BILL ANALYSIS �
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 1389 - Hill Hearing Date:
April 29, 2014 S
As Introduced: February 21, 2014 FISCAL B
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DESCRIPTION
Current law defines an intrastate transmission pipeline, and
directs the California Public Utilities Commission (CPUC) to
regulate and enforce intrastate gas pipeline transportation and
pipeline facilities pursuant to federal law. (Public Utilities
Code � 950, 955)
Current federal regulations and general order of the CPUC
establish and enforce minimum safety standards for the design,
construction, testing, operation, and maintenance of natural gas
pipeline facilities, including transmission pipelines. (49 CFR
190-193 and General Order 112-E)
Current federal regulations limit the maximum allowable
operating pressure (MAOP) of a steel or plastic pipeline
installed prior to July 1, 1970 to the lowest of the following
four pressures:
1) Design pressure of the weakest element in the segment;
2) Pressure obtained by dividing the post-construction
pressure by the applicable safety factor;
3) Highest actual operating pressure the segment was
subjected to during the five years preceding July 1, 1970
[a.k.a. the grandfather clause]; or
4) Maximum safe pressure, determined by the operator after
considering the history of the segment. (49 CFR 192.619)
Current federal law allows states to adopt standards for
intrastate transmission pipelines that are more stringent than
federal standards. (49 USC 60104)
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CPUC Decision 11-06-017 disallowed gas pipeline operators from
using method 3/the grandfather clause to determine MAOP.
Current law requires each gas corporation to submit to the CPUC
a general pipeline safety enhancement plan (PSEP) to either
pressure test pipelines or replace segments of pipelines that
were not pressure tested or that lack pressure testing
performance information. As an interim measure, to allow the gas
system to continue to operate until all pipelines have been
tested or replaced, engineering-based assumptions may be used to
determine MAOP in the absence of complete records. (Public
Utilities Code � 958)
This bill would require the CPUC to adopt rules for gas
corporations to follow when determining the MAOP for an
intrastate transmission pipeline installed prior to July 1,
1970.
BACKGROUND
Natural Gas Pipelines and Their Regulation - Natural gas travels
from the well to consumers through a series of pipelines,
including flowlines, gathering lines, transmission lines,
distribution lines, and service lines. Transmission pipelines
are large (20 - 42" diameter) pipes that operate at high
pressures (200 - 1,500 pounds per square inch gauge, psig) to
carry gas hundreds or thousands of miles from the producing
region to local distribution companies.
Federal law establishes minimum safety standards for intrastate
gas pipelines. Pursuant to federal law and by agreement with the
federal Pipeline and Hazardous Materials Safety Administration
(PHMSA), California has voluntarily assumed responsibility for
enforcing these minimum standards. In addition, California has
adopted additional, more stringent safety standards. To ensure
compliance with federal and state standards, the CPUC reviews
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the safety plans, records, and reports of utilities<1>; conducts
compliance inspections; responds to inquiries and complaints
from the public; and investigates accidents for over 10,000
miles of transmission pipeline.
San Bruno Pipeline Explosion - On September 9, 2010, a 30"
diameter natural gas transmission pipeline (Pipeline 132, owned
by Pacific Gas and Electric Company, PG&E) ruptured in a
residential neighborhood in the City of San Bruno. The rupture
caused an explosion and fire that killed eight people and
injured dozens more, destroyed 38 homes, and damaged an
additional 70. Three hundred customers saw their gas service
disrupted.
Following the tragedy, the National Transportation Safety Board
(NTSB) stated that California natural gas corporations may not
be aware of the features of all pipe throughout their systems
and, consequently, may not have calculated the pressure for each
pipe segment. Specifically, the NTSB determined that Pipeline
132 had a longitudinal seam weld, despite PG&E having considered
it to be seamless. Such recordkeeping inconsistencies may prove
dangerous as pipelines with different specifications or features
usually are operated differently, e.g., at different rates of
pressure.
Maximum Allowable Operating Pressure (MAOP) - Federal law
requires that pipeline operators determine MAOP for each
pipeline or each distinct segment of a pipeline system. MAOP may
differ from design pressure because numerous factors can alter
the integrity of a pipeline, including time-dependent threats
(stress corrosion cracking, internal or external corrosion,
etc.) as well as time-independent threats (third-party damage,
etc.). Accurately determining MAOP is important because the
threat to life and property increases as pressure increases.
Federal regulations (49 CFR 192.619(a)) limit the MAOP of a
steel or plastic pipeline installed prior to July 1, 1970 to the
lowest of the following four pressures. Method 1/Design pressure
is based on the specifications and/or features of the pipe.
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<1> Entities regulated by the CPUC include Pacific Gas and
Electric, Southern California Gas, San Diego Gas & Electric,
Southwest Gas, and several smaller natural gas utilities. The
CPUC also regulates Lodi Gas Storage and Wild Goose Storage,
independent/third party storage providers.
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Design pressure is not known or knowable for all currently
operating transmission pipelines, especially older ones. In
cases of incomplete or missing information, General Order 112-E
authorizes utilities to use engineering-based assumptions to
determine MAOP until all pipelines have been tested or replaced.
Method 2/Test pressure is known or knowable for most pipelines
through the use of hydrostatic pressure testing, which subjects
a pipeline to pressure much greater than its normal operating
pressure in order to assess integrity and identify leaks. Method
3/Historical pressure (a.k.a. the grandfather clause) exempts
pre-1970 pipelines "in satisfactory condition" from the
aforementioned regulations, and instead allows operators to set
the MAOP at the highest actual operating pressure to which the
segment was subjected during the five years preceding July 1,
1970. Method 4/Discretionary pressure is not commonly employed
since it likely would be the highest of all the values, not the
lowest.
Controversy over Method 3/The Grandfather Clause - In its
report<2> on the 2010 San Bruno pipeline explosion, the NTSB
stated that "there is no safety justification for the
grandfather clause exempting pre-1970 pipelines from the
requirement for hydrostatic pressure testing." In January 2011,
the NTSB issued urgent safety recommendations<3> that MAOP be
set at either the design pressure or the test pressure,
whichever is lower. The CPUC directed jurisdictional gas
utilities to comply with the NTSB safety recommendations through
D.11-06-017, which orders an "end to historic exemptions"-that
is, Method 3/Historical pressure (a.k.a. the grandfather
clause)-and requires "that all gas transmission pipelines
constructed before 1970 be subjected to a hydrostatic pressure
test."<4>
In a document dated January 14, 2014, PG&E appears to disregard
the 2011 CPUC decision (D.11-06-017) by stating that "a pipeline
designed and constructed prior to implementation of the federal
regulations may operate at the highest pressure experienced in
the five years prior to July 1, 1970 even if that pressure
exceeds the design pressure." This statement suggests that PG&E
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<2> http://www.ntsb.gov/doclib/reports/2011/PAR1101.pdf
<3> http://www.ntsb.gov/doclib/recletters/2010/P-10-002-004.pdf
<4> For more information, see R.11-02-019 and slide 48 of CPUC
Actions Post San Bruno, a presentation given by staff at the
CPUC's September 8, 2011 meeting.
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relies on Method 3/Historical pressure (a.k.a. the grandfather
clause) to determine MAOP under certain circumstances, despite
the CPUC ordering an end to this.
The Office of Ratepayer Advocates (ORA), the City of San Bruno,
and the City of San Carlos have questioned PG&E's compliance
with the 2011 CPUC decision ending the grandfather clause. ORA
is also concerned that PG&E has had off-the-record discussions
with CPUC Safety and Enforcement Division staff regarding MAOP,
as transcripts from a December 16, 2013 hearing<5> indicate.
COMMENTS
1. Author's Statement . The author writes that several
parties have raised concerns that PG&E has been
(incorrectly) interpreting rules regarding MAOP "behind
closed doors. This bill would require the CPUC to make a
public determination on the methodology, as the public
deserves."
2. Enforcement Needed, Not New Rules . The bill is calling
for rules for determining MAOP. In fact, the CPUC has
already adopted policy for determining MAOP, ordering in a
2011 decision (D.11-06-017) that Method 3/Historical
pressure (a.k.a. the grandfather clause) no longer could be
used. Therefore, since the CPUC has already taken the
action proposed by this bill which is being ignored by the
gas corporation, the author and committee may wish to
consider codifying the CPUC's order which supersedes
federal law and prohibits California gas corporations from
utilizing the grandfather clause (49 CFR 192.619(c)) to
determine the maximum allowable operating pressure for any
pipeline installed prior to July 1, 1970."
3. A Transparent, Public Forum is Appropriate . Any state
action regarding MAOP would apply to all gas corporations
operating in California. Thus, it is appropriate that the
issue be addressed on-the-record of a transparent, public
forum rather than in private meetings between PG&E and the
CPUC.
4. No Direct Financial Impacts . This bill is not expected
to result in rate increases, decreases, or cost shifts for
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<5> Evidentiary hearing on R.11-02-019. See pages 3176-3177.
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customers. While it requires no ongoing costs for the CPUC,
it would require the CPUC to address the methodology for
determining MAOP, potentially extending R.11-02-019.
POSITIONS
Sponsor:
Author
Support:
Office of Ratepayer Advocates, if amended
The Utility Reform Network
Oppose:
None on file
Alexis Erwin
SB 1389 Analysis
Hearing Date: April 29, 2014
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