Plan to expand natural gas to Bucksport this year falls through amid acrimony, mistrust

Posted Sept. 28, 2012, at 6:49 p.m.

BUCKSPORT, Maine — A plan that would have saved about $100,000 in heating costs this winter by switching Bucksport’s schools to natural gas has fallen through after the town and Bangor Gas Company could not come to an agreement to expand the utility into the town.

The failure of both sides to come to a deal also affects 11 residents and 20 businesses who had signed up to be the first in Bucksport to switch to natural gas.

Regional School Unit 25 had budgeted for the savings this school year. Superintendent Jim Boothby was unavailable Friday, but previous reports state that the district will divert money from the RSU’s capital improvements projects to make up the difference.

The town and utility have been in talks for years about bringing natural gas to Bucksport. At Thursday’s Town Council meeting, representatives from the utility asked whether the town would agree to its terms or if more negotiation would be necessary.

Jerry Livengood, Bangor Gas’ general manager, said that if the company was going to build for this winter, workers needed to start by Oct. 1.

“The reality is there are some things to work out,” said Livengood. “But people are calling us, asking if we’re going to build out this year. This is the 11th hour.”

Several negotiating hurdles were aired during the meeting, and councilors said that until those issues were resolved, they couldn’t give the project a green light. Both sides said they hoped a deal could be reached and infrastructure completed by next winter.

Among the obstacles, Bucksport officials said they were upset that Bangor Gas won’t disclose how it devised revenue projections for the first five years after the gas lines are laid. That figure is important because it’s half of the equation used to come up with the “CIAC” — that’s the “contribution in aid of construction,” or the amount of money the town will pay to bring natural gas to Bucksport.

The CIAC ensures that within five years, Bangor Gas will have recouped the cost of bringing natural gas to Bucksport. It is the difference between the cost of the project — currently estimated at about $709,000, according to Jonathan Kunz, manager of marketing and sales at Bangor Gas — and five years of projected revenue.

The company set the CIAC at $300,000, but Bucksport said it can’t trust Bangor Gas’ revenue projections if it can’t verify how those projections were calculated.

“As President Reagan used to say, ‘Trust, but verify,’” said Economic Development Director David Milan on Friday. “That’s what we’ve been trying to do all along.”

Bangor Gas said there are a lot of numbers it will not provide to the town. Aside from revenue figures, it also won’t give the town details about project expenses that came from subcontractors.

“Seven pipeline contractors bid on this contract,” Livengood said. “They have a right to keep that information confidential.”

Another sticking point was Bangor Gas demanding the town’s full share be paid upfront. Councilors said that kind of arrangement is unheard of. Councilor Byron Vinton III said he worried that if all the money was paid before work was complete, the town would be stuck holding the bill if there were problems, particularly with repaving roads after they are dug up to lay pipe.

The town wants a payment plan that allows them to pay some money upfront, some during construction and some when the job is complete.

Kunz said that the company’s tariff, the state document that regulates the utility, does mention the option of a payment plan, but no such structure currently exists. “The only thing we can do is ask for the full CIAC upfront,” he said.

But in an interview Friday, Maine’s Deputy Public Advocate William Black said he disagreed. “I’m not aware of any provision in the Bangor Gas Tariff or the PUC rules that require that the town of Bucksport pay full amount of the CIAC in advance of the start of construction.”

Livengood told councilors Thursday that he recognized there’s risk involved, but said his company was also taking on financial uncertainty.

If the company discovers ledge while laying line, it would have to pay extra to work through it, he said. Other complications or unexpected costs also would have his company on the hook.

“We’ve already bought material and incurred costs,” Livengood said. “It’s not like I’m standing here saying, ‘We haven’t spent a dime, give us money now.’”

The two sides also have disagreed about whether the town would agree to tax increment financing, which would refund one half of the property taxes paid by Bangor Gas. Livengood wrote in a Sept. 21 letter that the TIF is a factor in calculating the feasibility of the project.

“Unfortunately, without this benefit, the economics supporting the investment slip further toward the negative,” he wrote. “As a result, the project will not move forward without the TIF or an equal tax abatement.”

The town said it would only use a TIF to reduce Bucksport’s contribution for the project. Milan said Friday that the point of a TIF is to attract businesses that may not see a return on investment right away. That problem is already resolved by the CIAC, he said.

Milan said the TIF was just another ultimatum without explanation.

“They have a lot of demands, but don’t want to give us any information that shows why those demands are necessary,” he said.

Perhaps the tensest moment in the evening came when Town Manager Michael Brennan tried to explain to Livengood and Kunz why he was loathe to pay the town’s full contribution up front.

“I talked to a half-dozen town managers who had little good to say about Bangor Gas,” Brennan said. Shortly before that, Councilor Belle Ryder, who is also assistant town manager of Orono, said the company’s track record of cleaning up after itself is “terrible.”

Bangor Gas services five communities: Bangor, Brewer, Old Town, Orono and Veazie. Reached for comment Friday, two managers offered different assessments of the company.

In Orono, Town Manager Sophie Wilson said councilors have heard many complaints from residents about the company. She also said the town had to wait nine months for the company to repair a sewer main and road after it punctured the main when laying natural gas lines.

“Councilors have had conversations about complaints they’ve heard from constituents about sewer lines being hit, and the length of time to fix that, and about the length of time it’s taken [Bangor Gas] to clean up after themselves,” she said.

In Bangor, City Manager Cathy Conlow said the city is happy with the company’s track record, despite a mishap with road repaving. She said it’s unfair to expect a company to have a perfect track record. The most that should be expected, she said, is that the company be willing to sit down with a municipality to find solutions.

“Nothing will be perfect, so I’m not going to lie and tell you everything is hunky dory,” she said Friday. “But we’ve been able to sit down, the city and the company, and work through it.”

Despite the mistrust and acrimony on display during the council meeting Thursday, both sides said they’re optimistic a deal will be reached eventually.

“We may have beaten you up a little bit tonight, but I’d like to continue the discussion so we can get the job ready and get it done next year,” Vinton said.

Both sides also are hopeful they will convince more residents and businesses to sign up for natural gas. The more who do so, the smaller the town’s contribution will have to be, and the rosier the town will look to Bangor Gas.

Follow Mario Moretto on Twitter at @riocarmine.

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