State hits PSE with $1.25 million fine

State regulators have fined Puget Sound Energy (PSE) $1.25 million for fraudulent natural gas pipeline inspection records spanning a four-year period. The fine is the largest penalty ever imposed by the state on a natural-gas distribution company.

Faulty pipeline records cited

State regulators have fined Puget Sound Energy (PSE) $1.25 million for fraudulent natural gas pipeline inspection records spanning a four-year period. The fine is the largest penalty ever imposed by the state on a natural-gas distribution company.

In approving a settlement agreement, the Washington Utilities and Transportation Commission (UTC) levied the fine against PSE for record-keeping violations committed by the utility’s Kirkland, Wash.-based subcontractor, Pilchuck Contractors, Inc. Although Pilchuck performed the inspections and prepared and maintained PSE’s safety records, Puget is legally responsible for its pipeline-inspection program and for required record-keeping.

“Accurate record-keeping is a critical component of pipeline safety and vital to the commission’s ability to perform safety inspections,” said Mark Sidran, chairman of the three-member UTC. “Falsifying safety records is a particularly serious violation, warranting a serious penalty.”

The UTC oversees pipeline safety in Washington including PSE’s 11,350 mile natural-gas distribution system in Washington. State regulations require PSE to maintain gas-leak records – including specific dates and times a leak was investigated and who did the inspection – as long as the pipeline is in use.

The violations involved so-called “phantom leaks,” where a natural-gas odor is investigated but no leak is found. Regulations require a follow-up inspection within 30 days, using a second inspector who did not investigate the original leak.

An audit of PSE inspection records from Jan. 2002 through Dec. 2005, revealed 209 violations, including submitting false statements regarding inspections and altering pipeline safety-maintenance documents. In some the follow-up “phantom leak” inspection records contained a second person’s name, although the entry was filled out in the same handwriting as the person who did the original leak investigation.

In others, a second person could not have performed the follow-up inspection because that person was not investigating leak inspections on a particular day in a certain area. The investigation also found documents apparently falsified intentionally to show inspections were done within the 30-day requirement when, in fact, they were performed later.

Under the settlement, PSE will establish a quality control program to better monitor its subcontractors and make changes to its leak records system to prevent fraudulent entries and improve record-keeping procedures. The company also will undergo an independent audit of all gas safety-inspection records. Puget will not recover the $1.25 million penalty or the first $250,000 of the cost of the independent audit from its customers.

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