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Pipeline Safety

Distribution Pipeline Replacement and Expansion Efforts and the Associated Natural Gas Emission Reduction Benefits. Pipeline Safety. Many Regulators and Stakeholders. Pipeline Safety Regulations. DOT Pipeline Safety & Hazardous Materials Administration (PHMSA)

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Pipeline Safety

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  1. Distribution Pipeline Replacement and Expansion Effortsand the Associated Natural Gas Emission Reduction Benefits

  2. Pipeline Safety

  3. Many Regulators and Stakeholders

  4. Pipeline Safety Regulations • DOT Pipeline Safety & Hazardous Materials Administration (PHMSA) Regulates gas utilities under 49 C.F.R. Part 192 • Significant number of new requirements on the way More than 80 mandates from Congress and recommendations from NTSB, GAO, and the OIG

  5. PHMSA’s Other Initiatives • Transmission Integrity Management Program (TRIMP) • Distribution Integrity Management Program (DIMP) • Control Room Management • Damage Prevention • Land Use Planning • Public Awareness • Emergency Preparedness

  6. DOT Pipeline Safety Action Plan • Raises the bar on pipeline safety • Accelerates rehabilitation, repair and replacement programs for high risk pipelines • Focuses on cast iron, bare steel, older plastic • Reports to the Nation on Pipeline Safety • AGA Supports the Action Plan and “Smart Modernization” of infrastructure that is no longer fit for service

  7. States with Infrastructure Cost Recovery Mechanisms Overall trend is positive: 4 more States in last 6 months States address issue differently Basis: just and reasonable rates

  8. NARUC 2013 Resolution: RESOLVED, That the Board of Directors of the National Association of Regulatory Utility Commissioners… encourages regulators and industry to consider sensible programs aimed at replacing the most vulnerable pipelines as quickly as possible along with the adoption of rate recovery mechanisms that reflect the financial realities of the particular utility in question; and be it further RESOLVED, That State commissions should explore, examine, and consider adopting alternative rate recovery mechanisms as necessary to accelerate the modernization, replacement and expansion of the nation’s natural gas pipeline systems…

  9. Pipeline Expansion

  10. The Game Has Changed . . . • How Will “We” Adapt ?

  11. Drivers for Expansion  • Economic development • Reductions in consumer energy prices • Environmental quality (GHG reduction, efficiency) • Energy security

  12. The Low Price of Natural Gashas Attracted Investmentby Utilities Low Prices Are Also Generating Interest in Switching and/or Obtaining Service • Consumers • Government (state, municipalities, townships, etc) • Regulators/Legislators • Where natural gas is available, a builder will put it in 84 percent of the time. • Natural gas will have 80 - 90 percent of the market where lines reach, but there is a significant amount of construction and/or area beyond reach of utility lines. 12

  13. Is Utility Motivated to Expand Beyond "the traditional box"? Rate designs and/or legislation reflect current political and social ideals -- and economic realities. Thus, they do change over time. • Uneconomical • Opportunity to earn allowed return • Do not want to subsidize other customers and make themselves less attractive to Wall Street • Regulator/Legislator pressure Has the paradigm shifted such that infrastructure needs should be viewed through a new lens? Should LDCs go beyond status quo?

  14. States with Infrastructure Expansion Programs EXAMPLES: Mississippi Connecticut Nebraska Pennsylvania

  15. The Critical Question: Who Pays? Utility New customers Existing customers Government (local, state, federal) Taxes

  16. HOW? • Innovative Rate Design: rate stabilization, CIAC, amortization • Trackers • Supplier Refunds and Commodity Reduction Funds • Bonds • Economic Development Grants • PILOTs • NARUC (Resolution) • Legislative efforts

  17. Natural Gas Distribution Shrinking Emissions by the Numbers • 1000s – miles of cast iron & bare steel pipe replaced with PE plastic pipe • 300,000 – added miles of distribution mains • 17 million – number of new customers served (30% increase) • 16% - emissions shrinkage since 1990 • 0.3%- EPA estimated emissions of produced natural gas from distribution systems in 2011

  18. Conclusion • Safe, Reliable Gas Delivery is our Core Business • Pipeline Safety & Expansion Initiatives are Driving Natural Gas Emissions Down

  19. Kyle Rogers Vice President, Government Relations American Gas Association 400 N. Capitol St. NW Washington, DC 2001 Find Us Online www.aga.org www.truebluenaturalgas.org http://twitter.com/AGA_naturalgas www.facebook.com/naturalgas www.linkedin.com/company/50905?trk=tyah

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