AUGUSTA — Weeks of behind-the-scenes wrangling will come to a head next month when two companies vying to provide natural gas to the Kennebec Valley will meet before a state appeals panel.

The appeal of the state’s choice of Maine Natural Gas to bring a natural gas pipeline to Augusta and possibly the Kennebec Valley is scheduled for Aug. 14-15 at the state Department of Administrative and Financial Services.

Summit Natural Gas, which filed the appeal, lost the bid narrowly based on cost savings to the state, job creation, capacity and fiscal stability.

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

Representatives of both sides said appeals of projects this size are fairly common, echoing a previous statement by state officials that appeals of big contracts are not unusual.

What’s uncommon, though, are the stakes.

Some local officials and business leaders have written letters to Gov. Paul LePage, urging him to get involved in ensuring the first natural gas pipeline in the capital area goes beyond state property in Augusta to also serve potential users as far north as Madison.

The winner of the state contract, Maine Natural Gas, proposed a $19.3 million project creating 46 jobs, focused mainly on providing natural gas to state buildings in the Augusta area and expanding farther north only if there’s sufficient demand to justify expansion costs. Summit’s proposed investment totals over $150 million, with service to 15,000 customers within three years and 435 jobs created.

Ken Fletcher, director of the governor’s energy office, has said LePage does want natural gas brought to customers who want it, including those beyond Augusta. But Fletcher said the governor doesn’t care which company provides the service, and he would not insert himself into the appeals process.

Summit officials say the appeals hearing is needed to right a wrong.

“We believe that our proposal to invest $150 million in the state of Maine and hire 400-plus employees, while aggressively expanding to provide thousands of households access to lower cost energy, is a strong proposal,” said Kathie Summers-Grice, a consultant with Eaton River Strategies Inc., representing Summit Natural Gas.

The appeals process will do little more than delay their plans to lay pipe in the ground and start natural gas flowing into Augusta, according to officials from Maine Natural Gas. The firm is a subsidiary of Iberdrola USA, which is also the parent company of Central Maine Power Co.

“Our hope is this procedure concludes quickly so we can get to work,” said Dan Hucko, a spokesman for Iberdrola USA. “We were ready to start laying pipe toward Augusta this spring and could have had natural gas flowing to the state’s facilities in Augusta this year.”

Both Summit and Maine Natural Gas 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.

In its appeal, Summit officials argue the state undervalued the importance of their plan to create more jobs and more widely distribute gas.

The Summit appeal, filed by Verrill Dana attorneys Brett D. Witham and James I. Cohen, also states that Maine Natural Gas “suggests that future expansions may occur to the north and south, ‘all depending, of course, on being financially viable,’ … and included no assurance that its proposed Augusta service would include the requested ‘development of a pipeline to supply natural gas to the communities from Augusta to Madison.'”

Hucko, meanwhile, said Maine Natural Gas won the state’s bid process because its project provided better value than Summit’s, and the state process was fair and conducted properly.

“We believe Summit is simply disappointed that it lost, which is no reason to overturn a state contract,” he said.

Hucko said Maine Natural Gas will expand its pipeline beyond Augusta “aggressively” to the north and south as long as there are enough customers to make such expansions financially viable.

He said the company plans, in an upcoming advertising campaign targeting the entire Kennebec Valley region, to ask the region’s residents and businesses to go to a website and identify themselves and their location if they are interested in connecting to natural gas.

Summit Natural Gas is currently in the process of acquiring Kennebec Valley Gas Co., the Portland-based company that initially proposed a natural gas pipeline project in central Maine and has obtained tax break agreements from 10 of 12 central Maine communities to help finance it.

Summers-Grice said that if Summit’s appeal fails, the firm “will re-evaluate the remainder of the project excluding Augusta and make a decision at that time.”


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