Two utility companies that are bidding for the chance to bring natural gas to thousands of families and businesses in Cumberland, Yarmouth and Falmouth say they would spend about $60 million to $70 million to expand access to the cost-saving fuel, according to documents provided by the towns.
Maine Natural Gas and Summit Natural Gas both are seeking the blessings of town officials to build a network of piping that would eventually bring gas to roughly 27,000 customers in the coastal towns, where oil and propane are now the dominant energy sources.
While there is a chance the towns could collectively reject both proposals, each town’s manager was optimistic Thursday that the communities would band together to lower their energy costs.
“Even though we won’t get as good a deal as some parts of the state, (gas service) would still be a pretty significant savings,” said Yarmouth Town Manager Nat Tupper, who met Wednesday with the other managers to read through the proposals.
Cumberland Town Manager Bill Shane, a former engineer who has led the three communities in the pursuit of gas service, said town councils will meet individually Feb. 21 to hear detailed comparison information that the managers will work up in the coming weeks. They hope to have an agreement worked out with one of the companies by late March, Shane said.
The proposals were submitted last Friday, but were released late Wednesday in response to a Freedom of Access request fom the Portland Press Herald.
Many questions remain about the plans. Exact pricing differences, rate structures, construction timelines still must be meted out. The information will be formulated into a rubric for town councilors and the public to evaluate.
Officials said they are working to calculate the possible savings for homeowners and business in each proposal, but have estimated that the arrival of natural gas could reduce fuel costs 30 to 50 percent at current prices.
“We’re all learning together,” Tupper said. “None of us have been through this before.”
Both gas companies have so far laid out plans that would require no upfront cost to the municipalities or the ratepayers, instead building the cost to lay miles of pipe into the rate structures they offered.
Each has also offered aggressive estimates of when customers could first see service. Maine Natural Gas said it could energize the first of its lines as soon as December 2014. Summit estimated service along main pipe routes would begin in the third quarter of the same year.
MNG foresees reaching 64 percent of buildings in the three towns, with higher rates for commercial customers. The utility is proposing to spend nearly $60 million to complete the build-out.
Summit put forward a plan to reach 63 percent of customers by the third year, and 80 percent of residential customers by 2017, according to the proposal. By 2023, it projects over 90 percent of potential customers will convert to gas. If selected, Summit said it intends to invest $72.5 million in the project.
The new gas lines would branch off from an existing pipeline to the west of the communities and be installed along public roads.
Both companies are offering to connect the gas lines directly to new customers without hook-up fees.
Maine Natural Gas was the only company that said it would require a tax increment financing plan to proceed. The proposed TIF would give the company an 80 percent break on property taxes through 2023, a contingency that must be hashed out by elected officials who have yet to see the plans.
Summit, meanwhile, said it would not reject a TIF if the communities chose to pursue one.
Both companies are also providing incentive programs for customers to convert equipment in homes and businesses so they can burn natural gas instead of other fuels. Maine Natural Gas said it will pay for half the conversion cost — up to $1,000 for residential customers and up to $1,500 for commercial customers.
Converting to natural gas for homeowners can be costly, said Peter Maietta, co-owner of Maietta Titus Blaschke Plumbing and Heating.
Depending on the age of a particular boiler or heating system, costs can vary widely, from a couple thousand dollars for boilers that can be partially converted and are less than about 10 years old, to systems that require total replacement that can cost upwards of $10,000, he said.
“It starts with the customer’s willingness to do the swap,” Maietta said.
Although natural gas costs are attractive right now, he said, the future of oil and gas commodities are never certain. Depending on long-term fluctuations in price, some households recoup the conversion cost in a few years, while others take closer to a decade, he said.
“The variables are unknown,” Maietta said.
Shane and others said they will work in the coming weeks to ensure the companies provide comparable, apples-to-apples information about rate structures and potential cost savings.
Estimations for annual savings use different base assumptions about how much energy customers will use, and are therefore misleading, said Shane.
“We have to really drill down into the details to really understand what they’re saying,” he said.