Utility concedes pipeline contractor’s fraudulent record-keeping

State regulators today 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-based subcontractor, Pilchuck Contractors, Inc.

“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 here 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 January 2002 through December 2005 revealed 209 violations, including submissions of false statements regarding inspections and alterations of pipeline safety-maintenance documents. Some of 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.

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.

PSE is the state’s largest electrical and natural gas utility, serving more than 1 million electric and 729,000 natural-gas customers in 11 counties, primarily in western Washington.

For more information, go to UTC’s Web site: www.utc.wa.gov.