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Press Release AG Healey Reaches $56 Million Deal With Columbia Gas for Its Role in the Merrimack Valley Gas Explosions

Columbia Gas to Leave Massachusetts and Transfer Assets to Eversource; Settlement Money Creates Funds to Support the Merrimack Valley and Wipe Out Low-Income Customer Debt
For immediate release:
7/02/2020
  • Office of Attorney General Maura Healey

Media Contact for AG Healey Reaches $56 Million Deal With Columbia Gas for Its Role in the Merrimack Valley Gas Explosions

Chloe Gotsis

BOSTON Attorney General Maura Healey has reached an agreement with Columbia Gas that requires the company to pay $56 million for its role in the Merrimack Valley gas explosions and to leave Massachusetts by the upcoming heating season. These funds will provide debt relief to thousands of low-income gas customers and enable energy efficiency efforts in older homes and buildings in Lawrence, Andover, and North Andover. The company’s new owner, Eversource, also will be required to ensure safe and reliable operations going forward.

The settlement agreement with Bay State Gas Company d/b/a Columbia Gas of Massachusetts, its parent company NiSource, and Eversource, filed today and pending approval by the Department of Public Utilities (DPU), was reached in coordination with the Department of Energy Resources (DOER) and the Low-Income Weatherization and Fuel Assistance Program Network. The agreement resolves the AG’s investigation into Columbia Gas for violations of the state’s consumer protection laws, along with the DPU’s investigation into the company’s pipeline safety compliance and emergency response related to the September 2018 explosions.

“The Merrimack Valley gas explosions were heartbreaking and disruptive for the lives of thousands of families and businesses – many of whom are still recovering,” AG Healey said. “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. This significant result will lay the groundwork for a safer natural gas system in the region and bring the benefits of our clean energy economy to more residents.”

Under the terms of the agreement, Columbia Gas will leave Massachusetts and all of its assets will be transferred to Eversource. The settling parties anticipate the asset transfer to occur on November 1, at which time Eversource will be required to implement a comprehensive safety and reliability program, address any remedial actions remaining from Columbia’s pipeline safety violations from the explosion, fund a heat pump pilot for customers impacted by the Northampton moratorium, and develop a clean energy analysis to ensure that its business strategies are consistent with the state’s greenhouse gas emissions reduction requirements.

“Today’s announcement builds on our Administration’s commitment to the full recovery of the communities, residents and businesses of the Merrimack Valley who were severely impacted by the tragic 2018 gas explosions, and to improved pipeline safety throughout the Commonwealth,” said Governor Charlie Baker. “We are pleased that this settlement will support the affected communities by improving and maintaining safety in the region, increasing clean energy and energy efficiency measures and providing rate relief to low-income customers.”

“From safety and reliability improvements to carbon reduction and increased support for energy efficiency, this agreement is a positive step toward a finalized transaction that delivers long-term benefits to Columbia Gas customers,” said Eversource President of Gas Operations Bill Akley. “We appreciate the diligence of the Massachusetts Attorney General’s Office and the Massachusetts Department of Energy Resources in reaching an agreement that represents the best result for customers, and we look forward to working with all stakeholders to complete this transaction so that we can begin serving Columbia Gas customers and communities.”

Low-income Assistance and Merrimack Valley Funding

NiSource will pay $56 million for the creation of an Energy Relief Fund that will help approximately 26,000 low-income customers across the company’s three service territories by wiping out nearly $15 million in accumulated debt on their gas bills. The remaining funds will be devoted to the Merrimack Valley for clean energy programs and grants for homeowners, tenants, businesses, and municipalities. This Merrimack Valley Renewal Fund will be implemented by the AG’s Office and DOER. The Merrimack Valley Renewal Fund will finance a variety of programs through direct grants, competitive requests for proposals, leveraging existing programs, and local partnerships.

Clean Energy Initiatives

Under the agreement, Eversource will engage an independent consultant to prepare a case analysis outlining potential decarbonization strategies for its gas business that are consistent with Massachusetts’s greenhouse gas emission reduction requirements and protect customers. This requirement follows a petition the AG’s Office filed with the DPU last month, calling for an investigation into the future of the natural gas industry in the state and the policy and structural changes companies need to make in order to ensure a transition to a clean energy system with minimal and equitable customer impact.

Eversource also commits to meeting Columbia Gas’ existing three-year energy efficiency plan and extend the special weatherization offer in the City of Lawrence through 2021. In addition, Eversource will fund two heat pump pilot programs to increase technology adoption through the Mass Save program and as an alternative to the current gas moratorium in western Massachusetts. Eversource also pledges to provide up to 2,000 WiFi thermostats connected to natural gas fired furnaces or boilers to help reduce gas usage through demand management programs.

In addition, Eversource commits to monthly reporting of its energy efficiency initiatives, improve communication with landlords and partnerships with local organizations, and provide Spanish speaking outreach, marketing, and customer service. 

Rate program

Following the Merrimack Valley gas explosions, the AG’s Office asked Columbia Gas to withdraw its pending rate increase request. Today’s settlement extends the rates set in 2015 through November 2021 and requires Eversource to return to customers more than $6.7 million in savings from the Tax Cuts and Jobs Act. The settlement also requires Eversource to spread the impact of its next rate increase out over two years: $6.3 million in November 2021 and $16.7 million in November 2022.

Recovery Effort

In the days, weeks, and months following the gas explosion, the AG’s Office played an active role in the Merrimack Valley’s recovery efforts, including having a consistent presence at the claims center, pressing for clearer customer communications, attending community meetings, and running a dedicated hotline to take reports, assist those impacted, and provide guidance about legal representation and home improvement scams. The AG’s Office issued an advisory for homeowners, for displaced renters, and for those considering giving to charities to help impacted residents. The AG’s guidance outlined the rights of landlords and tenants impacted by the explosions, and the office served as a resource for them throughout the recovery process.

“I want to thank Attorney General Healey for taking money out of the hands of Columbia Gas and putting it back into the impacted residents who to this day, are still trying to recover from the effects of the gas fires,” said Lawrence Mayor Dan Rivera. “This is another step towards justice, and an opportunity for our community to continue to heal. I look forward to a heating season without Columbia Gas at the helm, and with priorities that put safety of people over profit, thanks to AG Healey and her team.”

The AG’s Office sent letters to Columbia Gas in September 2018 and October 2018 detailing serious concerns with the company’s failure to meet the needs of the community following the explosions. The AG’s Office also insisted that the company’s plans to replace appliances for impacted residents include high efficiency equipment, and where appropriate, energy efficiency measures and heat pumps.

After the 2018 incident, Governor Baker declared a State of Emergency and authorized Eversource to take management control over the coordinated effort to safely restore utility services in South Lawrence, Andover and North Andover. Columbia Gas was ordered to impose a moratorium on all work, except for emergency and compliance work, and was required to enter into an agreement with Nitsch Engineering to monitor the company’s management of the restoration and recovery work. The Administration selected an independent auditor to conduct a statewide examination of the safety of the natural gas distribution system and the operational and maintenance functions of natural gas companies in the Commonwealth. To help the communities recover, the Baker-Polito Administration leveraged over $13 million in emergency funds for businesses directly impacted by the recent gas explosions in Lawrence, Andover and North Andover.

To ensure the safety of the Commonwealth’s residents and energy infrastructure, on December 31, 2018, Governor Charlie Baker signed legislation previously filed by the Administration and recommended by the National Transportation Safety Board (NTSB) that required all natural gas work that could pose a material risk to public safety be reviewed and approved by a certified professional engineer. Last year, the Baker-Polito Administration and the Northeast Gas Association also announced that all natural gas companies in Massachusetts will adopt recommended comprehensive pipeline safety management standards.

Following the release of the NTSB’s final report regarding the September 13, 2018 gas incident in Merrimack Valley, the DPU formally opened two public investigations into the incident.

If approved by the DPU, the terms of today’s agreement are expected to take effect on November 1.

This matter was handled by Assistant Attorneys General Matthew Saunders, Donald Boecke, Ashley Gagnon, Elizabeth Mahony, Joe Rogers, Deputy Division Chief Nathan Forster, Division Chief Rebecca Tepper, and Analyst Tim Newhard, all of AG Healey’s Energy and Telecommunications Division.

 

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Energy and Environmental Affairs Secretary Kathleen Theoharides

“With this settlement, the Commonwealth is holding Columbia Gas accountable for the tragic gas incident in the Merrimack Valley and securing support for the impacted communities. The funds announced today will support the Baker-Polito Administration’s ambitious net-zero emissions target and significantly increase resources available to allow more customers, especially low- and moderate-income customers and non-English speaking residents, to take advantage of energy efficiency measures.”

Department of Energy Resources Commissioner Patrick Woodcock

“DOER is looking forward to developing meaningful local partnerships to invest modern energy efficiency measures into the homes and businesses affected by the 2018 gas disaster. Specifically, under the settlement DOER will be able to upgrade buildings and leverage the nation-leading Mass Save programs to lower energy bills and reduce emissions.”

Senator Elizabeth Warren

“Nearly two years ago, Leonel Rondon, a young man lost his life, 25 people were injured, and thousands of families had their lives turned upside down in the 2018 gas pipeline explosion in the Merrimack Valley. Massachusetts lawmakers have worked with community leaders to demand accountability from Columbia Gas and NiSource, and as a result, Columbia Gas was required to rebuild roads, restore heating safely to homes and businesses, and improve safety. Now, Columbia Gas will be forced to leave Massachusetts and the settlement money from Columbia Gas investigations will be directed back to the community to serve the people and businesses affected. I’m grateful to Attorney General Healey and her office for fighting tirelessly to make this happen.”

Senator Ed Markey

“We must never stop fighting for justice for Leonel Rondon’s family and for all those who were harmed by Columbia Gas’s criminal actions. This settlement can’t undo the losses in Lawrence, Andover, and North Andover, but the financial penalties will help the community continue to rebuild and the safety provisions will help Massachusetts avoid further tragedy. And once we pass my Leonel Rondon Pipeline Safety Act, communities all around the country will be better protected from companies that put profit above public safety.”

Congresswoman Lori Trahan

“Columbia Gas's negligence led to devastating and in many cases irrevocable harm to small businesses and the victims of the Merrimack Valley gas explosions. I’m grateful to Attorney General Healey for her relentless pursuit of justice for Leonel Rondon and for the victims and communities still working to recover from that fateful day.”

State Senator Barry Finegold

“I am thrilled that Attorney General Healey and the Department of Energy Resources have fought and won on behalf of my constituents who were impacted by the Columbia Gas explosions. Two years after the disaster, many families and small businesses are still struggling to put their lives back together. This settlement will help make them whole and will put many back on track to repairing their lives. I am especially grateful to the Attorney General for fighting both for the impacted residents across my district and for low-income residents across the state who will benefit from these funds.”

State Senator Diana DiZoglio

“My team has spent the better part of the last month in communication with the Attorney General’s Office assisting many of our residents in connection with receiving the full class action settlement payments to which they are entitled. In addition to achieving resolution on those issues, we are gratified that a settlement agreement has finally been reached that will see Columbia Gas exit Massachusetts and bring robust safety improvements, $56 million invested back in the impacted communities, and much needed closure for affected residents and businesses.”

State Representative Frank Moran

“Today’s announcement is a momentous victory for the communities of the Merrimack Valley who have greatly suffered, and continue to suffer, as a result of this entirely preventable tragedy. I would like to thank Attorney General Maura Healey and her dedicated staff for their continued advocacy on behalf of the families whose lives were forever changed by this horrific occurrence.”

State Representative Marcos Devers

“Firstly, I want to thank the Attorney General’s Office for their invaluable support to bring justice to our communities, to our federal legislators that represent our Commonwealth for their commitment and solidarity to hold Columbia Gas accountable, to the Lawrence State Delegation for the collective effort to ensure that our people are safer and are compensated to certain extend. Columbia Gas may be gone soon, but we will still have some challenges to face ahead of us in terms of utility public safety and accountability.”

State Representative Christina Minicucci

“Earmarking $41 million of the settlement dollars to the Merrimack Valley will ensure our communities have the resources available to transition away from natural gas into safer, clean energy alternatives. These investments will help remove barriers and provide all our families with access to a green energy future.”

Andover Town Manager Andrew P. Flanagan

“I appreciate the Attorney General’s advocacy on behalf of the Town and the residents of Andover. These funds will he used to make strategic investments in our public facilities in a manner that is consistent with our efforts to provide the highest level of services to the people of Andover.”

North Andover Town Manager Melissa Rodrigues

“It has been a long 18 months for the Town of North Andover, and we are thrilled to finally see this coming to an end. This Town looks forward to a fresh start that will benefit rate payers and bring confidence in the utility back to the community. We are thankful to the Attorney General and her team for looking out for our town.”

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Media Contact for AG Healey Reaches $56 Million Deal With Columbia Gas for Its Role in the Merrimack Valley Gas Explosions

Office of Attorney General Maura Healey 

Attorney General Maura Healey is the chief lawyer and law enforcement officer of the Commonwealth of Massachusetts.
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