MONTPELIER —In a reversal of last week’s vote, the City Council approved the first phase of the district energy project Wednesday night that supporters say will bring major long-term savings. The city will put all phases of the project out to bid.

“We’re reserving the right to make a smaller project ...” City Manager William Fraser said, but he noted the city didn’t plan to downsize it.

Wednesday’s 5-1 vote solidified an energy partnership with the state that has been in the works since 2003, though last week it came to a screeching halt when the council voted 4-2 not to go forward, citing cost-related concerns such as signing a “blank check.”

Under the partnership, the city will buy and distribute thermal energy from a new state-owned power plant. It’s up to the city to install and pay for the pipelines needed to distribute the heat.

In the last week, the state made concessions in how the city’s recurring thermal costs would be arranged, according to City Council member Angela Timpone. A previously proposed agreement would have required the city to pay a fixed amount each year for heat.

The arrangement approved Wednesday allows the city to pay based on usage, Timpone said. City officials said the new cost arrangement with the state will help reduce risks.

The first phase of the pipeline will connect the federal courthouse and post office as well as several commercial properties, stopping at the intersection of State and Elm streets.

Alan Weiss was the only council member to vote against the project both times.

Last week, Tom Golonka, Thierry Guerlainand Andy Hooper joined him in opposing it.



Residents rally

The latest vote came after residents and advocates rallied outside City Hall around 12:30 p.m. Wednesday in support of the project.

More than 50 people stood as rally organizers from the Vermont Public Interest Research Group and Vermont Natural Resources Council spoke along with others.

The rally was scheduled before the announcement of Wednesday night’s special council meeting — in which the city seemed to suggest the project would be back on track.

“Until they vote, we don’t have anything,” said Justin McCabe, who was chairman of a city committee that shepherded the heating project. “This is still to keep pressure on city councilors.”

Timpone also spoke at the rally in favor of the city’s involvement in the project. Newly appointed City Councilor Anne Watson also supported it, in statement that was read at the rally. She couldn’t attend because she was working.



Project background

The wood chip-fired heating plant owned by the state and the pipeline to carry the energy to city businesses and government buildings is projected to cost $20 million — an estimate that included all phases of the project. The city’s pipeline in total is to cost about $3.7 million.

The city could determine in November the full extent of the pipeline based on contractors’ bids. If certain businesses don’t agree to hookup, certain aspects of the plan could be scaled back, Fraser said before the meeting. The heat plant will be behind the state Department of Motor Vehicles building off State Street.

Fourteen commitments to hook up to the pipeline — out of the project’s 34 potential hookups — were said to be in place as of Wednesday. Six were under active discussion, the city said in a memo.

The state had set an Aug. 31 deadline for the city to commit to join the project.



Project costs

The state had planned to construct the plant even without the city’s involvement, but the city secured a federal Energy Department grant for $8 million in part to help the municipality tack onto expanded capacity of the plant.

The first phase of the pipeline will connect the federal courthouse and post office as well as several commercial properties, stopping at the intersection of State and Elm streets.

The first phase is expected to cost nearly $1.3 million, but the city has $4.3 million for the project. That money comes from a variety of sources, including a voter-approved bond, which the city said might not be needed in full.

Several people at the rally said the project was a no-brainer. “I think it’s going to reduce costs in government. Period,” said city resident Jane Osgatharp, who attended the afternoon rally with a white sign that read “Vote yes district heat” written in caps.



Project scope

The city hopes to run pipeline to City Hall, the police station, fire station and Union Elementary School. Certain businesses need to hook up, though, in order to justify costs. Before Wednesday evening’s meeting, Frasersaid he expects the necessary business hookups will warrant all phases of the pipeline.

Weiss told an audience of more than 60 people at the special meeting that his decision to vote against the project in part was because no municipal buildings were in the first phase.

Pipeline construction could begin in the spring, with thermal heat hookups as soon as October 2013. City rates with the state are still being negotiated.

“I still will be critical going forward,” Golonka said regarding phases two, three and what he called “possibly” the fourth phase.

“I think it would have been a true loss to the community,” he added, “if we had lost those $6 million or $8 million.”

david.taube @timesargus.com