HOUSE . . . . . . . No. 3765
The Commonwealth of Massachusetts
HOUSE OF REPRESENTATIVES, November 18, 2013.
The committee on Telecommunications, Utilities and Energy to whom were referred the petition (accompanied by bill, Senate, No. 1580) of Benjamin B. Downing and Cynthia S. Creem for legislation relative to natural gas leaks, the petition (accompanied by bill, Senate, No. 1594) of John Hart, Jr., Michael F. Rush, Tackey Chan, Mark J. Cusack and other members of the General Court for legislation to promote the safe operation of utility vaults, the petition (accompanied by bill, Senate, No. 1596) of John Hart, Jr. for legislation relative to promoting safety by making gas gate boxes easily accessible to gas company service employees and emergency public service personnel, the petition (accompanied by bill, Senate, No. 1597) of John Hart, Jr. for legislation to monitor natural gas, , the petition (accompanied by bill, Senate, No. 1621) of James E. Timilty, Michael F. Rush, Josh S. Cutler, Carl M. Sciortino, Jr. and other members of the General Court for legislation relative to the safety and maintenance of gas shut-off valves, the petition (accompanied by bill, House, No. 2917) of James M. Cantwell, Josh S. Cutler and Thomas M. Stanley relative to the safe operation of utility vaults, the petition (accompanied by bill, House, No. 2924) of Nick Collins and others relative to the safe operation of utility vaults, the petition (accompanied by bill, House, No. 2933) of Lori A. Ehrlich and others relative to natural gas pipeline safety, the petition (accompanied by bill, House, No. 2950) of John D. Keenan and others for legislation to establish winter patrol cast iron survey protocols for utility company inspections of gas pipelines, the petition (accompanied by bill, House, No. 2962) of Paul McMurtry for legislation to increase the availability, affordability or feasibility of natural gas service, and the petition (accompanied by bill, House, No. 2990) of Martha M. Walz and others for legislation to establish a program within the Department of Public Utilities for natural gas distribution companies to replace certain leaking pipes, reports recommending that the accompanying bill (House, No. 3765) ought to pass.
For the committee,
JOHN D. KEENAN.
HOUSE . . . . . . . . . . . . . . . No. 3765
In the Year Two Thousand Thirteen
An Act relative to natural gas leaks.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
SECTION 1. Chapter 143 of the General Laws, as appearing in the 2012 Official Edition, is hereby amended by adding after section 3L the following new section:-
Section 3M. The board of fire prevention regulations shall make and promulgate, and from time to time may alter, amend and repeal, rules and regulations relative to the establishment of minimum safety standards for access, structural integrity, ventilation, and lighting of utility transformer vaults located within buildings subject to the state building code. For the purposes of this section, utility transformer vaults shall mean any totally enclosed structure or room in which electrified network transformers, network protectors and related electrical equipment are housed. The board shall require regular inspections of utility transformer vaults, conducted by a local inspector and an employee of the electric company providing service to the building, to ensure the enforcement of minimum safety standards.
SECTION 2. Section 1I of chapter 164 of the General Laws, as appearing in the 2012 Official Edition, is hereby amended by inserting after the first sentence the following sentence:-
Each natural gas distribution company report shall include: (i) the percentage loss of natural gas for the previous calendar year, as calculated under section 94J; (ii) measures taken, if any, to reduce avoidable losses from pipelines, including, but not limited to, leakage, meter inaccuracies and theft; and (iii) unavoidable losses, if any, from pipelines.
SECTION 3. Said chapter 164 is hereby further amended by inserting after section 94I the following section:-
Section 94J. The department shall establish a formula for gas companies to use to calculate lost and unaccounted for gas. A gas company, when filing a schedule required by section 94, shall state the company’s annual percentage of lost and unaccounted for natural gas for each year subsequent to its most recent rate proceeding. The department shall establish an annual loss benchmark for each gas company. A gas company shall recover, through rates, only the cost of lost and unaccounted for gas that falls within the benchmark. The benchmark shall remain in effect until the department approves a new schedule.
SECTION 4. Section 105A of said chapter 164 of the General Laws is hereby amended by striking out the second paragraph and inserting in place thereof the following paragraph:-
Any person, firm or corporation who violates any provision of any code adopted by the department pertaining to the safety of pipeline facilities and the transportation of gas, or any regulation or rule thereunder, at a time when the department has submitted and has in effect the annual certification to the United States Secretary of Transportation provided for in section 5(a) of the Natural Gas Pipeline Safety Act of 1968, as amended, (see section 60101 et seq. of Title 49 of the United States Code), shall be subject to civil penalties as specified in section 60122(a)(1) of Title 49 of the United States Code, as amended, or any successor statute enacted into federal law for the same purposes as said section 60122(a)(1).
SECTION 5. Said chapter 164 of the General Laws is hereby further amended by inserting the following 4 sections:-
Section 144. (a) There shall be established a uniform natural gas leak classification standard in the commonwealth for all natural gas companies.
(b) All reported gas leaks shall be assessed a grade based on the following system:
(1) Grade 1. A leak that represents an existing or probable hazard to persons or property. Such a leak requires repair and continuous action until the conditions are no longer hazardous. Completion of repairs shall be scheduled immediately and the condition kept under continuous surveillance until the hazard or source of the leak is permanently eliminated.
(2) Grade 2. A leak that is recognized as non-hazardous to persons or property at the time of detection, but justifies scheduled repair based on probable future hazard. Such leaks shall be permanently repaired or cleared within 12 months from the date the Grade 2 leak was classified. The frequency of reevaluation shall be determined by the location and magnitude of the leakage condition, provided that all Grade 2 leaks shall be reevaluated at least once every 6 months until eliminated.
(3) Grade 3. A leak that is recognized as non-hazardous to persons or property at the time of detection and can be reasonably expected to remain non-hazardous. Such leaks shall be reevaluated during the next scheduled survey, or within 12 months of the date last evaluated, whichever occurs first, until the leak is eliminated or main replaced. A Grade 3 leak requiring immediate upgrade for scheduled repair shall apply to any nuisance Grade 3 leak, as defined by the department, that is certified to be a public safety threat by a municipal or state public safety official.
(c) Gas companies shall survey for the presence of gas leaks and set repair and or replacement schedules whenever a municipality or the commonwealth, after adequate notification to a gas company, undertakes a significant and confirmed project involving the repair and/or paving of a public way exposing natural gas infrastructure, such gas company shall survey the project area and repair or replace any known or newly detected Grade 1 or Grade 2 leak. Gas companies may also repair any known or newly detected Grade 3 leaks at its discretion or after consultation with such municipality or the commonwealth.
(d) Gas companies shall prioritize any required pipeline repairs under this section for gas leaks detected within a school zone. For the purposes of this section, the term “school zone” shall mean in or on, or within fifty feet of the real property comprising a public or private accredited preschool, accredited Head Start facility, elementary, vocational, or secondary school.
(e) Each gas company shall report annually to the department the location of each Grade 1, Grade 2 and Grade 3 leak existing as of that date classified by the company, the date each Grade 1, Grade 2 and Grade 3 leak was classified, and the dates of temporary and permanent repairs performed on each Grade 1, Grade 2 and Grade 3 leak as part of its service quality standards report required by section 1I of this chapter. Gas companies shall specify any reclassification of previously identified leaks in its annual report. Such gas leak information shall be made available to any municipal or state public safety official upon written request to the department.
(f) The department shall promulgate regulations necessary to implement the uniform leak classification standards as specified in this section, and shall oversee and monitor company response and reporting.
Section 145. The department shall investigate whether it should require the winter surveillance and patrol of cast iron gas pipelines in the commonwealth, and shall determine whether the presence of extended frost cap conditions may result in additional stress on cast iron pipe segments, requiring enhanced surveillance and patrol. The department is authorized to establish minimum uniform procedures for cast iron winter surveillance and patrols consistent with any federally mandated standards for integrity management programs for distribution pipelines. Gas companies are authorized to establish procedures that exceed any minimum standards, subject to approval of the department.
Section 146(a) For the purposes of this section, the following words shall, unless context clearly indicates otherwise, have the following meanings:-
“Customer”, a retail natural gas customer.
“Eligible infrastructure replacement”, a replacement or an improvement of existing infrastructure of a gas company that:
1) is made on or after May 1, 2015;
2) is designed to improve public safety or infrastructure reliability;
3) does not increase the revenue of a gas company by connecting an improvement directly to new customers;
4) reduces or has the potential to reduce lost and unaccounted for natural gas losses through a reduction in natural gas system leaks;
5) is not included in the current rate base of the gas company as determined in the gas company’s most recent rate proceeding, or included in any other targeted infrastructure replacement program previously approved by the department.
“Plan”, an infrastructure replacement program plan that a gas company files under subsection (b) of this section.
“Project”, an eligible infrastructure replacement project proposed by a gas company in a plan filed under this section.
(b) A gas company may file with the department a targeted infrastructure replacement plan to address aging or leaking natural gas infrastructure within the commonwealth in the interest of public safety and reducing lost and unaccounted for gas.
(1) A plan shall include, but not be limited to, eligible infrastructure replacement of mains, services, meter sets and other ancillary facilities composed of non-cathodically protected steel, cast-iron and wrought iron, prioritized based on an assessment of the highest public safety risk and largest number or volume of leaks as identified by the company.
(2) A plan shall also include:
a. A timeline for the completion of each eligible infrastructure replacement project;
b. The estimated cost of each project;
c. Rate change requests;
d. A description of customer benefits under the plan, and;
e. Any other information the department considers necessary to evaluate the plan.
(c) Provided that a gas company files a plan on or before October 31 of a calendar year, the department shall review the plan within 6 months. The department shall consider the costs and benefits of a plan, including, but not limited to, impacts on ratepayers, reductions of lost or unaccounted for gas and improving public safety, and give priority to plans narrowly tailored to addressing leak-prone infrastructure most immediately in need of replacement.
(d) If the plan complies with the requirements of this section and the department determines the plan reasonably accelerates eligible infrastructure replacement and provides public safety benefits, the department shall issue preliminary approval of the plan, in whole or in part, and allow the gas company to begin recovery of the reasonable costs of such projects on May 1 of the year following the filing of the plan to collect any revenue requirement, including depreciation, property taxes and return associated with the plan.
(e) Within 1 year of a preliminary approval of a plan, the gas company shall file final project documentation to demonstrate substantial compliance with plans and that project costs were reasonably and prudently incurred. The department shall investigate such costs within 6 months, and the department shall have the authority to approve and reconcile the authorized rate factor if necessary upon a determination that such costs were reasonable; provided that:
1) the approved recovery factor shall include only costs of incremental replacement of leak-prone gas infrastructure in excess of the depreciation expense allowed during the company’s last general rate case being recovered through current rates; and
2) the annual costs allowable shall not exceed 1 per cent of the company’s most recent calendar year distribution revenue.
(f) All rate change requests made to the department pursuant to said plans shall be filed annually on a fully reconciling basis. The company shall file reconciliation adjustment rates, which shall be subject to investigation by the department under subsection (e) to determine whether the company has over-collected or under-collected its requested rate adjustment. Said reconciliation adjustment rates shall become effective pursuant to department order pending the investigation pursuant to subsection (e).
(g) The department shall promulgate rules and regulations in accordance with this section, including a procedure which discontinues the replacement program and allows the refund from a gas company any costs charged to customers due to poor management, failure to substantially comply with the work plans, or failure to properly manage project costs.
Section 147. All gas companies shall make easily and immediately accessible any gate boxes regulating gas distribution in the immediate vicinity of any Grade 1 or Grade 2 leak requiring repair pursuant to section 144 of this chapter, any gate boxes connected to distribution mains replaced pursuant to section 146 of this chapter, or any gate boxes connected to distribution mains replaced as part of any targeted infrastructure replacement program approved by the department.
SECTION 6. The department shall open a docket to examine methods to improve meter and meter prover accuracy, including but not limited to, a method for determining meter and meter prover accuracy, and a reasonable level of variance from accuracy. The department may promulgate rules and regulations based on its findings.
SECTION 7. On or before January 1, 2015, the department of public utilities shall commence a proceeding to investigate new programs and policies that will facilitate and increase the availability, affordability, and feasibility of natural gas service for new customers.
(a) As part of the investigation under this section, the department shall: (1) review each gas company’s process for determining if a main or service extension is economic; (2) review each company’s contribution in aid of construction policy and methodology; and (3) establish guidelines, if necessary, for alterative rate mechanisms or company project review methodology that facilitate access to natural gas service for new customers, including, but not limited to, new area surcharges for zones of new off-main customers; provided that natural gas distribution system expansion surcharges shall not burden existing customers. Guidelines established under this subsection shall outline the department’s methods and procedures for reviewing proposals, including factors the department will consider for program or policy approval.
(b) The department of energy resources and gas companies may, as part of the investigation, petition the department to approve: (1) financing programs for customer natural gas conversion costs repaid on participating customer bills; (2) other financing programs as petitioned by a gas company; or (3) other cost effective programs that reasonably accelerate the expansion of and conversion to natural gas usage in the commonwealth; provided that such programs do not unreasonably burden existing natural gas customers.
(c) The department shall complete its investigation under this section and shall issue an order by January 1, 2016, including final determinations on gas company expansion programs filed with the department pursuant to subsection (c). Gas companies shall file appropriate tariff changes and otherwise implement any gas expansion programs or policies approved under this section.
(d) The department shall prioritize programs that are likely to accelerate the conversion to natural gas usage for low income consumers currently eligible for the LIHEAP program, including programs that exempt new residential low income heating customers from any new area surcharge developed under this section. Notwithstanding subsection (b) of this section, the department may approve alternative methods of cost recovery by a gas company for such low income programs, policies or exemptions.
SECTION 8. Section 146 of chapter 164 of the General Laws shall be effective October 1, 2014.
SECTION 9. Whereas, the department of public utilities determined additional electric generation facilities are needed in the ISO New England Inc.’s Northeastern Massachusetts Boston electric load zone; a new 674 megawatt, natural gas-fired, quick-start, combined-cycle generating facility and any ancillary or related facilities has been proposed at 24 Fort Avenue, Salem, Massachusetts to provide the needed electric generation in such load zone; the proposed facility will ensure the beneficial remediation, redevelopment, and replacement of the existing, retiring coal power plant, currently known as Salem Harbor Power Station as required by an act relative to competitively priced electricity in the commonwealth; as part of the redevelopment, the owner of the site will fully demolish the retired plant and address environmental remediation of at such location in a manner consistent with condition F of the final decision of the energy facilities siting board in docket EFSB 12-2 and special condition 3 of the decision of the department of environmental protection in its decision on a variance request and written determination with respect to the proposed facilities; the secretary of energy and environmental affairs has determined the proposed facilities will provide clear public benefits; the energy facilities siting board unanimously approved the construction of the proposed facilities in an order in docket EFSB 12-2; the proposed facilities have obtained the unanimous approval of the Salem conservation commission, Salem planning board and Salem zoning board of appeals in obtaining local permits and variances, and the department of environmental protection has issued a decision on variance request and written determination related to the proposed facilities’ Chapter 91 license and a proposed air quality approval and draft prevention of significant deterioration permit ; the Salem harbor task force also established pursuant to an act relative to competitively priced electricity in the commonwealth determined that the development of the proposed facilities in Salem at this site is the highest and best use of the retiring power plant location; the further delay in the development and construction of the proposed facilities could result in brownouts, the need for higher cost emergency electricity transmission projects, emergency requests for proposals to supply electricity that may come from more environmentally detrimental facilities; damage to the overall reliability of the electric grid, and significant public health and safety concerns which impact the commonwealth’s compelling public interests, the General Court finds that notwithstanding any general or special law, rule or regulation to the contrary, the development, construction and operation of the proposed facilities to be located on the site of the Salem Harbor Power Station at 24 Fort Avenue, Salem, Massachusetts in the manner described in the final decision in EFSB 12-2 is in the commonwealth’s public interest and is approved and further determines that:
1) the construction and operation of the proposed facilities at said location shall be exempt from the requirements of G.L. c. 164, §69J¼, provided, however, that the energy facilities siting board shall retain authority to implement and enforce compliance with the requirements and conditions of the final decision in EFSB 12-2 and to review and approve any modifications or revisions to the construction or operation of the proposed facilities as are otherwise subject to its jurisdiction; and
2) that the construction and operation of the proposed facilities at said location shall be exempt from the requirements of G.L. c. 40A, provided, however, that the city of Salem planning board and zoning board of appeal shall retain authority to implement and enforce compliance with the requirements and conditions of the Planned Unit Development Special Permit Site Plan Review, and Flood Hazard District Special Permit Decision issued by the Salem planning board on August 1, 2013 and the Decision by the Salem zoning board of appeals on June 28, 2013 and to review and approve any modifications or revisions to the construction or operation of the proposed facilities as are otherwise subject to their jurisdiction ; and
3) that the construction and operation of the proposed facilities at said location shall be exempt from the requirements of G.L. c. 111, Section 142 A-J, c. 21C, Section 4 and 6, and c. 21E, Section 6, provided, however, that the department of environmental protection retain authority to implement and enforce compliance with requirements and conditions of the proposed air quality approval and draft prevention of significant deterioration permit issued by the department of environmental protection in Transmittal No. X254064, Application No. NE-12-022 and to review and approve any modifications to the construction or operation of the proposed facilities as are otherwise subject to its jurisdiction; and
4) that the construction and operation of the proposed facilities at said location shall be exempt from the requirements of G.L. c. 91, provided, however, that the department of environmental protection shall retain authority to implement and enforce compliance with requirements and conditions of the decision on variance request and written determination issued by the department of environmental protection in waterways file no. W-13-3886-N and to review and approve any modifications to the construction and operation of the proposed facilities as are otherwise subject to its jurisdiction; and
5) that the developer of the proposed facilities is hereby granted a composite of all state and local permits, approvals and authorizations that would otherwise be necessary for the construction and operation of the proposed facilities at said location with the same effect as a certificate granted pursuant to G.L. c. 164, §69K1/2.
This section and the exemptions granted hereunder shall not apply to any other proposed uses or facilities at said location.