WEST ENFIELD – Gov. John Baldacci and the owners of a Dover-Foxcroft-based spruce mill and a town electrical plant announced plans Thursday to build a $17 million wood mill on Route 2 that will help create as many as 350 new jobs.

The proposed Pleasant River Lumber Co. mill will employ 70 people, but its impact should help create four to five more jobs in support industries and local businesses for every person employed, Baldacci said.

He characterized it as part of continuing efforts to keep the state’s $220 million wood products industries competitive.

“This will really be a shot in the arm to the local and regional economy,” Baldacci said. “It should be another connection between the Bangor area and the state’s forestry and wood-making industries.”

The companies will aid one another. Pleasant River will make more than 100 million board feet of lumber annually while supplying wood chips to fire the boilers at the adjoining Ridgewood Renewable Power plant.

The 22-megawatt plant burns about 30 tons of wood chips per hour round the clock, said Randall Holmes, Ridgewood’s president. By taking the mill’s chips and wood wastes, the plant will save the mill disposal costs while saving the electrical plant transportation costs on the wood chips it has trucked in.

To make the deal feasible, Pleasant River Lumber Co. officials bought 250 acres from Ridgewood Renewable Power LLC and state officials pledged to designate the area a Pine Tree Zone.

The designation would allow the companies to claim tax refunds and exemptions, reduced electrical rates and tax increment financing.

As part of the zone, companies must pay workers at least $10.76 per-hour, plus benefits, said Cathy Kecki, executive director of Lincoln Lakes Region Development Corp., one of the economic development organizations that helped lure Pleasant River to the area.

“These are good-paying, family jobs,” Kecki said.

The new spruce dimension lumber mill will ship spruce wood nationwide for housing construction, said Jason Brochu, a company owner. Pleasant River officials reviewed sites in Costigan, Enfield, Howland, Lincoln and Passadumkeag.

The Ridgewood site’s proximity to Route 2 and Interstate 95 were selling points. Another, though not-yet realized, selling point: the land’s proximity to an abandoned Maine Central Railroad line that ends near the Pleasant River property line.

State and local officials hope to help create a $2 million, 11/2-mile rail spur that could plug into Guilford Transportation Industry rail lines to ship finished wood nationwide, saving the mill trucking costs that spike with the rising cost of gasoline.

Guilford Transportation still owns the right of way on the abandoned line. The state will have to absorb a third of the spur’s costs, said Chris Hall, a former state legislator who lobbied for Pleasant River. Federal money and project investors will cover the rest.

Pleasant River will begin tree-clearing operations in 30 days, with groundbreaking due to occur this fall. Construction of the new mill is due to finish by fall 2006, Brochu said.