Vermont Business Magazine Don Rendall, the incoming CEO of Vermont Gas Systems (VGS), today announced a reset of the Company’s Addison Rutland Natural Gas project. The company will ask the Vermont Public Service Board (PSB) to postpone hearings on Phase II of the project, scheduled to begin in January. The company will also file with the PSB a revised cost estimate for Phase 1 of the project, from Burlington to Middlebury. The Middlebury phase is now estimated at $154 million from its original $86 million. This is the second cost estimate increase.
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| Vermont Public Service Department statement
The Public Service Department was informed on Tuesday of the estimated cost increase announced today by Vermont Gas Systems, and its decision to postpone requested action on Phase II before the Public Service Board. The Department urged the company to make a timely filing with both us and the Board about these issues, which they are doing today. “We will carefully evaluate the reasons for the cost estimation increase associated with Phase I of this project and the implications for Phase II,” said Christopher Recchia, Commissioner of the Public Service Department. “We will be making our recommendation to the Board in the context of ongoing proceedings currently before the Board,” he added. On July 2, 2014, Vermont Gas announced cost estimation increases of approximately $35M on the $86M project, for a total of $121.6M. Today’s announcement increases that estimate an additional 27% to $154M. The net benefits of the project after the first increase were estimated at $48.8M excluding any added efficiency benefits or carbon dioxide emission reduction benefits,and these will also likely be re-evaluated in further proceedings. |
“My first order of business at VGS has been to understand the status of this project. This company promised last summer to update the costs of Phase I using accepted industry cost estimating standards. We’ve been determined to get this job done effectively and to communicate it openly, honestly and quickly,” stated Rendall. “With the estimated costs increasing substantially over our previous estimate we are hitting the reset button. This is how we will operate.”
Phase 1 will offer natural gas service to residents and businesses in Vergennes, Middlebury and other Addison County communities. Phase 2 is planned to deliver natural gas to Cornwall, Shoreham and the International Paper plant in Ticonderoga, NY.
The budget for Phase 1 has been adjusted in accordance with accepted industry standards for project cost estimation and is now estimated at $154 million -- $138 million to complete Phase 1, plus a $16 million contingency -- if the project is completed without additional delays or unexpected cost pressures.
VGS will file the revised Phase 1 cost estimate with the PSB this afternoon. In light of this cost increase, VGS will ask the PSB to defer hearings on Phase 2 of the project. “We are requesting a hold on Phase 2 regulatory proceedings so that we can develop and announce a revised plan, schedule and budget for completing both Phase 1 and 2 in the smartest, most cost-effective way,” said Rendall. “We will do what’s best for our customers and the new communities, families and businesses we look forward to serving.”
“The company remains confident that the expansion of natural gas service will serve the public good. Each phase of this project provides significant economic and environmental benefit by reducing energy costs for Vermont families and businesses, and lowering greenhouse gas emissions,” said Rendall.
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AARP VT Statement on Second Cost Overrun for VGS Phase 1 Pipeline Project December 19, 2014 “Today we learned of yet another significant cost overrun on the Vermont Gas Systems Phase 1 pipeline project to the tune of $33 million. This comes on top of a $35 million increase announced this summer. AARP Vermont is calling on Vermont’s Dept. of Public Service and the Public Service Board to give close scrutiny to today’s announcement since it is current ratepayers in Chittenden and Franklin Counties that will be footing the bill. The public deserves to know what the additional costs are, how they are being justified, and if the project is still viable given that the projected cost has now gone from $86 million to $154 million in just a matter of months. The Department should also ask the utility to provide reliable and well documented projections on what the final costs will actually be, in order to make an informed recommendation to the Public Service Board on reopening the certificate of public good process. Current ratepayers – especially seniors – should not be expected to absorb ever rising costs for a multi-million project that will provide them no real benefit. Consumers need to be protected and if this overrun goes through it is a glaring example of how broken our regulatory system has become.” -- Greg Marchildon, State Director AARP Vermont Rising Tide Responds Vermont Gas Systems announced today a second cost increase for Phase 1 of the Fracked Gas Pipeline and requested a hold on the permitting process for Phase 2, affirming pipeline opponents claims that the pipeline is too costly for Vermonters. "Since the first cost increase in July, we've known that costs would continue to rise, at the expense of Vermonters who are struggling every winter to pay their heating bills," said Will Bennington, a volunteer with Rising Tide Vermont. "Once again, Vermont Gas has shown that their word can't be trusted." Groups and individuals from across the state have been working for two years to stop the project, which represents the biggest fossil fuel infrastructure project in Vermont in over 50 years. Rising Tide Vermont, along with other groups, has appealed to the Public Service Board, taken action at construction sites, and staged a massive sit-in at the Governor's office to convince state regulators to deny permits for all phases of the project, which they say will lock Vermonters into decades more of dependence on dirty fossil fuels. "This news from Vermont Gas shows that the growing movement against new fossil fuel infrastructure is effective, and that we have what it takes to win, representing enormous benefits to the climate, to Vermonters and to the people in Alberta whose water is contaminated by fracking." Opponents of the project are also concerned about the vulnerability of rate-payers, who face higher rates due to increased project costs, and who will bear the pain of sky-rocketing increases in gas prices in the future. A coalition of landowners, rate-payers and climate justice advocates delivered a petition signed by over 500 rate-payers to the Public Service Board in July, calling on them to re-open the Phase 1 CPG in light of the first round of cost increases for the project. "We expect to hear shortly that Vermont Gas is pulling the plug on the entire project. It is clear as day that costs will continue to rise and that this project offers no benefit to Vermonters," Bennington added. "It is time for Vermont Gas, the Public Service Board and Governor Shumlin to cut their losses and put an end to this fossil fuel folly." |
Rendall emphasized that VGS remains committed to bringing natural gas service to Addison and Rutland counties. “We are resetting today to help this project succeed,” said Rendall. “In the meantime, we are actively pursuing innovative ways to offer natural gas to new customers.”
Earlier this month VGS announced an innovative partnership with NG Advantage creating a “gas island” in Middlebury, delivering compressed natural gas by truck to a distribution network serving major businesses and institutions while the pipeline is under construction. VGS is actively working with NG Advantage to bring this gas island concept to Rutland.
The company recently announced that it has reached agreements with about 80% of landowners whose property will be affected by Phase 1.
“We are successfully negotiating with willing landowners and will continue to reach out to and mediate with landowners, existing and potential customers, local and state government officials, and opponents to hear their views and work to solve problems and reach agreement,” said Rendall.
Natural gas produces fewer emissions than other conventional fuels such as heating oil and propane and costs up to 50 percent less.
“We are focused on project planning and implementation, and in addition Vermont Gas will be a leader in efforts to reduce emissions that contribute to climate change,” Rendall added. “Vermont has always been an environmental leader and – along with a larger commitment to energy efficiency and renewable energy – natural gas can play a valuable part in the state’s clean energy future.”
About Vermont Gas
Vermont Gas serves almost 50,000 customers in Franklin and Chittenden counties and is currently working to expand service into Addison and Rutland counties through the Addison-Rutland Natural Gas Project. The company's long heritage for safe and reliable operations includes its award-winning energy-efficiency programs, which reduce energy use while saving current customers an additional $13 million annually for homes and businesses. For more information on Vermont Gas’ energy efficiency programs visit, www.VermontGas.com
Source: VGS 12.19.2014