MADISON — A private company is closer to securing the financing for a natural gas pipeline through central Maine as it solidifies its ties with a Colorado firm that has experience building the underground lines.

Portland-based Kennebec Valley Gas Co. has been working to bring natural gas to 12 communities from Richmond to Madison and recently introduced a partner, Summit Utilities, based in Littleton, Colo.

The two will pursue the project together but have not yet finalized what legal form the partnership will take.

They are discussing a range of options, including whether Summit Utilities will acquire or enter into a joint venture with Kennebec Valley Gas, according to officials at both companies. Negotiations are expected to end in about a month.

“As far as the final structure that the company will take, that’s what we’re still negotiating,” said Tim Johnston, executive vice president of Summit Utilities. Kennebec Valley Gas is “bringing the opportunities and the relationships with the towns and what they’ve established with the (tax increment financing districts), and we’re bringing our expertise in building (the pipeline) and operating it.”

Even though Madison selectmen agreed to not compete to build the pipeline, Madison residents will still go to the polls on Tuesday to vote whether to borrow up to $72 million.

A yes vote would give selectmen authority to possibly build the pipeline through central Maine if the Kennebec Valley Gas project failed, construct distribution lines to connect with homes and businesses just in Madison, or nothing at all.

Johnston said if Madison residents do not approve the borrowing “then we will invest our own money and build that distribution system ourselves.”

Summit Utilities is a holding company that owns and operates natural gas subsidiaries that construct natural gas distribution systems. Summit Utilities is owned by an infrastructure investment fund managed by the bank JP Morgan, though the bank doesn’t have any of its own investments in the fund, Johnston said.

The infrastructure investment fund is comprised of institutional investors that provide low-risk, long-term backing of utility companies.

“They expect to own us for the rest of my lifetime, which is comforting when you’re in the utility business,” he said.

The fund will provide the equity for the pipeline project — about 40 percent of the cost. Summit is still exploring its debt options.

When the three men that lead Kennebec Valley Gas — Tony Buxton, Richard Silkman and Mark Isaacson — originally announced their intentions to pursue the line, people “were having trouble figuring out how three guys from Maine were going to build an $86 million pipeline,” Buxton said.

But “we’ve always said that it would require large financial institutions to provide the equity and provide the debt projected for this gas project or any gas project in Maine. This is a lot of money,” he said.

Johnston said tax increment financing districts in each town, where pipeline communities redirect a percentage of the new property taxes generated by the pipeline back to the developer, are still essential.

If the company pays less in property taxes, then there’s a greater likelihood that natural gas rates will be lower, he said.

“To the extent that we have the TIFs then we don’t end up charging as much for the natural gas. So it’s kind of an advantage to everybody,” he said.

Johnston added that the company is exploring the idea of expanding the distribution systems already planned by Kennebec Valley Gas, if it’s economically feasible.

He said the company has a goal for the next five years. “We would like to expand the natural gas distribution systems both off of the Kennebec Valley main line, and we’re going to be looking into other areas in the state of Maine. Any area that it makes economic sense for us to run gas lines and connect people up, we’re planning to do that. That’s our business,” he said.

Buxton said, “We decided to go with Summit because we looked at a lot of different companies that had gas pipeline experience and development experience. We were looking for someone who wasn’t your grandfather’s utility, somebody who wanted to build a significant infrastructure in Maine relatively rapidly.”

Summit has committed to finishing the pipeline by November 2013.

Erin Rhoda — 612-2368

erhoda@centralmaine.com