Case Background
On
April 12, 2017, Florida City Gas (FCG or Company) filed a petition requesting Commission
approval of tariff modifications to address the installation of excess flow
valves (EFVs) in order to comply with new federal guidelines. FCG is a natural
gas local distribution company subject to the Commission’s regulatory
jurisdiction under Chapter 366, Florida Statutes (F.S.).
Effective April
14, 2017, a federal pipeline safety rule (49 C.F.R. § 192.383 (2017)) with
which FCG must comply was amended by the Pipeline and Hazardous Materials
Safety Administration (PHMSA). As a result of PHMSA’s revisions to the
federal rule, FCG is seeking to modify Tariff Sheet Nos. 1A and 22B. The
proposed tariff sheets are included as Attachment A to this recommendation. Staff
issued a data request to the Company for which the responses were received on
May 4, 2017. Staff received the Company’s responses to follow-up questions on
May 11, 2017, which staff placed in the docket file.
The Commission
approved a similar petition by Peoples Gas System at its May 4, 2017 Agenda
Conference (Docket No. 170071-GU). Staff placed the relevant rulemaking
record as published in the Federal Register in the Docket No. 170071-GU file for
informational purposes. The Commission has jurisdiction in this matter pursuant
to Sections 366.03, 366.04, 366.05, and 366.06, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve FCG's proposed modification
to Tariff Sheet Nos. 1A and 22B relating to the Company's Excess Flow Valves
tariff?
Recommendation:
Yes, the Commission should approve FCG’s proposed modification
to Tariff Sheet Nos. 1A and 22B relating to the Company’s Excess Flow Valves
tariff, as reflected in Attachment A, effective June 5, 2017. (Guffey)
Staff Analysis:
The proposed tariff revision
would allow FCG to be reimbursed by customers who request the installation of
an EFV on an existing service line pursuant to the new PHMSA rule discussed
below.
PHMSA Changes and Pipeline Safety Rules
FCG is required by PHMSA to
comply with Federal Rule 49 C.F.R. § 192.383 (2017). As originally adopted, the
rule required the installation of an EFV on any new or replaced service line
serving a single family residence after February 12, 2010, subject to certain
exceptions. An EFV is a device designed to shut off automatically when the
natural gas flow exceeds certain limits, such as when a service line is damaged
due to excavation or other activities. Thus the EFV provides safety benefits by
limiting the risk of escaping gas due to third party damage or a pipe failure.
EFVs do not protect against gas leaks occurring in piping behind the customer’s
gas meter. Most service lines serving non-residential customers deliver in
excess of 1,000 standard cubic feet per hour and are fitted with curb valves
that are shut off manually.
PHMSA adopted an amendment to 49
C.F.R. § 192.383 (2017), which took effect on April 14, 2017. Among other
things, the rule revisions, subject to certain exceptions, provide for the
following: (a) “operators” such as FCG are required to notify customers of
their right to request installation of an EFV, (b) if a service line customer
requests an EFV installation, FCG must install the EFV at a mutually agreeable
date, and (c) the question of who bears the cost of the requested EFV
installation is left to the “operator’s rate-setter.”
These three key elements are discussed individually below.
Regarding customer notification,
PHMSA determined that notification through broad electronic means, including
website postings, was acceptable. In
response to staff’s data request, FCG provided the information that was posted
on the Company’s website and a copy of the bill insert containing EFV
information. The website posting includes information related to the function
and benefits of an EFV and answers to “Frequently Asked Questions” regarding
EFVs, including potential cost estimates for EFV installations and a point of
contact for interested customers.
Regarding EFV installation, FCG
stated that the Company installs EFVs on new service lines at a cost of
approximately $13 to $137. However, FCG stated that it is considerably
different in the case of an existing customer who requests an EFV installation
on a line that may have been installed many years before. FCG stated that the
cost to have an EFV installed on an existing line is between $2,300 and $4,000. This
general estimated range includes the cost of crew members, hours, excavator,
other equipment and materials, landscaping, service upsize and taxes. The
actual cost will be determined after a site visit and it could be less or more
than the above stated general estimated cost.
The rulemaking record published
in the Federal Register also devoted considerable discussion to the appropriate
regulatory entities which would be responsible for determining who should pay
for the costs of EFV installation on existing service lines. PHMSA considered
stakeholder comments and ultimately “left the question of who bears the cost of
installing EFVs on service lines not being newly installed or replaced to the
operator’s rate-setter.” FCG
states that the Commission is the Company’s rate-setter.
Conclusion
Based upon the information
provided by FCG and a review of the PHMSA rulemaking record published in the
Federal Register, staff agrees with FCG’s assertion that the Commission is FCG’s
“rate-setter” for purposes of the federal rule. Staff also believes that it is
appropriate for customers who request the installation of EFVs on existing
service lines to bear the cost of the modifications and that such costs should
not be subsidized by the general body of ratepayers. Therefore, staff
recommends that the Commission approve FCG’s proposed tariff modifications to
Tariff Sheet Nos. 1A and 22B relating to the Company’s EFVs tariff, as
reflected in Attachment A, effective June 5, 2017.
Issue 2:
Should this docket be closed?
Recommendation:
If Issue 1 is approved and a protest is filed within
21 days of the issuance of the order, the tariffs should remain in effect, with
any revenues held subject to refund, pending resolution of the protest. If no
timely protest is filed, this docket should be closed upon the issuance of a
consummating order. (DuVal)
Staff Analysis:
If Issue 1 is approved and a protest is filed within
21 days of the issuance of the order, the tariffs should remain in effect, with
any revenues held subject to refund, pending resolution of the protest. If no
timely protest is filed, this docket should be closed upon the issuance of a
consummating order.
