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Lawmakers seek clarity on benefits, costs of pipeline

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Posted on July 3, 2013 |
By John Flowers



ADDISON COUNTY — Faced with what they say is at times “conflicting” and “incomplete” information regarding Vermont Gas Systems’ two natural gas pipelines proposed for Addison County, a group of local lawmakers is asking state officials to prepare a study on the economic and environmental costs of the projects.

At issue is a July 1 letter sent to Vermont Public Service Department (PSD) Commissioner Chris Recchia by members of the Addison County legislative delegation, including Sen. Claire Ayer, D-Addison; Rep. Willem Jewett, D-Ripton; and Rep. Will Stevens, I-Shoreham. The letter requests that the PSD — which serves as the citizens’ advocate in applications that come before the Vermont Public Service Board — provide a “full, least-cost analysis, on a life-cycle basis,” comparing both pipeline proposals to:

•  Maintaining the status quo. In other words, residents and businesses would continue to rely on heating fuel oil, propane and other energy sources.

“In this regard, it is necessary under Section 218c (of state statutes) to show that this proposal is the lower life-cycle cost option in comparison to the status quo,” the letter states.

•  Delivering liquefied natural gas to Middlebury’s industrial park businesses, with residents continuing to use the fuels they use today.

“This scenario is reasonable to consider since it may be less intrusive than a new pipeline while bringing a fuel alternative to the commercial and industrial occupants of the (industrial) park,” the letter states.

“If we’re weighing the real costs, let’s look at all the options we have,” said Ayer, the Vermont Senate majority whip and chairwoman of the Senate Health and Welfare Committee.

Vermont Gas is pitching two multi-million-dollar pipeline projects in Addison County. Phase 1 would extend from Colchester into Middlebury and Vergennes. The second phase would extend from Middlebury, through Cornwall and Shoreham and under Lake Champlain, to the International Paper mill in Ticonderoga, N.Y. Both phases are drawing controversy — particularly the proposed pipeline to International Paper, panned by many Cornwall residents at a packed public meeting late last month.

The legislators’ letter to Recchia also requests the PSD’s written confirmation that any costs associated with the International Paper pipeline will not be borne by ratepayers. That segment is to be paid exclusively by International Paper.

The study should also consider, according to lawmakers, greenhouse gas emissions of each alternative, infrastructure construction and “the extraction, transportation, and consumption of the fuels used to meet the public’s need for energy services.”

Lawmakers cite state law governing the review of utility projects that requires a “least-cost integrated plan” for meeting the public’s need for energy services, “after safety concerns are addressed, at the lowest present value life-cycle cost, including environmental and economic costs.”

The Public Service Board is currently reviewing Vermont Gas’ proposed pipeline from Colchester to Middlebury and Vergennes, which could begin delivering natural gas to Middlebury’s industrial park by next year. Vermont Gas is still planning specifics of the Phase 2 pipeline.

Ayer and her colleagues want the PSD to let them know by July 15 if it will be able to complete the requested study and if so, by what date.

Addison County legislators have been regular listeners at informational meetings about the pipelines — particularly the lawmakers whose districts would be bisected by the projects. But the July 1 letter to Recchia represents a high-profile action on what is a controversial issue with two emerging constituencies: Those adamantly opposed to the pipelines out of environmental, property rights and safety concerns, and those who want access to the cheaper natural gas as a money saver and economic development tool.

Supporters stressed the letter should not be construed as a point-blank indictment of the projects, but rather as a call for more information and clarification.

“We are asking the PSD to take a ‘deep dive,’ to do an apples-to-apples analysis of the proposed pipeline,” said Stevens, a member of the House Agriculture Committee.

“We do have a responsibility to look out for the public’s interests.”

Stevens added the PSD study will also be able to put some of Vermont Gas’ marketing assertions to the test — such as its claim that natural gas is currently more than 40 percent cheaper than fuel oil.

“Looking at alternatives can’t be a bad thing,” agreed Rep. Dave Sharpe, D-Bristol, who also supports the letter.

Sharpe is particularly intrigued about what the study might reveal about the transportation of liquefied natural gas. He said the proposed pipeline projects would only serve the most densely clustered neighborhoods. Sharpe wants to see if the availability of liquefied natural gas could be a money saver for rural residents and businesses.

Sharpe, a veteran member of the House Ways and Means Committee, is also exploring a new way of taxing natural gas. He noted that communities that host natural gas infrastructure receive property tax revenues that gradually decline as the infrastructure depreciates. Sharpe is weighing a switch whereby Vermont Gas would be taxed based on units of  natural gas it dispenses. This, he said, is how nuclear power, solar and wind projects are taxed.

INFORMATION GATHERING

Sen. Chris Bray, D-New Haven, also sees the study as an information-gathering tool. And this is information that many communities within the pipelines’ paths don’t have the time or resources to obtain on their own, according to Bray.

“We’re talking about a $112 million investment,” Bray said of the combined costs of phases one and two. “Is this a wise investment for Addison County and Vermont to make?”

Recchia on Monday acknowledged receiving the letter. He said he and his department will weigh the request, but noted his department must fulfill various aspects of the proposed study anyway as part of the PSD’s role in representing Vermonters during the Public Service Board’s review of the Vermont Gas application.

“I’m not sure right now what (aspects of the request) can be done independent of the docket, as part of the docket or as evidence in the case itself,”  Recchia said. “We’ll discuss the letter here and let (the signers) know what we think we can do.”

Meanwhile, Vermont Gas spokesman Steve Wark said the company is confident a study would confirm natural gas to be cleaner and more cost-effective than fuel oil. He said the company had recently commissioned an independent analysis of the Addison Natural Gas Project that shows “the 41-mile project will significantly reduce greenhouse emissions if customers switch from heating oil to gas.” That study, performed by energy consulting firm ICF International, indicated that the life-cycle greenhouse gas emissions of carbon dioxide and methane from natural gas are 23 percent lower than fuel oil on an end-use basis, according to Wark.

“The Public Service Board will conduct an independent and objective analysis based on facts from the participants in their evidentiary process,” Wark said. “We have no doubt natural gas will continue to be shown as cleaner and more affordable than the alternatives.”

Wark added the use of liquefied natural gas would require construction of an LNG plant in Middlebury. That plant, he said, would require a large tank supplied with natural gas trucked in on a regular basis.

“Such a system would not serve homes and businesses outside the industrial area,” Wark contended.

Editor’s note: Because of a holiday early deadline, the Independent could not include coverage of a Tuesday evening meeting in Shoreham where the pipeline proposals were due to be discussed. Look for a story in Monday’s edition.

Reporter John Flowers is at johnf@addisonindependent.com.

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