Vermont Business Magazine Going against the recommendation of the Vermont Department of Public Service and the request ofVermont Gas System, the Vermont Public Service board in an order filed today, has fined VGS $100,000 for waiting six months to report cost increases for its Addison pipeline project. The fine amount was recommended by the Conservation Law Foundation. The PSB ruled that it must be paid within 30 days. The department, which recommended a $35,000 fine, acts the the public advocate before the board. The board is the regulator.
"We have given due consideration to each of the statutory factors enumerated in 30 V.S.A. § 30(c)," wrote board membersJames Volz,Margaret Cheney andSarah Hofmann. "Having determined that VGS's failure to disclose a reportable cost increase as of January 13, 2014, constituted an initial violation of Rule 5.409, and that the Company's ongoing failure to so report until July 2, 2014, constituted a daily continuing violation for a period spanning 164 days, we have decided to impose a total civil penalty in the amount of $100,000."
Much of the discussion involved what would be a reasonable reporting time for VGS to inform the board of the cost increases. VGS maintained that the language was not clearly defined. The PSB ultimately disagreed, as it took the South Burlington company more than five months to report the increase. The PSB says that if it had known earlier it could have acted sooner to head off a second cost increase.The maximum penalty amount available in this matter is $109,284 based on VGS's gross revenues for 2014 of $109,283,509.
Don Rendall, President & CEO of Vermont Gas issued the following statement regarding the Public Service Board ruling:
“I began my leadership at Vermont Gas earlier this year with a commitment to candor and openness. I’m pleased that today we have a demonstrated record of accomplishment in this area. We are making tremendous progress on the ARNGP with mainline construction beginning this week.
“We understand and respect the Board’s order with regard to events that occurred during the first half of last year. We will comply with the order. We appreciate the Board’s acknowledgement of our overall compliance record.
“Very importantly, we are looking forward to bringing the choice and opportunity of cleaner more affordable natural gas to thousands of Vermonters in Addison County and beyond.”
Don Gilbert retired as president and CEO of VGS at the end of 2014.
The PSB is now considering whether to re-open the Certificate of Public Good it previously granted VGS to allow for the Colchester to Middlebury pipeline because of two cost increases in 2014 (from $86 million to $121.6 million to now $153.6 million).VGS reiterated last week that its new projection from late last year is holding, that it has a new contractor and that the project is "on budget and on time" for a late 2016 completion.
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In its 24-page decision, the PSB writes: "We agree with VGS and the Department that VGS's failure to report the cost estimate increase in a timely manner did not result in harm, either actual or potential, to the public health, safety or welfare, the environment, or the reliability of utility service. However, we disagree with VGS and the Department that there was no potential for harm to the other interests of utility customers. As of January 13, 2014, when VGS learned that the cost estimate had increased 30%, the Board still retained jurisdiction over the Project and had several motions for reconsideration pending. The Board was thus in a position at that time to conduct a review of VGS's changed cost estimates and consider their effects on existing and prospective customers. In turn, the Board could have conducted this review and exercised its authority to modify the December 23 Order or impose additional conditions. The Board could have proceeded in this manner without first having to seek and obtain a remand from the Vermont Supreme Court. We find the harms described by Ms. Peyser (friend of the court Louise Selina Peyser, who advocated for additional punitive action)to be too remote and speculative to take into account under this factor in assessing the amount of the penalty to be imposed for VGS's violation."
The Supreme Court action allows the PSB to potentially re-open the Addison pipeline case, from which it could impose new conditions on VGS, cancel the project or let it go ahead as is. The PSB is expected to rule this summer on whether it will indeed re-open the CPG.