Pipeline Safety Enhancement Plan - FAQ

Southern California Gas Company (SoCalGas) is filing its Pipeline Safety Enhancement Plan to comply with the CPUC’s pipeline safety rulemaking proceeding directives to enhance public safety. As part of the proceeding, the CPUC ordered the state’s four natural gas transmission pipeline operators – Pacific Gas & Electric, Southwest Gas and San Diego Gas & Electric, as well as Southern California Gas Company -- to develop plans to replace or pressure test all natural gas transmission pipelines that have not been pressure tested. Regulations specifying pressure testing were implemented after many of the transmission pipelines were installed.

We also are proposing to retrofit existing valves and install new valves so we can respond to transmission pipeline incidents more quickly and in multiple locations simultaneously. Additionally, we propose to install technology enhancements, such as fiber optic cabling and methane detection instruments, to enable near real-time monitoring of events and conditions along our pipelines.

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SoCalGas is filing this plan in response to an order from the CPUC in its pipeline safety rulemaking proceeding. The CPUC’s order and our filing builds on lessons learned from recent events, including last year’s natural gas pipeline rupture in San Bruno, a city just south of San Francisco.

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While we believe our system is safe as it exists today, our proposed plan will enhance the safety of our pipeline system.

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The CPUC ordered the state’s four natural gas transmission pipeline operators – Pacific Gas & Electric, Southwest Gas and San Diego Gas & Electric, as well as Southern California Gas Company -- to develop plans to replace or pressure test all natural gas transmission pipelines that have not been pressure tested. Regulations specifying pressure testing were implemented after many of the transmission pipelines were installed.

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The initial work included in this filing, which we call Phase 1, will be done over the next 10 years. The initial plan includes pipelines in populated areas. Although high level planning has been completed for Phase 2, additional detailed planning is underway to identify pipeline projects in outlying areas. The Phase 2 work may take place concurrently during the latter half of Phase 1 work.

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The total cost estimate for Phase 1 is $2.5 billion over a 10-year period. In this filing, we are asking the CPUC to authorize funding only for 2012 through 2015, which totals about $1.5 billion.

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The Pipeline Safety Enhancement Plan Surcharge increases over time, as more project work is completed. If the CPUC approves our proposal as filed, in 2012 the surcharge for residential customers would be 67 cents per month. This would steadily increase to $2.82 per month by 2015. We are proposing to provide the California Alternate Rate for Energy (CARE) rate discount of 20 percent to this surcharge on the bills of income-qualified customers.

A typical business customer using 300 therms of natural gas a month would see a surcharge of $2.47 per month in 2012, reaching $10.45 per month in 2015. A typical business customer using 500 therms of natural gas a month would see a surcharge of $4.11 per month in 2012, increasing to $17.42 per month in 2015. And, a large commercial and industrial customer using 6,250 therms of natural gas a month would see a surcharge of $51.42 per month in 2012, reaching $217.74 per month in 2015.

Beyond 2015, we are proposing to request Pipeline Safety Enhancement Plan costs as part of the General Rate Case process.

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Because all customers will benefit from enhanced pipeline safety, we are proposing an equitable percentage increase for all customers.

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In support of the CPUC’s objectives, the benefits of this plan will be enhanced pipeline and public safety.

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Our plan includes several proposals to reduce costs, including:

• Directly examining some pipeline segments using non destructive examination techniques, rather than pressure testing them or replacing them. This would lower costs, would not interrupt the flow of gas to customers and would help reduce customer bill impacts.
• Using internal pipeline inspection technology called a Transverse Field Inspection (TFI) tool as a possible alternative to pressure testing. If the TFI tool proves to be effective, SoCalGas would propose that it be used instead of pressure testing. While costlier at first, using the TFI tool could provide savings over the long-run.
• Retrofitting, rather than replacing some pipeline valves, to reduce overall costs.

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Additional details about the pipelines included in the plan will be filed with the CPUC on September 7, 2011 in our work papers.

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We will communicate with all those who live and work in the area where the work will take place before we begin any significant pipeline work under this plan.

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SoCalGas considered both the cost effectiveness of testing versus replacing, as well as the potential impact on customers. One of the key objectives of our plan is to minimize the potential for service disruption. The entire pressure testing process can require from 2-6 weeks to complete. If an issue is found with the pipeline, the line could be out of service for an extended period of time. We do not believe it is prudent to have customers without service for these extended durations.

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Pressure testing is the CPUC’s preferred method for assessing a pipeline’s strength. It involves filling a pipeline with water, inert gas, air or natural gas, and increasing the pressure to a point higher than that at which it will operate to see if it has or causes any leaks.

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SoCalGas is proposing to retrofit or add valves so we can respond to transmission pipeline incidents more quickly and in multiple locations simultaneously (such as in the event of a major earthquake).

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Valves are equipment installed at intervals on pipelines that allow system operators to control the flow of natural gas through pipelines. Typically, valves are open to allow gas to flow. They can be closed to stop the flow of natural gas for pipeline maintenance, leaks or ruptures. There are three types of valves: manually operated, remote control and automatic shut-off. Manually operated valves can be opened or closed by hand (or hand operated actuators); remote control valves can be operated electronically from a remote location. Automatic shut-off valves will automatically close if pipeline pressure changes significantly enough for the automatic controller to sense and respond.

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SoCalGas is proposing to add fiber-optic monitors to help identify when intrusions along the pipeline have occurred or when there is movement near a pipeline which might pose a threat to it. This system will allow SoCalGas to pinpoint within several feet when a buried cable has been disturbed from activity along a pipeline, such as construction crews working in an area, or when a sizeable leak occurs. This technology will help drive our decisions about when to send operational crews to investigate a suspected incident.

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SoCalGas is proposing to add methane detection monitors to allow for quicker leak detection. The methane sensors will detect a leak before a person could smell the odorant that we place in natural gas.

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