Eversource Energy : application to acquire assets of Columbia Gas of Massachusetts

KEEGAN WERLINLLP

ATTORNEYS AT LAW

99 HIGH STREET, Suite 2900

BOSTON, MASSACHUSETTS 02110 ---

TELECOPIER: (617) 951- 1354

[phone]

July 2, 2020

Mark D. Marini, Secretary

Department of Public Utilities One South Station, 5thFloor Boston, MA 02110

Re:Joint Petition of Eversource Energy, Eversource Gas Company of Massachusetts, NiSource Inc. and Bay State Gas Company d/b/a Columbia Gas of Massachusetts for Approval of Purchase and Sale of Assets Pursuant to General Laws Chapter 164, §§ 94 and 96- D.P.U. 20-59

Dear Mr. Marini:

Pursuant to G.L. c. 164, §§ 94 and 96, Eversource Energy ("Eversource"), Eversource Gas Company of Massachusetts ("EGMA"), NiSource Inc. ("NiSource"), and Bay State Gas Company d/b/a Columbia Gas of Massachusetts ("Bay State Gas") (together the "Joint Petitioners") submit this petition to the Department of Public Utilities (the "Department") for approval of NiSource's sale of the business of Bay State Gas to Eversource and EGMA (the "Transaction"). Completion of the Transaction is subject to the terms and conditions set forth in the Asset Purchase Agreement ("APA"), executed by and among NiSource, Bay State Gas and Eversource on February 26, 2020.

On February 26, 2020, NiSource, Bay State Gas and Eversource executed the APA, setting the price, terms and conditions by which Eversource shall acquire the "Purchased Assets," as defined in Section 2.1(a) of the APA. As stated in the APA, NiSource and Bay State Gas have agreed to sell, and Eversource has agreed to purchase, with certain additions and exceptions: (1) substantially all of the assets of Bay State Gas; and (2) all of the assets held by any affiliates of Bay State Gas that primarily relate to the business of storing, distributing or transporting natural gas to residential, commercial and industrial customers in Massachusetts, as conducted by Bay State Gas. Under the APA, Eversource will assume certain liabilities of Bay State Gas and its affiliates. However, subject to the terms and conditions of the APA, Eversource will not assume any liabilities related to the Greater Lawrence Incident, as defined in Section 2.1(c) of the APA. Prior to the closing of the Transaction, Eversource will assign its rights to acquire the Bay State Gas business under the APA to EGMA, as allowed and contemplated in the APA.

Upon the closing of the Transaction, Bay State Gas customers will become EGMA customers under the same rate schedules and terms of service as currently exist for Bay State Gas customers. EGMA is not seeking any changes to the rates charged to Bay State Gas customers that would take effect as of the date of Closing. The Joint Petitioners' request for approval of theJuly 2, 2020 Page 2

Transaction includes a proposed Rate Stabilization Plan to be implemented to achieve net benefits, as required under the Department's public interest standard, encompassed within G.L. c. 164, § 96. The Rate Stabilization Plan requires the Department's review and approval under G.L. c. 164, § 94.

Bay State Gas customers will see economic and non-economic benefits from the proposed Transaction. Net benefits in the range of $281 million or more will result for Bay State Gas customers in conformance with the Department's standard for approval of an asset sale. Over the long term, Eversource anticipates that the proposed Transaction will provide opportunities for operating cost efficiencies in certain operating areas, including the potential to manage gas portfolios on a combined basis to reduce gas supply costs and optimize gas resources. As EGMA customers, Bay State Gas customers will also benefit from Eversource's high performance standards and service quality. The acquisition will enable Eversource to leverage best practices of its gas distribution business across the Eversource platform. In addition, Bay State Gas customers will be served going forward by a larger local company with expertise in emergency management and emergency response, with a larger pool of resources to draw upon should exigent circumstances arise. Customers will also benefit because Eversource is committed to maintaining appropriate staffing levels that enable safe and reliable operations. Lastly, Eversource has one of the strongest financial profiles among U.S. distribution utilities with top-tier credit ratings that help to lower financing costs for customers.

Bay State Gas employees will benefit because under the terms of the APA, Eversource will offer employment to Bay State Gas employees who are employed in good standing at closing. Eversource's proximity to the Bay State Gas service territory and its familiarity with the operations of Bay State Gas will allow for seamless integration of these employees into the Eversource organization. As Eversource employees, these individuals will enjoy greater opportunities for training, career development, and professional advancement as compared to the status quo, both within and outside of the natural gas distribution business.

In support of the petition, the Joint Petitioners are providing the following direct testimony:

1.Testimony of William J. Akley and Penelope M. Conner: The joint testimony of

William J. Akley, President of the Eversource Energy gas distribution business, and Penelope M. Conner, Chief Customer Officer and Senior Vice President of the Customer Group for Eversource Energy, is provided herewith as Exhibit JP-WJA/PMC-1. Mr. Akley and Ms. Conner's testimony describes the transition, Day One preparation and operational plan for EGMA to operate the Bay State Gas system and provide a seamless integration for the current Bay State Gas customers.

2.

Testimony of Douglas P. Horton: The testimony of Douglas P. Horton, Vice President, Distribution Rates and Regulatory Requirements for Eversource Energy, is presented herewith as Exhibit JP-DPH-1. Mr. Horton's testimony describes Eversource's proposed acquisition of the Bay State Gas business and provides an

July 2, 2020 Page 3

overall demonstration that the acquisition is consistent with the public interest under G.L. c. 164, § 96, including each of the factors that the Department considers in reviewing a utility asset sale and its impact on Massachusetts customers. Mr. Horton quantifies and presents the net benefits analysis associated with the Joint Petitioners' proposals for providing customer benefits and demonstrates that net benefits in the range of $281 million or more will result for Bay State Gas customers in conformance with the Department's standard for approval of an asset sale. As part of the net benefits analysis, Mr. Horton presents EGMA's proposed, acquisition-related investment plan and discusses the requirements of the APA pertinent to that plan.

3.Testimony of Shawn Anderson: The direct testimony of Shawn Anderson, Senior

Vice President, Chief Strategy and Risk Officer of NiSource is provided herewith as Exhibit JP-SA-1. Mr. Anderson describes the proposed Transaction from NiSource's perspective and discusses the reasons why NiSource has decided to sell its Massachusetts business to a local natural gas system operator. Mr. Anderson also provides an overview of the process undertaken by NiSource and Bay State Gas to accomplish the sale. Mr. Anderson discusses the reasons that NiSource endorses the net benefits analysis presented in the testimony of Eversource Witness Horton.

By law, the proposed Transaction is subject to the Department's approval under G.L. c. 164, § 96, with confirmation under G.L. c. 164, § 21, that Eversource will possess all of the franchise rights and obligations of Bay State Gas upon closing and that further action pursuant to G.L. c. 164, § 21 is not required to complete the proposed Transaction.

The Joint Petitioners are requesting that the Department approve the proposed Transaction under the terms and conditions contemplated by the APA no later than September 30, 2020. This date is necessary to allow for preparation and completion of the closing arrangements that would result in Eversource ownership no later than November 1, 2020, which is the start of the winter peak season.

The Company looks forward to working with the Department and other interested parties during the course of this proceeding. All correspondence relating to the filing should be addressed to:

July 2, 2020 Page 4

Cheryl M. Kimball, Esq.	Vincent P. Pace, Esq.
Danielle C. Winter, Esq.	Assistant General Counsel
Matthew C. Campbell, Esq.	Eversource Energy
Keegan Werlin LLP	P.O. Box 270
99 High Street, Suite 2900	Hartford, Connecticut 06141-0270
Boston, Massachusetts 02110	Tel: [phone]
Tel: [phone]
Kenneth W. Christman, Esq.
NiSource Corporate Services
Company
121 Champion Way
Canonsburg, Pennsylvania 15317
Phone: [phone]
Thank you for your attention to this matter.

Sincerely,

Cheryl M. Kimball, Esq.

Enclosures

cc: Hon. Matthew Nelson, Chair (cover letter only)

Hon. Robert Hayden, Commissioner (cover letter only) Hon. Cecile Fraser, Commissioner (cover letter only) Shane Early, General Counsel

Sarah Spruce, Hearing Officer

George Yiankos, Director, Gas Division

Emily Luksha, Director, Rates and Revenue Requirements Rebecca M. Tepper, Assistant Attorney General

Joseph W. Rogers, Assistant Attorney General Rachel Evans, Department of Energy Resources

Jerrold Oppenheim, Low Income Weatherization and Fuel Assistance Program Network D.P.U. 19-140 and D.P.U. 19-141 Service Lists

COMMONWEALTH OF MASSACHUSETTS

DEPARTMENT OF PUBLIC UTILITIES

_____________________________________ )

Petition of Eversource Energy, NiSource Inc., )

Eversource Gas Company of Massachusetts, and Bay State Gas Company d/b/a Columbia Gas of Massachusetts for Approval of Purchase and Sale of Assets Pursuant to General Laws Chapter 164, §§ 94 and 96 _____________________________________

) ) ) ) ) )

AFFIDAVIT OF WILLIAM J. AKLEY

William J. Akley does hereby depose and say as follows:

D.P.U. 20-59

I, William J. Akley, certify that the attached direct testimony on behalf of Eversource

Energy, which bears my name, was prepared by me or under my supervision and is true and accurate to the best of my knowledge and belief.

Signed under the pains and penalties of perjury as of this 2ndday of July, 2020.

President, Gas Business Eversource Energy