Fine demonstrates need for open records

A whistle-blower tip has led to a $1.25 million fine against Puget Sound Energy for fraudulent natural gas pipeline inspection records. The fine is the largest penalty ever imposed by the state on a natural gas distribution company.

The fine helps make the case why pipeline records should remain open to public inspection — an issue the pipeline industry has resisted in the state Legislature and in the courts.

The state Utilities and Transportation Commission levied the fine against Puget, which serves 721,000 natural gas and one million electric customers in 11 counties in Washington state. Puget has 2,400 employees, assets of $7.1 billion and the utility’s 2006 revenue totaled $2.9 billion.

The UTC, which oversees pipeline safety, imposed the fine because of violations committed by Pilchuck Contractors Inc. of Kirkland, a subcontractor hired by the utility to perform and maintain natural gas pipeline inspections and records.

Puget has worked with Pilchuck since 2001. Sue McLain, Puget’s senior vice president of operations, said 90 percent of Pilchuck’s inspection records were accurate.

But after the whistle-blower complaint, an audit of PSE inspection records from January 2002 until December 2005 uncovered 209 violations, including:

• False inspection statements.

• Altered pipeline maintenance documents.

• Falsified documents to show timely natural gas leak inspections.

“Falsifying safety records is a particularly serious violation, warranting a serious penalty,” UTC Chairman Mark Sidran said in prepared comments.

McLain said, “We accept full responsibility and recognize the importance of our records. The (inspection) work itself was always performed, and there was no risk to the public.”

It’s not as if this was the first fine for Puget. The company was fined $995,000 last year for the alleged illegal release of private customer data. Puget was fined $500,000 in 2005 for steel pipeline maintenance rule violations.

If there is good news for ratepayers in this litany of mistakes, it’s that Puget is prohibited from soaking ratepayers for the $1.25 million fine or the first $250,000 in costs for the independent audit.

“Puget Sound Energy cannot raise electric or (natural) gas rates to pay the penalty,” UTC spokeswoman Marilyn Meehan said.

Under terms of the agreement Puget has the option of asking Pilchuck to pay the fine.

Also Puget will be subject to an independent audit of all its natural gas safety inspection records. 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.

Clearly, Puget has let its 1.7 million customers down. Falsifying pipeline maintenance records is a serious breach of trust.

And that’s why it’s imperative that pipeline records continue to be open to public inspection. The industry has a terrible track record, yet continues to press to seal certain records from the public. After failing to win their case in the Legislature, industry attorneys have turned to the courts for assistance. This latest fine should give judges all of the ammunition they need to shoot down requests to seal pipeline records. It’s a matter of public trust.