Vermont Gas Pipeline Keeps Approval Despite Cost Increases

Jan 8, 2016

Regulators announced Friday afternoon that Vermont Gas will be allowed to continue to build its 41-mile pipeline from Chittenden County to Middlebury despite a nearly 80 percent increase of cost estimates for the project since its initial approval.

The order from the Vermont Public Service Board refers to an Oct. 7, 2015 agreement between Vermont Gas and the Department of Public Service. The agreement was designed to limit the cost impacts on Vermont Gas customers, but it was set to become void if the board didn’t issue a decision by the end of the day Jan. 8.

Less than two hours before close of business on Jan. 8, the board met that deadline.

An Interactive History Of The Vermont Gas Pipeline Project 

The board’s order allowing the project refers to the Oct. 7 agreement, drafted in an effort to ensure permission for the project.

“In light of the MOU and the company’s commitment to the board to not seek to recover project costs above the cost recovery cap from ratepayers, we have determined that we probably would not reach a different decision from the decision we reached in the 2013 Final Order,” the board’s order said, referring to the board’s original approval of the project.

That approval was granted when the cost estimate for the project was $86.6 million. The company announced in December 2014 that new estimates show the pipeline will cost $156 million to build.

The board spent much of the past year considering whether the cost increase was so significant that the original permit the board issued should be revised or revoked.

Vermont Gas executives were concerned last fall that regulatory delay could doom the project. The Friday order allows the company to prepare for another construction season in 2016 with the assurance that regulators won’t stand in its way.

Update 5:44 p.m. Sandra Levine is a senior attorney for Conservation Law Foundation, which is contesting the pipeline at the Public Service Board. She was disappointed with the board's review.

“It's a very different project than it was more than two years ago when it was originally approved,” she said, “and unfortunately the board just provided a very narrow evaluation. What we were looking for was a more thorough and a more comprehensive review of the overall project.”

Vermont Gas CEO Don Rendall had a different opinion of the regulatory review.

“The decision from the public service board concludes a long and thorough regulatory proceeding and we appreciate the opportunity to keep our project moving forward,” he said.

Levine said CLF will explore new legal options to oppose the pipeline, and the group already has a pending motion with the Public Service Board that could lead to the Cerfiticate of Public Good (which serves as a permit) for the pipeline being amended.

Update 4:01 p.m. Vermont Gas Systems issued the following statement in response to the Public Service Board order:

The Addison project will deliver a new clean energy choice to thousands of Vermont families, businesses, and institutions. Today's decision concludes a thorough regulatory proceeding and we appreciate the opportunity to keep moving forward.

Our company has worked through significant challenges to get the project on track. We appreciate the time and effort invested in this project by many potential customers, businesses, towns, and landowners along the route.

Our team will now be able to turn its full attention to the important planning and preparation necessary for our upcoming construction season.

Our focus remains on completing this project on time and on budget at the end of 2016.