Bucksport’s relationship with Bangor Gas Co. remains icy

Posted March 01, 2013, at 1:38 p.m.

BUCKSPORT, Maine — Town officials are not optimistic about reaching a deal with Bangor Gas Co. to extend natural gas service in town, according to a report to councilors on Thursday.

Describing a recent meeting of town officials and representatives from Bangor Gas, Town Manager Mike Brennan said not much was accomplished.

“It was really an experiment in hot air,” Brennan told councilors. “Nothing was accomplished. They didn’t move the ball forward in any way.”

The town and the utility company have been negotiating a plan to expand service in Bucksport for 13 years. A plan last year to install pipeline, at least to the town’s schools, fell through, with the town skeptical over hidden math the company used to calculate the town’s expected contribution in aid of construction.

Brennan and others wanted to see how Bangor Gas came up with its numbers. But the company has said its calculations are proprietary and private.

Jonathan Kunz, manager of marketing and sales for the company, said he had no comment on the recent meeting with the town, but added that he also was frustrated by the lack of progress.

“I’ve been here 15 years and I’ve never had a situation that has come up like this one,” he said.

Brennan said Thursday that unless a deal with Bangor Gas could be reached soon, the town would explore other options to bring natural gas to Bucksport. Councilor Michael Ormsby said residential demand should push town officials to do whatever it takes to bring the cost-saving energy source to town.

“I, personally, would like to see something done this year,” he said. “We had a lot of disappointed people last fall. I wouldn’t want to see that again.”

But even if Bucksport opts to look elsewhere for natural gas, Bangor Gas Co. will still be on the town’s radar.

The town was granted intervenor status by the PUC in upcoming discussions about the gas company’s service rates.

Bangor Gas has been operating under a 10-year PUC agreement that allowed the company to charge a higher rate than normal, according to Wayne Jortner, senior counsel for the state’s Public Advocate.

Usually, rates for public utilities are calculated by assessing the costs of providing service, while retaining fair profits for the utility company. Because Bangor Gas was a start-up company, the state allowed it to charge more than a cost-based rate in order to encourage growth and expansion.

There are two pieces to a customer’s bill that would be affected by a rate change, Jortner said: The “fixed cost,” charged uniformly to every customer of Bangor Gas, and the transportation rate. The current transportation rate for a residential customer in Bangor is 35.6 cents per thermal unit, Jortner said, and the fixed cost is $14.29 per month.

Jortner could not speculate what a lower rate might be because the calculation will take months of PUC assessment and analysis. The Public Advocate is seeking that re-assessment, he said, while Bangor Gas wants to keep the rates where they are.

The reassessment would likely mean a reduction in rates, Jortner said. Bangor Gas is expected to argue in favor of keeping its “start-up” status, and thus the higher rate for delivery.

“The question is, if we calculated a routine rate now, what would it look like?” Jortner said Friday. “We may be pushing for a lower rate, based on their relatively low costs. Bangor Gas, on the other hand, is looking for a continuation of their alternative rate.”

Bucksport sought intervenor status because the town’s largest company, Verso Paper, receives natural gas from Bangor Gas Co.

“I think it’s in the best interest of Bucksport to be involved in this, because anything that affects Verso affects Bucksport,” said Mayor David Keene.

Jortner said the rate-setting hearing could last for months. Efforts to contact Bangor Gas’ general manager, Jerry Livengood, were unsuccessful.

Follow Mario Moretto on Twitter at @riocarmine.

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