A retiree advocacy group contends that Vermont Gas has illegally forced existing customers to subsidize a near doubling of the cost of the construction of a pipeline through Addison County.
AARP Vermont has an appealed a lower court decision in the case to the Vermont Supreme Court.
Vermont Gas says the expansion is part of a strategy to keep natural gas rates low and predictable, and argues that the state has on numerous occasions reviewed, litigated and approved the funding in question.
Attorneys are currently filing briefs in the case, in preparation for oral arguments before the Supreme Court this fall.
The case hinges on a pool of ratepayer money that Vermont Gas collected over the past six years called the System Expansion and Reliability Fund.
Money accumulated in that fund is used to “smooth” rates for Vermont Gas customers.
The System Expansion and Reliability Fund comes from $4.4 million collected annually from Vermont Gas ratepayers. This year the company spent $5.5 million of more than $20 million in the fund to prevent rates from going up.
There is upward pressure on rates as a result of a 41-mile pipeline expansion completed this year. Ratepayers are on the hook for $134 million out of about $165 million for expansion costs.
Vermont Gas officials original told state regulators that the construction of the pipeline would cost $87 million.
Vermont Gas attorneys say the fund was created by the Public Utilities Commission (formerly the Public Service Board) to protect ratepayers from construction cost hikes.
Jim Dumont, an attorney representing AARP, countered that view, saying in an August brief that the law prohibits current ratepayers from being forced by a regulated monopoly to subsidize future Vermont Gas customers.
This matters to AARP because many of its members in Vermont live on a fixed incomes. Greg Marchildon, AARP’s Vermont state director, says current Vermont Gas customers in Chittenden County shouldn’t be forced to pay for a natural gas pipeline expansion in Addison County that they won’t benefit from.
In a reply filed September 18, Vermont Gas attorneys argue that multiple state entities have reviewed the company’s use of SERF money without objection. Furthermore, they contend, AARP has attempted already to litigate over the SERF question, and lost.
“The project has been reviewed thoroughly by our regulators three times and each time was found to be in the public good — meaning it’s a good investment for the state,” said VGS spokeswoman Beth Parent. “It will also bring a needed boost to the local economy and help businesses stay competitive in Addison County.”
Oral arguments in the case have not been scheduled, but are expected to take place later this fall.
