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Calif. gas utilities to spend $315M to reduce methane emissions

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Calif. gas utilities to spend $315M to reduce methane emissions

California's four major gas utilities plan to spend $314.7 million over the next two years to repair or replace pipelines to reduce methane emissions, under a resolution that state regulators approved Oct. 11.

California enacted legislation in 2014 that changed the way the state views leaks from gas systems. Methane is a potent greenhouse gas, and while small gas leaks do not necessarily pose an immediate safety threat, the California Public Utilities Commission in 2015 said it considered all leaks hazardous from a climate perspective.

The state's major gas utilities have since devised plans for tackling their backlogs of leak repairs, and the CPUC on Oct. 11 approved their leak reduction programs.

"We should no longer delay implementation of the compliance plans," the commission resolution said. "The utilities need to begin implementation of the program in order to gain additional insight and accuracy of the emissions reductions, the methodology to increase the reductions, and the cost effectiveness of the proposals."

The utilities have a goal of cutting methane emissions from their gas systems by 40% by 2030 compared to a 2015 emissions inventory.

Sempra Energy subsidiary Southern California Gas Co., which serves 5.9 million meters in more than 500 communities, said it planned to spend $234 million on leak repairs and related pipe replacements over the two-year program period. SoCalGas estimates a 14% annual methane leak reduction by 2020.

San Diego Gas & Electric Co., also a subsidiary of Sempra Energy, plans to participate in most of the same activities and research as SoCalGas and expects to spend $12.3 million.

PG&E Corp.'s Pacific Gas and Electric Co. had the second-highest projected plan cost, proposing to spend $66 million on its methane emissions reduction program. The utility projected a 17% reduction in the 2015 leak baseline by 2020. It expected to spend the most on repairing high-emitting leaks and on adopting a three-year leak survey cycle.

The CPUC directed Pacific Gas and Electric to limit spending on underground "grade 3" leaks, which are those with relatively low leak rates, to no more than half of what the company had requested for that category. Pacific Gas and Electric's original plan for these leaks appeared "excessively costly relative to the expected emission reduction," the commission said.

"We will re-evaluate the program after we have had the opportunity to review this pilot in 2020," the CPUC resolution said.

Southwest Gas Corp., which has a service territory that is largely outside of California, plans to spend $2.4 million on its California methane emissions reduction program.

The Environmental Defense Fund, which has advocated for methane emissions reductions across oil and gas sectors, welcomed the CPUC resolution.

"This is a massive deal that will fundamentally change the way we think about gas leaks," Timothy O'Connor, Environmental Defense Fund's California energy program senior director, said in a statement. "After years in development, California utilities are finally accountable for reducing the negative environmental impact that gas leakage can cause. If implemented nationwide, this action could make our nation's pipelines cleaner and safer, and put a significant dent in the oil and gas industry's carbon footprint."