BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced an $8.9 million settlement Wednesday with Columbia Gas to resolve allegations the utility company failed to refund ratepayers for an undisclosed contract payment.

Coakley alleged that Bay State Gas Company, doing business as Columbia Gas of Massachusetts, received an estimated net $12 million partial buyout from MASSPOWER in 2006 that should have been returned to ratepayers immediately. The buyout allowed Columbia Gas to reduce the annual payments required on a 20-year special contract for gas transportation. The company allegedly failed to disclose the payment to the Department of Public Utilities.

"We alleged that Columbia Gas received the benefit of using $12 million from this deal that should have been disclosed and returned directly to ratepayers at that time," Coakley said. "Our office is pleased to reach an agreement that will mitigate the cost of gas distribution service to consumers this winter season."

Coakley's office alleged that if the $12 million buyout was disclosed, the payment should have been given as credits to ratepayers. Coakley's office discovered the buyout payment in 2009 during another rate case for Columbia Gas.

Under the terms of the settlement, rate credits worth $8.9 million will be refunded to Columbia Gas customers between Nov. 1, 2013 and April 30, 2014.

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