A special state appeal panel plans to rule in September which of two competing proposals would be authorized to build an 80-mile-long natural gas pipeline to Maine's state capital, Augusta, and the surrounding Kennebec Valley. The chosen pipeline would bring natural gas to the area for the first time.

In June Maine officials selected Maine Natural Gas (MNG), a company affiliated with Central Maine Power Co. (CMP) parent company Spain-based Iberdrola USA to build the pipeline system in the Augusta area. The decision was promptly appealed by the losing bidder, Summit Natural Gas of Maine. A state hearing for the two competing proposals was held Aug. 14, and closing arguments are due Friday before the special appeal committee rules.

MNG was given the right to build the Windsor-to-Augusta pipeline by the state's Bureau of General Services. Colorado-based Summit, which is in the process of acquiring Kennebec Valley Gas, objected, in part because it said its pipeline would create more jobs and serve more communities.

The Maine Public Utilities Commission last year conditionally approved plans to build an 80-mile pipeline that would bring natural gas service to a swath of the state for the first time. The eight-inch diameter transmission pipeline would run through more than a dozen towns from Richmond to Madison in the Kennebec Valley region (see Daily GPI, Aug. 19, 2011). Maine Natural Gas already has full authorization to build its pipeline, pending the appeal resolution of the state bidding process.

Summit argues that the bidding process used by the state was flawed; MNG contends it won the bid in a fair, albeit imperfect, process. The bids are starkly different with the Brunswick, ME-based gas distributor proposing to serve only state offices and facilities on either side of the Kennebec River in Augusta; the Summit proposal eventually would serve residential and industrial customers. Summit's proposed pipe eventually would traverse more than a dozen central-Maine towns, none of which currently have a supply of natural gas.

"Maine Natural Gas has been ready since the end of January to start this pipeline," a spokesperson for the Iberdrola USA utility told NGI. "We have all the permits, all the engineering done, contractors lined up, pipe orders on hold and ready to buy, waiting to start. It has just been one delay after another. They [Summit backers] are really holding the people of Augusta hostage, making them pay higher energy costs than they need to." He said if Summit's larger proposal for the valley prevails, people in Augusta would have to help subsidize those costs in their rates.

MNG's plan calls for a $19.3 million project, which would create 40 jobs during the next two years. Summit estimated its broader-scale project at $150 million, which would create 435 jobs to eventually serve 15,000 residential and industrial customers by its third year of operation. Summit's pipe is designed to stretch north from the capital to Waterville and terminate at Madison, ME.

Most of the new transmission pipeline, which would run along the west side of the Kennebec River in the south-central part of the state, would be buried in public right-of-way with distribution pipelines interconnecting at nine points, based on the original proposal. Gas supplies would come from the existing 685-mile Maritimes and Northeast interstate pipeline tapping offshore Nova Scotia supplies on a transmission line in which Spectra Energy is the majority owner/operator (see Daily GPI, July 30, 2010). The pipeline runs near Richmond.

Maine has been characterized by pipeline proponents as having the highest per-capita use of oil in the nation and twice that of other New England states, so the pipeline proposals have been touted as potentially lowering fuel costs for all customer segments: residential, commercial and industrial.

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