Merrimack Valley Gas Disaster Costs Surpass $1B, Continue to Mount

Andover Police worked in concert with gas technicians to assist residents in the wake of the Merrimack Valley gas-related fire disaster. (Courtesy photograph)

Third-party claims in connection with the Columbia Gas explosions in the Lawrence, Andover and North Andover last September could reach $790 million and the utility expects to spend up to $345 million in other related costs, its parent company reported in a Securities and Exchange filing on Wednesday.

According to the State House News Service, third-party claims in 2018 totaled $757 million and other incident expenses last year totaled $266 million. “We also expect to incur expenses for which we cannot estimate the amounts of or the timing at this time, including expenses associated with government investigations and fines, penalties or settlements with governmental authorities in connection with the Greater Lawrence Incident,” NiSource said.

The costs are still mounting and the amounts included in the annual report do not include the estimated capital cost of the pipeline replacement. According to NiSource, Columbia of Massachusetts paid $167 million for the replacement of the entire affected 45-mile pipeline system and the company estimates the replacement work will cost $220 million to $230 million in total. Discussions around an insurance claim for the replacement work have begun, and the outcome of that proceeding is uncertain. NiSource said the recovery of any capital investment not reimbursed through insurance “will be addressed in a future regulatory proceeding.”

With more than 8,000 employees, NiSource serves about four million customers in seven states—Pennsylvania, Virginia, Kentucky, Maryland, Massachusetts, and Indiana. The company operates about 60,000 miles of pipeline.

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