Pennsylvania Agency Seeks $2.6M Fine Against Gas Distributor UGI Utilities

Over the past several years, there appears to have been a significant increase in fines imposed on gas distributors by state and federal regulators. Fortunately for the propane industry, most of this activity has involved natural gas utilities. Fines imposed on propane distributors, when they do happen, appear to be significantly lower than those imposed on natural gas companies. 

Still, it is worthwhile for the propane industry to keep an eye on this trend. A recent natural gas example is a complaint filed by the Bureau of Investigation & Enforcement of the Pennsylvania Public Utilities Commission against UGI Utilities Inc., seeking fines totaling $2,576,627. The matter arises from a natural gas explosion and fire that destroyed the R.M. Palmer Company candy factory in West Reading, Pennsylvania. The complaint before the Public Utilities Commission, as well as a prior report on the incident from the National Transportation Safety Board (NTSB), is of particular interest to the propane industry because of their advocacy of the installation of electronic gas alarms in customer buildings. 

Odor of Gas 

Late in the afternoon of March 24, 2023, employees began to smell the odor of natural gas inside the R.M. Palmer candy factory buildings. These reports started at about 4:20 p.m. and continued over the course of the next half hour before the explosion. There were about 65 employees in the building. Some reported the odor to their supervisors and were told they could leave work early. (None left work early, and several later said they were concerned that an early departure would count against their workplace attendance.) However, some did self-evacuate the factory buildings. The company did not call for an evacuation. 

At 4:55, a massive explosion destroyed one of the factory buildings. Seven R.M. Palmer employees were killed, six from blast injuries and one from extensive burn injuries. Four others were seriously injured, and six others received minor injuries. The blast destroyed one of the factory buildings and severely damaged another. Total property damage was estimated to be approximately $42 million. 

Tee Fitting 

Investigators determined the explosion was the result of a natural gas leak. Gas was supplied to the factory by UGI Utilities. Gas leaked from a fractured underground tee fitting in a UGI underground gas main next to one of the candy factory buildings. 

The underground gas main, as well as the underground gas service lines serving the R.M. Palmer factory buildings, were installed in 1911. In 1982, new plastic pipe, made of a polyethylene plastic material known as “Aldyl A,” was inserted into the old steel line. Aldyl A is no longer in use for gas lines and tends to crack or fail when exposed to elevated heat. 

Corroded Steam Line 

In 2021, two years before the incident, a routine survey disclosed that gas was entering one of the R.M. Palmer buildings. This resulted in replacement of the service line that provided gas to one of the buildings (the one that ultimately exploded). The Aldyl A tee fitting on the main that connected to the old service line was plugged and abandoned. The new service line was attached to the main in a different location. 

R.M. Palmer owned two underground pipes that were near the abandoned Aldyl A tee fitting. The first was a steam line that distributed steam to the plant facilities for heating. The second was a line for the distribution of liquid chocolate between the plant buildings. 

Investigators found that the steam line was corroded and leaking at a point very close to the abandoned tee fitting. Steam that escaped from the line impacted the plastic tee fitting, causing it to crack and leak. Investigators concluded that escaping gas then followed a chocolate line into one of the buildings, where it accumulated and exploded. 

NTSB Report 

In March 2025, the NTSB issued a report on the incident. The NTSB does not issue penalties or fines, but it does make findings and safety recommendations with a view to preventing future accidents. It made the following findings which, although they relate specifically to natural gas, are of particular interest to the propane industry: 

“15. Natural gas pipeline operator public awareness programs may not reach members of the public in places of congregation or in multifamily residential buildings who do not directly receive bill stuffers; thus, these members of the public may be unaware of the natural gas safety guidance to immediately report a natural gas odor. 

“16. Installing natural gas alarms can alert people of a gas leak so they can evacuate the area; however, natural gas customers may not be aware of the necessity of such alarms. 

“17. Had natural gas alarms been installed inside Buildings 1 and 2, an alarm could have alerted employees to the natural gas leak, likely prompting them to evacuate, reducing or eliminating the fatal consequences of the explosion.” 

The NTSB report went on to make the following recommendation to the 50 states: 

“Require the installation of natural gas alarms that meet the specifications of National Fire Protection Association [NFPA] 715 in businesses, residences and other buildings where people congregate that could be affected by a natural gas leak.” 

NTSB also recommended that the American Gas Association promote the installation of gas alarms in customer locations, and that the International Code Council and the National Fire Protection Association revise the International Fuel Gas Code and NFPA 54 respectively to require the installation of gas alarms. 

PUC Complaint 

The NTSB report did not end the matter. On March 18, 2026, the Bureau of Investigation & Enforcement of the Pennsylvania Public Utility Commission filed a 39-page complaint against UGI, alleging 27 violations of state and federal pipeline safety regulations. In general, the allegations center on UGI’s alleged failure to maintain appropriate distance between its Aldyl A plastic line (and the abandoned Aldyl A tee fitting) and the heat source of Palmer’s underground steam line. 

There are also allegations regarding the accessibility of the in-line valves in UGI’s gas main, which may have impeded the efforts of UGI crews to shut off the gas after the explosion. The complaint seeks penalties totaling $2,576,627, which the Bureau says is the maximum allowable under Pennsylvania law. (The bureau added that without this limitation, it would have sought almost $7 million in penalties.) 

Of particular interest to the propane industry is the complaint’s request that UGI implement a “corrective action” regarding electronic gas alarms: 

“u. [UGI must] expand its Methane Detector Pilot Program … for smart remote methane detectors (“SRMD”) that can identify potential leaks, detect the presence of methane gas, and directly notify the gas operator and/or emergency official(s) through smart technology and communication networks, in addition to the audible alarm at the detector location. … UGI will be responsible for the installation of the SRMDs and the supporting communication network.” 

UGI had previously initiated the pilot program on a limited basis as part of its 2025 rate case, installing approximately 100 methane detectors in employee households. It will be of great interest to see how this claim by the Bureau is resolved. 

UGI has stated that it will defend itself against the allegations of the complaint, and it will likely be some time before there is a resolution.