By Thomas P. Caldwell, InDepthNH.org
BERLIN — An electric power plant that North Country residents see as a key part of their economy may get a reprieve if Senate Bill 271 makes it into law.
The bill would grant a one-year extension to Burgess Biopower’s operations cap to allow it to continue selling energy created through the burning of low-grade wood at above-market rates. The extension is intended to give the plant time to develop a sustainable business plan before the rate agreement expires, but detractors say it is unfairly costing ratepayers money.
Following the collapse of Berlin’s economy when its paper mills closed, Burgess Biopower made a $275 million investment to convert an abandoned pulp mill chemical recovery boiler into a state-of-the-art biomass-fueled power plant. The project was supported by a $500,000 renewable energy grant from the New Hampshire Public Utilities Commission, but Burgess declined the funding because the project did not move forward.
The original power purchase agreement from 2013 allowed Burgess BioPower to charge above-market rates for the electricity it generated up to a cap of $100 million. After that, it would charge market rates for its power. The 75-megawatt plant reached its cap sooner than expected and the New Hampshire Legislature in 2018 adjusted the cap, adding another three years for it to charge the higher rates.
In implementing the legislation, the PUC misinterpreted the General Court’s intention and ordered the company to immediately repay any amounts it accumulated after the expiration of the suspension period, causing a hardship that threatened the plant’s existence.
The bipartisan SB 271, whose prime sponsors are senators Jeb Bradley, R-Wolfeboro, Erin Hennessey, R-Littleton, David Watters, D-Dover, Kevin Avard, R-Nashua, Ruth Ward R-Stoddard, and Bob Giuda, R-Wentworth, was designed to keep the plant operating by ordering the PUC to amend its orders “to protect the continued operation of the Burgess Biopower plant.”
Bradley testified that ISO-NE, which has oversight of New England’s power grid, has warned of rolling blackouts if there is a prolonged cold stretch, and noted that the electricity the Berlin plant provides is dependable without reliance on the wind or sun.
Dammon Frecker, executive vice-president for CS Operations Inc., which oversees the plant, noted that it operates on locally sourced fuel and is the largest producer of clean renewable energy in New England and the fourth largest power producer in New Hampshire.
An independent study credited Burgess with supporting more than 240 jobs and generating more than $70 million in economic activity in the state each year.
Berlin Mayor Paul Grenier said the city collected $1.5 million from the plant under a payment-in-lieu-of-taxes agreement. That amounts to 11.9 percent of all real estate taxes in the city. The plant also spends $664,000 for city water, a figure that represents 24 percent of the water department budget.
Grenier testified that the plant stopped the city’s death spiral, and he said its closure could force the city into receivership.
Burgess purchases more than 800,000 tons of low-grade wood annually, which Jasen Stock, executive director of the N.H. Timberland Owners Association, said is critical for timberland owners to sustainably manage their lands.
Burgess is working with Berlin on a proposal for a federal Better Utilizing Investments to Leverage Development (BUILD) grant that would channel waste heat from the plant’s cooling tower to city streets and sidewalks.
When the House took up the bill last week, members amended it to extend the suspension of the cap for an additional year from its November expiration. Rep. Peter Somssich, D-Portsmouth, attempted a floor amendment to extend it for two years, arguing that the company would need longer to develop a long-term solution to its financial problems.
“[Energy and Natural Resources] Committee members were in agreement that a well-designed long-term solution is needed,” Somssich argued.
“However, the majority [amendment] only provides a 12-month reprieve, preempting the work of the commission from the Natural Resources Committee, which is currently tasked with addressing the overarching issue of the long-term sustainability of our New Hampshire timber industry. Twelve months is, in my opinion, not enough to avoid a shutdown of this facility. Few businesses, when given a 12-month extension of their financial situation, would start to make new future business plans. More likely, with such uncertainty, they would start planning for an orderly shutdown or for a sale.”
He also said that asking the PUC to amend its orders for the plant would take a while. “The last time the PUC dealt with Burgess, it took them 18 months to certify the settlement, and then their interpretation of the legislation was incorrect,” he argued.
“The existence of the low-grade wood market is not only an economic-rich requisite for the forest sector,” Somssich said, “but also ensures the health … of our tourist sector.”
Michael Harrington, R-Strafford, argued against Somssich’s amendment, pointing out that it would effectively extend the exemption for two and a half years.
“The contract is now where they owe the ratepayers of New Hampshire over $50 million, and it’s time to pay it back,” Harrington said.
“They’ve been operating at a loss for as long as they’ve been there,” Harrington said, “and they will continue to operate at a loss, and that debt to the ratepayers will continue to build up. We’ve been paying extra money and extra money and we’ll continue to do it. The question is do we do it for another year from November or two years from November?”
The two-year amendment failed, 143-190, leaving the one-year extension in place. Because the Senate bill was amended, it now will go to a committee of conference following the joint session of the House and Senate on Thursday, May 12.
The Office of the Consumer Advocate has not taken a position on the bill.