MADISON — Walter and Betty Thebarge are two of many residents who have received mailings recently from a group opposing the town’s proposal to build a natural gas pipeline in central Maine.

The Thebarges, who support the town’s plan, said the fliers are spreading misinformation and have only one name attached: Madison Taxpayers Against Bad Debt.

Additional Photos

WHY NOT: Walter and Betty Thebarge of Madison hold a flier they received recently urging residents to vote against a town pipeline bond proposal. The couple said they will vote in favor of the proposal. Staff photo by David Leaming

The mailings are funded by the town’s competitor to build the line, Kennebec Valley Gas Co., and local residents. They were sent about a week before Tuesday’s election, when residents will vote on whether to approve a $72 million bond to pay for the pipeline, which would run from Richmond to Madison.

The fliers state that a Madison pipeline will raise the town’s taxes, curtail Madison’s ability to borrow for future needs and hold residents responsible for the debt if the project fails. Members of the group say its important to get those facts across to Madison residents.

But town officials say the statements in the fliers are false.

“Madison has been very truthful, and they’ve backed up their facts,” Betty Thebarge said. “Madison is a great town to live in and to do business in, and (the pipeline) would bring in perhaps some new business.”

Walter Thebarge said the fliers may influence people who don’t take the time to educate themselves on the issue.

“My main concern is they’re mailing this out, and there’s not a name on it anywhere,” he said.

Tony Buxton, an investor in competitor Kennebec Valley Gas, said the company is paying for a firm called Strategic Advocacy, based in Augusta, to run the campaign with the political action committee Madison Taxpayers Against Bad Debt.

“We intend to communicate with citizens and tell them what we think are relevant facts,” Buxton said.

Though he didn’t know an exact number, he said he estimated the effort will cost Kennebec Valley Gas between $5,000 and $10,000.

“Obviously we’re not trying to hide anything,” he said, adding that the company plans to send a letter soon to residents. If people have questions, he said, they can call 772-6190.

Buxton said the local political group tried to register with the state but was told it couldn’t. Cindy Sullivan, with the Maine Ethics Commission, said only political organizations in communities with populations greater than 15,000 have to follow campaign finance laws.

“They legally do not have to register or file reports with anybody,” she said.

Though there’s no individual name on the mailings, an address of 103 Russell Road is provided. The property there belongs to Paul Fortin, according to town property records. Efforts to reach Fortin for this story were unsuccessful, but an op-ed column he wrote against the town’s project appears today on page A8 and he lists himself as the group’s founder.

Buxton said the information on the mailings is “absolutely true.”

And resident Doug Denico, who is a member of the political action committee, said, “I think people deserve to have another side of the information given to them.”

Town Manager Dana Berry said, “Certainly people can send out information expressing their opinion, but it should be supported by a proper perspective.

“The vote on Tuesday is just the next step in going forward. There are other gates we’ll have to pass through, being the PUC (Public Utilities Commission) and the bond bank before the selectmen will approve issuing the bond,” he said.

The town will not send out its own fliers, he said, because it would mean spending taxpayer money. But town officials are meeting with Gov. Paul LePage today to discuss the pipeline.

About 200 people have submitted absentee ballots, according to Town Clerk Kathy Estes.

Competitors dispute risksof town-owned pipeline

* The fliers state Madison taxpayers will be on the hook for $102 million if the pipeline fails. That includes the $72 million bond, plus $30 million in interest.

“If for some terrible reason there were a default by the pipeline, the town would have to pay,” Buxton said. “What happens if they fail? That is the point. What happens if they don’t get the revenues they anticipate? It happens all the time in business.”

If an anchor tenant goes out of business, he said, the town won’t be able to increase natural gas rates with long-term customers to make up the difference because they would have already negotiated contracts.

Joy Hikel, Madison’s economic development director, said the pipeline would not fail and that it would earn enough revenue to not only pay back the interest and loan but to offset property taxes. In order to do the project, the town has to get approval from the Maine Public Utilities Commission and bond counsel, which offers a legal opinion on the debt. They won’t support a project that’s not viable, she said.

Buxton’s statement that the town won’t be able to increase rates is false, as other entities have historically received rate increases, and contracts would be written to allow for them, she said.

* The fliers state that Madison’s ability to borrow will be curtailed because the pipeline will take up all the town’s borrowing capacity. “What if Madison wants to borrow for an emergency?” it reads.

Hikel responded that the projected revenue from the pipeline will pay down the bond, allowing for the town to borrow. The town has no large projects planned, she said, and when the town anticipates one it typically saves money for several years in a reserve account.

* The fliers state that revenue from a town-owned utility cannot be used to offset taxes because of the laws governing nonprofit organizations.

“To achieve that change, Madison would have to change what has been the law and legal tradition in this country for 300 years, before the founding of the nation, and it is very, very unlikely to happen,” Buxton said.

Hikel replied that the PUC has no precedent and will make the determination about offsetting taxes with pipeline revenues when Madison submits its plan. The town will not spend money unless the pipeline is feasible, she said.

“Our taxpayers, the investors, are every bit as important in our project as Kennebec Valley Gas’ investors are in their project. They’ll be allowed a return on investment, and we expect to be able to have the same structure as a private company,” Hikel said. “The PUC has not seen our proposal. I imagine that it’s going to be well received.”

* The fliers state that in October Hikel said a Madison pipeline would be able to charge consumers in other towns higher rates and use the surplus to lower Madison property taxes.

Hikel said the flier is wrong. “I never said that. It’s not allowed by law,” she said.

* When asked why Kennebec Valley Gas wanted to do the project if it was too risky for Madison, Buxton said, “Clearly we hope to make some kind of profit off this, but there is a very substantial risk.”

He said it’s better for a private company to do the project in case an anchor tenant goes out of business. Then the private investors will lose money, not the town of Madison.

“You lose money until you can replace that volume,” he said. “(Investors) would be the first people to be hurt by the loss of a big customer. They would not earn a profit anymore, but the bank would still be paid because the bank is only getting 60 to 70 percent of the revenues of the pipeline.”

Hikel said the town will continue adding natural gas customers over time, so the loss of one anchor tenant wouldn’t hurt Madison taxpayers. If anything, the availability of natural gas will make industrial users more competitive and less likely to go out of business.

Residents have less of a risk than private investors in this case because it will be cheaper for Madison to finish the project, she said. It can borrow at a lower interest rate and doesn’t have to pay sales tax for materials.

“Our residents have way less of a risk on this project than Tony Buxton’s investors,” she said. “If Tony Buxton can find investors that will take that risk, then our residents have less of a risk than we can even imagine.”

* The fliers state Kennebec Valley Gas is a year ahead of Madison and already has initial PUC approval.

Hikel responded: “We will be ahead of them when the bond passes because we will have a financial mechanism in place.”

* The fliers cite Harrisburg, Pa., which has approximately $300 million in debt tied to its trash incinerator and recently declared bankruptcy. The fliers say bond holders could sell Madison residents’ homes to pay off the bonds.

They also state that Madison officials don’t talk about the risk associated with the bond.

Hikel said several measures are in place to prevent a major problem like in Harrisburg. Even so, she said, the Pennsylvania capital “is still in existence, and people still own their homes.”

She also said Madison residents should be aware that one of the principals of Kennebec Valley Gas, Richard Silkman, and the company he co-founded, Competitive Energy Services, are under scrutiny from the Federal Energy Regulatory Commission.

The commission has accused them of trying to manipulate electric markets in 2007, in concert with a Rumford paper mill.

Silkman said he has cooperated fully with the investigation and denies any wrongdoing.

Erin Rhoda — 612-2368

erhoda@centralmaine.com

Related Stories