HARTFORD, Conn. — Connecticut’s ambitious natural gas expansion plan took its first step with a project announced Monday to establish gas lines in downtown Wilton.

Gov. Dannel P. Malloy joined Wilton officials and representatives of Yankee Gas to launch the start of a 3.5-mile natural gas expansion project. Wilton will be the first community in Connecticut to work with a utility using a state plan enacted last year intended to cut energy costs by expanding Connecticut’s natural gas distribution systems.

First Selectman William F. Brennan said the town approached Northeast Utilities a few years ago. “We mentioned we’d love to expand natural gas to Wilton,” he said.

The state plan extended loan payoffs for capital expenses to 25 years from 15 years. Brennan called that provision a “key element in the success of the program.”

The typical homeowner faces no upfront connection costs and will pay an extra 10 percent premium on monthly bills for 10 years. An average-size business would pay an extra 50 percent premium on its monthly bills over a decade.

Oil dealers who typically are family businesses have criticized Malloy’s natural gas expansion plan as unfair competition promoted and subsidized by the state. And environmentalists who oppose hydraulic fracturing, or fracking, that releases natural gas from beneath the ground, have challenged greater demand for natural gas because it will lead to more fracking.

Yankee Gas will install a 3.5-mile underground pipeline linking natural gas to Wilton’s downtown business district, municipal buildings, schools and a community center. The cost will be $4 million, said Tricia Taskey Modifica, a spokeswoman for Yankee Gas.

Wilton will spend $2 million for boiler conversions in three schools, but the town had budgeted that amount because the equipment is more than 30 years old, Brennan said.

The town could save up to $500,000 a year in energy costs, he said.

State regulators approved a financing plan last year requiring no up-front connection costs for homeowners. Homeowners and businesses will pay a monthly premium over 10 years. Connecticut Natural Gas, Southern Connecticut Gas and Yankee Gas have told regulators they’re prepared to spend tens of millions of dollars to expand natural gas lines in the state.

Brennan said the gas line will be installed by November and the town and utility have a year to connect schools.