American Gas - November 2012 - (Page 26)

m o d e r n i z at i o n Part 1: PiPelines nAvigAnt’s rAlPh zArumbA looks At DeveloPments in four stAtes Need to Know Commentary from the front lines “It is important that utilities accelerate the replacement of pipelines no longer fit for service, to ensure the continued safe and reliable delivery of natural gas to customers. The Michigan Public Service Commission has approved pipeline replacement programs with innovative rate mechanisms that expedite company rate recovery, thereby assisting utilities in accelerating needed safety improvements.” —MPSC Chairman John D. Quackenbush “The [Pa.] legislature, working with industry and consumer groups, passed HB 1294, which was enacted as Act 11 of 2012. Act 11 makes it easier for utilities to make needed repairs, replacement, or upgrades to utility infrastructure, and enables them to gradualize cost recovery, rather than imposing large increases in customer bills following general rate cases. The quality and safety of utility services are only as good as the quality of the infrastructure over which the services are provided, and Act 11 provides utilities with the necessary tools while minimizing the overall capital investment costs that will be recovered from ratepayers.”—Pennsylvania State Rep. Bob Godshall “our decision allows these utilities to replace all high-risk cast iron or bare steel gas pipelines within 10 years, rather than the 50 to 70 years anticipated under current replacement programs. The utilities requested approval of accelerated replacement programs in order to proactively respond to public concerns regarding infrastructure reliability and safety. This important investment will not only improve the safety and reliability of this critical infrastructure, but also provide an economic benefit to the State.” —Eduardo E. Balbis, commissioner of the Florida Public Service Commission, commenting on the unanimous approval, in August, of new tariffs to recover the cost of accelerating the replacement of cast iron and bare steel distribution pipelines. “rebuilding America’s energy infrastructure is the key to our country’s future. Our 100+ year old systems cannot continue to provide the essential services that are the backbone of America. Collaboration among our regulators, consumers, utilities, and lawmakers is the key. Development of innovative financial mechanisms and programs to achieve this multipronged rebuild should be the order of the day. Such a joint effort and good old American know-how will ensure our country’s promise to current and future generations.” —Illinois Commissioner Erin O’Connell-Diaz, commenting on the rejection of a pipe replacement program, previously approved by the Illinois commission, by the state’s attorney general. “by this time next year, the larger local distribution company, Atlanta Gas Light Co., will have completed a 13-year program that replaced over 2,700 miles of bare steel and cast iron pipe at an investment of just over $600 million. This Commission will also examine the appropriateness of extending the PRP program to include the oldest system installations of vintage plastic pipes and mains that may be subject to shorter commercial life spans than originally anticipated. By providing regulatory certainty, Georgia’s infrastructure surcharge allows gas utilities to plan for and capitalize multiyear replacement programs that improve the safety and reliability of the system. The end result is that the improvements get constructed over a shorter time period than with traditional recovery and without the necessity to hold back-to-back rate cases.” creAting regulAtory Assets Last September, Ohio amended Section 4929.111 of the Ohio Public Utilities Act to let natural gas LDCs request deferral of the revenue requirement associated with incremental investments in their distribution systems. LDCs can now create a regulatory asset equal to the return on the cost of plant upgrades. The regulatory asset can be recovered when the utility files an application for recovery of the deferred asset through a rate case, an alternative regulation case, or an automatic adjustment application. While this solves the cost-recovery problem for LDCs, it does not address the cash flow required by the LDC to finance the investment. If the time period between rate requests is substantial, an LDC could face significant payments before the investment enters the rate base. Furthermore, in an uncertain regulatory environment, an LDC may have to establish reserves for potential write-offs for potential non-approval of the yet-to-be-recovered plant investments. OhiO mAking striDes geORgia Unlike many other infrastructure programs in the United States, Atlanta Gas Light has implemented a broader program that captures core infrastructure improvements, customer growth and economic development, and a traditional pipeline replacement program. The effort, called STRIDE (STRategic Infrastructure Development and Enhancement), has three distinct elements. integrated system Reinforcement: This allows AGL to replace or uprate existing infrastructure ensuring reliability on peak days. Triennial plans must be filed with the Georgia PSC to support the investments. Currently, $176M of investments are planned under the program. integrated Customer Growth: This addresses expansion into strategic corridors and supplemental line extensions. Under the ICG, annual plans are filed with the Georgia PSC. The program has been approved to be in place through 2025. Pipeline Replacement Program: The PRP began in 1998 and expects to complete infrastructure replacement by 2013. The PRP was one of the first replacement programs in the country and is focused upon cast iron and bare steel pipes. 26 AmericAn GAs november 2012

Table of Contents for the Digital Edition of American Gas - November 2012

American Gas - November 2012
Table of Contents
President’s Message
Industry News
Ask AGA
Search Engine
In the Know
Part One: Pipelines
Company Profiles
Places to Be
Jobline
Advertisers Index
Noteworthies
Marketplace
Facts on Gas

American Gas - November 2012