Montpelier Heating District Has Early Cost Overruns

A wood-fired heating plant in Montpelier provides heat to state buildings. City officials in Montpelier plan to help expand the plant and then pipe excess heat to public and private buildings around downtown.

A wood-fired heating plant in Montpelier provides heat to state buildings. City officials in Montpelier plan to help expand the plant and then pipe excess heat to public and private buildings around downtown.

By Kirk Carapezza

A proposed heating district that’s jointly run between the state and the city of Montpelier is already more than 10 percent over budget.

The city and the state plan to run pipes under State Street to carry heat and water to public and private buildings. In September, the City Council announced its intention to support the $20 million energy project that would expand the state’s existing wood-fired heating plant. On Thursday, Montpelier Mayor John Hollar said he was surprised to learn earlier this week that the state had run into significant cost overruns.

“The latest number I have is $2.3 million, but we haven’t received a lot of detail yet from the state,” Hollar said.

Skeptics have worried this would happen and the city would be left to pay infrastructure costs and incur debt. Hollar recognized those who are opposed to the project will see these cost overruns as vindication of their view. But Hollar wanted to reassure them that the city is still fully committed to moving forward with the project.

“Projects of this magnitude are going to run up against uncertainties and complications,” Hollar said. “This project has never relied on taxpayer support. It’s always been designed to be self-sufficient and to essentially be financed out of savings that we would get from shifting from one source of fuel to another.”

The state has been operating a district heat plant for more than 40 years. This project would add a distribution system, which Secretary of Administration Jeb Spaulding believes still makes financial sense for Montpelier as the cost of oil goes up and for a state that wants to promote its working landscape.

“To the extent that those costs are legitimate and need to be covered to make this work, the lion’s share of those costs will be the responsibility of the state not the city. But we are partners and there is likely to be some portion of the increased cost that the city is going to have to cover as well,” Spaulding said.

Spaulding said the administration will ask the Legislature to find additional funding for the biomass plant.

The Montpelier City Council expects to get more information from the state at its meeting tonight. City and state officials still hope part of downtown will be served by the new heating system by the fall.

Earlier: Montpelier Gets into the Utility Business