LG&E TO PAY $125,000 FINE TO SETTLE ALLEGED SAFETY VIOLATIONS

     (The following press release from the Kentucky Public Service Commission 
was received by e-mail. The sender verified the statement.) 
LG&E to Pay $125,000 Fine in Natural Gas Safety Case
Problems found during investigation of December 2011 explosion in Louisville 
FRANKFORT, Ky. (Feb. 5, 2013) - Louisville Gas & Electric Co. (LG&E) will pay a 
$125,000 penalty to the Kentucky Public Service Commission (PSC) in settlement 
of alleged safety violations that were uncovered during the PSC's investigation 
of a Dec. 6, 2011 natural gas explosion that destroyed a house in southern 
Jefferson County.
Another $125,000 in penalties is suspended pending LG&E's completion of several 
requirements set forth in a settlement agreement approved today by the PSC.
Both the $125,000 payment and the $250,000 total penalty are the largest ever 
assessed by the PSC in a safety case. The maximum possible fine in this case 
was $500,000.
In an order issued today, the PSC noted that LG&E has since taken a number of 
steps to improve training and emergency response. The PSC also noted that the 
settlement requires LG&E to make changes in how it maintains proper operating 
pressures in its natural gas distribution system.
The settlement was reached through negotiations between LG&E and PSC staff.
The explosion destroyed a house at 5206 River Trail Place and damaged several 
nearby properties. The explosion and fire resulted in no serious injuries to 
residents; however, a dog in the home was killed.
Fire investigators determined that a high-pressure leak in a water line cut a 
hole in a plastic gas main, allowing gas to work its way into nearby homes. The 
cause of the leak in the water line has not been determined.
The explosion occurred at about 7 a.m., 2½ hours after the first LG&E worker 
arrived at the scene to investigate a report of a possible gas leak in the 
neighborhood. Following the explosion, LG&E workers checked three nearby houses 
and evacuated those homes when gas was detected.
A fourth home, where the three residents of the destroyed house had taken 
refuge, was not checked. That house was evacuated two hours later, when 
firefighters tested it and found gas inside.
In reviewing LG&E's initial response to the odor complaint, PSC investigators 
determined that the first company worker at the scene did not take the 
necessary steps - including properly checking for gas in sewers - to determine 
how far the gas had migrated and to establish a safe perimeter around the leak.
Subsequent review of LG&E records determined that the company had allowed 
pressure in the neighborhood's gas system to slightly exceed allowable levels 
on a regular basis.
The PSC alleged that LG&E violated four pipeline safety regulations:
·Not following proper safety procedures during an emergency response.
·Failing to minimize the danger of a gas explosion by not checking for gas 
levels in all nearby homes and eliminating all possible ignition sources.
·Operating a gas system in excess of the established maximum allowable 
operating pressure.
·Not taking the required corrective actions when abnormal pressure levels are 
detected.
Each of the alleged violations is tied to a specific provision in federal 
pipeline safety regulations. The PSC, under certification by the federal 
Pipeline and Hazardous Materials Safety Administration, enforces those 
regulations for natural gas distribution companies in Kentucky.
The PSC's responsibility is to determine whether any safety regulations have 
been violated and to see that those violations are corrected. Therefore, the 
investigation made no findings as to whether the alleged violations in this 
case caused or contributed to the explosion.
Measures that LG&E is required to take under the settlement agreement include:
·Providing additional and enhanced training for its employees who respond to 
reports of gas leaks.
·Strengthening protocols for the response to leak reports.
·Improving its gas training facility to allow a greater variety of emergency 
response scenarios.
·Conducting surprise drills for field response personnel, with PSC natural gas 
safety investigators in attendance.
·Making sure that operating pressure of its natural gas distribution system 
does not exceed maximum allowable levels under normal operating conditions.
LG&E is required to provide the PSC with documents showing that it has 
implemented all of the corrective measures.
Before today, the largest penalty ever paid in a natural gas safety case was 
$100,000. That amount was assessed in 1981 against Union Light Heat & Power Co. 
(now Duke Energy Kentucky) for violations connected to two Oct. 9, 1980, 
explosions that leveled a portion of Simon Kenton High School in northern 
Kentucky, killing one person and injuring 37.
When adjusted for inflation, the 1981 penalty would come to about $250,000 in 
today's dollars. The maximum penalty per violation per day in 1981 was $1,000, 
with the maximum penalty for a series of related violations set at $200,000.
At the time of the 2011 LG&E explosion, the maximum penalty per violation per 
day was $25,000, with an aggregate maximum of $500,000 for related violations. 
Last year, the maximum penalties were increased to $100,000 per day, with a 
total maximum of $1 million for a series of related violations.
Today's order and documents in the case are available on the PSC website, 
psc.ky.gov. The case number is 2012-00239.
The PSC is an independent agency attached for administrative purposes to the 
Energy and Environment Cabinet. It regulates more than 1,500 gas, water, sewer, 
electric and telecommunication utilities operating in Kentucky and has 
approximately 90 employees. 
Andrew Melnykovych
Director of Communications
Kentucky Public Service Commission
211 Sower Boulevard
Frankfort, KY 40601
502-782-2564   cell:502-330-5981 
(rml) NY