Vermont Gas submits testimony on benefits of proposed gas pipeline

Vermont Gas Systems (VGS) has filed a comprehensive benefit analysis of Phase 1 of the Addison Rutland Natural Gas Project, connecting the Chittenden County gas infrastructure to Addison County, with the Vermont Public Service Board (PSB). The analysis follows on from VGS’s December announcement that the cost estimate for the first phase of the proposed pipeline has risen to US$154 million. The estimate was prepared in accordance with Association for the Advancement of Cost Engineering methodology that VGS adopted, with the assistance of expert contractors, after its testimony to the PSB in 2014.

“The benefit analysis indicates that the project is still strongly in the public interest,” stated Don Rendall, VGS’s CEO and President. “It will provide lower cost, lower emissions energy for Vermont homes, businesses, and institutions. We remain confident that Vermonters and the Vermont economy benefit when we invest in energy infrastructure that provides an opportunity to reduce cost for thousands of Vermonters and will benefit Vermont for decades to come.”

“The analysis indicates that the project will provide robust economic benefits to Vermont,” stated Eileen Simollardes, VGS Vice President for Regulatory Affairs. “Just the energy cost savings for Addison County customers over the first 20 years of the pipeline will exceed US$190 million.”

Over three years of construction (2014 - 16), from construction alone, the project would create annual employment gains of as many as 444 jobs, payrolls will increase by US$48.8 million, and state tax revenues will increase by about US$4 million. Further, as the PSB found in December of 2013, the extension of the pipeline into Addison County both substitutes lower-emitting natural gas for oil and propane and allows the implementation of VGS’s energy efficiency programmes in Addison County, producing what the PSB called ‘a double greenhouse gas benefit’.

The recent decline in oil prices was also analysed, based on December 2014 fuel oil, propane, and natural gas prices. “Even with a decreased competitive position relative to fuel oil, the project still has solid economic benefits for customers and for the economy,” said Simollardes.

Household and small business savings by conversion to natural gas can total hundreds or thousands of dollars per year, depending on the amount of energy consumed. According to VGS, at December prices, a typical home using fuel oil would save about US$780/year, and using propane would save US$1520. Low-income customers could save even more (US$950 and US$1643 respectively). Because the December cost estimate concludes that the project may cost about US$33 million more to build than was estimated in July 2014, the pre-filed testimony indicates that there could be an additional 3.2% rate impact on VGS customers over 10 years.

“This is not a proposal to raise rates. We remain committed to providing our customers with superior service at competitive, affordable prices. Our regulators thoroughly review our prices annually and we look forward to making that presentation later this year,” stated Rendall.

Adapted from press release by Rosalie Starling

Published on 04/02/2015

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