By PAULA TRACY, InDepthNH.org
BERLIN – Gov. Chris Sununu has vetoed a bill for the Burgess Biopower plant refusing to forgive $70 million spent by ratepayers of Eversource, leaving the plant’s future in doubt and its impact potentially significant to the city of Berlin.
In a late Friday afternoon news release, Sununu said to sign the bill would violate his obligation to protect the consumers of New Hampshire “from perpetual adverse financial investments.
“This company has failed the City of Berlin, the region, and the ratepayers of New Hampshire. Enough is Enough,” Sununu wrote in his veto message.
The veto is likely to go to an override vote before the next legislative session as House Bill 142 passed the House 269-109 and cleared the Senate on a voice vote.
Berlin Mayor Paul Grenier said he was disappointed by Sununu’s veto.
“The impact to the City of Berlin will be enormous, at the time when our economy was gaining momentum,” Grenier said.
“The lopsided positive votes from both the House and Senate indicates the legislature got it right. Governor Sununu loves to tout a great NH state economy but he just thrust a meat cleaver through the heart of the Androscoggin Valley’s economy. Coos’s economy will suffer for years,” Grenier said.
Maintaining the biomass plant was considered by the majority of legislators “desirable to the energy infrastructure” of the state and in its analysis would have allowed the Public Utilities Commission to amend its orders as necessary to protect its continued operation.
Burgess Biopower released a statement through a spokesman saying the veto “creates a serious financial event for the company and the entire northern New Hampshire economy.”
The company said it is evaluating the impacts of the veto and considering their next steps.
“HB 142 provides both a sustainable path forward for Burgess’s continued operation, while also ending ratepayer subsidies.
“At a time when New Hampshire and our regional grid operator are concerned about having enough power generation, losing the seventy megawatts Burgess provides will create a new set of challenges when it comes to meeting demand, especially during winter months.
“No one can predict future power prices. At times this year, Burgess’s fixed price was significantly lower than the market rate. But Burgess’s story is not solely about cost. It is much more about value, when you consider the hundreds of jobs Burgess supports, its $70 million in annual economic benefits, and the reliable baseload energy it produces,” the company said.
State Sen. David Watters, D-Dover, said the veto will have a negative impact on the North Country, particularly Berlin, as well as ratepayers across the state by putting the continued operation of the Burgess Biopower Plant in jeopardy.
“This shortsighted decision will have significant repercussions for the ratepayers of our state. However, I am committed to working with my colleagues, from both sides of the aisle, and Governor Sununu to develop a bipartisan solution that will address Burgess’ debt while avoiding the downshifting of costs to New Hampshire taxpayers,” Watters said.
The plant, the last of its kind in Berlin which uses secondary wood from the forests to make electricity, recently celebrated 10 years of operation this summer and had a potential buyer before the veto.
A copy of the governor’s veto message can be found here.
The original purchase power agreement for the electricity, signed by Burgess Biopower and Public Service Company of New Hampshire, now Eversource, and conditionally approved by the PUC, was deemed necessary in 2010 to provide support for the economically disadvantaged North Country due to the closure of a large paper mill, a major Coos county employer, the bill states.
Burgess Biopower and PSNH agreed to the terms that posed several risks.
The legislature intervened to mitigate one such risk in 2017, which Burgess Biopower believed would forgive an accumulation of over-market energy costs.
The PUC interpreted the legislation to mean that the over accumulation of costs would require a repayment according to the terms of the contract.
The legislature then extended the relief provided for one year in Senate Bill 271.
This year, a Department of Energy audit confirmed repayment would be detrimental to the continued operation of the plant and forgiving those over-threshold costs, which have already been recovered from ratepayers, could restore the original intent of the Purchase Power Agreement and redress the legislature’s earlier erroneous interference in a private contractual matter, it states, as well as protect ratepayers and the overall economy of the state.
The bill would maintain the CRF Balance, capped at $100 million and anything over that would not be obligated to be repaid.
Sununu, in his veto message said New Hampshire ratepayers have been taken for over $200 million in order to subsidize the Burgess Biomass Plant.
“New Hampshire has a strong economy and record low unemployment rate, in part because we realize that government should limit subsidies, taxes, and mandates. There are countless economic opportunities in the state that are sustainable without substantial government subsidization or bailouts.
“The Power Purchase Agreement with Burgess Biopower is a great example of what can go wrong when the good intentions of a sympathetic government get exploited and abused by opportunists in the private sector,” Sununu said.
He said the Burgess Biopower plant has been enormously expensive for New Hampshire ratepayers. After accounting for overmarket energy costs and Renewable Energy Certificate costs, Burgess Biopower has received over $200 million in subsidies since 2014.
“$200 million to support fewer than 40 full time jobs. All of these overmarket costs are
paid by approximately 530,000 Eversource customers, forcing those families and businesses to bear additional unnecessary financial burden on top of already historically high electric bills,” Sununu wrote.
“We have given considerable time to Burgess Biopower to find a long-term solution. In June of 2018, I signed Senate Bill 577 to provide a bridge to financial sustainability for Burgess Biopower, continuing the subsidies on the promise from their CEO that they could find a stable financial model that did not require continuous subsidies,” Sununu said.
“They failed,” Sununu said.
“Again in 2022, I signed a bill to continue that suspension for another year with the expectation a sustainable solution would be found. Again, they failed. It has now been five years since Senate Bill 577 was signed and the best idea brought forward to keep the plant going is to ask the state to forgive the approximately $70 million that the plant owes back to ratepayers.
“Time and again the Burgess management and ownership team has made bad promise after
bad promise to our elected officials. The only thing we have to show for it are more empty promises and false hope to the City of Berlin,” Sununu said.
“To sign this bill would continue to allow Burgess Biopower to collect millions of dollars in ratepayer subsidies every month with no hope of a solution and wipe out their debt obligation to our ratepayers.
“After a decade of continuous government support with nothing to show for it, such an ask is unconscionable,” he said.
Opponents of the bill praised the governor’s decision saying it was a win for the free market. The plant is the largest taxpayer in Berlin.
“The Burgess Biopower plant is a jobs program, not a green energy program,” said Josiah Bartlett Center President Andrew Cline. “Its subsidies were a scheme to forcibly transfer money from ratepayers to a politically favored industry. Those subsidies have already cost ratepayers well north of $600,000 per job saved, assuming any jobs were actually saved.
“If the state wants to help the timber industry, there are better ways to do it. The governor’s veto puts an end to a scheme that ratepayers never should have been compelled to join. It’s a win for ratepayers and for free markets,” Cline said.
House Majority Leader Jason Osborne, R-Auburn said, “While it is unfortunate that a long-term solution could not be found to address the financial difficulties of the Burgess Biopower plant, today’s veto by Governor Sununu will protect consumers from further unnecessary financial burden. The legislature has given Burgess multiple chances, and we have passed multiple bills over the last five years with the intent to help the management team at Burgess find a long term solution.”
“This legislation would mark the third time that Burgess has required relief from New Hampshire ratepayers for these ongoing issues, while failing to uphold their end of the bargain and once again asking that the state government continue to bail them out. The company has already received $200 million in subsidies and a plan to change the status quo has yet to be presented. I believe the governor made the correct decision in saying, ‘enough is enough,’” Osborne said.