October 30, 2012

MaineGeneral signs 10-year deal with Maine Natural Gas for new hospital heating

Company says Kennebec Valley expansion coming in 2013; competitor takes umbrage at claims

By Keith Edwards kedwards@centralmaine.com
Staff Writer

AUGUSTA -- MaineGeneral Medical Center has agreed to buy 10 years' worth of natural gas for its new regional hospital from one of two companies competing to build a pipeline in the region.

click image to enlarge

Maine Natural Gas started construction earlier this month installing a natural gas pipeline along Route 17 in Windsor, seen above. The firm worked with the Maine Department of Transportation and its contractors to install 12-inch coated steel pipe under 11 culvert crossings that are being rebuilt this year as part of a paving project.

Photo courtesy of David Bosse/Maine Natural Gas

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Maine Natural Gas officials said securing that commitment from such a major user has prompted them to move ahead with construction of a pipeline into Augusta -- even without a commitment from the state government to buy gas the pipeline will bring.

"We're coming to Augusta," said Mark R. Beaudoin, director of quality and franchise development for Iberdrola USA, parent company of Maine Natural Gas and Central Maine Power. "We have a deal with one major customer and we're negotiating with others. We're going to serve our first customers in 2013."

The agreement comes as Maine Natural Gas is moving quickly to build on momentum to build the pipeline over rival firm Summit Natural Gas of Maine.

Meanwhile, Maine Natural Gas officials sought to address concerns among some local business leaders that its pipeline plans weren't as far-reaching and extensive as Summit's plan.

"Beyond Augusta, we do have plans to serve up north, up into the Kennebec Valley," Beaudoin said. "We're seriously in negotiations with major anchor customers throughout the Kennebec Valley. The timeline to expand up north depends upon those negotiations with those major anchor customers."

Darrel Quimby, vice president of Maine Natural Gas, recently told city councilors in Augusta that the firm will lay some sections of pipe over the next couple of weeks near the new hospital site in north Augusta, on Old Belgrade and Bog roads, off Route 27.

Chuck Hays, chief executive officer of MaineGeneral Medical Center, confirmed Monday the hospital and Maine Natural Gas had struck a deal so natural gas could be the hospital's primary heating source.

"We went with Maine Natural Gas mainly because they can get us up and running by the time the new regional hospital opens up," Hays said.

Dan Hucko, a spokesman for Iberdrola, said the agreement starts Nov. 1, 2013. MaineGeneral's new regional hospital is expected to open about a month after that.

Counting on gas

Quimby said getting a gas line to the hospital will be Maine Natural Gas's top priority, because the fuel is a necessity at the hospital.

The hospital committed to use at least 1 million decatherms to be provided by the pipeline Maine Natural Gas will build. One decatherm is the equivalent of 100,000 British thermal units, or Btu, and the equivalent of about 7 gallons of No. 2 heating oil, according to www.think-energy.net.

Hays said between the new hospital and the adjacent Harold Alfond Center for Cancer Care, MaineGeneral anticipates using about 100,000 decatherms a year. The distribution agreement with Maine Natural Gas should cover the hospital for about 10 years.

Hays said MaineGeneral designed the hospital to be heated by natural gas because using it will significantly decrease air emissions and the hospital's carbon footprint and it costs less than fossil fuels.

He said using natural gas instead of heating oil could save the hospital about $600,000 a year.

Quimby said natural gas is currently about half the cost of oil. He said it would cost the average resident now heating with oil about $2,500 to convert to heat with natural gas.

Hays said the hospital had originally planned to use a liquefied natural gas system, but piped-in gas is estimated to save more than $250,000 in infrastructure costs.

He said he could not disclose the rate MaineGeneral secured with Maine Natural Gas. He noted the agreement with Maine Natural Gas is for distribution of the gas., and that the hospital will be able to buy gas from any firm connected to the pipeline.

(Continued on page 2)

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