More long-term detail needs to be given and more consideration for who is paying for the proposed $1.4 billion, four-year upgrade to the plans submitted by Sempra Energy’s Southern California Gas Co. (SoCalGas) for its natural gas pipelines, which were submitted last year to the California Public Utilities Commission (CPUC), according to the Division of Ratepayer Advocates (DRA), the commission’s ratepayer advocacy unit.
Late last month DRA recommended that Sempra shareholders — not SoCalGas utility ratepayers — pay for most of the proposed safety upgrade work that has been called for statewide in the wake of the Pacific Gas and Electric Co.’s (PG&E) San Bruno, CA, pipeline rupture and explosion nearly two years ago. Both Sempra gas utilities and PG&E have submitted pipeline enhancement plans to the CPUC that have drawn push back from DRA and other consumer organizations.
SoCalGas has asked the CPUC to charge utility customers for $587 million of its proposed pipeline upgrade costs through 2015. The rests of the costs would be collected over a number of years after 2015. The DRA wants the proposed SoCalGas work segregated into three groupings: pipelines installed before 1935; ones installed in 1935-55; and ones installed after 1955. The consumer unit said ratepayers should not pay for hydrostatic pressure testing pre-dating 1935. Similar testing of lines from 1935 forward should be paid for by shareholders as should the replacement of pipelines installed since 1955.
“SoCalGas needs to concentrate on ensuring the pipeline system is safe and not on using this occasion to add to their bottom line with unsupported and possibly unnecessary system enhancements,” said DRA acting director Joe Como.
In its June recommendations to the CPUC, the DRA suggested that the rate of return applied to replacements of pipelines installed between 1935-1955, for which there is no reliable pressure test record, should be set “significantly lower” than current authorized returns. DRA based this recommendation on the fact that gas utilities have been responsible for complying with various safety laws and industry guidelines that have been in existence over the past more than 70 years.
Como said DRA also advocated that ratepayers be protected against the utilities diverting funds collected in rates to other purposes not directly tied to the upgrade of the pipeline system. In that regard, any unused funds would be returned to customers if the form of future credits or rate decreases.
Separately on Monday PG&E demonstrated a new one-ton, 14-foot-long “smart pig” to inspect the internal walls of pipelines. The manufacturer, PII Pipeline Solutions, demonstrated the equipment in Milpitas, CA, and later this week the equipment is to be used to test 15 miles of transmission pipeline in the East Bay of San Francisco between Fremont and San Lorenzo.
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