Operations Audit of the Accuracy of New York State Utilities' Self-Reported Data Gas Safety ...

530 Pages·2015·4.3 MB·English

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Case No. 13-M-0314

Operations Audit of the Accuracy of
New York State Utilities’ Self-Reported Data
Gas Safety

Submitted to:

State of New York Department of Public Service

Submitted by:

Overland Consulting
11551 Ash Street, Suite 215
Leawood, KS 66211
[phone]

April 2015

Volume 2 – Gas Safety
This document, and the opinions, analysis, evaluations, or recommendations contained
herein are for the sole use and benefit of the party or parties with whom Overland
Consulting enters into written agreements(s) solely for the purposes defined in such
agreement(s). There are no intended or permitted third party beneficiaries with respect
to this document or the opinions, analysis, evaluations, or recommendations contained
herein. Any and all copying, modification, reproduction, and/or distribution of this
document is strictly prohibited absent express prior written permission by Overland
Consulting.
Contents

1. Executive Summary – Gas Safety .............................................................................................. 1-1
Introduction ........................................................................................................................................... 1-1
Audit Scope and Objectives – Gas Safety ............................................................................................... 1-2
Regulatory Background .......................................................................................................................... 1-3
Overview of Audit Findings and Recommendations .............................................................................. 1-4
General Findings Applicable to All Utilities and Gas Safety Metrics .................................................. 1-4
Audit Recommendations Applicable to the Commission, NYSPSC Staff, and All Utilities ................. 1-6
Recommended Additions to the Gas Safety Data Filing Requirements ............................................ 1-7
Utility-Specific Audit Recommendations vs. Workshop Guidelines .................................................. 1-8
2. Gas Safety Performance Metrics Comparison ........................................................................... 2-1
Comparison of Utility Gas Safety Performance Metrics ........................................................................ 2-1
Damage Prevention............................................................................................................................ 2-2
Emergency Response ....................................................................................................................... 2-10
Leak Management ........................................................................................................................... 2-15
Infrastructure Replacement ............................................................................................................. 2-18
3. Gas Safety – Consolidated Edison ............................................................................................. 3-1
Internal Control over Systems and Processes Governing Con Edison’s Gas Safety
Performance Metrics ............................................................................................................................ 3-1
Audit Findings .................................................................................................................................... 3-2
Recommendations ............................................................................................................................. 3-2
System Controls ................................................................................................................................. 3-3
Procedural and Process Controls ....................................................................................................... 3-5
Supervisory Controls .......................................................................................................................... 3-5
Audit Controls .................................................................................................................................... 3-6
Audit of Gas Safety Performance Measures and Performance Mechanism Parameters
Reported to the NYSPSC ....................................................................................................................... 3-7
Damage Prevention............................................................................................................................ 3-9
Emergency Response ....................................................................................................................... 3-23
Leak Management ........................................................................................................................... 3-32
Infrastructure Replacement ............................................................................................................. 3-39
© 2015 OVERLAND CONSULTING i
Other Filed Information ....................................................................................................................... 3-46
Audit Findings .................................................................................................................................. 3-46
Recommendations ........................................................................................................................... 3-46
Benchmarking and Other Gas Safety Performance Metrics Collected ................................................ 3-51
Audit Findings .................................................................................................................................. 3-51
Recommendations ........................................................................................................................... 3-51
4. Gas Safety – Orange & Rockland .............................................................................................. 4-1
Internal Control over Systems and Processes Governing O&R’s Gas Safety Performance Metrics ...... 4-1
Audit Findings .................................................................................................................................... 4-2
Recommendations ............................................................................................................................. 4-2
System Controls ................................................................................................................................. 4-3
Procedural and Process Controls ....................................................................................................... 4-4
Supervisory Controls .......................................................................................................................... 4-5
Audit Controls .................................................................................................................................... 4-5
Audit of Gas Safety Performance Measures and Performance Mechanism Parameters
Reported to the NYSPSC ....................................................................................................................... 4-6
Damage Prevention............................................................................................................................ 4-7
Emergency Response ....................................................................................................................... 4-22
Leak Management ........................................................................................................................... 4-32
Infrastructure Replacement ............................................................................................................. 4-39
Other Filed Information ....................................................................................................................... 4-44
Audit Findings .................................................................................................................................. 4-44
Recommendations ........................................................................................................................... 4-45
Benchmarking and Other Gas Safety Performance Metrics Collected ................................................ 4-49
Audit Findings .................................................................................................................................. 4-49
Recommendations ........................................................................................................................... 4-50
5. Gas Safety – Niagara Mohawk Power Corporation .................................................................... 5-1
Internal Control over Systems and Processes Governing NiMo’s Gas Safety Performance Metrics ..... 5-1
Audit Findings .................................................................................................................................... 5-2
Recommendations ............................................................................................................................. 5-2
System Controls ................................................................................................................................. 5-3
Procedural and Process Controls ....................................................................................................... 5-5
Supervisory Controls .......................................................................................................................... 5-5
© 2015 OVERLAND CONSULTING ii
Audit Controls .................................................................................................................................... 5-6
Audit of Gas Safety Performance Measures and Performance Mechanism Parameters
Reported to the NYSPSC ....................................................................................................................... 5-7
Damage Prevention............................................................................................................................ 5-8
Emergency Response ....................................................................................................................... 5-20
Leak Management ........................................................................................................................... 5-29
Infrastructure Replacement ............................................................................................................. 5-35
Other Filed Information ....................................................................................................................... 5-40
Audit Findings .................................................................................................................................. 5-40
Recommendations ........................................................................................................................... 5-41
Benchmarking and Other Gas Safety Performance Metrics Collected ................................................ 5-45
Audit Findings .................................................................................................................................. 5-45
6. Gas Safety – KeySpan New York ............................................................................................... 6-1
Internal Control over Systems and Processes Governing KEDNY’s Gas Safety
Performance Metrics ............................................................................................................................ 6-1
Audit Findings .................................................................................................................................... 6-2
Recommendations ............................................................................................................................. 6-2
System Controls ................................................................................................................................. 6-3
Procedural and Process Controls ....................................................................................................... 6-5
Supervisory Controls .......................................................................................................................... 6-5
Audit Controls .................................................................................................................................... 6-6
Audit of Gas Safety Performance Measures and Performance Mechanism Parameters
Reported to the NYSPSC ....................................................................................................................... 6-7
Damage Prevention............................................................................................................................ 6-8
Emergency Response ....................................................................................................................... 6-21
Leak Management ........................................................................................................................... 6-32
Infrastructure Replacement ............................................................................................................. 6-40
Other Filed Information ....................................................................................................................... 6-44
Audit Findings .................................................................................................................................. 6-44
Recommendation ............................................................................................................................. 6-45
Benchmarking and Other Gas Safety Performance Metrics Collected ................................................ 6-49
Audit Findings .................................................................................................................................. 6-49

© 2015 OVERLAND CONSULTING iii
7. Gas Safety – KeySpan Long Island ............................................................................................. 7-1
Internal Control over Systems and Processes Governing KEDLI’s Gas Safety
Performance Metrics ............................................................................................................................ 7-1
Audit Findings .................................................................................................................................... 7-2
Recommendations ............................................................................................................................. 7-2
System Controls ................................................................................................................................. 7-3
Procedural and Process Controls ....................................................................................................... 7-5
Supervisory Controls .......................................................................................................................... 7-5
Audit Controls .................................................................................................................................... 7-6
Audit of Gas Safety Performance Measures and Performance Mechanism Parameters
Reported to the NYSPSC ....................................................................................................................... 7-6
Damage Prevention............................................................................................................................ 7-8
Emergency Response ....................................................................................................................... 7-21
Leak Management ........................................................................................................................... 7-33
Infrastructure Replacement ............................................................................................................. 7-40
Other Filed Information ....................................................................................................................... 7-46
Audit Findings .................................................................................................................................. 7-46
Recommendation ............................................................................................................................. 7-46
Benchmarking and Other Gas Safety Performance Metrics Collected ................................................ 7-50
Audit Findings .................................................................................................................................. 7-50
8. Gas Safety – New York State Electric & Gas .............................................................................. 8-1
Internal Control Over Systems and Processes Governing NYSEG’s Gas Safety Performance Metrics .. 8-1
Audit Findings .................................................................................................................................... 8-2
Recommendations ............................................................................................................................. 8-2
System Controls ................................................................................................................................. 8-2
Procedural and Process Controls ....................................................................................................... 8-4
Supervisory Controls .......................................................................................................................... 8-5
Audit Controls .................................................................................................................................... 8-5
Audit of Gas Safety Performance Measures and Performance Mechanism Parameters
Reported to the NYSPSC ....................................................................................................................... 8-6
Damage Prevention............................................................................................................................ 8-6
Emergency Response ....................................................................................................................... 8-17
Leak Management ........................................................................................................................... 8-25
Infrastructure Replacement ............................................................................................................. 8-31
© 2015 OVERLAND CONSULTING iv
Other Filed Information ....................................................................................................................... 8-37
Audit Findings .................................................................................................................................. 8-38
Benchmarking and Other Gas Safety Performance Metrics Collected ................................................ 8-41
Audit Findings .................................................................................................................................. 8-41
Recommendation ............................................................................................................................. 8-41
9. Gas Safety – Rochester Gas & Electric ....................................................................................... 9-1
Internal Control Over Systems and Processes Governing RG&E’s Gas Safety Performance Metrics .... 9-1
Audit Findings .................................................................................................................................... 9-2
Recommendations ............................................................................................................................. 9-2
System Controls ................................................................................................................................. 9-3
Procedural and Process Controls ....................................................................................................... 9-4
Supervisory Controls .......................................................................................................................... 9-5
Audit Controls .................................................................................................................................... 9-5
Audit of Gas Safety Performance Measures and Performance Mechanism Parameters
Reported to the NYSPSC ....................................................................................................................... 9-6
Damage Prevention............................................................................................................................ 9-6
Emergency Response ....................................................................................................................... 9-16
Leak Management ........................................................................................................................... 9-24
Infrastructure Replacement ............................................................................................................. 9-29
Other Filed Information ....................................................................................................................... 9-33
Audit Findings .................................................................................................................................. 9-34
Benchmarking and Other Gas Safety Performance Metrics Collected ................................................ 9-36
Audit Findings .................................................................................................................................. 9-36
Recommendation ............................................................................................................................. 9-36
10. Gas Safety – Central Hudson .................................................................................................. 10-1
Internal Control Over Systems and Processes Governing Central Hudson’s
Gas Safety Performance Metrics ........................................................................................................ 10-1
Audit Findings .................................................................................................................................. 10-1
Recommendations ........................................................................................................................... 10-2
System Controls ............................................................................................................................... 10-2
Procedural and Process Controls ..................................................................................................... 10-4
Supervisory Controls ........................................................................................................................ 10-5
Audit Controls .................................................................................................................................. 10-6
© 2015 OVERLAND CONSULTING v
Audit of Gas Safety Performance Measures and Performance Mechanism Parameters
Reported to the NYSPSC ..................................................................................................................... 10-6
Damage Prevention.......................................................................................................................... 10-7
Emergency Response ..................................................................................................................... 10-16
Leak Management ......................................................................................................................... 10-22
Infrastructure Replacement ........................................................................................................... 10-28
Other Filed Information ..................................................................................................................... 10-34
Audit Findings ................................................................................................................................ 10-34
Benchmarking and Other Gas Safety Performance Metrics Collected .............................................. 10-37
Audit Findings ................................................................................................................................ 10-37
11. Gas Safety – National Fuel ..................................................................................................... 11-1
Internal Control Over Systems and Processes Governing National Fuel’s Gas Safety Performance
Metrics ............................................................................................................................................... 11-1
Audit Findings .................................................................................................................................. 11-2
Recommendations ........................................................................................................................... 11-2
System Controls ............................................................................................................................... 11-2
Procedural and Process Controls ..................................................................................................... 11-4
Supervisory Controls ........................................................................................................................ 11-4
Audit Controls .................................................................................................................................. 11-5
Audit of Gas Safety Performance Measures and Performance Mechanism Parameters
Reported to the NYSPSC ..................................................................................................................... 11-6
Damage Prevention.......................................................................................................................... 11-6
Emergency Response ..................................................................................................................... 11-15
Leak Management ......................................................................................................................... 11-25
Infrastructure Replacement ........................................................................................................... 11-31
Other Filed Information ..................................................................................................................... 11-35
Audit Findings ................................................................................................................................ 11-36
Recommendations ......................................................................................................................... 11-36
Benchmarking and Other Gas Safety Performance Metrics Collected .............................................. 11-39
Audit Findings ................................................................................................................................ 11-39

© 2015 OVERLAND CONSULTING vi
List of Tables

Attachment 1-1 – Interview List
Attachment 1-2 – Detailed Listing of the Report Findings
Attachment 1-3 – Detailed Listing of the Report Recommendations

Table 2-1 – Treatment of Coating Damages .............................................................................................. 2-5
Table 2-2 – Treatment of Damages Attributed to Work Performed on Behalf of the Local Electric Utility2-7
Table 2-3 – Treatment of One-Call Ticket Activity ..................................................................................... 2-8
Table 2-4 – Emergencies Reported by Operator-Qualified Personnel During Normal Business Hours .. 2-12
Table 2-5 – Emergencies Involving Foreign Odors ................................................................................... 2-13
Table 2-6 – Emergencies Called in as Carbon Monoxide Incidents ......................................................... 2-14
Table 2-7 – Leak Backlog vs. Main Mileage – 2013 .................................................................................. 2-16
Table 2-8 – Leak Backlog vs. Number of Services – 2013 ........................................................................ 2-17
Table 2-9 – Grouping of Leaks.................................................................................................................. 2-18
Table 2-10 – Infrastructure Replacement Requirements – 2013 ............................................................ 2-19
Table 2-11 – Leak-Prone Infrastructure vs. Total Infrastructure – December 31, 2013 .......................... 2-20
Attachment 2-1 – Individual PI Metrics Reported by Utility to the NYSPSC by Year
Attachment 2-2 – Customer Service Questionnaire

Table 3-1 – Hypothetical Emergency Response Time Durations Impact on Reported Metrics ................. 3-4
Table 3-2 – Gas Safety Performance Mechanism Parameters .................................................................. 3-8
Table 3-3 – Damages Per 1,000 One-Call Tickets Pursuant to Rate Case Requirements
For the Calendar Year .......................................................................................................... 3-12
Table 3-4 – Damages Per 1,000 One-Call Tickets For Use in the State’s Gas Safety
Performance Measures Report For the Calendar Year ....................................................... 3-13
Table 3-5 – Raw Data Used to Calculate Damage Prevention Metrics Pursuant to
Current Rate Case Requirements For the Calendar Year .................................................... 3-14
Table 3-6 – Reconciliation of State’s Rate Case Filings to Annual Report Filings
For the Calendar Year .......................................................................................................... 3-14
Table 3-7 – Raw Data Used to Calculate Damage Prevention Metrics For Use in the Gas Safety
Performance Measures Report ........................................................................................... 3-15
Table 3-8 – NYSPSC Classification of Damage Reason Codes .................................................................. 3-18
Table 3-9 – Derivation of One-Call Ticket Counts Used in Metrics – 2013 .............................................. 3-22
Table 3-10 – Emergency Response Performance Metrics For the Calendar Year ................................... 3-25
Table 3-11 – Emergency Tickets Reconciliation of Total to Quantities Used in Metrics; 2013 ............... 3-28
© 2015 OVERLAND CONSULTING vii
Table 3-12 – Emergency Calls Underlying Computation of Submitted Metrics –
Calendar Year 2013 ........................................................................................................... 3-29
Table 3-13 – Emergency Response Performance Metrics – Impact of Correcting for
Improper Inclusions For the Calendar Year 2013 ............................................................. 3-30
Table 3-14 – Leak Backlog ........................................................................................................................ 3-34
Table 3-15 – Infrastructure Replacement Performance Metrics For the Time Periods .......................... 3-41
Table 3-16 – Mileage of Main Replaced .................................................................................................. 3-42
Table 3-17 – Distances of Main Replaced – 2013 .................................................................................... 3-44
Attachment 3-1 – Leak Backlog Roll-forward – 2013
Attachment 3-2 – Other Gas Safety Metrics
Table 4-1 – Hypothetical Emergency Response Time Durations Impact on Reported Metrics ................. 4-4
Table 4-2 – Gas Safety Performance Mechanism Parameters .................................................................. 4-7
Table 4-3 – Damages Per 1,000 One-Call Tickets Pursuant to Rate Case Requirements
For the Calendar Year ......................................................................................................... 4-11
Table 4-4 – Damages Per 1,000 One-Call Tickets For Use in the Gas Safety Performance
Measures Report ................................................................................................................. 4-12
Table 4-5 – Raw Data Used to Calculate Damage Prevention Metrics Pursuant to Current Rate
Case Requirements For the Calendar Year ......................................................................... 4-13
Table 4-6 – Reconciliation of State’s Rate Case Filings to Annual Report Filings For the
Calendar Year ...................................................................................................................... 4-14
Table 4-7 – Raw Data Used to Calculate Damage Prevention Metrics For Use in the Gas Safety
Performance Measures Report For the Calendar Year ....................................................... 4-15
Table 4-8 – PSC Classification of Root Causes .......................................................................................... 4-18
Table 4-9 – Derivation of One-Call Ticket Counts Used in Metrics – 2013 .............................................. 4-21
Table 4-10 – Emergency Response Performance Metrics For the Calendar Year ................................... 4-25
Table 4-11 – Emergency Tickets Reconciliation of Total to Quantities Used in Metrics; 2013 ............... 4-27
Table 4-12 – Emergency Calls Underlying Computation of Submitted Metrics – Calendar Year 2013 ... 4-28
Table 4-13 – Emergency Response Performance Metrics Impact of Correcting for Improper
Inclusion of Other States’ Data in Metrics For the Calendar Year 2013 ........................... 4-29
Table 4-14 – Emergency Calls Sensitivity of Reported Metrics – Calendar Year 2013 ............................ 4-31
Table 4-15 – Leak Backlog As of December 31, XXXX .............................................................................. 4-34
Table 4-16 – Roll-Forward of Total Leak Backlog 2013 ............................................................................ 4-39
Table 4-17 – Infrastructure Replacement Performance Metrics For the Time Periods .......................... 4-41

© 2015 OVERLAND CONSULTING viii