The Legislature is proposing a bill to make ratepayers responsible in paying the entire three-year debt owed on Berlin’s biomass plant.
The plan is Senate Bill 271Ratepayers could be responsible for $160 million to $170 millions in costs, instead of having their portion cap at $100 million per annum. Supporters of the bills argue that the plant is at risk of closing and taking with it more than 200 jobs.
The plant submitted a ReportThe February report by the state Public Utilities Commission showed that it was almost broke in 2021, despite having kept its financial information secret for many years. Other concerns are raised about the bill’s inability to implement environmental controls.
Berlin Station has a 20 year contract to sell energy at Eversource at a fixed price. The price at which the station sells energy to Eversource will vary depending on the energy markets. The contract provided a protection mechanism for customers by setting a cap on how much Eversource can charge customers for excess market energy at $100 million.
The station is supposed to sell energy at a lower rate to customers if the cap is exceeded. The Legislature intervened four years ago and told the utilities commission to Stop the capIt would have been in effect for three more years. This allowed Berlin to sell the excess energy and Eversource, to charge customers without any limitation, for a period of three years.
The fear was that the plant would shut down if it couldn’t charge more than the current energy rate. This concern persists.
This bill is necessary for the plants to continue to function, Senator Jeb Bradley, a Wolfeboro Republican, stated to lawmakers during a February public hearing on the bill. The Senate passed the bipartisan bill on March 18. On April 12, the House Science, Technology, and Energy Committee is scheduled to hold a public hearing.
Residents told lawmakers that closing the plants would be economically disastrous for the region. This was during a public hearing on bill. It came at a moment when Berlin is still trying to recover from the economic blow of many pulpmills closing.
Kathleen Kelly, a Randolph resident, stated that our middle-aged middle classes left as soon as the pulp and paper mills left.
According to census data, North Country’s population has been declining, which is why local leaders fear that the plants closing would worsen the problem.
Paul Grenier, Berlin’s mayor, stated that we no longer have the luxury to experience another human exodus as we rebuild our valleys economy. He stated that the plant’s benefits outweigh its costs.
Grenier described the company a good neighbor who pays approximately $2 million in property taxes. This is almost 12 per cent of the $17 millions Berlin collects.
The company is responsible for 240 jobs in the state. 208 of these are in Coos County which has been hard hit by the exodus from the paper mill industry. This has put the timber industry in a difficult position, and the only remaining market for low-grade lumber is to be burned for electricity. According to a company report Berlin Station, also known as Burgess BioPower spends $25 million per year on low-grade timber, making it the largest buyer of low grade biomass in the state. The New Hampshire Timberland Owners Association supported the bill.
Eversource customers will be paying more for the measure, as they will see their monthly electric bills rise. The New Hampshire Department of Energy opposes the bill for this reason.
Tom Frantz is the director of the regulatory support section at the Department of Energy. He estimated that the additional cost to an average household would be between $2 and $3 per month. A bold energy efficiency plan was canceled last year due to the possibility of a similar rate increase for ratepayers in the state.
According to company executives the Berlin biomass plant produces 75 megawatts, which is enough to power 13,000 New Hampshire households. According to company executives, biomass can produce what is called baseload power. This energy can be created on-demand unlike wind and solar energy, which are intermittent resources that only come onto the grid when the sun shines.
The 2018 suspension of the $100 million cap was extended to provide a temporary solution. Don Kreis, Consumer Advocate, stated that the idea behind the suspension of the $100 million cap was that someone would eventually come up with a solution to keep the plant functional and that the money would be repaid.
It hasn’t happened.
Frantz said that as we enter the third year, we are still not sure what the permanent solution is. He spoke to lawmakers at a public hearing on the bill. We wish there was one. These costs are very high.
Now, lawmakers argue that they never intended to make Burgess BioPower a payer for energy that is too expensive, but ratepayers should be accountable.
Frantz mentioned that the bill would cost ratepayers an additional $60 million to 75 million, on top of the $100m cap in the original contract.
Frantz explained to lawmakers that this energy is worth approximately 20-25 million dollars more than the market over the course of a single year.
He said that these are additional costs for customers.
The bill comes at a time when energy prices have risen significantly. The increased energy prices have led to increased funding for assistance programs in order to keep state residents’ energy costs affordable.
Kreis has not yet taken a position on this bill, but pointed out a potential legal issue in an email to lawmakers: Whether the state is exceeding federal law by passing additional costs onto ratepayers.
I didn’t take a position because I couldn’t think of anything constructive to say. Kreis stated in an interview that all I can do is remind the Legislature to do this. The only wallet in the room belongs the Eversource customers. My department is not responsible for deciding whether public policy requires ratepayers or not to contribute yet again to the support of that plant.
Kreis called the cap-suspension arrangement, which was established three years ago and has been extended for an additional three years, a silly way of trying to kick the can down the road.
A Cost and Profitability Report Berlin Station submitted by the Public Utilities Commission revealed that it was not profitable in 2021. The company waived its right not to disclose the report confidentially, disclosing information it had long insisted be kept private.
Kreis wrote in an email that the energy markets have gone haywire this year, which is even better if you are a merchant generator such as this one. Berlin Station is seeking another ratepayer bailout, and it’s possible that I am missing something.
The company had $70.4 million of revenue for 2021 and spent $68.8million in operating and maintenance expenses, in addition to the $2.9million it paid in taxes or fees to the City.
The bill includes biomass in the state’s renewable energy portfolio. It also points to state energy goals, including fuel diversity, sustainability, and energy independence, to justify the subsidy.
But there are some EnvironmentalistsMany have argued that using wood to generate electricity is bad because it emits a lot carbon into the atmosphere for each unit of energy. Trees that sequester carbon take time to grow back and reach maturity.
Catherine Corkery, director at the New Hampshire Sierra Club, pointed to the fact that the bill does not require new clean air controls or waste heat trapping. It also doesn’t require any certification for carbon sequestration after wood is harvested. She stated that the bill, which she does not support, comes at taxpayer cost for very little.
Plants like Burgess BioPowers Berlin Station don’t work.
Joe Fontaine, who works within the New Hampshire Department of Environmental Services’ air resources division, has calculated Burgess BioPowers efficiency to be around 25%. This means that for every four trees that are burned, only one is actually used to generate electricity. The rest of energy is simply hot air that isn’t used.
The New Hampshire conundrum is not unique. Vermont residents are subsidizing a biomass facility in neighboring Vermont. This amounts to approximately $1.8 million. $5 million per annumSome lawmakers believed it would make sense for wood to be burned for electricity only if hot air was being used.
Burgess BioPower executives informed lawmakers that they are seeking ways to do so using the waste heat for projects like heating Berlin streets. However, the law doesn’t require them to do so.
