Friday, May 9
PORTLAND, Maine - With oil prices continuing to rise, a former ski industry mogul and part-owner of the Boston Red Sox has started a venture that aims to convert thousands of home heating systems in the Northeast from oil to wood pellets.

Les Otten is investing $10 million to launch Maine Energy Systems, which will import pellet-fueled boilers from Europe and install them in homes beginning this summer.

The company initially will focus on Maine, with Otten hoping to switch 10 percent of the state's oil-burning residences - about 44,000 houses - to pellets within five years. The company also plans to expand to New Hampshire, Vermont, Massachusetts and New York.

With oil prices topping $125 a barrel, wood pellets provide cheaper energy for those willing to spend money to install a new furnace, Otten said. Currently, about 80 percent of Maine homes are heated with oil or kerosene, the highest share in the nation.

"This is like a giant social experiment," Otten said. "Our surveys show people want to switch from oil, but are they really going to do this?"

There are plenty of risks with the venture. If oil prices fall, that could negate the cost advantage of wood heat. There are

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questions about whether certified technicians can be trained fast enough to install and service the boilers.

Energy prices are particularly volatile now, and consumers should be cautious about switching from oil to save money, said Jamie Py, executive director of the Maine Oil Dealers Association.

"Oil prices could drop anytime and wood pellet prices could rise," Py said. "You've got to look past the hype."

Otten is best-known in Maine as a ski resort owner.

He bought the Sunday River ski resort in Newry in 1980 and used it as the foundation to create American Skiing Co., which purchased Maine's Sugarloaf ski resort and resorts in five other states. Otten was eventually forced out of American Skiing and became a minority partner of the Red Sox before selling his stake in the club last year.

Most recently, he has been active in real estate development and other business ventures while taking an interest in renewable energy issues and heading a wood-to-energy task force formed by Gov. John Baldacci.

Otten is the lead investor in Maine Energy Systems. His partners are William Strauss, president of the FutureMetrics financial forecasting firm, and Harry "Dutch" Dresser, a former Gould Academy associate headmaster.

The business plan calls for Maine Energy to sell fully automated boilers made by Bosch Thermotechnologies, an arm of the large German appliance maker.

The technology is far different from traditional wood boilers, which require users to keep cords of wood and feed the wood into the furnace by hand.

Instead, a fleet of delivery trucks will pump pellets into storage tanks, where they can be automatically fed into the boilers, Otten said. The boilers produce less pollution and less ash residue than outdoor boilers and conventional wood stoves because they use a refined product that is burned at high temperatures, he added.

If all goes as planned, the plan could pay off for Otten and the Maine economy, said Charles Spies, a former chief executive of the Finance Authority of Maine.

Otten is smart to make an early entry into the wood pellet market, Spies said, because he can capture customers ahead of competitors. But the plan could falter if oil prices fall or if the company can't generate enough demand to support its delivery network, he said.

"There's a lot of risk," said Spies, now a program director at CEI Capital Management LLC and a member of the wood-to-energy task force. "But if it pans out the way Otten thinks it will, the returns will be better. Entrepreneurs love that kind of environment."

Another question is whether buyers will balk at spending $12,000 for pellet heating systems, an expenditure that's nearly twice as high as a typical oil boiler. The company calculates that an average home, burning seven tons of pellets, will save roughly $2,300 a year.

Maine Conservation Commissioner Patrick McGowan, who's also a member of the wood-to-energy task force, wonders if Mainers instead will choose less-costly pellet-burning stoves over central heating systems.

"It's going to have to be a hell of a selling job to get people to tear out their oil furnaces and convert," said McGowan. "But I think Les' motto is, go big or go home."