House Passes HQLA Legislation
On February 1, the House of Representatives passed bipartisan legislation; H.R. 2209, introduced by Representative Messer (R-Ind.) would require regulators to classify all investment grade municipal securities as High Quality Liquid Assets (HQLA). This legislation would amend the 2014 Liquidity Coverage Ratio rule approved by the FDIC, Federal Reserve and OCC, which excludes municipal securities from classification as HQLA. The legislation was passed by voice under the suspension calendar, which is typically reserved for non-controversial legislation for which there is strong support. In September 2014, the Federal Reserve unanimously adopted new liquidity standards for large banks. Under the standards, banks that meet a specified total asset threshold must maintain designated levels of HQLA, which are assets that are easily convertible to cash. The issue of concern from APGA’s perspective is that the rule did not classify municipal securities as HQLA, which in turn would ultimately reduce the appeal of banks to underwrite municipal securities and increase borrowing costs for public natural gas systems, state and local governments.
On January 29, APGA joined numerous other organizations in a letter sent to the House of Representatives expressing support for this legislation. In the letter, APGA and the other groups communicate that failure to classify municipal securities as HQLA “will increase borrowing costs for state and local governments to finance public infrastructure projects, as banks will likely demand higher interest rates on yields on the purchase of municipal bonds during times of national economic stress, or even forgo the purchase of municipal securities.” The letter also states that classifying investment grade municipal securities as HQLA “will help ensure low-cost infrastructure financing remains available for municipal securities issuers to continue to build the infrastructure for commerce, public safety, job creation and the development of an educated workforce that our communities and national economy rely on.”
A copy of the letter sent by APGA and the other groups is available on the APGA website at www.apga.org/correspondence. With House passage of this legislation, debate now moves to the Senate with efforts underway to have similar legislation introduced in near future. For questions on this article, please contact Dave Schryver of APGA staff by phone at 202-464-2742 or by email at firstname.lastname@example.org.
Senate Energy Bill Update
The Senate continues debate over their comprehensive energy bill, titled the Energy Policy Modernization Act. The legislation contains several provisions supported by APGA including language that delays the Department of Energy’s (DOE) implementation of the furnace rule to allow stakeholders the opportunity to negotiate and reach agreement on a rule that makes sense, enacts revisions to the role DOE plays in the development of energy codes, and repeals section 433, which bans the use of fossil fuels in federal buildings by 2030. APGA successfully opposed an amendment that would have mandated an arbitrary nationwide energy efficiency resource standard that would have imposed financial penalties on electric and gas utilities yet failed to achieve the required efficiency gains in their customer base. Through years of hard work, the repeal of section 433 has become fairly non-controversial. The repeal of section 433 has been included in the base text of several energy bills and continues to be a non-issue.
Over the last several weeks, many energy efficiency advocates and environmental organizations have been trying to strip out the Senate’s furnace language. This language would remand the rule back to DOE for additional stakeholder analysis and input. These groups have been pushing to have the Senate language replaced with language that was developed early in 2015 as part of the House’s energy bill debate. However, over the past year, the House language has become obsolete, as this language would only delay DOE action on a rule until July, so replacing the current Senate language with the House’s language would have nullified APGA’s ability to remand the furnace rule back to DOE. Because of the outreach from APGA members, staff and partners over the last two weeks, the energy efficiency advocates were unable to secure enough votes to convince any Senator to take up their effort to swap out the language. APGA has scored a major victory, but this issue is far from being settled.
Another major victory was standing up and expressing opposition to Senator Franken’s (D-Minn.) energy efficiency resource standard amendment. The amendment would have imposed a one-size fits all federal energy efficiency mandate that would require natural gas and electric systems to achieve annual energy savings equal to an escalating and arbitrary percentage of a base period of energy consumption. Because of the work and outreach conducted by APGA, the amendment received only 43 votes in favor of it—far short of the 60 that was needed—and 52 votes against it.
On February 4, the Senate ended their debate with the hopes that an amendment to provide financial aid to Flint, Mich., can be negotiated over the weekend. Without an agreement on financial aid to Flint, the Senate will probably fail to pass an energy bill.
For questions on this article, please contact Dan Lapato of APGA staff by phone at 202-464-2742 or by email at email@example.com.
Apply by March 1 for 2016 SOAR Recognition!
Operating a safe and efficient distribution system is at the core of every APGA member's mission. Once again, in 2016 APGA will recognize public natural gas systems that epitomize operational excellence through the System Operational Achievement Recognition (SOAR) program.
Systems are judged on four criteria that exemplify a utility’s commitment to operational achievement:
1. System Integrity: This means a natural gas distribution system is performing its overall intended function safely, efficiently and effectively—distributing energy to all customers without being degraded or impaired by its internal or external environment. Systems that exhibit excellence in system integrity have adopted policies and procedures for records management, emergency preparedness, regulatory compliance and system management.
2. System Improvement: Refers to keeping the natural gas system well maintained and up-to-date through a self-improvement program that includes both an eye on the future through technology integration and a commitment to system improvement programs. Operational excellence in system improvement involves supporting research and development of new technologies for operations and natural gas end-use, infrastructure modernization through capital improvement programs and targeted replacement of portions of the distribution system.
3. Employee Safety: Employee injury prevention and employee safety education are core components of a safety program that is utility-wide and evident in all aspects of utility operations, including work performed by contractors. Key components of an employee safety program include policies and procedures for education involvement and accountability for all employees, as well as tracking safety performance.
4. Workforce Development: There is a focus on creative recruitment, training, education and development practices that provides a return on investment through increased employee loyalty, motivation, safety, and productivity. Systems that exhibit excellence in workforce development emphasize continuing education, certification, and training; encourage participation in outside organizations such as state, regional and national trade and professional associations; and, have a well thought out succession planning and recruitment program.
The 2016 SOAR enrollment period is open until March 1. Enrollment in SOAR includes a $250 non-refundable fee, and you will be sent the criteria forms after completion of entry form. The full criteria and entry application can be found at www.apga.org/programs/soar.
Any APGA member that feels it meets these criteria for operational achievement may complete an application describing its programs, policies, procedures, and accomplishment in these four areas. Applications will be reviewed by a panel of experts from the APGA Operations and Safety Committee. All systems that meet the criteria will be recognized.
Your system’s SOAR application must be submitted to APGA due by March 1. The first group of SOAR winners will be notified on July 1. For questions on SOAR, please contact John Erickson of APGA staff by phone at 202-464-2742 or by email at firstname.lastname@example.org.
Marketing Materials Available to APGA Members!
The free Look Closer marketing campaign materials are now ready for APGA members to access and download online!
APGA has worked over the past year to develop a national, unified marketing campaign for its members to utilize. The theme is Look Closer and it encourages natural gas customers to learn more about the benefits and availability of the direct-use of natural gas. The materials in this campaign include a PSA, advertisements, brochure, and social media messaging. These materials are a benefit to APGA members and are no cost to members.
APGA members can now visit apgalookcloser.com where they will find information and a link to access the materials. Members are then encouraged to download the materials and distribute them in their communities. It is imperative that members promote the direct-use of natural gas, and using the Look Closer campaign will greatly further this goal of our industry.
For questions about the Look Closer campaign, please contact Audrey Anderson at email@example.com.
Celebrate Your Natural Gas Utility Workers on March 18!
March 18 is now national Natural Gas Utility Workers Day! In 2015, the APGA Marketing & Sales Committee began discussing how they believed natural gas utility workers deserved a day to be recognized for their hard work and accomplishments. After several months of planning, the committee named March 18 the day in which natural gas utility workers around the country will be honored each year. The decision to hold this day on March 18 was made by a poll on the APGA community. March 18 is the date of the New London, Texas school explosion in 1937 that led to the widespread odorization of natural gas and an increased emphasis on safety. Safety is a vital aspect to natural gas distribution and the employees of distribution companies endeavor to make natural gas delivery as safe as possible.
Please honor the natural gas utility workers in your community and at your system by celebrating on March 18! APGA will provide materials to use in the coming weeks. In the meantime, we encourage you to plan events, communication, social media posts, etc., to celebrate this new and very important day!
For questions on Natural Gas Utility Workers Day, please contact Audrey Anderson at firstname.lastname@example.org.
PHMSA Advisory on Underground Storage Safety Provides Insight into California Storage Leak
The Pipeline and Hazardous Materials Safety Administration (PHMSA) has issued an advisory urging operators of underground storage facilities to have processes, procedures, mitigation measures, periodic assessments and reassessments, and emergency plans to maintain the safety and integrity of all wells and associated storage facilities whether operating, idled, or plugged. While only one or two public natural gas systems operate underground storage, the advisory contains useful information about the leak at an underground storage facility in Los Angeles that is garnering much press attention. This information may be useful to APGA members to answer questions from constituents.
On October 23, 2015, Southern California Gas Company’s Aliso Canyon Well SS25 failed, causing a sustained and uncontrolled natural gas leak in an area known as Porter Ranch in Los Angeles. At the present time, the well leak is believed to be from a subsurface (downhole) well casing. The well was drilled in 1953 as a production well and was later converted to natural gas storage in 1972. Over 4,400 households have been relocated due to the natural gas odorant according to the Aliso Canyon Incident Command briefing report issued on February 1. On January 6, California Governor Jerry Brown issued a proclamation declaring the Aliso Canyon incident a state emergency. After repeated unsuccessful attempts to contain the leak, a relief well is being drilled to plug the leaking well. The Aliso Canyon underground storage field, which can store up to 86 billion cubic feet of natural gas, has 115 storage
wells, and is the second largest storage facility of its kind in the United States. The root cause of this failure is the subject of ongoing investigations, however it is clear that this is not related to Southern California Gas Company’s gas distribution pipelines and is not something that could occur on a distribution system.
PHMSA emphasizes that the processes and procedures should take into consideration the age, construction, maximum operating pressures, operating and maintenance history, product, corrosion, casing and tubing condition (including chemical and mechanical damage), cement condition and depths or heights, safety valves (surface and subsurface), operation of each well, and the amount of time elapsed since the most recent assessment. A copy of PHMSA’s Advisory can be found here. For questions on this article, please contact John Erickson of APGA staff by phone at 202-464-0834 or by email at email@example.com.
EIA Reports Storage Decrease of 152 Bcf to Put Working Gas Storage at 2,934 Bcf
Here is the weekly EIA Summary Report issued on Thursday, February 04, 2016, which reports the week’s storage report highlights for Friday, January 29, 2016. A 152 Bcf decrease has been reported.
Working gas in storage was 2,934 Bcf as of Friday, January 29, 2016, according to EIA estimates. This represents a net decline of 152 Bcf from the previous week. Stocks were 490 Bcf higher than last year at this time and 445 Bcf above the five-year average of 2,489 Bcf. At 2,934 Bcf, total working gas is within the five-year historical range.