MADISON — Residents rejected on Tuesday a proposal to allow the town to borrow up to $72 million to build natural gas distribution lines in town.

The plan would have also allowed the town the option to build a pipeline through central Maine if a project by Kennebec Valley Gas Co. failed.

The final vote was 421-316, with 57 percent opposed. About 24 percent of the town’s 3,125 registered voters turned out to cast ballots.

It was the second time the community voted on the issue, after residents gathered petition signatures to bring it back to the polls. A proposal to borrow $72 million to build the line through 12 communities failed by 27 votes on Nov. 8.

“I’m disappointed, but life goes on. We had good representation,” Town Manager Dana Berry said.

Even though residents turned down the potential borrowing proposal, Madison officials will continue to determine how best to bring natural gas to town, Berry said.

One option would be asking residents to bond for between $7 million and $10 million to build lines solely within town limits. Also, Kennebec Valley Gas could build the local system.

Richard Silkman, a principal of Kennebec Valley Gas, said Madison’s vote changes nothing about the company’s plans and that it continues to want to build the distribution system in Madison.

The company, in tandem with Colorado-based Summit Utilities, is on track to get natural gas flowing in 12 communities by December 2013, he said.

Bob Hagopian, chairman of the selectmen, said town officials will talk with the company about the best way to proceed.

“The bottom line is that as long as Madison gets natural gas — that was our goal anyway,” he said.

Selectmen plan to meet next at 5:30 p.m. Tuesday at the Old Point Avenue facility. Though the agenda has not been set, he said, they probably will discuss natural gas.

Selectmen and Kennebec Valley Gas recently approved a deal that, among other things, would have the company pay up to 5 percent of the sale of gas in Madison each year to the town to offset the general fund and provide tax relief. The fee would not come from the company’s revenue, per se, but from a fee built into users’ rates.

The compensation arrangement has not been done before in Maine and would require approval by the Maine Public Utilities Commission.

Selectman Bruce Bristow said selectmen wanted to find a way for all residents to benefit from a pipeline, if possible, as not every home or business is likely to get hooked up to natural gas.

“It’s not something that Kennebec Valley Gas is doing because they want to or need to. It’s something we requested because we would like to see a benefit to all our taxpayers, not just the people who would be able to access the gas,” he said.

Silkman said the 5 percent compensation agreement probably will not be arranged in other towns along the proposed pipeline route.

That’s because of the utility Madison Electric Works, which has the rights to distribute natural gas in Madison, as granted by the Legislature.

“I think the situation in Madison, because they have a utility and have authorization to serve in Madison, creates a special arrangement in Madison that doesn’t exist in any other town,” Silkman said.

Erin Rhoda — 612-2368

[email protected]

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