Public Service Board investigates pipeline costs

MONTPELIER — The Public Service Board on Thursday asked the Supreme Court to allow it to reexamine the merits of Phase I of the Addison Rutland Natural Gas Project.
The board will evaluate whether Vermont Gas Systems violated board rules by failing to notify regulators of a 40 percent cost increase for the project in a timely fashion, and could reopen proceedings for the Certificate of Public Good it issued the project last December.
Even if the board permits the project to move forward, the board’s order is a victory for opponents of the pipeline, who have argued that Vermont Gas has not been transparent with the public or regulators.
The Public Service Board approved the project last December, and a citizen, Kristin Lyons, appealed the approval to the Supreme Court in April. The Court has not yet ruled on Lyons’ appeal. Since the Supreme Court has jurisdiction, the Public Service Board is seeking remand, a term used when a higher court sends a case to a lower court.
The board is a quasi-judicial tribunal that regulates state utilities.
Vermont Gas on July 2 announced a new budget for the project of $121.6 million, $35 million higher than the $86.6 million budget it presented to the board in early 2013.
The company said the cost hike was due to a litany of factors, including route changes, increased oversight and a higher demand for workers laboring on natural gas infrastructure across the United States.
In the 15 months between the initial filing and July of this year, the company did not give any indication that the project would cost more than planned.
The company has since apologized to regulators in the public, and drawn the ire of the Public Service Commissioner Chris Recchia and Gov. Peter Shumlin, who said Vermont Gas had acted irresponsibly by not keeping regulators apprised.
The department last month asked the Public Service Board to fine Vermont Gas $35,000 for violating board rule 5.409, which mandates that utilities must notify the state of project cost increases greater than 20 percent. The department has also required the company to provide cost updates on a quarterly basis.
But while the department expressed disappointment with Vermont Gas about the delay in reporting the cost overrun to the state, officials still believe the project is in the public good, and should move forward as scheduled.
James Dumont, a Bristol attorney who represents Lyons and other appellants, said he hopes the board reopens and ultimately revokes the project’s Certificate of Public Good.
“The costs of the project are no longer justified by the benefits,” Dumont said.
Dumont said he is particularly concerned that ratepayers from Chittenden and Franklin counties, whose rates will rise to subsidize the cost of the pipeline extension to Addison County, won’t see savings from that investment for more than a quarter-century.
This is not the first time in recent years that a project subject to Public Service Board approval has gone significantly over-budget. In the last decade, the budget for the Northwest Reliability Project, an electricity infrastructure project in Addison and Rutland counties, ballooned from $120 million to $228 million, an increase of 90 percent.
The Supreme Court agreed to send the case back to the Public Service Board, which ultimately decided not to reopen Certificate of Public Good proceedings and allow the project to move forward.
In its court filings, Vermont Gas has argued that the Public Service Board has no basis for revoking the project’s Certificate of Public Good, and that the project, despite the 40 percent cost hike, is still good for Vermonters. Company officials have said that any delays will further increase the cost of the project, which will ultimately be paid for by ratepayers.
Vermont Gas began construction on the 49-mile pipeline in June. Company spokesman Steve Wark said Thursday that crews are currently working on “cross country and open area construction” in Williston. The company has said it hopes to complete the pipeline by late next year.

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