MONTPELIER, Vt. (AP) — Vermont Gas Systems Inc. has agreed to cap the cost of its natural gas pipeline project in the western part of the state to $20 million less than its latest estimate, the company and state officials said Wednesday.
Earlier this year, Vermont Gas said the price tag for the Addison County Natural Gas Pipeline had gone from $86 million to nearly $154 million. The memorandum of understanding reached Wednesday with the state Public Service Department says the maximum cost the company may seek to recover will be $134 million. The only exceptions to the cap are if there are delays to the project beyond the control of Vermont Gas, the department said.
The board approved the first part of what was originally planned as a three-phase project in December 2013, but since then that first phase — extending gas service from Colchester to Middlebury — had seen nearly 80 percent growth in its projected cost.
The state Public Service Board announced in July that it would fine Vermont Gas $100,000 for its slowness in reporting the first of two big cost increases. The board is now considering whether to reopen the question of its 2013 approval in light of the cost increases.
Recchia said the department has maintained the budget and performed work efficiently this construction season.
"The department feels very strongly that this project remains in the interest of Vermont and is in the general good of the state," commissioner Chris Recchia said in a letter to the board.
Don Rendall, company president and CEO, said it has nearly completed the segment through Colchester, Essex and Williston, which will achieve its 2015 goal on time and on budget.