VT Gas pulls the plug on pipeline expansion to NY

Release Date:
February 10th, 2015

Contact:
Dan D'Ambrosio

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Vermont Gas Systems announced today it will not proceed with its proposal to build Phase 2 of its proposed pipeline expansion project from Middlebury to International Paper's plant in Ticonderoga, N.Y.

Don Rendall, president and CEO, said in a statement that International Paper and Vermont Gas were unable to find a "mutually acceptable path forward" given the costs and challenges of building the pipeline. International Paper had committed to paying for this portion of the pipeline expansion.

"Our updated estimate for Phase 2 is now $105 million, compared to $74.4 million as presented to the Public Service Board last August," Jim Sinclair, Vermont Gas' vice president for system expansion, said in a statement.

Rendall said International Paper decided to withdraw because of the new cost estimate, which was in keeping with the terms of the agreement between the two companies.

EARLIER COVERAGE

The Phase 2 announcement does not affect Phase 1's certificate of good or cost estimate, the utility said. Phase 1, extending the pipeline from Colchester to Middlebury, is currently being reevaluated by the Public Service Board because of cost estimates that have increased from $86 million to $154 million.

"We will now focus our efforts on completing Phase 1 of our expansion plan to serve Addison County as far south as Middlebury, and explore creative options for extending service to more Vermont communities, including Rutland," Sinclair said in a statement.

Vermont Gas will ask the Public Service Board to dismiss the company's pending petition for approval of Phase 2.

Vermont Gas Press Release: Vermont Gas Will Not Proceed With Proposed "Phase 2" Middlebury-Ticonderoga Pipeline

South Burlington, Vt. - Vermont Gas Systems, Inc. today announced that it will not proceed with the proposal to build Phase 2 of its proposed pipeline expansion project – the connection from Middlebury to International Paper's (IP) plant in Ticonderoga, NY.

"As the company committed to the Vermont Public Service Board (PSB) last year, Vermont Gas recently completed a thorough review of the schedule, costs and challenges to complete Phase 2 under current business conditions," said Don Rendall, President and CEO of Vermont Gas. "IP and Vermont Gas extensively discussed the issues raised by this reassessment of the project, and we were unable to find a mutually acceptable path forward."

"Our updated cost estimate for Phase 2 is now $105 million, compared to $74.4 million as presented to the PSB last August," said Jim Sinclair, Vermont Gas' Vice President for System Expansion. Under the agreement between Vermont Gas and IP, this would mean that IP's total financial responsibility to Vermont Gas for Phase 2 as well as Phase 1 improvements would have risen from $99 million to $135 million, resulting in Phase 2 no longer being commercially practical.

In keeping with the terms of the companies' agreement, IP has elected to withdraw because of the cost estimate increase. "We value our relationship with IP. The door is open for cooperation in the future," stated Rendall.

Today's announcement does not affect Phase 1's Certificate of Public Good or cost estimate. The PSB evaluated Phase 1 as a stand-alone project, without Phase 2, and Vermont Gas' updated cost estimate for Phase 1, released in December, is also for a stand-alone project.

"We will now focus our efforts on completing Phase 1 of our expansion plan to serve Addison County as far south as Middlebury, and explore creative options for extending service to more Vermont communities, including Rutland," said Sinclair. Vermont Gas will ask the PSB to dismiss the company's pending petition for approval of Phase 2.

"It is crucial for all of us to have a clear understanding of what it takes to complete these projects. We have done that work and now we are looking to the future – how to serve more Vermont families and businesses and how to advance Vermont's clean energy future by innovating, helping reduce emissions, partnering with renewable energy, and enhancing our successful energy efficiency programs," said Rendall.

Contact Dan D'Ambrosio at 660-1841 or ddambrosio@freepressmedia.com. Follow him on Twitter at www.twitter.com/DanDambrosioVT.

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