February 26, 2020 / 2:48 PM / a month ago

Utility operator NiSource to sell Massachusetts operations after gas explosions probe

BOSTON (Reuters) - Utility operator NiSource Inc on Wednesday agreed to sell its Massachusetts operations to Eversource Energy for $1.1 billion after striking a deal with prosecutors to resolve a probe into catastrophic gas explosions there in 2018.

FILE PHOTO: FILE PHOTO: A burnt Columbia Gas of Massachusetts envelope sits on the sidewalk outside a home burned during a series of gas explosions in Lawrence, Massachusetts, U.S., September 14, 2018. REUTERS/Brian Snyder/File Photo

News of the sale came after federal prosecutors in Boston said Columbia Gas of Massachusetts, the NiSource unit that Eversource agreed to buy, would plead guilty to violating a federal pipeline safety law and pay a $53 million fine.

Columbia is scheduled to plead guilty on March 9 to violating the Pipeline Safety Act to resolve a probe into the disaster, which killed one person, injured 22 others and destroyed multiple buildings in three communities northwest of Boston.

NiSource, as part of a deferred prosecution deal, agreed to sell Columbia and leave Massachusetts, a condition U.S. Attorney Andrew Lelling said was meant to “vindicate” the outrage of residents in Lawrence, North Andover and Andover.

“Clearly what happened here is this particular company couldn’t be bothered to maintain the safety of its customers,” Lelling said.

Merrillville, Indiana-based NiSource, which serves nearly four million natural gas and electric customers across seven states, said in a statement it took full responsibility for the “tragic events.”

NiSource said it expects the deal with Eversource to close in the third quarter of 2020. Prosecutors said Columbia’s operations will be subject to monitoring during a three-year probationary period.

Prosecutors said NiSource would forfeit to the government any profits from selling Columbia.

Prosecutors said Columbia recklessly disregarded minimum federal safety standards, causing its gas pipelines to become over-pressurized, which led to the Sept. 13, 2018, explosions.

The blasts occurred while Columbia was replacing cast-iron pipes with plastic lines. They damaged about 131 homes and commercial buildings and prompted the evacuation of thousands of residents.

Prosecutors said Columbia failed to account for pressure detectors while workers replaced aging cast-iron pipes and failed to follow any plan to prevent the over-pressurization that resulted.

The allegations mirrored the findings of the National Transportation Safety Board, which in September said that “weak engineering management” did not adequately plan and oversee the project.

The accord is separate from a $143 million settlement the company reached in July to resolve lawsuits brought by residents and businesses affected by the explosions, and an $80 million accord it struck with the three communities.

Columbia also last year reached a settlement with the family of a teenager killed during the gas explosions.

Reporting by Nate Raymond in Boston; additional reporting by David Shepardson in Washington; Editing by Bernadette Baum and Sonya Hepinstall

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