AUGUSTA – Jeff Gagnon’s phone is ringing off the hook. Gagnon, who owns Gagnon Heating and Air Conditioning of Bridgton, said he fields several calls a day from homeowners looking to install geothermal heating systems.

The systems are expensive to install but save owners money in the long run; especially as home heating oil prices continue to skyrocket. The most recent statewide average for home heating oil is $3.78 per gallon, up more than 17 cents from last week, according to the Maine Energy Resources Council. Homeowners paid $1.51 per gallon in March 2004.

“The fuel prices going up are just getting everybody, and people are looking for alternative sources of energy,” Gagnon said.

Installing the system in a 2,500-square-foot house costs more than $20,000, estimated Gagnon, who has been installing the systems since 2000. The company now installs geothermal systems in 20 to 30 houses annually, he said.

But the initial system cost is a heavy burden to bear for many Mainers, even though the trade-off is no longer paying for heating oil.

A bill sponsored by Timothy Carter, D-Bethel, would help homeowners shoulder the initial high costs of the environmentally friendly system, by providing low-interest loans to pay for installation.

“We were looking for ways to reduce the dependence on oil and come up with a way to make it more affordable for people to heat their houses,” Carter said. “They’re low-interest loans from the Maine Housing Authority for homeowners and the Finance Authority of Maine for businesses, so this is a really good place to start.”

The loans will have interest rates from 2 to 5 percent.

Carter’s bill was recently approved by the Legislature and awaits the signature of Gov. John Baldacci before becoming law. Baldacci supports the bill and is expected to sign it soon, according to Joy Leach, a member of the governor’s press office.

Geothermal systems take advantage of heat reserved in the earth’s crust, which typically remains between 40 and 50 degrees Fahrenheit.

“We take the heat out of the earth directly,” Gagnon said. “We just circulate water to and from a drilled well and use a refrigerant to pick up the latent heat.”

Electricity is used to supplement the system to get buildings up to a comfortable temperature, he said.

The University of Maine at Farmington installed a geothermal heating system during the construction about 18 months ago of a new education center, which houses the College of Education, Health and Rehabilitation.

“I’ve been amazed at how well it’s been working,” said Bob Lawrence, the university’s director of facilities management. “We’re not burning any oil, and we’re keeping the building comfortable all year long.”

UMF is looking into installing more geothermal heating systems in new buildings and retrofitting older buildings, as it becomes feasible, Lawrence said.

Ian Burnes, director of policy and planning with the state Office of Energy Independence and Security, said geothermal heating systems are still expensive to install but are a good alternative for people who want to stop paying for heating oil every winter.

“It’s going to take a broad diversity of solutions to get us off of oil heat and foreign oil,” Burnes said. “This hopefully can be one of them.”

Burnes is attending a forum next week addressing Maine’s potential for geothermal heating.