The settlement requires PGW to revise its process for responding to natural gas leaks and retrain its employees. The penalty includes a $100,000 payment to the Philadelphia Fire Department's smoke detector program.
The commission also gave PGW 45 days to devise an enhanced gas-leak detection pilot program, a requirement that was not part of the settlement the utility agreed to in November.
"We remain far from convinced that these amounts adequately penalize PGW for their numerous actions and inactions that culminated in these devastating losses," Vice Chairman John F. Coleman Jr. said in a joint statement with Chairman Robert F. Powelson.
Commissioner James H. Cawley, a harsh critic of PGW in the past, expressed frustration at regulating a municipal utility that he said had been unresponsive. He suggested the state General Assembly should revisit the 2000 law that put PGW under the PUC's purview, while it remains simultaneously supervised by the Philadelphia Gas Commission, which he called a "complete redundancy."
"I'm not only of the view that this company ought to be sold, until it does, this commission's jurisdiction ought to be relinquished back to the City of Philadelphia and let them stew with this mess," he said.
Cawley noted that PGW is on a pace to replace its aging cast iron and bare steel pipes in 80 years.
"How many more explosions are going to have to happen in the city of Philadelphia before this company is sold to someone who is going to accelerate that replacement?" he asked.
Cawley, a lawyer with extensive utility experience, apologized to the other commissioners "for that outburst," prompting the chairman, Powelson, to reassure him no apology was needed.
"I appreciate your candor and openness and I can say I can associate myself with your frustrations dealing with this entity. I know Mayor Michael Nutter joins you as well."
Nutter is driving an effort to sell the 176-year-old company, the nation's largest municipal gas utility. The effort is opposed by PGW's unionized workers and some City Council members.
PGW will comply with the PUC's order to create a pilot program to find a better way to detect leaks, said Barry O'Sullivan, the utility's spokesman.
"PGW welcomes the opportunity to work with the PUC to identify those measures and how they might be integrated into our established, robust leak-detection operations," he said.
The PUC's order for PGW to devise an enhanced leak-detection program was modeled on a similar requirement demanded of UGI Utilities, which was fined last year for an Allentown explosion that killed five people less than a month after the fatal Philadelphia blast. UGI Utilities is a subsidiary of UGI Corp. of Valley Forge.
The PGW complaint, which the PUC's staff filed 19 months ago, said the utility "failed to take required steps to minimize the danger of accidental ignition of gas" after its workers responded to a reported rowhouse gas leak in the 6900 block of Torresdale Avenue on Jan. 18, 2011.
The complaint said PGW failed to shut off gas mains and electricity to the neighborhood, in violation of its own policies. Fire investigators said the blast was triggered when built-up gas was sparked by the electronic pilot light of a furnace.
The blast killed PGW worker Mark Keeley as he was attempting to ventilate the gas leak and destroyed the building, which contained a chiropractic clinic and two apartments. It flattened cars, shattered windows for blocks, and burned for two hours before being brought under control.
The $500,000 fine was the maximum allowed by the law at the time of the blast. Lawmakers raised the limit to $2 million in 2012, part of a law that allows utilities to bill customers to finance accelerated infrastructure replacement. PGW this year got permission to raise rates $22 million a year to pay for more new pipes.
PUC Commissioner Wayne E. Gardner on Tuesday commended the Philadelphia Fire Department for taking "prompt and decisive action" to clear a perimeter around the gas leak before the explosion.
"If not for the actions of the PFD, this tragic event could have been an incredible catastrophe," he said.
Contact Andrew Maykuth at 215-854-2947, @Maykuth or email@example.com.