State regulators are delaying their consideration of Phase 2 of the Vermont Gas Systems pipeline because the company has so far failed to get federal approval to bring gas to New York and because of ongoing concerns about cost overruns for Phase 1 of the pipeline.
The second phase of the pipeline would connect the planned Phase 1 terminus in Addison County to a paper mill owned by International Paper in Ticonderoga, N.Y.
Vermont Gas filed for permission to move forward with that phase last November, and said in January that it expected to receive the federal ruling within “approximately 90 days.” Because the company didn’t provide federal regulators with all of the necessary paperwork from New York’s state regulator, it still hasn’t received the federal ruling.
Meanwhile, a July 2 announcement that Phase 1 of the project will likely cost 40 percent more than the company initially planned has the Vermont Public Service Board (the state’s regulatory body for utilities) weighing whether or not to reopen that case and consider reversing its approval or revising the conditions under which the project is approved.
Vermont Gas spokesman Steve Wark has said that phase 1 of the project will still be beneficial for Vermont, even after the price increase, and that the company looks forward for the opportunity to prove that before the Public Service Board.
As a result of both of those setbacks, the Public Service Board announced Friday that the procedural schedule for considering Phase 2 of the pipeline has been pushed back.
“Because the pipeline under review in Phase II would physically connect to the pipeline that was approved in Phase I, any approval of a [Certificate of Public Good] for the construction of the Phase II pipeline presumes the construction of the Phase I pipeline,” the order says. And if the status of Phase 1 is jeopardized by the 40 percent cost overrun, the board reasons, it doesn’t make sense to hold a hearing on Phase 2 until those questions are resolved.
The order pushes hearings originally scheduled for October 6 back to January 12 of next year. Both the federal approval issue and the potential reconsideration of Phase 1 are expected to be resolved by then.
As a result, any construction activity on Phase 2 that requires state approval will not happen in 2014.
Wark said Friday that the delay won’t be harmful to the overall project.
“It shouldn’t affect the project in the long term,” he said. “We think it’s a good step because it’ll, I think, bring greater comfort to the board and to others that these projects still have great value.”
