BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1371 (Leno) - Natural gas: leakage abatement.
Amended: May 7, 2014 Policy Vote: EU&C 8-1
Urgency: No Mandate: Yes (see staff comment)
Hearing Date: May 23, 2014 Consultant: Marie Liu
SUSPENSE FILE. AS AMENDED.
Bill Summary: SB 1371 would require the California Public
Utilities Commission (CPCU) to adopt rules and procedures to
minimize leaks on commission-regulated intrastate gas pipeline
facilities for the protection of public and worker safety and to
reduce the state's greenhouse gas (GHG) emissions.
Fiscal Impact (as approved on May 23, 2014):
One-time costs of approximately $250,000 from the
California Public Utilities Commission Reimbursement Account
(special) in FY 2015-16 to the CPUC for the required
proceeding to develop rules and procedures for leak
minimization.
Ongoing costs of $163,000 from the California Public
Utilities Commission Reimbursement Account (special),
beginning in FY 2016-17, to the CPUC to perform ongoing
evaluation of operations, maintenance, and repair practices
of gas pipeline facilities.
Background: Existing law (PUC �955 and �963) directs the CPUC
to regulate intrastate gas pipeline facilities pursuant to
federal law in a manner that prioritizes the safety of the
public and gas corporation employees. Each gas corporation is
required to develop, adopt, and implement a plan for the safe
and reliable operation of its gas pipeline facilities that
provides for the effective inspection of leak detection and
timely repairs.
The CPUC under existing law is required to determine the
reasonableness of operational costs and to design rates for
public utilities.
The California Global Warming Solutions Act of 2006 (aka AB 32)
(Health and Safety Code �38500 et seq.) requires the ARB to
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adopt GHG reduction measures by regulations to reduce the
statewide GHG emissions to 1990 levels by 2020.
Proposed Law: This bill would require the CPUC to adopt rules
and procedures governing the operation, maintenance, repair, and
replacement of commission-regulated intrastate transmission and
distribution lines to minimize leaks to both (1) protect public
and worker safety and (2) reduce natural gas emissions as a GHG
pursuant to AB 32. A proceeding to adopt these rules and
procedures into the utilities' safety plan would be required to
commence by January 15, 2015. The CPUC would be required to
consult with the State Air Resources Board and other relevant
agencies in its proceeding.
The rules and procedures would be required to achieve specified
objectives, which include, among other things, the following:
To provide for the maximum technologically feasible and
cost-effective repair of leaks within a reasonable time frame
after discovery.
To provide for the ongoing repair of leaks that are in the top
20 percent of gas volumes leaked on an annual basis.
The establishment of a baseline systemwide leak rate, based on
reports from pipeline owners.
To establish and require the use of best practices for leak
surveys, patrols, leak survey technology, leak prevention, and
leak reduction.
This bill would additionally require the CPUC, when approving
rates, to consider specified information including:
Providing an adequate workforce to be able to reduce hazards
and emissions from leaks.
Directing revenues from reducing natural gas leaks to further
leak avoidance, reduction, and repair.
The impact on affordability of gas for vulnerable customers.
The social and public costs associated with climate change and
air pollution.
Staff Comments: The CPUC estimates that the required proceeding
in this bill will have one-time costs of $508,000 for the
necessary staff (1 administrative law judge II, 1 legal analyst,
1 public utilities counsel IV, and one utility engineer). Once
the proceeding is concluded, the CPUC anticipates transferring
the one utility engineer to evaluate operations, maintenance,
and repair practices to determine whether alternative practices
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may be appropriate, as required by the bill. This would result
in an ongoing cost of $163,000.
This bill contains codified findings and declarations. In the
interest of code clarity and efficiency, staff recommends this
bill be amended to place the findings and declarations in an
uncodified section of the bill.
This bill is a state mandate because it modifies creates a new
crime as violations of the Public Utilities Code are crimes.
However, under the state constitution, this mandate is not
reimbursable.
Committee amendments: Reduces the requirement for CPUCs
activities to rules and procedures governing natural gas leak
abatement for the purpose of reducing greenhouse gas emissions.
Deletes the requirements for the CPUC to consider additional
information when approving rates.