State says Atmos doesn’t have to tell customers about untreated natural gas

Some rural residents including Jon Salis, who lives near Lake Palo Pinto, are concerned about untreated natural gas they are receiving from Atmos Energy.
Some rural residents including Jon Salis, who lives near Lake Palo Pinto, are concerned about untreated natural gas they are receiving from Atmos Energy. Star-Telegram

Atmos Energy will not be required to tell rural customers if untreated natural gas is being pumped into their homes despite evidence that it may damage appliances, shut down service and possibly release elevated levels of carbon monoxide in their homes, state hearing examiners ruled.

Texas Railroad Commission examiners Cecile Hanna and Rose Ruiz, granting a request by Atmos to abandon the service to a small neighborhood near Lake Palo Pinto, did not impose tougher notification standards even when the company is selling what has been described as a “raw gas cocktail.”

“The examiners find those requests for relief to be outside the scope of this proceeding and not required by applicable statutes and rules,” Hanna and Ruiz wrote in their March 6 ruling.

The Texas Railroad Commission may consider their recommendation to allow Atmos to stop providing service to nine customers in April. Atmos said the use of what is known as “wet gas” made the project not economically viable.

But Michelle McFaddin, an attorney and former assistant director of enforcement at the Railroad Commission, believes Atmos and other utilities should be prohibited from selling the untreated natural gas without prior notice to residential customers. McFaddin asked the examiners to make that ruling during the abandonment hearing.

“These guys know this gas does not even meet their (Atmos’) own published gas quality specifications,” McFaddin said. “How many people are out there that are using this gas and have no clue what is going on?”

Atmos, which serves more than 1.5 million customers in its Mid-Tex division, has said that fewer than 200 households rely on untreated gas. While it considers it ill-suited to power homes, Atmos does not consider it dangerous and none of its customers have reported related health problems, an official said.

“Safety is Atmos Energy’s top priority,” said spokeswoman Elizabeth Beauchamp.

It also argued in documents filed in the abandonment case that a general communication with homeowners “regarding the risks of wet gas use would create more questions and confusion.”

Earlier this year, an Atmos official said that there are thousands of people who live in Texas who are fully aware of the risks of wet gas and still choose to utilize it as an energy source for their homes.

The Railroad Commission’s Pipeline Safety Division Staff also inspects all natural gas distribution system operators annually, and operators are subject to integrity management requirements under commission rules and federal regulations, said Ramona Nye, a spokeswoman for the agency.

Shutting down “farm taps”

The gas being pumped through the Lake Palo Pinto neighborhood, and others in rural Texas, is referred to as “wet gas” because it contains higher concentrations of liquids such as ethane and butane. It is being piped into the homes through what is known as a “farm tap.” In the past, many utilities and landowners considered it the easiest and cheapest way to hook up to a pipeline carrying mostly raw fuel on its way to a processing plant. Most residential gas is purged of troublesome liquids in processing.

No one knows how many Texas customers are receiving wet gas. The Railroad Commission, which regulates natural gas utilities and the state’s 426,000-mile network of natural gas, hazardous-liquid and other pipelines, does not set standards for the gas pumped through them.

One problem with untreated gas is that it is prone to freezing in cold weather and, in rare cases, can corrode appliances, causing them to misfire and potentially emit carbon monoxide, according to documents filed with the Railroad Commission.

As a result, Atmos and other utilities are more frequently seeking permission to turn off farm taps and convert neighborhoods to other fuels. In 2009, utilities filed seven applications to abandon wet gas service, according to the Railroad Commission. Last year, the agency received at least 23.

In most cases, the companies call the services too expensive to maintain, Nye said.

In the Lake Palo Pinto case, Atmos said it has annual operating costs of about $15,590 a year while taking in only $1,900 in revenue from the nine customers. In one year, the company responded to 129 service calls. But to connect the neighborhood to more suitable gas would cost $8 million, the hearing examiner’s report states. Testimony during the hearing suggested the existing line was constructed prior to the mid-1960s.

Dan Bida, an Arlington dentist who has a home and office in the Lake Palo Pinto neighborhood, said he has been wanting Atmos to do something about the line for a long time and is anxious to have it replaced. Over the years, he has put three water heaters in the home after they malfunctioned.

“It does mess with your appliances,” Bida said. “I want to get rid of those lines and go to electricity.”

When a gas utility seeks to abandon a line, the state requires it to offer its customers another source of energy. At Lake Palo Pinto, Atmos is offering to convert the homes to either propane, which would cost $6,000 per home, or to electricity, which has a pricetag of $12,000 to $15,000.

“Nonquality“ gas

Jon Salis, who grew up in Arlington and moved to Lake Palo Pinto from Pantego in 2001, initially fought being disconnected because he thought natural gas was the best option for heating his 2,100-square-foot home. Salis hired McFaddin to represent him during the abandonment hearing in September.

It was during that proceeding that Jesse Garcia, an operations supervisor for Atmos, testified that the gas was “not suitable for residential use” and that the gas had been “nonquality“ ever since customers requested service. He said it can cause an irregular flame burning in appliances that could give off carbon monoxide.

Garcia also testified that Atmos had not systematically told customers of those risks, but that technicians may have done so during individual service calls.

After Salis heard that, he couldn’t get off the natural gas fast enough, calling what was being piped into his house a “raw gas cocktail.” Since then, even during the frigid winter weather of recent months, he has heated his home with six space heaters.

“It has been a cold winter and (my wife) complains a bit, but we made a decision that we don’t want this stuff in our house anymore,” Salis said.

Advocating for change

Those frigid winds will be a memory by the time change finally comes to Salis’ and Bida’s neighborhood.

The Railroad Commission may consider the examiners’ recommendations at its meeting on April 28, and if it signs a final order it can’t be acted on for at least another 20 days. So, it could be May or June before Atmos can take concrete steps to abandon the line, since the hearing examiners didn’t set any deadlines.

McFaddin said the Railroad Commission should have moved with more urgency.

“Quite frankly, the Railroad Commission doesn’t hear a lot of cases that involve a serious public health risk and this case should have been prioritized. It should have been put on the fast track,” McFaddin said. “The winter months were the ones where he (Salis) was most at risk.”

Salis said he was not surprised by the hearing examiners’ ruling, saying “they followed the letter of the rule for abandonment.” But he said the case offers the Railroad Commission an opportunity to “take the ball and go in a different direction” by adopting rules that protect homeowners. He’s already contacting state lawmakers.

Salis said there really are some “deaf ears and blind eyes looking at the composition of gas going into residential homes.”

Max B. Baker, 817-390-7714

Twitter: @MaxBBaker

Related stories from Fort Worth Star Telegram