Letter from the Executive Director
As we prepared to discuss the topic of natural gas this month I went back to review my files. I started working as executive director on March 1, 2011. Towards the end of April that year my first board chairman Bob Hardison and I, along with then-Town Manager Mark Green, met with Mike Smith & Kelly Fowler, staff for Unitil, our City's natural gas provider. We were curious regarding the extent and whereabouts of existing gas pipelines in Sanford and whether Unitil had future plans for extending the pipeline. We learned that in 2000 the company had extended its pipeline from Wells up Main Street (Route 109) about 2.7 miles to Jagger Mill Road at the site of the former Vishay-Sprague manufacturing plant in South Sanford. Unitil had limited staff at the time of our meeting so we were unable to get much traction on our informal attempts to determine future gas prospects for Sanford. We corresponded intermittently after that with the company and kept following the costs for various fuels. Bottom-line we wanted our companies to have access to any competitive advantages that would lower their energy costs and encourage further investments and job creation in Sanford.
With natural gas a regulated industry, we also began corresponding with Unitil's state regulator - the Maine Public Utilities Commission - to better understand what constraints Unitil was under and what actions a municipality could take to encourage gas extension. Finally, we met with local companies to get their views regarding a decision to convert to natural gas. We hope the sum of our work to date is captured in the articles in this month's newsletter. We want to help a better informed business community make the right strategic energy decisions that enhance their economic stability and growth. We can't express it much better than Dave Cabana of Cabana Auto Body, our featured company this month: "At least look into it."
Maine Public Utilities Commission: How Sanford's Natural Gas Utility Works
The Maine Public Utilities Commission (PUC) regulates electric, natural gas, telecommunications and water utilities to ensure that Maine consumers enjoy safe, adequate and reliable services at rates that are fair and reasonable for both consumers and utilities. The Commission oversees emerging competitive markets for some of these services. The Commission also regulates water taxis and ferries in Casco Bay, and promotes safe digging through the Dig Safe underground utility damage prevention program.
PUC staff shared recently that Maine's gas utilities are quite busy fielding a surge of interest in conversion to natural gas service and pipeline extensions due to favorable gas prices. Even so, staff explained that gas utilities should be reasonably responsive when approached by potential customers and municipal officials. With a large extension project, a gas utility would need to have its engineering department develop an initial project estimate. However, the utility might only commit engineering resources if it has a fairly reliable indication of the potential load to be gained. Oftentimes the utility can assist in estimating additional heating load using average usage assumptions for residential properties and square footage information.
In Sanford's case, Unitil owns and operates the pipeline within the public ways that reach from the Wells line to the former Vishay-Sprague property (and any lateral lines constructed). PUC staff indicated that any decision by Unitil to extend a line to serve other customers is based upon its formulaic analysis of the economics as approved by the PUC. The broad outline of the process is that Unitil completes a calculation that weighs estimated capital investment costs and estimated load to determine the pay-back term, including a margin for return to the company on its investment. If the extension does not meet Unitil's economic threshold, the entity requesting the extension is quoted an amount of a contribution in aid of construction (CIAC) that could be paid to ensure that other (non-benefiting) customers are not required to subsidize the project. If the entity opts to pay the CIAC, Unitil proceeds with contractual arrangements, engineering design and construction.
Regarding the possibility of competition, PUC staff is not aware of any instances in Maine in which a gas utility serving within a municipality has been required to grant access to its infrastructure to another company. And while Maine Law may contemplate this possibility, to date Maine's gas utilities have typically competed for customers with separately-constructed facilities. In Sanford, with Unitil currently providing gas service, the PUC would need to approve a second utility.
Unitil Corporation
The Growth Council's Board of Directors met earlier this month with Unitil Corporation and learned from Cindy Carroll, Director of Customer Energy Solutions, that Unitil is a public utility holding company established in 1985 with operations in Maine, New Hampshire and Massachusetts. Together, Unitil’s operating utilities serve approximately 103,600 electric customers and 75,600 natural gas customers. Their natural gas company in Maine is Northern Utilities Inc. which has 30,200 gas customers across more than 20 municipalities and, combined with NH, has 1,050 miles of gas main.
Unitil is committed to the construction, operation, and maintenance of high-quality, reliable, and safe gas and electric distribution systems and to the provision of convenient and responsive service to all its customers. In 2000, gas service was extended into Sanford from the Granite State Pipeline to serve Vishay-Sprague. Michael Smith, Unitil's Manager of Business Services, indicated that the gas utility has approximately 5 miles of infrastructure in Sanford. Unitil currently has 30 gas services and 52 customers in the city. To date, the majority of gas expansion in Sanford has been in the industrial-zoned area to serve commercial and industrial customers. There are minimal residential customers.
Most of its pipeline is in south Sanford servicing the industrial parks. This includes Route 109, Gatehouse Road, Industrial Drive, Eagle Drive, service to Wal-Mart & Lowes, Cyro Road (2010), and another 2,200 feet currently under consideration(2014).
Kelly Fowler, Senior Business Development Representative, highlighted the 2,200 foot expansion that is currently under consideration on Cyro Road leading to the IDC's Sanford Industrial Park. She also provided the utility's preliminary planning for two phases of 13,000 foot expansions that would 1) run along Route 109 from the former Vishay-Sprague site to the Old Mill Road intersection where the new High School and Technical Center entrance is planned and 2) continue on Route 109 from there to City Hall and then to SMHC.
A clear priority that emerged from the meeting for both Unitil and the City is the importance of providing natural gas service to the new school. The City is considering an official request to Unitil to extend service further into Sanford. Once the process is concluded (see Maine PUC article above), both parties will have better information to determine how an extension would be funded.
We will post updates in future newsletters as this important project progresses. For more information about Unitil,
visit their website.
A Small Business Perspective on Natural Gas: Interview with Dave Cabana
In a recent discussion with Dave Cabana, owner of Cabana's Auto Body and Auto Sales in Sanford, we found out that Cabana's recently switched to natural gas. We asked Dave whether he would be willing to let us interview him and discuss the process of conversion and his company's experience with natural gas. He agreed, and this is what Dave had to say.
Can you tell us a bit about your company and its history, and tell us about your family’s connection to the business?
My dad started the business in 1961. He had worked in other body shops and was actually the manager of the local Ford dealer at the time, which was Wescott Ford back then, and he decided to go out on his own. I got involved as a young boy because back then, the body shop was at the house – it was an old farm-house converted into a barn, converted to a garage. At about 11 years old I started getting in my father’s way over there. I’m not sure if I was helping or hindering – probably more hindering than anything else. And I just grew to love it. I still do, many years later.
My wife and I have our oldest son, David Jr., who is involved in the business also. Hopefully one day he will take over. I’m encouraged by the fact that there’s another generation that wants to take over.
What fuel or fuels did you previously use to heat your facility and what led you to consider changing to natural gas?
We’ve always heated with oil until we made the conversion. The oil has continually gone up in price. We were spending in the wintertime about $1000 per week during the cold months – January, February, part of December, most of March. It concerned us to the point that we started to look for alternatives.
Talk us through the process of switching to natural gas. What research did you do? Did you approach the gas company or did they approach you? How long did the lead-up to the switch-over take?
I saw quite a few years ago they ran the [natural gas] pipeline right across the street from the shop, and never realized that they ever turned it on until one day we got a card in the mail from Unitil saying they were looking for customers in the Sanford area. We gave them a call and they were very good to work with – they were awesome and helpful. They came in and looked at our oil useage. The deal ended up being that they brought the gas right to my building at no cost to me – nothing. The only expense we incurred was converting our oil furnaces over to natural gas.
We considered alternatives – we thought of putting an outside wood-fired boiler to heat the shop; we considered a pellet-fired boiler to heat the shop. But when we got the card in the mail, it was a no-brainer.
What were your conversion costs?
The actual conversion costs – we had to take the oil-fired burner that was in our spray booths and convert it to a furnace that used natural gas, and the same with the furnace that we had that heated the rest of the body shop. We put two smaller units in to heat the shop that produced more BTUs than the one big one I had. So that total conversion including labor was about $16,000 to convert.
Can you share some figures about Cabana’s fuel use before and after the switch, the cost of conversion and how much you have saved by making the switch to natural gas?
We looked at the options. I got an estimate from Dave Plant, who did the conversion for us and did an excellent job. He gave us an estimate and we looked at the numbers with Unitil and they said, “You know, your energy bill is going to be cut in half.” And actually, we have cut it over 50%. Our biggest gas bill has been under $1800 for one month – and this has been an exceptionally cold winter. In the past we were spending $4000 per month during the cold months.
We know eventually the investment will be paid for – and some of that cost was additional plumbing of gas in the existing shop in preparation for the new addition that we will be starting next month. So the $16k wasn’t just to convert what I had, it was planning for future use.
What changes to equipment did you have to make? How complicated/expensive/invasive was the changeover process and how long did it take?
There were no problems – it went very smoothly. They were so helpful. They came in on the day they hooked the gas up, and they were there at quarter to seven in the morning with all this equipment and crew. I’m thinking, “Oh boy, my yard’s going to be torn up for three days – this is not good.” And the guy looks at me and says, “We’ll be out of here before 5:00.” I said, “Really?” He said “Yep.” By quarter to four, they were packed up and gone, finished.
Did you have any preconceptions about natural gas before you made the switch – and did they prove to be right or wrong?
Not really. My wife was concerned because, you know, when you see a house that’s blown up it’s usually because of a natural gas problem. But no, I had no concerns at all. We were looking to try to cut our energy costs and natural gas is here. It’s not coming over from the other side of the world. It’s our stuff. That alone is most important for me.
Were there any regulatory issues around the change-over?
No. They said they would take care of anything that needed to be done, and they did. I basically signed a contract with them and they took care of it. They did cap how much they would spend to get it to my building – they said they would spend up to $12,000 to get it to me. And I never got a bill, so I’m assuming there’s nothing owed.
I think we had to sign a contract for five years. But I saw the work they did just to get it to my building and I thought, that’s a huge investment on their part. Just the meter that they use – they guy who installed it said it is worth $15,000. I looked at that and said, “You’re kidding me, right?” And he said, “Nope – don’t wreck it!”
You mentioned that Cabana’s will be expanding. Would your future plans be different if you hadn’t switched to natural gas?
It makes it look like, you know, we’re spending $4000 a month on heating the building that we’ve got. The expansion is ¾ the size of the existing building, so would I be spending $7000 a month? That’s an awful lot of money and now, even if my gas bill doubles, it’s still less than I was paying before. And I don’t believe it will.
Do you think having natural gas available throughout Sanford would affect businesses and the community?
I would say yes. Anybody that can have natural gas versus whatever else they’re using, it’s got to be a savings. A friend of mine has a business in Wells on Rt. 109 and he was heating his business with propane. He made the conversion to natural gas with Unitil and he’s saving I think 60%. It’s unbelievable the amount of savings. And the nice part about it is, it’s always on. I don’t have to look at the oil tank and think, “I’ve got to call the oil company to get some oil today because I’m not going to make it!” It’s always on.
"If three people that have a business in the middle of Sanford call Unitil and say they want gas, probably not much is going to happen. But if three or four hundred do, that changes the picture quite a bit." - Dave Cabana
What advice would you give to another Sanford company that might be considering making the switch to natural gas?
When I think how long that pipeline has been in the ground… I just wish I’d done it earlier. Remember when oil went to $4 something per gallon? Those were painful months. But you know, the cost of oil is crazy. It’s crazy to not even consider natural gas. Every business owner would have to make their own decision: what’s it going to cost me to convert it, what are my savings going to be? But I will say that the people at Unitil were pretty correct when they said I would save 50%. I’m actually saving probably a hair more – I’ve never crunched the numbers, but comparing the utility bill from them versus what I was paying where we were buying our oil.
At least look into it and call them. If three people that have a business in the middle of Sanford call Unitil and say they want gas, probably not much is going to happen. But if three or four hundred do, that changes the picture quite a bit.
Stay tuned for a video of the interview with Dave Cabana and a company profile soon to come on our website.
Sanford's inaugural film festival, pulled together in less than two months and held on May 31st & June 1st, was by all accounts a smash hit with the hundreds of attendees from within and outside of the community! The festival garnered high praise from film-goers and resulted in a great deal of positive press in the media. For links to news articles, television news clips, radio broadcasts and more, visit the 
Adam Cote is a Co-founder and CEO of Thermal Energy Storage of Maine, a company dedicated to providing Maine families with affordable home heating solutions and enhancing Maine’s energy independence through the promotion of electric thermal storage (ETS) and off-peak heating and cooling systems. He previously served as Senior Vice President of Global Relief Technologies and practiced law in the renewable energy field at the Portland Law firm of Pierce Atwood. He is a graduate of Sanford High School, Colby College and the University Of Maine School Of Law. Adam also serves in the Maine Army National Guard, with prior deployments to Bosnia, Iraq and most recently, to Afghanistan as a Company Commander in Maine’s 133rd Engineer Battalion. He was recently awarded the Bronze Star Medal for his service in Afghanistan. He has served on numerous boards including the Greater Portland Salvation Army, Mid Coast Regional Redevelopment Authority, Sanford School Committee, National Advisory Council for the Small Business Administration and the Colby College Alumni Council. He ran for Congress in 2008, placing second in a six-way primary. In 2013, he was honored by the Obama Administration as a “Champion of Change” as a veteran advancing clean energy and climate security. He lives in Springvale with his wife, Paulina, and their five young children: Ana, Audrey, Mia, Adam Jr., and Michael.
