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Columbia Gas agrees to pay $56 million to resolve state investigations into Merrimack Valley incident

Eversource will buy the Columbia Gas operations in Massachusetts this fall

Flames consumed a home in Lawrence in this Sept. 13, 2018 file image taken from video provided by WCVB. Columbia Gas of Massachusetts has agreed to pay $56 million to resolve state investigations into the incident.
Flames consumed a home in Lawrence in this Sept. 13, 2018 file image taken from video provided by WCVB. Columbia Gas of Massachusetts has agreed to pay $56 million to resolve state investigations into the incident.Associated Press

The parent company of Columbia Gas of Massachusetts has agreed to pay $56 million to resolve investigations by state regulators into its role in the Merrimack Valley gas explosions in 2018 that killed one person, injured more than 20 people, and damaged more than 100 buildings.

The state’s agreement comes less than two weeks after a federal judge in Boston approved a similar settlement between NiSource and federal prosecutors, resolving a criminal case involving a violation of a pipeline safety law. As part of that settlement, NiSource agreed to pay $53 million.

Federal prosecutors said the utility disregarded risks related to pressure-sensing lines that help monitor and control gas pressure, as old cast-iron pipes were being replaced. The utility, they said, failed to account for the relocation of pressure-sensing equipment, causing the system to improperly increase pressure on portions of the lines, and flooding the gas network in September 2018.

Attorney General Maura Healey’s office helped broker the state agreement, which resolves her investigation into the incident, as well as two related probes by the Massachusetts Department of Public Utilities. Healey’s office said the settlement funds will provide debt relief to thousands of low-income gas customers and support energy efficiency efforts in older buildings in Lawrence, Andover, and North Andover, the three communities where the explosions occurred.

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“Today’s first-of-its-kind agreement ensures that Columbia Gas never does business in Massachusetts again, invests millions of dollars in the Merrimack Valley, and helps low-income customers pay their gas bills,” Healey said in a statement.

The settlement helps clear the way for Eversource to buy Columbia Gas of Massachusetts from Indiana-based NiSource Inc. for $1.1 billion. Eversource and NiSource reached the deal in February, and it is scheduled to close this fall.

The $56 million will be divided up into two buckets. One will help about 26,000 low-income customers across the three Columbia Gas service territories in Massachusetts — in the Lawrence, Brockton, and Springfield areas. The goal: to wipe out nearly $15 million in accumulated debt for those customers.

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The remaining $41 million will help fund energy efficiency work and clean-energy projects for homeowners and businesses in the Merrimack Valley, with an emphasis on low- and moderate-income residents.

“The settlement shows the administration’s commitment to working for a full recovery for the communities that were impacted by this tragic event while improving the energy efficiency and resiliency of the housing stock in those affected communities,” said Katie Theoharides, the state’s energy and environmental affairs secretary.

Eversource is also a party to the settlement, which was filed with the state DPU on Thursday. Among other things, Eversource has agreed to fund a pilot program to distribute heat pumps in Northampton and Easthampton, two communities served by Columbia Gas with moratoriums on new natural gas hookups, and to hire a consultant to study “decarbonization strategies” for its gas business.

Under the settlement, Eversource will be allowed to phase in higher gas rates that had been put on hold, in Columbia Gas territories, following the incident. The hike will now take effect in two phases, over the next two years, assuming the DPU finalizes the settlement.

However, Eversource can’t seek another rate increase for these areas until 2027, although it can ask to be reimbursed for increases in the costs of its natural gas purchases or for necessary safety upgrades.

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“This proposed settlement is a positive step toward completing our acquisition of the Columbia Gas of Massachusetts system, maximizing the benefits delivered to customers while fairly balancing the financial considerations needed to ensure safe, reliable service,” Eversource spokeswoman Caroline Pretyman said in a statement.



Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.