1. Smart Modernization: Infrastructure Replacement & Expansion Update
Maryland-District of Columbia Utilities Association
2016 Annual Fall Conference

2. Natural Gas Records in 2015 Domestic Annual Production – 27.1 Tcf
Proved Reserves – 368 Tcf (dry)
Undiscovered Gas Resources – more than 2,500 Tcf
Domestic Natural Gas Consumption – 27.4 Tcf
Natural Gas Consumed for Power Gen – 9.4 Tcf
Working Gas in Underground Storage – 4,009 Bcf
Sources: Bentek Energy, Energy Information Administration, Potential Gas Committee

3. Safely transported Across the Country
Natural gas pipelines, are an essential part of the nation’s infrastructure. Transportation by pipeline is the safest form of energy delivery in the country.
Natural gas utilities spend $22 billion annually to help enhance the safety of natural gas distribution and transmission systems.
Interstate Pipelines
Intrastate Pipelines

4. Regulatory Oversight
AGA supports continuous improvements to the safe delivery of natural gas through:
There is significant oversight and regulation focused on the natural gas industry to help ensure public safety. The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) establishes federal safety standards for pipelines, and PHMSA partners with state pipeline safety agencies on inspections and enforcement of intrastate pipelines. Individual states can regulate intrastate pipeline systems above and beyond federal requirements, and there are hundreds of state-specific pipeline safety regulations currently in place.
Information sharing among emergency responders and the public that effectively informs and enhances pipeline safety
Research and development of safety-enhancing technologies
Collaboration with key stakeholders
Advocating for the effective enforcement of “Call 811”
Conducting forums for the industry that facilitate the sharing of leading practices

5. Pipeline Safety Regulations
PHMSA’s
Other Initiatives:
DOT Pipeline Safety & Hazardous Materials Administration (PHMSA)
Regulates gas utilities under 49 C.F.R. Part 192
Significant number of new requirements on the way
More than 80 mandates from Congress and recommendations from NTSB, GAO, and the OIG
2016 PIPES Act
PHMSA’s Proposed Transmission Rule
Transmission Integrity Management Program (TRIMP)
Distribution Integrity Management Program (DIMP)
Control Room Management
Damage Prevention
Land Use Planning
Public Awareness
Emergency Preparedness
Pipeline safety regulated and overseen by PHMSA.
There are a significant number of programs underway and new rules and requirements are on the way.

6. Infrastructure Investments
For Economic Renewal
America’s natural gas utilities invest billions in our nation’s natural gas 2.4 million miles of pipeline infrastructure — the most extensive, integrated, safe and reliable in the world — which provides access to homes and businesses across the nation. Working with governors, legislators and state regulators around the country, utilities are developing innovative models for making these capital investments possible. Natural gas utilities spend more than $22 billion annually to help enhance the safety of natural gas distribution and transmission systems and to upgrade systems and expand service so more Americans can access this foundation fuel.

7. States with Accelerated Infrastructure Replacement Programs
The overall trend is positive
States address this issue differently
The basis for these decisions is always just and reasonable rates for consumers
There is a growing effort underway to accelerate the replacement of pipelines no longer fit for service, and AGA and its members are committed to that effort; That work is being facilitated by regulatory and legislative policies that establish innovative rate mechanisms which allow for accelerated replacement and modernization of natural gas pipelines.
40 states and the District of Columbia have some sort of accelerated infrastructure program (trackers, surcharges, etc.).
According to DOT’s website, over the last 10 years, 10,000 miles of main and 33,000 services of cast iron have been replaced. The numbers are 19,000 miles of main and 2.2 million services for bare steel.
A rate stabilization mechanism allows utilities to recover whatever costs they incurred in the previous year in current rates.  In doing so, utilities can choose the speed in which they replace their pipe (within reason) and recover any costs associated with that replacement.  When we circulated the presentation, a number of members indicated that they’d accelerated their replacement schedules and recovered their costs through these mechanisms.

8. Remaining Materials in States without Mechanisms
Idaho and Vermont have finished replacing their cast iron and bare steel. 
Wisconsin has finished replacing its cast iron and bare steel main and has a limited quantity of bare steel services remaining.
Other companies/states on this list are on the verge of completing their cast iron and bare steel replacement.
State
Main -Steel Unprotected Bare (Miles)
Main - Cast/Wrought Iron (Miles)
Estimated Miles of Services -Steel Unprotected Bare
Estimated Miles of Services - Cast/Wrought Iron AK
7.5
0.00 DE
6.18
76.3
8.13 HI
101.8
83.27 ID MT
3.34
0.63 ND
0.14 NM 5
0.55
0.0 SD
0.068
1.92 VT WI
0.04
 Totals
117.19
Source: DOT Data

9. System Modernization Has Been a Decades Long Process and Will Continue
Source: Department of Transportation

10. “Smart Modernization”
Infrastructure replacement programs, if designed and coupled properly, provide the opportunity to put new technology in the ground which could allow for greater pipeline capacity and pressure in a given area.
With greater capacity, utilities are better positioned to expand to serve more customers.

11. States with Infrastructure Expansion Programs
39 states presently have or are considering an innovative infrastructure expansion program or policy
States with Infrastructure Expansion Programs

12. As a Result, Emissions Have Declined Even as the System Grows
Today, emissions off the distribution system are 0.1% as a percentage of total natural gas production.
Source: AGA Analysis based on Department of Transportation data and EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks *Excludes Reductions from Voluntary Programs

13. Key Takeaways
There is a record and flexible supply of natural gas in the U.S.
Significant modernization and expansion efforts are underway.
The industry has always considered safety and reliability its top priority.
Working collaboratively with NARUC and individual commissions, state legislators and governors. LDCs have been modernizing pipelines at a record pace.
This work has now extended to a concerted effort to expand infrastructure into unserved and underserved areas.
Investing in the infrastructure makes sense given the critical role natural gas plays today and in the future in providing safe, reliable, low-cost and environmentally friendly energy to the consumer.

14. Find Us Online Lori Staffin Traweek Chief Operating Officer
Lori Staffin Traweek
Chief Operating Officer
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