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Natural Gas Companies Vie for Dominance in Maine
12/26/2012   Reported By: A.J. Higgins

After nearly a year of legal wrangling, a dispute between two competing natural gas companies in central Maine could be nearing a resolution. It all started when Maine Natural Gas won a state award to provide natural gas to state offices in Augusta and Gardiner. But then in September, the state reversed its decision, opening the door for a competing gas company to get a foothold in the same market. Now, Maine Natural Gas is suing the state, and both companies are vying for dominance. A.J. Higgins has more.

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The confusion over the details of both company proposals is aggravating many in state government -- even Gov. Paul LePage.

"It's insane what we're doing to ourselves," LePage said, expressing his frustration with the natural gas dispute at a recent appearance before the Bangor Region Chamber of Commerce.

"For two years, two companies have been in court fighting back and forth," he said. "Every time one makes a step forward, the other one sues them. We're not going to get it done that way. Frankly, if they both sat down and figured it out, they probably could work together -- one start at one end and one at the other, and meet in the middle, and let's get some gas going."

Eric Earnest, the chief operating officer for Summit Utilities, wishes the solution could be that easy. His company currently has conditional approval from the state Public Utilities Commission to operate in Maine, and he is pushing hard for unconditional approval.

Some of the problems the company is experiencing with the state have to do with the utility's rates. Summit has estimated its yearly residential rates for customes would average about $1,400 a year - almost double what's been put forward by Maine Natural Gas - about $730.

Summit's Eric Earnest questions whether Maine Natural Gas actually will deliver its product to large numbers of Kennebec County consumers. "If they have lower rates, it doesn't mean anything unless they will bring you a gas line," Earnest says.

Earnest says he believes that his competitor had planned to focus on large gas consumers in Kennebec county, and take a slower track toward providing its product to residential consumers. He says public documents filed with the PUC show that Maine Natural Gas can spend only about $3,300 per customer to build its supply infrastructure.

"So you figure they might have a lower rate than us, but it only allows them spend $3,300," Earnest says. "We might have a higher rate, but that allows us to spend $6,300 per customer, so we can get out a lot farther than they can."

"My response to that is: That's a pretty specious argument," says Dan Hucko, the director of media relations for Iberdrola USA and its subsidiary, Maine Natural Gas. Hucko says the company already has pipe in the ground in Windsor and is heading toward Augusta, where it has an agreement for gas sales with the new MaineGeneral Medical Center.

Hucko says his company also values residential gas sales and has a business plan that will provide gas to consumers at a lower cost.

"We've been in the gas business for a long time and serve a lot of customers. We have a lot of experts who really understand the costs," he says. "And so they've done all the calculations, and we feel that we can deliver natural gas. We can build this pipeline at the rates that we published in our tariffs, and then other negotiated power purchase agreements that we will get - the combination of those two - will fund this construction for these pipelines at an acceptable rate of return."

In the meantime, Summit is awaiting a response on its bid for unconditional approval from the Maine Public Utilities commission, which is scheduled to meet next week.



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