MONTPELIER — The $20 million district energy project, which includes a state-owned heating plant and city-owned pipelines to businesses and municipal buildings, could cost around $2 million more.
The city learned last week that the state’s side of the project is costing more than expected, in part due to an expedited work schedule to meet an Oct. 1 deadline, Administration Secretary Jeb Spaulding said Wednesday. The increase could require intervention by the Legislature to make up the difference, as the city says it’s strapped for cash.
“We’ve told the state we don’t have any funds available,” said Mayor John Hollar. “That said, we have an obligation to hear from them the scope of the problem.”
The city has essentially expended or allocated all of the money for its share of the project, which was less than $4 million, Hollar said. A federal grant for $8 million is also helping.
Hollar met with Spaulding on Friday and told the City Council on Monday that the cost overrun in the state’s portion of the project could be $2.3 million or $2.6 million. Members of Gov. Peter Shumlin’s Cabinet have suggested the increase is less than $2 million.
Top administration officials said the state is still committed to the project. Spaulding also said that within the level of recommended bonding for the next two years, the state would either have to delay some items or find savings elsewhere.
The project plan has the state building a new power plant behind the Motor Vehicles Department building. The wood chip-burning plant would deliver heat and hot water, and the city is working to create distribution pipelines to various businesses, municipal buildings and Union Elementary School.
One of the primary reasons for the cost increase is that lengthy negotiations with the city delayed the project’s start, said Buildings and General Services Commissioner Michael Obuchowski on Wednesday.
Despite the state’s commitment to the project, it has not been immediately clear to the City Council where the state would get the additional money. City Council member Tom Golonka said Wednesday he wasn’t sure if the cost increase meant the state would have to reduce the capacity of the plant. The state has already ordered boilers, seeming to limit that possibility.
Spaulding said that considering a smaller project is an important exercise but a possibility unlikely to be implemented.
Obuchowski, however, said one theoretical possibility could be to use the boilers ordered for the Montpelier heating plant at a new state office complex in Waterbury.
The October deadline marks the beginning of the heating season, so if the district energy plant is not in place by that time, a mobile boiler would be needed. It was not clear Wednesday whether contingency provisions have included that extra cost.
The council will meet this evening for a public briefing from the state, Hollar said. The council likely will go into executive session for a private discussion because the terms of the city’s contract with the state could be modified, Hollar said. The meeting is scheduled for 6 p.m. at the Police Department community room. Buildings and General Services officials plan to give a presentation at the meeting.
In the past, several City Council members have expressed reservations about certain financial unknowns in the project, and the council even voted in the fall to cancel the project, only to reverse the decision a week later.
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