Vermont Gas Cancels Part of Pipeline Project

by John MacKenna

Vermont Gas Systems’ three-phase pipeline expansion project suffered a major setback yesterday with news that Phase 2 has been cancelled. VGS announced it will not build the proposed pipeline connecting Middlebury, Vt., to the International Paper mill in Ticonderoga, N.Y., according to the Burlington Free Press.

The utility said International Paper was planning to shoulder the entire cost of Phase 2, but withdrew that pledge after Vermont Gas said the project would cost $135 million instead of the original estimated cost of $99 million. The pipeline would have passed under Lake Champlain, which borders Vermont and New York.

Similar cost overruns are also threatening the rest of VGS’s proposed expansion. The Vermont Supreme Court on Monday authorized a reconsideration of the entire project after VGS had announced two rounds of cost overruns that increased Phase 1 price tag from $86 million to $154 million. The Vermont Public Service Board had granted a permit for Phase 1 in 2013 but will now reopen the case with authority to change the cost structure or even revoke the permit altogether. The Board has granted VGS authority to pass on all the project costs to ratepayers.

Phase 1 is a 41-mile pipeline running from Colchester south to Middlebury near the state’s western border. Phase 3 would extend the pipeline south from Middlebury to Rutland.

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