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Vermont Gas will not pursue Phase 2 pipeline to paper mill in Ticonderoga, N.Y.

SOUTH BURLINGTON —Vermont Gas Systems Inc. on Tuesday afternoon announced that it will not proceed with the proposal to build Phase 2 of its proposed Addison Rutland Natural Gas Project pipeline — the connection from Middlebury to International Paper’s plant in Ticonderoga, N.Y.
“As the company committed to the Vermont Public Service Board (PSB) last year, Vermont Gas recently completed a thorough review of the schedule, costs and challenges to complete Phase 2 under current business conditions,” said Vermont Gas President and CEO Don Rendall, in a press release. “IP and Vermont Gas extensively discussed the issues raised by this reassessment of the project, and we were unable to find a mutually acceptable path forward.”
Jim Sinclair, Vermont Gas’ vice president for system expansion, said the projected cost for the pipeline spur to IP — which would have travelled through Cornwall and Shoreham, and then under Lake Champlain to the IP mill — has gone up substantially.
“Our updated cost estimate for Phase 2 is now $105 million, compared to $74.4 million as presented to the PSB last August,” Sinclair said.
Under the agreement between Vermont Gas and IP, this would mean that IP’s total financial responsibility to Vermont Gas for Phase 2 as well as Phase 1 improvements would have risen from $99 million to $135 million, resulting in Phase 2 no longer being commercially practical, he added.
In keeping with the terms of the companies’ agreement, IP has elected to withdraw because of the cost estimate increase. But Rendall said Vermont Gas would keep the door open for future cooperation between his company and International Paper.
IP for years has been looking for ways to reduce costs with cheaper fuel. In the mid-2000s the company proposed burning tires for fuel but met with broad opposition in Vermont — and in Addison County in particular — because of the pollution that would reign down upon the region from tire burning. IP officials have said the Ticonderoga mill produces a more expensive, high-end paper that is expensive to produce, and have held the prospect of plant closure as a reason for economic help.
Today’s announcement does not affect Phase 1’s Certificate of Public Good or cost estimate, Vermont Gas emphasized. The PSB evaluated Phase 1 — a 41-mile pipeline from Colchester to Middlebury and Vergennes — as a stand-alone project, without Phase 2, and Vermont Gas’ updated cost estimate for Phase 1, released in December, aren’t dependent on Phase 2.
“We will now focus our efforts on completing Phase 1 of our expansion plan to serve Addison County as far south as Middlebury, and explore creative options for extending service to more Vermont communities, including Rutland,” said Sinclair.
Vermont Gas will ask the Public Service Board to dismiss the company’s pending petition for approval of Phase 2.
“It is crucial for all of us to have a clear understanding of what it takes to complete these projects,” Rendall said. “We have done that work and now we are looking to the future — how to serve more Vermont families and businesses and how to advance Vermont’s clean energy future by innovating, helping reduce emissions, partnering with renewable energy, and enhancing our successful energy efficiency programs.”
Vermont Gas Systems’ existing pipeline brings natural gas from Canada and serves almost 50,000 homes, businesses and institutions in Franklin and Chittenden counties. 

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