MONTPELIER, Vermont — Vermont Gas Systems announced Tuesday that it is not going through with the second phase of a natural gas pipeline that would have extended underneath Lake Champlain to the International Paper plant in Ticonderoga, New York, because cost increases made the project no longer viable for the paper company.
International Paper notified Vermont Gas on Tuesday morning.
The cost estimate for the project's second phase had grown from $74 million to $105 million, Vermont Gas said, with the cost to International Paper jumping from $99 million to $135 million for the entire project. That increase and uncertain timetable for delivery of the project made it no longer viable, International Paper spokeswoman Donna Wadsworth said.
Gov. Peter Shumlin said he was pleased that Vermont Gas did what he asked and reviewed the numbers to determine whether benefits of expansion still made sense for the state.
"Given the conclusions that the costs have exceeded International Paper's threshold and the benefit to Vermonters from pursuing that project have decreased significantly, I support the companies' decision to withdraw the project," Shumlin said.
A lawyer for the Conservation Law Foundation, which has opposed the pipeline project, called the announcement great news for the state.
"Broadly expanding a natural gas pipeline in Vermont is both expensive and too polluting to meet Vermont's long-term energy needs," Foundation senior attorney Sandy Levine said.
Last year, Vermont Gas announced two cost increases for the first phase of the pipeline, designed to reach Vergennes, Middlebury and other communities. The cost went from $86 million to $121 million and then to $154 million in December.
The project was appealed to the Vermont Supreme Court and sent back for re-evaluation by the Vermont Public Service Board in the fall of 2014.
The board is reviewing the revised cost estimate for the first phase and recently asked for an updated cost estimate for the second phase.
Vermont Gas said cancelling the second part of the pipeline doesn't affect the cost estimate or certificate of public good of the first phase of the project.
"We will now focus our efforts on completing Phase 1 of our expansion plan to serve Addison County as far south as Middlebury and explore creative options for extending service to more Vermont communities, including Rutland," said Jim Sinclair, Vermont Gas' vice president for system expansion.
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