Montpelier district heating costs up 25 percent

(WCAX)
Published: Nov. 19, 2018 at 4:52 PM EST
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Heating costs in Montpelier are going up this winter for the state and the city. State and city officials say the cost of wood chips burned at the downtown district heating plant are rising by nearly 25 percent.

The state-owned wood-burning plant in downtown Montpelier came online in 2014. It services eighteen state buildings and fifteen others in the city, but it's about to get more expensive.

"Basically, our price went up by maybe a quarter or a fifth more than what we were paying from the year before," said heating plant supervisor Dan McLoughlin. He says that's because there's more demand for wood chips now. He says the state recently signed a new long-term contract that reflects the demand.

To provide heat for downtown buildings, the city constructed a hot water loop throughout the downtown. The payments on the $2 million bond are rising this year, making it more expensive for the city's customers.

"The bond this year, for the first time, has gone from an interest-only bond to a full principal and interest. So that's a big expense," said Montpelier City Manager Bill Fraser.

Despite the increase this year, McLoughlin says it's still a good deal for the state and city. "Chips are way cheaper than oil, and safer too. I don't have to worry about oil spills, which is a nice thing," he said.

Fraser says adding more downtown buildings to the city's heating system would further lower costs. "Of course, we're always looking for more customers that would help bring the cost down for everybody," he said.

But there may not be much capacity left. "We're probably at 90 percent capacity right now. I'm not sure how many more buildings the city can add on to the system," McLoughlin said.

Fraser says the city expected more downtown buildings would connect to the heating system. And fuel prices haven't followed projections so far. "Oil prices have stayed pretty low since we started and the projections were that they were gonna keep rising. As a result, the incentive to switch on to district heat hasn't been as much as a push," Fraser said.