July 8, 2013

Consultants: Summit Natural Gas is Augusta's best municipal deal

Maine Natural Gas would be a better bargain for residents, businesses served on its smaller pipeline network, consultants say

By Keith Edwards kedwards@centralmaine.com
Staff Writer

AUGUSTA — A city consultant hired to recommend a natural gas provider has selected Summit Natural Gas of Maine, but said that recommendation could flip to Maine Natural Gas, depending on city officials' goals.

click image to enlarge

Bruce Madore, director of engineering and construction, looks over some natural gas pipe on May 24 at Summit Natural Gas of Maine's pipe laydown yard in Augusta. A city consultant told Augusta officials this afternoon that Summit would be the least expensive natural gas provider for city and school buildings, but that competitor Maine Natural Gas would be a more affordable provider for those residents and businesses it would serve.

Staff file photo by Joe Phelan

Summit's proposal would save the city the most money for heating city and school buildings, Energy Market Decisions told an ad hoc committee this afternoon. The Summit proposal could save about $641,000 a year starting in 2014, versus $622,000 via Maine Natural Gas, a savings of just less than $19,000.

The Maine Natural Gas proposal, meanwhile, could save residents who connect to their gas pipeline more money, but would reach fewer of them than Summit's, according to the consultants.

"In penetration, Summit has a slight advantage because its plan also serves Gardiner and Hallowell," said consultant Rebecca Bachelder. "I think Summit is better prepared to serve the entire community, rather than just the denser neighborhoods. But it does that with a cost. Because every foot of main has a cost."

Maine Natural Gas' annual residential heating costs, according to the consultant's report, would be $1,524, just over $200 less than Summit's estimated $1,725.

But fewer residents and businesses would likely be able to take advantage of those lower costs, because Maine Natural Gas' proposal is expected to serve fewer customers than Summit's.

Maine Natural Gas proposes 57 miles of distribution pipeline in Augusta, which is about 35 percent of the 161 miles Summit plans to build in the city. Maine Natural Gas officials have said they hope to convert 70 percent of residences in Augusta to gas, versus Summit's goal of converting 90 percent of residences and bringing gas mains to every neighborhood in Augusta.

Summit, according to the consultants, plans to invest $95 million in Augusta, while Maine Natural Gas plans to invest $54 million.

Summit also plans to run pipe to Gardiner and Hallowell, while Maine Natural's proposal only states the firm could bring a pipeline to those cities sometime in the future, if it is economically viable.

And that cost means higher rates. The consultants estimate a resident using Maine Natural Gas would spend $17,370 for gas over 10 years, not counting fees, versus $18,543 for a Summit customer, a difference of $1,173.

Those estimates were based on Summit's rate plan, which increases 1.35 percent a year, and an assumption by the consultants that Maine Natural Gas' rates will go up 1.5 percent a year, although company officials said they have no current plans to seek a rate increase.

Summit's proposal has more potential financing help built into its rates than Maine Natural Gas, consultant C. John Meeske said, which is an important factor because it can cost thousands of dollars to convert from oil to a natural gas heating system.

He said Maine Natural Gas offers rebates of up to $400 to help residents convert to a high-efficiency gas heating system and offers financing plans of up to 10 years, at 5 to 10 percent interest.

Summit offers rebates up to $1,500, a free, in-home energy audit and up to six hours of air sealing work, which Meeske said could help customers qualify for low-interest financing through Efficiency Maine.

"If you can pay for your conversion (to natural gas) with cash you have in hand, then you want to go with the guy who has got the lowest rates," Meeske said. "But if you're like most consumers, and don't have a lot of cash on hand, then the option for them is the one that provides more in rebates and helping them get over those front-end costs so they'll have the opportunity to save something, rather than continue to use oil or propane."

(Continued on page 2)

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