(Editor’s note: This story was expanded and updated July 8 at 7:45 p.m.)The Public Service Board on Friday ordered Vermont Gas Systems to explain within seven days why the company should not be held in contempt and forced to halt construction on its 41-mile natural gas pipeline for alleged violations of its permit.
The order came in response to a petition from Jim Dumont, an attorney for nearly a dozen users of Hinesburg’s Geprags Park, through which Vermont Gas plans to run the pipeline.
Dumont told the board that a wetlands biologist his clients hired found wetlands in the park last month that weren’t described in Vermont Gas’s 2013 certificate of public good that allowed the project. The pipe must pass through the area on which the wetlands sit, company representatives said.
Because of the discrepancy, the permit isn’t valid, Dumont argued.
Vermont Gas and its opponents disagreed Friday over whether the permit issue, even if resolved in the company’s favor, could sink the project through delays.
The mismeasurement of wetlands seems to have been an accidental oversight on the part of the company, said Natural Resources Commissioner Deb Markowitz.
Vermont Gas can’t amend an existing permit to include the larger area, Markowitz said, and likely will need to file for a new wetlands permit.
But the Public Service Board’s 2013 order allowing the pipeline’s construction contains a stipulation that all necessary permits must be secured first.
Vermont Gas spokeswoman Beth Parent said the company already has all its required permits and that the situation in Hinesburg doesn’t change that. The company intends to comply with the board’s order and supply a response by July 15, she said Friday.
Work on the pipeline has not stopped, but neither is it proceeding on the land in question, Parent said.
“We have 4,000 families and businesses depending on us,” Parent said, referring to the number of customers the pipeline is expected to serve. They’re counting on Vermont Gas to complete the pipeline this year, she said.
Dumont vowed to appeal if the board doesn’t halt construction. It’s not clear how soon the board will make a decision.
The importance of timing to the project’s future was a matter of dispute Friday.
Dumont said every setback throws Vermont Gas closer to what he described as an October deadline for completing the project in order to avert a dramatic rate increase for the company’s customers.
Parent, however, said rates won’t necessarily spike if the pipeline isn’t completed by October.
The question has to do in part with a hearing at the end of October, when Parent said the company plans to request a one-year, 3.3 percent rate decrease for its customers.
That decrease would be made possible, in spite of a costly expansion effort, through the use of money from what’s called the System Expansion and Reliability Fund, or SERF. Since 2011, Vermont Gas has collected about $5 million annually from ratepayers and put it into the fund, which holds about $21 million currently.
By withdrawing two-thirds of that sum, Vermont Gas would temporarily limit the hit to ratepayers of the $134 million in pipeline costs they are expected to cover. Without the withdrawal, ratepayers would see a 13.8 percent rate increase next year, primarily due to the long-term cost of the pipeline, according to the Department of Public Service.
Vermont Gas would need permission from the Public Service Board to use money from the SERF for that purpose.
Dumont said Vermont Gas in its original permit application told the board it wouldn’t use money from the SERF until the pipeline is built. Therefore, if the project remains unfinished by the October rate hearing, he said, Vermont Gas can’t request the rate decrease.
That was in order not to incur costs upon customers for a structure they can’t use, since the SERF consists of ratepayers’ money, said Philene Taormina, advocacy director for Vermont’s AARP chapter and a litigant against Vermont Gas on behalf of AARP members who fear rate hikes due to the pipeline.
But Dumont’s deadline scenario, Parent said, “is just not true.” The pipeline project is under no threat from any October deadline, she said.
The company has filed for a rate decrease, Parent said, “and we look forward to presenting our case and the facts in October.”
The project has experienced numerous delays and cost increases since the Public Service Board approved it in 2013. Sandra Levine, senior attorney with the Conservation Law Foundation, said further delays would threaten the project’s viability.
Levine has been involved in several pieces of pipeline-related litigation and said the most recent setback only continues a pattern that’s been evident since the project’s inception.
“It’s been cobbled together with bubble gum from the beginning, and each of the problems builds on the previous problems,” Levine said.
The Geprags Park segment would be part of a 41-mile pipeline extension to Addison County that is now expected to cost $165.6 million. Ratepayers, according to an agreement the company reached last year with the Department of Public Service, would need to cover $134 million of that.
The project has struggled to secure access to the planned route and attracted protests from environmental activists who oppose expansion of fossil fuel infrastructure.
Vermont Gas remains “laser focused” on finishing the pipeline this year, Parent said, and access to the Geprags Park parcel will be a critical component to meeting that timeline.
The company is involved in eminent domain proceedings to win the right to put the pipeline beneath the park. Dumont and his clients also are trying to prevent that, on the grounds that eminent domain can’t be used to obtain easements on land “dedicated to use as a public town park.”