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May 21, 2012

What Vermont Employers Are Telling Us (about the need for natural gas beyond the pipeline)

"Every day we wait costs us $7,000!" the CEO emailed to my new company, NG Advantage. Turns out that trucking compressed natural gas (CNG) to his factory and using it to replace dirty #6 oil will reduce his fuel costs by almost half – more than two million dollars a year. His company spends as much on fuel as it does on raw materials. Some of his competitors are located on natural gas pipelines; they are undercutting him in the marketplace.

"My company is putting new machinery into facilities located on the pipeline," a CFO told us. Unless we can cut the amount we're paying for energy, no new investment is going into our Vermont plant. "When are you going to be able to start delivering?"

"Beginning of 2013," we told him. He wishes it were sooner; so do we.

"We'll pay back the cost of the burner upgrades in the first three months of using natural gas," the plant engineer said. "Our boiler people are all over it. This is something we need to do."

"Our hospital can save about one million a year, half our fuel bill. We were going to have to stop burning #6 oil anyway; it's too dirty."

"It's good to be able to save money and reduce pollutants. We don't think well have much trouble getting our Act 250 permit revised to allow us to reduce our emissions." Our prospects are looking at replacing oil products with much cleaner – and cheaper - natural gas.

"You have competition." The emergence of a competitor selling trucked natural gas from New Hampshire has made our job both easier and harder. When we were the only company planning to deliver this new product, prospects were more skeptical even though they were eager for the cost benefits. Now the question is more whom to buy from than whether to buy. Competition also reassures customers that they will pay reasonable prices and have options if one company doesn't give them good service. That's the way it should be.

"Food processing businesses want a Vermont seal, but they won't open new plants anywhere that doesn't have a supply of natural gas." That quote came from a Regional Development Council which has been bringing us together with their members and helping introduce them to the concept of natural gas.

"We need you to start service ASAP. Why are you beginning with a compressor station in Vermont where everything is hard to permit?" That's a good question. We are also looking at a compressor site in New Hampshire to better serve eastern Vermont, New Hampshire, and Maine. Adjacent territories provide backup for each other and better service for our customers.

One reason we started in Vermont is because we're Vermonters. Another reason is that our planned site in Milton, Vermont is the best place we could find from which to serve customers in Addison, Rutland, Lamoille, and Washington counties as well as adjacent New York State. Even though the pipeline will eventually come to Addison and probably Rutland and will then be the cheapest source of natural gas, businesses in those counties tell us that they need to do something about the high price and uncertain supply of oil products now.

Our CEO, Neale Lunderville, led the state's surprisingly speedy and effective recovery efforts from Tropical Storm Irene. We know that Vermonters, Vermont businesses, Vermont communities, and Vermont state government can move quickly in an emergency. If alternatives to oil for industrial use aren't delivered quickly, our economy will suffer much longer lasting damage than it did from Irene. New energy-dependent companies won't locate beyond the pipeline (which is most of Vermont). Companies which have a choice will shift investment and production to plants located on natural gas pipelines; other companies will simply be unable to compete and have to close. We have to move quickly.

That's what Vermont employers are telling us.

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