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Regulators Give Thumbs-Up to Vermont Gas Expansion Project

State regulators have approved an application from Vermont Gas Systems (VGS) for Phase 1 of its Addison Rutland Natural Gas Project (ANGP), which would extend service to the towns of Monkton, Ferrisburgh, Vergennes, New Haven, Bristol, Middlebury and East Middlebury in Addison County, the South Burlington, VT-based utility said.

Natural gas has a price advantage of more than 40% over either fuel oil or propane, the predominant fuels currently used in the area, according to the Vermont Public Service Board (PSB).

"Based on projections of customers switching to natural gas service, VGS anticipates that over $200 million in direct and indirect savings (including greenhouse gas emission benefits) will be realized over the next 20 years. These direct economic savings are far in excess of the estimated $86 million cost of the project," PSB said in its ruling.

"The project will also provide incremental tax revenue to towns along the route, thus increasing the direct economic benefits for those towns and the state. Overall, the project is expected to afford Vermonters in the new service areas lower energy costs than under the current fuel options and any presently known alternatives; thus, we conclude that the Project is needed."

Vermont Gas serves almost 50,000 customers in Franklin and Chittenden counties and is expanding service into Addison and Rutland counties through the Addison Rutland Natural Gas Project. Gas to be transported through the proposed pipeline originates in western Canada. In October, the company said it is seeking regulatory approval for Phase 2 of the project, which would extend service to portions of Addison and Rutland counties and the International Paper mill in Ticonderoga, VT (see Daily GPI, Oct. 8). A third phase of the expansion is also planned, though an application for that phase has yet to be filed.

New England electric power generation is heavily dependent on natural gas, but the governors of six New England states have committed to work together with the Independent System Operator of New England (ISO New England) to advance an energy infrastructure initiative that diversifies the region's energy supply portfolio (see Daily GPI, Dec. 6).

Reliability and peak demand in New England could be compromised without a more robust natural gas market and infrastructure buildout in the region, according to officials from the gas and power sectors, including Kevin Kirby, vice president for market operations at ISO New England (see Daily GPI, Oct. 24). And Peter Brandien, vice president of system operations for ISO New England, has said that while the region is taking a fuel-neutral approach, it needs to have additional gas infrastructure (see Daily GPI, Oct. 17).

The Northeast has become heavily gas-reliant and preliminary estimates call for the Northeast to replace as much as 6.2-9.8 GW of coal-fired capacity with gas by 2015. Gas demand in the New England region is growing, but is hampered by a geology does not lend itself to market-area underground storage for peak-shaving, like that maintained by pipelines and distribution companies around most major population centers. Construction of new pipelines just to serve winter peaking is not economic. In some areas, growing numbers of off-pipe customers are receiving natural gas via "virtual pipelines" -- compressed natural gas (CNG) or liquefied natural gas (LNG) trucked in on tractor-trailers (see Daily GPI, Nov. 22).

"Conversion to CNG generally makes sense for baseload customers who consume at least 10 b/d of fuel oil or propane, are greater than 10 miles from the nearest natural gas pipeline, and are within 100-200 miles of [a centralized compressor station]," Concentric Energy Advisors Vice President Jane Michalek said in a posting Wednesday on the RBN Energy website. "The economics of conversion to LNG versus CNG improve as load or distance from natural gas source increases. This is primarily due to the higher density of LNG relative to CNG (an average LNG trailer holds about 1,100 MMBtu while an average CNG trailer holds one-third to one-half the energy content of LNG).

"Pipeline gas is generally the most economical choice for customers who consume significant energy volumes and are located somewhat proximate to the interstate pipeline or local distribution system."

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