Ratepayers are picking up the VGS pipeline tab, but will they ever see any benefit?

 Witho ut a doubt, the Vermont Gas pipeline project has stirred up plenty of controversy. There’s environmental impact challenges, troubling property rights issues and even the fracking debate, but little has been said about who is paying the freight on this monumental undertaking.  Current ratepayers!  Over the next 35 years, ratepayers will have to pony up over $270 million in additional rates to pay for what is now at least a $153 million endeavor. All of this is justified by a claim that the overall public good is being served. That rationale is questionable at best.

AARP Vermont filed testimony this week with the Vermont Public Service Board (PSB) which strongly challenges the economic benefits used by Vermont Gas Systems (VGS) to justify the Phase 1 Addison Natural Gas Project.  As the PSB reviews this case once again, AARP remains concerned that significant cost overruns and incomplete economic impact analysis will lead to approval of a project that will not benefit ratepayers nor the state overall.  AARP retained an internationally recognized expert on utility regulation and energy policy to provide a thorough and independent analysis of the economic impact to the state and to ratepayers.

AARP is concerned that the Phase 1 project uses funds collected from existing ratepayers to pay for a very expensive pipeline expansion that will serve a small number of new customers. The Department of Public Service (DPS) has supported the Phase 1 project thus far based on its view that the expansion project will provide overall economic benefit for the state as a whole.

While net economic benefit is relevant to approving a large utility project, AARP asserts that the alleged economic benefit appeared to be based on faulty analysis by VGS. The independent  analysis found that the VGS pipeline expansion fails to provide a net economic benefit to the state. In fact, Phase 1 of the pipeline expansion will have a negative impact on Vermont’s economy and will actually result in job loss over the next few decades.

VGS itself states that current ratepayers will not receive any economic benefit for 35 years – far longer than most older Vermonters and our members will be alive! Yet current ratepayers have been, and are still, paying for this project in their monthly bills. That’s 50,000 Vermonters who are financing an expensive pipeline to another county to serve fewer than 3000 ratepayers.

In short, the utility overestimated the economic benefits to Vermont and underestimated the economic costs. And more troubling is that our regulators seem to have accepted this claim at face value.

On behalf of our members and all VGS ratepayers, we call for the PSB to reopen the proceedings.  These new findings reveal that the Board’s statutory criteria in granting a Certificate of Public Good -- net economic benefit -- is no longer satisfied.  In fact, the project is estimated to cause a contraction in the state economy to the tune of nearly $200 million, and a loss in employment.

Clearly, this project needs a closer look. We can do better.

 

--Greg Marchildon, AARP Vermont State Director