AUGUSTA — Central Maine’s natural gas war is on.

Some local and regional officials fear the state’s recent choice of the smaller of two proposals to build a natural gas pipeline in the region could kill what they see as a much bigger and better opportunity for residents and businesses.

Additional Photos

A high-density polyethylene gas pipeline — similar to what would be built in the Augusta area distribution system — is seen during the expansion of a system in Freeport. Photo courtesy of Iberdrola USA

Meanwhile, the company proposing to create a more expansive pipeline system to distribute natural gas throughout the Kennebec Valley, Summit Utilities, plans to appeal the state’s recent selection of Maine Natural Gas as its provider. The state-approved plans would mainly serve state property in the Augusta area, with the potential for expansion if there’s demand, while the Summit plan would stretch from Augusta to Madison.

If Summit Utilities’ appeal is unsuccessful, Tim Johnston, chief strategy officer and executive vice president with the company, warned that their plan could be dead.

“The Augusta piece is pretty crucial to us doing the larger project,” Johnston said Wednesday. “It provides 25 percent of the load of the whole system. Without that in there, I’m not sure that project would go forward.”

Daniel Hucko, spokesman for Maine Natural Gas parent company Iberdrola USA, said his company already has some 3,000 customers in Maine in other pipeline distribution systems and is committed to get pipeline in the ground within weeks if the process is not delayed. He said Summit has made no public commitment as to when or how long it will take to build its proposed system.

“Summit is trying to politicize the state’s procurement process,” Hucko said. “Potential customers shouldn’t trade a proven Maine company that already is serving Maine people and is ready to lay pipe in the ground within weeks for a newcomer with no Maine track record that is making a lot of very large promises.”

But some local officials don’t want to give up on those large promises, and they’re imploring Gov. Paul LePage to get involved.

“The Maine Natural Gas proposal is very limited in scope, covering a much reduced geography and many fewer future customers,” said Ken Young, executive director of the Kennebec Valley Council of Governments, in an email sent to municipal officials throughout the region.

KVCOG has been shepherding the larger gas proposal for more than a year and worked out tax break deals with 10 of 12 communities in central Maine that would help finance the Summit project.

The state’s decision is a “major blow to the prospect of having natural gas widely available in the region,” Young went on to write in his email. “KVCOG is working with Summit Utilities to provide municipal support during its appeal. Additionally, Summit is hoping to convince the governor to support the Summit project as a much better approach to serving the state’s immediate needs in Augusta and in the region.”

LePage’s office did not respond to a request for comment Wednesday.

Last week, the state Bureau of General Services selected Maine Natural Gas, a Brunswick-based subsidiary of Central Maine Power Co. parent company Iberdrola USA, to build a pipeline system in the Augusta area, primarily to distribute the gas to state property.

The Maine Natural Gas submission to the state said the firm would spend $19.3 million and create about 40 jobs to develop the project over the next two years, first serving state facilities and users on both sides of the Kennebec River in Augusta, with the potential to expand, as demand warrants.

Summit’s submission said it would invest about $150 million, creating about 435 jobs in an effort to serve about 15,000 residential and industrial customers by its third year of operation.

“The numbers are extraordinary,” Young said Wednesday of the differences in the two proposals. “There is a significant difference in the value of the investments between Maine Natural Gas and Summit, and the number of people who’d be employed and the number of customers who’d be served.”

That includes large anchor customers, such as the Madison and Sappi paper mills, and the Huhtamaki plant in Waterville, Young said.

Expansion opportunities

Hucko, the Maine Natural Gas spokesman, said the state’s selection process was open, fair and transparent. His company’s proposal satisfied the requirements of the state request, and the state made a good business decision in selecting his firm, he said.

And he noted that their project is designed with the capacity to expand both north and south, up and down the Kennebec Valley.

“If there is demand, and it makes financial sense to do so, our system can (and will) be expanded northward to Winslow/Waterville/Fairfield and south to Hallowell; then Farmingdale and on to Gardiner,” Hucko said in an email Wednesday. “We promise to look aggressively for those expansion opportunities after the first two phases of this project are completed.”

He said expanding north and south would increase Maine Natural Gas’ investment far beyond its initial $20 million cost.

Augusta Mayor William Stokes wrote a letter to LePage this week, urging him to intervene in the state’s decision to go with Maine Natural Gas.

“I don’t care which company gets it, but I just think we need to think more broadly, and boldly, about what the economic impact of this could be, not just about providing service to the state buildings or Augusta, but to the many communities in Kennebec Valley,” Stokes said Wednesday. “This is a once-in-a-lifetime opportunity for the entire region to benefit. It seems shortsighted to go with the lowest responsive bid, because the state will get gas slightly cheaper, when the difference in the potential project could effect the entire central Maine area.”

Stokes said in his letter to LePage that the “decisions we make today will pay dividends, or will cost us dearly, in the years ahead.”

Johnston said Summit’s proposal would connect roughly 15,000 central Maine customers to natural gas over the next three years, saving the average homeowner heating with oil, based on recent prices, close to $1,500 a year on heating bills.

Cost matters

Johnston said Summit will file an appeal because the state’s process awarding the contract to Maine Natural Gas was flawed.

Importantly, he said, is that the process didn’t give enough weight to job creation, comparing Summit’s 435 jobs, created versus 46 under the Maine Natural Gas plan.

In addition, Johnston said, the state’s request said that proposals should cover the entire Kennebec Valley region, but the selected project does not directly propose to do that at first.

Also, he said the state’s request for proposals was written too ambiguously.

State Bureau of General Services officials involved in the selection of the Maine Natural Gas project could not be reached for comment on Wednesday.

Last week, Alan Henry, director of special projects for the bureau, said the competing proposals from the two firms were determined by the panel that reviewed both to be essentially even in terms of experience, references, job creation, fiscal stability and most other measures.

Where they differed was cost, Henry said.

The per million British thermal unit price in the proposal from Maine Natural Gas was $11.98, compared to Summit’s $12.67.

James Cohen, an attorney with Portland-based law firm Verrill Dana, who is working with Summit, said the firm would file its appeal of the state’s decision within the limit of 15 days of the June 20 contract award. That means it will need to be filed by July 5.

Related Stories