Editorial: Vermont Gas' broken pipedream

The decision by Vermont Gas to scrap the second phase of the company's ambitious pipeline expansion leaves the big question, who will be left with the tab for the truncated project?

Vermont Gas on Tuesday announced the company is no longer moving forward with building a natural gas pipeline from Middlebury to the International Paper plant in Ticonderoga, N.Y.

The company plans to plow ahead with the first phase of the project — from Chittenden County to Middlebury — which has been hit with massive overruns that has inflated the cost by 79 percent from the original estimate submitted to the Vermont Public Service Board.

Phase 1, now with a $154 million price tag, would serve 3,000 additional customers in Addison County — more than $50,000 per customer. Even at that price, Vermont Gas CEO Don Rendall has argued phase 1 offers "significant benefits" to Vermonters.

Vermont Gas has already said that current customers, who receive no direct benefit from the expansion, could see a rate increase to help pay for the project. Vermont's utility regulators must make sure this never happens.

The only reasonable answer is that the cost should be borne by the company and investors, those who stood to gain most had the financial payoff from the pipeline expansion reached its most optimistic forecasts.

Those who seek to reap the rewards must also accept the risks.

The goal of the project, officially known as the Addison Rutland Natural Gas Project, made sense on paper. By delivering access to natural gas along the western side fo the state, Vermonters down to Rutland would reap the benefits of cheaper fuel and the expanded economic opportunities that come with lower energy costs.

The Public Service Board is reviewing the state certificate of public good for the first phase in light of the huge cost increase and potential impact on current customers. Vermont Gas said phase 2 was dropped when International Paper pulled out after the cost of the company's participation in the pipeline project rose from $99 million to $135 million.

The pipeline project has all but collapsed under the weight of its own ever escalating costs. The Addison Rutland Natural Gas Project is looking like it was never anything more than a pipedream.

State regulators have a duty to see that Vermonter are not stuck with the bill.

Join the conversation online at BurlingtonFreePress.com or send a letter to the editor to letters@freepressmedia.com. Contact Aki Soga at asoga@freepressmedia.com. Follow him on Twitter at @asoga.