The 5 Things You Need to Know about the Vermont Gas Technical Hearings

Hearing-takeaways-updated

After a slew of cost increases, Vermont regulators are weighing whether to “re-open” the permit process for the fracked gas pipeline Vermont Gas wants to build. After 15 hours of testimony, 12 witnesses and 10 pages of notes, VPIRG’s Energy and Democracy advocate, Julia Michel, offers her impression of the key takeaways.

  1. The total cost of the pipeline has ballooned, and the total amount is even greater than had been previously reported by the media. The real cost of the pipeline is now $162.4 million, almost doubling the cost it was when state regulators granted the original permit in December of 2013.

Wait, what? Let’s review. In December of 2013, when the Public Service Board gave its original go-ahead to the project, the budget rang in at $86.6 million. In July of 2014, those costs almost doubled, to $121.6 million. In December of 2014, that figure jumped to $154 million. But, according to Vermont Gas, the dollar figures we’ve all become familiar with never included distribution costs—just the “transmission” costs of the pipeline. On Monday, Eileen Simollardes, a vice president for Vermont Gas, testified that distribution to customers in Middlebury and Vergennes is assumed to be a flat $5.8 million plus $1,600 per customer hookup. So really, the cost of the pipeline is $162.4 million.

According to Vermont Gas, they’ve reported these distribution costs in filings all along. But of course, it’s not just about the cost—it’s about who pays. And in this case, the big price jump means an even bigger bill will be headed to Vermont Gas ratepayers, who could see a big jump in their rates (though that will be decided in a separate proceeding).

Big picture? Every cent that’s being spent on this expensive fracked gas pipeline is unnecessary given the availability of clean energy technologies, like cold climate heat pumps. If Vermonters can save big money on their fuel bills and reduce global warming pollution at the same time without using fracked gas, why in the world would we build $162.4 million worth of fracked gas pipeline?

  1. A LOT in the energy world has changed since the Vermont Gas got its original permit—and the benefits to Vermonters simply don’t justify the costs.

A big reason why the Board gave its original approval for the project back in 2013 had to do with the big difference in price between fracked gas and what residents were currently using (mostly fuel oil). Two years later, that argument is much harder to make. Since the project was approved, the cost of oil has dropped by half. Remember those ads where Vermont Gas was touting how it could cut fuel bills by 50%? Well, today they read 25%. Which makes paying to switch to fracked gas significantly less attractive.

Why does this matter? These technical hearings are about deciding whether enough has changed since the Board gave its original permit (back in December 2013) to merit “re-opening” the case for additional hearings. One of the key ways in which the project has changed—in addition to the huge increase in cost—has do to with a shrinking demand for fracked gas.

And that shrinking demand for fracked gas isn’t just because of oil prices. Cold climate heat pumps, a super-efficient heating (and cooling) technology that run on electricity, have been a game-changer. Back in 2013, this technology was barely on the market. Today,  heat pump installers I’ve spoken to are booked solid. It’s not a big mystery why—heating your home with heat pumps costs basically the same as it would if you used fracked gas. AND you can use heat pumps as air conditioning. And did I mention they’re cleaner than gas? Yup. Ok, one final fun fact: as Chris Neme points out in his rebuttal testimony, “gas prices are projected to grow faster than electricity prices in each of the next three decades, meaning that the advantage that cold climate heat pumps have today will grow over time.” (For more great information about heat pumps, this report is DEFINITELY worth your time.)

  1. Even the pipeline’s benefits to businesses are appearing to shrink.

Another big reason why Vermont Gas got the original approval in 2013 was to introduce natural gas service to industries in Middlebury and Vergennes. Guess what? Gas service is already there. A handful of those big potential customers went ahead to arrange for Compressed Natural Gas (CNG) delivery on their own (check out NG Advantage’s press release on its “Gas Island” here).  Again, this switch matters because it’s cutting deeper into the already declining cost savings that Vermont Gas is resting its case on.

It’s worth pausing here to point out that really, CNG is really just the lesser of two evils. It’s fracked gas, and we aren’t for it. But it’s a more temporary solution for big users—it doesn’t involve building the massive pipeline infrastructure that amounts to an “on ramp” toward deeper dependence on fossil fuels. I think of CNG as the “off-ramp.” When the clean energy solutions for big industrial users emerge, they can be readily adopted—and ratepayers aren’t stuck with the $162.4 million bill for infrastructure no one’s using.

To recap: A lot of what the pipeline was supposed to do is being done by other fuel sources. So we’ve got big reasons to think that fewer people will pay to connect to the pipeline than expected back in 2013. And if that’s the case,  doesn’t it make sense to make sure that the pipeline is really necessary before it gets built? Does it make sense to keep throwing good money after bad?

  1. Trustworthiness remains an issue with Vermont Gas.

One of the most satisfying moments over the two-day technical hearings was listening to a member of the Board, Margaret Cheney, ask a question that had been on many minds: “Why should the Board rely on Vermont Gas’ representations in this proceeding, given our arguably misplaced reliance last fall?” It was a good question, and I wish she’d gotten a better answer. (If you’re interested in a longer discussion of this point, VPR’s Taylor Dobbs has a good summary.)

Back in December, after the latest cost increase, VPIRG’s executive director was quoted in the Times Argus pointing out how “it’s hard for us to understand how the project could still be considered to be in the public interest from an economic perspective. The availability of alternative technology like air-sourced heat pumps could really save the average residential customer more.” He pointed to briefs filed during the last remand case in September 2014 by Jim Dumont, the lawyer for Kristin Lyons, where Dumont recommended that the Board avoid relying on Vermont Gas’ budget estimate ($122 million at the time) because it “was developed by a project management team that (Vermont Gas) itself has dismissed because it lacks the skills and experience necessary to manage and predict the costs of the project.”

Since Kristin Lyons sat next to me during the hearings on Tuesday, I had to ask. “I don’t know if you’d be able to print what I think about that,” said Kristin. “A lot of people are here today because Vermont Gas has lied to them. I hope the Board doesn’t fall for the same trick twice.”

  1. Opponents of building this brand new fracked gas infrastructure have the facts on our side.

Over the two days of hearings, one of the most damning pieces of evidence for why the Board should reconsider its approval was presented in a VPIRG-commissioned study about how cold climate heat pumps outshine the proposed pipeline, whether you’re looking at it from the perspective of an individual resident or from a  societal cost vs. benefits. This fact cuts to the core of Vermont Gas’ stated reason for building the pipeline, and when the author of the study took the stand Tuesday to answer questions, his conclusions went virtually uncontested. (If you’re interested in more of the economic conclusions presented by opponents, VTDigger’s Erin Mansfield has a good write-up.)

On the other hand, there were more holes in Vermont Gas’ testimony than a block of Swiss cheese. How much could current ratepayers expect to see their bills go up to foot the $164 million pricetag of the pipeline? Vermont Gas refused to say, despite estimates by AARP’s expert witnesses that forecasted 15 or even 20% rate increases on current customers. Why, after promising to be more transparent about cost increases, did Vermont Gas wait three months to come clean about the most recent price hike? Why is Vermont Gas so confident that residents of Addison County will choose to pay for fracked gas when they could cut fuel bills and pollution using clean technology—avoiding the cost of building all that new infrastructure?

You get my point. The facts that the Public Service Board based its decision on back in 2013 have shifted like sand on a beach. And if there’s one thing I learned over the last two days, it’s that this proposal deserves the bad rap it’s getting. The cost of this massive undertaking has almost doubled—and so should the scrutiny it receives.