The Conservation Law Foundation argues that the board should revoke the natural gas company’s permit because the cost of the project has nearly doubled.
Conservation Law Foundation brought a lawsuit against Vermont Gas in 2014, after the company first announced cost estimates for the pipeline had increased from $86 million to $121 million. Projections are now at $165 million. Ratepayers will cover $134 million of the construction costs, based on a memorandum of understanding between Vermont Gas and the state.
State regulators say expenses resulting from poor management were a major driver of those cost increases.
Vermont Gas attributes the cost hikes to unanticipated rock ledges, expensive horizontal drilling, and costs associated with acquiring rights-of-way.
Whether an increase in the project’s cost constitutes a “significant change” was the issue in question at a hearing on Wednesday morning.
According to Public Service Board rules, a significant change is one that “significantly impacts” criteria used to approve a project. The No. 1 criteria considered by the board is whether a project benefits the public.
Opponents argue that the cost increases directly threaten the economic benefits Vermont Gas says the pipeline will generate.
Sandra Levine, a senior attorney for the Conservation Law Foundation, wants to require the board to re-examine pipeline cost estimates and projected economic benefits.
“If its project is as good as [Vermont Gas] keeps claiming, it has nothing to fear,” Levine said.
The project is nearly finished, but Levine and other opponents say it’s still possible that the board could find the pipeline no longer benefits the public. That finding would likely prevent the issuance of a new permit, and Vermont Gas investors, not ratepayers, would be on the hook for the pipeline costs.
An amendment or new-permit process would also establish precedent and would subject Vermont Gas to the same rules that would have applied had the Public Service Board taken up the case in 2014, before the pipeline was under construction, Levine says. The fact that the pipeline is now almost finished is the fault of the board’s schedule, opponents said, and should not dictate the outcome of the case.
An attorney for the Vermont Department of Public Service said the near-doubling of the cost of the pipeline is a significant change to the project, but it is impractical for the board to require Vermont Gas to seek a new permit.
The Public Service Board has thoroughly reviewed the project several times in light of current energy prices and other factors. Each time the board has found that the project benefits the public.
Vermont Gas attorney Peter Zamore said only changes to the project construction, which he described as a transmission line, distribution utilities and three gate stations, should trigger board re-approval.
The Department of Public Service’s attorney, Louise Porter, said that the project’s “cost is part and parcel of the project.” In other words, the increased cost does provide justification for, and might even demand, an amendment process or even a new permit, Porter said. But since those processes have almost no chance of changing the project’s outcome in an appreciable way, she said the Public Service Board should waive the rule requiring a new permit in the event of significant changes to an already-approved project.
After the hearing, Vermont Gas CEO Don Rendall said the project has already withstood scrutiny: The board has rejected arguments advanced against the pipeline through two separate and extensive permit-remand processes, he said.
Vermont Gas provides quarterly updates to the board, on both the project’s costs and expenditures, Rendall said, and has done so for the past two years.
Reviews of the project have found the Addison County natural gas pipeline expansion provides economic benefits to the state that outweigh the cost to ratepayers, Rendall said.
The project is 90 percent complete, Rendall said, and all but approximately 2,200 feet will be finished within weeks. Only a section in Hinesburg, traversing the town’s Geprags Park, will remain after that, he said. That section remains mired in legal challenges raised by Bristol-based attorney James Dumont on behalf of several Hinesburg residents.
Levine said she’s disappointed by the board’s slow response.
If Vermont Gas hasn’t complied with the rules, she told the board it should apply appropriate penalties. These could include fines, or conditions or restrictions placed on the project’s permit, she said.
Levine said the project may not make sense any longer, and even though it is nearly complete, the PSB should not hesitate to halt it. The price of oil in comparison to natural gas has dropped dramatically, and the project may no longer be as good a deal to ratepayers as once thought, she said.
“The bottom line is, this is a risk Vermont Gas Systems took,” Levine said.
Should the board halt construction and later find against issuing a new permit, she said, Vermont Gas investors would eat the millions of dollars already spent on the pipeline.
