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Fending off penalties, Washington Gas disputes blame for deadly Md. explosion

Washington Gas Light Co. told Maryland regulators that it should not face penalties over a deadly 2016 apartment complex explosion, reviving its argument that federal investigators were wrong to link the disaster to the company's natural gas equipment.

The AltaGas Ltd. subsidiary said the National Transportation Safety Board, or NTSB, lacked sufficient evidence and relied on speculation when it traced the blast and subsequent fire to the equipment. The company also defended itself against suggestions by Maryland regulators that it should have removed the equipment years before the blast occurred.

SNL Image

The Aug. 10, 2016, explosion and fire at the Flower Branch apartment complex killed seven people, sent 65 residents and three firefighters to the hospital, and damaged two buildings.
Source: Maryland Public Service Commission

Washington Gas has long disputed the NTSB's probable cause determination. The board blamed the blast on a failed service regulator in a basement meter room at the Flower Branch apartment complex in Silver Spring, Md. That failure, coupled with a disconnected ventilation line, caused an accumulation of gas that ignited, killing seven people and damaging two buildings, the NTSB said.

In September, the Maryland Public Service Commission ordered Washington Gas to respond to the NTSB's probable cause determination, outline its plan for fulfilling NTSB safety recommendations and furnish information about its program to replace mercury service regulators. The PSC informed Washington Gas that it could face fines over its failure to replace the regulators on time.

Washington Gas claims NTSB lacks 'competent evidence'

Washington Gas said in its response that equipment in the basement of the apartment complex was badly damaged in the explosion and fire, and the NTSB could not definitively trace the blast to the regulator and vent.

The company first presented that argument to the NTSB in the weeks before the board announced its determination in April. However, Washington Gas had made a case as early as June 2017 for ruling that the cause of the blast could not be determined.

Analysis by investigators hired by Washington Gas during ongoing civil litigation over the accident also supports that finding, the company said.

One of the investigators intends to testify that "absent competent evidence of a regulator failure or obstruction (there is none in this case), there is no scientifically valid means of characterizing the NTSB's regulator failure/obstruction theory as anything more than an unproven hypothesis," Washington Gas said.

Washington Gas also claimed the NTSB made factual and material mistakes about when a resident first smelled gas. Modeling of gas emissions does not match the eyewitness testimony, the utility said.

While the company disputed the NTSB findings, it is still responding to the board's safety recommendations. The company told the Maryland PSC that it expected to spend about $32 million to meet five recommendations focused on replacing and relocating mercury gas regulators and revising procedures to check vent lines.

Utility disputes alleged failures

The PSC also ordered Washington Gas to explain why it should not be fined for failing to meet its "stated commitment" in a 2003 rate case to replace 66,793 mercury regulators over 10 years and for failing to use $654,000 collected from ratepayers for that purpose.

But Washington Gas suggested the PSC's orders are misleading because the PSC's own ratemaking policy does not require utilities to track or reconcile costs tied to a specific program except in rare cases, the company said. The policy also does not require utilities to use money allocated to programs in rate cases solely for that purpose, it said.

"[T]he commission has historically disfavored forward-looking trackers, i.e., accounting mechanisms, to record specific costs for future reconciliation in rates," Washington Gas explained. "Thus, dollars from customers pursuant to a revenue adjustment are mutually interchangeable with dollars collected from customers for the other cost of service elements."

As an example, the company said it shifted funds from mercury regulator removal in the early days of the program, reallocating the resources to tackle an "unprecedented and significant increase" in gas leaks in Prince George's County, Md., which began in fall 2003. Once it addressed the high-priority leaks, Washington Gas turned its attention back to the regulator replacement program.

Washington Gas also argued that the $654,000 revenue adjustment for regulator removal was only in effect for the 2004-2007 period. It also noted the adjustment put forward in the proposed rate case decision that PSC ultimately adopted reflected a revised goal of replacing 42,745 meters.

The utility replaced 53,542 mercury regulators throughout its system from 2004 to 2013, according to records from a contractor hired to replace the equipment.

On Oct. 23, the PSC granted a request by Montgomery County, Md., to extend the deadline to Nov. 18 for stakeholders to comment on the Washington Gas response.