Thread by @jglarusso

1. If you think that the @ColumbiaGasMa (CMA) Settlement Agreement announced 7/2 is solely about settling the score for the 2018 Merrimack Valley gas explosions, you’re mistaken.

You’re off by $1.1 billion.

#mapoli

https://twitter.com/massago/status/1278837258926338048

2. This will require a trip in the WABAC machine. First stop? 9/13/18; 4:15 p.m.

Catastrophe.

CMA workers over-pressurize low pressure gas distribution lines in S. Lawrence causing multiple fires & explosions in Lawrence, Andover, & N. Andover. The toll is horrific.

3. 18 y.o. Leonel Rondon is killed, 23 people are injured—one is severely disabled—& ~ 130 homes & commercial buildings are damaged.

Personal injury & property damage claims, infrastructure damage, & mutual aid payments to other utilities come to $1B.

bit.ly/30jeW1A

4. It will take 15 months to complete repairs to CMA’s damaged gas system.

The day after the explosions @MassGovernor declares a state of emergency authorizing the DPU to give Eversource “management control” over gas repairs. (@nationgridus was then in the midst of ...

5. ... a lockout involving its unionized gas repair workers.) Days later @josephjalbanese is put in charge of the recovery. In Dec. 2018 the MA DPU puts @nitscheng in charge. bit.ly/301cpZq

6. Our next WABAC destination? Feb. 26th of *this* year. Two pivotal, back-to-back announcements are made on this date, and they’re inextricably linked.

First, @TheJusticeDept announces that it has reached a plea agreement to settle all criminal charges against CMA. (CMA...

7. ...had been charged w/violating the federal Pipelines Safety Act (PSA).) CMA pleads guilty to the charges & pays a fine of $53M—the heftiest fine ever levied under the PSA.

DOJ also announces a Deferred Prosecution Agreement (DPA) w/@NISourceInc, CMA’s parent. Per the...

8. ...DPA NISource is required to “make reasonable best efforts” to sell CMA, forfeit any profit from the sale, and cease all activities in MA. That is, the DPA requires NISource to divest its MA gas business to avoid criminal charges. bit.ly/30f4bNw

9. Evidence of NISource’s “reasonable best efforts” to sell its MA gas business are manifested only hours later when NISource & Eversource announce that they have signed an Asset Purchase Agreement (APA) providing for the sale of CMA’s assets to Eversource for $1.1B.

10. You’d be wrong to think of this as a shotgun wedding. First, CMA & Eversource won’t merge. Rather, Eversource is just buying all of CMA’s assets—its stuff—& getting access to CMA’s 320k customers. Second, it seems Eversource wasn’t the sole suitor. News reports...

11. ...circa June 2019 stated that NISource had hired an adviser to auction CMA. At the time CMA was expected to fetch $2B: ~two times the $1.1B NISource ultimately agreed to accept from @Eversource. (See bloom.bg/3eHLPtJ.)

12. Other than those scant details we know nothing about how the NISource-Eversource deal was struck. (IMO the history of the deal is arguably the most important *untold* MA energy news story of this year.) Price, after all, was not a consideration since NISource...

13. ...would have had to disgorge any profit from the sale. What other considerations might have come into play? Both the CMA and Eversource PRs announcing the sale (bit.ly/38UqAnb; bit.ly/3gVef56) emphasize that the sale will put CMA’s customers in...

14. ...the hands of a competent, hometown team—Eversource. But Eversource isn’t the only hometown team—there’s also @nationalgridus. Did NGrid not put in a bid for CMA? Did the fact that @MassGovernor gave Eversource “management control” over the recovery effort...

15. ...after the blast give Eversource a leg up? Were any & all out-of-state bidders disfavored b/c CMA—now a corporate pariah—is an “out of state” co.? (NISource’s HQ is in IN.) In fact, when Eversource purchases CMA, CMA’s unionized employees—most of whom were working for...

16. ...CMA on 9/13/18—will *presto chango* become Eversource employees.

For his part, @MassGovernor emphasized his admin. hadn’t midwifed the deal. He too added he was glad that CMA was being sold to a “locally-owned, locally-managed company.” bit.ly/2WyeRWu

17. You may be under the false impression that the CMA-Eversource transaction has already happened. It hasn’t. The Asset Purchase Agreement (APA) announced on 2/26 is like a Purchase & Sale Agreement for a house. That is, “I will buy your house (or utility assets) if...

18. ...the following conditions are met, &c.” The APA conditions were set out in an SEC disclosure NISource filed 2/26 (bit.ly/2CuW9Z9): (1) the expiration of a statutory (Hart-Scott-Rodino Act) waiting period (2) MA DPU approval of the sale, & last but certainly not...

19. ...least, (3) the final resolution of all pending/future claims MA DPU has/might have against CMA for the 9/13/18 explosions—aka the “Greater Lawrence Incident.” (If you’re writing a book about this, there’s your title.) The last requirement is the most imp. of the three...

20. ...b/c it set in motion the negotiations that resulted in the Settlement Agreement filed & announced on 7/2.

This is where/when things go all curious.

There were then two pending MA DPU investigations re CMA’s involvement in the Greater Lawrence Incident (19-140 & 19-141).

21. It appears that settlement negotiations got underway in the late winter/early spring of this year—likely around the 2/26 APA. By then all of the parties to the 7/2 Settlement Agreement had intervened in the 19-140/141 dockets. Evidence of negotiation progress likely came...

22. ...on 5/22 when @MassAGO, @MassDOER, @NISourceInc, & @EversourceCorp moved the DPU to appoint DPU staffers to participate in negotiations—clearly to ensure that the 19-140/141 investigations would be resolved by the settlement, fulfilling the 3rd condition of the APA.

23. Sometime b/t 5/22 & 7/2 the Settlement was struck.

The end of the long ordeal? Hardly. The end will come if/when the DPU approves (i) the Settlement Agreement & (ii) CMA’s asset sale to Eversource. You can rest assured re the “If”—approval will be given. But the “When” &...

24. ...the “How”?

At this point in this long saga it’s time to ask a pointed question. Actually, it’s *the* pointed question this twepic has been leading up to all along. I’m sure you feel the excruciating tension.

Maybe not so much.

Here’s the pointed question, nevertheless.

25. Q: Are the good people of the Merrimack Valley—the people whose homes, businesses, lives & loved ones were blown up by CMA, & who certainly deserve every scrap of the relief provided by the Settlement Agreement—are those good people being co-opted so Eversource can...

26. ...more than double its gas customer at a cost of 50¢ on the $1? (Eversource will go from 300k to 626k gas customers; they’ll pay $1.1B for gas assets likely worth ~$2B.)

A: Nesting the Joint Motion to approve the Settlement Agreement within the docket opened to examine...

27. ...the merits of the $1.1B CMA-Eversource asset sale (20-59) sure does make it *appear* that they are. Docket 20-59, after all, is captioned “Joint Petition... for approval by the [DPU] of Purchase and Sale of Assets.” *That* is the real business of the docket: to approve...

28....Eversource’s $1.1B purchase of CMA’s assets. Approval of the Settlement Agreement is ancillary to that purpose.

Let’s look at the Joint Motion to approve the Settlement Agreement.

CMA, its parent NiSource, Eversource Gas Co. of MA (“EGMA”; a new Eversource co. created...

29. ...to receive the assets & operate the expanded gas business), Eversource Energy, @MassAGO, @MassDOER, and the Low-Income Weatherization and Fuel Assistance Program Network (“LIPN”) are all party to the Joint Motion. Notably, however, the Joint Motion was filed by...

30. ...Eversource’s & CMA’s attorney—again, because docket 20-59 is about approving the sale of CMA’s assets to Eversource. The Joint Motion is clear on this point: “The Settlement Agreement resolves issues relating to the petition to the [DPU] by NiSource, [CMA], and...

31. ...Eversource for approval of NiSource’s sale of the business operated by [CMA] to Eversource for a purchase price of [$1.1B]...”

But here’s the truly insidious thing—the Explanatory Statement that accompanies the Joint Motion says this: “If the [DPU] does not...

32. ...approve this Settlement Agreement in its entirety by the [9/30/20] Requested Approval Date, or if, for any reason, the Closing [i.e. the asset sale] does not take place, this Settlement Agreement shall be null and void.” (p. 45.)

33. Remember too that one of the APA’s conditions for approval of the asset sale is DPU approval of the Settlement Agreement—that is, the final resolution of all pending/future claims the DPU has/might have against CMA for the horrific Greater Lawrence Incident.

34. So, no asset sale, no Settlement Agreement. No Settlement Agreement, no asset sale.

I asked above if the good folk of the Merrimack Valley hadn’t been co-opted in service to the asset sale. A reasonable person could suggest the opposite: that the asset sale has been...

35. ...held hostage to provide a Settlement for the good folk of the Merrimack Valley. Would that this were so.

You see, the Settlement Agreement doesn’t only require CMA to pay $56M and other benefits to the good folk of the Merrimack Valley, it also requires concessions...

36. ...from Eversource in consideration of its purchase of CMA’s assets and the acquisition of CMA’s 320k customers.

“That’s a good thing,” you’ll likely counter—“Eversource *should* be required to make make concessions in consideration of the sale!”

37. Agree. Completely. It is good & entirely appropriate for Eversource to make those concessions. It isn’t good, however, that those concessions weren’t developed publicly in the DPU’s 20-59 docket, but were fully developed by the settling parties around a conference table...

38. ....*before the docket for the DPU to examine the asset sale was even opened*.

We’ll likely never know how Eversource’s concessions were negotiated as a result—the rationales for the concessions that were exacted, the concessions that were abandoned, the concessions...

39. ...that were left on the table. Why? Because the Settlement Agreement states that all materials relating to the negotiations are Public Records. The implication is that the materials are *not* subject to disclosure b/c they fit within an exemption to the public records law.

40. So go ahead, file a Public Records Law request to see the materials—and be prepared to go to court with your best case for disclosure.

Neither are the @MassAGO, @MassDOER, or LIPN planning to file anything else in docket 20-59 re the asset sale: the Settlement Agreement...

41. ...states their approval for the transaction.

There’s no better time than tweet 41 to mention too that most, but not all, of Eversource’s concessions benefit CMA customers. There are comparatively few concessions that benefit Eversource’s existing 300k customers. So...

42. ...few that existing Eversource customers seem like poor step-children to the $1.1B asset sale.

(By now you’ve realized that this thread is mostly about the regulatory process around the Settlement Agreement & asset sale, rather than the substance. But the two do...

43. ...go hand-in-hand. I urge you read the Settlement Agreement here—bit.ly/32AWLqU—so that you can come to your own conclusions re its merits—esp. if you’re a *current* Eversource gas customer.)

44. The consolidation of the DPU’s investigations into the “Greater Lawrence Incident” (dockets 19-140 & 19-141) in the docket examining the sale of CMA’s assets to Eversource—wrapping everything up in a single bundle—was one way...

45. ...to dispose of these matters, but it certainly wasn’t the only way. The Joint Motion for the DPU to approve the Settlement Agreement and the Joint Petition to approve the asset sale could have been put into two separate DPU dockets: the two DPU...

46. ...investigations (dockets 19-140 & 19-141) could have been consolidated, and the Joint Motion to approve the Settlement Agreement could have been lodged there; and the Joint Petition for the DPU to approve the CMA-Eversource asset sale could have been separately...

47. ...considered in the current docket (20-59).

What would have been the merits of separating the Settlement Agreement and asset sale into two separate dockets?

48. First, the Settlement Agreement was about negotiating full and final satisfaction for the harm done by CMA to its customers in the Merrimack Valley, and resolving the two DPU investigations into the Greater Lawrence Incident (dockets 19-140/141). It would have been...

49. ...entirely appropriate for those negotiations to have been conducted in private because they were meant redress the damage done by CMA with CMA’s resources alone.

Second, wrapping negotiations with CMA re the Settlement Agreement up with negotiations with Eversource...

50. ...about the the asset sale short-circuited public consideration of the merits of Eversource’s acquisition of CMA’s assets and acquisition of its 326k customers. The CMA-Eversource asset sale was postured as a fait accompli the moment the petition to...

51. ...approve the sale was filed, & all deliberations about the sale up to that point were cloaked & may very likely be undiscoverable.

As things stand, both the Joint Motion to approve the Settlement Agreement & the Joint Petition to approve the asset sale call for the DPU...

52. ...to give those approvals by Sept. 30. Think about that for a moment. The docket was opened on 7/2. The DPU is poised to approve a $1.1B transaction giving the assets of one utility to another, in a transaction the will affect ~ 1 in 10 Commonwealth residents, in a mere...

53. ...90-day (rocket) docket. The DPU has taken far, far longer than 90 days to consider matters of far less import.

So why the rush? The parties to the Settlement Agreement say it’s in the interest of current CMA customers, so that they can enjoy the benefits of the...

54. ...Settlement ASAP. Eversource says a 9/30 closing will allow them to prepare for the 2020-21 heating season.

In fact, there is no rush. CMA customers have been served through the 2018-19 & 2019-20 heating seasons already. Eversource does not need to own CMA’s assets...

55. ...in order for CMA customers to have heat. And the Settlement Agreement does say that it can be amended, and its 9/30 deadline can be extended, by agreement of the parties.

Neither will CMA/NiSource or Eversource walk away from the deal if it doesn’t happen...

56. ...by 9/30. NiSource will stay at the table because its feet have been turned to the fire by the DOJ’s Deferred Prosecution Agreement. Eversource will stay b/c it wants CMA’s assets.

57. So the consolidation of the Settlement Agreement and the asset sale into a single docket could be protested. DPU dockets 19-140/41 could be consolidated and the Settlement Agreement could be lodged there. The asset sale could remain in docket 20-59 where it would receive...

58. ...the extended consideration it deserves. Per MGL c. 164, § 96, the DPU is required to determine that the proposed asset sale is “consistent with the public interest.” As part of its approval, the DPU is obligated to consider the following questions:

59.

• Effect on rates;
• Effect on the quality of service;
• Resulting net savings;
• Effect on competition;
• Financial integrity of the post-merger entity;
• Fairness of the distribution of resulting benefits between shareholders and ratepayers;
• Societal costs;

60.

• Effect on economic development;
• Alternatives to the acquisition;
• Long-term strategies that will assure a reliable, cost-effective energy delivery system;
• Any anticipated interruptions in service; and
• Other factors that may negatively impact customer service.

61. Not to mention how the transaction is will impact the Commonwealth’s 2050 carbon neutrality goal.

But none of these particulars are likely to be addressed at length in docket 20-59. It seems more likely that the DPU will accept the conclusion set forth in the...

62. ...Settlement Agreement—the ex cathedra statement that the proposed asset sale is “consistent with the public interest.”

To date no one but the DPU and the parties to the Settlement Agreement and the asset sale have filed in docket 20-59.

63. Two virtual hearings hearings have been scheduled: 6:00 pm 8/25/20 (zoom.us/j/98300271706); 10:00 am 8/27/20 (zoom.us/j/91090189958).

Will anyone protest the consolidation dockets 19-149/41 and the Settlement Agreement into docket 20-59 and argue in favor of...

64. ...an extended public examination of whether the CMA-Eversource asset sale is indeed “consistent with the public interest?

¯\_(ツ)_/¯

Perhaps it will have to suffice to show, even in a medium as ephemeral as this, how the business of utilities is conducted in Massachusetts.

65. Attention must be paid.

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