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Vermont Gas stands by Phase II pipeline cost estimate

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Posted on July 21, 2014 |
By Zach Despart



ADDISON COUNTY — Weeks after announcing a hefty cost jump for Phase I of the Addison-Rutland Natural Gas Pipeline project, Vermont Gas Systems on Thursday said it wouldn’t amend cost projections the company submitted to the Public Service Board for Phase II of the project that would extend the pipeline from Middlebury to the International Paper plant in Ticonderoga, N.Y.

 “We don’t have any plans to do that,” company spokesman Steve Wark said.

Wark said the company stands behind the $49.3 million Phase II cost estimate the company submitted to the Public Service Board in November 2013. Wark said the company used a different process to estimate costs for Phase II, and that the company believes it has anticipated all the costs it failed to initially estimate for Phase I.

 “It’s our belief that a lot of the changes in Phase I have been incorporated,” Wark said. “We believe (the figures) are up to date and accurate.”

For Phase II, the company concurrently filed a contingency budget of $64.4 million, which would cover cost increases up to 31 percent of the original cost projection.

The initial estimate for Phase 1 was $86.6 million and submitted to the Public Service Board in 2013 with contingency costs of 15 percent, which the company now concedes was too low.

Vermont Gas announced July 2 that it now projects Phase I to cost $121.6 million, a jump of 40 percent. The company attributed this to higher costs for materials, labor, land acquisition and increased oversight of the project.

Phase I of the pipeline, which will run from Colchester to Middlebury, was approved by the Public Service Board in December. Vermont Gas began work on the pipeline last month after receiving the final permits.

Phase II of the pipeline would run west from Middlebury through Cornwall and Shoreham and underneath Lake Champlain to the International Paper Co. plant in Ticonderoga, N.Y. The project is currently before the Public Service Board.

Department of Public Service Director of Public Advocacy Geoff Commons hesitated to speculate on when the Public Service Board may rule on the project, but provided some insight.

 “Vermont Gas has requested an order by the end of the year,” Commons said, noting that the Board is not bound by a deadline.Commons said the timeline for the Phase I approval may be helpful for predicting when the Board will rule on Phase II. In Phase I, the Board began technical hearings in September of last year, and issued a Certificate of Public Good for the project that December.

The Board will start technical hearings for Phase II in October, meaning that if the process follows a similar timeline to Phase I, Vermont Gas can expect a decision near the end of the year or in early 2015.

Wark also said the company has negotiated more land use agreements for Phase I with several landowners since the beginning of the month. As of July 8, the company had acquired land through easements or outright land purchases from just 35 percent of the 221 landowners along the first pipeline route to Middlebury.

 

 

 

 

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