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Vermont Gas reverses course, announces cost increase for Phase II pipeline

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Posted on August 4, 2014 |
By Zach Despart



ADDISON COUNTY — Vermont Gas Systems reversed course Friday and announced that it will increase the projected cost of Phase II of the Addison-Rutland Natural Gas Project.

Spokesman Steve Wark told the Independent on July 18 that the South Burlington company stood by its November 2013 testimony to the Public Service Board, in which Vermont Gas estimated the cost of the pipeline from Middlebury to Ticonderoga, N.Y., would be $49.3 million.

“We believe (the figures) are up to date and accurate,” Wark said on July 18.

But on Aug. 1 Wark retracted his earlier comments and said that the company now estimates the cost of the project to be $74.4 million. That figure is 15 percent more than the $64.4 million contingency budget Vermont Gas filed in November 2013. Wark said the new figure is also a contingency budget.

Wark said the contradiction between his July 18 comment and Friday’s higher cost number was the result of a breakdown in communication between himself and senior company officials.

“It was a communication error on my part,” Wark said. “We used different estimators, used some adjustment for the market, and I missed the overall bottom line number.”

Wark said the company would file the cost update with the Public Service Board on Friday. He added that 96 percent of this increase would be borne by International Paper Co.; that company’s paper mill in Ticonderoga would be the main beneficiary of the Phase II pipeline.

The Public Service Board has not yet approved Vermont Gas’ application to build this stage of the pipeline.

This isn’t the first time Vermont Gas has announced a significant cost increase for the Addison-Rutland Natural Gas Project. Last month, the company announced a 40 percent cost increase for Phase I of the pipeline, taking the estimated price tag for that project from $86.6 million to $121.6 million.

The Department of Public Service on July 31 asked the Public Service Board to fine Vermont Gas $35,000 for failing to disclose the costs increase in a timely manner. Prior to the July 2 announcement of a 40 percent cost hike, the company had not disclosed to state regulators a cost update since March 2013.

Phase I of the project, which will lay pipeline run from Colchester to Middlebury and Vergennes, was approved by the Public Service Board in December of last year. 

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