response procedures and delay in isolating the
rupture to stop the flow of gas.
PUC review panel : The PUC formed its own review panel based on
authority it cited in its
resolution to "do all things, whether specifically designated in
... �the Public Utilities Code] or in addition thereto, which
are necessary and convenient" to our regulation of public
AB 1456
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utilities, including, though not limited to, adopting necessary
rules and requirements in furtherance of our constitutional and
statutory duties to regulate and oversee public utilities
operating in California."
In September 2010, PUC's Independent Review Panel (IRP) was
formed to examine
contributing factors to the San Bruno disaster. 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.
IRP findings and recommendations : IRP released its findings on
June 9, 2011. Important
findings related to this bill are:
1)A recommendation that "Upon thorough analysis of benchmark
data, adopt performance standards for pipeline safety and
reliability for PG&E, including the possibility of rate
incentives and penalties based on achievement of specified
levels of performance."
2)A finding that "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."
IRP did not recommend that safety performance be a consideration
in PUC's rate of return assessment.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083
FN: 0005284