Pipeline construction to resume even as PSB begins investigation

ADDISON COUNTY — The new Public Service Board investigation into cost hikes related to the Addison Rutland Natural Gas Project will begin this month and may not conclude until late May at the earliest, according to a schedule proposed by the board March 2.
The inquiry is shaping up to be both longer and much broader in scope than the investigation into a previous cost hike by the PSB last fall. Meanwhile, construction crews are waiting for the ground to thaw so they can resume work on the 41-mile pipeline.
The new investigation was spurred by Vermont Gas Systems’ announcement in December that the estimated cost of Phase I of the pipeline — which will run from Colchester to Vergennes and Middlebury — had jumped $32 million, to $154 million. That price tag is 78 percent higher than the figure the PSB approved in December of 2013.
Opponents of the pipeline asked regulators to investigate, alleging that Vermont Gas is unable to manage such a large project and that the pipeline is not in the best interests of Vermonters. The Vermont Supreme Court, which has yet to rule on an appeal of the case, last month remanded the case back down to the Public Service Board so it would have jurisdiction to launch the investigation.
In what amounts to a small victory for project opponents, the new proposed schedule includes a discovery phase, during which new evidence and testimony may be introduced, and the opportunity for parties to depose witnesses. The last cost hike investigation lasted just 30 days and included no discovery phase or deposition.
Bristol attorney James Dumont, who represents several pipeline opponents, said by being allowed to depose experts of their own, opponents have a new tool with which to challenge testimony from Vermont Gas officials.
“Hopefully this allows for a hearing that produces more useful evidence, much better cross examination and a better end product,” Dumont said on Tuesday.
Parties to the case — which include Vermont Gas, project opponents, towns along the pipeline route and state regulators — had until March 9 to file comments on the PSB’s proposed investigation schedule.
In briefs filed with the board, opponents advocated for a broad inquiry during which the PSB re-examines any part of the 2013 Certificate of Public Good that may have been affected by the price hike.
“At no phase of the proceedings would it make sense for the board to consider only one factor, such as cost, without considering the other factors,” wrote Dumont, who represents Monkton resident Kristin Lyons and the Vermont branch of the AARP.
As it did in January, Vermont Gas argued that the scope of the investigation should be limited to the December cost hike, and not other factors like environmental and broader economic concerns.
But the Department of Public Service, which advocated for a narrow scope in the cost hike investigation last fall, took a harder line this time around. DPS counsel Louise Porter urged the board to compare how a natural gas pipeline fits into the “broader economic environment” in the state, such as evaluating the effect of lower oil prices and increasing availability of heat pumps.
In reference to the Section 248 process, which includes a number of criteria that projects must meet to receive a Certificate of Public Good, Porter said the PSB must demonstrate that the new estimated cost of the pipeline can be justified to ratepayers.
“Vermont Gas should be required to demonstrate that the project continues to satisfy those criteria that are impacted by costs,” Porter wrote.
The PSB has the authority to alter or revoke its December 2013 approval of the pipeline. Or it can do nothing and allow the project to proceed, as it did after its investigation last September of a $35 million cost hike last July.
Cooling temperatures that froze the soil forced Vermont Gas crews to abandon most construction on the pipeline late last fall. Minimal construction, such as horizontal directional drilling in Williston, continued throughout the winter.
Vermont Gas plans to resume construction later this spring, when the ground has completely thawed, company spokeswoman Beth Parent said.
But the Department of Public Service last month warned that in building before the PSB investigation is complete, Vermont Gas would be taking on additional risk.
DPS Commissioner Chris Recchia told the Independent in February that if Vermont Gas continues to spend money during the PSB investigation, it does so at its own risk. Recchia cautioned that if the PSB revokes approval for the project, Vermont Gas may be unable to justify seeking to recoup the money it spent during the investigation.
Vermont Gas plans to reimburse itself for the cost of the project by asking the PSB to raise rates on customers. The PSB has the sole authority to set rates for the utilities it regulates, including Vermont Gas.
Parent said Tuesday that the ongoing investigation will have no bearing on the construction process, which the South Burlington company hopes to complete in spring 2016.
“I don’t think the two are connected right now,” she said.
Parent said that, as of Tuesday, Vermont Gas has spent $52.5 million on Phase I. The company is due to submit an updated cost and expenses estimate to the PSB in April.
The PSB said it will finalize the schedule for the new investigation at a status conference on March 18. 

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