NiSource Inc. disclosed that a federal investigation is underway into the natural gas pipeline explosions in September that rocked neighborhoods in the Greater Lawrence area of Massachusetts, killing one man.

NiSource and subsidiary Columbia Gas of Massachusetts received grand jury subpoenas in September from the U.S. Attorney’s Office in Massachusetts, the Illinois-based operator said in a regulatory filing. NiSource said it is cooperating.
In mid-September, a series of fires and explosions in Lawrence, Andover and North Andover where Columbia Gas of Massachusetts was upgrading pipelines damaged or destroyed 131 structures. An initial investigation by the National Transportation Safety Board determined that gaps in construction work orders provided to the work crew may have caused the incident, as “high-pressure natural gas was released into a low-pressure gas distribution system” in the northeast region of the Merrimack Valley.

In a Form 10-Q filing with the Securities and Exchange Commission for the third quarter, NiSource said it recorded a loss of about $415 million for third-party claims and about $45 million for other incident-related expenses related to the incident.

“We estimate that total costs related to third-party claims will range from $415 million to $450 million, depending on the final outcome of open investigations and the number, nature and value of third-party claims,” management said.

NiSource also expects to incur $180-210 million in other incident-related costs, substantially all of which would be incurred by the end of this year. Expenses related to various lawsuits, including class action suits, will extend beyond 2018, it said.

Columbia of Massachusetts expects to record recoveries from third-party insurance, resulting in increases to operating income in future quarters. The utility following the incident withdrew its petition for a base rate revenue increase, resulting in delayed increases in forecasted revenues and cash flows beginning the 1Q2019.

Columbia of Massachusetts also expects to invest $135-165 million to replace the entire affected 45-mile cast iron and bare steel pipeline system that delivers gas to the Greater Lawrence area.

NiSource also warned that state and federal legislation could be enacted that would require the Massachusetts subsidiary to incur more costs by mandating some changes, including operating practice standards for natural gas distribution operations and safety.