Phoenix, Ariz. (November 8, 2024) – The Arizona Corporation Commission unanimously voted on Wednesday November 6, 2024, to approve a Consent Agreement between Southwest Gas Corporation (SWG) and the Arizona Corporation Commission Office of Pipeline Safety (AZOPS). The agreement proposes a resolution of issues arising from two incidents involving Southwest Gas in 2021. In 2021, there were two separate incidents that occurred in Chandler and Scottsdale, with the Chandler incident resulting in an explosion that injured four people.AZOPS investigators concluded that the pipe purchased by Southwest Gas degraded in high-heat areas, leading to leaks and possible explosions. The investigators further concluded that Southwest Gas failed to properly map where this type of pipe, referred to as Driscopipe polyethylene (PE) M7000 and M8000, was located and needed to increase leak patrols. The mapping errors lead to an incorrect understanding of where the potentially failing piping is located. Maintaining accurate records is mandated by law.
Southwest Gas accepted responsibility and agreed to pay the Commission $2,000,000 as a civil penalty. As part of the agreement, Southwest Gas must also plan to replace or abandon all newly discovered, previously unmapped services with no active meter sets or stubs identified underground that contain the defective piping material. Southwest Gas must also notify AZOPS of leaks found in M7000 and M8000 services to enable AZOPS to continue to monitor the situation.
Southwest Gas estimates that more than 10,000 miles of M7000 and M8000 pipes are installed throughout Arizona. The company maintains a Distribution Integrity Management Plan to target high-risk portions of pipe for replacement or abandonment.
An amendment proposed by Commissioner Kevin Thompson was also approved. It clarified that the enactment of the settlement does not constitute approval or authorization by the Commission to recover the costs of pipe replacement or costs associated with fulfilling the settlement terms in any upcoming rate case. Commissioner Thompson’s amendment clarified that the issue of cost recovery for pipe replacement will be handled in due course in a rate hearing.
"This matter has been before the Commission long enough and the approval of this settlement is a big step in the direction of maintaining public safety and holding the utility accountable," said Commissioner Thompson. "I don't believe customers should bear the entire responsibility for the mistakes of the manufacturer and their defective products, and I wish the utility would have pursued this path more aggressively when they had the chance."
Southwest Gas did not file a civil suit against the manufacturer for defective product liability. It also agreed to increase its leak patrols along its extensive network to six times per calendar year.
All documents related to this case can be found in the ACC’s eDocket system, https://edocket.azcc.gov/, docket number G-01551A-21-0305.