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Peoples Gas former employee's complaint sparks audits, then she's ignored by state regulators

Former Peoples Gas employee Pam Carollo said that during her five years with the company, management hid important data from a state regulatory agency and kept incomplete records which put residents lives at risk.  She is standing next to a rectifier which sends a small electrical current down a gas pipe to prevent it from rusting. [JAMES BORCHUCK   |   Times]
Former Peoples Gas employee Pam Carollo said that during her five years with the company, management hid important data from a state regulatory agency and kept incomplete records which put residents lives at risk. She is standing next to a rectifier which sends a small electrical current down a gas pipe to prevent it from rusting. [JAMES BORCHUCK | Times]
Published Mar. 3, 2017

TAMPA — The Florida Public Service Commission crowed last May that its employees "first identified" numerous safety violations by Peoples Gas as it issued its largest fine ever — $3 million — against the utility.

The big fine seemed to offer a counterpoint to criticism that the PSC is too cozy with the utilities it regulates.

But a Tampa Bay Times examination of the PSC's investigation of Peoples Gas reveals the agency did not publicly disclose key information that may have proved embarrassing to both itself and the utility. Among the omissions:

• A Peoples Gas whistleblower alerted the PSC to violations, though the agency took the credit for uncovering them.

• The whistleblower alleged that Peoples Gas "sanitized" records to hide violations from the PSC and that some safety inspections may not have been done for 20 years or more. Peoples Gas denied the allegations.

• Peoples Gas employees bought lunches for a PSC inspector who had failed to note numerous safety violations in Tampa Bay over the course of several years.

The whistleblower, Tampa resident Pam Carollo, who worked for Peoples Gas from 2007 until 2012 as a meter reader and inspector, said the PSC's system for policing utilities failed.

"They didn't find anything themselves," said Carollo. "They missed the violations. They missed them for years."

The PSC's findings amounted to one of the most significant failures ever of a utility inspection program, involving missed or long-delayed safety inspections or leak surveys of natural gas pipes and equipment across Tampa Bay. No leaks ever ignited or caused injury. But the PSC has acknowledged the safety lapses could have harmed the public.

The PSC does not dispute that Carollo triggered its audits of Peoples Gas. Yet, the commission's executive director, Braulio Baez, said the PSC kept nothing relevant from the public and pursued the utility aggressively.

"Is there a $3 million fine on the books for this company for violations . . . or not?" he said. But in defending his agency he revealed why the PSC may have been dismissive of Carollo.

"The thing is," Baez said, "we don't deal with whistleblowers."

• • •

Thousands of miles of natural gas pipe criss-cross Tampa Bay and the state in a vast arterial web.

Peoples Gas is the state's largest natural gas utility with about 365,000 customers in Tampa Bay and across Florida. It was a subsidiary of TECO Energy before both were acquired last year by Emera, a Canadian energy conglomerate.

Ensuring the safety of its network of pipes and related infrastructure is a continuing challenge for any utility, but especially for a gas utility where the consequences of a leak can be disastrous.

At Peoples Gas, Carollo was a cog in the company's inspection machinery.

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Carollo, 55, a chemistry graduate of Atlanta's Emory University, said she soon discovered just how dysfunctional the utility's safety programs operated.

Carollo worked first in St. Petersburg as a meter reader. In early 2010, she began working as a cathodic protection inspector, eventually transferring to the utility's Tampa division.

Cathodic protection is a process that prevents corrosion of a pipe by sending a small, electric current through it. The current directs corrosion to a softer, sacrificial metal, which rusts instead of the pipe, preventing gas leaks.

Carollo's job was to check the pipes to make sure the current was working properly, thereby protecting the pipe. Current can sometimes become blocked, especially if something like a tree limb interferes.

It didn't take long for Carollo to see that the computer revolution appeared to have left Peoples Gas behind. Inspections were largely documented through paper records, often on index cards. But many of those records, Carollo said, were in chaos.

For example, she could find no inspection records for 79 miles of galvanized piping in the Tampa Bay area since at least the early 1990s, a serious breach that Carollo said invited the possibility the pipe might be corroded and leaking. She said there was no follow-up to indicate that Peoples Gas had dealt with decades-old readings that showed pipes were out of compliance.

"I checked filing cabinets, back rooms, boxes. I couldn't find anything" more current than 1992, she said. Some missing records dated to the 1980s, she told the PSC.

• • •

The PSC did not share Carollo's level of concern over Peoples Gas.

The utility was largely getting a clean bill of health from the PSC inspector who examined the company's books in its Tampa and St. Petersburg divisions and made spot checks in the field. That stunned Carollo.

After the PSC inspector, Lovedale Peterside, 64, formerly of Valrico, inspected utility's records in early 2011, she said she assumed Peoples Gas was about to get slapped by regulators.

"Our regional manager for the whole west side of Florida came down the stairs and I'm looking at him expectantly, and he said, "No violations. No warnings.' I said, 'What? How did that happen?' He told me, 'We have a nice relationship with Lovedale.' "

Carollo said she soon learned just how chummy that relationship was — utility workers, she said, routinely bought lunch for Peterside using a utility credit card.

Peterside did not return messages from the Times seeking comment.

"If Lovedale wanted a treat in the afternoon, we got it for him," Carollo said. "And that didn't make sense to me. When the IRS is auditing you, you don't take them to dinner, you know?"

Baez at the PSC and Peoples Gas later said it was wrong for Peterside to accept free lunches. Peterside denied he accepted the lunches, though the PSC inspector general confirmed that he did by reviewing Peoples Gas credit card records.

The reason the lunches did not make the audit, Baez said, was that it wasn't relevant.

Not that Peterside could be blamed for all the missed violations, Carollo said.

That is because, she said, Peoples Gas "sanitized" its inspection records before presenting them to Peterside for review. If one of the numerous "books" detailing inspections had a glaring problem, Carollo said, then it didn't go to Peterside. The company denied the accusation.

"It was just a company culture of getting the job done without any violations, no matter what you had to do," she said.

• • •

Carollo blew the whistle after Peoples Gas fired her in 2012.

The reasons for her dismissal are unclear. Carollo said she had raised a stink about the free lunches. But she admitted it was certainly possible her dismissal was not retaliatory. Carollo, who drove a company truck home, said neighbors recorded video of her cussing them out and was fired for "unprofessional behavior."

Still, Carollo was angry at her former employer, which denied retaliating against her.

In early 2013, months after her termination, Carollo said she sent complaints detailing Peoples Gas' safety practices to TECO's board of directors and its president, Gordon Gillette. She said she never got a response.

Peoples Gas insisted it first learned of Carollo's complaints after she filed a detailed complaint to the PSC in May 2013 alleging safety failures.

The PSC inspector general interviewed Carollo about Peterside's free lunches. But she said he was not really interested in her other allegations against Peoples Gas. The inspector general, Steve Stolting, who confirmed Carollo's tip about Peterside, said in an interview that her other charges against the utility were beyond the scope of his investigation.

Separately, PSC auditors did ask Peoples Gas officials if they sanitized records, documents show. But the utility denied the accusation.

In fact, the PSC had launched an investigation of Peoples Gas. Carollo said she waited for another, more detailed interview. No call ever came. She said she considered going to the media and called the PSC as a courtesy before doing so. She said she got a call from Baez, a call he later denied making.

"He told me, 'I am asking you to not go to the media because that could start a huge panic, a huge scare. Everyone's going to be smelling gas. Everyone's going to be worried about their gas stove, their pipe in the yard. I'm asking you not to.' "

Carollo said that sounded like a reasonable point, so she agreed to keep quiet.

• • •

The PSC would eventually publish two audits of Peoples Gas that would document 156 violations of agency regulations.

The first, released in September 2013, focused on just the utility's Tampa and St. Petersburg operations. It found that Peoples Gas had not completed inspections in a timely fashion and had both inadequate record keeping and poor management oversight that allowed "compliance deficiencies to persist."

The second audit, released in November 2015, looked at the utility's operations statewide. While the utility had made progress correcting problems, it said, it documented what were, in some regards, even more serious deficiencies.

That included outright fraud in the Ocala division, where workers documented nearly 2,000 inspections that had never taken place. The PSC also noted 30,000 "out of compliance" inspections statewide.

The audits, whose main findings were uncontested by the utility, said that the company's management had largely failed in its safety oversight. Nowhere was Carollo mentioned. She said she figured she knew why.

"The PSC," she said, "wanted to save face."

• • •

So why didn't the audits mention Carollo?

Baez, the PSC executive director, said it was because Carollo wasn't really relevant.

Once Carollo alerted the PSC to the inspector's free lunches, Baez said, the agency decided to take a second look at Peterside's work because it was now in question.

"The thing is, we don't deal with whistleblowers," Baez told the Times. "You have to understand how I can't adopt the allegations of the whistleblower, all right, because those are, as you say, allegations."

In fact, he said, the PSC was legally prevented from dealing with Carollo because her allegations "carry a legal significance" for any court enforcing the whistleblower statute.

"I tried to explain to you that the PSC is not such a court. . . . To my knowledge, the whistle-blower's allegations have yet to be tested by a court," Baez said in an email to the Times.

Dana Gallup, a South Florida attorney who specializes in whistleblower law, said Baez's explanation is absurd. He said the state's whistleblower law simply protects an employee from retaliation by an employer for reporting wrongdoing.

In this case, Carollo has not sought whistleblower protection and her case is before no court.

"Yeah, that doesn't make sense," Gallup said. "Arguably, the state or any regulatory body would have, you would think, an affirmative duty and obligation to investigate credible allegations to determine if there's a violation. And these's nothing in the whistleblower act that precludes that."

Indeed, the PSC's general counsel, Keith Hetrick — who said he was not involved in the Carollo case and did not speak to Baez about it — said nothing prevents the PSC from talking to whistleblowers.

"We don't ignore any whistleblower complaint," he said, "and try to dig down deeper to see if it has merit or not."

Times researcher John Martin contributed to this report. Contact William R. Levesque at levesque@tampabay.com. Follow @Times_Levesque.

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