Pennsylvania needs new gas pipelines
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Two Eastern Pennsylvania gas explosions in early 2011 resulted in a total of six deaths, several injuries and the destruction of homes. A town in eastern Ohio, about 70 miles from Pittsburgh, this year also was rocked by a gas explosion, but thankfully no one was injured.
While in each instance good maintenance and leak-detection methods were practiced, these recent events illustrate the need for natural gas companies to become more vigilant in upgrading and modernizing the gas distribution system underneath our communities.
The Pennsylvania Public Utility Commission has determined that older cast iron and bare steel pipes account for the vast majority of gas leaks. The commission estimates there are 3,600 miles of cast iron and 9,000 miles of bare steel pipes in Pennsylvania, and it recommends that these pipes, most of which are from the World War II era, be replaced by more durable plastic lines.
Older pipes are more susceptible to pressure changes as the ground freezes and thaws in the winter and spring than flexible plastic pipes. In addition, cast iron and unprotected steel pipes can experience corrosion from water vapor in the gas they carry. As production in the Marcellus Shale grows, corrosion from water likely will increase. Natural gas from Pennsylvania wells has a higher water concentration than natural gas from the interstate pipelines.
Faced with the need to replace aging water pipelines, state lawmakers 15 years ago gave water companies the authority to gradually raise customer rates to pay for necessary improvements. The policy change has allowed water companies to accelerate the replacement of old pipes by allowing them to recover these investments in a timely manner.
Now is the time to give natural gas companies in Pennsylvania the same ability.
Pennsylvania's natural gas companies currently spend millions annually on repairing and replacing pipes. However, in a February 2010 report, the PUC cited an estimate that it could cost $13 billion over 20 years to replace aging cast iron and bare steel pipes in Pennsylvania. In order to fund these huge investments, gas companies need a process -- similar to the one for water companies -- to recoup them in a timely manner rather than waiting years and even decades.
Under the current process, natural gas companies must file a base rate increase request with the PUC to recoup several years of investments in the pipeline system. That delay between the investment and the recovery of funds often forces companies to seek a large rate increase to recover tens of millions or hundreds of millions in repairs.
The PUC supports a "Distribution System Improvement Charge" for natural gas companies in Pennsylvania. This would allow the companies to incrementally raise rates to pay for replacing their aging distribution pipelines. The PUC would conduct an annual review of these rate increases, but the companies would not need advance PUC approval before replacing pipes.
The increased investment created by such a change would not only enhance our distribution system, but it also would improve our economy by creating thousands of jobs for Pennsylvanians.
The time has come for the General Assembly to give natural gas companies the ability to modernize its pipeline system by allowing them to accelerate their replacement of old pipes in the most efficient manner.
It makes sense for our customers. It makes sense for our economy. It makes sense for our future.
First Published May 11, 2011 12:00 am