A bill that could expand the use of natural gas in Maine — a state currently dominated by the use of heating oil — is in committee and could be up for a vote in the state legislature shortly after it convenes on Jan. 4.

But a proposal to build a natural gas pipeline could be in jeopardy after residents of one community along the route say they are opposed to granting tax breaks for the gas line.

Under bill LD 1644, also known as “An Act to Expand the Availability of Natural Gas to Maine Residents,” the Finance Authority of Maine (FAME) would be authorized to issue bonds for natural gas pipeline projects in the state. Applicants would receive FAME approval if they commit to financing at least 25% of the project’s cost.

“We need to be looking at alternatives [to oil], and solar and wind need to be part of that discussion, but those are more long-term,” the bill’s sponsor, Sen. Roger Katz (R-Augusta), told the Bangor Daily News. “Natural gas expansion is something we can do right now.”

LD 1644, which also sets minimum and maximum capital reserve requirements, was referred to the Committee on Energy, Utilities and Technology on Dec. 21. No committee hearings are currently scheduled.

The primary beneficiary of the bill’s passage could be the Kennebec Valley Gas Co. (KV), which has received regulatory approval to build a $70 million, 80-mile natural gas pipeline from Richmond to Madison, ME, in the state’s Kennebec Valley (see Daily GPI, Dec. 21, 2011; Aug. 19, 2011). The pipeline would interconnect with the Maritimes & Northeast Pipeline (M&N).

Although KV could have access to $25 million in loans through FAME if the bill passes, the utility has been pursuing $15 million in tax increment financing (TIF) agreements from municipalities along the proposed route. Some communities have already agreed to the TIFs but one, Farmingdale, voted against the idea on Dec. 10.

“The way the majority of the people saw it, they asked why [KV] would ask for a TIF when they need to go through our town and they can get the money from the state,” Rickey McKenna, a member of the Farmingdale Board of Selectmen, told NGI on Thursday. “They can get the money somewhere else.”

McKenna said the annual town meeting usually draws between 75 and 100 people, but he estimated that 3,000 people — which is about equivalent to Farmingdale’s entire population — were on hand for the Dec. 10 meeting. He also said the citizens voted twice against letting representatives from KV speak at the meeting.

McKenna said he is aware that KV has indicated that it needs the $15 million from TIFs for the project to go forward and that the company has threatened to bypass Farmingdale over the decision. “I know [KV] has made comments about it and I have mixed emotions about it,” McKenna said. “It would be nice to have the pipes in the ground so one day we can tap into it. But they’re not going to be laying lines up into neighborhoods unless they have a demand for them. That could be 10-15 years down the road before they have enough demand.”

Besides Farmingdale, the proposed KV pipeline is to pass through Richmond, Gardiner, Hallowell, Augusta, Sidney, Waterville, Oakland, Fairfield, Norridgewock, Madison and Skowhegan. None of the municipalities currently have natural gas service.

“Converting from oil to gas is not a cheap process for a homeowner,” McKenna said. “If your furnace is gone and you have to buy another one, that would be the time to decide. But most people aren’t going to spend the money for a new gas furnace if they already have an oil furnace and it’s working properly.”

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