THE POWER PLANTS OF AT LEAST FIVE UTILITIES IN NEW England and California get swapped this year for more than $5.3 billion. And happily, those holding bonds on the plants will be given cash for...
Gas Pipelines Do the Safety Dance
The industry responds to FERC's new safety regulations.
Utility companies are scrambling to understand and comply with the Pipeline Safety Improvement Act of 2002, which became law in December 2002. According to Daphne Magnuson, director of public relations at the American Gas Association (AGA), the act will require member companies to make significant changes during the next 10 years in how they operate.
The AGA is working with the Department of Transportation (DOT) and its Research and Special Programs Administration (RSPA), which operates the Office of Pipeline Safety. RSPA is writing the integrity management rule, due out by the end of this year, for natural gas transmission pipelines.
The act requires the Transportation secretary to issue regulations prescribing standards to direct an operator's risk analysis and the implementation of an integrity management program no later than 12 months after enactment of the law. The minimum requirement of the integrity management program requires a baseline assessment of all pipeline facilities. It requires that the assessments be completed no later than 10 years after enactment of the law, and that at least 50 percent of the facilities be assessed no later than 5 years after the date of enactment.
Magnuson characterized the act: "It's like Congress said, 'OK, go and inspect these pipelines every 10 years,' and RSPA takes it and says, 'By that we mean this percentage in such time and inspection techniques that we think are OK.'" She explained that DOT wants companies to add an extra layer of safety for pipelines that are in "high-consequence" or high-density areas. "When the proposed rule came out, AGA's largest area of concern was how these high-consequence areas are defined for different classes of pipes, and there is an added layer of complexity for how they determine impact range," Magnuson says.
AGA realized that its member companies could spend years trying to figure out which of their pipelines fall under which definition. "So we made a few recommendations to RSPA on how they can simplify that," Magnuson says. "Our biggest concern is getting this simplified, because depending on how you define this law, energy utilities that deliver natural gas are transmission pipelines-anywhere from 30 percent to 50 percent of our pipelines would fall under this definition of the law-which would mean they have to be inspected more frequently."
The ambiguity in interpreting the act is another problem, the association says. "We are given 10 years to complete the baseline, but I guess the way that some people have interpreted the law is that if you get your baseline assessment completed in five years, then you should just go forward and start reinspections again," Magnuson noted. "We're saying no … you're almost building in an incentive for waiting longer to complete the baseline. It's kind of the law of unintended consequences. If a company completes that baseline inspection early and then the deal is they have seven years to do the reinspection intervals, it just snowballs, and before you know it, as soon as you're finished inspecting you'll start inspecting again and again." AGA also asked