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California Lawmakers Review Pipeline Blast; Tighter Regulations Hinted

There were no major surprises from a six-hour California Senate joint committee hearing in Sacramento Tuesday, reviewing the aftermath of the natural gas transmission pipeline explosion that took eight lives, destroyed a quiet suburban neighborhood and forced the glare of public scrutiny on Pacific Gas and Electric Co. (PG&E) and the state regulators overseeing its operations.

Reading between the lines of testimony, questions and answers from officials and state lawmakers, it appears there will be increased expectations, if not new legislative mandates, for the California Public Utilities Commission (CPUC) to step up its oversight of the state's many thousands of miles of high-pressure, large-diameter transmission pipelines traversing many heavily populated areas, such as San Bruno on the peninsula south of San Francisco where the failed Line 132 and at least three other major pipelines move south-to-north into the city.

Representatives from local government, the CPUC, PG&E and the other major private-sector utilities, organized labor and consumer organizations appeared before the joint informational hearing by the Senate Energy, Utilities and Communications and Public Safety Committees, offering suggestions for tighter regulations and new laws that bring utility field workers into the safety oversight process, strengthen whistle blower protections and generally give the CPUC broader powers.

Even with the lead investigation of the cause of a massive failure in a section of the 30-inch diameter Line 132 ongoing at the National Transportation Safety Board (NTSB), and parallel work under way at the CPUC and PG&E, at the end of the long hearing some of the state legislators indicated in comments urging a separate inquiry by the CPUC that might include the legislature.

"I would argue for greater scrutiny by the CPUC," said Sen. Mark Leno, Public Safety Committee chairman. "I think the reasons for that were addressed fairly clearly today, and I think there is some agreement from the CPUC as well. That is really something that the legislature [going forward] can be a part of. The issue of safety and maintenance programs does not go away, so...we await the final conclusions of the NTSB's investigation -- and we understand that could be a year or more from now.

"While that [federal investigative] process is unfolding, I would encourage CPUC and staff to consider beginning a formal investigation of its own. That could be a full, public, transparent investigation that would address both the governmental and community concerns. This is just the beginning of the conversation and not the end."

Two PG&E executives testified to the joint committees, reiterating condolences to the families of the eight victims, emphasizing the utility's establishment of the $100 million Rebuild San Bruno Fund and touting its latest offshoot of that shareholder donation -- a program to buy or help rebuild the destroyed and damaged homes (see related story).

Kirk Johnson, vice president of gas engineering and operations, said PG&E maintains approximately 6,700 miles of transmission pipelines, a little more than 1,000 miles of which goes through "high consequence areas (HCA)" with substantial population densities. In assuring the integrity of the system, PG&E used three federally authorized assessment methods -- in-line inspections ("pigging"), direct assessment and pressure testing, Johnson said.

Johnson also summarized the preliminary NTSB report and PG&E new Pipeline 2020 initiative announced last Wednesday (see Daily GPI, Oct. 14). Expanded use of automatic or remotely operated shut-off valves and expanded public safety partnerships are two of the five areas on which the utility is now going to focus more.

Despite being second guessed in some quarters for getting funds allocated for certain transmission pipeline maintenance and repair programs and then shifting the funds to other projects, PG&E's Jane Yura, vice president for rates and regulation, said from 2003 through 2009 the utility spent $698 million for pipeline safety and repair work, and that was $23 million more than had been authorized in rates by the CPUC.

Yura said most of the rate coverage for this work was determined by multi-party settlements among all of the major stakeholders in the case, such as consumer organizations that have recently been critical of the utility's administration of the rate case-allocated funds. "When PG&E and the intervening parties reach settlement in a rate case, PG&E always ensures that any settlement adequately covers the costs to safely maintain and operate its facilities," she said.

In concluding the hearing, Sen. Alex Padilla, chair of the energy/utilities committee, said shifts of rate-case approved funds was one of several themes that came out of the day's hearing, which he called "substantive," leaving a lot of work to be done. "There is perhaps a need to tighten those [regulatory] processes and perhaps provide less flexibility for utilities to shift money from one project to another," Padilla said.

"There is a need for the CPUC to keep a closer eye on projects that are funded to make sure they are actually undertaken and completed on a timely basis." He said shut-off valves and the mapping and identification of pipeline locations are two other areas that need more attention in the future. Padilla made it clear that the legislature would be looking at these and other issues "all with the intended purpose of making pipeline infrastructure in the state safer and minimizing the chances of another incident like San Bruno ever happening again."

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