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Consumers Fined $437,000 for Deadly Natural Gas Incidents

Consumers Energy, one of Michigan's largest natural gas utilities, has agreed to spend $1 million to create a response fund for natural gas disasters and to help train first responders following two deadly incidents in three years, Michigan Attorney General Bill Schuette said Monday.

State regulators on Monday also fined the utility $430,000 for the Feb. 27 explosion that killed Royal Oak resident Daniel Malczynski and damaged 30 homes in the Detroit suburb, as well as for a 2010 furniture store explosion in Wayne on Dec. 29, 2010 that killed two people.

Consumers agreed to spend $900,000 to create the Natural Gas Incident Response Fund, while $100,000 would be set aside for improved safety and training practices for first responders and utility workers in Michigan.

Victims of the disasters who are helped by the fund won't waive their right to file a lawsuit against the unit of Jackson, MI-based CMS Energy Corp., Schuette said.

In April, Consumers management admitted in an interim report concerning the Royal Oak tragedy that employees did not follow safety standards meant to protect the public.

"What happened to Daniel Malczynski was an inexcusable tragedy, and my heart goes out to his loved ones," said Schuette. "The two main goals of this $1 million agreement are, first, to ensure tragedies like this are not repeated, and second, to provide a safety net for Consumers Energy customers who face the unthinkable tragedy of a natural gas disaster."

Most of the settlement fund would be available to customers affected by state natural gas disasters. Consumers would inform customers of the fund's creation in billing statements.

Consumers agreed to the settlement following staff reports by the Michigan Public Service Commission (MPSC) regarding the two incidents. "We fully accept the commission's conclusions and the fine announced...by the MPSC and Attorney General Schuette," Consumers management stated. "As we've said previously, these incidents failed to meet our standards, or the standards expected by our customers across Michigan.

"For the Royal Oak incident, we have announced disciplinary measures, including terminations, for employees involved in this incident who failed to follow established policies and procedures. We have reinforced our training and policy education for all employees who work on our natural gas system."

Consumers said it is investing more than $200 million this year to enhance its gas system.

"It's not good enough to just respond to victims after the fact," Schuette said. "We must do all we can to ensure mistakes of the past are not repeated. To accomplish this, Consumers Energy will complete an independent study of the best natural gas safety practices in the industry and train Michigan utility workers and first responders to better respond to natural gas incidents for the protection of the public."

 The settlement agreement with the attorney general is independent of an ongoing inquiry by MPSC into the Royal Oak explosion and any sanctions that may follow.

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