- Eversource Energy announced on Wednesday a $1.1 billion acquisition of Columbia Gas of Massachusetts from NiSource, which would add 330,000 natural gas customers to its Massachusetts distribution business.
- Gov. Charlie Baker had tapped Eversource to take over repairs in the Merrimack Valley after Columbia Gas infrastructure led to explosions on Sept. 13, 2018. The companies expect to close the deal, which analysts regarded as a fair transaction, in the third quarter of this year.
- NiSource recently reached a $143 million settlement resolving a class action lawsuit with Massachusetts residents, following the Columbia Gas explosions, pending final approval in the state's Superior Court. In the acquisition agreement, Eversource excludes any past and future liabilities in litigation or proceedings arising from the 2018 fires and explosions, per Eversource's annual report.
NiSource leadership remained conservative during its quarterly earnings call on Thursday, according to Morningstar analyst Charles Fishman, not wanting to be overly optimistic about the deal. However, following the sale of its Massachusetts gas subsidiary, the company took an issuance of about $500 million of equity off the table, Fishman said.
"The [Columbia Gas of Massachusetts] asset sale is expected to enable us to eliminate the 2020 block equity issuance from our financing plans," Ken Stammen, NiSource spokesperson, told Utility Dive via email.
"What we're seeing is that gas utilities are pretty popular and that's a good price," he said.
Fishman estimated the $1.1 billion figure was about 24 times the amount Columbia Gas was able to get in returns from their Massachusetts ratebase before the 2018 accident.
Prior to the reconstruction work in Merrimack Valley, Eversource was not considering an expansion of its natural gas business, spokesperson Reid Lamberty told Utility Dive.
The Massachusetts Department of Public Utilities will have to sign off on the acquisition and the resulting rate plan.
Despite NiSource's good operational track record before the 2018 explosion, Fishman said Eversource's proximity might also give it better oversight.
Eversource has stronger relationships with regulators and politicians in the state, Fishman added, whereas NiSource, headquartered in Indiana with less connection to the Northeast, was "gonna have trouble going back for a ratecase and getting treated equally."
"At this point in time, Eversource is a better owner, and that's not knocking NiSource," Fishman said.
Animosity had grown between Massachusetts communities and Columbia Gas after the explosion. That opposition continued even after the company reached a settlement on the class action lawsuit. The 2018 explosions impacted communities in Lawrence, Andover and North Andover, Massachusetts. Lawrence Mayor Dan Rivera objected to the settlement's terms as "unfair and reasonable" in December.
Rivera did not respond to requests for comment on the Eversource acquisition, but the utility's leadership highlighted a number of benefits for Columbia Gas customers, such as the benefit of "locally-based gas dispatch and emergency response," per the press statement.
"We are going to move the gas operations from Ohio ... to Southborough, which will keep crucial functions local," Lamberty said. "We do have a very long-standing reputation as a very good corporate neighbor."
"Communities and state regulators have trusted us, the local energy company here, with deep roots and commitment in New England," he said.
Eversource plans to extend its goals to be carbon neutral by 2030 to the Columbia Gas territory. The company will have the second largest gas distribution assets in the state, behind National Grid.