Pipeline Replacement Programs
Presentation By Frank Radigan
Hudson River Energy Group
June 26, 2012
Topics of the Day
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Who is HREG?
Pipeline Replacement Programs
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What they tell the regulator
What they tell Wall Street
Lessons learned
Considerations to be addressed in
developing a program to upgrade the
LDC's system
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Who is HREG
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Former NYS Public Service Employees
Frank Radigan – Rates, Cost of Service,
Rate Design, Depreciation
Phil Teumim – Focus on utility
management, policy issues and rates
John Gawronski – Gas Safety
Mike Scott – Gas Safety and Planning.
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Our Recent Experience
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Yankee Gas
Southern Connecticut Gas
Connecticut Natural Gas
Washington Gas Light Company
Northwestern Energy (Montana)
Peoples Gas (Chicago)
Investigation into the cause of a gas
explosion in the Southwest
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Pipeline Replacement Programs
(a rose by any other name)
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Pipeline Integrity Program
Accelerated Pipe Replacement Program
Leak Prone Pipe Replacement Program
Pipeline Modernization Program
On Electric Side –
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Smart Grid
Environmental and Reliability Account
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What Utilities Tell The Regulator
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Maximize Safety
Proactive to prevent accidents
Reduce customer outages
Current system safe but program will
enhance safety and reliability
Local economy benefits from new jobs
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What Utilities Tell Wall Street
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Lessons Learned
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Sales Growth is slow or non-existent
due to decoupling
Companies are in the business to grow
Increased investment increases
earnings
Riders (et. al.) reduce regulatory lag
If request for rider is rejected, utilities
survive
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Distribution Integrity
Management Plan (DIMP)
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USDOT Pipeline Safety requirement
Under development for years and first
applied to high pressure pipelines
Regulations affecting LDCs issued 2/10 and
plans must be implemented by 8/11
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DIMP Requires LDCs to
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Know and understand their systems
Development of awareness of threats to systems
Rank risks in terms of likelihood and
consequences
Identify and implement measures to address the
identified risks
Put in place systems to monitor performance and
measure effectiveness
Evaluate the program periodically and implement
improvements
Report the above annually to US DOT (PHMSA)
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Findings to Date
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LDC approaches tend to be long on
spending (throwing money at the problem)
and short on analysis
To be fair, analytical deficiencies may be
the result of poor data quality
DIMP implementation is spotty
DIMP does not mean you have to increase
spending
Some LDCs requesting substantial funding
for DIMP
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Which Pipe is Most Vulnerable?
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Cast iron, particularly smaller diameter tendency to crack
Bare steel, non-cathodically protected steel
(typically pre-1970) - tendency to corrode
Some early plastic pipe - tendency toward
embrittlement
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Indicators of Need for Upgrades
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Amount and Percent of Vulnerable Pipe
(Cast Iron and Bare Steel)
Leak rates, categorized by pipe
composition and cause
Numbers of Third Party Damages
(excavation)
LDC's response to DIMP.
DIMP analysis will show need for upgrades
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Leak Rates, the Primary Indicator
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Annual data available; all LDCs required to
file annual report with US DOT
Broken down by pipe material, cause of
leak, vintages of pipe
Enables analysis of pipe replacement rates,
trends in leak rates
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Third Party Damages
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Not a function of the condition or age of
the infrastructure.
Typically, largest single cause of leaks and
incidents on LDC systems
Programs vary widely but should include:
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Outreach and education to the public
Outreach and education to excavators, both
public employees and private contractors
Close working relationship with one-call system
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How to Evaluate Proposed Program
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Does the LDC have a plan for replacing its
vulnerable pipe?
How does it prioritize pipe sections for
replacement/rehabilitation?
Does the LDC's plan target the highest risk
areas?
What has the LDC done to address DIMP?
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Independent Analytical Approach
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Compare leak rate performance against
national and regional averages
Compare third party damage rates against
national and regional averages
Determine trends in leak rates by type and
vintage of pipe
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Summary
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Basic premise: vulnerable pipe needs to
be replaced over a reasonable period of
time according to a well thought out plan.
Worthy goal. Need to find the right
balance between cost and safety.
Is a Rider necessary?
Plan should be data driven.
LDC may need to do a lot more homework
to come up with a reasonable plan.
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Contact Information
Frank Radigan
Hudson River Energy Group
237 Schoolhouse Road
Albany, NY 12203
e-mail: FRadigan@aol.com
Tel. (518) 452-2585
Fax (518) 452-2684
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