Utility Raises Merrimack Valley Gas Disaster Cost To $1.6 Billion

NORTH ANDOVER, MA — NiSource Inc., the parent company of Columbia Gas of Massachusetts, Said Wednesday it will pay between $1.62 billion and $1.70 billion for last year’s gas explosions in Andover, North Andover and Lawrence. Of that, $1.1 billion will be covered by insurers. The company’s new estimates, released in a conference call with financial analysts Wednesday morning, is slightly higher than a previous estimate of $1.5 billion.

The higher costs come largely from a $143 million agreement to settle four class action lawsuits against the company announced on Monday. On Wednesday, company executives said it does not expect to insure significant additional costs as a result of the explosions, which damaged or destroyed more than 130 buildings and killed an 1-year-old Lawrence man.

“We will always be mindful of the impact these tragic events on our customers in these towns,” CEO Joe Hamrock said in the conference call. “We’re dedicated to finishing the restoration.”

The company said it was on schedule to complete the replacement of heating equipment damaged in last year’s gas explosions on Sept. 15 — a year and two days after the disaster shook Andover, North Andover and Lawrence. Last fall, the utility opted to repair rather than replace heating equipment damaged in the explosions for 875 customers. The utility has been working to replace the equipment throughout the spring and summer

NiSource disclosed the update of the Merrimack Valley recovery effort in its second quarter earnings release Wednesday. The company had operating net income of 5 cents per share for the three months ended June 30, down from 7 cents a share a year ago and missing estimates by Wall Street analysts for the second quarter by a penny.

Last month, analysts began speculating NiSource would sell Columbia Gas of Massachusetts to cover its losses from the gas disaster. Harock declined to address that speculation in Wednesday’s call.

“As a matter of policy, we do not comment on M and A rumors,” he said. “We remain focused on the recovery effort to serve our customers in the Merrimack Valley.”