Vermont Gas announced Monday that a 41-mile natural gas pipeline extension through Addison County will cost 7.8 percent more than anticipated, an increase of $12 million. The latest estimate pegs the total cost at nearly $166 million.
It’s the fourth time Vermont Gas has upped the price tag. The company, a subsidiary of Montreal-based Gaz Metro, originally told state regulators that the cost of the project would be $87 million.
Vermont Gas is seeking permission from state regulators to increase the cost and filed a letter with the Vermont Public Service Board on Tuesday explaining why the project is running over budget. Company officials say most of the additional money would be for unexpected construction costs. Vermont Gas will submit more detailed filings with the board in mid-July.
The company says about $4.5 million of the additional costs are due to unanticipated construction costs for the pipeline. Of that amount, $525,000 is due to “interference” from protesters and eminent domain proceedings. The remaining $5.6 million is for a contingency fund.
Don Rendall, the CEO of Vermont Gas, says contractors for the company have had to blast more rock and ledge in the right of way corridor than anticipated. It has also been more expensive than anticipated to drill around environmentally sensitive areas, he said.
Last October, the Department of Public Service entered into an agreement with Vermont Gas that capped ratepayer liability for the project at $134 million. About 50,000 ratepayers in Chittenden and Franklin counties are subsidizing the pipeline, which will serve about 3,000 customers in Addison County.
“My top priority to customers is finishing the project and protecting customers from higher costs,” Rendall said in an interview. The Vermont Gas CEO says customers should not be liable for the risks associated “with a challenging and complex construction project in two counties, eight towns across 41 miles.”
“I’m very pleased the cost cap is in place and that we, Vermont Gas, will bear the responsibility for costs, not customers,” Rendall said.
Chris Recchia, the commissioner of the Department of Public Service, said ratepayers, for the most part, will not be liable for the cost overruns. “Boy, am I glad that we entered into that $134 million cap,” Recchia said. The agreement he said was “visionary.”
The memorandum of understanding between Vermont Gas and state regulators comes with certain loopholes for the company. Ratepayers, for example, must pay for delays caused by demonstrations and pushback from landowners. At this juncture, those costs are an additional half million dollars.