Arizona regulators fine natural gas utility $2 million over defective piping

PHOENIX -- A natural gas utility with more than 2 million customers in Arizona, Nevada and parts of California is being fined $2 million by regulators in Arizona over concerns about piping that is known to degrade in the heat.

The Arizona Corporation Commission announced Friday that it reached a consent agreement with Southwest Gas that includes the civil penalty and requires more inspections.

At issue is piping that can degrade in locations with hot ambient temperatures. Federal regulators issued an advisory in 2012 alerting operators that the piping — known as Driscopipe polyethylene (PE) M7000 and M8000 — could be susceptible to degradation.

It was reported that degradation and resulting leaks involved piping installed in the Southwest, particularly in the Mohave Desert region in Arizona, California and Nevada.

In Arizona, state investigators concluded that Southwest Gas failed to properly map where this type of piping had been installed.

Southwest Gas estimates there are more than 10,000 miles (16,100 kilometers) of the piping throughout Arizona. The utility says it has a plan to target high-risk areas for replacement or abandonment.

The agreement between state regulators and Southwest Gas stems from two separate incidents in 2021, including one in Chandler in which an explosion injured four people.

In addition to replacing or abandoning all newly discovered and previously unmapped spots that contain the defective piping, Southwest Gas must also notify regulators of any leaks.

An amendment to the agreement that was proposed by Corporation Commissioner Kevin Thompson made clear that the company would have to propose new rates — and win regulatory approval through an administrative process — if it wants to recoup from customers any of the costs associated with fulfilling the agreement.

“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,” Thompson said. “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 also agreed to increase leak patrols throughout the year.