NGA ISSUE BRIEF: Accelerated Infrastructure Replacement



Accelerated repair and replacement of more "leak-prone" natural gas distribution system components is an issue of growing interest.

The Pipeline and Hazardous Materials Safety Administration (PHMSA) of the U.S. Department of Transportation is urging action on repairing older, more leak-prone systems. In March 2012, PHMSA published an advisory bulletin to owners and operators of natural gas cast iron distribution pipelines and state pipeline safety representatives - highlighting "the need for continued safety improvements to aging gas pipeline systems." This advisory bulletin, among other points, urges owners and operators to conduct a comprehensive review of their cast iron distribution pipelines and replacement programs; and accelerate pipeline repair, rehabilitation and replacement of high-risk pipelines. It also requests state agencies to consider enhancements to cast iron replacement plans and programs.

In June 2013, announcing his Administration's Climate Action Plan, President Obama said that "investments to build and upgrade gas pipelines will not only put more Americans to work, but also reduce emissions and enhance economic productivity."

Benefits of Accelerated Infrastructure Replacement

An accelerated program will enable the utilities to address system upgrades in a comprehensive and timely manner.

An accelerated improvement program will provide the utility with the capability to replace and upgrade older system components on a broader and faster scope. It will enhance system safety, as well as reduce emissions through leak-prone systems.

U.S. PHMSA, March 2012, advises natural gas owners and operators to conduct a comprehensive review of their cast iron distribution pipelines and replacement programs; and accelerate pipeline repair, rehabilitation and replacement of high-risk pipelines. It also requests state agencies to consider enhancements to cast iron replacement plans and programs.

The advantages of an accelerated replacement program are:
  • Replacement of aging and more leak-prone infrastructure in a more comprehensive and timely manner
  • Reduction of leaks on a broader scale rather than more piecemeal approach
  • Reduction of methane emissions from more leak-prone system components (i.e., older bare steel and cast-iron segments)
  • Elimination of lag between when the capital investment is made and recovery in rates
  • Enhanced system integrity
  • Enhanced system safety
  • Increase in jobs for work crews resulting from capital commitment and work scope
  • Better utilization of operations and maintenance funds and cost stabilization.

Northeast Efforts

The Northeast states have generally older pipeline systems than the national average and consequently higher averages for "leak-prone" pipe, specifically, cast or wrought iron and bare steel. The level of this material is declining in the region as utilities replace older components, but more needs to be done.

Utilities are working with state regulatory agencies to develop programs to enable accelerated replacement. In July 2013, the National Association of Regulatory Utility Commissioners (NARUC) adopted Resolution GS-1, "Resolution Encouraging Natural Gas Line Investment and the Expedited Replacement of High-Risk Distribution Mains and Service Lines." The Resolution encourages States to fully explore, examine, and implement alternative rate recovery rate mechanisms that will accelerate the modernization, replacement and expansion of the nation's natural gas pipeline systems. The resolution also encourages regulators and industry to consider sensible programs aimed at replacing the most vulnerable pipelines as quickly as possible along with the adoption of rate recovery mechanisms that reflect the financial realities of the particular utility in question.

Both these topics have been of central importance in the Northeast region in recent years, owing to growing interest in conversions and new services, and the need to replace older system infrastructure in many areas. In June 2014, for example, the Commonwealth of Massachusetts enacted legislation ("H4164") that includes provisions for both accelerated infrastructure replacement by utilities, as well as encouraging utilities to submit ideas to the state regulatory agency regarding system expansion. In April 2015, the New York State Public Service Commission, as part of its continuing efforts to strengthen the safety and reliability of the State's extensive natural gas distribution network, reduce climate change emissions, and manage consumer costs, commenced a proceeding to accelerate removal and replacement of aging natural gas infrastructure that could be prone to leaking.

PHMSA notes that approximately 97 percent of natural gas distribution pipelines in the U.S. are now made of plastic or steel. The remaining 3 percent is mostly iron pipe.

The averages for distribution main in the Northeast composed of cast/wrought iron or bare steel as of 2016 were: CT, 18.1%; ME, 3.5%; MA, 21.6%; NH, 5.9%; NJ, 16.1%; NY, 19.1%; PA, 20.2%; RI, 31.1%; and VT, 0%.

For Further Information:

PHMSA's Pipeline Replacement Information Portal

U.S. Dept. of Energy report on Gas LDC Infrastructure Modernization Programs, Jan. 2017