S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * *

Transcription

1 S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) SEMCO ENERGY GAS COMPANY ) to combine its MPSC Division and Battle Creek ) Case No. U Division rates and for authority to redesign and ) increase its rates, on a combined basis, for the sale ) and transportation of natural gas and for other ) relief. ) QUALIFICATIONS AND DIRECT TESTIMONY OF BRIAN MILLS MICHIGAN PUBLIC SERVICE COMMISSION November 19, 10

2 QUALIFICATIONS OF BRIAN MILLS PART I 1 Q. Please state your name and business address. 2 A. My name is Brian Mills. My business address is 655 Mercantile Way, Lansing, 3 Michigan Q. By whom are you employed and in what capacity? 5 A. I am employed by the Michigan Public Service Commission (MPSC or 6 Commission) as a Gas Safety Engineer in the Operations and Wholesale Markets 7 Division (OWMD). 8 Q. What are your responsibilities as a Gas Safety Engineer? 9 A. As a Gas Safety Engineer, I provide enforcement of the Michigan Gas Safety 10 Standards, Minimum Federal Safety Standards, and various Commission orders 11 and directives to ensure the protection and safety of persons and property in the 12 State of Michigan in the area of natural gas pipeline safety. I also perform 13 detailed inspections of regulated utility companies to ensure compliance with their 1 own design, construction, operation, maintenance, and emergency standards. 15 These inspections include 1) review of Operations and Maintenance Procedures, 16 2) documentation audits to assure operation and maintenance tasks have been completed properly and that qualified utility personnel are carrying out each task, 18 3) on-site investigations to determine if utility involvement has occurred during 19 natural gas related incidents, and ) field compliance audits to make certain quality workmanship practices are being carried out on each project. 21 Q. Please outline your academic training. 22 A. I received a Bachelor of Science degree in Mechanical Engineering Technology 23 from Wayne State University in December 0. I have also received an 1

3 QUALIFICATIONS OF BRIAN MILLS PART I 1 Associate Degree in Applied Arts and Science from Saint Clair County 2 Community College in May 01. I completed courses with the Pipeline and 3 Hazardous Materials Safety Administration s Transportation Safety Institute beginning in 07. The classes that I have completed with the Transportation 5 Safety Institute are; 1) Corrosion Control of Pipeline Systems, 2) Internal 6 Corrosion Direct Assessment, 3) Fundamentals of Pipeline Corrosion and 7 Cathodic Protection, ) Safety Evaluation of Gas Pipeline Systems, 5) Pipeline 8 Safety Regulation Application and Compliance Procedures, 6) Fundamentals of 9 Gas Pressure Regulators, 7) Gas Pressure Regulation and Overpressure 10 Protection, 8) Introduction to Gas Laws, 9) Regulatory Overview, 10) Natural 11 Gas Odorization, 11) Introduction to Part 192, 12) Joining of Pipeline Materials, 12 13) Introduction to Pipeline Welding, 1) Fundamentals of Plastic Pipe, 15) 13 Fundamentals of Basic DC Electricity, and 16) Pipeline Failure Investigation 1 Techniques. In June 09, I was certified by the National Association of 15 Corrosion Engineers (NACE) as a Cathodic Protection Tester. 16 Q. Please outline your professional experience. A. Prior to being assigned to my current position at the MPSC, I worked in the 18 Energy Grants Section beginning in 05. Within this Section I was responsible 19 for oversight of nine million dollars in energy efficiency grants related to new technologies that were funded by the Low Income Energy Efficiency Fund. Part 21 of my duties consisted of reviewing and awarding proposals from outside 22 agencies that were attempting to create energy conserving technology, monitoring 2

4 QUALIFICATIONS OF BRIAN MILLS PART I 1 the grants awarded to assure completion within the required timeline, and assuring 2 compliance with the grant contract agreement. 3 Before accepting my position at the MPSC, I was employed at Wayne State University as an Engineering Technician on the Smart Sensors and Integrated 5 Microsystems Program. My responsibilities in this position included design and 6 assembly of equipment that would allow engineers to conduct research and 7 development in the field of micro and nano engineering. 8 Q. Have you previously testified before this Commission? 9 A. No. 3

5 DIRECT TESTIMONY OF BRIAN MILLS PART II 1 Q. What is the purpose of your testimony? 2 A. The purpose of my testimony is to provide the Commission subject matter 3 expertise on certain aspects of SEMCO s natural gas facilities, and also give expert opinion as to the following: 5 1) Corrosion Control, 6 2) The Infrastructure Replacement Program, 7 3) The Service Valve Replacement Program, and 8 ) Inside Meters. 9 Q. Are you sponsoring any exhibits in this proceeding? 10 A. Yes. I am sponsoring one exhibit in addition to my direct testimony: 11 Exhibit S-2, Schedule B-11, Annual Report for Calendar Year 09 - Gas 12 Distribution System. 13 Q. In general, what are the Michigan Gas Safety Standards (MGSS)? 1 A. The MGSS are rules promulgated by authority granted to the MPSC in Section 2 15 of Act 165 of the Public Acts of The rules apply to the design, fabrication, 16 installation, inspection, testing, and safety aspects of the operation and maintenance of gas pipelines used in the transportation of gas. The Code of 18 Federal Regulation s (9 C.F.R.) Part 192 entitled Transportation of Natural and 19 Other Gas by Pipeline: Minimum Federal Safety Standards is adopted by reference in R of the MGSS. 21 Q What is a non-compliance? 22 A. A non-compliance is a violation of one or more of the MGSS rule(s). 23 Corrosion Control

6 1 Q. What is corrosion? DIRECT TESTIMONY OF BRIAN MILLS PART II 2 A. Corrosion in general, is the deterioration of metallic material from a reaction to its 3 environment. Q. What action should be taken to prevent the spread of corrosion? 5 A. Metallic structures should be cathodically protected to help prevent corrosion. 6 Q. What is cathodic protection? 7 A. In general, cathodic protection is a technique used to prevent corrosion of metallic 8 structures utilizing electric current. 9 Q. What are the MGSS requirements for cathodic protection? 10 A. The requirements found in Subpart I of the MGSS entitled Requirements for 11 Corrosion Control in general require SEMCO to maintain a quantifiable level of 12 cathodic protection on its buried facilities. 13 Q. Are SEMCO s cathodic protection systems meeting the requirements of the 1 MGSS? 15 A. No. As of August 10, 10, SEMCO had 233 systems in the Eastern Operating 16 Region (EOR) that are below the required cathodic protection criteria specified in the MGSS. 18 Q. What is SEMCO doing in order bring their cathodic protection systems back into 19 compliance with the MGSS? A. SEMCO has an ongoing initiative to bring their cathodic protection systems back 21 into compliance. This initiative involves installation of rectifiers and is targeted 22 at SEMCO s EOR, which is their largest operating area and contains the most 23 miles of unprotected main. 5

7 1 Q. What are rectifiers? DIRECT TESTIMONY OF BRIAN MILLS PART II 2 A. Rectifiers are impressed current systems that utilize AC voltage from the electric 3 grid and convert it to DC voltage. The voltage is applied to the pipeline as part of the cathodic protection system. 5 Q. Has SEMCO completed this initiative? 6 A. No. SEMCO has been working on this project for the last three years and has 7 committed to having it completed in 10 as stated in company witness Mr. Marc 8 Simone s September 22, 10, response to Staff s discovery request. 9 Q. What is the scope of the initiative? 10 A. SEMCO has separated their EOR into five smaller regions in order to complete 11 the initiative. Beginning in 07, SEMCO began evaluating each area in order to 12 determine where each rectifier would be required to be installed. Each of the five 13 regions has multiple rectifiers that will be utilized to protect main in each area. 1 Q. How many rectifiers is SEMCO installing? 15 A. SEMCO is installing a total of 22 rectifiers in their EOR. 16 Q. What is the status of SEMCO s initiative? A. As of October 1, 10, SEMCO has installed a total of 1 rectifiers. Of the 1 18 rectifiers installed, only 1 rectifier has become fully operational. The remaining rectifiers that are installed require additional construction in order for them to become fully operational. 21 Q. Does the Staff believe that SEMCO will meet this time commitment? 6

8 DIRECT TESTIMONY OF BRIAN MILLS PART II 1 A. It seems unlikely that SEMCO will be able to do so. SEMCO has a total of 8 2 rectifiers awaiting installation. With each rectifier installation there are various 3 components and testing that is also required. Q. In the past has SEMCO complied with the corrosion control requirements of the 5 MGSS? 6 A. SEMCO has had some compliance issues related to corrosion control. 7 Specifically within the last three years SEMCO has been issued the following 8 non-compliances for violations of Subpart I of the MGSS: 9 1. Non-compliance 08-06BM for MGSS Rule entitled Atmospheric 10 corrosion control: Monitoring, Non-compliance 09-06BM for MGSS Rules entitled Atmospheric 12 corrosion control: Monitoring and entitled Atmospheric corrosion 13 control: General, and 1 3. Non-compliance 10-12BM for MGSS Rules entitled External 15 corrosion control: Monitoring, and entitled External corrosion control: 16 Cathodic protection. Q. Does the Staff have any recommendations regarding SEMCO s corrosion control 18 initiative? 19 A. If SEMCO is unable to meet their 10 time commitment, as discussed with Mr. Simone s response to Staff s discovery request, Staff recommends that SEMCO 21 notify the Commission Staff upon such discovery and work with the Staff as to a 22 new completion date. 23 Infrastructure Replacement Program (IRP) 7

9 DIRECT TESTIMONY OF BRIAN MILLS PART II 1 Q. What is the Infrastructure Replacement Program? 2 A. SEMCO is proposing the IRP in order to replace its current unprotected facilities. 3 Replacing these facilities will address the corrosion leaks, which is the largest category of main leaks shown on Exhibit S-2, Schedule B-11, that SEMCO is 5 experiencing. 6 Q. What is unprotected pipe? 7 A. Unprotected pipe is metallic pipe that is not protected against corrosion by use of 8 cathodic protection. Unprotected metallic pipe can include steel pipe that can not 9 be cathodically protected because it is bare or has an ineffective coating, cast iron, 10 wrought iron, and ductile iron. 11 Q. What is the difference between coated and uncoated steel pipe? 12 A. Coated steel pipe has a protective coating that was applied at the time of 13 installation or was retrofitted with a coating at a later date. Uncoated steel pipe is 1 steel pipe that has not had a coating applied. Generally, a pipe that has a good 15 coating can be protected against corrosion by using cathodic protection. 16 Q. Does SEMCO have unprotected pipe? A. Yes. Exhibit S-2, Schedule B-11 shows that SEMCO currently operates 18 approximately 518 miles of unprotected steel main, 36 miles of cast/wrought iron 19 main, and miles of ductile iron main. SEMCO has 2,192 miles of metallic main, so approximately 25% is unprotected. 21 Q. Is SEMCO currently replacing unprotected main? 22 A. SEMCO has upgraded portions of its unprotected facilities. As stated on page 9 23 of Mr. Simone s testimony, SEMCO has replaced an average of 9 miles of 8

10 DIRECT TESTIMONY OF BRIAN MILLS PART II 1 unprotected bare steel and cast iron pipe annually during the period of 05 2 through Q. Does Staff agree with the requested IRP? A. Yes. Safety is a top priority when it comes to pipeline operations. Quite often 5 unprotected pipelines can leak. When leaks occur it can potentially place the 6 customers and public at risk. When SEMCO upgrades its unprotected mains, it 7 creates a safer environment for their customers and the general public. 8 Q. Do the MGSS require SEMCO to recondition or phase out pipelines found to be 9 in unsatisfactory condition? 10 A. Yes. Rule entitled Continuing Surveillance states in part that If a 11 segment of pipeline is determined to be in unsatisfactory condition but no 12 immediate hazard exists, the operator shall initiate a program to recondition or 13 phase out the segment involved. 1 Q. Is SEMCO using a risk based analysis approach for identifying facilities in need 15 of replacement? 16 A. In general yes. SEMCO has used a model that risk ranks main segments based on main characteristics and environment. The risk rankings are used to determine 18 which segments are renewed. If SEMCO uses this approach correctly, the model 19 should identify the appropriate mains to be renewed. Q. Does Staff agree with this approach? 21 A. Yes. 22 Q. Does the Staff have any recommendations for the Commission regarding 23 SEMCO s proposed IRP? 9

11 DIRECT TESTIMONY OF BRIAN MILLS PART II 1 A. The Staff believes that the Commission should support SEMCO s proposed IRP, 2 with their EOR rectifier initiative. SEMCO s EOR rectifier initiation project will 3 determine what cathodic protection systems can feasibly be brought into compliance with the MGSS and identify segments of pipeline that may not need 5 to me replaced under the proposed IRP. 6 Service Valve Replacement Program 7 Q. Please discuss the Service Valve Replacement Program? 8 A. This has been an ongoing program that SEMCO developed to address service 9 valve failures. On page 15 of Mr. Simone s testimony, SEMCO stated that they 10 have experienced 11 failures of the valves. SEMCO is currently in the process of 11 identifying and replacing the affected valves. 12 Q. Does the Staff support the Service Valve Replacement Program? 13 A. Yes. The valves in question should be changed out as soon as practical. 1 Q. Does the Staff believe SEMCO is taking the appropriate measures to identify and 15 replace these valves? 16 A. Yes. SEMCO has taken a number of measures in order to identify and replace these valves. In addition to already identifying and replacing approximately 18 2,000 valves as stated on page 16 of Mr. Simone s testimony, SEMCO has trained 19 local fire departments to recognize and operate the valves using the appropriate tools during an emergency. SEMCO has also trained its own personnel and 21 supplied them with the equipment to operate the valves. SEMCO has also taken 22 the additional step to notify their customers that these valves should not be 23 operated. 10

12 DIRECT TESTIMONY OF BRIAN MILLS PART II 1 Q. How does SEMCO identify the valves in need of replacement? 2 A. SEMCO visually identifies most valves during leak survey operations. Once 3 identified in the field, SEMCO places a yellow tag over the valve itself. SEMCO then places the location of the valves on a list that they maintain. 5 Q. Has Staff reviewed this list? 6 A. Yes. Included in Mr. Simone s response to Staff s discovery is a list of all valves 7 in need of replacement as of September, 10. This list identifies the location 8 of each valve by address. As shown on Exhibit S-2, Schedule B-11 SEMCO has 9 292,193 service lines and the valve replacement list has 36,782 valves on those 10 service lines that require replacement. 11 Q. Do the MGSS require these valves to be replaced? 12 A. Yes. As previous discussed Rule requires SEMCO to initiate a program 13 to recondition or phase out a segment of pipeline found to be in unsatisfactory 1 condition if no immediate hazard exists. 15 Q. Does the Staff have any recommendations for the Commission regarding 16 SEMCO s service valve replacement program? A. Staff recommends that the Commission support SEMCO s efforts to address the 18 issues related to the service valves. 19 Inside Meters Q. What did SEMCO include in their testimony regarding inside meters? 21 A. During main replacement [a]ll risers, regulators, and meters will be moved 22 outside of the customer premises, to reduce the pressure of the gas entering the 23 premises and improve accessibility to this equipment for SEMCO Gas personnel. 11

13 DIRECT TESTIMONY OF BRIAN MILLS PART II 1 Q. How many inside meters does SEMCO maintain? 2 A. As discussed in Mr. Simone s response to Staff s discovery, SEMCO currently 3 has 1,681 inside meters through-out Michigan which equates to less than 1% of the total meters maintained. Since 07, SEMCO has moved a total of meters outside statewide with the majority of the relocates in the EOR. 6 Q. Does Staff believe SEMCO should have a specific deadline to which all meters 7 need to be moved outside? 8 A. No. SEMCO s recognizes the importance of moving these meters outside. 9 SEMCO also undergoes measures to contact each customer in order to gain access 10 inside the home to inspect each meter. 11 Q. Does Staff have any recommendations regarding SEMCO s inside meters? 12 A. Because SEMCO has taken a proactive approach to eliminate these meters, the 13 Staff does not have any recommendations. 1 Q. Does this complete your testimony? 15 A. Yes. 12

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17 S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) SEMCO ENERGY GAS COMPANY ) to combine its MPSC Division and Battle Creek ) Case No. U Division rates and for authority to redesign and ) increase its rates, on a combined basis, for the sale ) and transportation of natural gas and for other ) relief. ) PROOF OF SERVICE Beth Schafer, being duly sworn, deposes and says that on November 19, 10, A.D., she served a copy of the attached Testimony, by electronic mail to the persons as shown on the attached service list. Subscribed and sworn before me this 19th day of November, A.D., 10 Beth Schafer Lisa Felice Notary Public, Eaton County, Michigan as acting in Ingham County, Michigan My Commission expires April 15, 1

18 MPSC Case No. U SERVICE LIST November 19, 10 Sherri A. Wellman Paul M. Collins Miller Canfield Paddock & Stone, PLC One Michigan Ave., Ste. 900 Lansing, MI Michael E. Moody, Assistant Atty General Environment, Natural Resources, and Agriculture Div. G. Mennen Williams Bldg., 6th Floor 525 W. Ottawa St.; P.O. Box Lansing, MI 8909 Vincent J. Leone Assistant Attorney General Michigan Public Service Commission 655 Mercantile Way, Suite 15 Lansing MI Eileen Wicklund City Attorney General City of Battle Creek 10 N. Division Street Battle Creek, MI 901 Michael J. Brown Carlin Edwards Brown & Howe, PLLC 60 W. St. Joe Hwy., Ste. 2 Lansing, MI 89 MBrown@cebhlaw.com Eric J. Schneidewind Varnum Riddering Schmidt & Howlett The Victor Center #810 1 N. Washington Sq. Lansing, MI 8933 ejschneidewind@varnumlaw.com Mark Cummins, Administrative Law Judge Michigan Public Service Commission 655 Mercantile Way, Suite 1 P.O. Box Lansing, MI 8909 cumminsm1@michigan.gov John R. Liskey Field Law Group PLLC 915 N. Washington Lansing MI 8906 jrliskey@fieldlawgroup.com