ADDISON COUNTY — Opponents of the Addison-Rutland Natural Gas Project have asked the Vermont Public Service Board to reexamine its approval of Phase I of the pipeline, while the Department of Public Service asked the Board not to delay construction of the project.
Three residents who live in towns affected by the pipeline, which would run from Colchester to Middlebury and Vergennes, on July 21 petitioned the Board to investigate the reasons behind a 40 percent project cost increase announced by Vermont Gas Systems earlier this month, and take appropriate action.
The motion was filed by Bristol attorney James Dumont on behalf of Kristin Lyons of Hinesburg and Jane and Nathan Palmer of Monkton. The Palmers live along the pipeline route and have not yet reached an agreement for Vermont Gas to use their land.
The motion is similar to one filed last week by the Conservation Law Foundation, in which that organization asked the Board to amend the Certificate of Public Good it issued for the project last December.
Vermont Gas informed the Public Service Board on July 2 that the company expected to spend $121.6 million on the Phase I project, up from the $86.6 million budget the company filed with the Board in 2013. The entire cost of the project will be borne by Vermont Gas ratepayers in Addison, Chittenden and Franklin counties.
The company said the cost jump was due to a number of factors, including design modifications, increased oversight and increased demand for natural gas infrastructure construction across the country.
Dumont noted that the Board, which regulates all of the state’s public utilities, generally approves projects that pay for themselves after 10 years. For Phase I of the project, the Board estimated that revenues would not exceed the cost of project for 20 years. In light of the project’s new price tag, Dumont estimated that revenue from the pipeline would not equal the cost of the project for nearly three decades.
“Now that the cost of Phase 1 has increased by 40 percent, based on the analysis already in the Board’s order, it is now evident that Vermont Gas’ 20-year estimate was not conservative,” Dumont wrote to the Board. “The project is not likely to generate revenue that covers carrying costs for 40 percent longer than that — for 28 years.”
Dumont argued that this new timeline extends beyond any contingencies the Board had studied while reviewing the project.
“The 40 percent increase means that Franklin and Chittenden county ratepayers will be paying for the Addison upgrade for so long that the analysis in the Board’s order no longer supports, or fits, the facts of the case.”
Specifically, Dumont asked the board to determine when revenues from the project would exceed the entire project cost and reexamine the economic benefits of the pipeline. If the Board does so and finds that conclusions drawn in its December 2013 approval of the project are no longer valid, Dumont said the Board should reopen the approval process.
REGULATORS RESPOND
In a July 21 letter to the Public Service Board, the Department of Public Service scolded Vermont Gas for failing to anticipate the significant cost increases.
“As an initial matter, the department was dismayed and disappointed to read of the substantial increase in the estimated capital costs of Phase I,” special counsel Louise Porter wrote. “We have also expressed our concern that there be no reoccurrence of this event as Phase I construction proceeds.”
But despite its admonition, the Department of Public Service stated it believes the project is still in the public good, and will bring substantial economic benefits to the state.
“As the benefits continue to outweigh the costs, we would urge the Board — regardless of any additional review it undertakes — not to delay the initiation of construction, as such action would only exacerbate the increases,” Porter wrote.
In the letter, Porter said the department declined to comment on the Conservation Law Foundation petition.
ANOTHER PROTEST
Pipeline opponents on Tuesday staged a protest at the Public Service Board headquarters in Montpelier. The protestors, who included residents of towns along the Addison-Rutland Natural Gas Project pipeline route, called the action a “fish in” to call attention to what they said were the bait and switch tactics used by Vermont Gas when announcing the cost hike.
The protestors also delivered a petition they said was signed by more than 500 Vermont Gas customers, calling for the Public Service Board to re-evaluate the Certificate of Public Good it issued for the first phase of the project, and to halt construction on the pipeline until that process is complete.
“Ratepayers have to stand up for themselves, because now we know the Department of Public Service will not stand up for them,” Cornwall property owner Randy Martin said in a statement.