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UPDATED: Vt. Gas, Cornwall eye agreement on Phase II pipeline

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Posted on December 17, 2014 |
By John Flowers



CORNWALL — The Cornwall selectboard on Tuesday evening tabled action on a negotiated agreement with Vermont Gas Systems regarding the Phase II natural gas pipeline, following pleas from most of the approximately 25 people who turned out at the board’s meeting to argue the pact was flawed.

The agreement, unveiled this week, calls for Cornwall to drop its opposition to the project in exchange for Vermont Gas making some substantial financial concessions that would collectively reduce local residents’ property taxes by an estimated 4 percent.

It’s an agreement that, if ultimately approved, would also likely result in Vermont Gas sweetening a separate compensation deal it forged with the town of Shoreham — another community that would be affected by the Phase II pipeline project — back in June.

In view of public opposition expressed at its Tuesday meeting, the Cornwall selectboard was scheduled on Wednesday to revisit the pact with Vermont Gas officials.

One of the agreement provisions they are slated to review (based on public feedback) is a statement in which Cornwall agrees that the Phase II project meets the criteria of the state’s Section 248 review process.

Secondly, the board wants to honor a request expressed on Tuesday that townspeople have a way of voting — or at least weighing in — on any settlement proposal with Vermont Gas. This could be tricky from a timeline standpoint, officials said, as calling a special town meeting requires at least 45 days warning. Meanwhile, the Vermont Public Service Board could render its decision on the project. And if that decision is in favor of the project, it would be rendered without the Cornwall-friendly components of the pending agreement with Vermont Gas.

The proposed agreement is posted on the town’s website, cornwallvt.com.

Bruce Hiland, chairman of the Cornwall selectboard, had said on Monday morning that he and his colleagues looked favorably on the terms of the agreement with Vermont Gas and that it could form the basis of a formal memorandum of understanding between the town and Vermont Gas. It would end what has been at times a very bitter dispute between the Cornwall selectboard and Vermont Gas concerning the Phase II project, which calls for a natural gas pipeline to be dug underground from Middlebury, through Cornwall and Shoreham, under Lake Champlain, to the International Paper mill in Ticonderoga, N.Y.

Cornwall officials and residents have overwhelmingly opposed the pipeline, citing primarily public safety and property rights issues. That opposition was voiced by scores of Cornwall residents at a series of public meetings and through a survey earlier this year in which a majority of respondents acknowledged the town could spend upwards of $60,000 to fight the $70 million project, which is currently being reviewed by the Vermont Public Service Board.

But the selectboard, following months of talks with Vermont Gas and after getting a read on the permitting process to date, came to the conclusion that a legal challenge to the permit would probably not be successful. The PSB has already approved Phase I of the so-called Addison Rutland Natural Gas Project, a natural gas pipeline to be laid from Colchester to Middlebury and Vergennes.

“The Cornwall selectboard has concluded that it is unlikely that the state will deny a Certificate of Public Good for the Vermont Gas Systems (VGS) ‘Phase II’ pipeline project and that spending more taxpayer dollars to oppose the project at the Public Service Board (PSB) would be imprudent,” reads the board’s posting on the town website. “Consequently, we have two alternatives: Allow the PSB to set terms and conditions for pipeline construction and operation in Cornwall, or negotiate the best possible deal for Cornwall taxpayers and residents with VGS before the PSB takes final action.”

The selectboard decided the latter course would be most logical and during several negotiating sessions with Vermont Gas exacted six concessions, including:

•  Full property taxes estimated to net $60,000 annually to the town.

•  $1.5 million paid over 10 years directly to the town over and above property taxes.

•  $125,000 paid over five years to fund educational activities.

•  A $2 million VGS investment in distribution pipelines to provide natural gas service to “at least 50 percent” of Cornwall properties.

•  Energy efficiency programs for all Cornwall residents.

•  Environmental indemnification for any physical damages, loss of use of facilities and injury caused by pipeline construction, operation or maintenance.

Hiland added that Cornwall residents who connect to the pipeline would receive additional savings on top of those cited above because natural gas is currently cheaper than fuel oil.

“While we understand that this solution will not satisfy everyone, the selectboard believes that this agreement is in the collective best interest of our community,” the board concluded in its online statement.

Hiland said the agreement was made possible in part by a recent change in the Vermont Gas leadership. Most notably, Vermont Gas President and CEO Don Gilbert announced his retirement, effective Jan. 1. Donald Rendall will succeed him.

Hiland noted that when Vermont Gas first approached Cornwall in 2012, it simply offered to pay property taxes on the pipeline infrastructure that would be placed in the town. The newly negotiated deal, he noted, is a significant upgrade to that.

Randy and Mary Martin are among eight Cornwall landowners who would be directly affected by the proposed pipeline. They stressed they will appeal any PSB approval of the Phase II pipeline, though they acknowledged the selectboard’s efforts to reach a compromise.

“We have the utmost respect for our selectboard,” the Martins wrote in an emailed response to the Independent’s request for comment. “We understand it’s tough to be in their position. I think the financial compensation request is reasonable considering we voted and the town stated clearly, we don’t want this pipeline here.”

Looking at the proposed agreement, the Martins don’t believe Vermont Gas will be able to extend natural gas service to at least 50 percent of Cornwall residents, nor do they think many locals will take advantage of the free energy audits offered through the pact.

“We still believe that the PSB will deny the Certificate of Public Good,” the Martins said. “If they don’t and they allow this to go through, then our selectboard has garnered the best deal they feel they could.”

But they concluded, “There is more to life than money.”

Don Rendall, the new president and CEO of Vermont Gas, was pleased with the proposed agreement with Cornwall.

“From our perspective, we greatly appreciate having had the opportunity to work with the (Cornwall) selectboard, and we look forward to the selectboard’s consideration of the agreement framework,” Rendall said during a phone interview Tuesday morning. “We are confident that the terms of the agreement are very beneficial for the residents of Cornwall, and that it’s fair.”

He added the pact embodies what he called “doing things the Vermont way,” a manner he said involved sitting down with people with differing needs and coming to a mutually satisfactory resolution.

TALKS WITH SHOREHAM

Rendall confirmed that Vermont Gas is prepared to reopen talks with Shoreham to make its agreement with the South Burlington company more on par with Cornwall’s.

Shoreham in June signed its own memorandum of understanding, known as an MOU, with Vermont Gas concerning the Phase II pipeline project. That agreement includes distribution of natural gas to homes and businesses in Shoreham’s village area; conditions on how and where the 10-inch underground transmission pipeline would be built; creation of a $100,000 community fund; and enhanced emergency training and safety management measures. The $100,000 community fund may be used for consumer education, feasibility studies related to commercial expansion in town, retrofitting municipal facilities, and a financing program for residents to make energy-efficiency improvements.

The Shoreham-Vermont Gas MOU also includes a clause stipulating that the agreement would be re-examined if another community affected by the Phase II project were to hammer out a more lucrative deal with the company.

“I anticipate we will be having open, candid discussions with the town of Shoreham, assuming the town of Cornwall approves this (agreement),” Rendall said.

“We will sit down with them and walk through what we are doing with Cornwall and how that impacts our agreement with Shoreham and we will achieve the right outcome with Shoreham, I’m sure,” Rendall added.

Shoreham selectboard Chairman Steve Goodrich said he and his colleagues will wait to see if Cornwall and Vermont Gas ultimately agree on an MOU. If that happens, he said, “It looks like we could definitely benefit from what has been proposed.”

Reporter John Flowers is at [email protected]

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