Editor’s note: This commentary is by Diane Derrick, who is a self-employed small business consultant and landowner in Hinesburg.
[A]fter attending both days of the technical hearings last month on the Addison-Rutland natural gas pipeline, I walked away with almost as many questions as I did answers. One of the major concerns I had was which metric method and whose numbers should I rely upon.
Throughout the project, Vermont Gas has presented so many financial models and varying numbers it has been hard to keep track, but from the hearings, my understanding was the company stands by $100 million or so in economic benefits to Vermont over 20 years. The Department of Public Service has scaled their benefits down a bit to $44 million or so, and AARP’s witness projected an economic net loss of over $198 million. There was much talk on the components of each model used and each witness defended their analysis. Very simply put, the difference in these numbers is astronomical. How can any of them be trusted enough to just keep forging ahead with this project as it stands today?
Very simply put, the difference in these numbers is astronomical. How can any of them be trusted enough to just keep forging ahead with this project as it stands today?
Another burning question is transparency. What did Vermont Gas know and when did they know it on the cost increases that now total over 79 percent, which for me, speaks directly to the commitment to transparency that Vermont Gas so often speaks of. There is still a decision pending from the Public Service Board on what penalties should be enforced on Vermont Gas for not submitting the cost increase timely, as required by law. The Department of Public Service has also been criticized for not telling the board when it knew of the increase.
In March, when questioned on their failure to timely notify the board, Eileen Simollardes, vice president for supply and regulatory affairs at Vermont Gas, told regulators “it’s not the company we want to be.” DPS Commissioner Chris Recchia responded that his department “would do things differently.” I guess once caught, it was at least regrettable for both the company and the department that they delayed presenting the board with critical information that may or may not have affected their decision.
In June, Ralph Roam, who works for PricewaterhouseCoopers and consults with Vermont Gas on its price estimates, testified that he suspected in September that the previous methodology was inadequate and led to the revised increase. Roam told AARP’s lawyer, Jim Dumont, that he had an “a-ha” moment about the methodology in September 2014. Roam told Dumont the “a-ha” meant that he realized that the methodology Vermont Gas used to estimate prices would need to be changed.
“It was in the roughly September time frame,” Roam told Dumont. “Honestly, Mr. Dumont, I don’t have a specific date when in September. I just remember it being in September.”
Dumont pushed him on the witness stand to find out if Roam’s realization happened before Sept. 24, 2014 — the day that the Public Service Board held its first set of hearings to determine if the state permit needed to be reopened. Vermont Gas’ lawyer then asked Roam when he knew what the new price would be. Roam responded that he didn’t realize what the new price would be until December.
How can both these answers be credible? Whether they knew the exact new price in September or not, Roam’s testimony proves the company knew its methodology was flawed. It does not take a financial wizard or expert to know that this would result in a significant cost increase. I think the Vermont Gas spin here might be since they didn’t know the exact price, they again waited. Another view is they just did not want the board to have this significant cost information for the September hearings because it would not bode well for their project.
This is where trust should become one the most important components in the final analysis of this project, as well as the entire process that brought us to where we are today.
