AGL-owned gas co. in Virginia cited for multiple pipeline violations

RICHMOND, Va. - Virginia Natural Gas has agreed to pay as much as $1.8 million in penalties to settle state regulators' allegations of multiple pipeline safety violations.
In two settlements with the State Corporation Commission covering more than 40 violations, the company didn't admit or deny the allegations. It agreed to make various changes in its practices and spend $15 million for pipeline-replacement projects.
Under the settlement, VNG cannot recoup the cost of the penalties, repairs or operational changes from rate-payers. The company, based in Norfolk, provides natural gas service to about 271,000 customers in Hampton Roads.
The violations cite failures of the company's workers to follow proper procedures while installing, repairing or conducting maintenance on or around its pipelines. Inspectors for the commission's Division of Utility and Railroad Safety found improper welding methods, the installation of a defective service line and a VNG contractor smoking while working in an excavation near the gas system, according to one settlement. It also cited the company's failure to keep required records or manuals.
One settlement focused on VNG's lack of necessary measures to ensure that underwater pipelines are protected against corrosion. The company completed construction last year of an underwater link between its Peninsula and South Hampton Roads systems. In August, according to the settlements, sections of that pipeline floated from their proper position and had to be fixed.
The instances occurred across VNG's system between 2006 and 2009, said Ken Schrad, a commission spokesman.
No one was harmed and no service was affected as a result of the violations, said Tami Gerke, a spokeswoman for AGL Resources Inc., the Atlanta company that owns VNG.
"Our industry records show no major issues with our pipelines," Gerke wrote in an e-mail response to questions. "Due to regular inspections such as the one completed by the VSCC and audits done regularly by VNG, our customers can be assured that any issues are addressed immediately."
Under the settlements, the company will pay $1 million up front. The commission could waive part or all of the remaining $800,000, depending on the company's compliance with the required remediation, Schrad said.
That includes the hiring of an outside consultant to evaluate the corrosion-control measures. The company must complete most changes by Aug. 15, 2011.