BOSTON (CBS) – In the wake of last week’s fatal gas-explosion fiasco in the Merrimack Valley, Columbia Gas has donated $10 million to help victims. But that might be just a drop in the bucket of the company’s long-term financial exposure from the incident.

The first lawsuit was announced Tuesday. But a clue to what may come next was also offered by the bond rating agency Moody’s, which warned Columbia and its parent company they may face consequences comparable to those suffered by Pacific Gas and Electric after a similar pipeline disaster outside San Francisco eight years ago.


After that catastrophe, which killed eight people and destroyed 38 homes, the company took responsibility, apologized and made cash payments to affected residents.

But faced with more than 100 lawsuits, PG&E lawyers tried to blame the city and even the residents themselves. They claimed the modest payouts they had made absolved them of further legal liability. And they backed away from the notion that their pipes were at fault.

They successfully got customers to pick up more than half the tab for fixing the pipelines. Ultimately, the company was indicted on an array of federal crimes, including ignoring safety rules and lying to investigators about it.

The California fiasco also cast a harsh spotlight on state regulators, who had to answer for what some saw as an overly cozy relationship with the utility. The Moody’s warning Tuesday cites Columbia’s “historically…healthy relationship” with the state department of public utilities, which has resulted in “credit supportive rate case outcomes,” rulings that benefited the company.

So far, the Merrimack Valley fiasco aftermath is following a similar pattern.

And with Senators Ed Markey and Elizabeth Warren pushing for congressional hearings on the disaster, the lawyering and finger-pointing is likely to keep this in the headlines for months to come.


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