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Senate Bills Address Repair, Replacement of Old, Leaking Gas Pipelines

U.S. Sen. Edward Markey (D-MA) has introduced a pair of bills to speed up the repair and replacement of the nation's natural gas pipelines, and to set up a funding mechanism designed to motivate utilities and states to complete the projects, with the federal government shouldering some of the costs.

The bills were referred to the Senate Committee on Commerce, Science and Transportation on Thursday.

The firstbill -- SB 1769, also known as the Pipeline Modernization and Consumer Protection Act -- calls for both state regulatory authorities and non-regulated gas utilities to accelerate the repair, rehabilitation and replacement of high-risk natural gas pipelines. They would also develop prioritized timelines to repair all leaks, adopt cost recovery programs and agree on the best methods to define and calculate lost sums of gas.

SB 1769 also calls on the administrator of the federal Pipeline and Hazardous Materials Safety Administration (PHMSA) to issue, within one year, non-binding guidelines identifying best practices for pipeline repairs and replacement, after meeting with state regulators, the secretary of the Department of Energy (DOE), the administrator of the Environmental Protection Agency (EPA) and the Federal Energy Regulatory Commission (FERC). The PHMSA administrator would review and possibly revise the guidelines at least every seven years.

According to the PHMSA, the nation's gas distribution network includes 61,000 miles of bare steel pipe without adequate corrosion protection, and 32,000 miles of cast iron pipe, some of which dates to the 1830s.

Meanwhile, the secondbill -- SB 1768, the Pipeline Revolving Fund and Job Creation Act -- establishes revolving loan funds for the states to pay for pipeline repairs and replacements. The proposal empowers the PHMSA administrator to make capitalization grants and write letters of credit to eligible states to finance the projects.

Under SB 1768, states would be required to match at least 20% of the federal funds they receive to the revolving loan fund, and may not use more than 4% to pay for administrative costs. States would also be required to submit a biennial report to the PHMSA administrator over the fund's activities.

SB 1768 is modeled after bills that established the Drinking Water State Revolving Fund and the Clean Water State Revolving Fund.

"We can put people to work building a new natural gas energy backbone that is safer, cheaper, and better for the environment," Markey said. "This legislation will create jobs, protect consumers from being charged for gas they may never get, and plug the dangerous leaks that cause accidents and worsen climate change."

In a Nov. 21 letter to Markey, American Public Gas Association CEO Bret Kalisch said the organization supported SB 1768, on the grounds that repairing and replacing distribution lines was an expensive proposition for all LDCs.

"Financing these projects is particularly challenging for not-for-profit LDCs, as in many cases the options are limited compared to our investor-owned counterparts," Kalisch said. "Municipal LDCs can raise capital by utilizing tax exempt municipal bonds, requesting that local officials raise rates for customers, or requesting that locally-elected officials raise taxes or cut other services to pay for upgrades. All of these options are made even more challenging due to the fiscal difficulties faced by all levels of government and the slow economic recovery.

"[SB 1768] provides a low-cost, sustainable mechanism to finance pipeline repair and replacement. [It] will allow municipal LDCs and other market participants to be eligible for affordable loans and loan guarantees to improve distribution system integrity and efficiency."

A variety of consumer, environmental, labor and safety groups support either one or both bills, including the Consumer Federation of America, Consumers Union, Gas Safety USA, National Grid USA Service Co. Inc., New England Gas Workers Association, Pipeline Safety Trust, Professional Fire Fighters of Massachusetts, United Association of Plumbers and Pipefitters, and United Steelworkers.

Last August, a study by the House Natural Resources Committee determined that, based on data from Massachusetts, at least $20 billion in gas has been lost nationally between 2000 and 2011 (see Daily GPI,Aug. 2). Markey, a former member of the committee, had requested the study.

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