aga 0507REASONABLE - Cesar Delgado

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7/11/2005 
Ensuring a Reasonable Approach for Distribution Integrity Management 
 
Now that a regulation has been developed for integrity management of natural gas 
transmission pipelines, it is time for regulators and operators to consider how to approach 
distribution system integrity. Due to the positive overall safety record of natural gas 
distribution companies, it behooves all stakeholders to take a measured approach in this 
endeavor. 
 
Any assessment of distribution integrity management should take into account the 
following: 
 
• There are significant differences between transmission and distribution systems, 
both from a regulatory standpoint and an operational standpoint. It is not feasible 
to simply apply the transmission integrity management rule to distribution. 
 
• Recognition of the critical role that State regulators have in ensuring distribution 
integrity. 
 
• A clear understanding of the threats and causes of incidents as well as the existing 
regulations and practices in-place. To that extent, the American Gas Foundation 
is nearing completion of a study that should provide the basis for this analysis. 
State regulators representing the National Association of Pipeline Safety 
Regulators and NARUC and industry representatives have been involved in this 
study. 
 
• Clearly in today’s high natural gas price environment, it is important to ensure 
that any additional measures do not place an undue burden on the consumer with 
regards to financial and/or reliability impact. 
 
• Natural gas local distribution companies are subject to state regulations, based off 
the federal pipeline safety code. In addition, many LDCs have elected to 
implement additional practices beyond those required by code. 
 
• Ultimately, any process identified for distribution integrity must be risk-based, 
technically defensible and cost beneficial. 
 
Any approach to distribution integrity should involve the participation of all stakeholders. 
Regulatory agencies, public works, operators and industry trade associations should have 
an opportunity to work on a “model process.” 
 
Ideally, this model process should clearly direct operators how to assess their systems for 
safety and integrity. The deliverable would be comprehensive, risk-based guidance based 
upon input from all stakeholders. The guidance would identify the various threats to a 
distribution system, and ways each threat might be effectively addressed. The model 
process would integrate any data being collected by the Office of Pipeline Safety, state 
agencies or the American Gas Association. In addition, the model process should ensure 
7/11/2005 
that existing industry documents such as the Code of Federal Regulations Part 192, Gas 
Piping Technology Committee Guide, Common Ground Alliance Best Practices Version 
1.0, ASME B31.8S, API 1162, American Gas Foundation Study and NACE 
Recommended Practices are reviewed. The guidance document would likely extract 
content from each of these as needed. 
 
The model process would function under a national consensus standards process, similar 
to the one used in developing the API 1162 recommended practice for public education 
and the 1999 Common Ground Study. All stakeholders would have an equal voice in 
developing the model guidelines. 
 
The model process should identify areas of concern for local distribution companies, and 
what measures can be considered to manage their associated risk. Any model guidelines 
should recognize that LDC systems are diverse in many ways, including operating 
pressures and distribution piping composition. Each LDC system is designed, constructed 
and maintained to meet unique demands in customer base and service territory 
composition. This is why a rigid, “one size fits all” approach to distribution integrity 
management simply does not work. How operators manage the risks should be left to 
their discretion, but the model guidelines would identify potential actions and processes 
in managing these risks. 
 
In order to ensure that the model process is conducted under ANSI auspices, the 
guidelines would need approximately 18 months to develop. In addition to meetings and 
conference calls, this timeframe also accommodates multiple interim review periods 
where draft material would be widely disseminated to interested parties for comment. 
Assuming a start date of January 2005, the model process would then be completed by 
the end of June 2006. Completion by this date is contingent upon active participation and 
diligence of all stakeholders. AGA is willing to play a leading role in this initiative by 
reaching out to stakeholders and providing overall project administration and support.