Columbia Gas' pipeline project replaces aging infrastructure
By Kim Leonard
Published: Sunday, November 13, 2011
Columbia Gas of Pennsylvania is on pace to dig up more than 100 miles of old steel and iron pipe this year and put in new plastic or steel lines.
"This is the largest single year of pipe replacement in our history," Dan Cote, general manager of operations for the Cecil-based natural gas utility, said as he described the company's $1.2 billion, ongoing project in its Western Pennsylvania service area.
Since 2007, every year has been big for Columbia's pipeline work.
The utility said 450 miles, or about 19 percent of its "first generation" pipe, had been replaced by the end of last year. Some of the cast iron or bare steel lines dated to the 1880s, Cote said, and had become prone to breaks or corrosion.
Columbia customers are footing the cost, about $190 million so far, but customers of other Western Pennsylvania gas utilities are paying a few more dollars a month as utilities step up infrastructure updates.
Gas utilities must file plans with the federal Department of Transportation, saying how they'll monitor for leaks and maintain their lines, said Terrence Fitzpatrick, president of the Energy Association of Pennsylvania, an industry lobbying group.
Statewide, "Columbia has in particular accelerated more quickly than most, to get the old pipelines out of the ground," said Fitzpatrick, a former Public Utility Commission member.
"There are a number of reasons to do this. All utilities recognize that those pipes are their stock in trade, and they want to take care of them," he said. New pipelines "improve reliability, and cut the number of leaks you have. They enhance safety" even beyond federal standards. And the projects create jobs, he said.
Fitzpatrick's Harrisburg-based association and gas, electric and water utilities statewide are advocating a change in the way multimillion-dollar pipeline replacements and other utility work is funded.
A bill that the state House approved, 184-17, last month would allow utilities to skip the PUC's rate case process when they need to recover capital they put into projects The Senate now is considering the measure.
Columbia has obtained three rate hike approvals in the last four years, all "heavily focused" on the pipeline work, President Carol Fox said.
The latest, approved last month, raises the company's annual revenue by $17 million a year and adds $2.45 to a typical residential customer's monthly bill, but the company said it can't break out pipeline expenses from operations costs figured into the increase.
Each case takes about a year to resolve and costs the company up to $1 million, she said, while a more focused PUC review of planned investments might cost $100,000. "We could use that extra money for another mile of pipe or so," Fox said.
Fitzgerald said utilities that borrow money up front for projects now can't get favorable rates, because of the lag time, uncertainty and costs associated with rate cases. Customers would benefit from gradual rate increases, rather than spikes, he said.
Nineteen states, including Ohio and New Jersey, have similar laws that gas utilities use to replace main lines, the American Gas Association said.
State Consumer Advocate Sonny Popowsky doesn't like the Pennsylvania bill's broad impact on capital projects by all monopoly, regulated utilities and its failure to require companies to ramp up infrastructure work.
Ted Robbins, staff attorney for Squirrel Hill-based consumer group Citizen Power, called the legislation "unnecessary" and is uneasy with the bill's failure to guarantee public hearings for rate increases.
"It's preferable to have base rate hearings. They take time for a reason, because we want to get everything right," he said.
Columbia's work has created more than 800 jobs, mostly for contractors, but also 60 full-time employees for the utility, Fox said. Columbia has about 500 employees.
The utility uses computer software that tracks leaks, age and other data to decide where to dig up and replace pipes, Cote said. Crews time work to coincide with street repairs and other construction.
What goes into the ground doesn't always match the old pipe. "The mains laid in 1880 and operated at one quarter of a pound of pressure may have been 6 to 8 inches in diameter," Cote said. "Today, we can deliver as much gas at 60 pounds through a 2-inch main," saving money on materials and ease of installation.
Some growing areas get bigger lines, while towns where long-closed steel mills once used gas delivered in 18-inch pipes will get smaller ones.
And while property owners in Western Pennsylvania technically are responsible for their service lines, Columbia is replacing most of those pipes as well to ensure they work well with the new main lines. "It's not fair to knock on the customer's door and say, 'You've got to spend $2,000 to upgrade a service line, because we are upgrading the pressure," Cote said.
NiSource Inc., Columbia's parent, is replacing pipelines through its subsidiaries in Massachusetts, Maryland, Virginia, Ohio and Kentucky.
"The goal is to have a system that is safe, reliable and efficient, that will last for generations," Fox said.
Others follow suit
• Peoples Natural Gas Co. will replace 40 miles of old cast iron pipes in areas including Swissvale, Hazelwood, Squirrel Hill and Greensburg this year and in 2012, spokesman Barry Kukovich said. And Peoples TWP, the former T.W. Phillips gas utility that the Peoples utility's owners acquired in May, is targeting 22 miles of old bare steel pipe this year in Butler and five other counties; another 25 miles will be dug up next year.
• Equitable Gas replaced 386 miles of old, mostly cast iron pipes over the past decade, costing about $186 million, spokesman Scott Waitlevertch said. New service lines to customers' properties cost another $22 million.
The North Side and other Pittsburgh neighborhoods, plus the Route 910 area of Wexford and Route 28 area in Harmar were work sites. The 2012 schedule hasn't been set because Equitable, like other utilities, hope the alternate funding bill becomes law by year's end.
"That will make a difference," Waitlevertch said.
At a glance
About Columbia Gas of Pennsylvania:
What: Natural gas distribution utility, subsidiary of NiSource Inc., of Merrillville, Ind.
Customers: 414,000, mainly in Western Pennsylvania.
Pipes: 7,400 miles, including about 550 miles of "first generation" cast iron or bare steel pipe that have been or will be replaced by year's end.
Recent rate hikes: $41.5 million in 2008, about $8 more per month for the average residential customer. $12 million in 2010, about $2.19, $17 million this year, or $2.45 more. Project costs are spread over 50 or more years, and with low gas prices, customers pay only about 3 percent more now than they did in 2001, Columbia said. Rates will drop after old pipes are replaced and costs are recovered.
Neighborhoods with new pipes
Some areas where Columbia Gas of Pennsylvania has, or will replace pipelines:
• Upper St. Clair (East McMurray Road), 18,215 feet of pipe, $3.8 million cost.
• Brighton Heights, 10,000 feet, $3 million.
• Mt. Lebanon (Lakemont Drive) 19,000 feet, $2.3 million.
• McDonald, 13,000 feet, $2 million.
• Peters (Center Church Road) 18,100 feet, $1.3 million.
• Mt. Lebanon (Pickwick area), 9,500 feet of pipe, $2.9 million.
• Overbrook (Fairland Street area), 7,000 feet, $2.1 million.
• Brighton Heights, 3,600 feet, $2. million.
• Cranberry, 15,000 feet, $1.6 million.
• New Castle (Delaware Avenue), 7,500 feet, $1.5 million.
Keith Hodan | Tribune-Review
Jim Russo fuses two new 40-foot sections of polyethylene pipe for work in Bethel Park. The machine heats the ends of the two sections to 500 degrees, and then the ends are joined together. Columbia Gas is continuing with a $1.2 billion pipeline replacement program to put 2,400 miles of new lines into its system. Russo is with M. O'Herron Co. of Bloomfield.
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