Despite setback, Maine still hopeful about natural gas pipeline deal9/14/2012
AUGUSTA -- State officials said Thursday they remain very much interested in natural gas being brought to more Mainers, even though flaws have torpedoed the state's award of a multi-million dollar contract to build a pipeline in central Maine.
However, in the wake of the announcement Wednesday that the state has thrown out the award of the natural gas project and will start over, no one seems quite sure what the next step is in tapping into the gas grid.
"The administration, we still believe that getting natural gas to the places here that need and want it is one of the top priorities and one of the ways we can lower people's energy costs," said Ken Fletcher, director of the Governor's Energy Office. "This doesn't change the direction we're going. We're still pursuing (natural gas) and looking at options."
An appeals panel invalidated the state's award to Brunswick-based Maine Natural Gas to build a natural gas pipeline to state properties in Augusta that's capable of expansion to much of the Kennebec Valley. The panel, responding to an appeal filed by competitor Summit Natural Gas of Maine, found that the state's bid review process was flawed, unfair and illegal.
Rather than award the project to Summit or try to re-score the bids, the state Bureau of General Services instead elected to withdraw the invalidated request for proposals, essentially tossing out all the bids.
Jennifer Smith, a spokeswoman for the state Department of Administrative and Financial Services, which encompasses the Bureau of General Services, said the decision of whether to re-bid the project is being evaluated within the bureau.
"It's premature to make that determination" whether the project will be put out to bid with a rewritten request for proposals, Smith said.
Maine Natural Gas would seem to be an obvious potential bidder if the project were to be put out to bid again, but company officials were noncommittal Thursday, saying they are evaluating their options.
"If the state issues a new (request for proposals), it will be the third time we've been asked to respond, even though we have been ready to lay pipe to the area since early this year," said Dan Hucko, director of media relations for Iberdrola USA, which is the parent company of Maine Natural Gas and Central Maine Power Co. "So, at this point, Maine Natural Gas has to decide how we want to proceed regardless of what the state does. We are currently communicating with potential business and residential customers throughout the Kennebec Valley, and will make our decision on how we proceed based on the responses we get from them."
Summit Natural Gas of Maine officials said they expect to offer a bid if and when the state issues a new request for proposals.
Tim Johnston, chief strategy officer and executive vice president of Colorado-based Summit Utilities, parent company of Summit Natural Gas of Maine, said the firm would have no hesitancy to bid on another state project, despite the flaws discovered in the previous review process by the appeals panel.
"One thing we'd really like to be able to do is have a process, as came out in the appeals process (as something that could help), that includes a pre-bid conference, to be able to ask questions. One of the things incumbent on all parties bidding will be to look at the request for proposals, and if there are any questions or issues, have a chance to discuss them," he said.
The request for proposals that Maine Natural Gas won, only to have it invalidated, was actually the second related request from the state Bureau of General Services. Testimony during the appeals hearing indicated the first request for proposals, which also included other state facilities such as the Maine State Prison in Warren, was partially withdrawn by the state, removing the link from Windsor to Augusta from the request.
Bureau of General Services Director Donald McCormack, in a letter to the gas companies that bid on the request for proposals to bring gas to Augusta, said the appeals panel decision "represents the final agency action in this matter and as such may be eligible for judicial review."
His letter said the parties have 30 days to petition the courts. Smith initially disputed that such a court appeal was allowed, but conceded on Thursday that it is.
Asked if Maine Natural Gas planned to take legal action against the state, Hucko said only: "We continue to evaluate our options and will decide on a course of action in the near future."
While Fletcher declined to discuss the state's request for proposals, he did say the state could serve as an "anchor" user for a natural gas distribution system in central Maine.
"You've usually got to have that anchor load, a major user, then build out from that. That's a very important part in that economic equation," Fletcher said of a natural gas distribution system. "We think state government use is critical, both in lowering the costs to taxpayers by lowering the state's energy costs, but also as a catalyst to cause investments to be made. It's not like we need to use public money to build the infrastructure out. If the economics are there, private money will build it out."
Fletcher said the state will continue to work to encourage private investors to bring natural gas to more of the state.
"We're going to work consistently and do what we can at the state level," Fletcher said. "People from Maine, who are pretty bright, see this as a good energy source."