MIDDLEBURY — Middlebury voters on Tuesday, Nov. 7, will be asked if they’re OK with Vermont Gas getting three free easements on town land to reach around 15 potential customers.
Those who want to roll back the free easement want Vermont Gas to pay for the right to lay gas distribution pipe across three town parcels, saying it is a moneymaking venture.
Citing concern over the potential precedent of charging a utility for infrastructure-related easements, Vermont Gas officials served notice that a “no” vote could prompt the company to abandon plans to extend its distribution line to the approximately 15 potential customers at the end of those easements — including the Middlebury town offices and the Ilsley Public Library.
Future development of the so-called Economic Development Initiative parcel behind the Ilsley Library could also be affected, officials said.
What does this mean in terms of payments to the town of Middlebury? Vermont Gas could be asked make an easement payment of anywhere from a few thousand dollars to, in Vermont Gas CEO Don Rendall’s estimation, $6,000 or $7,000. Regardless of whether the easements are free or not, Vermont Gas would be taxed at around $2,500 annually for the pipeline infrastructure.
Combined, these numbers pale in comparison to the Addison Natural Gas Project’s total estimated price tag of $165.9 million.
But there’s more at stake than meets the eye, according to those who believe Middlebury should grant the easements for free.
Middlebury would become the first Vermont community to charge the utility for an infrastructure-related easement, a precedent that Vermont Gas officials believe could open the company up to future compensation requests from other towns in which it seeks easements in the future.
If residents vote “No” that “would mean that we will not be able to have the easements we have applied for to bring the natural gas choice to a number of customers on the other side of these easements — including some of the town’s own facilities,” Vermont Gas CEO Don Rendall said during a Monday phone interview with the Independent.
Rendall said company officials would still be willing to speak with town officials about the future of the three easements if a majority of residents on Nov. 7 vote against the current, free arrangement. But Rendall suggested it would be tough to arrive at a deal calling for compensation beyond the property taxes Vermont Gas is slated to pay Middlebury for the Addison Natural Gas Project pipeline infrastructure being installed right now within its borders.
The company expects to pay the town around $200,000 in property taxes beginning next July, an annual figure that will decline with depreciation of the pipeline infrastructure.
The ballot question wording doesn’t require the two parties to hammer out a fee for easements.
“At the end of the day, if the town decides they don’t want us to bring natural gas service to these neighborhoods on the other side of these easements, we will respect that decision and focus on areas where we can make a positive difference,” Rendall said.
“We certainly look forward to working together with the town on an outcome that, when all is said and done, would be one that puts us on an even playing field with other utilities that are bringing important, positive infrastructure to the town,” he added.
Middlebury resident Ross Conrad circulated the petition that is driving the Nov. 7 vote. He launched his petition drive arguing the selectboard shouldn’t have granted the three free easements to Vermont Gas back on June 27.
Conrad said he recently contacted town officials in “numerous” Addison and Chittenden county communities asking if Vermont Gas had requested pipeline-related easements on municipal land.
“It turns out that the company almost always uses the road rights-of-way when installing distribution lines, as they have already done for free throughout Middlebury,” Conrad said. “It appears that VGS hardly ever has to pay for easements to install distribution lines across municipal property because they hardly ever ask to do so.”
Conrad agrees with the general premise that communities shouldn’t charge utilities for easements on municipal property.
“Historically, the primary reason municipalities have allowed utilities to have access to public land at no charge, is because the services they provide greatly improve the quality of life and benefit its citizens,” he said.
But he believes Vermont Gas’s case should be treated differently. He argued most residents Vermont Gas is seeking to serve are able to get a comparable energy source: Propane. And he noted larger consumers are able to get portable tanks filled with natural gas at various locations in the state.
“Vermont Gas is not greatly benefiting the community by providing a service that has no comparable alternative available; instead, they are providing a less expensive alternative,” Conrad said. “That’s great. However, other companies in town also provide less expensive alternatives at times but they do not receive special treatment from the town.
“Just because gas companies have been given free easements in the past, it should not automatically mean they should continue to be given free easements now or in the future, especially when the conditions of their service and what it means to a community have changed,” he concluded.
Paying property taxes on its pipeline infrastructure in Middlebury should not preclude Vermont Gas from being charged for the three easements, according to Conrad.
“Unlike the property taxes (residents and businesses) pay that go up every year, the taxes Vermont Gas will pay on its pipeline are allowed to be reduced every year through depreciation of the pipeline’s value, so that after 20 or 30 years they bottom out at only 30 percent of their (original) value,” Conrad said. “This is despite the fact that VGS can expect to use and profit from the pipeline for 50 years or more.”
Conrad believes it would be fairer to municipalities if Vermont Gas made payments related to the value of the gas that passes through its pipeline each year, rather than based on the depreciating value of the pipeline.
“Given that the town of Middlebury ranks in the top 10 Vermont municipalities with the highest property taxes in the state, we should be seeking to develop as many alternative income streams as possible,” Conrad said.
Vermont Gas has, “on occasion, compensated private companies and landowners who will not receive property tax revenue like a municipality, to house our distribution lines,” according to company spokeswoman Beth Parent. But she reiterated Vermont Gas hasn’t made such a payment to a municipality.
The Addison County pipeline is bringing natural gas, sourced from Canada, through Chittenden County into Addison County. The pipeline will first offer natural gas service in Middlebury and Vergennes, with future service to other Addison County towns. Vermont Gas had hoped to bring the pipeline all the way into Rutland County, but that segment was eliminated after International Paper decided not to be served by a proposed natural gas pipeline spur. That separate spur would have been bankrolled by International Paper and was to provide key financing for the Rutland County portion of the pipeline.
The Nov. 7 ballot question reads, “Shall the legal voters of the town of Middlebury approve the current deed of easement agreements as approved by the selectboard at their meeting on June 27, 2017, and convey three land easements (one behind the town office and Ilsley Library, one near Mr. Ups Restaurant, and one on Mill Street) to Vermont Gas Systems?”
Middlebury selectboard Chairman Brian Carpenter maintains Vermont Gas shouldn’t have to pay for the three easements.
“We see it as a benefit to the town,” Carpenter said of giving consumers the option of natural gas. “I don’t see how we can treat one utility differently than another.”
Residents will vote by Australian ballot on the referendum, from 7 a.m. to 7 p.m. at the Middlebury town offices at 77 Main St. The Australian ballot vote will be preceded by an information meeting on the question, to be held on Monday, Nov. 6, at 7 p.m. at the Mary Hogan Elementary School gym/cafeteria.
Rendall hopes the vote preserves the status quo on infrastructure easements.
“We look forward to a being a positive and active member of the community in Middlebury and I don’t want our position here to be perceived as reacting negatively to anything,” Rendall said. “We’re focused on doing our best to bring choice and opportunity to Middlebury families and businesses and we’re also focused on respecting the wishes of the town and doing that in a fair and respectful way.”
Reporter John Flowers is at [email protected].