AUGUSTA — Summit Natural Gas of Maine officials said Tuesday the company has no plans to build out service this year in Oakland, Norridgewock, Farmingdale or Skowhegan and will instead concentrate its central Maine residential expansion on neighborhoods in Waterville, Fairfield and Augusta.
Now in the third year of a massive pipeline construction project, Summit executives said the company is hitting its stride and can avoid construction delays and safety issues that have bedeviled the multimillion-dollar gas project since it began two years ago.
To avoid repeating the same mistakes, the company has hired additional staff, including a pipeline integrity engineer, and has updated monitoring and inspection processes. The company also promises a “proactive” approach to communicate with customers this year, including a newly launched interactive online map showing proposed and current projects in the three communities, as well as in Yarmouth, Falmouth and Cumberland outside Portland.
“We’re under a microscope right now — that’s why we’re making those changes,” said Stacey Fitts, a former Republican state legislator who is now Summit’s regulatory manager. “We want a system that we, our customers and the regulators believe is safe.”
Summit comes into the 2015 construction season with 3,000 customers under contract in a dozen cities and towns in the Kennebec Valley and in Portland suburbs. The company is a subsidiary of Colorado-based Summit Utilities Inc., owned by a J.P. Morgan Infrastructure Investment Fund.
Summit expects to bring access to natural gas to another 2,400 customers this year. The expectation of the company’s ownership is to continue that pace of expansion every year for the foreseeable future, according to Mike Duguay, Summit’s director of business development.
Its Maine network, including lines in three Cumberland County towns in southern Maine, is estimated to cost $460 million.
Summit has run into problems it didn’t anticipate over the past two years, including finding qualified employees and contractors, the region’s relatively short construction season, cost issues and the physical barriers presented by the Kennebec Valley’s rocky geology.
Those issues created setbacks including missed deadlines for service hookups in Augusta, Madison and other areas, as well as safety concerns that led to at least three separate Public Utilities Commission probes into probable violations and fines.
To find workers with the technical qualifications to install the pipeline, the company had to retrain staff or hire experienced workers from out of state, Duguay said. Construction crews also had to contend with unanticipated ledge and bedrock in the Kennebec River valley that complicated and delayed construction.
The fact that projects in the coming years will be more compact also means it will be easier for company staff to monitor, he said.
KENNEBEC VALLEY BUILD
Summit has been constructing its central Maine backbone distribution trunk line from Windsor to Madison since 2013.
The next phase of the natural gas distribution system’s buildout has either started or is expected to start soon across five communities in the Kennebec Valley. Summit will “backfill” some neighborhoods in Hallowell and Gardiner, but the main push will be into residential neighborhoods in Fairfield, Waterville and Augusta.
Most of the main line in the region has been driven by its large anchor customers, including Madison Paper Industries and Backyard Farms in Madison, the Sappi paper mill in Skowhegan and the Huhtamaki factory on the Waterville-Fairfield line.
In expanding its service, Summit will set its sights on areas along its main transmission lines before moving into other areas, according to Fitts and Duguay.
The focus in Augusta, Waterville and Fairfield will be on installing two-inch plastic distribution pipelines underneath neighborhood streets.
In Waterville, the company plans to install lines in the residential northern part of the city bordered roughly by College Avenue to the east and Sanger Avenue to the west.
In Augusta, the plan is to install lines in east side neighborhoods around North Belfast Avenue and South Belfast Avenue.
In Fairfield, lines will be installed in the dense residential area southwest of downtown.
The plans are part of Summit’s strategy to build out through towns and cities where it already has an established presence before taking on new territory, a “phased approach,” Duguay said. For example, Summit hopes to provide gas access to half of Waterville by the end of this year and finish building out in the city within two years.
But that means that some outlying communities that Summit is authorized to serve may have to wait years to get natural gas.
Neither Fitts nor Duguay could say Tuesday when the company intends to pursue construction in other central Maine communities.
Constructing a gas main line is “extremely disruptive to a community,” and the company wants time to plan before launching expansions, especially those that include river crossings to serve communities such as Madison and Skowhegan, Fitts said.
Although the expectation from communities may be that they would have gas right away, the reality is that it will take time.
“This is not a system where you just snap your finger and it’s installed,” Fitts said. “I think they just need to be patient.”
In March, Summit representatives told disappointed town councilors in Winslow that the company didn’t have immediate plans to expand into the town.
Duguay told councilors that the cost to bring the gas lines across the Kennebec River were far higher than the company expected. In addition, solicitations in Winslow neighborhoods revealed that demand for natural gas was not as strong as anticipated in the town.
Norridgewock residents last June agreed to create a tax increment financing district around the pipeline construction.
Town officials said the move would help the town capture 100 percent of the tax revenue the pipeline generated.
Town Manager Michelle Flewelling said at the time the district would bring in an estimated $246,000 in additional revenue every year.
While the main pipeline goes through the town, it’s not clear what impact the decision to not build out will have.
‘SELF-INFLICTED’ PROBLEMS
In an interview with the Portland Press Herald in March, Summit President Mike Tanchuk admitted the company had tried to do too much with too few resources in 2014 and was working to address the issues this year.
Some of the problems Summit experienced were “more self-inflicted than others,” Fitts said Tuesday.
In its initial buildout, Summit was stretched thin, and it was difficult to provide oversight and to monitor the contractors who were working on the backbone pipelines, he said.
Some of the results are in evidence now in Waterville, Fairfield and Madison, as contractors from ETTI, a Lisbon-based company, dig up and inspect more than 400 electrofusion tees that may have been installed incorrectly by CCB Inc., a construction firm from Westbrook.
Minor, manageable gas leaks might be expected, even with the brand new infrastructure Summit is building, Fitts said.
“In gas systems, leaks happen,” he said.
Although the plans are clear on paper, actual construction will be driven by consumer interest.
The company needs to have enough customers who are willing and ready to connect to the service before it installs a line, so there is no guarantee all the lines will be installed this year, Duguay said.
“It’s got to be interest-based at some point,” Duguay said, adding that the company’s experience in Waterville and Fairfield so far has been positive.
The company doesn’t have an exact calculation for how many residents it needs to sign on before it installs a line on a certain street, Duguay said. Factors such as building cost, difficulty and distance help determine how many customers the company needs, he said.
There is no cut-off point to sign up right now, but deadlines will be set as construction progresses, Duguay said.
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