Columbia Gas, the company that pleaded guilty in connection with the 2018 natural gas disaster in the Merrimack Valley, has agreed to pay $56 million and transfer its business in Massachusetts to Eversource by the time the cold weather returns.
Attorney General Maura Healey on Thursday announced the agreement and said that it will resolve her office's investigation into Columbia Gas for violating the state's consumer protection laws and the Department of Public Utilities' inquiries into the company's pipeline safety compliance and emergency response related to the September 2018 explosions.
The $56 million payment from parent company NiSource — a larger sum than the $53 million criminal fine imposed by a federal judge — will form the basis of a new "Energy Relief Fund" that will help about 26,000 low-income Columbia Gas customers by wiping away nearly $15 million in gas bill debts, Healey said.
"The Merrimack Valley gas explosions were heartbreaking and disruptive for the lives of thousands of families and businesses — many of whom are still recovering," 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."
The rest of the money, $41 million, will go into a Merrimack Valley Renewal Fund for clean energy programs and grants for homeowners, tenants, businesses, and municipalities in Lawrence, Andover and North Andover. Some of the money will be available for property owners to make improvements to their properties to allow for the use of more energy efficiency tools. The fund will be overseen by Healey's office and the Department of Energy Resources, which negotiated the agreement alongside the attorney general's office.
"The announcement and the settlement that the Department of Energy Resources negotiated under [Commissioner] Patrick Woodcock's leadership and with the attorney general really shows the administration's commitment to the recovery of these communities as well as to improving overall pipeline safety and addressing many of the energy efficiency challenges we saw in these communities, while moving towards our climate change goals," Energy and Environmental Affairs Secretary Kathleen Theoharides said.
The fires and explosions that rocked Lawrence, Andover and North Andover on Sept. 13, 2018, killed one teenager, Leonel Rondon, injured 22 other people, and damaged more than 130 homes and businesses.
"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," Lawrence Mayor Dan Rivera said. "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."
A number of other elected officials, including Sens. Barry Finegold and Diana DiZoglio, and Reps. Frank Moran, Marcos Devers and Christina Minicucci, reacted Thursday afternoon to the agreement.
"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," Finegold said. "This settlement will help make them whole and will put many back on track to repairing their lives."
Within hours of federal prosecutors announcing that Columbia Gas had agreed to plead guilty to a federal felony and that its parent company was ordered to sell off Columbia Gas Massachusetts, Eversource Energy announced that it had reached an agreement to buy Columbia Gas's Massachusetts assets for $1.1 billion.
As part of the settlement announced Thursday, Eversource will have to hire an independent consultant to conduct an analysis outlining decarbonization strategies for its natural gas business in line with the Baker administration's net-zero greenhouse gas emissions by 2050 target.
Eversource must also fulfill Columbia Gas' existing three-year energy efficiency plan. And under the settlement, the rates set for Columbia Gas in 2015 will be extended through November 2021 and Eversource will be required 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. The company must also return to customers more than $6.7 million in savings it saw from the federal Tax Cuts and Jobs Act.
"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," Eversource President of Gas Operations Bill Akley said.
Gov. Charlie Baker has previously suggested that he is on board with the sale, which is subject to approval by the DPU and the U.S. Department of Justice.
"Obviously, we had a lot of experience with Eversource up in up in the Merrimack Valley during that terrible tragedy a couple years ago and I think we saw at that point in time that there are real benefits to having a locally-owned, locally-managed company worrying about utility issues," he said in February.
In the days following the gas explosions in the Merrimack Valley, Baker declared a state of emergency and used the authority that afforded him to replace Columbia Gas and put Eversource in charge of the recovery efforts "on behalf of the Commonwealth." Baker said at the time that he believed the switch would "make a big difference" in the relationship between what state and local officials are told, and what actually happens.
In the announcement of the settlement, Healey's office said the sale of Columbia Gas and the transfer of its business to Eversource is expected to take place on Nov. 1.
The sale would more than double the number of natural gas customers Eversource has in Massachusetts, from 300,000 to nearly 630,000. Columbia Gas does not operate solely in the Merrimack Valley. The company serves about 325,000 customers across Massachusetts, including service areas around Brockton and Springfield. Eversource also serves 1.5 million electric customers in 51 Massachusetts communities.
Once the federal National Transportation Safety Board released its final report on the September 2018 overpressurization incident that triggered natural gas explosions in Andover, Lawrence and North Andover, regulators with the Massachusetts DPU in October 2019 opened two separate investigations into the incident and Columbia Gas's handling of it.