• The price of gas
    August 10,2014
     

    The economics still work for the gas pipeline planned for Addison and Rutland counties, according to officials from Vermont Gas Systems, despite the higher-than-expected costs of pipeline construction.

    Last week Vermont Gas Systems revealed that its cost estimate for the pipeline it proposes to build from Middlebury to Ticonderoga, N.Y., was low by about $10 million. It has now raised its estimate by 15 percent, from $64.4 million to $74.4 million.

    That news followed an earlier revelation that its estimate for construction of the pipeline connecting Burlington and Middlebury was low by about 40 percent. The new estimate raises the cost of the Burlington-Middlebury connection from $86.8 million to $121 million.

    The Public Service Department has asked the Public Service Board to fine the company $35,000 for the tardy reporting of the higher costs, and company officials have said they would not contest that fine. They say they knew costs were rising faster than they anticipated and were waiting for completion of the permit process before reporting the higher costs to the board.

    The key question is whether natural gas will be the bargain that the company says it will be when the higher costs are taken into account. Company officials said previously that the pipeline to Middlebury would save customers $200 million over 10 years. When the higher costs of construction are figured in, they say, customers will still save about $150 million over 10 years.

    The higher costs are due mainly to the rising costs charged by contractors who build gas pipelines. Expansion of the nationís natural gas supply and of the infrastructure to transport it has been so rapid, and contractors are so busy, that their labor is bringing an ever-higher price.

    Vermont Gas Systems says that other factors have driven up the price of the project more than anticipated. The company is using pipe that exceeds standards in thickness for the purposes of safety, and it has had to reroute some of the path of the pipeline.

    As a result pipeline that costs about $1.4 million per mile in Chittenden County was expected to cost $2.1 million per mile in Addison County. After the unanticipated increases, that price has risen to about $2.9 million per mile.

    Climate change activists say that no pipeline should be built because it expands the use of fossil fuel, and they have a point. Averting climate disaster must be a policy priority, and halting the combustion of oil and gas is an imperative.

    But the principal fuel for the homes and industries of Addison and Rutland counties is oil, and for the near term it will continue to be oil unless something changes. Substituting natural gas for fuel oil, as the International Paper plant in Ticonderoga and the Cabot cheese plant in Middlebury plan to do, is to switch away from a bad fuel to a less bad fuel.

    A better option is to cut down on the use of all fuels by means of conservation and to switch to renewable fuels such as solar power and wind. None of these options rules out the other, however. All should be pushed. In fact, the Shumlin administration ought to complement its support for the gas pipeline by aggressive support of conservation measures, such as the languishing effort to fund energy-efficiency measures for homes and businesses, so that less gas and oil are burned.

    Gas will bring immediate benefits to the homeowners and businesses of Addison and Rutland counties (with a spillover benefit from gains at the IP plant in New York). Thus, Vermont Gas Systems officials say they continue to see interest beyond their expectations by potential customers. Residents of Vergennes, Bristol and Middlebury can all expect to gain access to natural gas. Shoreham has endorsed the extension of the pipeline from Middlebury through Cornwall to Shoreham and from there under Lake Champlain. Cornwall is on the record in opposition.

    The company expects to gain approval of the Middlebury-Ticonderoga connection by the end of the year, and then it will go to work on Phase III, which would take the pipeline down to Rutland. Then residents of Brandon, Pittsford and Rutland would be potential customers, with Omya in Florence a major one.

    Still, the burning of gas is a benefit to the climate only in relation to the burning of fuel oil. The growing reliance in New England on natural gas for electric power production is worrisome in its way. Natural gas is plentiful and ought to be relatively cheap for the foreseeable future. But it is a fossil fuel. As a replacement for oil, it is good. But it is no solution in itself.

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