TOPEKA — Thousands of miles of pipe carrying natural gas in Kansas is deteriorating, and three Kansas gas companies went before the KCC on Wednesday to make the case for an accelerated program and financing to replace aging and obsolete infrastructure.
Atmos Energy, Black Hills Energy and Kansas Gas Service officials brought samples of corroded pipe to KCC commissioners to highlight their request for additional ways to fund pipeline replacement.
Hearings as part of a general investigation docket opened in March were Wednesday and today, allowing the KCC to hear evidence from companies about the need to replace the pipes and to consider funding for that work.
Though all three companies testified their gas systems were safe — a fact supported by federal data showing gas incidents have decreased or flatlined in recent years — Atmos and Black Hills expressed dissatisfaction with the rate at which they are able to replace obsolete pipe under their current rate structure.
“At the current pace, it will take 187 years before all the obsolete pipe on the Atmos system is replaced,” said Jim Jeffries, attorney for Atmos.
The gas companies have been working with KCC staff, consulting with each other, and working with Citizens Utility Ratepayer Board staff to come up with a plan that would meet needs for getting rid of the obsolete pipes and ensure safety of the Kansas system.
“Clearly, there’s a need to accelerate the replacement of obsolete and aging pipelines and infrastructure, to reduce the risk of catastrophic events occurring in Kansas,” said James Flaherty, attorney for Black Hills.
That company could shorten its pipeline replacement program from 74 years to 31 years.
Company officials highlighted three primary options the companies and the commission have for funding an accelerated replacement program.
• The GSRS, or the General Service Reliability Surcharge, a charge already in use by the companies that is capped by the Kansas Legislature at a rate that companies consider too low to accelerate replacement.
• Incremental increases in capital expenditure by the companies.
• A SIP, or System Integrity Program, an alternative rate mechanism that would be an additional charge for customers designed to double the amount of money companies receive through the GSRS. An estimate presented Wednesday said a SIP could be as little as $15 per year for customers.
For Atmos, Jeffries said, that would decrease the 187 time period to 35 years.
Kansas Gas Service faces a different situation in it already has a proactive pipe replacement program and also is in a rate moratorium, according to attorney Walker Hendrix. The company had committed in the past to replacing its cast-iron pipe by 2024, but he said the company is shortening that time frame to 2019.
Commissioners listened and asked questions on a variety of topics throughout the day, including how obsolete pipe is defined and safety of the pipeline. CURB attorney David Nickel and KCC staff questioned gas company officials on the state of their transmission systems, including miles of pipeline in their systems that would be considered obsolete and how many leaks they had. The types of pipe under consideration for replacement are cast iron, bare steel, some older types of coated steel, Aldyl A and PVC.
CURB expert Edward McGee was questioned vigorously. McGee, a chemical engineer employed by Acadian Consulting Group in Delaware, testified he didn’t believe an accelerated replacement program was called for in Kansas.
McGee said he based his opinion on the fact leaks at all three companies had either been declining or flatlined for years, indicating the safety of their systems wasn’t in jeopardy.
Asked whether it would be prudent to replace obsolete and potentially dangerous pipes before they start to create more leaks and problems, McGee testified he didn’t think the age of the pipe could be explicitly tied to risk. He said such an expensive, extensive program shouldn’t be implemented until further problems become evident.