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$500K Fine Set in Deadly PA Blast

Monday, January 28, 2013

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Pennsylvania state regulators have hiked their fine to the maximum of $500,000 against a utility company whose aging pipeline caused a fatal explosion in Allentown, PA.

The Pennsylvania Public Utilities Commission voted unanimously Jan. 24 to fine UGI Utilities Inc. $500,000, the maximum civil penalty that was allowed at the time of the explosion and an increase from the original $386,000 fine. (However, Pennsylvania Legislature recently increased the allowable civil penalties to $2 million.)

The Feb. 9, 2011, blast that killed five people was caused by a 12-inch circumferential crack in a cast-iron natural gas pipe that had been installed in 1928, according to a complaint filed in June 2012 by the PUC's Bureau of Investigation and Enforcement.

The complaint, which followed a 15-month investigation, cited UGI Energy for 179 safety violations and accused the utilities company of ignoring well-known, decades-old problems in its cast-iron main network.

fastlane.dot.gov

UGI is being fined $500,000 by the state of Pennsylvania after a pipeline explosion in Allentown that killed five people in 2011.

Settlement, Modifications

The settlement requires UGI to replace all of its cast-iron pipelines within 14 years and its bare-steel mains over 30 years. The company must also enhance its odorant testing program, install fixed odorant level monitoring equipment at all third-party points of delivery into UGI's pipeline system, and install fixed odorizers at several gate stations.

In a motion to modify the settlement, PUC Chairman Robert Powelson and Vice Chairman John Coleman Jr. "grudgingly" agreed to terms, with the following modifications:

  • UGI must pay the maximum penalty allowed under the Public Utility Code, $500,000, and not recover the increased penalty through Commission-regulated rates;
  • UGI shall explore enhanced leak detection measures and file a pilot program within 45 days of the final order to utilize the enhanced measures throughout Allentown;
  • UGI is to file a Distribution Integrity Management Program within 30 days of the final order that accounts for any replacement reprioritization that needs to occur as a result of the accelerated replacement schedules; and
  • UGI is to file a plan within 60 days of the final order that establishes an initial time schedule for meeting the agreed main replacement requirements.

"We want to emphasize that UGI's compliance history related to gas safety issues is patently unacceptable," said Powelson and Coleman.

"This is the eighth time in slightly more than four years that this commission has adjudicated a matter containing allegations of gas safety violations by a UGI-owned gas distribution utility," they said. "This goes beyond cause for concern; it is downright alarming."

naturalgaswatch.org

In the modified settlement, UGI is heavily criticized for poor compliance and inadequate safety practices.

Powelson and Coleman blamed the utility's management for failing to pay adequate attention to safety.

"This history leads to one inescapable conclusion: that UGI's management has failed to adequately focus on gas safety issues. ... To be blunt, this cannot and shall not continue. Absent sweeping changes, the commission will be forced to consider taking drastic steps if there is another catastrophic incident attributable to some failure on UGI's part," they said.

Criticized by Commissioner

Commissioner Wayne E. Gardner criticized UGI for not taking advantage of a new funding mechanism that would allow the utility to accelerate its upgrades with a surcharge on customers' bills.

"While I agree that the settlement, as modified today, is in the public interest because it accelerates the replacement schedule for UGI's cast iron pipelines, I do not agree with the settlement provision that UGI will not utilize the distribution system improvement charge for two years," Gardner said in a statement Jan. 24.

Both the joint motion and the commissioner's statement acknowledged that UGI has made management changes, and "our expectation is that the corporate culture will be reformed with an emphasis on safety."

UGI's Response

Following the modified settlement, UGI released a statement stating it was aware that the PUC had voted on the changes. The company said it planned to review the language of the order and provide a response within the indicated time frame (five business days).

The statement said, "UGI again expresses its deepest sympathies to the Hall and Cruz families who lost loved ones, and to all members of the Allentown community who were affected by the incident."

   

Tagged categories: Explosions; Health and safety; Pipelines

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