Fiscal impact
reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for
standing finance committees of the NM Legislature. The LFC does not assume
responsibility for the accuracy of these reports if they are used for other
purposes.
Current FIRs (in
HTML & Adobe PDF formats) are available on the NM Legislative Website (legis.state.nm.us). Adobe PDF versions include all attachments,
whereas HTML versions may not.
Previously issued FIRs and attachments may also be obtained from the LFC
in
|
SPONSOR |
SFC |
DATE TYPED |
|
HB |
|
||
|
SHORT
TITLE |
Pipeline Safety Fund & Inspection |
SB |
170/SFCS |
||||
|
|
ANALYST |
Garcia |
|||||
REVENUE
|
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
|
FY04 |
FY05 |
|||
|
|
|
$772.7 |
Recurring |
Pipeline
Safety Fund |
|
|
|
$322.7 |
Recurring |
General
Fund |
(Parenthesis ( ) Indicate Revenue Decreases)
Largely Duplicates HB 23.
Relates
to Appropriation in the General Appropriation Act for the Public Regulation
Commission, Pipeline Safety Bureau FY05 operating budget.
LFC Files
Response
Received From
Public
Regulation Commission
SUMMARY
Synopsis of Bill
The bill establishes a new, non-reverting fund
called the Pipeline Safety Fund (Fund), to pay for the operations of the Public
Regulation Commission’s (PRC) duties under the Pipeline Safety Act and Chapter
62, Article 14 NMSA 1978. Establishment
of the fund will allow the PRC to expand and eventually pay for the base
operations of the Pipeline Safety Bureau to conform to federally-recommended
staffing levels and inspection cycles on intrastate pipeline facilities, with
the eventual goal of assuming the inspection function on interstate pipeline
facilities from the federal government.
The PRC would collect fees from regulated
entities subject to the Pipeline Safety Act.
The bill further specifies the maximum rate of assessment that can
imposed, and requires the PRC to annually report to the Legislature the amount
of fees collected in the previous year, the amount expended in performance of
its duties, and the fee rates and total fees anticipated to be collected the upcoming
year. The proposed bill also allows
natural gas public utilities to recover the cost of the fee from their
rate-payers without the necessity of a rate case.
In addition, the bill directs the Pipeline and
Safety Bureau to conduct master meter outreach and education. Master meters are
pipeline systems that transmit gas to the ultimate consumer such as a mobile
home park or apartment complex. The outreach and education provision would
concentrate on coordinating and conducting education and certification programs
for pipeline safety laws as well as developing agreements with municipal governments
for dual jurisdiction and inspection of master meters.
Significant Issues
1) The
bill specifies that the fees cannot exceed certain maximums, and allows the PRC
to set fees at levels below the maximum to match the anticipated revenue with
the estimated program costs. There are
currently only three natural gas public utilities regulated by the PRC, and,
per the proposed fee structure, they would shoulder the majority of the fees
imposed. The three regulated utilities
provide retail and wholesale gas service to the majority of
2) The
PRC conducts its intrastate pipeline safety programs through the Pipeline
Safety Bureau of the Transportation Division, through a 60105 and a 60106
agreement with the US Department of Transportation for gas and oil pipeline
facilities, respectively. Approximately, 40
to 50 percent of the pipeline safety program cost has historically been
provided by the federal government on a reimbursement basis, and is expected to
continue into the future.
3) The
Legislature would continue to set appropriation levels from the “Pipeline
Safety Fund” and budget the operations of the Pipeline Safety Bureau.
4) The
5) The Bureau has been historically under-funded
and is under-staffed to perform the current inspection, investigation, and
enforcement duties. As a result, federal
audits have historically found severe deficiencies in the Bureau’s record
keeping, accident investigation follow-up, enforcement, and inspection
frequency. New inspection and
investigation requirements have also been enacted by federal regulations and
the recent modification to
6) A recent
pipeline accident on an interstate pipeline (under the jurisdiction of the
federal government) in the
7)
Passage of the bill will enable the Bureau to improve its compliance with
federal and state requirements.
8) The
projected total impact of the fees imposed will be less than $1 per year per
FISCAL IMPLICATIONS
The House
and Senate adopted appropriation (
Consequently,
it is anticipated that the annual pipeline inspection fees provided for in the
bill on regulated utilities will be sufficient to fully fund the state’s
portion of the cost of performing the PRC’s duties. In FY06 and beyond, the
fees raised from pipeline inspection is expected to pay for both the Bureau’s
expansion costs plus the base operations cost. The savings to the general fund
from supplanting base operation costs is $322.7 thousand annually, as well as
an estimated $450 in expansion costs annually for a total of $772.7.
Consequently, the net gain to the general fund will be the cost of base
operations, or $322.7 thousand in FY06 and beyond.
ADMINISTRATIVE IMPLICATIONS
Passage
of the bill would result in improved relations with the federal Office of
Pipeline Safety, as well as more efficient functioning of the one-call
notification system for the prevention of excavation damage to underground
utilities.
The
PRC would have to set up procedures for assessing the fees and administering
this Fund. However, this could probably
be handled with current staffing levels.
OTHER SUBSTANTIVE ISSUES
Currently, the Pipeline Safety Bureau in
DG/lg:yr:dm