AUGUSTA — The state will consider an appeal of its controversial decision to choose the smaller of two proposals to bring a natural gas pipeline to the Kennebec Valley.

Tim Johnston, chief strategy officer and executive vice president of Summit Utilities, confirmed Thursday night that the state Bureau of General Services had granted his firm’s request for a hearing to appeal the state’s selection of Maine Natural Gas over Summit. Hearing details had not yet been set.

Meantime, the natural gas debate is fueling a behind-the-scenes battle over who will build the pipeline and how extensive it should be.

Local officials and business leaders are pressing Gov. Paul LePage to get involved in ensuring the pipeline goes beyond state property in Augusta to also serve potential users as far north as Madison.

Ken Fletcher, director of the governor’s energy office, said LePage doesn’t care which company brings natural gas to the region, but he wants it brought to the customers who want to use it both in and beyond Augusta.

Fletcher said LePage “certainly hasn’t said he believes the right supplier is ‘X,’ at all.”

“As we talk to people across the state, natural gas comes up, there’s a great deal of interest in it,” he said. “The mills — Huhtamaki, Sappi, Madison — and other folks who use quite a bit of energy have expressed interest. The governor is ambivalent as to which company brings it. As long as they’re bringing the option of using it to the people who want it.”

Even so, local business leaders are making clear they don’t like the state’s selection of Maine Natural Gas over Summit.

Kimberly Lindlof, president of the Waterville-based Mid-Maine Chamber of Commerce, said the chamber’s members want to be able to connect to natural gas to help combat the high cost of energy. She said those members are also disappointed the state’s initial request for proposals seeking a company to build a natural gas pipeline from an existing pipeline in Windsor to state property in Augusta didn’t specify that the natural gas pipeline must also be extended south and north of Augusta, particularly to mill towns, including Madison.

“We were disappointed it wasn’t included in the original request, making it mandatory to come up the Kennebec Valley,” said Lindlof, who served as finance director for LePage during his 2010 campaign for governor.

An email sent recently by Lindlof to Summit officials and Ken Young, executive director of Kennebec Valley Council of Governments, and obtained recently by the Kennebec Journal, states that Lindlof had received a message from LePage “indicating that he won’t sign on to anything that doesn’t hit the valley up to Madison.”

“That’s ‘mandatory,’ he said,” Lindlof wrote, referring to LePage. “And, according to him, the governor has to sign.”

Not so, said Dan Hucko, spokesman for Maine Natural Gas.

“There is nothing in front of the governor that he needs to sign on to,” Hucko said. “There are no large state government facilities in Madison. There is no state-issued (request for proposals) that requires a gas utility to lay pipe to Madison. We believe no gas company will build a long pipeline to an area where there are no anchor customers willing to sign long-term contracts that will help pay for the line.”

Fletcher concedes that LePage doesn’t have an official say in the process of selecting which company brings natural gas to the area, but he noted “in theory, the governor has a say in just about everything going on in the state.”

Even so, Fletcher said the governor has not inserted himself into the appeals process.

“There is a defined process that will be followed and it would be inappropriate for the governor’s office to say, before that has come to a conclusion, we have a right answer,” Fletcher said.

Johnston said Summit officials have met with LePage and his staff on several occasions over the past eight months to discuss the firm’s construction plans, but have not discussed the appeals process with the governor or his staff.

Political pressure?

Kennebec Valley Natural Gas Co. was the firm that originally proposed building a natural gas pipeline in the region. Summit Utilities is buying Kennebec Valley Gas and taking over its efforts to create a major natural gas pipeline distribution system in the region.

Both Summit and Maine Natural Gas, a subsidiary of Central Maine Power Co. parent company Iberdroula USA, submitted bids in response to the state’s request for proposals to build a pipeline to supply natural gas to state property on both sides of the Kennebec River in Augusta, and for the pipeline to be large enough for further expansion north and south.

Summit’s proposal for a $150 million project with 435 jobs and service to some 15,000 customers lost out to Maine Natural Gas, which proposed a $19.3 million project with 46 jobs, and plans to expand “aggressively” as long as such expansion made financial sense.

State officials said a deciding factor was that Maine Natural Gas offered the state a lower per British thermal unit price to distribute gas.

The Kennebec Valley Council of Governments, which has been assisting with the KV Gas and now the Summit proposal and worked out tax breaks for it in 10 of the 12 central Maine communities it was to pass through, sent an email to regional municipal officials after the state awarded its project to Maine Natural Gas. The email urged them to contact the governor’s office to ask him to intervene.

Many municipal officials did just that, with officials in Augusta, Belgrade, Gardiner, Fairfield, Oakland, Madison and other communities sending letters to LePage’s office expressing support for the Summit proposal.

On Thursday, Maine Natural Gas officials sent their own letter to members of council of governments, as well as members of the Kennebec Valley Chamber of Commerce, criticizing Young’s efforts to rally them in favor of the larger Summit proposal.

“It’s surprising to us that a group of government representatives would so blatantly interject politics into what is supposed to be an open and unbiased review of bids to serve state facilities in the Augusta area,” says the letter from Maine Natural Gas Vice President Darrel Quimby.

A regional question

Hucko, the spokesman for Maine Natural Gas, describes Summit as a company with no ties to Maine that is using politics to delay the process, which could in turn delay being able to lay pipeline in the ground as soon as possible.

Young said he’s not playing politics, he’s just advocating for the state’s project to be re-bid so it is clear the winner is required to supply natural gas throughout the region.

He said the proposal submitted by Summit would bring seven times as much money and 10 times as many jobs as the Maine Natural Gas proposal. Young said the potential difference in the two projects is significant, especially when considering some projections indicate an average homeowner burning oil could save $1,500 a year by converting to natural gas.

“We’re hoping to convince the state to step back and say, ‘What’s best for the region, best for the state of Maine? and re-bid it,” Young said. “Then Maine Natural Gas and Summit and anyone else can take their best shot at a regional system and let the state decide.”

The governor has asked to meet with major energy users in both the Waterville and Augusta areas, a meeting Lindlof and Peter Thompson, executive director of the Augusta-based Kennebec Valley Chamber of Commerce, have contacted their members about attending.

Fletcher said the governor wants to meet with businesses in the region, to gauge their interest in having the option of tapping into natural gas to reduce energy costs. The meeting has not yet been scheduled.

“There is a lot of interest in sitting down and talking about it,” Thompson said. “I don’t think there is any question we’ve been tempted for a taste of natural gas in this region. Our objective is to get it here as an option. We’re at a competitive disadvantage without it. Who provides it is not something we’ve really discussed.”

Keith Edwards — 621-5647

[email protected]

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