New Hampshire’s aged infrastructure contains a limited amount of aged, worn and leak prone pipelines comprised primarily of bare steel and cast iron. In 1990, when the New Hampshire Public Utilities Commission recognized that leak prone pipes required formal, systematic replacement, the Commission ordered an accelerated bare steel replacement program for one of our gas operators. Since that time the Commission has undertaken numerous safety related directives in many proceedings involving jurisdictional gas utilities containing cast iron and/or bare steel.
See Commission Orders Nos. 22,386 (1996); 23,333 (1999); 23,470 (2000); 24,777 (2007); 24,906 (2008); 24,996 (2009); 25,127 (2010); 25,244 (2011); 25,370 (2012); 25,378 (2012); 25,530 (2013); 25,684 (2014); 25,798 (2015); and 25,918 (2016). (All Commission Orders are available for review and located on the Commission website at http://www.puc.nh.gov/Regulatory/orders.htm.
In 1994, 353 miles, or 27% of New Hampshire’s distribution pipelines contained cast iron or bare steel. Through enhanced recovery mechanisms authorized by the Commission, that inventory has been trimmed by approximately two-thirds, to less than 130 miles with one operator projected to remove all bare steel by 2017 and another operator projected to remove all cast iron and bare steel by 2024. Presently, worn pipelines and leak prone pipelines represent only 6.8 % of the distribution mains in New Hampshire. More importantly, significant quantities of bare steel services that are directly connected to customers’ homes and businesses have been steadily replaced with the latest polyethylene pipelines. The Commission’s Safety Division has been extensively involved with developing customized approaches applicable to New Hampshire gas distribution systems for determining which pipelines are subject to the highest pipeline safety risks. This requires, among other things, reviewing operators’ data integrity methodologies and algorithms used for weighting worn pipelines and determining priorities, requiring submission of physical samples, reporting on selected candidates for verification purposes, tracking associated expenses and incorporating replacements into inspection monitoring schedules.
Presently, five gas operator inspection units have either cast iron, bare steel or a combination of both remaining within their distributions. To address this potential safety risk, the New Hampshire Public Utilities Commission has implemented customized initiatives to spur replacement of this aged infrastructure. There are two programs in place for two of the three operators that are similar but structurally different. Despite the continued focus by the Safety Division, New Hampshire utilities, collectively, as of December 31, 2015 ranked the ninth worst nationally in terms of percentage of pipelines containing cast iron and 30th worst in the nation in terms of percentage of pipelines containing bare steel.
Northern Utilities, Inc.
Northern Utilities, Inc. within a settlement agreement approved by Commission Order 24,906 in DG 08-048 agreed to have all remaining bare steel mains in New Hampshire replaced by 2017. The Commission did not require an annual submittal of proposed mains nor did it allow for surcharge recovery. There was no acceleration of bare steel replacement as it was deemed a continuation of the existing rate of replacement by predecessor companies but with a final date of replacement. It did not include cast iron mains which Northern Utilities had a minimal amount remaining within its system.
Commission Order 25,563 in DG 13-086 allowed for two step adjustments to rates for eligible capital investments that were part a Targeted Infrastructure Rate Adjustment. Northern Utilities’ New Hampshire Replacement program was one of three eligible type infrastructure adjustments that could be made. The New Hampshire Replacement program was expanded to include cast iron mains as well as bare steel mains and costs of associated services. The initial step adjustment was included within the Order 25,563.
Commission Order 25,779 in DG 15-083 approved the second step adjustment to rates for the Targeted Infrastructure Related Improvements.
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EnergyNorth Natural Gas d/b/a Liberty Utilities
Commission Order 25,370 approved a settlement agreement in DG 11-040 that implemented a Cast Iron Bare Steel (CIBS) Replacement Program. This updated and replaced a former program that was initiated by Commission Order 24,777 in DG 06-107. The current programs allows for annual revision of rates for certain allowable capital expenditures associated with an annual replacement program of selected cast iron and bare steel pipeline segments within EnergyNorth’s gas distribution systems. The program allows for expedited recovery of four specific expenditures:
- unprotected bare steel main replacement, as determined by the evaluation and selection process;
- cast iron main replacement as determined by the evaluation and selection process;
- cast iron or bare steel main replacement candidates requested by field operating personnel; and
- bare steel services replaced as a result of a segment of bare steel main or cast iron main that is selected.
It also limits annual cost recovery to those above a $500,000 threshold and defers capital expenditures of associated work that is often performed during replacement program. Eight items are specifically excluded from the CIBS rate adjustment but eligible for cost recovery using traditional rate making procedures, they are:
- costs of moving inside meters to outside;
- costs of reconnecting existing plastic services or existing coated steel services from cast iron mains or bare steel mains to the newly installed replacement main;
- costs of any mains replaced made of polyethylene or steel that have a protective coating;
- costs of any mains that are abandoned;
- costs of coated steel mains that “act as bare steel mains” such as poorly coated steel mains or disbonded steel mains, unless approved by the Safety Division;
- incremental costs of upsizing with the exception of low pressure 3 inch nominal diameter pipelines; and
- carryover costs in aggregate exceeding 5% of the approved estimated total expenditures under the CIBS program for the construction year, unless approved by the Safety Division. Such carryover costs include items such as restoration costs not incurred during the construction year.
- Replacements made under the Cast Iron Encroachment Policy are not eligible for accelerated rate recovery in the Cast Iron/Bare Steel Program unless a special circumstance is approved by the Safety Division.
Each construction season Liberty Utilities undertakes an annual review of the performance of its distribution system as it relates to the integrity of its cast iron and bare steel pipelines. This review provides: (1) a detailed analysis of leak activity over the preceding ten years on the bare
steel and cast iron gas mains, and (2) an evaluation of which main segments represent the highest priority segments for replacement. Consideration is given to the age of the main, the
date the leak(s) occurred, leak classification, type of leak, number of clamps used in leak repair, condition of main when repaired, specific leak location, building types in the area of the main segment and quantity of bare steel services attached to the potential segment to be replaced.
Liberty Utilities is required to provide the Safety Division with actual cutouts of the worst section within any bare steel main segment replaced prior to reconciling any cost adjustments for associated construction season. Cutouts are required to be approximately 12 inches to 24 inches in length. They are also required to provide a written report accompanying the actual cutouts in that includes: photographs the replaced bare steel segment; a general description of the condition of the pipe; the street address from which it was taken; age of material; original wall thickness; measured depth of deepest pit of the cutout; operating pressure of replaced pipe; pH of soil condition of cutout surrounds; results of testing for microbiological acid producing bacteria (APB) and sulfate reducing bacteria (colonies per ML); and identification of the threshold of high bacteria counts. A power point of the bare steel segments removed to date can be found here.
Since 2009 EnergyNorth Natural Gas has replaced approximately 800 bare steel services and approximately 26 miles of leak prone distribution main under the CIBS program while another 21 miles of leak prone distribution main have been replaced as a result of municipal projects.
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