Pennsylvania regulators Thursday approved a revised settlement raising to $500,000 the penalty on UGI Corp. for an explosion that killed five people in Allentown, PA two years ago.

The Pennsylvania Public Utility Commission (PUC) unanimously approved a joint motion by chairman Robert F. Powelson and vice chairman John F. Coleman Jr. that increased the civil penalty from $386,000 to $500,000, which was the amount allowed by law at the time of the explosion on the UGI Utilities system (see Daily GPI, Feb. 11, 2011). The Pennsylvania legislature has since raised the maximum penalty to $1 million, an amount in line with federal regulations.

“We want to emphasize that UGI’s compliance history related to gas safety issues is patently unacceptable. 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. This goes beyond cause for concern; it is downright alarming,” Powelson and Coleman said.

Commissioner Wayne E. Gardner said that “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 provisions that UGI will not utilize the distribution system improvement charge for two years.”

Under the revised settlement, UGI is barred from recovering the charge for the costs of its replacement system for two years, said PUC spokeswoman Jennifer Kocher. The settlement calls for the utility to replace all cast iron natural gas pipelines over a 14-year period and bare steel over a 30-year period; enhance its odorant testing program; and install fixed odorant level monitoring equipment at all third-party points of delivery into UGI’s pipeline system and fixed odorizers at gate stations serving Allentown, Lancaster, Reading, Harrisburg and certain other population centers in its service territory.

If either UGI or the PUC’s Bureau of Investigation and Enforcement (I&E) object to the additional terms imposed by the joint motion, the matter will be remanded to the PUC’s Office of Administrative Law Judge for further proceedings.

Last June, I&E filed a complaint against UGI regarding the natural gas explosion, which besides the deaths, forced more than 750 people to evacuate over a three-block area and damaged numerous properties.

The complaint alleged that UGI failed to promptly and effectively respond to the gas leak and explosion; had insufficient levels of natural gas odorant in its distribution system; failed to comply with regulations for its natural gas odorant testing program; and failed to adequately and timely respond to “warning signs” regarding the integrity of its cast iron mains. The source of the natural gas that led to the explosion was a 12-inch diameter cast-iron main with a circumferential crack that had been installed in 1928, according to the I&E complaint (see Daily GPI, July 9, 2012).

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