PG&E Pipeline Safety Enhancement Plan:
Update Plan

 

Background

In February 2011, the CPUC opened a Rulemaking  to establish a new model of natural gas pipeline safety regulations in the wake of the San Bruno pipeline explosion in September 2010. In December 20, 2012 the CPUC issued a Decision approving PG&E’s initial Pipeline Safety Enhancement Plan (PSEP) for the 2012-2014. The CPUC also ordered PG&E to file an updated pipeline safety plan within 30 days after completion of the Maximum Allowable Operating Pressure validation and records search to present the results of those efforts in their updated Safety Plan.

On October 29, 2013, PG&E filed its Pipeline Safety Enhancement Plan Update, proposing reductions in needed work and associated costs from its original pipeline safety Plan. Following the San Bruno pipeline explosion, the National Transportation and Safety Board investigation found that accurate pipeline records are critical to establish a valid Maximum Allowable Operating Pressure, which is the highest pressure up to which a pipeline can be operated safely. In its updated Safety Plan, PG&E proposed reductions based on its ability to locate additional pipeline records and identify pipeline attributes such as pipe thickness and diameter, as part of its Maximum Allowable Operating Pressure validation program, including:

  • Strength Testing: 783 miles of pipeline to 658 miles
  • Pipeline Replacement: 185.7 miles to 143.3 miles

These changes resulted in PG&E recommending a total $53 million reduction to the revenue requirements in its Update Plan, from the CPUC’s previously approved Pipeline Safety Plan:

  • Capital Costs: Reduced from $852.5 million to $614.9 million = a reduction of $237.6 million
  • Operations and Maintenance Expenses:  Reduced from $149.5 million to $118.3 million = a reduction of $31.2 million

In July 2014, ORA entered into a proposed Settlement Agreement with The Utility Reform Network (TURN) and PG&E which would further reduce PG&E’s initial Update Plan proposal for its revenue requirement by $23 million. PG&E, ORA, and TURN also filed a Motion with the CPUC to include PG&E’s commitments to the Safety and Enforcement Division, in response to the safety division’s report and review.

On November 19, 2014, the CPUC adopted the Proposed Decision approving the Settlement Agreement.

 

ORA Policy Position

ORA supports the Settlement Agreement because it comports with the CPUC’s 2012 decision for PG&E to make appropriate adjustments to its Safety Plan once it located additional pipeline records and learned more about its actual system, as ORA had requested during the original Pipeline Safety proceeding. Accordingly, ORA supported PG&E’s initial $53 million reduction that resulted as of the Update compliance process. Through the settlement process, ORA was able to work with PG&E and TURN to negotiate an additional $23 million reduction in PG&E expenses, without reduction in their scope of work.

See ORA’s December 6, 2013 Protest to PG&E’s Update Plan.

 

Proceeding Status

See the Proceeding docket.

 

 

Other Resources

ORA Pipeline Safety Enhancement Plans Portal