By Lou Varricchio
The Vermont Public Service Board has penalized Vermont Gas Systems’ earnings for three years due to management shortcomings dating back to early construction of a new gas pipeline running through Addison County.
The penalty, which is being imposed on the utility’s income and was announced Feb. 2, will prevent Vermont Gas from being able to earn more than 8.5 percent on its capital assets through the end of 2019.
Vermont Gas President and CEO Don Rendall admitted that the company failed to “prudently” plan and manage the first phases of the construction project, which spans 41 miles and goes through Addison County. As the project nears its final phase of completion, Rendall told reporters that “significant challenges” were confronted early on, but the pipeline is now “back on track.”
Since 2015, the project has been plagued by regular protests against Vermont Gas and the Vermont Department of Public Service. The gatherings, staged mostly in Hinesburg, disrupt construction work in the area and in Geprags Park, a small local community park. Protesters oppose the pipeline because it will transport fracked natural gas from Canada to future customers.
In 2012, Vermont became the first state to ban fracking as a method for extracting oil and gas. Yet former Gov. Peter Shumlin largely supported Vermont Gas’ plan to transport imported fracked gas — supplied by Montreal-based Gaz Metro — to Addison County and elsewhere.
Vermont Gas, a subsidiary of Gaz Metro, serves 50,000 customers in Chittenden and Franklin counties.
The PSB’s penalty is not the only development putting the $156 million pipeline back into the public spotlight — the other is a federal investigation of Vermont’s oversight of the project.
The feds step in
Last month, the U.S. Department of Transportation’s Pipeline Hazardous Materials Safety Administration (PHMSA) announced in a letter that it was investigating the Vermont Department of Public Service regarding oversight and safety issues related to the pipeline.
The U.S. investigation actually started in 2016 after DOT received a request from anti-pipeline activists to get involved. According to Rachel Smolker, an activist and member of Protect Geprags Park, a Hinesburg-based anti-pipeline group, PHMSA sent the letter to her group after hundreds of neighbors submitted a letter in October asking DOT to investigate the construction on an emergency basis.
“This whole thing focuses around safe construction standards in proximity to high-voltage transmission wires, which causes induced voltage in the steel pipes,” Smolker said. She added that Geprags Park, where construction is underway near high-voltage lines, was deeded as a park and education area, not a utility right-of-way.
On Feb. 3, Department of Public Service Commissioner June Tierney told Watchdog that DPS is “cooperating fully with the (federal) investigation.”
According to Tierney, PHMSA is investigating whether the state conducted appropriate inspections and adequately enforced the Federal Minimum Pipeline Safety Standards during the construction of the Addison natural gas project.
“As part of this investigation, PHMSA has reviewed the records of the DPS and the records of Vermont Gas Systems,” Tierney said.
She added that DPS will continue to oversee the project even as the federal investigation continues.
Smolker told Watchdog that anti-pipeline protesters don’t like how the DPS and Vermont Gas are doing their jobs, particularly as it relates to oversight and construction processes. She contends that the state’s oversight of the project hasn’t complied with basic federal safety standards.
According to Smolker, her group’s opposition will continue, both through the PHMSA investigation and at the Vermont Supreme Court.
“In Hinesburg, Vermont Gas is just beginning construction through Geprags Park, even though the granting of an easement through public park land is currently under appeal by the Vermont Supreme Court,” Smolker said. “Citizens are demanding a halt to further construction, pending outcomes of the investigation.”