The Public Utility Commission Wednesday approved the long-term infrastructure improvement plan (LTIIP) for UGI Utilities, Inc. – Gas Division (UGI).
“One of the main criteria that the Commission must use in judging the adequacy of an LTIIP is whether the plan accelerates the replacement of aging infrastructure,” said PUC Chairman Robert F. Powelson in a motion. “A thorough review of UGI’s LTIIP shows that proposed replacement schedule maintains the level set forth in the settlement and is an acceleration over their historic replacement schedule. As such, I believe that approval of the LTIIP is warranted.”
The Commission voted 5-0 to approve the LTIIP petition.
UGI’s LTIIP is a five-year plan to replace its cast iron mains within 14 years and its bare steel mains within 30 years of March 2013. UGI expects to pay $51.2 million each year of the LTIIP from 2014 through 2018. This includes cast iron and bare steel main replacement and service line replacements. According to the LTIIP, UGI will replace gas service lines on a planned basis in conjunction with the replacement of the mains to which they are connected.
Materials used for natural gas pipelines have evolved and require replacement as they age, according to UGI’s petition. Cast iron was used in the oldest portions of UGI’s system, but it can be vulnerable to breakage from ground movement.
The industry transitioned to bare steel and wrought iron piping until the 1960s, but because bare steel is susceptible to corrosion, the industry again transitioned to plastic piping. Some plastic materials used early in this process have shown a vulnerability to stress cracking.
According to UGI, the company has already accelerated capital investment in infrastructure replacement as a result of the commitments made in a 2012 Settlement Agreement regarding a 2011 fatal natural gas explosion in Allentown, Pa.
In addition to replacing first-generation mains made of these materials, UGI plans to install excess flow valves; replace and relocate meters; and replace risers, meter bars, regulator stations and service regulators.
All facilities included in the LTIIP are considered eligible for a distribution system improvement charge (DSIC). Under the settlement, UGI cannot file for a DSIC until March 2015.
UGI provides natural gas service to about 356,000 customers in Eastern and Central Pennsylvania. Its system contains approximately 5,423 miles of natural gas distribution mains and 117 miles of natural gas transmission mains.
On Feb. 14, 2012, Gov. Corbett signed Act 11 of 2012, which allows jurisdictional water and wastewater utilities, natural gas distribution companies, city natural gas distribution operations and electric distribution companies to petition the Commission for approval to implement a DSIC.
Under the law, the DSIC must be designed to provide for "the timely recovery of the reasonable and prudent costs incurred to repair, improve or replace eligible property in order to ensure and maintain adequate, efficient, safe, reliable and reasonable service.”
Act 11 requires and provides for, among other things, utilities to file the plans as part of any action to establish a DSIC to recover reasonable and prudent costs incurred to repair, improve or replace certain eligible distribution property that is part of a utility’s distribution system.
As of Jan. 1, 2013, public utilities could petition the Commission for approval to establish a DSIC. The petition must contain the following elements: 1) initial tariff; 2) testimony and exhibits to demonstrate that the DSIC will ensure the provision of adequate, efficient, safe, reliable and reasonable service; 3) long-term infrastructure plan; 4) certification that a base rate case has been filed within the past five years; and 5) any other information required by the Commission.
The petition must demonstrate that granting the petition and allowing the DSIC to be charged will accelerate the replacement of infrastructure.
For more information, visit the PUC’s DSIC Act 11 webpage.
