Maryland regulators fined Washington Gas Light Co. for failing to report on removal of equipment linked to a catastrophic 2016 apartment complex blast while declining to penalize the company for leaving the equipment in service.

The Maryland Public Service Commission, or PSC, on Dec. 18 hit Washington Gas Light with a $750,000 penalty over its failure to file annual reports on mercury service regulator replacements. The PSC order also approved the utility's proposal to replace the regulators that remain in service.

In April 2019, the National Transportation Safety Board traced a deadly explosion at the Flower Branch apartment complex in Silver Spring, Md., to an on-site mercury service regulator. In September 2019, the PSC ordered Washington Gas Light to explain why it should not face penalties for leaving the equipment in service long after it was scheduled to be replaced as well as for failing to use ratepayer funds to do the work.

In its Dec. 18 order, the PSC rejected Washington Gas Light's argument that it was not required to replace all 66,793 mercury service regulators in its system within 10 years, as originally outlined in its 2003 rate case. The AltaGas Ltd. subsidiary had argued that unprecedented gas leaks in other parts of its service territory required leaders to reallocate resources to tackling the leaks.

The PSC countered that Washington Gas Light explicitly committed to the schedule and made several representations over the years that it would complete the work on time. "At a minimum, [Washington Gas Light] was required to notify the commission, either informally or through the mandatory annual reports, if unforeseen circumstances might require adjustments to the original timeline," the commission said.

Still, commissioners declined to exercise their authority under state code to fine the company for failure to adhere to the schedule. Maryland's Office of People's Counsel, or OPC, recommended a $1 million fine for failure to complete the work in a timely manner, while PSC staff said a $1.25 million fine was appropriate to resolve the issue.

OPC and PSC staff recommended penalties of $544,600 and $620,500, respectively, for the reporting failure. The PSC used a different calculation to arrive at its $750,000 fine. Under its methodology, the maximum penalty would be nearly $5.6 million, but the PSC said that would be "excessive."

Washington Gas Light noted that one of the considerations for assessing penalties under state code is whether a company makes good-faith efforts to come into compliance after being notified of a violation. The company said its new proposal to replace mercury service regulators in multifamily buildings within three years and throughout its entire service territory within five years satisfies that condition.

In accepting the replacement program, the PSC ordered the utility to update commissioners on the annual costs of the program and its date of commencement. It required Washington Gas Light to file annual reports on the program's status and to adopt a customer notification and service termination process in partnership with the PSC's Consumer Affairs Division.