Utility's Bottom Line Weathers Gas Explosions

NORTH ANDOVER, MA -- Even as lawmakers called for the resignation of its CEO, shares of the parent company of Columbia Gas closed at $25.79 Monday, up 12 cents, or 0.47 percent, from Friday's close. Shares of NiSource Inc. had been down for most of the morning as a Congressional hearing in Lawrence looked into the company's role in the Sept. 13 gas explosions. But as news broke that NiSource CEO Joe Hamrock would not rule out passing on the costs of the restoration to its customers, share prices moved into positive territory and stayed there for the remainder of the session.

Columbia Gas recorded its 52-week high of $28.08 when the stock market closed at 4 pm on Sept. 13. Eleven minutes later, someone placed the first of hundreds of 9-1-1 calls reporting more than 130 explosions that left one man dead, touched off dozens of fires and forced the evacuation of thousands of people. But since Sept. 13, shares of Columbia gas have outperformed shares of other energy companies and the broader stock market.

Monday's hearing was just the first by state and federal regulators that will look into the company's response to the explosions. Two wrongful death suits and a class action lawsuit against the company are in the works, and NiSource is under a criminal indictment. But Wall Street has not punished the company.

Since Sept. 13, shares of NiSource have not closed lower than $24.56. The 8.5 percent decline between Sept. 13 and Friday's close for NiSource trails the 9.4 percent decline by the Standard & Poor's 500 during the same time. NiSource has also outpaced the New York Stock Exchange Arca Oil Index, which tracks energy company stocks. The index is down 15.2 percent since Sept. 13.

Monday's hearing might have been uncomfortable for company executives, but it was reassuring for investors. The government response to the explosions will likely be more regulation, which will be applied equally to all gas utilities and not single out NiSource or Columbia Gas.

On Nov. 1, NiSource said it was taking a $461.9 million charge for third-party claims and other expenses stemming from the explosions as part of its third-quarter results. The final number could be as high as $1 billion, according to some estimates. But a Nov. 1 statement that most of the charge would be recouped from insurers, and Monday's refusal by Hamrock to rule out increasing rates, offered reassurances to NiSource investors that the impact on the company's bottom line would be minimized.

"I'm not in a position today to make such a commitment," Hamrock said when Rep. Nikki Tsongas (D-MA) asked him to pledge that the costs would not be passed onto customers.

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Patch file photo via Shutterstock.

Dave Copeland can be reached at dave.copeland@patch.com or by calling 617-433-7851. Follow him on Twitter (@CopeWrites) and Facebook (/copewrites).