And who made the promises? Nearly every state across the country that, through their legislatures or state utility commissions (PUCs), adopted infrastructure tracking mechanisms to reward the LDCs with accelerated cost recovery for replacing pipes rather than requiring the LDCs to explore lower-cost solutions for customers. The scheme was a great solution for the LDCs over the past ten years. Thanks to the replacement of thousands of miles of aging pipes, the average bill for residential customers has increased by 33%, even though residential customers on average use 21% less gas. Gas customers now pay roughly twice as much to have the gas delivered than for the gas itself. Hooray for promises for the LDCs. But not for LDC ratepayers.
The virtually exclusive reliance on pipe replacement as the remedy of choice by LDCs has produced catastrophic results for LDC ratepayers and the public generally. The erase and replace solution is:
Expensive. Alternatives to replacement are far cheaper for customers.
Exploitive of a Failed Cost-Recovery Mechanism. Widespread use of infrastructure tracking mechanisms removes any incentive for LDCs to investigate and deploy lower-cost solutions.
Primitive. Technological advances in remediating risky pipes make it unnecessary to rely on the decades-old solution of erase and replace.
Destructive and Disruptive. Replacing pipes tears up landscaping, sidewalks, and driveways in entire neighborhoods, and disrupts traffic for days.
Wasteful. Pipes can be repurposed through relining or repair, rather than left to decay in the ground and permanently obstruct later municipal and utility projects.
Inconsistent with Declining Gas Throughput & Growing Competition from Electric Alternatives. Spending money to install new pipes makes no sense in the face of declining throughput and simply leads to further increases in delivery charges.
The Regulatory Background
The federal Pipeline and Hazardous Materials Safety Administration (PHMSA) has regulatory authority over the safety of the nation’s gas pipelines. With the enactment of the Pipeline Inspection, Protection, Enforcement, and Safety (PIPES) Act of 2006, the reach of federal law was extended to gas distribution pipeline operators, and led to PHMSA’s adoption of the DIMP rule in 2009.
The LDCs routinely claim that the DIMP rule requires them to replace aging pipes with new ones. It doesn’t. PHMSA’s DIMP regulations are codified in 49 C.F.R. Part 192, Subpart P (§§192.1001–192.1015), and require each LDC to develop and implement a written integrity management program designed to identify and reduce risks within its system. Among other requirements, LDCs must identify potential threats to their distribution infrastructure, evaluate and rank the risks associated with different segments of the system, and implement measures designed to address those risks. These measures may include a range of actions, such as enhanced leak detection, increased inspection frequency, improvements to corrosion control, pressure reductions, targeted repairs, or pipe replacement. The choice of mitigation measures is left to each LDC’s engineering judgment and risk evaluation, subject to oversight by state pipeline safety regulators. Nothing in the DIMP rule mandates that LDCs retire or replace higher-risk pipe materials at any specified rate or by any specified date.
Nor is there anything in the U.S. Department of Transportation’s subsequent “Call to Action” in 2011 that requires aging or risky pipe to be replaced to the exclusion of remediation by other means.1 The Call to Action encouraged states to speed up the remediation of “high-risk” cast iron and bare steel pipelines and to adopt special rate mechanisms that would accelerate the recovery of the associated costs. The instruction from DOT and PHMSA notably refers to “the timely rehabilitation, repair, or replacement” of high-risk gas pipelines rather than mandating replacement as the sole remedy.
Notwithstanding the flexibility available to LDCs under their DIMPs to remediate “high-risk” pipes by any number of means, the vast majority – about 99% – of aging pipe remediated since the Call to Action has been through replacement. This erase and replace solution is the most profitable path for the LDCs, and the most expensive solution for customers. Moreover, it is the pathway most likely to contribute to billions of dollars in stranded investment – ultimately borne by ratepayers and/or taxpayers – as the gas system nationwide continues to constrict due to lower sales volumes, primarily from the transition to electric heat pumps.
Replacement is the Most Expensive Solution for Customers (and the Most Profitable One for LDCs)
LDCs routinely take the position that replacing mains is more efficient and cost-effective than repairing leaks. However, the cost of pipe replacement exceeds that of leak repair by orders of magnitude, and leak repair technology has now evolved to the point where, for certain pipe materials, it competes with pipeline replacement for longevity.
As an example, National Grid’s Boston Division reported average leak repair costs for leak-prone mains over the past three years of $4,780 per leak in the recent Gas System Enhancement Plan (GSEP) proceeding in Massachusetts. Meanwhile, the cost to replace a mile of main in 2025 was $4.7 million.2 Assuming four leaks in a one-mile section of distribution pipeline (i.e., a leak rate of 4 leaks/mile), repairing the leaks would cost $19,120. Alternatively, replacing the entire mile would cost roughly 245 times more ($4.7 million). National Grid invariably opts to replace the entire pipe segment. Why? Because the erase and replace solution is vastly more profitable for an LDC.
The pipe replacement project is a capital investment that will be included in the LDC’s rate base – upon which the LDC will earn a profit throughout the minimum 50-year service life of the main. The LDC will also recover depreciation expense for each year the pipe remains in service. (In the case of National Grid, in addition to depreciating the $4.7 million cost of the replacement pipe over its useful life, it will collect an additional 80% – or $3.76 million – in “net negative salvage” to reflect the estimated cost of pipe removal – even though the pipe is not in fact removed at the end of its useful life but rather is cut and capped and abandoned in the ground – producing an annual depreciation expense for this pipe replacement project of $169,200.)
The repair option, in contrast, produces no profit for the LDC. Because the repair typically does not extend the useful life of the main, the expense cannot be capitalized and included in the LDC’s rate based as a capital investment. Rather, the $19,120 cost incurred would be recovered through the LDC’s annual operations and maintenance budget. These routine expense items are mere “pass-through” costs for the LDC – reviewed and approved in general rate cases – and do not generate profits.
Replacement Is the Consequence of a Flawed Cost-Recovery Mechanism
As discussed in my earlier Substack post, Debased Rates: How Infrastructure Trackers Thwart Regulatory Scrutiny, states responded to the Call to Action by implementing cost recovery trackers that expedite the rate recovery of pipe replacement costs. In fact, by the early 2010s, over 40 states had these trackers in place. An essential feature of these trackers is that the regulatory lag that otherwise exists as part of the traditional ratemaking process – which provides an incentive to LDCs to minimize costs – is eliminated in favor of prompt dollar-for-dollar rate recovery of pipe replacement expenditures. As a result, there was little incentive for LDCs to explore lower cost options to address risky pipes, and the default erase and replace solution was used in the vast majority of projects. Capital expenditures by LDCs more than quadrupled since the Call to Action, from less than $6 billion in 2010 to over $28 billion in 2023.
Replacement Fails to Take Advantage of New Technology
Outside of the U.S., gas distribution companies have been aggressively exploring and implementing new technology to repair or reline pipes at a lower cost rather than replacing them. Three technologies in particular are worth mentioning:
Plastic sleeving. The interior of some cast iron and unprotected steel distribution pipes can be sleeved or lined with a flexible plastic insert fitted tightly within the pipe needing repair. According to an EPA fact sheet, “installing flexible liners offers an immediate payback when compared to the costs of excavation and installation of protected steel or plastic pipe.”3 EPA estimated the cost of installing liners at $10,000 per liner in 2011.
Cured-in-place liner (CIPL) pipeline renewal systems. CIPL systems can line cast iron and steel pipes from 4” to 48” in diameter, creating a durable bond and impermeable composite pipe that is bonded as an inner liner to the host pipe without trenching. Extensive testing by NYSEARCH/PHMSA and Cornell University has established that CIPL can extend the life of cast iron pipes by up to 100 years of simulated aging.4 Remediating pipe through CIPL is 30-60% cheaper than replacing the pipe. One CIPL installer, for example, cites a 2025 pricing estimate of $333.50 per foot to install CIPL on an 8” diameter pipe, which is a cost-per-mile of $1.76 million, or about 60% cheaper than National Grid’s $4.7 million per-mile replacement cost in 2025.5
CISBOT (cast iron sealing robot). CISBOT is another internal pipeline repair and renewal technology that allows for more efficient sealing of cast iron joints by using a robotic system that enters live, large-diameter cast iron gas main to internally remediate leaks and prevent new leaks from forming.
Brazil renewed 155 miles of pipeline between 1999 and 2004 by inserting polyethylene pipes, or plastic liners, into its existing cast iron network, a technique known as “slip-lining.” CIPL has been used for about 45 years, beginning with the Pipeline Automatic Lining System (PALTEM) liner developed in Japan in 1980 by Ashimori Industry Co., Ltd. in conjunction with a Japanese gas company. Germany developed its own CIPL liners in the late 1990s – the Starline® system invented by Karl Weiss in Berlin – a technology that was subsequently licensed for North America to Progressive Pipeline Management (PPM) of Wenonah, New Jersey in 2002. CISBOT, for its part, was developed around 2010 by ULC Robotics (now ULC Technologies) in collaboration with Con Edison and National Grid.
Unlike the experience in other countries, the gas industry in the U.S. has shown minimal interest in internal pipeline repair and renewal. In 2015, PHMSA began asking operators to report their reconditioned cast iron (RCI) mileage as a new material category. As of 2015, there were 20.5 miles of RCI, which increased to 46.5 miles by 2024. PPM, for its part, has deployed the Starline® technology using materials manufactured in Germany in gas distribution mains for National Grid, PSE&G, Con Edison, and Philadelphia Gas Works.
Replacement Tears Up Entire Blocks and Disrupts Traffic for Days
Apart from the lower cost of remediating risky pipes, using internal pipeline renewal and repair solutions provides significant benefits for communities, by avoiding the road closures and construction delays associated with pipe replacement projects. Instead of tearing up streets and landscaping for several blocks, CIPL requires only the digging of access holes at intervals that can be several hundred feet apart. For pipes of 4-10 inches in diameter, for example, the trenches can be up to 800 feet apart; for CIPL projects of 12-24 inch diameter pipe, the pits can be up to 1200 feet apart.
Assuming remediation of an 8” pipe for a half-mile segment, for example – about five city blocks – only six openings would be necessary rather than the disruption associated with the pipe replacement option: close down the street for days, hire police to reroute the traffic, and bring in heavy equipment to dig a half-mile long trench. And the restoration costs are dramatically reduced, as repaving/landscaping is limited to restoring only the areas where pits were dug.
CISBOT offers similar benefits – the access holes are somewhat closer together (up to 500 feet apart) – but CISBOT provides the additional advantage of avoiding any interruption of gas service, as it can be deployed inside “live” pipelines.
Replacement Is Wasteful
Leaving the pipe to simply rot in the ground, rather than repurposing it through relining, is just plain wasteful. Moreover, future municipal and utility projects will be forced to deal with the obstruction and complications when they run into the corroded pipe years from now. On the heels of our observance of Earth Day 2026 last week, we should be pursuing solutions that maximize the usefulness of existing assets rather than simply erasing and replacing them.
Replacement Is Inconsistent with Declining Gas Throughput & Growing Competition from Electric Alternatives
Another driver for the erase and replace approach is the false premise urged by LDCs that the gas system will remain in place in perpetuity and thus a relatively permanent solution – replacement – is more cost-effective for customers. LDCs routinely claim in cost recovery proceedings that repairing leaks is a waste of money as it merely delays the inevitable replacement of pipes.
It is no longer a “given,” however, that the gas distribution system will have a permanent presence in the energy landscape, in light of advances in electric heat pump technology and the declining throughput in the gas system as gas customers transition into electrified solutions. Moreover, for those states with aggressive greenhouse gas (GHG) reduction targets, the shrinking of the gas system is a statutory requirement that undermines any suggestion regarding the eternalness of the gas distribution system. A low-cost repair that can extend the life of a pipe by 5 to 10 years, for example, may be sufficient to provide the lead time necessary to enable implementation of a non-gas pipeline alternative (NPA), such as decommissioning a pipe segment in favor of a neighborhood electrification project.
What States Can Do About It
State regulators should be asking tough questions of their LDCs regarding the evaluation of CIPL and CISBOT solutions as alternatives to continued reliance on erase and replace. At a minimum, LDCs should be required to “show their work” that these lower-cost internal renewal and repair solutions were thoroughly evaluated before they are allowed to recover any costs associated with the erase and replace path. Imposing this requirement is not a novel theory; it is simply a matter of the LDC having to sustain its burden of proof that it is pursuing the lowest-cost solution for customers.
As discussed in Debased Rates: How Infrastructure Trackers Thwart Regulatory Scrutiny, cost recovery mechanisms should encourage innovation rather than rewarding reliance on expensive, decades-old solutions. So long as infrastructure trackers remain in place – thereby removing any incentive for LDCs to minimize the costs of remediating risky pipes – LDCs will likely continue to disregard lower-cost solutions in favor of the default erase and replace solution.
1 Following several high-profile pipeline accidents, Transportation Secretary Ray LaHood issued a Call to Action urging states to create programs to accelerate pipeline replacement. This was followed by a direct request to state regulators by PHMSA Administrator Cynthia Quartermain urging the adoption of expedited rate recovery mechanisms.
2 MA DPU, Docket No. 25-GSEP-03, Exhibit NG-GPP-9.
3 EPA, Insert Gas Main Flexible Liners, PRO Fact Sheet No. 402 (2011) at 2.
4 David W. Merte, Cured-in-Place Liner Research Demonstrates Long-Term Viability, Underground Infrastructure Magazine (February 2016, 71:2); NYSEARCH, Cured-in-Place Liner (CIPL) Durability and Longevity Testing.
5 Progressive Pipeline Management, Cured-in-place lining (CIPL) for the life extension and renewal of natural gas pipelines – Comprehensive FAQ, ProgressivePipe.com, available at https://www.progressivepipe.com/cipl-faq
