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Mon July 21, 2014
Pipeline Opponents Say Project Is No Longer Economically Justifiable
Originally published on Tue July 22, 2014 9:20 am
A group of opponents of the Vermont Gas Systems pipeline say the cost of Vermont Gas Systems’ pipeline from Colchester to Addison County is no longer justifiable in light of a recently announced cost increase.
The increase, announced earlier in July, brings the estimated project cost from $86.6 million up to $121.7 million. The opponents say that increase means ratepayers will be subsidizing the company’s building expenses for almost 30 years – a length of time they say is unprecedented.
The Vermont Public Service board must approve all major utility projects with a certificate of public good. The board weights the benefits of the project against cost to ratepayers, environmental concerns, and other potential issues. Vermont Gas Systems received a certificate of public good for phase 1 of its three-part pipeline project, which is ultimately planned to provide service to a paper mill in upstate New York and customers in the Rutland area.
Phase 1 of the project is planned to bring service to the Middlebury area.
A complaint filed on behalf of Kristin Lyons and Nathan and Jane Palmer says the Public Service Board usually judges a project’s “public good” in part by making sure it will pay for itself within 10 years.
“The [Public Service] Board found that for phase 1, this would not be likely,” the group’s comment says. “Instead, the board found that phase 1 would not produce incremental revenues that exceed carrying costs for 20 years.”
And that finding happened before the $35 million price increase announced this month.
“Now that the cost of phase 1 has increased by 40 percent, based on the analysis already in the board’s order, it is now evident that VGS’ twenty-year estimate was not conservative. That project is not likely to generate revenue that covers carrying costs for 40 percent longer than that – for 28 years,” they said.
The joint comment comes on the heels of a petition from the Conservation Law Foundation calling on the Public Service Board to make Vermont Gas stop construction immediately and re-apply for a modified Certificate of Public Good for the project.
Another comment on the price increase comes from more than 500 Vermonters, according to Jen Berger who helped generate support for the petition. That petition is shorter, and at least 95 percent of those who signed are ratepayers, Berger said. The petition echoes the demands of the CLF petition.
“As Vermont Gas Systems’ ratepayers, in light of these projected cost increases, we demand that the Public Service Board of Vermont halt construction and reopen the certificate of public good permitting process for Phase 1 of the fracked gas pipeline,” the petition says.
Berger said that petition will be submitted by email Monday, then hand-delivered as part of a news conference on Tuesday.
Vermont Gas spokesman Steve Wark said stopping the project now would be counter-productive and further increase costs. He maintains that the project is still environmentally and economically beneficial to Vermont, even after a $35 million cost increase.