Vermont Gas' pipeline will cost an additional $35 million due to "market forces, design modifications and increased oversight," an attorney representing the natural gas utility told state regulators Wednesday.

The total cost of the 41-mile pipeline extension through Addison County is now estimated at $121 million, the company said. The company began staging for the construction of the project last week after securing all state and federal permits.

The project in 2013 was estimated at $83 million, but growth in the demand for pipeline construction led to a cost increase of nearly $20 million, the company said.

"If you look at what's going on in New England and nationwide, you're seeing there is a heavy demand for cleaner, affordable natural gas, and that in turn has driven up the market costs," said Jim Sinclair, vice president of marketing and customer service.

Bottlenecks in the natural gas pipelines used to power generators drove up electricity prices to record highs last winter for much of New England.

Geoff Commons, director for public advocacy for the Department of Public Service, said the board will decide whether to review the cost increases "promptly."

He said the board has the legal authority to revoke the company's state permit if the costs outweigh the benefits, but he said this would be unlikely.


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He said the board has approved reliability transmission projects that increased in cost after they were approved initially.

He said the board may consider changes to the permit if it decides the cost estimates are significant.