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Public Service Board Considers Fining Vermont Gas For Late Reporting Of Cost Overruns

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Vermont Gas

Vermont Gas Pipeline cost overruns were the subject of a Public Service Board meeting earlier this week. The regulatory board is determining whether the company violated regulations by delaying notice to state officials about the rising costs.

In 2012 Vermont Gas filed a petition for approval to build a 43-mile natural gas pipeline from Colchester to Middlebury. The project’s estimated cost at that time was just under $84 million.  According to the budget summary presented to the Public Service Board on January 21st, current Phase 1 costs are now projected to be more than $153 million.  

The Public Service Board has been conducting a review of the company’s permits and met Wednesday to determine if the cost overruns merited substantial fines and other penalties.

The Conservation Law Foundation had requested intervenor status. It was denied, but it will be allowed to file legal briefs at the end of the case.  Senior Attorney Sandra Levine says it’s very troubling that Vermont Gas waited until after the company received approval and permits before reporting the cost overruns.   “The regulation is clear that when there is a 20 percent or more increase in costs that the company has an obligation to notify regulators about that. The case on Wednesday addressed what are the appropriate penalties for the failure of Vermont Gas to inform both regulators and the public and other parties in the case of the skyrocketing costs for this project.  Vermont Gas waited at least three months and maybe longer before they notified people about the cost increase. And the cost increase is very troubling. It undermines the credibility of the project and really the viability of the project going forward.”

Vermont Gas Spokesperson Beth Parent says in hindsight a better course of action would have been to report it had reason for an increase.  “We understand the call for us to be penalized for not coming forward sooner with a cost increase. But the company has made a commitment in November with our new administration to being open and forthcoming with any changes in scope, cost and schedule.  So the company has really made strides to make sure that doesn’t happen again. This wasn’t done to mislead anybody. We just, in hindsight, we would have done it differently.”

Vermont Department of Public Service Commissioner Chris Recchia says improvements have been made to the reporting process, but his overall concern is that VT Gas had a responsibility to follow industry trends and reflect that in its understanding of what the project would cost.   “If they had been more attentive to the pressures in their industry they would have understood that cost of labor and materials for pipeline installation were going up and they could’ve brought that to our attention and to the board’s attention much sooner. New management at Vermont Gas has been thoroughly evaluating the costs of the project. They have updated those estimates I think in a way that is accurate. I think mistakes were made by both the company and in retrospect I wish my department had handled it differently too.  But we learned from that and I think we’re moving on.”

Groups adamantly opposed to the pipeline say this presents an opportunity for the Public Service Board to revoke the project’s Certificate of Public Good. Rising Tide Vermont activist Will Bennington doesn’t care about a fine.   “The Public Service Board should remove their permits and stop the entire project. This is not the first time that Vermont Gas has lied or misled either the board or the public or the landowners.  If I could count the amount of times I’ve heard I’m sorry we’ll do better next time. If I got a nickel  for every time I’d be doing pretty well right now. So this fine doesn’t really matter to me. They should scrap the entire project.”

A second phase of the pipeline project was canceled in February when International Paper in Ticonderoga, NY pulled out of the project citing cost overruns.

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