Corporation Commission Slaps $2 Million Fine on Southwest Gas Over Catastrophic Leak and Explosion

By Matthew Holloway |

On November 6th, following the recent Election Day, the Arizona Corporation Commission (ACC) unanimously endorsed a Consent Agreement with Southwest Gas Corporation (SWG). This decision came in response to a substantial civil penalty of $2,000,000 levied against SWG due to two severe incidents in 2021 involving pipeline degradation, leaks, and explosions in Chandler and Scottsdale, including an explosion that resulted in injuries to four individuals.

The ACC revealed that an explosion on August 26, 2021, at a Chandler business triggered their investigation. The incident, which occurred near Ray and Rural Roads, resulted in a complete structural failure of the building, forcing nearby residents to evacuate. Damage from the explosion was reported to exceed $5 million, according to records cited by 12News.

Detailing the outcome, the ACC indicated that the Consent Agreement seeks to address the grievances stemming from the Chandler and Scottsdale events. Investigators from the Arizona Corporation Commission Office of Pipeline Safety (AZOPS) determined that improper mapping and pipe degradation were key factors leading up to these failures.

AZOPS found that the Driscopipe polyethylene (PE) M7000 and M8000 pipes used by Southwest Gas had degraded in areas subjected to high heat, creating serious safety hazards. Furthermore, the company failed to maintain accurate maps detailing the locations of these at-risk pipes, as mandated by law.

In accepting responsibility, Southwest Gas committed to the $2 million penalty and outlined plans to either replace or abandon underground services connected to defective piping. Estimates suggest over 10,000 miles of M7000 and M8000 pipe are currently installed across Arizona.

Commissioner Kevin Thompson added an amendment during the proceedings, clarifying that the settlement doesn’t imply approval for the recovery of pipe replacement costs in future rate cases. Thompson emphasized the importance of public safety and accountability, noting the utility’s responsibility in addressing the consequences of using defective materials.

Tom Ryan, a trial attorney representing victims of the Chandler explosion, expressed the overwhelming destruction caused by the event. Describing the aftermath, he remarked on the extensive damage, asserting, “It was a shock—a complete devastation. Metal was bent, doors were sent flying 200 feet.”

As of now, Southwest Gas has not initiated legal action against the pipe manufacturer for product liability issues. The required changes outlined in the Consent Agreement may affect thousands of businesses and residences within the Phoenix Metro area, necessitating nearly 1,000 miles of replacement piping.

In a statement to AZFamily, a representative from Southwest Gas affirmed their collaboration with the ACC’s Office of Pipeline Safety throughout the investigation. The company expressed a commitment to enhancing safety and reliability measures in its infrastructure following these incidents.

Matthew Holloway is a reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.