Pipeline permit should be pulled
Back in 2011 Vermont Gas Systems was given the go-ahead for a System Expansion and Reliability Fund to start extracting $4.4 million per year from its current customers in Chittenden and Franklin counties. This was purportedly to fund a $60-$70 million gas pipeline extension from Shelburne to Vergennes and then on to Middlebury (PSB Docket 7712). Seemingly a most generous gift by current ratepayers to its southern neighbors, it’s doubtful that many of them were then, or are even now, aware of the extra tariff tacked on to their monthly bill.
So after 5 years you would have thought these towns would be gassed up. But don’t hold your breath as to getting it any time soon or maybe never, as multiple missteps by VGS have thrown the whole project into disarray and back before the Public Service Board (PSB) with a high chance of them yanking the Certificate of Public Good.
As recorded at the PSB hearing in 2011, Mr. Gilbert (then president and CEO) and Mr. Lyons (VP) of VGS said that the fund would be used for beefing up the gas supply around Burlington and extending a plastic distribution pipe from the Shelburne teddy bear factory location 13 miles south to Vergennes and then onto Middlebury. Mr. Gilbert went on to state that for VGS with a $100 million plant this $60-$70 million project was a large undertaking for them.
Were the PSB, Public Service Department (PSD), ratepayers, Vergennes and Middlebury duped though? Once the funding source was secured the project somehow morphed and then ballooned into something totally different. It became a 43-mile-long, large-diameter, high-pressure, welded-steel transmission pipeline over a much different and very contentious route — a route that raises many safety and hazard concerns as the highly volatile gas pipe follows and is directly under high voltage power transmission lines.
The project was dressed up and given a new title: the “Addison Natural Gas Pipeline.” It also came with a hefty new price tag of $86 million. Against much citizen advice and protests the PSB nevertheless gave it a Certificate of Public Good. The project costs soon grew to $122 million and now to $154 million, almost before shovels are in the ground. This is two and a half times the original funding plan.
This deviation occurred when VGS discovered a potential customer with a voracious appetite for gas in the form of International Paper (IP) on the New York side of the lake who would generate significantly greater profits for them and their Canadian owners. VGS must have had stars dancing in front of its eyes that blinded them from reading their own Mission Statement which is: “To provide reliable, high quality, competitive, clean and safe natural gas service to as many Vermonters as is economically feasible ….” I don’t see anything about New York here.
The consequence was that the much smaller market of Vergennes and Middleburywas shoved to the back burner and any chance of getting gas soon evaporated as NY IP became the new focus of the project, Mr. Don Rendall CEO of VGS admitting so in a recent interview on WCAX TV on April 25. “…the IP project was one that diverted that focus a little bit….” A little bit! It completely changed the project.
The fact that this would be a significantly larger, riskier and costlier project didn’t faze VGS; after all it wasn’t their money that they were playing with. VGS, who had never managed a project of this size before (a fact they previously stated), became overwhelmed and out of their depth, all the while portraying that all was well, while they scrambled, dumping or changing consultants, design project teams, management and spokespersons. However costs kept spiraling out of control and IP, not wanting to go down with the sinking ship, sensibly pulled the plug.
With its anchor customer gone this leaves VGS with some major problems and a white elephant. First, as 80-90 percent of the gas capacity and its requirement have evaporated there is no longer a need or justification for the massive transmission pipeline. Second IP was to have made a monetary contribution towards Phase I and this too evaporated. The other troubling problem is that the $154 million is an illusionary cost due to significant omissions. This only gets a pipe to the outskirts of Vergennes and Middlebury. The added cost of the in-town distribution gas pipe network and individual hookups is not included. Once again the $154 million price tag starts to look shaky and could easily rise to $160-$170 million.
In an attempt to keep the project alive, VGS has sought once again to rebrand it, this time as the “Addison-Rutland Pipeline,” but here’s the thing, adding another 35 miles of pipe to Rutland including the in-town distribution at a cost of an additional $130-$140 million would put the total cost of the overall project at over a quarter BILLION dollars. Now there’s a real pipe dream, especially when you put it in context with the current money woes of the state as Montpelier scratched around to find $113 million to solve a budget gap and local towns see failing schools budgets. For comparison of recent large projects the replacement of the Champlain Bridge cost $78 million and was built in 2 years, seems quite a bargain in comparison with the VGS pipeline.
Recently VGS indicated that there will be yet another delay until 2016 for getting the transmission pipe completed. New customers won’t be seeing gas probably before 2018-2019. Even this is optimistic as VGS has yet to secure a “right of way” through many landowners’ properties as it drags them into court to start the distasteful process of seizure by eminent domain.
The question is what is to be done? It appears that Vergennes and Middlebury as well as Bristol are still demanding natural gas, as was apparent by the table banging by representative from these towns at a recent Addison County Regional Planning Commission (ACRPC) meeting. However, demanding gas by this pipeline under the present circumstance does a great disservice to the residents they represent as well as to current and new customers who, make no mistake, are the ones who will be footing the bill.
Due to all the significant problems VGS is having, the PSB has decided to take another look at the project. So now is the time for these towns and ACRPC to start banging on the table in Montpelier at the PSB and PSD to say enough is enough and revoke the Certificate of Public Good. If these towns still want natural gas then I suggest a reset to the original plan of a shorter cheaper distribution pipe from Shelburne or the expansion of the gas islands.
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