Pipeline preparation in Williston in July 2014. VBM photos
by Timothy McQuiston, Vermont Business Magazine Vermont Gas Systems received a largely positive result from an exhaustive report filed Wednesday by a third-party investigator on behalf of the Vermont Public Utilities Commission. The PUC ordered the investigation of the Addison Natural Gas Project based on several charges that VGS violated the terms of its Certificate of Public Good. The interested parties that called for the investigation in February 2018 included opponents of the pipeline, environmentalists, landowners and abutters, and ratepayer groups like AARP. The principal focus was on the safety of the natural gas pipeline, which runs 43 miles from Colchester down to Middlebury.
Rising Tide protester Sara Mehalick is interviewed by a WPTZ-TV reporter while chained to the VGS front door in South Burlington.
The conclusion of the 83-page report reads, in part: "VGS was diligent in their efforts to comply with the pipeline safety regulations, their own plans and specifications, and the CPG commitments during construction of ANGP. While they did not have perfect success in every instance, they resolved issues in a timely manner as they became aware of them. The answer to “Did VGS comply with pipeline safety regulations and the 2013 Final Order and CPG in Docket 7970?” is generally Yes."
The investigation was conducted by William R Byrd, President of RCP Inc, based in Houston, TX. The firm describes itself on its Website: "RCP is a registered professional engineering consulting firm that specializes in asset integrity, risk management, regulatory compliance services and web-based assessment tools for pipelines and pipeline related assets."
As for compliance, Byrd wrote: "I have reviewed the DPS (Department of Public Service) inspection reports for each year and found any critical comments (aside from those that resulted in NOPVs [Notice of Probable Violation]), to be minor deficiencies that are routinely found and corrected on a daily basis during a project of this type. They caused no overall compliance concerns. The compliance issues that resulted in NOPVs have been resolved appropriately (except the Bedding / TB NOPV which is still open)....
"Most of the discussion concerning non-compliance by VGS and its contractors is based on non-compliance with regard to plans and specifications – not some explicit rule requirement. In fact, both Findings from the Bedding / TB NOPV are related to non-compliance with a specification developed by [engineering firm] CHA for ANGP. As noted earlier, these plans and specifications were occasionally incomplete, inappropriate for the situation at hand, or internally inconsistent.
"Our independent review of DOT compliance records (post construction) for ANGP did not note any deficiencies."
Don Rendall, VGS President and CEO, today issued the following statement regarding a recent report reaffirming the Addison Expansion Project’s safety:
“We are so pleased that the Public Utility Commission’s independent expert investigation validates the work VGS has done to construct a safe, quality pipeline to Addison County. The independent expert concluded that pipeline ‘was thoroughly and competently designed and engineered using modern equipment and technology, and comprehensively inspected during construction by multiple parties.’ He also recognized that the project’s construction in many important respects ‘significantly exceeds the typical requirements.’
Don Rendall, VGS President and CEO at the announcement in late November that they are seeking to eliminate greenhouse gas emissions by 2050.
“This has been a long and thorough process, with dozens of parties involved. The Commission’s expert conducted his investigation transparently and inclusively, over many months. Safety is our core mission at VGS. This process has helped further strengthen our focus on safety. Our comprehensive pipeline safety and integrity management plans, along with the outcome of the independent expert’s further recommendations, will ensure that continues. This pipeline is delivering a cleaner, affordable energy choice to our customers, and is also enabling the use of local, renewable natural gas from a farm digester. That is where VGS’s future is focused, on our deep commitment to be a part of the solution in fight against climate change. Last month, we announced an ambitious and comprehensive strategy to transform the company and eliminate greenhouse gas emissions by 2050.
“While we have some regulatory work ahead of us to complete this investigation following the independent expert’s report, we look forward to working with the parties to bring this matter to conclusion.”
Vermont Gas serves over 52,000 homes, businesses, and institutions in Franklin, Chittenden and Addison counties.
VGS received its Certificate of Public Good to build the pipeline in 2013 and almost immediately ran into trouble. Problems were headlined by cost increases.
The original contractor was dismissed after significant earthwork had begun, resulting in dual lawsuits.
Plans to extend the pipeline under Lake Champlain to the International Paper plant in Ticonderoga, NY, which was considered to be a significant revenue stream, was terminated by IP because of the projected cost.
VGS headquarters in South Burlington was the site of several protests.
Protesters disrupted the construction phase several times. They mostly opposed the construction of the pipeline through environmentally sensitive areas of Vermont and/or the possible use of natural gas extracted with hydro-fracturing techniques. Protesters held sit-ins at the VGS offices in South Burlington and others chained themselves to on-site equipment.
In Monkton, the harsh sunflower led to VGS being fined by the PUC in June 2017 when a contractor accidentally destroyed some of the rare wildflowers.
There were several contentious land-takings. Some abutters also opposed the project. AARP and others opposed the increase in rates to existing customers to help pay pipeline costs. Early on, Vermont Gas CEO Don Gilbert retired after 13 years in 2014 and Rendall was hired away from Green Mountain Power to run the company. He took over January 1, 2015.
Ultimately VGS began supplying natural gas to Middlebury in April 2017.
A nearly completed section in Williston.
The PUC opened an investigation into whether the utility violated its 2013 permit in part because it did not bury the pipe at the required depth in a certain section of Addison County. Both VGS and Byrd acknowledged that that did occur, but only with the mitigating circumstances of wet, swampy conditions in portions of New Haven. VGS has consistently maintained that the pipeline meets or exceeds safety standards.
The rising cost of the project, which has plagued pipeline construction across the nation, resulted in an agreement between VGS and the Department of Public Service to cap ratepayer costs at $134 million. At that time in October 2015, the ultimate cost was expected to be $154 million, with VGS ownership eating any further increase. The original cost of the pipeline was expected to be $86 million. Not only was the construction costing more than planned, but higher-than-budgeted land acquisition and legal fees were driving up costs.
The two cost increase estimates in 2014 drove the price tag from $86 million to $121.6 million to $153.6 million. VGS brought in a new contractor in 2015, Michels Corp from Wisconsin, and subsequently said that the project was "on budget and on time" for a late 2016 completion. Over & Under Piping Contractors of Auburn, NY, had its contract terminated in November 2014.
VGS and other proponents, including then-Governor Peter Shumlin, had even hoped to one-day extend the line all the way to the Rutland region. At this point, that day would be far into the future.
View the full report: Vermont Public Utilities Commission Case 17-3550-INV
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Vermont Gas completes 41-mile expansion, begins serving customers in Middlebury
Sources: PUC. VGS