BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 879|
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THIRD READING
Bill No: SB 879
Author: Padilla (D)
Amended: 5/11/11
Vote: 21
SENATE ENERGY, UTIL. & COMM. COMMITTEE : 10-0, 5/3/11
AYES: Padilla, Fuller, Berryhill, Corbett, DeSaulnier,
Pavley, Rubio, Simitian, Strickland, Wright
NO VOTE RECORDED: De Le�n
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Natural gas pipelines: safety
SOURCE : Author
DIGEST : This bill designates the Public Utilities
Commission as the state authority responsible for
regulating and enforcing intrastate gas pipeline
transportation and pipeline facilities pursuant to federal
law, including the development, submission, and
administration of a state pipeline safety program
certification for natural gas pipelines. This bill
requires that in any ratemaking proceeding in which the
commission authorizes a gas corporation to recover expenses
for the inspection, maintenance, or repair of transmission
pipelines, that the commission require the gas corporation
to establish and maintain a one-way balancing account for
the recovery of those expenses.
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ANALYSIS :
Existing Federal law and general orders of the California
Public Utilities Commission (CPUC) require the commission
to regulate gas transmission, distribution and gathering
pipeline facilities which include investor-owned utilities,
master-metered mobile home parks, storage facilities, and
propane operators.
Existing Federal law and general orders of the CPUC
establish safety requirements pertaining to the design,
construction, testing, operation, and maintenance of
utility gas gathering, transmission, and distribution
piping systems, and for the safe operation of such lines
and equipment.
Existing Federal law
1. Requires the United States Department of Transportation
Pipeline and
Hazardous Materials Safety Administration (PHMSA) to
adopt minimum
safety standards for pipeline transportation and for
pipeline facilities,
including an interstate gas pipeline facility and an
intrastate gas pipeline
facility, as defined.
2. Authorizes the United States Secretary of
Transportation to prescribe or
enforce safety standards and practices for an
intrastate pipeline facility or
intrastate pipeline transportation to the extent that
the safety standards
and practices are regulated by a state authority that
annually submits to
the secretary a certification for the facilities and
transportation or,
alternatively, authorizes the secretary to make an
agreement with a state
authority authorizing it to take necessary action to
meet certain pipeline
safety requirements.
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3. Prohibits a state authority from adopting or continuing
in force safety
standards for interstate pipeline facilities or
interstate pipeline
transportation, but permits a state authority that has
submitted a specified
certification to adopt additional or more stringent
safety standards for
intrastate pipeline facilities and intrastate pipeline
transportation only if
those standards are compatible with the minimum
standards prescribed
by PHMSA.
Existing law vests regulatory authority over gas
corporations to the CPUC and authorizes it to fix the rates
and charges for service as well as standards and practices
for services to be furnished.
Background
Natural Gas Regulation
The CPUC regulates natural gas utility service for
approximately 10.7 million customers that receive natural
gas from Pacific Gas and Electric (PG&E), Southern
California Gas, San Diego Gas & Electric, Southwest Gas,
and several smaller natural gas utilities. The CPUC also
regulates independent storage operators Lodi Gas Storage
and Wild Goose Storage.
The vast majority of California's natural gas customers are
residential and small commercial customers, referred to as
"core" customers, who accounted for approximately 40% of
the natural gas delivered by California utilities in 2008.
Large consumers, like electric generators and industrial
customers, referred to as "noncore" customers, accounted
for approximately 60% of the natural gas delivered by
California utilities in 2008.
The CPUC regulates the California utilities' natural gas
rates and natural gas services, including in-state
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transportation over the utilities' transmission and
distribution pipeline systems, storage, procurement,
metering and billing.
Most of the natural gas used in California comes from
out-of-state natural gas basins. In 2008, California
customers received 46% of their natural gas supply from
basins located in the Southwest, 19% from Canada, 22% from
the Rocky Mountains, and 13% from basins located within
California. Natural gas from out-of-state production
basins is delivered into California via the interstate
natural gas pipeline system
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 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 CPUC 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.
The NTSB's examination of the ruptured pipe segment and
review of PG&E records revealed that although those records
marked the pipe as seamless the pipeline in the area of the
rupture was constructed with longitudinal seam-welded pipe
and was constructed of five sections of pipe, some of which
were short pieces measuring about 4 feet long. These short
pieces of pipe contained different seam welds of various
types, including single- and double-sided welds that may
not have been as strong as the seamless pipe listed in
PG&E's records. The NTSB has not concluded that the faulty
records or welds were the proximate cause of the rupture.
However, the NTSB is concerned that there are other
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discrepancies between installed pipe and as-built drawings
in PG&E's gas transmission system. It is critical to know
all the characteristics of a pipeline in order to establish
a valid operating pressure below which the pipeline can be
safely operated. The NTSB is concerned that these
inaccurate records may lead to incorrect operating
pressures.
Related legislation
The following measures have been introduced in this session
in response to the San Bruno tragedy:
SB 44 (Corbett) requires the CPUC to commence a proceeding
to establish emergency response standards, which include
emergency response plans, to be followed by owners or
operators of commission-regulated gas pipeline facilities.
Status: Placed on Senate Appropriations Suspense file.
SB 216 (Yee) directs the CPUC to adopt standards that
require the installation of automatic shut-off or remote
controlled sectionalized block valves on all
commission-regulated pipelines that are located in a high
consequence area or that traverse an active seismic
earthquake fault unless the commission determines it is
prohibited under federal law. Status: Placed on Senate
Appropriations Suspense file.
SB 705 (Leno) requires gas corporations to develop, adopt
and implement a service and safety plan that places safety
of the public and gas corporation employees as the top
priority. Status: Placed on Senate Appropriations
Suspense file.
AB 56 (Hill) implements a number of public safety measures
with regard to natural gas pipeline facilities, including
requiring the owner or operator of a gas pipeline to
develop a public safety program and a facilities
modernization program, and requiring the CPUC to track
proposed repairs to gas facilities to determine if the
repairs were made. Status: Pending hearing in the
Assembly Appropriations Committee.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
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Local: Yes
ARGUMENTS IN SUPPORT : According to the author's office,
"In the aftermath of the San Bruno tragedy questions were
raised as to whether PG&E had been redirecting funds
authorized for pipeline maintenance and repair to
non-safety uses or company profits. Investigation showed
that as part of the PG&E's spending authorization they
submit a list of potential safety work to be done and
related locations to the CPUC. There was no evidence that
PG&E redirected the funds from pipeline safety as approved
by the CPUC but some of those funds were used for other
repairs for other pipeline segments that at the time were
deemed more critical. However, a shadow of doubt was cast
on the budgeting of these critical needs. The purpose of
this bill is to improve the transparency of that process."
RM:rm 5/23/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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