Columbia Gas has not ruled out raising customer rates as a way to recover some of the $1 billion costs incurred by the Merrimack Valley gas disaster last year, company officials said recently.
After the Sept. 13 over-pressurization of natural gas pipelines owned and operated by Columbia Gas caused explosions, fires, one fatality and widespread displacement, the company recorded more than $1 billion in costs for repairing affected pipeline and claims paid to the thousands of people affected in a 2018 financial report filed last week.
NiSource Inc., Columbia's parent company, said it expects the costs to grow, and has not ruled out future rate hikes to recoup some of those costs related to the pipeline replacement project, according to spokesperson Ken Stammen.
The company sustained expenses of $757 million for third-party claims including property damage, and $266 million for other incident-related expenses.
Columbia Gas replaced nearly 45 miles of affected pipeline. According to the financial filing, the company spent $167 million to do so already, and expects to spend between $220 million and $230 million to complete related infrastructure work.
Stammen said the company is focused on completing restoration efforts and settling claims right now, but might look to raise rates to recover some of the costs specifically for that capital project.
"We'd anticipate at some point in the future, for that piece of it, just the capital piece, there could be a regulatory filing of some kind," he said. "Even a decision about regulatory proceedings would be much later this year and perhaps not even until 2020."
Utility companies in Massachusetts are regulated by the Department of Public Utilities, which oversees standards and sets rates through regulatory filings.
"We're still focused on recovery in the communities, and still focused on, after we get through the winter heating season, the process to complete appliance replacement," Stammen continued. "We have not lost sight of that at all."
Local, state, and federal officials have said repeatedly they would fight attempts by the company to raise rates and put the cost of recovery from the tragedy on customers.
Any attempt to increase rates would have to be approved by the DPU.
“The Baker-Polito administration expects Columbia Gas to completely fulfill its obligation to the residents and businesses affected by the tragedy in Merrimack Valley, and opposes Columbia Gas passing any costs on to ratepayers associated with any wrongdoing of the company related to the gas explosions in Merrimack Valley," said DPU spokesperson Katie Gronendyke.
According to DPU records, Columbia Gas last filed for a rate increase on April 13, 2018, five months before the gas disaster. On Sept. 19, it filed a motion to withdraw its petition for a change.
It has not filed for another rate increase with the DPU since.
The company is insured for up to $800 million in casualty insurance, and $300 million in property insurance. The company noted in its financial filing that expenses related to the Sept. 13 incident have exceeded the total amount of coverage available to it.
Stammen said Columbia has just started filing claims with its insurance in December, and expects insurance to "cover most of those costs," but acknowledged there will be a gap.
As of last week, Stammen said the company has paid out about 75 percent of its "expected expenses" for third-party claims from affected residents.
"While we expect additional expenses beyond what we've already paid, we believe the majority of these expenses are behind us," he said.
But in the filing, the company said the Greater Lawrence incident "has had and may have an additional material adverse impact on our financial condition."
"There is an impact there as well for shareholders, I want to make that clear," said Stammen.