[V]ermont Gas Systems said Friday that a Wisconsin-based company won the contract to resume construction on a pipeline that will run natural gas from Colchester to Middlebury.
The announcement comes days after competing lawsuits were filed between Vermont Gas and Over & Under Piping Contractors Inc. — the New York-based company that left the project late last year.
Over & Under broke ground on the construction of the 42-mile pipeline project in June 2014, but work halted less than five months later when the contract was abruptly terminated.
Don Rendall, the CEO of Vermont Gas, said Friday that workers with the new contractor, Michels Corp., will be on the site in the next week.
Michels will resume construction of the main line of the Addison-Rutland Natural Gas Pipeline project, which Rendall said he expects will be completed on schedule by the end of 2016.
The dispute
The lawsuits filed by Vermont Gas and Over & Under are about “a billing dispute,” Rendall said, adding that it’s not unusual for disagreements to arise in major construction projects.
Vermont Gas filed a lawsuit in Vermont Superior Court in Burlington last week charging that Over & Under breached the contract between the two companies.
According to Vermont Gas, by November 2014, Over & Under had completed less than 14 percent of the total project — 5.65 miles of the total 42-mile pipeline. However, the company had been paid 20 percent of the total $45 million cost that Vermont Gas had agreed to pay Over & Under for the entire project.
Rendall would not discuss what led to the termination of the contract.
“We decided that it would be best for the project, for the schedule, for the budget to look at other contractors to be our business partners and move forward,” Rendall said.
Meanwhile, in a lawsuit filed in the U.S. District Court in Burlington this week, Over & Under claims that Vermont Gas failed to pay the company for labor, materials and other costs.
Over & Under is suing Vermont Gas for $11.2 million related to costs the company says are associated with a five-month delay in the start of construction.
The Over & Under lawsuit states that the original call for bids advertised a start date of Feb. 10, 2014, which was then delayed. The two companies made a verbal agreement in February, the document states. However, Vermont Gas did not propose a written contract until late May and the document had significant differences from the initial bid documents, Over & Under claims.
According to Over & Under, Vermont Gas sent the company a letter of intent in April, setting June 2, 2014, as the date for the groundbreaking. At that point Over & Under purchased some equipment for the project, including a $1.2 million rock trencher.
Ultimately, work did not begin on the pipeline until July 21, 2014. Over & Under says that Vermont Gas was responsible for the delay, in part because of problems with permits, materials and rights of way.
Under & Over CEO Joe Panna declined to comment on the lawsuits when reached Friday afternoon.
On schedule, but still controversial
Rendall says that the process of hiring a new contractor has not impacted the timeline of the total project. He anticipates the pipeline will be finished by the end of 2016.
Michels Corp. shares Vermont Gas’ “commitment to safety and environmental stewardship,” Rendall said.
Michels Corp. workers will begin to arrive on the site in the next week, Rendall said, and he expects that the company will complete the first 11-mile segment of the pipeline this fall. Although Over & Under left the construction of the main pipeline last year, other aspects of the construction work have continued since that time, he said.
The construction of the project has raised controversy in the Green Mountains. The project has been a frequent target of environmental activists, with one demonstrator arrested in Essex last month. Several landowners along the pipeline route have refused to enter right of way agreements with Vermont Gas, prompting the company to begin eminent domain proceedings.
A survey by AARP released Friday found that more than three-quarters of Vermonters do not think that ratepayers should have to shoulder the cost of the project.
David Reville, of Vermont AARP, said the survey shows that Vermonters feel there is a lack of transparency around the project and about utility rates.
“It really shines a light on the fact that Vermonters are very concerned about rising utility costs in general,” Reville said.
Meanwhile, the escalating cost of the pipeline has raised concerns; last month, the Vermont Public Service Board held a two-day hearing on the pipeline construction.
The anticipated cost of the project has increased from an original estimate of $86.6 million to $153.6 million.
AARP is concerned that ratepayers in other parts Vermont will shoulder the expense of a project that will only impact residents of Addison County.
Rendall said that he hears often from customers who are “pleased” to have the option of natural gas.
“We’re committed to offering more Vermonters the choice of a cleaner more affordable fuel to heat their homes and businesses,” Rendall said.
