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Staff of Va. utility regulator uses WGL/AltaGas merger to push safety changes

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Staff of Va. utility regulator uses WGL/AltaGas merger to push safety changes

Safety program improvements should be part of the deal if the Virginia State Corporation Commission decides to approve AltaGas Ltd.'s proposed acquisition of WGL Holdings Inc., according to the commission's staff.

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In reviewing WGL's proposed merger with AltaGas, the Virginia SCC staff recommended WGL implement risk-focused safety systems for its pipeline operations.

Source: S&P Global Market Intelligence

In a move aimed at tackling contractor cheating on gas utility work qualifications tests, staff recommended the commission stipulate as part of a merger approval that within six months of the deal closing, WGL should come up with a plan for new, secure qualification testing protocols.

Qualifications tests show competence in a range of activities, including welding, pipe burying, leak surveying and corrosion monitoring, and the SCC earlier this year began investigating qualifications-test cheating by a number of contractors working for gas utilities in Virginia. WGL was among the companies that had to suspend some contract employee work and retest a number of contracted field workers. The staff recommendation appeared aimed at preventing these types of work-stopping issues in the future.

The commission staff also recommended that a merger approval include requirements for WGL's subsidiary Washington Gas to fully put in place pipeline safety management systems — comprehensive business programs designed to help entities understand and mitigate risk.

The American Petroleum Institute created an official recommended practice for safety management systems, and Massoud Tahamtani, the SCC's director of utility and railroad safety, has emphasized that even though the standard is voluntary, regulators should work it into requirements for their regulated utilities.

Acting on that attitude, commission staff said that within six months of the merger close, WGL should have set up its pipeline safety management system. That system should include a strategy for identifying gaps in safety, fixing them and cyclically reviewing their safety practices, in addition to periodic assessments of company culture as it relates to safety.

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The Virginia SCC staff said WGL should have to report on any decisions to cut employees that perform safety-related work.

Source: S&P Global Market Intelligence

Staff recommended that for five years after the merger closes, WGL should be required give the commission an annual report showing any staffing cuts related to safety. The report would include job titles and responsibilities that relate to safety codes, rules and standards that apply in Virginia, along with what WGL has done to prevent the staffing cuts from adversely affecting the company's safety, the staff said.

Also for five years after the merger closes, WGL should submit an annual report to the SCC on what the company finds during compliance audits of safety-related tasks being done in the field. The report would include the number of audits, any ways in which personnel did not meet safety requirements, and what remedies the company took when field work was deficient.

The Federal Energy Regulatory Commission on July 6 approved AltaGas' proposed $6.4 billion acquisition of WGL, but the companies still need approval from Virginia, Maryland and D.C. utility regulators. The Virginia SCC's staff recommendation will be considered as part of the commission's decision on the transaction.