January 11, 2013

Panel approves new pipeline through central Maine

By Keith Edwards kedwards@centralmaine.com
Staff Writer

AUGUSTA — Summit Natural Gas of Maine on Thursday won the approval of the state Public Utilities Commission to provide natural gas through a pipeline in 17 central Maine communities.

Colorado-based Summit joins Maine Natural Gas, which won the PUC's approval long ago and has already begun laying pipeline in the ground in Augusta. It's part of the race to supply natural gas to customers throughout the Kennebec region, including Augusta, Fairfield, Farmingdale, Gardiner, Madison, Richmond, Skowhegan, Waterville and Winslow.

"Obviously, we're very pleased with the decision and we're looking forward to getting on with this project, starting construction, and starting to bring service to the Kennebec Valley," said Tim Johnston, executive vice president of Summit Natural Gas of Maine, a subsidiary of Summit Utilities. "We've started the permitting process. Our intention is to start laying pipe as soon as the weather permits -- this spring."

Johnston said construction will start with bringing the pipeline from an existing pipe in Windsor into Augusta. He said the company's goal will be to run the steel main line and a significant portion of a large-diameter polyethylene line that will be the backbone of its distribution system this year.

He said as many as 400 contract workers could be working on the system this year, completing multiple sections at once.

Meanwhile, officials at Maine Natural Gas, a subsidiary of Iberdrola USA, which is also the parent company of Central Maine Power, expressed concerns about having two pipeline companies competing for customers in the same area. That could lead to inefficient duplication of infrastructure and even put public safety at risk, the firm said.

Dan Hucko, spokesman for Maine Natural Gas, said the two companies could have pipe running along the same roads, such as Route 17 from Windsor to Augusta.

"With two pipelines so close together, the danger of dig-in is increased greatly -- they could be working on their line and dig into our line and damage it," Hucko said. "And if there is a problem with one of the lines, and there is a leak, there could be confusion and delays in getting that corrected. There could be confusion over who to call. And delay could cause disaster. We're a bit disappointed those issues weren't discussed more fully."

Johnston said the safety aspects can be handled and the Public Utilities Commission is requiring the firms to put together rules for how they will operate when there are dual systems in the same area.

"We're both regulated utilities, we'll make the system safe," Johnston said. "When we build now, we're already building around underground sewer and water lines, which is going to worry me more. A polyethylene gas line is more rugged and flexible than a water or sewer line. From a construction standpoint, having that extra gas line isn't going to affect much."

Competition encouraged

William Black, an attorney for the state Public Advocate Office, said procedures will be established for situations where both companies will be burying pipe along the same streets to make sure it is done safely and costs are shared between the two companies fairly.

The state Public Advocate Office was an intervenor in the case and also signed off on the agreement approved by the PUC on Thursday.

"Maine and the Kennebec Valley are fortunate to have two companies seeking to provide gas," Black said.

Black said the Legislature established a system in which two natural gas companies can be authorized and compete against each other in Maine. Even so, he acknowledged that the public advocate, at the time those statutes were adopted, recommended against such a system.

Karen Geraghty, spokeswoman for the PUC, said Thursday's vote grants Summit unconditional authority to serve 17 municipalities in the Kennebec Valley. But there will be follow-up proceedings in the coming weeks and months looking at specifics such as the safety protocols, to be followed by two companies potentially installing pipelines in the same street, she said.

Maine Natural Gas, in filings with the PUC, also complained that allowing another gas utility to serve the same area, specifically Augusta, would make it more difficult and costly for Maine Natural Gas to serve customers efficiently.

But that argument didn't sway commissioners at their Thursday morning deliberative session.

"I believe it's consistent with the public interest," PUC Chairman Tom Welch said of Summit's request for approval to serve central Maine. "I frankly think Maine Natural Gas has a different view of the full implications of competition than we do. I think it is inevitable one entity's actions will have an impact on the other. That's no reason to not allow a competitor."

Commissioner David Littell said having two gas companies will bring healthy competition to the Kennebec region.

Rate differences

Maine Natural Gas crews started laying pipe in the area in October, and have a contract to supply gas to the new regional MaineGeneral Medical Center hospital under construction in north Augusta by November.

Hucko said the company continues to install pipe today, using horizontal boring methods that allow it to install pipe even in cold weather.

He noted Maine Natural Gas rates are lower than Summit's rates approved by the PUC on Thursday.

The Maine Natural Gas rate for residential service is $6.08 a decatherm, while Summit's recently approved rate is $8.50 a decatherm. One decatherm is the equivalent of 100,000 British thermal units, or btu, and the equivalent of about seven gallons of No. 2 heating oil, according to www.think-energy.net.

Johnston said that Summit's rates are higher because Summit plans a bigger project. Summit's plans have long called for a pipeline running from Richmond to Madison, while Maine Natural Gas has focused its plans on the Augusta area and said expansion farther north would happen if there's enough demand.

He said Maine Natural Gas rates will only be enough to bring gas to residents who live on a gas line between two major gas users, while Summit plans to serve nearly everybody in the region, including residents and businesses.

Johnston said "our construction cost estimate for serving everybody in the Kennebec valley runs to about $6,500 a customer" while Maine Natural Gas rates "only allow them to put in about $3,500 worth of infrastructure per house."

Hucko said it will be up to customers to decide.

"Our rates are significantly cheaper than Summit's," Hucko said. "It's going to come down to customer choice. Customers in Augusta will have a choice. They can pay higher rates (to Summit) if they want to subsidize the pipeline being built to Madison. It will be interesting to see how many folks want to do that."

Keith Edwards -- 621-5647

kedwards@centralmaine.com

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