MADISON — The town will not build a natural gas pipeline through central Maine and will instead turn over the responsibility to former competitor Kennebec Valley Gas Co., town officials announced at a public hearing Wednesday night.

In return, Madison will be able to distribute natural gas within town limits, Bob Hagopian, selectmen chairman, told about 100 people who gathered in the auditorium of Madison Area Junior High School.

The announcement was made at a public hearing on a $72 million bond issue up for vote in two weeks that would allow the town to build a natural gas line up from Richmond to Madison, the same 12-community route Kennebec Valley Gas’ plan is slated for.

“We have a tentative agreement, and Kennebec Valley Gas will be building the line from Richmond to Madison, and in return they will be supporting Madison,” Hagopian said. “Madison will have the rights to distribute gas in the town of Madison if we want to.”

Town Manager Dana Berry said the aim is for Kennebec Valley Gas to provide gas by Nov. 30, 2013. It will partner with Summit Utilities, based in Colorado, to build the line.

Timothy Johnston of Summit Utilities said, “We have an agreement in principle to come in and do this. We will build the pipeline from Richmond to Madison. If the town wishes to build their own natural gas distribution line within town limits, we’ll help.”

Details of the plan were still to be hashed out Wednesday night at press time, but the agreement would not include the tax break that Kennebec Valley Gas is asking from the other communities the line would go through.

Berry said if the plan falls through, the town can still pursue its own plan to build the line through central Maine if the bond issue is approved.

The vote on the $72 million bond issue is March 13.

“If these guys are going to run the gas line, why are we borrowing money?” said resident Peter Sirois. “Are we just a back-up to them?”

Berry replied that the town wouldn’t pursue a project unless it was beneficial to the town.

Madison “may go forward with a pipeline should Kennebec Valley Gas and/or Summit fail to meet their obligations as they are spelled out in our agreement. That’s why we would continue to support the borrowing,” Berry said.

Approval of the bond would grant selectmen the authority to possibly pursue building the pipeline, in addition to possibly building a local gas distribution system to serve only Madison homes and businesses.

There has been a question about whether Madison, as a municipality, can use revenue from a pipeline to offset the tax base. That was part of the selectmen’s decision to join with Kennebec Valley Gas.

“We don’t know the answer to that question today. And we would not know until we applied to the (Maine Public Utilities Commission) to get clarification, and that might require a considerable investment before we do that, and we might get a no answer,” Berry said.

House Majority Leader Phil Curtis, of Madison, said he had planned to submit a bill to allow Madison to lower taxes with pipeline revenue but ultimately decided it wouldn’t have a chance of passing in the Legislature.

Gov. Paul LePage has also spoken against the town-owned project and in support of the private company. “He has been adamant that we should not put public money in the ground,” Curtis said.

Before the meeting, Hagopian told the crowd that town officials were going to talk in a closed-door session with representatives from Portland-based Kennebec Valley Gas.

Sirois, who helped gather petition signatures to bring the pipeline matter to a second vote, stood up and said he wanted his objection to the executive session to be on the record.

A group of about 10 men then left the auditorium and went upstairs to talk. They returned about 10 minutes later and made the announcement about the public-private partnership.

Residents will vote from 8 a.m. to 8 p.m., Tuesday, March 13, at the municipal building.

After narrowly defeating the question in November, residents gathered petitions with 320 verified signatures to bring the pipeline matter to another vote. This time, though, the ballot question will be worded slightly differently to allow for the wider range of options.

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