A developer may have moved a step closer to financing a proposed natural gas pipeline in central Maine, but its competitor to build the line says it isn’t worried.

Last week, Augusta became the first municipality to approve a tax break for developer Kennebec Valley Gas Co., which is proposing to build a natural gas pipeline from Richmond to Madison.

But what does the Augusta City Council’s unanimous decision mean for the town of Madison, which is competing to build essentially the same pipeline? Not much, according to Madison Economic Development Director Joy Hikel.

“It means that Augusta wants to move forward with gas, which is good for Madison. It means they’re assisting Kennebec Valley Gas Company with their plans to pursue financing. But other than that it doesn’t really affect us,” Hikel said Monday.

Augusta City Manager Bill Bridgeo said the city’s approved tax break agreement with Kennebec Valley Gas would only be fulfilled if that company built the pipeline.

“If for some reason the town of Madison should actually go forward and build a pipeline, and that pre-empts the Kennebec Valley Gas pipeline, that (tax increment financing) agreement would be moot,” Bridgeo said.

Both the private company and the town of Madison are proposing to build the pipeline through 12 communities in Kennebec and Somerset counties. While both are offering to build relatively the same project, each differs on the method of financing.

In addition to private investments and contracts with industrial users, Kennebec Valley Gas’s project hinges on securing tax-increment financing districts, or TIFs, with all 12 of the communities.

When the Augusta City Council approved a TIF Thursday, it agreed to return 80 percent of the pipeline’s property taxes back to the developer for the first 10 years of the project. For years 11 through 15, it agreed that 60 percent would be returned to the developer.

Madison, however, would not require communities to approve TIF agreements. Its pipeline financing hinges on whether Madison voters approve a $72 million bond on Election Day, Tuesday, Nov. 8.

If Madison residents defeat the bond proposal, the town has no pipeline project. If they approve it, town officials say they would then begin arranging natural gas deals with large users and each community along the line.

In addition to providing low-cost energy to the region, the goal of having a revenue-generating pipeline is to substantially lower Madison residents’ taxes, Hikel said.

Bridgeo, Augusta city manager, said the council decided to approve a TIF agreement with Kennebec Valley Gas for one main reason: It wants natural gas in the area, and agreeing to a TIF will make it more likely to come.

“We have not been approached by the town of Madison, have had no discussions with the town of Madison about their proposal. So it’s not like we’re weighing competing opportunities. We’re not. The city council is interested in encouraging the availability of natural gas in Augusta, and that’s really the only reason we’ve proceeded as we have,” Bridgeo said.

Approving the TIF “may set in motion approvals from the other municipalities. To the extent the gas company gets the TIF agreements all the way down the line, then that makes their project much more likely to occur,” he said.

Augusta Development Director Michael Duguay said it doesn’t matter who builds the pipeline as long as someone does. The city is not favoring one project over another in what he said is “one of the biggest stories in economic development regionally that we’ve seen in a long, long time.”

“Honestly, to me, it’s not important necessarily which entity supplies the gas, it’s that we actually have a source of natural gas,” he said.

Competition to provide the gas is a good thing, he said. Having two entities validates the project.

“I think it refines both sides’ due diligence,” Duguay said.

“At the end of the day, I’m feeling really optimistic for central Maine that we’re going to be supplied with natural gas one way or another.”

Waterville City Manager Mike Roy also said the most important thing is that natural gas comes to the area, particularly for big employers like Huhtamaki Packaging, located in both Fairfield and Waterville.

“We’re not supporting any one over the other,” Roy said. “We’re very interested in having an alternative to oil. Natural gas certainly presents that, and we don’t care who brings it.”

Overall, Hikel said it’s a good sign for Madison that Augusta supports a TIF, even though the agreement is with a competitor. “It shows us that they really want gas, which is a great thing,” she said.

Madison will hold a public hearing on the proposal at 6:30 p.m., Thursday, at Madison Area Junior High School.

Erin Rhoda — 612-2368

[email protected]

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