This seems like an issue with the tool. Network Analyst and Utility Network Analyst are still very much 2-D tools, or at least the come from that lineage and rely on those associated assumptions.
Two possbible work arounds I can think of:
1. Edit the pipe so it is not "perfectly" vertical, and therefore has a XY length > 0. In reality the pipe is probably not perfectly verticals, right? Maybe it's off by a few millimeters?
2. Edit the pipe so that it is merged with some other feature that has a XY length > 0. The final upside down "L" shaped feature would have x,y,z coordinates of something like (0,0,0), (0,0,10), (1,1,10). thus preserving the vertical infomation and instilling a horizontal length, teh latter seeming to be a be a requirement.