Pipeline Safety Bill Puts New Focus on Aging Gas Infrastructure

9496055390_6ce041c81b_oLast month, the U.S. Senate unanimously passed the SAFE PIPES Act, reauthorizing the Pipelines and Hazardous Materials Safety Administration (PHMSA). Tucked inside the bipartisan bill are important new measures intended to advance the ways in which regulators facilitate the repair and replacement of old, increasingly leaky pipeline systems.

The bill also creates a multi-agency task force looking into the health, safety, environmental and economic impacts of the four-month disaster at the 70-year-old Aliso Canyon natural gas storage facility – and what should be done to prevent another one like it.

Aging pipeline systems are a huge challenge. Besides safety concerns, the cost of lost gas is a needless burden on ratepayers. And regulators are also growing increasingly concerned about the climate impact of leaking methane, the main ingredient in natural gas.

Taking Stock

The Senate bill offers a significant opportunity to evaluate the effectiveness of various aspects of the existing regulatory scheme in limiting gas pipeline leaks.

For example, it requires the U.S. Comptroller General to review state policies on repair and replacement of leaking natural gas pipelines, and report back to PHMSA and Congress on key findings. The report will also recommend policies and practices to improve safety by accelerating pipeline repair and replacement while taking into account potential ratepayer impacts. Provided the PHMSA Administrator finds that the recommendations will significantly improve pipeline safety, the agency is required to issue regulations implementing them nationally.

Utilities across the country are looking to replace thousands of miles of leak prone distribution pipes over the coming decades in order to limit pipeline leaks. Nationally, replacement costs are estimated at $270 billion. The massive financial implications underscore the need to thoughtfully design and execute pipe replacement programs.

States are working to enhance the safety of local utility distribution systems through policies aimed at accelerating pipe replacement. For instance, most have created accelerated mechanisms for utilities to recover costs associated with these investments, providing greater financial certainty and additional incentive for utilities. As of 2015, 39 states had such mechanisms in place.

But until now, a comprehensive effort to examine how well these policies are working has been lacking. The SAFE PIPES Act contains provisions allowing for their review and highlighting the need to evaluate all opportunities to advance pipeline safety.
Broadening the Mandate

But there’s a larger issue here. The current regulatory framework governing pipe repair and replacement is solely safety focused. While utilities are required to fix hazardous leaks immediately, there is generally no requirement to repair non-hazardous leaks within a specific timeframe.

Leaks deemed non-hazardous – by dint of size, location or proximity to people – often continue unabated for years, sometimes for decades, not only causing environmental harm, but doing so at the expense of ratepayers. But lately, regulators, and utilities themselves have been looking at broadening the set of criteria they use to prioritize pipe repair and replacement to include environmental and ratepayer considerations.

That’s because methane, the primary constituent of natural gas, is a potent global warmer, 84 times as powerful as CO2 over a 20 year timeframe. As of 2012, the distribution pipeline system accounted for 20% of methane emissions from the natural gas sector, 30% of which is attributable to leak-prone cast iron and unprotected steel pipes.

And of course it is ratepayers who pay the costs of leaked gas. A 2013 report estimated that ratepayers in Massachusetts alone paid between $640 million to $1.5 billion from 2000-2011 for lost and unaccounted gas.

Safety First, but Other Factors are Important

Public safety must come first when it comes to oversight and management of the nation’s pipelines. But our leaking pipes pose other risks that must also factor in. Pipeline replacement and repair programs, which implicate ratepayer and environmental interests, must be conceptualized, assessed and implemented, recognizing that leaking gas pipelines are a multi-dimensional problem.

In proposing a multi-agency initiative to consider the public safety, health, environmental and economic implications of the Aliso Canyon leak, the SAFE PIPES Act acknowledges that this is a problem of unusual complexity. And by requiring that ratepayer impacts be considered in assessing recommendations to improve pipeline safety, the bill makes an important step towards recognizing that the extensive leaks on our pipeline system are a similarly complex problem going beyond public safety.

The SAFE PIPES Act is, by any measure, a much needed legislative effort. In creating opportunities to advance the existing pipeline safety regulatory framework, it moves the ball forward in important ways. Now it’s up to the House to complete the play.

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