Out with the Old, in with the New (Infrastructure)



How utility upgrades to infrastructure can keep Ohioans safe and improve efficiency

How often do you think about the pipes, wires, drains and ducts that carry utility services to your home? Ohio alone has over 72,000 miles worth of gas pipelines and 88,000 miles of overhead electric distribution lines. We depend on this infrastructure to keep the lights on and heat flowing. A key part of the PUCO’s mission is to ensure that utility service remains safe and reliable through infrastructure investments and maintenance.

Why replace infrastructure if it still works? 

Safety is the number one priority – physical wear and tear over time can jeopardize the integrity of the infrastructure and could lead to more accidents, less resiliency and reduced security.

The U.S. Department of Energy even notes that nationwide “our electric infrastructure is aging and is being pushed to do more than it was originally designed to do.” Updating utility infrastructure can provide more benefits beyond just safety. Improvements in technology and materials, like smart meters or plastic pipes, can allow consumers to manage their costs and utilities to reduce outages and improve service restoration times.

How is infrastructure monitored and replaced? 

While there isn’t a set age limit on utility infrastructure, there are guidelines in place to help determine when and where maintenance and replacements are needed.

When it comes to electrical safety, the National Electric Safety Code is the minimum standard. Under the Ohio Administrative Code (OAC), electric utilities in Ohio are required to comply with it.

Electric distribution companies are required under the OAC to file plans for general inspection and maintenance, which need to be reviewed and approved by the PUCO. Companies must notify the commission of any changes to the plan. Those companies also file annual reports with data about inspections and maintenance.

For natural gas lines, safety rules are developed by the U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration (PHMSA). The state of Ohio has adopted these federal regulations, and the PUCO enforces the regulations. Pipeline operators are required to file annual reports on the status of their pipeline systems.

At the PUCO, the Facility Operations and Field Division employs several inspectors in each utility category to ensure that companies follow the noted rules. The inspectors look at each operating company on a periodic basis.  Depending on the nature of the violation, the company may be able to correct the issue. The Commission can also assess fines and penalties.

Where does the money come from for upgrades and replacements? 

Utility maintenance and upgrades can cost hundreds of millions of dollars each year to replace corroded pipes, install new poles or reinforce existing wires.

Costs for traditional maintenance for aging electrical and natural gas infrastructure is usually covered through the distribution rate case process. Companies spend the initial investment, then look to recover those costs through those distribution rates.

However, some upgrade programs are funded through single-issue ratemaking mechanisms known as riders. Riders are specific and targeted charges to customers that recover the cost of updating or modernizing infrastructure.

For electrical improvements, riders are typically used for the development and implementation of smart grid or modernization programs. Such programs can install smart meters, automated equipment and digital grid technologies.

When it comes to natural gas, specific riders can cover the cost of pipeline replacement. Over the last decade or so, the PUCO required Ohio’s four major natural gas utilities to update the old cast iron and bare steel pipelines with more modern protected steel and plastic lines.

To make sure that the funds in either case are appropriately used, the PUCO have several ways to monitor results and ensure prudent spending:

  • Cost caps to make sure spending doesn’t exceed estimates
  • Project monitoring to make sure timelines are being followed
  • Annual audits with site visits to make sure only appropriate types of costs are being incurred
  • Metric measuring to ensure programs are successful

Aging utility infrastructure has become a key concern across America in the wake of extreme weather events. Federal legislation is primed to invest considerable funds into improving the resiliency and safety of the grid and pipeline networks. As Ohio’s utility regulator, the PUCO will continue its work to plan for, inspect and monitor utility infrastructure.

Information courtesy of the Public Utilities Commission of Ohio