AUGUSTA — The LePage administration is backing a bill that would allow natural gas providers access to state-backed bonds for pipeline expansions. 

The proposal, LD 1644, sponsored by Sen. Roger Katz, R-Augusta, is designed to facilitate natural gas expansion to a state that has been historically dependent on oil to heat homes and businesses. While the bill is receiving broad public support, it could face behind-the-scenes opposition from the Maine Energy Marketers Association, the industry group representing the state’s oil dealers.   

The consortium, formerly known as the Maine Oil Dealers Association, in November met with LePage following several public statements indicating he was willing to use public money to support natural gas development in Maine. The meeting was followed by a strongly worded letter to MEMA’s members stating that they should “take offense that our free-market governor would be encouraging the state to pick winners and losers in the energy market.”

That rhetoric was absent from Wednesday’s public hearing on LD 1644. However, MEMA President Jamie Py urged lawmakers on the Legislature’s Energy Committee not to restrict Katz’s proposal to natural gas.

Py also cautioned lawmakers to “think long and hard” about betting on a commodities market that currently favors natural gas over oil, but may not in the future.

The current affordability of natural gas due to the discovery of domestic shale reserves is the impetus for the LePage administration’s efforts to expand its access to Mainers and Katz’ bill.

LD 1644 would essentially expand the Finance Authority of Maine’s ability to consider bonds for natural gas expansion projects. The proposal builds on efforts from last session’s LD 1091, which granted the quasi-governmental agency authority to consider those projects, but only if the costs didn’t exceed the annual limit established by FAME. 

Katz said the bill passed last year worked for smaller projects, such as the Woodland Mill pipeline extension. However, the limit wouldn’t work for proposed pipelines being considered in Penobscot Valley and Kennebec Valley. 

Under Katz’ proposal, FAME could provide loan guarantees to such projects as long as the developer contributed 25 percent of the expected cost of the project.

Katz acknowledged that backing natural gas companies could be risky. However, he said the reason they were risky was because the lack of natural gas makes them less competitive in their respective markets.

Without the support of large industrial users, he said, there isn’t enough financial support to pay for expensive pipeline expansion. That’s where the state can help, he said. 

Lower energy prices, Katz said, is not only important to Maine consumers, but vital to the state’s economy. 

“When other parts of our country can offer prospective businesses not just lower, but much lower energy costs, we often lose out to those competitors,” he said. 

He added, “When we see an opportunity to assist in lowering those energy costs, we ought to jump on it.”

Katz’ proposal was supported by the Maine public advocate and business groups.

The LePage administration offered “qualified” backing, an endorsement that could reflect the administration’s attempt not to appear as though it’s favoring one energy source over another. 

The oil dealers have long had a voice in Augusta. During the 2010 election, MEMA’s political action committee made $11,500 in contributions to candidates and PACs, including a $750 donation to LePage.

All but $500 of the 2010 donations went to Republican candidates or PACs.

The Energy Committee had not yet scheduled a work session for LD 1644.

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