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Vermont Gas: Later Finish Date Won't Affect Pipeline Cost

Vermont Gas Systems made some changes in its cost estimates related to the company's pipeline from Chittenden County to Addison County, according to the latest filings with regulators, but the total cost of the project seems to have stopped rising. The filing shows a major increase in project management costs, largely offset by savings elsewhere in the project.

The new filing also shows the major costs related to the recently canceled second phase of the pipeline.

In filings to the Vermont Public Service Board last week, the company indicated that construction on the pipeline will take a year longer than initially planned. The extension does not change the project’s overall cost, according to the filing.

“Nothing is really slowing it down,” said Vermont Gas spokeswoman Beth Parent in an interview Tuesday. “Basically, it’s all about being cost-efficient and time-effective,” she said.

Parent said the company has known since announcing a “reset” of the project in December that the original late-2015 deadline would not be met.

“Our working assumptions since we announced the new cost estimate/project reset in December was that we were not going to be able to make the original 2015 deadline,” Parent said in an email. “Rather than rush to construct in the winter when it is more expensive, the company extended the project during the summers of 2015 and 2016, when it is most cost effective.”

Parent said building is easier in the summer and fall months when the ground is not frozen.

Based on the most recent cost estimates, the overall project cost of $153,610,333 remains unchanged, though there were some changes in how that money will be spent.

The extended project timeline means another year of project management, which the company estimates will cost an additional $4.65 million. The previous cost of project management for the pipeline was $7.25 million.

The company said procurement costs and construction costs will both fall by more than $1 million, though the filing does not go into much detail about why those costs fell.

“Analysis of construction services identified anticipated lower costs compared to budget,” the filing said of the construction costs, which fell from $76.4 million to $75.4 million.

Parent said in an interview that the construction cost change represents a different way Vermont Gas is counting those costs, not a major shift in the actual cost of construction.

Vermont Gas also downsized its estimate for right-of-way costs, despite ongoing disputes with a few holdout landowners, including eminent domain filings announced earlier this month. The new cost report is also vague about the reasons for this reduction.

The latest filing also shows Vermont Gas spent nearly $10 million planning the second phase of the project, despite the fact that it didn’t lay a single pipe on that stage of the pipeline.

Phase II was canceled in February after cost increases caused International Paper to back out of an agreement to finance a pipeline that would run under Lake Champlain to the company’s mill in Ticonderoga, New York.

Despite that cancelation, Vermont Gas Vice President Jim Sinclair said in a letter to regulators that “Phase 2 costs including actuals and accruals through March 31, 2015 are $9.5 million. Phase 2 costs include payment of invoices for work performed prior to December 31, 2014, project work performed in 2015 prior to termination of the Facilities Development Agreement with International Paper, and expenses related to closing down Phase 2.”

Update 3:51 p.m. The headline and text of this article have been changed to reflect that the 2016 completion timeline was publicly announced in December.

Taylor was VPR's digital reporter from 2013 until 2017. After growing up in Vermont, he graduated with at BA in Journalism from Northeastern University in 2013.
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