Except for gardeners, few people in Maine are more eager to see the frost go out of the ground than Mike Tanchuk, the new president of Summit Natural Gas of Maine.
The 2012 arrival of the Colorado-based utility looked to be a game changer for Maine’s energy market. In a state where oil heat still dominates, Summit pledged to spend $350 million to connect 15,000 homes in the Kennebec Valley to natural gas, and $73 million to serve 80 percent of the homes in Cumberland, Falmouth and Yarmouth within five years.
But Summit got off to a rough start, particularly in the Portland suburbs. A harsh winter set back the construction season, and when digging finally began in spring 2014, the company tried to hook up too many people with too few resources. That resulted in safety violations when drilling came too close to sewer lines, and fines at the state Public Utilities Commission. It also left a bad taste with frustrated customers, who were promised gas by the fall but didn’t get it. Taken together, the problems pushed back the original build-out timetable by a year and created a public relations challenge for a company that needs to build trust to gain customers.
Things will be different starting next month, according to the new president. In an interview with the Press Herald, Tanchuk laid out a more-focused strategy of reaching fewer homes and businesses this year, and making sure the ones that are targeted get gas service on schedule.
“We want to get it right in 2015,” he said.
Tanchuk also sought to clarify how many customers are now receiving gas, versus the company’s stated ambitions. He also elaborated on how Summit has spent roughly $148,000 to compensate customers for installation jobs that were left hanging by now-defunct Dave Ireland Builders, and why the company doesn’t think it has to compensate customers in Cumberland, Falmouth or Yarmouth for failing to meet its contract obligations, as it had to do in central Maine. That latter point continues to be a live issue at the PUC, which has opened a comment period on Summit’s response.
Tanchuk came to Maine in January to replace Michael Minkos, who retired. Tanchuk is the former CEO of Ormet Corp., an Ohio-based smelter that filed for bankruptcy in 2013 when electricity costs skyrocketed. He said he took the Summit job because he was interested in the potential for growing a utility business here. He now lives in Hallowell.
Here’s a brief summary of the high points of the interview discussion, which also included Mike Duguay, Summit’s director of business development:
Q: Your news releases say that by the end of the year, Summit will make gas “available” to 10,000 homes and businesses. You also say Summit has 3,000 customers “under contract.” Can you break it down?
A: By the end of 2015, Summit plans to have mainline pipes in front of 10,000 homes and businesses. Roughly 55 percent of that will be in Central Maine, and 45 percent in the Portland suburbs. We expect to sign contracts with 2,400 new customers this year, so by the end of 2015, we expect 5,400 customers to be on gas.
The 10,000 figure refers to the potential to serve at the end of the build-out. We’re hoping for an 80 percent to 90 percent penetration rate within five years, so that adds up to 8,000 to 9,000 customers ultimately.
Q: Filings at the PUC from early this month indicate that 351 customers in Cumberland, Falmouth and Yarmouth didn’t receive service by their estimated installation dates, but that 131 now are on gas and 58 are waiting to make connections. Can you clarify how many total customers you have in the three towns?
A: We currently have a total of 3,000 Maine customers on gas, with half in the three Portland suburbs.
Q: What went wrong last year?
A: First, the build size was too large for the resources. Second, we had incomplete information about where sewer lines were, because some town records are old and don’t include the precise elevation and depth. This year, we’re pre-locating the sewer laterals and physically checking them before drilling, to confirm clearances. We’ve developed a more-detailed, street-by-street installation schedule to better identify drilling obstructions. Third, we got behind because the frost was late leaving the ground and it rained a lot in the spring.
Q: Despite that, you worked into the winter in Cumberland, Falmouth and Yarmouth. But you don’t have many customers to show for it. Why?
A: A lot of the work we did was backbone main lines, what you need to distribute gas to the areas. Like Tuttle Road and Blanchard Road in Cumberland, Route 1 in Falmouth, Main Street in Yarmouth. This year, we’ll be doing smaller builds in areas with the highest demand and in neighborhoods next to where response is already strong. We’re going to be gassing up shorter lengths of pipe, so people aren’t waiting three or four months for gas.
Q: You’d had some bad press about last year’s stumbles. How do you win back trust?
A: We’re holding meetings in local communities. Telling residents where we plan to go. And the biggest thing with trust is to do what we say. We’ll gain the trust back over time, but that won’t happen overnight. We’re also providing quarterly reports on construction progress.
Q: In the 17 communities in central Maine, you paid customers up to $250 each as a penalty for service delays. But your recent filing at the PUC says you don’t plan to do that in the Portland suburbs. Why?
A: The PUC stipulation agreement lays out the 17 communities, but doesn’t talk about the others at all. It doesn’t trigger payments outside the Kennebec Valley. That said, we have helped out some people on a case-by-case basis who had hardships after converting their heating systems, before gas was available. We have paid $1,500 for the differential cost, for example, between propane and natural gas.
We do warn people, however: Don’t convert until we tell you gas is available at your house.
Q: Dozens of Summit customers lost money last year when one of your partners, Dave Ireland Builders, abruptly closed. How have you worked with these customers?
A: Customers and vendors who have brought their problems to us, we have tried to help them. Equipment that was not completely put in, systems that weren’t working properly. As of last November, Summit has given $19,000 to customers who made deposits with Dave Ireland Builders, and $52,240 to those who lost their deposits. We also have spent $10,700 to correct work and $66,800 to cover materials and warranties. We felt it was the right thing to do. We think those are some of our most grateful customers.
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