NiSource discloses criminal probe of Massachusetts gas pipeline explosions

HOUSTON/BOSTON (Reuters) - Federal prosecutors have launched a criminal investigation of utility company NiSource Inc over gas explosions and fires in three Massachusetts communities that killed one person and injured at least 21 others in September, the company disclosed on Thursday.

Grand jury subpoenas were served to NiSource and its subsidiary Columbia Gas of Massachusetts on Sept. 24, according to a NiSource regulatory filing. The company said it is cooperating with the investigation.

The U.S. Attorney’s Office in Massachusetts is conducting the probe, NiSource said in its filing.

The explosions occurred in Lawrence, North Andover and Andover, all communities northwest of Boston, while Columbia Gas of Massachusetts was conducting repairs on its system. Fires erupted after the gas lines became over-pressurized, and critical valves controlling the flow of gas were not shut for almost 3-1/2 hours after the first alarm was raised.

NiSource spokesman Ken Stammen declined to comment on details related to the investigation, and a spokeswoman for U.S. Attorney Andrew Lelling, whose office is overseeing the investigation, also declined to comment.

NiSource recorded $461.9 million in expenses related to the incident in its third quarter and said it expected to recover most of those costs through insurance. The company has liability insurance for damages up to roughly $800 million, according to its filing.

Shares of NiSource were up less than 1 percent in morning trading at $25.56.

The disaster was the largest U.S. natural gas pipeline incident since 2010 in terms of structures involved, according to the National Transportation Safety Board. Eight years ago, a gas transmission line operated by Pacific Gas and Electric Company ruptured in San Bruno, California, killing eight people, destroying 38 buildings and damaging 70 others.

NiSource said it replaced all of the 45-mile distribution network necessary to return service to Massachusetts customers impacted by the explosions, but that it had further work to do.

It anticipates restoring service to all customers affected by the gas-line explosion by Dec. 16, executives said on the call.

Reporting by Liz Hampton in Houston and Nate Raymond in Boston; Editing by Chizu Nomiyama and Dan Grebler