Southweat Gas Pipeline Safety Enhancement Plans

Background

In June 2011, the CPUC ordered all California natural gas transmission operators to develop and file a Natural Gas Transmission Pipeline Comprehensive Pressure Testing Implementation Plan (Implementation Plans). On August 26, 2011, Southwest Gas submitted its Implementation Plan, proposing safety improvements for its two natural gas transmission systems in California:

  • Victor Valley Transmission System: $3.75 million to pressure test or $7.1 million to replace, across 7.1 miles of transmission pipe.
  • Harper Lake Transmission System: $250,000 for installation of remote shut-off valves, across 8.3 miles of pipe.

On August 5, 2013, the CPUC issued a Proposed Decision which would require Southwest Gas to enact its proposed Implementation Plan and would approve the utility’s recovery of 1) actual capital cost and expense of replacing the Victor Valley system (less $3.75 million due to Southwest Gas imprudence); and 2) $250,000 for the Harper Lake remote shut-off valves.

 

CPUC FINAL DECISION

On October 17, 2013, CPUC’s Final Decision requires Southwest Gas to enact its proposed Implementation Plan. The cost of replacing the Victor Valley system will be shared between ratepayers and shareholders, and costs of shut-off valves will be included in revenue requirement.

 

 Public Advocate Office's Policy Position

The Public Advocates Office (the Office) supports the CPUC’s June 9, 2011 Decision to implement important safety improvements to Southwest Gas’s pipeline system. However, the Office recommended that Southwest Gas shareholders, and not ratepayers, should be responsible for the costs associated with the Implementation Plan given that records should have been kept for all pipeline installed and hydro tested after 1935 when it became an industry standard practice. Accordingly, where pipeline installed prior to 1955 must be replaced due to absent pressure test documentation, shareholders should bear the costs of such replacement.

See the Office’s June 15, 2012 Brief.

The office generally supports the CPUC’s August 5 Proposed Decision, with the following modifications:

  •  Clarify cost responsibility regarding the Victor Valley Transmission System to ensure that Southwest Gas’s shareholders pay their fair share of the company’s imprudent recordkeeping.
  • Treat ratemaking for Harper Lake system as a capital investment made between general rate cases and exclude from rate base until the next general rate case.

See the Office’s September 3, 2013 Reply Comments on the Proposed Decision.

See the Office’s November 20, 2013 Rehearing Request on the Final Decision, which has been denied by the CPUC on February 28, 2015.

 

Proceeding Status

See the Proceeding docket.