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Top stories of 2014: #1 — Pipeline project spurs plenty of controversy

For the second year in a row, the Vermont Gas Systems Addison Rutland Natural Gas Pipeline Project captivated (and sometimes enraged) county residents, and was the subject of more than 50 articles in the Independent.
After the Public Service Board in December 2013 approved Phase I of the pipeline, which will run from Colchester to Middlebury and Vergennes, Vermont Gas land agents spent the year securing land easements from Addison County residents.
Phase II, which would run from Middlebury underneath Lake Champlain to the International Paper plant in Ticonderoga, N.Y., has not yet been approved by regulators.
Vermont Gas, by its own admission, made several gaffes throughout 2014, and twice announced cost hikes for the project.
Trouble began in February when Vermont Gas sent letters to nine Monkton residents in which the company threatened to use eminent domain to secure land if landowners didn’t come to terms. Some residents said they felt bullied, and Vermont Gas apologized and pledged to “reset” relations with landowners.
In April, the company asked regulators to approve a protective order that would exempt from public records requests many documents related to the Phase II project, which drew criticism from open government advocates and the Vermont Press Association. In May, the Public Service Board approved a watered-down version of the order.
In June, Monkton landowners told state regulators that negotiations with the company had not improved. Later that month, after securing final environmental permits from the Army Corps of Engineers, Vermont Gas broke ground on the project. But at year’s end, the company still needed to secure land rights from 20 percent of landowners along the 41-mile route.
Just before the long Fourth of July weekend, the company announced the project would cost 40 percent more than expected, bringing the total price tag from $87 million to $122 million. Vermont Gas blamed those price hikes on increased demand for pipeline infrastructure in the U.S., increased oversight, increased costs for land acquisition and higher legal expenses. Vermont Gas also said it had updated its accounting methods to more accurately calculate project costs.
The state levied a $35,000 fine against the company for failing to provide an updated budget in more than a year preceding the price hike announcement, and required Vermont Gas to provide quarterly budget updates to the state.
Also in July, a company spokesman told the Independent Vermont Gas would not be adjusting its Phase II cost estimate, but the company did just that 11 days later.
In August, Gov. Peter Shumlin said he was “extremely disappointed” with the Phase I cost overruns and the company’s choice to delay telling regulators. He announced that the state would pay for independent appraisers to assist with easement negotiations.
Vermont Gas in August announced it would pay for independent mediators to help landowners and the company come to terms, and said that program has had some success. Other landowners remained distrustful.
The governor sat down with landowners in November to hear their concerns about Vermont Gas negotiating tactics. At his request, Vermont Gas agreed to temporarily hold off on eminent domain filings so that landowners and the utility could find some common ground.
Also in November, the company announced that CEO Don Gilbert would retire at the end of the year, and Don Rendall would lead the company.
In December, Rendall announced a second price hike for Phase I, this time to the tune of $33 million. The price tag at the end of the year stood at $154 million, some 78 percent higher than what the Public Service Board approved in December 2013. The company again pledged to update its accounting methods, and also pushed back the estimated completion date of Phase I from late 2015 to early 2016.
Rendall also said the company asked the Public Service Board to hold off on its review of Phase II, so Vermont Gas could “reset” its approach to that project. Part of that reset was negotiation of a deal with the town of Cornwall.
When the ground thaws in the spring, Vermont Gas will resume construction of Phase I. The fate of the Phase II application, which has languished in front of the Public Service Board for more than a year, remains uncertain, especially as the price of fuel oil continues to drop, due to a boom in domestic production and other factors.

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