AUGUSTA — The battle between two firms vying to bring a natural gas pipeline to the Kennebec Valley has entered a new and more contentious stage.

One company has received conditional approval from regulatory officials to do the work even as the other company is already laying pipeline in the ground between Windsor and Augusta.

Meanwhile, representatives from both companies are rapidly setting up meetings with municipal officials in the communities affected by the pipeline, pitching their plans in an attempt to garner more public support.

And the question of whether Maine Natural Gas or Summit Natural Gas of Maine will win the right to bring natural gas to state facilities in Augusta is the subject of a lawsuit, putting any state action on hold.

Even so, both companies say they’re moving forward with their plans to build their natural gas pipelines.

“There is enough potential demand by nonstate users in Augusta and the rest of the Kennebec Valley to make this project financially attractive,” said Dan Hucko, spokesman for Iberdrola USA, parent company of Brunswick-based Maine Natural Gas. “We believe we will be able to secure long-term energy purchase agreements at the right terms from a number of key customers, and will build the pipeline regardless of what the state does. We would be happy to negotiate a contract with the state if it wants us to deliver natural gas to its facilities.”

Likewise, officials of Colorado-based Summit say they are moving forward, even without a commitment from the state.

“Summit looks forward to an opportunity to serve state facilities, and in the interim, Summit is moving forward with our project to serve the broader Kennebec Valley region,” said Tim Johnston, executive vice president of Summit Utilities, parent company of Summit Natural Gas of Maine.

Johnston said the company could start construction if it receives unconditional authority from the Maine Public Utilities Commission.

“We still consider the Augusta portion of the pipeline to be important to our mission,” he said. “In the interim, we are exploring all options to begin construction of the Kennebec Valley project” ahead of the state seeking new proposals to provide gas to state facilities in the capital area.

Summit received conditional approval to provide natural gas in Maine from the state Public Utilities Commission on Oct. 16. Johnston said gaining conditional approval is a big step, meaning the PUC recognizes there is a need for the service and Summit has the expertise and resources to provide it.

Unconditional approval, which Johnston hopes Summit could obtain by the end of the year, would allow the firm to begin construction.

Pipeline installed

Maine Natural Gas is already laying pipe in the ground.

Hucko said the firm obtained unconditional authority from the PUC to service Maine back in 1998, and currently serves 3,000 customers in southern communities such as Bath, Brunswick, Bowdoin, Freeport, Topsham and Windham.

He said the firm is approved to lay pipe in any town in Maine where natural gas is not already being provided.

Their work bringing a natural gas pipeline from an existing Maritimes and Northeast pipeline in Windsor into Augusta and beyond has started on a small scale.

Last week, contractors installed 12-inch coated steel pipe under 11 culvert crossings on Route 17 between Windsor and Augusta for Maine Natural Gas.

Hucko said the state Department of Transportation was rebuilding the culverts as part of a paving project on Route 17, so Maine Natural Gas decided to install pipe under the culvert crossings before new pavement is put down. Hucko said it would be more expensive and disruptive to people and businesses in the area to put those sections of pipe in after Route 17 is repaved in the state project.

Not surprisingly, that action has been criticized by Summit.

Kathie Summers-Grice, a local consultant for Summit, said the size of the 12-inch pipe Maine Natural Gas installed along Route 17 is generally used for lower-pressure projects and is indicative of a project that is going to serve only a limited area.

“The fact they’re using the 12-inch pipe reaffirms what they put forth in their proposal to the state,” Summers-Grice said, “that their intention is just to service the Augusta corridor up to the State House and not do a full build-out from there and up in to the Kennebec Valley.”

Hucko, however, said the pipe is properly sized “to provide natural gas service throughout the Kennebec Valley to Madison.”

Project scope

Just how far the Maine Natural Gas pipeline might go was a central question in the controversy over which of the two companies the state should have picked following its request for proposals. That contract bid, which has since been tossed out, called for a pipeline to serve state facilities in Augusta and Gardiner, capable of being expanded to serve much of the rest of the Kennebec Valley.

Maine Natural Gas, in its submission to the state, had proposed a $19.3 million project that would have employed about 46 people. It would have served state property in the Augusta area, and company officials said it could have been expanded to serve businesses and residents elsewhere in the Kennebec Valley if doing so was economically feasible.

Summit Natural Gas proposed a $150 million project employing 435 people, reaching communities throughout the Kennebec Valley as far north as Madison. Summit is in the process of acquiring Kennebec Valley Gas Co. of Portland, which had previously secured tax breaks from most of the dozen affected communities to help finance the cost of construction.

A panel put together by the state Bureau of General Services selected the proposal offered by Maine Natural Gas.

But that award was overturned last month in an appeal by Summit after a review panel determined the state’s selection process was flawed and unfair.

Maine Natural Gas has filed a lawsuit, or petition for judicial review, claiming Summit missed a 15-day deadline when it filed its appeal — apparently by one day. The lawsuit, filed in Kennebec County Superior Court on Oct. 11, asks the court to vacate the appeals panel decision and reinstate the state Bureau of General Services’ original decision to award the project to Maine Natural Gas.

Rate questions

As part of the process of seeking approval from the PUC to provide gas service in Maine, both companies have submitted their proposed rates.

Hucko said Summit’s proposed rates are approximately double Maine Natural Gas’ approved rates. He said that means an average residential customer using gas would pay about $650 more a year if Summit constructs the pipeline than if Maine Natural Gas does.

The average small-business owner would pay nearly $2,600 a year more and the average large commercial user would pay $13,000 a year more, he said.

However, Johnston said it is far from clear that the rates would be lower under Maine Natural Gas. In its proposal to the state, Maine Natural Gas proposed to set higher rates than the tariffed rates it charges customers elsewhere in Maine, and it used different gas cost estimates than Summit to calculate its rates, he said.

In addition, Summit’s rates reflect the additional cost of building out the larger pipeline system it proposed that reaches up to Madison, Johnston said.

Making the rounds

Both companies are meeting with local officials in the region to pitch their plans to bring natural gas to the Kennebec Valley.

Summit officials recently met with leaders in Madison and Farmingdale, and Johnston said that over the next several months the firm will be contacting all municipal authorities in the Kennebec Valley to discuss its plans to provide natural gas service to “anyone who wishes to have service within these communities.”

Maine Natural Gas, according to Hucko, will meet with officials in Madison, Fairfield and Skowhegan this week, and is scheduling meetings with other town officials and leaders over the next few weeks.

Augusta city councilors discussed gas pipeline developments at a council meeting Thursday. Councilors have said they anticipate having natural gas available could save money because it is currently so much cheaper than oil.

City officials expressed concern the dispute over the state contract has delayed the arrival of natural gas in Augusta.

“My sense is it will arrive here, but it’s not going to arrive here as soon as we want it to,” said Augusta Mayor William Stokes.

In Farmingdale, Summit officials met with selectmen Wednesday and said they want to run as many distribution lines as possible through Kennebec Valley because they are interested in offering natural gas to as many homeowners and small commercial businesses as possible.

Farmingdale has twice rejected requests for a tax break, known as tax-increment financing, or a TIF, for the Summit proposal.

Eric M. Earnest, vice president and chief financial officer of Summit Utilities Inc., told Farmingdale selectmen the firm doesn’t need the tax break.

“We have the capital. Any savings from a TIF will be put in a program so people can convert,” Earnest said, adding that the average cost of conversion is $5,000.

Keith Edwards — 621-5647
kedwards@centralmaine.com