May 23, 2007
PG-060215


OLYMPIA, Wash. – Staff members at the state agency that regulates pipeline safety are recommending a $2 million penalty against Puget Sound Energy (PSE) for failing to keep accurate and complete documentation of suspected gas leaks.

After reviewing PSE’s natural-gas pipeline inspection records over a four-year period, staff members of the Washington Utilities and Transportation Commission (UTC) allege PSE’s contractor, Pilchuck Contractors, Inc., violated recordkeeping rules by intentionally filling out leak-inspection reports with incorrect information or changing those reports to reflect compliance. The UTC staff identified 209 violations during an audit of the company’s pipeline safety records from January 2002 through December 2005.

Although PSE’s pipeline safety records were prepared and maintained by its Kirkland-based subcontractor, Pilchuck, PSE is responsible by law for ensuring its pipeline system complies with state pipeline-safety requirements.

The three-member commission is not bound by its staff recommendations and will set a schedule for hearing this complaint in the near future. If the UTC rules against PSE, the utility company would not be allowed to recover the penalties from ratepayers in any future rate case.

The UTC monitors PSE’s compliance with pipeline-safety regulations, including its pipeline-safety records, for the company’s 11,350 mile natural-gas distribution system in Washington.

The state’s pipeline-safety program depends in large part on the accuracy and reliability of pipeline-safety records prepared by the regulated companies. State regulations require PSE to maintain records containing the specific dates and times a suspected leak was investigated and the name of the person who performed the inspection.

PSE must maintain its gas-leak records for as long as the pipeline is in use. PSE’s operating manual requires inspections of “phantom leaks,” where a reported leak is investigated but no leak is found. PSE must do a follow-up inspection within 30 days by a second person not involved with reporting the original phantom leak.

In examining the company’s pipeline-safety records, UTC staff members found several instances where PSE was unable to provide original gas-leak records. They also discovered numerous inspection reports allegedly filled out by someone other than the person who conducted the inspection. In still other instances, the required follow-up inspections were allegedly not performed within 30 days.

PSE is the state’s largest electrical and natural gas utility, serving more than 1 million electric and 718,000 natural-gas customers in 11 counties, primarily in Western Washington.