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HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 3873


The Commonwealth of Massachusetts




House of Representatives, January 27, 2014.

BILL #:  H3765

BILL STATUS:  Favorable with Amendment





For the committee,


HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 3873

[SPONSOR], a [PETITION] [BACKING TEXT].  Senate Ways and Means. 


The Commonwealth of Massachusetts



In the Year Two Thousand Fourteen



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.  Section 105A of chapter 164 of the General Laws, as appearing in the 2012 Official Edition, 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 2. Said chapter 164 of the General Laws is hereby further amended by inserting the following 2 sections:-

              Section 144.  (a) There shall be established uniform natural gas leak classification standards 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 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.  Grade 2 leaks shall be repaired or cleared within 12 months from the date the leak was classified. The frequency of reevaluation shall be determined by the location and magnitude of the leakage condition; provided, however, 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. Grade 3 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 municipal or state public safety official may request a reevaluation of a Grade 3 leak prior to the next scheduled survey, or sooner than 12 months of the date last evaluated, if there exists a reasonable belief on behalf of the official that the Grade 3 leak poses a threat to public safety.

              (c) Upon the undertaking of a significant project involving the repair or paving of a public way exposing confirmed natural gas infrastructure, a municipality or the commonwealth shall submit written notification of the project to a gas company.  The gas company shall survey the project area for the presence of Grade 1 or Grade 2 leaks and set repair and replacement schedules for any known or newly detected Grade 1 or Grade 2 leaks. A gas company may repair any known or newly detected Grade 3 leaks at its discretion or after consultation with the municipality or the commonwealth.  The repair and replacement schedule of Grade 1 and Grade 2 leaks shall be provided to the municipality or the commonwealth and shall include a notification of the presence of any Grade 3 leaks that were detected during the survey. 

              (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 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) On or before March 1, each gas company shall report annually to the department the location of each Grade 1, Grade 2 and Grade 3 leak existing as of the date of the report, the date each Grade 1, Grade 2 and Grade 3 leak was classified, and the dates of  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. A gas company shall specify any reclassification of previously identified leaks in its annual report. 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 applicable filing requirements with the department.

              SECTION 3. Said chapter 164 of the General Laws is hereby further amended by inserting the following section:-

              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 January 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 solely for the purpose of serving 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; and (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 construction 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 unaccounted for gas. 

              (c) Any plan filed with the department shall include, but not be limited to, (1) eligible infrastructure replacement of mains, services, meter sets and other ancillary facilities composed of non-cathodically protected steel, cast-iron and wrought iron, prioritized to implement the federal pipeline safety distribution integrity management plan annually submitted to the department and consistent with 49 C.F.R. 192; (2) an anticipated timeline for the completion of each eligible infrastructure replacement project; (3) the estimated cost of each project; (4) rate change requests; (5) a description of customer benefits under the plan; and (6) any other information the department considers necessary to evaluate the plan.

              (d) Provided that a gas company files a plan on or before October 31 of each calendar year for the subsequent construction year, the department shall review the plan within 6 months. The plan shall be effective as of the date of filing, pending department review, unless a new plan is filed by the gas company or under the direction of the department within the 6 month review period. The department shall consider the costs and benefits of the plan, including, but not limited to, impacts on ratepayers, reductions of 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.

              (e) If a plan in in compliance with this section and is determined by the department to reasonably accelerate eligible infrastructure replacement and provide public safety benefits, the department shall issue preliminary acceptance of the plan, in whole or in part.  A gas company shall then be permitted to begin recovery of the estimated costs of projects included in the plan commencing on May 1 of the year following the initial filing and collect any revenue requirement, including depreciation, property taxes and return associated with the plan.

              (f) On or before May 1 of each year, a gas company shall file final project documentation to demonstrate substantial compliance with the plan and that project costs were reasonably and prudently incurred. The department shall investigate project costs within 6 months of submission and shall approve and reconcile the authorized rate factor, if necessary, upon a determination that such costs were reasonable.  Annual changes in the revenue requirement eligible for recovery shall not exceed 1.5 per cent of the company’s most recent calendar year total firm revenues, including gas revenues attributable to sales and transportation customers. Any revenue requirement approved by the department in excess of the cap may be deferred for recovery in the following year, subject to the cap.

              (g) All rate change requests made to the department pursuant to an approved plan shall be filed annually on a fully reconciling basis.  A gas company shall file reconciliation adjustment rates, which shall be subject to investigation by the department under subsection (f) to determine whether the company has over-collected or under-collected its requested rate adjustment.  The reconciliation adjustment rates shall become effective pursuant to department order pending the investigation pursuant to subsection (f).

              (h) 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 failure to substantially comply with a plan or failure to properly manage project costs.             

              SECTION 4. On or before January 1, 2015, the department of public utilities shall permit a gas company to design and offer programs to customers which increase the availability, affordability and feasibility of natural gas service for new customers.

              (a) As part of the department’s approval of a program and prior to implementation, the department shall: (1) review each gas company’s process for determining if a main or service extension is economically feasible; (2) review each company’s contribution in aid of construction policy and methodology; and (3) allow for alternative 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, however, that natural gas distribution system expansion surcharges, except alternative rate mechanisms, shall not unreasonably 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) Gas companies may petition the department independently, or in coordination with the department of energy resources, 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 issue a decision on gas company expansion programs filed with the department pursuant to subsection (a) within 8 months of the filing date. Gas companies shall file appropriate tariff changes and otherwise implement any gas expansion programs or policies approved under this section. 

              (d) The department shall consider 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 including impacts to uncollectible costs.

              SECTION 5. Section 3 shall take effect on October 1, 2014.

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