Massachusetts natural gas explosions may trigger strained regulatory relations

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Fallout from last week’s gas explosions north of Boston could lead to a more contentious regulatory relationship between Massachusetts and the utility companies involved, Moody’s Investors Service said Tuesday.

The Sept. 13 explosions in Lawrence, Andover and North Andover killed one person, injured 25 and destroyed roughly 60 homes. Massachusetts Gov. Charlie Baker declared a state of emergency and replaced supplier Bay State Gas Co., which operates as Columbia Gas, with Eversource, New England's largest energy supplier, to coordinate recovery.


“Quantifying the financial damage associated with the event will take time, but the company’s management and their response to the event is already being politicized with Gov. Baker’s decision,” said Moody’s, which called the catastrophe a credit negative for Bay State Gas and its parent, NiSource Inc.

U.S. Senators Edward Markey and Elizabeth Warren, both Massachusetts Democrats, said after briefings from regulators that pressure inside the pipes were at least 12 times higher than what it should have been, though the National Transportation Safety Board has yet to determine its findings.

The NTSB has said it would examine the utility’s record-keeping, policy compliance and procedures, training and oversight related to its gas system.

Baker told reporters Monday that Columbia Gas would be on the hook.

“Columbia is going to be expected to and will anticipate that the infrastructure issues are going to be on them," Baker said at a press conference. “But there are a whole bunch of issues associated with how people actually get from here to there and the losses that they incur as a result of that that need to be dealt with."

The company said it is committed to completely replacing the natural gas distribution system in the Merrimack Valley. "Over time, we hope to earn back the trust we lost during this incident," said NiSource president and chief executive Joe Hamrock.

The tragedy has triggered arguments from clean-energy advocates who point to accident risks from fossil-fuel companies. Warren, meanwhile, has a bill before the Senate that would require every public company to disclose climate-related risks.

NiSource, one of the largest local distribution utility holding companies in the U.S., has seven utilities operating across different jurisdictions in the Nortehast. Bay State Gas is NiSource’s fourth largest utility, after its Ohio, Indiana and Pennsylvania holdings.

That Columbia Gas, according to the Boston Herald, had donated to the campaigns of Baker, predecessor Deval Patrick and Lawrence Mayor Dan Rivera raised questions within the Bay State about supervision of regulators.

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Infrastructure Charlie Baker Moody's Massachusetts
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