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Editorial: Ding-dong, Phase II is dead. But will we pay even more?

  Before the whoops and hollers of relief die down in light of Vermont Gas Systems’ decision to abandon Phase II of its natural gas pipeline through Middlebury, Cornwall and Shoreham en route to the International Paper plant in Ticonderoga, let’s assess the consequence of that decision, and whether the pipeline deserves the public ire heaped upon it.
One positive consequence of the decision is that opposing landowners in those three communities won’t have a pipeline going through their yards. To those few property owners on whose land it would cross, that’s a big victory and huge relief. To most everyone else, it means that Cornwall and Shoreham will forfeit more than a $1.5 million in revenue over 10 years the gas company would have paid as compensation for crossing the land. That’s not a lot, but a $100,000-plus windfall annually certainly could have helped keep taxes down.
The larger consequence has to do with fuel costs in Rutland and, possibly, Addison counties. In our market economy, competition is the primary force that keeps prices in check. When fuel oil or electricity are the only games in town, the cost to heat homes, businesses or industry tends to creep upward until the market can longer bear the expense. Today, oil prices are at record lows for these times, but few expect those prices to remain depressed for long. When oil prices rise again, the disparity between the cost of natural gas and fuel oil will force businesses and industry to consider fleeing to places with lower prices and wider choice. That’s just what happens in a competitive marketplace.
For residents and communities that don’t have the option of natural gas, their cost of living will simply be that much higher. Such factors don’t prompt many residents to pick up roots and move, but it certainly does have an impact on attracting prospective businesses or industry.
Because of that reality, the state’s goal to extend the natural gas pipeline through Addison County and on down to Rutland remains steadfast. What has changed, however, is the cost of extending the pipeline to Rutland will now fall heavier on the shoulders of Vermont ratepayers. That’s because IP was going to help pay for several miles of the pipeline through Middlebury and on south, and pay for a larger diameter pipeline along Phase 1 to feed the IP plant. Without IP in the mix, ratepayers will pick up that part of the tab.
Residents should also understand that this is not a purely market-driven environment. Vermont Gas operates as a regulated utility in that it is given a monopoly to distribute natural gas by the state with the understanding that a share of its profits be plowed back into an ever-expanding network of users. The push into Addison County and Rutland County fulfills that state mandate and, simultaneously, boosts the potential economic development of the region.
Because oil prices will likely increase in the years ahead and because burning oil produces significantly more carbon dioxide than natural gas, we remain hopeful that Phase I of the project (from Colchester to Middlebury) remains viable and withstands the recent decision of the state Supreme Court to remand its earlier approval and send the case back to the Public Service Board. From a purely economic perspective, having access to natural gas makes Middlebury (and Vergennes) more attractive and affordable places to live, helps the communities attract and retain industries and businesses and opens up the possibility of future energy savings through alternative sources such as heat pumps powered by natural gas — known technology that drives down fossil fuel consumption while lowering the cost of heating one’s home or small business.
The economic viability of Phase 1 is what will come under review by the PSB. Most economic evidence in the past has indicated that the cost benefit serves the public good, but the upcoming review will challenge that premise.
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While the PSB will rightly rule on only one project at a time, it also makes sense that the PSB would immediately thereafter look at the viability of extending the pipeline further south. At some point, it could be that the economic cost of the infrastructure outweighs the benefit of extending the pipeline; but what then?
If it stops in Middlebury, should all the benefit bestowed on those who have access to natural gas be limited to those few (parts of Addison, Chittenden and Franklin counties), while ignoring the rest of the state? Should the profit that currently goes into future expansion be used to drive down gas prices for those few? Or should the profits currently used for expansion be diverted to renewable infrastructure in areas not served by natural gas? How will the state fairly allocate such an unequal wealth of resources currently devoted to a relatively small geographic area?
These and many other questions will impact the state’s economic development for years to come, as well as set the tone for how we as a state manage our responsibility to be good stewards of the environment.
In those discussions, one step forward would be to stop thinking of these forces as being good or evil, but rather as posing different sets of opportunities. It may be that using natural gas to its highest potential, if appropriately limited, is what is best for society. Each fuel source — whether it is wood heat, biofuels, methane digesters, geothermal, solar or wind power — should be judged accordingly and used to its greatest benefit. Casting one energy source or the other, or one company or another, as the Wicked Witch — whether that is natural gas, wind power or solar — only compromises our ability to respond with the nuance that will likely be necessary to make wise and timely choices.
Angelo S. Lynn 

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