By PAULA TRACY, InDepthNH.org
CONCORD – Berlin’s Burgess Biopower plant could go bankrupt if the state doesn’t agree to forgive about $50 million in debt as part of a 2010 power agreement, a Senate committee was told Tuesday.
Berlin Mayor Paul Grenier pleaded with the Senate Energy and Natural Resources Committee to recommend passage of House Bill 142, to support the city’s largest taxpayer and jobs for 240 saying that losing it would be “devastating” at a time when there is huge development potential from its waste heat.
Republican State Rep. Michael Vose of Epping brought his bill to the Senate Energy and Natural Resources Committee Tuesday after it sailed through with bipartisan support in the House.
The bill passed the House 269-109 and it is now facing the Senate.
A hearing Tuesday brought out some who argue that the long-term solution is not this but to renegotiate the deal with Eversource, which buys the power.
About 60 percent of the wood chips used at the plant come from New Hampshire woodlands and help clean up parcels that used to have access to the now-closed pulp mills.
Burgess has been the exception but at an over-market cost.
Some in the state business community oppose the bill for not returning the funds to ratepayers, arguing that business expansions and recruiting efforts could hinge on the added energy costs.
A new state audit suggests what the company officials assert is that the plant could go into distress if asked to start paying back to New Hampshire electric consumers.
Burgess Biopower is a 75-megawatt plant that is currently the fourth-largest power producer in the state.
It is the largest renewable energy producer, contributing 10 percent of the power for the state or about enough electricity for 67,000 homes from wood, said Sarah Boone for the company.
Berlin was once a big pulp town which has come on hard times with that industry shrinking.
A 2010 deal struck to restart a factory with a utility was agreed upon by the state Public Utilities Commission.
It met some state needs including helping with renewable energy standards, providing an economic anchor for Berlin, and acting as a long-term hedge against fluctuating markets, using locally sourced products, said Boone.
The bill states that, “The general court finds that the continued operation of the Burgess Biopower plant in Berlin is desirable to the energy infrastructure of the state of New Hampshire, within the bounds of previous agreements made to sustain the facility, and while not damaging the larger economy of the state.”
The bill indicates that, “In 2023, a Department of Energy audit confirmed that such repayment of accumulated costs would be detrimental to the continued operation of Burgess Biopower. Forgiving those over-threshold costs, which have already been recovered from ratepayers, can (a) restore the original intent of the PPA (purchase agreement), (b) redress the legislature’s earlier erroneous interference in a private contractual matter, and (c) protect ratepayers and the overall economy of the state.”
Last year, legislation passed which would allow Berlin Biopower to sell its electricity at a higher rate for one more year over its $100 million cap without repaying, giving it an extension but not forgiving the funds.
The bill will leave the $100 million cap, agreed to in 2018 as part of the three-year suspension on the payment and it has accrued above that $100 million level from 2019 forward.
Passage of the bill would mean ratepayers, who have already footed the bill, would not get to see a lower adjustment in their bill through payment, the committee was told.
Business and Industry Association policy director Kristen Koch said they are concerned about the impact on attracting businesses and expansions in the state if it is passed with the cost of energy high here already.
Some took no position on the bill like Meredith Hatfield of the Nature Conservancy but suggested during the hearing that the best course of action might be for Eversource to return to the bargaining table on the long-term contract, forged in 2010 when the market was far different.
“This does not provide a long-term solution,” Hatfield said.
The state Department of Energy did an audit as part of the agreement which portends economic disaster if the plant has to repay this debt at that level.
Tom Frantz, regulatory director for DOE said the department has a neutral position on the bill but passage would give them “short-term breathing room.”
Still, he said the biomass plant would likely continue to “face a struggle” though he noted there were times this winter when the plant was “in the money.”
Biomass is not entirely embraced by all as renewable.
It’s considered a mixed bag by some but its local benefits are not without notice as well.
Timber taxes are generated from these timber cuts and in some small towns that money goes a long way to keeping property taxes down, the committee was told.
To lose this plant would be to lose one of the top five baseload generators in the state.
For much of the winter, the over-market power was making money but that is not now the case as the market has shifted, Frantz noted.
Grenier said members of the legislature need to “do some math” and that he should not have to come periodically to the State House to “play Russian roulette with an asset that is very important to us.”
Jasen Stock, executive director of the NH Timberland Owners Association, spoke in strong support of the measure noting multiple benefits to the private landowners.
Senate President Jeb Bradley, R-Wolfeboro initially put forth a bill last year to forgive the debt over the $100 million cap but the repayment was extended to this November instead.
Bradley, then said the plant benefits North Country jobs, the state environment, and energy needs and is a “manageable” cost.
Koch for the BIA said the organization would pledge to help Berlin replace lost jobs but that the mill artificially inflates costs for consumers and could impact commercial and industrial locations expansions and relocations.
“We want to keep those jobs here,” she pledged, “and find a way to support (Berlin).”
The committee chair, Sen. Kevin Avard, R-Nashua, said the plant is important, locally to the timber industry as well as Berlin and there could be a “ripple effect.”
Sen. David Watters, D-Dover, called Grenier’s testimony “powerful” but asked if this isn’t just delaying the process of solution. He asked if there was a chance that the city could buy community-based power.
Grenier said the city was looking into it and agreed that the rates could be lower.