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January 31, 2013

Natural gas firms offer millions in investment to three Maine towns

By Matt Byrne
mbyrne@pressherald.com
Staff Writer

Two utility companies that are bidding for the chance to bring natural gas to thousands of homes and businesses in Cumberland, Yarmouth and Falmouth say they would spend about $60 million to $70 million to expand access to the cost-saving fuel, according to documents provided by the towns.

Maine Natural Gas and Summit Natural Gas are seeking approval from town officials to build a network of piping that would eventually bring gas to roughly 27,000 customers in the coastal surburbs, where oil and propane are now the dominant sources of energy.

While there is a chance that the towns could collectively reject both proposals, each town's manager was optimistic Thursday that they will band together to lower their energy costs.

"Even though we won't get as good a deal as some parts of the state, (gas service) would still be a pretty significant savings," said Yarmouth Town Manager Nat Tupper, who met with the other managers Wednesday to read through the proposals.

Cumberland Town Manager Bill Shane, a former engineer who has led the three towns in their pursuit of gas service, said the town councils will meet individually on Feb. 21 to consider detailed comparisons that the managers will work up in the coming weeks.

They hope to have an agreement with one of the companies by late March, Shane said.

The proposals were submitted on Jan. 25. They were made public late Wednesday in response to a Freedom of Access request from the Portland Press Herald.

Many questions remain about the plans, including exact pricing differences, rate structures and construction time lines. The information will be formulated into a rubric for town councilors and the public to evaluate.

Officials said they are working to calculate the possible savings for homeowners and businesses in each proposal, but have estimated that the arrival of natural gas could reduce fuel costs 30 to 50 percent, at current prices.

"We're all learning together," Tupper said. "None of us have been through this before."

Both gas companies have laid out plans with no upfront cost to the towns or ratepayers. The cost to lay miles of pipe would instead be built into the rate structures.

And both companies are offering to connect gas lines directly to new customers without hook-up fees.

Each company has offered an aggressive estimate of when customers could first see service. Maine Natural Gas says it could energize the first of its lines as soon as December 2014; Summit estimates that service along main pipe routes would begin in the third quarter of 2014.

Maine Natural Gas foresees reaching 64 percent of the buildings in the three towns, with a higher percentage for commercial customers. The utility is proposing to spend nearly $60 million to complete the project.

Summit plans to reach 63 percent of the customers by the third year, and 80 percent of residential customers by 2017, according to its proposal.

By 2023, it projects that more than 90 percent of potential customers will convert to gas. If selected, Summit said, it intends to invest $72.5 million in the project.

The new gas lines would branch off from an existing pipeline to the west of the communities and run along public roads.

Maine Natural Gas says it would require a tax increment financing plan to proceed. The TIF would give the company an 80 percent break on property taxes through 2023, a contingency that must be considered by elected officials who have yet to see the plans.

Summit says it would not reject a TIF plan if the communities chose to pursue one.

Both companies are offering incentive programs for customers to convert equipment in homes and businesses to burn natural gas instead of other fuels.

Maine Natural Gas says it would pay half the conversion cost -- up to $1,000 for residential customers and up to $1,500 for commercial customers.

Converting to natural gas can be costly for homeowners, said Peter Maietta, co-owner of Maietta Titus Blaschke Plumbing and Heating.

Depending on the age of a boiler or heating system, costs can vary widely, from a couple of thousand dollars for boilers that can be partially converted and are less than about 10 years old, to systems that require total replacement and can cost as much as $10,000, he said.

"It starts with the customer's willingness to do the swap," Maietta said.

Although natural gas prices are attractive now, he said, the future of oil and gas commodities is never certain. Depending on long-term fluctuations in price, some households recoup the conversion cost in a few years, while others take closer to a decade, he said.

Shane and others said they will work in the coming weeks to ensure that the companies provide comparable information about rate structures and potential cost savings.

Current estimations for annual savings use different base assumptions about how much energy customers will use, so they are misleading, Shane said. "We have to really drill down into the details to really understand what they're saying."

Staff Writer Matt Byrne can be contacted at 791-6303 or at:

mbyrne@pressherald.com





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