AUGUSTA — Just two weeks after a competitor signed up its first major gas customer in the city, Summit Natural Gas of Maine officials say they too have a commitment from a major central Maine gas customer.
Harper’s Development, owner of the Central Maine Commerce Center in Augusta, has signed a letter of intent to have Colorado-based Summit provide gas service to its buildings in central Maine for the next 10 years. Harper’s has its headquarters in Winthrop and other commercial buildings in Oakland, Hallowell and Gardiner.
Summit officials said Harper’s buildings total more than 750,000 square feet of space.
The announcement comes on the heels of competitor Maine Natural Gas announcing it had inked a 10-year agreement to provide natural gas to the new MaineGeneral Medical Center regional hospital under construction in north Augusta.
The dueling deals highlight how both natural gas firms are moving quickly to out-do each other in the battle to build a gas system in the area that’s wanted by both the state government and energy users.
Kevin Mattson, president of Harper’s Development, said Harper’s and Summit officials have been meeting for more than a year about striking a gas deal.
“This is probably one of the single most important pieces of infrastructure for central Maine since the turnpike came in,” Mattson said of Summit’s proposed natural gas pipeline, which would run from an existing connection in Windsor to Augusta and throughout the Kennebec Valley as far north as Madison. “I can’t think of a single input variable that is more important than fuel, in terms of competitiveness. We have a building in Portland that heats with gas; it’s 50 percent of the cost of what it would be if it was oil. This is an enormous development that makes the region so much more competitive.”
Mattson said his firm selected Summit because of its commitment to bring natural gas to the entire Kennebec Valley region. Some local officials and business leaders have criticized the Maine Natural Gas proposal for not being as far-reaching as Summit’s.
Summit officials, in a presentation to Augusta city councilors Thursday night, said they remain committed to bringing natural gas to the entire region. The company plans to start laying pipe in the ground in April, as long as they have their anticipated unconditional approval to do so from the Maine Public Utilities Commission.
Maine Natural Gas already has started laying a supply line to the new hospital site. Maine Natural Gas officials also have said their pipeline will serve both Augusta and much of the rest of the Kennebec Valley, if they can secure commitments from enough users to the north of Augusta for the expansion to be economically feasible.
Both companies are steadfast in stating they will serve essentially all customers who want to buy natural gas in the Augusta area.
“There essentially is no road in Augusta we don’t intend to put gas lines down,” Tim Johnston, chief strategy officer and executive vice president of Summit Utilities, parent company of Summit Natural Gas of Maine, told city councilors. “We expect to be able to serve, basically, all the city.”
Dan Hucko, spokesman for Maine Natural Gas parent company Iberdrola USA, which also owns Central Maine Power Co., said Friday that Maine Natural Gas plans to serve “any and all customers in Augusta who want to convert to natural gas.”
“We’ll start building out to densely populated areas and business hubs first and plan to have the entire city done in five years,” Hucko said.
Representatives of both companies said neither of them have ever built pipelines in such a competitive situation before, with plans for virtually parallel pipelines possibly in the ground next to each other along the same roads in many locations.
Johnston said other states in which Summit does business generally regulate utilities that have a monopoly for that area. In Maine, however, he said regulators have taken the position that competition among public utilities is a good thing.
Maine Natural Gas already has the PUC’s approval to operate in Maine. Summit has conditional approval and officials anticipate it will have unconditional approval by the end of the year.
However, Hucko expressed doubt the PUC will allow two companies to serve the same areas because it isn’t an effective use of resources.
Each company also claims its rate structure is better for customers in central Maine than the other’s.
Hucko said Maine Natural Gas’s rates are about half of Summit’s rates.
Summit officials said their rates are indeed higher than Maine Natural Gas’s, though not as high as claimed. The rates are higher because they reflect Summit’s higher costs incurred by building a much larger gas distribution system serving more customers, according to Summit.
They said Maine Natural Gas’s rates won’t support the cost of building a large distribution system like what Summit has planned.
“Cheaper rates only matter if you can get service,” Johnston said. “Our rates are higher for a reason: It gives us additional money to invest and bring gas to more people and businesses, which results in more savings to the area. If you don’t get a line to your house, you don’t get any savings at all.”
A done deal?
City Councilor Mike Byron reiterated his position that Summit has the better proposal and will serve more customers than Maine Natural Gas.
Hucko said the number of customers Maine Natural Gas serves is dependent on the willingness of customers to convert to natural gas. He said with the price differential now so wide between oil and natural gas, Maine Natural Gas will serve more and more customers.
“Maine Natural Gas will be building a natural gas pipeline to Augusta. It’s a done deal,” he said. “We have the authority, we have the permits, we are lining up the contractors, we have the financing, we have anchor customers and we already have pipe in the ground and more on the way. We believe that in the long run, our project will be more beneficial to everyone in Augusta and the Kennebec Valley because our rates are almost half the price Summit plans to charge.”
Both companies said they will move forward with their pipeline plans despite the lack of a commitment from state government to connect state buildings in the area to either pipeline.
Earlier this year the state awarded a deal to bring a gas pipeline to state facilities in Augusta, and capable of being expanded to the rest of the Kennebec Valley, to Maine Natural Gas, which had projected a lower per unit price. That award was thrown out by an appeals panel because the state’s decision-making process was found to be flawed.
Maine Natural Gas has since filed a lawsuit, which the courts have not heard yet, challenging the decision to grant Summit’s appeal and throw out the state’s award of the deal to Maine Natural Gas.
State officials have not said whether they will issue a new request for proposals to provide state facilities with natural gas.
Keith Edwards — 621-5647