News & Politics » Feature

Blowing Smoke

Two years after the River West explosion, Peoples Gas and the ICC are still resisting a public investigation.



It all began with a bad smell. A little before 4 PM on January 17, 1992, the ominous smell of natural gas filled the apartments and businesses of River West, just east of the Kennedy and west of the river. Next came hissing noises from stoves and space heaters. In one home a pilot light shot up three feet. As people stumbled out into the dusk, the buildings along Racine started blowing up.

The first fire fighters arrived at four o'clock to find a scene of lethal randomness. They kept one man from going back into his house, which promptly exploded. One woman ran out of her restaurant, then ran back in and safely retrieved the day's receipts. Another woman, in Hyde Park for a job interview, saw a pile of rubble on television without realizing that it had once been her home. The Como Inn on Milwaukee, perhaps the area's best-known landmark, was untouched.

Three people--Alan Bass, Stephen Hoenig, and Victoria Opeka--died instantly when the house at 824 N. Racine exploded; a fourth, Frances Kosiba, died later of her injuries. Fire fighters, police, and Peoples Gas workers swarmed over the neighborhood. Fire commissioner Raymond Orozco told the Sun-Times that, in his 33 years of fire fighting, River West was "the worst I've ever seen."

Standing shoeless in the January slush, the neighbors could only wonder why it had happened. They got little reassurance. The gas company knew there'd been a gas surge, but it was as bewildered as anyone: most gas accidents involve too little pressure, not too much.

Mayor Daley got into a row with the media because he didn't visit River West during the cleanup. He said such visits were just for show. In truth, neither he nor anyone else had much to show Chicagoans. In the days that followed, the City Council and state legislature held hearings, the Illinois Commerce Commission made reassuring noises, the National Transportation Safety Board came to investigate (gas pipelines are "transportation"). But nobody could say why the gas surge had hit River West. And nobody knew if it could happen again.

At first Peoples Gas blamed the accident on a failed gas regulator near the intersection of Chicago and Carpenter, which made sense because most of the 18 buildings that had been destroyed were nearby. But that regulator proved to be intact. The culprit had to be somewhere else in the city's largely invisible gas-distribution system.

Natural gas travels to Chicago from the southwestern states through pipelines at a pressure of up to 300 pounds per square inch. Near the city limits four gate stations reduce the pressure to 17 to 22 pounds per square inch ("medium pressure"). Farther downstream, at some 385 regulator stations across the city, the pressure is reduced again, to one-quarter of a pound ("low pressure"). It is this gas that's piped throughout the neighborhood and into stoves and furnaces and hot-water heaters.

Low-pressure gas-distribution systems like this are common in older industrial cities such as New York, Boston, Philadelphia, Detroit, Saint Louis, and San Francisco. They're not common in newer cities or suburbs, where for many years utilities have been installing "medium-pressure" systems in which gas stays at medium pressure right up to each building's individual regulator. Only there is it finally stepped down to low pressure.

Medium-pressure systems are cheaper because they use smaller pipes to carry the same amount of gas. Peoples Gas has been gradually converting Chicago to medium pressure, though it insists it's doing so only for reasons of economy, not safety. Nevertheless, in areas served by medium pressure, a single accident can no longer introduce medium-pressure gas into the homes of an entire neighborhood, as may have happened in River West. Peoples Gas plans to have the whole city converted by 2033.

Each of the 385 regulator stations that drop the pressure to the low level consists of two underground vaults, the first is in a six-foot-deep, cylinder-shaped "monitor vault" and the second--a backup--is in a virtually identical "district vault" about 25 feet downstream. (If one fails, the other can prevent medium-pressure gas from flowing into the neighborhood.) In each vault the key piece of equipment is an automatic regulator that admits just enough gas to keep the pressure downstream at one-quarter pound.

Federal law requires Peoples Gas to inspect and, if necessary, overhaul each regulator every 12 to 15 months. And, in fact, a three-man team of utility employees had been doing just such an overhaul at Erie and Green, the other station serving River West, on the afternoon of January 17. Did they make a mistake?

If they did, it might not have been fatal if it weren't for the fact that River West had an unusually small, isolated gas-distribution system. Most neighborhoods tie into a huge network of pipes with dozens of regulators. But like portions of Hegewisch, Hyde Park, and Near Norridge, River West was a relatively small area, served by only two regulator stations and cut off from the rest of the distribution system. It seems reasonable that excess gas pressure could have caused more damage in River West than elsewhere, simply because the neighborhood had fewer miles of pipe to disperse the buildup and fewer appliances to burn it off. Had the company made a mistake by not converting these cut-off neighborhoods to medium pressure?

On February 28, 1992, six weeks after the accident, Cook County state's attorney Jack O'Malley put these questions to the Illinois Commerce Commission. He asked the ICC to investigate both Peoples Gas's regulator-overhaul procedures and the safety of cut-off neighborhoods.

At the time this was just one proposed investigation among many. Now it is the last, lingering bureaucratic echo of the River West explosion. The other investigations are over, but this one--the only public forum where the competing theories about the accident might still be thrashed out--has yet to begin.

Soon after the request was filed, the city of Chicago and the Labor Coalition on Public Utilities got permission to participate in the proceedings. In the 20 months since, the city's attorneys have been content to simply observe 18 inconclusive hearings. But the Labor Coalition--a small, feisty consumer-advocacy group run by Chicago unionists--has been anything but quiet, for reasons that take a bit of explaining.

According to Labor Coalition executive director Lois Anne Rosen, the first chapter in the tragedy of River West was written not in January 1992 but in January 1981. That was when Peoples Gas's corporate parent, Peoples Energy Corporation, announced a plan to spin off its five profitable nonregulated businesses in gas, oil, and coal exploration and mining--leaving behind its less profitable state-regulated utilities, namely Peoples Gas and North Shore Gas, that merely sell gas to consumers.

To Rosen this looked like a typical 80s deal: a big business milking what it could from a company and then cutting it loose. From 1977 to 1981 Peoples Gas had paid 85 percent of its profits in dividends to Peoples Energy, which, in the coalition's view, had not put enough of that money back into repairing and replacing the aging pipes under Chicago. Rosen quotes William Terpstra, then vice president of Peoples Energy, who said the "aging distribution system which may force capital spending" was a "key consideration" in the spin-off. Abandoning a company with a huge maintenance backlog is "classic asset stripping," says Rosen.

In 1982 the coalition published a report, based on public data from the company, claiming that the utility's gas-distribution pipes were unusually leaky and that it had more accidents than other gas utilities--evidence that maintenance was being neglected. In a 1986 update prepared for the Illinois attorney general's office, the coalition reaffirmed its contention that "Peoples Gas has not had a history of replacing its infrastructure at a responsible rate."

This is a story that fits well with the scandals of the 1980s and with the decrepitude of much of Chicago's visible infrastructure. But that doesn't make it true. When the details of the Labor Coalition's accusations were reviewed in court and by the commerce commission, they were not confirmed.

In 1982 Cook County circuit court judge George Schaller permitted the corporate spin-off, ruling that the dividends Peoples Gas paid to Peoples Energy hadn't hurt the company. Besides, he said, "What [Peoples Energy does] with dividends after they are paid, I don't think is the business of the Commerce Commission." And in 1988, after a convoluted five-and-a-half-year proceeding, the ICC refused to open an investigation of Peoples Gas, ruling that the Labor Coalition's leaky-pipe report had misinterpreted the data. The ICC added that "the condition of Peoples' distribution system has been thoroughly studied." Rosen says the report raised enough doubts that an investigation should have been held; she could also point out that at the time the ICC employed only five people to inspect all the gas utilities in Illinois.

The Labor Coalition was quick to see River West as another sign of a decaying gas system, as were other consumer advocates. "They had an environment where a single mistake could cause a disaster," concurs Citizens Utility Board research director Brian Ross.

From the utility's point of view, this is a vendetta. "[The Labor Coalition] raises the same points over and over again," complains Peoples Gas attorney Matthew Greene, "no matter how often the ICC or the courts say they are unfounded. It's frustrating dealing with them, because they pay no attention to adjudicatory bodies. If the ICC or judges disagree with them, then they say, well, they're just controlled by the utility."

That is indeed what Rosen says, and she may have a point. The ICC's conflict-of-interest follies, most recently the White Sox tickets affair, are notorious. Certainly its endless delays in deciding simply whether to hold a public investigation of River West as the state's attorney asked have served to favor Peoples Gas, as damage suits against the company are settled and public interest in River West fades. From the beginning Peoples Gas and the ICC staff have agreed: first, that there should be no investigation of River West beyond the one conducted by the National Transportation Safety Board; second, that if there must be another investigation, it should be conducted privately, not in public; and third, that either way there's no hurry.

Long before any official report emerged, the respected investigative monthly Chicago Reporter ran a May 1992 cover story with the sensational headline "Peoples Gas Could Have Saved River West."

How? Author Paul Cuadros argued that if Peoples Gas had been more aggressive in replacing aged pipes throughout its system, it might have converted River West to the newer medium-pressure system, preventing the January 17 explosions. Cuadros also claimed that Peoples Gas disregarded a clear forewarning--an overpressure incident in Hegewisch, another cut-off area--back in June 1989.

The company insists the two accidents had little in common. In Hegewisch a gas crew cut the wrong line and then compounded the mistake by plugging it, but the backup regulator worked and no serious damage occurred; the pressure in the downstream lines briefly went up by one pound. (Some Hegewisch residents think the incident was more serious than that. The Labor Coalition believes Peoples Gas should have reported the incident to state and federal authorities.) In a letter to the Reporter Peoples Gas condemned the story as "conjecture, speculation and an array of misinterpreted information."

The state's attorney had asked for an "immediate" investigation in February. So on May 6, 1992, when ICC hearing officer Wanda Kamphuis held the first hearing, everyone thought she would quickly be able to recommend to the Illinois Commerce commissioners whether to hold the investigation or not (the commissioners never attended any of the hearings). Peoples Gas attorney Matthew Greene moved to dismiss the hearing because the National Transportation Safety Board was already investigating--and got a stern lecture. "To file a motion to dismiss in early May to a complaint filed in February dealing with very serious matters, is not to be taken lightly," Kamphuis admonished him.

The battle lines were soon drawn. Assistant state's attorney Thomas Rowland insisted the ICC should conduct its own investigation, not just help out the NTSB--because the ICC is responsible for overall utility safety, not just a single accident. He accused the utility of trying "to avoid any review by the commission." But Greene pointed out that the ICC would soon have nothing to investigate, because Peoples Gas was converting River West and similar cut-off areas to medium pressure. The ICC staff agreed there was no need for another investigation.

Hearings continued into the fall of 1992 in the same contentious vein. A new hearing officer, Michael Guerra, was assigned in midsummer. One of his first tasks was to order the company to end three months of stonewalling its opposition's requests for information.

Greene prepared the company's fall-back position in a June 25 brief: If there must be a separate ICC investigation, he wrote, at least keep the state's attorney, the city, and the Labor Coalition out of it. Leave it strictly in the hands of the ICC staff and do it behind closed doors. Why? Because--lie still, George Orwell--public involvement would "interfer[e] with the free flow of information."

At the November 4, 1992, hearing (hearing number six), Greene launched the company's preemptive strike. Peoples Gas had just finished converting the city's four cut-off areas--River West and the portions of Hegewisch, Hyde Park, and Near Norridge--to medium pressure systems. (The conversions were not a confession that it had previously made an error, says the utility; it merely wanted to replace possibly damaged pipes in River West and to allay residents' fears elsewhere.) Greene also noted that after River West, Peoples had completely changed its method of overhauling gas regulators.

These were exactly the things the state's attorney had wanted investigated. Now, both Greene and the ICC staff agreed, there was nothing left to talk about. But Lois Rosen of the Labor Coalition pleaded for a more general investigation, mentioning that her group had publicly doubted the system's safety for more than ten years. Greene replied that whatever had caused River West, it was not leaky pipes--the main concern the coalition had always had. "To somehow say that the Labor Coalition can say, 'We told you so,' is just outrageous."

Nevertheless the state's attorney's request for an investigation was not dismissed. The hearings sputtered along waiting for the National Transportation Safety Board to publish its report.

That report, dated January 5, 1993, disappointed some observers. Its 17 pages offered the first detailed picture of the underground events leading to the aboveground disaster, but made only a murky guess about the actual cause. With some details added from the background testimony, the NTSB story goes like this:

On Friday, January 17, 1992, a three-man crew led by supervisor Gerald A. Best opened up the two vaults in the regulator station near the corner of Erie and Green streets in River West. Together the crew had 69 years of experience working for Peoples and more than 20 years doing overhauls. "The work they do," gas-operations superintendent William J. Reinert told the NTSB, "it's like riding a bike. You never forget how to ride a bike."

Obviously you can't overhaul a regulator while it has gas going through it. And on a day when it was in the 20s, with furnaces and hot-water heaters running hard, there was no way the only other regulator station serving River West--at Chicago and Carpenter--could pump enough gas into the neighborhood by itself. So the crew performed a routine operation: they gradually closed the monitor-vault regulator and the backup district-vault regulator and gradually opened a bypass valve, letting gas from upstream go around both of the automatic regulators on its way into the neighborhood.

With those regulators cut off, the crew members had to maintain the correct pressure themselves. They attached a gauge filled with water (a manometer) to the bypass line so they could keep an eye on the pressure and adjust it by hand if necessary. When the gas pushed the water up to the seven-inch mark, they knew the pressure coming through the bypass line was one-quarter pound. Then they could go to work overhauling the automatic regulator in the monitor vault.

Three hours later they had finished and were ready to put both automatic regulators back on-line. Best started to close the bypass valve--and suddenly the water erupted from his manometer. He immediately knew that the pressure of the gas flowing into River West was far higher than it was supposed to be. The first call to the Fire Department came in minutes later, at 3:57 PM.

The gas crew screwed in new manometer gauges. They blew out too. One man then brought out a numerical pressure gauge. It showed that instead of one-quarter pound of pressure, River West was receiving a frightening ten pounds--40 times normal.

At 4:06 PM, with sirens wailing all around, Best called his boss on the radio and asked what to do. "I didn't understand what was going on," he said later, "because of the fact we had been shut down for two and a half to three hours, and it didn't make any sense to me that we were the cause of anything." The crew had never been trained what to do in such a situation, and Best wasn't sure he had the authority to shut off all the gas to River West.

James J. Kirrane, the utility's general supervisor of gas operations, was handed the call at 4:10. He decided to send a crew to check the other regulator station serving River West, the one at Chicago and Carpenter. "Having a supervisor [Best] at Erie and Green, I didn't think there could be anything wrong [there]," he later told the NTSB. Given the unprecedented situation, it was a reasonable if disastrous supposition. "This is the first time it ever happened, so I didn't think that it could happen."

The regulators at Chicago and Carpenter were working fine. After more confusion and consultation, Kirrane ordered both stations shut down. At about 4:35, after nearly an hour of mayhem, gas quit flowing into River West.

Why the gas surge? The NTSB ruled out equipment failure, then concluded inconclusively: either Best had opened the bypass valve when he meant to close it (he has always denied this), or else the same valve had been partially blocked by some debris that was suddenly dislodged (no evidence of this was found). With a bit more conviction, the board added that all might have been well if Best had closed the bypass valve as soon as he saw signs of trouble, and it urged Peoples Gas to do a better job of training employees for emergencies. It added that Peoples planned never to bypass both automatic regulators during an overhaul again. (This is why Peoples Gas insists nothing like River West can happen again.)

The NTSB didn't mention the Hegewisch incident. Contrary to expectations, it didn't even discuss whether cut-off areas like River West were more vulnerable than others to pressure surges. These omissions didn't bother the ICC staff, which continued to say that all necessary investigating had been done.

Now that the NTSB report was out, ICC hearing officer Michael Guerra was on the spot. Peoples Gas and the ICC staff were still saying that there was no need to have another investigation as the state's attorney had requested, because the two specific things he'd asked about were no longer a problem. Nevertheless at the February 8, 1993, hearing (hearing number ten) Guerra asked the ICC staff to bring him a prompt recommendation on the need for an investigation "beyond the areas specified in the complaint." In words that might have come from a consumer advocate, he said, "I want to know if Peoples Gas service territory or service area is safe. . . . Or could this happen again."

Guerra never got the recommendation. Instead, the ICC staff decided to conduct their own investigation.

The ICC staff spent four and a half months preparing a second report on River West. Their 78-page report, released June 29, 1993, added two items of substance to the NTSB version. It offered a theory to back up the NTSB's rather mysterious supposition that, in the midst of a routine operation, Best turned the bypass valve the wrong way. (The ICC investigators think he might have accidently turned another valve the wrong way at the beginning of the overhaul, causing his gauges to give misleading readings from then on.) And it added six paragraphs on whether River West's being cut off from other service areas was a factor in the accident, concluding that it was "very difficult to determine."

From the ICC staff's point of view, answering that question is beside the point. The staff sees the commission's job as preventive, not punitive. Rather than try to prove conclusively what happened, it aims to present plausible scenarios of what might have happened and make recommendations to keep any of them from happening again. A surge in pressure could happen in a larger low-pressure system, so the ICC wants Peoples to be careful everywhere.

The ICC report's 33 recommendations differ from the NTSB's mainly in their detail. Peoples Gas says it has already complied with 17 of them and is working on the rest--even though it doesn't agree that all of them are necessary. With 16 personal-injury lawsuits still pending against his company, attorney Matthew Greene can't say which parts of the reports he thinks are valid and which aren't.

The Labor Coalition thinks both reports zeroed in on one tree and missed the forest. "The question is not why a valve was turned the wrong way," says coalition consultant Gregory Palast. "Valves are bound to be turned the wrong way. The real question is why, when a valve is turned the wrong way, do four people die and 18 buildings blow up? And the real answer is that it required several shortcuts in maintenance and system upgrading."

The company responds that River West was a detail problem, not a system problem. "These types of regulator stations have been in service since the turn of the century," Matthew Greene points out, and each one has been overhauled every year. If the system is so unsafe, he implies, why was this the first accident of its kind after hundreds of thousands of overhauls?

The utility company and the public servants hired to oversee it tend to share a philosophy quite different from that of the Labor Coalition or CUB. They tend to believe the system is fundamentally sound and that the company's word is good because it has a great self-interest in making sure accidents like this never happen.

So it comes as no surprise that the ICC staff report, like the NTSB's, said nothing about the 1989 Hegewisch incident. An attorney representing the ICC staff says, "[The company] explained what happened [in Hegewisch], and it made sense to us. It was a classic digging accident." Therefore, in the staff's view, it offered no warning that something worse could happen at River West. Palast finds this rationale particularly galling. "It's like the police asking robbers 'Did you rob anything?' and taking their word for it."

On the morning of July 29, 1993 (hearing number 15), state representative Clem Balanoff and County Clerk David Orr joined a small Labor Coalition picket line in front of the ICC's home office at 160 N. LaSalle. The demonstrators called for a public investigation and demanded that Peoples Gas speed up converting the city to medium pressure and that the ICC, like the federal Nuclear Regulatory Commission, start fining utilities that do wrong. But the real excitement was in an eighth-floor hearing room, where Peoples Gas was using yet another delaying tactic.

The state's attorney's request had now been on hold for over a year, first waiting for the NTSB report and then waiting for the "recommendation" that became the ICC staff report. Now Peoples Gas argued that these long-awaited reports could not be used as evidence in the ongoing hearings, because they were "hearsay." The state's attorney filed a blistering reply: "To have waited this long for a decision on whether an investigation should be initiated, and then face uncertainty over the admission of the documents which precipitated the delay, is unconscionable."

The company gained another six weeks anyway. Not until September 14 (hearing number 17) did hearing officer Michael Guerra admit the ICC staff report as part of the evidence.

Both Peoples Gas and the ICC staff again asked Guerra to dismiss the state's attorney's request, again stating that there was nothing left to investigate. The state's attorney replied, in essence, that to drop the case would be to take the company's word that everything was fine.

Guerra promised a decision at the next hearing, October 22. On October 22 (hearing number 18) he promised a decision on October 29. On October 29 he recommended that the ICC deny the state's attorney's request. The commissioners won't make their decision for at least another two weeks.

Those of us still paying attention after nearly two years know a lot more about regulator overhauls and bypass valves than we did January 17, 1992. But we probably know less than we should about the gas system as a whole. The Labor Coalition's persistent claims of general company malfeasance and neglect haven't been proven--but they haven't been refuted either.

We don't know the truth here. But if Peoples Gas and the ICC staff are right that the system is safe and well maintained, then a public investigation would clear their names, reassure the city, and reveal the Labor Coalition's charges to be a confused hodgepodge of rumor and innuendo. With all that to gain, what are they so afraid of?

Art accompanying story in printed newspaper (not available in this archive): photos/Mike Carter.

Add a comment