Friday, May 24, 2013
By Keith Edwards firstname.lastname@example.org
AUGUSTA — Construction of natural gas pipelines in central Maine is becoming more visible each day as two competing companies jostle for customers and accelerate efforts to build the backbones of dueling gas systems.
Rick Bellemare inspects a steel pipe delivered to the Windsor laydown yard of Maine Natural Gas on Monday. The firm, competing to deliver gas to Kennebec County, expects to start installing pipes in Windsor to connect a line to Augusta. Bellemare works for Enterprise Trenchless Technologies of Lisbon Falls.
Staff photo by Andy Molloy
NATURAL GAS RATE COMPARISONS
Summit Natural Gas
• Residential: $20 monthly charge; a delivery charge of $8.50 per decatherm
• Small commercial: $33 monthly charge; delivery charge of $7.50 per decatherm
• Large commercial: $285 monthly charge; delivery charge of $5.50 per decatherm
Maine Natural Gas
• Residential: $24.34 monthly charge; $3.92 per decatherm for the first five decatherms and $3.48 per decatherm beyond the first five
• Small commercial: $34.77 monthly charge; $3.92 per decatherm for the first five decatherms and $3.48 per decatherm for the next five to 95 decatherms, and $3.05 per decatherm beyond 95
• Large commercial: $260.79 monthly charge; $3.48 per decatherm for the first 100 decatherms, $3.05 per decatherm for the next 400 decatherms, and $2.60 per decatherm beyond 5,000 decatherms
Note: a decatherm is the equivalent of about one million British thermal units, or Btu, and the equivalent of about seven gallons of No. 2 heating oil.
Source: Public Utilities Commission
Steel pipe arrived Monday for crews with Maine Natural Gas to install on Route 17 in Windsor, and work continued on piping off Civic Center Drive in Augusta to reach MaineGeneral Medical Center's new regional hospital under construction.
The company also launched a newspaper, radio and direct-mail marketing campaign urging area residents and businesses to sign for natural gas plans.
"We expect to complete our main and distribution line to the new medical facility this year and will connect customers along those lines this year — before the next heating season," said Dan Hucko, spokesman for Iberdrola USA, parent company of Brunswick-based Maine Natural Gas. "We will keep going from there and expect to pipe most of Augusta in the next few years. We are laying pipe now in Augusta, not just talking about it."
Summit Natural Gas of Maine, which is competing with Maine Natural Gas, has established an office in Augusta and plans to start laying pipe by May 1. That company hopes to install the backbone of its distribution system — both in Augusta and in communities to the north and south — this construction season.
Summit, a subsidiary of Colorado-based Summit Utilities, also plans to launch its own local marketing campaign in May.
"We will have contractors installing pipe in all the communities along the steel pipeline route this year," said Tim Johnston, executive vice president of Summit.
Summit plans to install a steel mainline into Augusta, south to Gardiner and Richmond, and north to Skowhegan, Norridgewock and Madison. Distribution pipelines made of polyethylene will be extended to communities farther away from the main route in the next five years, Johnston said.
While both companies plan to provide natural gas from the same existing Maritimes and Northeast pipeline, their gas will come into Augusta via different routes, at different prices, and with different business models.
That will influence how widespread their pipelines will distribute the fuel which is now a significantly cheaper heating alternative than oil.
Each company proposes varying rates, which have been OK'd by the state Public Utilities Commission. For residential users, for instance, Summit proposes a $20 monthly charge plus a delivery charge of $8.50 per decatherm, while Maine Natural Gas plans a monthly charge of $24.34, and additional charges of $3.92 per decatherm for the first five decatherms and $3.48 per decatherm beyond the first five.
A decatherm is the equivalent of about one million British thermal units, or Btu, and the equivalent of about seven gallons of No. 2 heating oil.
Neither company's rates include the commodity cost of the fuel itself, which would likely be the same for both firms.
Johnston doesn't dispute Summit's rates are higher than those proposed by Maine Natural Gas. But he said there's a reason for that: the additional cost of Summit's plans to bring gas to more people and businesses throughout the Kennebec Valley.
"Our rates are set to recover the cost of providing natural gas service to all the customers in our service area," Johnston said. "Maine Natural Gas' rates are lower than our rates, but the consequences of this lower rate is that they cannot make the investment necessary to provide service to any except the largest commercial customers or smaller commercial customers in densely packed zones."
Hucko said Maine Natural Gas will expand to other communities in the Kennebec Valley, but only if the demand is there to make doing so financially viable.
He said Summit's distribution plan and rates may be set up to bring gas to more customers. But by structuring the rates that way, customers in more built-up areas such as those in Augusta are in effect subsidizing customers in more rural areas by paying Summit's higher rates, Hucko said.
"Because we're going to run the pipe right through Augusta, where there is a high density population per mile, it's going to be cheaper," Hucko said. "When you start to get farther away from the backbone of the pipeline, it's more expensive for the average customer wanting gas. That increases the costs for everybody, so people in Augusta end up paying $400 or $500 more a year so people in the rural areas can get gas."
While both pipelines will feed off the existing Maritimes and Northeast pipeline that runs through area communities including Windsor and Richmond, they plan to take different routes to serve this area.
Maine Natural Gas will branch off the Maritimes line in Windsor via a pipeline following Route 17 into Augusta, where it will cross the river between Memorial Bridge and Calumet Bridge at Old Fort Western.
Summit, which had previously planned to follow a similar route, instead now plans to branch off the Maritimes pipeline via two taps — both coming through Gardiner. One will run up the west side of the river to serve Gardiner, Farmingdale, Hallowell and Augusta, and the other will go up the east side of the river. It would cross over just south of Waterville and continue north to serve Skowhegan, Norridgewock and Madison in Somerset County.
Johnston said having two taps will increase the capacity of Summit's system to serve more customers.
But it remains unknown which company will provide natural gas to serve state government buildings in Augusta.
Both companies submitted bids in response to a state request for proposals last year to provide natural gas to state facilities in Augusta and Gardiner; however, the state's efforts were scuttled. An appeals panel ruled in September that the bid process used by the state Bureau of General Services to select Maine Natural Gas as the provider was flawed and invalid.
Maine Natural Gas then filed a lawsuit challenging that appeal. The lawsuit was dismissed last week, according to officials from both companies.
The lawsuit's dismissal would appear to clear the way for the state to issue a new request for proposals. State officials could not be reached for comment Monday, and officials at both gas companies said they were not aware of the state issuing a new request.
Both companies could soon square off in bids to provide natural gas to municipal, school, court and county facilities in Augusta, Gardiner and Hallowell. Those local entities partnered in a recently-issued regional request for proposals for natural gas service. Johnston said Summit will submit a bid, while Hucko said Maine Natural Gas is reviewing the proposal and will decide soon whether to bid.
Keith Edwards — 621-5647