Concord Steam works toward year-end deadline for new plant
Concord Steam has scaled back plans for a new plant in the South End and now must reach an agreement with an investor before federal tax credits expire at the end of the year.
The current plan, which Concord Steam President Peter Bloomfield explained in testimony before the state Public Utilities Commission, could be the company’s last chance at building a new wood-burning plant.
Concord Steam is working with investors who are involved in the biomass plant in Berlin, according to a transcript of Bloomfield’s Oct. 21 testimony.
“And, hopefully, we’ll be finalizing things with them in the next month or so, and getting that project finally on line,” Bloomfield told the commission.
If plans progress, Bloomfield said the new plant would open by early 2016.
But nothing is final yet, said developer Steve Duprey, and the company is facing a tight deadline because it relies on federal tax credits that are set to expire at the end of the year.
“In order to qualify for the investment tax credit by the end of this year, a proposed plant either has to have a certain dollar value under actual construction in the ground, which would be, quite frankly, impossible to meet,” Duprey said. “Or, by the rules and regulations . . . you can achieve what they call safe harbor . . . if you’ve made expenditures qualifying at 5 percent of the total project cost.”
For Concord Steam’s project, that amount is between $5 million or 6 million, Duprey said.
Duprey and his associate Jon Chorlian began working with Concord Steam this year, offering their expertise in financing large projects.
Concord Steam has been working toward a new plant since 2007, when the company purchased land at the corner of Langdon Avenue and South Main Street. The proposed wood-burning plant would generate steam heat for downtown buildings and produce electricity. The project was delayed for years while the company sought customers for its electricity. The city and state governments approved long-term contracts in 2011 to purchase power and steam heat from the new plant, but they backed out earlier this year after Concord Steam repeatedly missed deadlines to secure financing.
Now, attempts to finance the plant would not rely on electricity contracts with the state and city governments, Bloomfield told the PUC last month. Instead, the plant would produce less electricity, for which he has contracts in place with the New Hampshire Electric Co-op and Reading Municipal Light Department of Reading, Mass.
The complex city and state contracts made it difficult to finance the new plant, Bloomfield told the PUC. The contracts had called for Concord Steam to sell electricity to South Jersey Energy, which would then supply power to the city and state.
“It was a very complicated deal with that there was three parties involved, and the state didn’t want to go longer than 10 years, which was causing problems with financing,” he said. “So, by eliminating that piece and restructuring it, we think we’re getting . . . closer to making it happen.”
A new plant would still require long-term agreements with the state and city to purchase steam heat.
Concord officials have been in touch with the company, but they have not reviewed any specific proposal, said Deputy City Manager for Development Carlos Baia. He said he was aware that the company is working with a “significant partner” to invest in the new plant.
“A lot of it is contingent over what will happen over the next month and a half or so,” Baia said, stressing the importance of Concord Steam’s year-end deadline to secure federal tax credits.
Though the company has missed several deadlines in the past, Baia said this one appeared final.
“It doesn’t seem like it will be viable” without the federal investment tax credits, he said.
Baia said city officials and the city council would review contracts proposed by Concord Steam.
“We’re willing to review any proposal, but it has to be the right proposal for the community, it has to make sense financially,” he said. “So we’ve been open, going on several years now, to looking at different arrangements.”
While speaking to the PUC, Bloomfield faced questions about the feasibility of his new plant.
“Let met preface this by saying I hope and trust your project will go ahead wonderfully,” Commissioner Robert Scott told Bloomfield. “But, forgive me if I don’t – I mean, this is kind of like deja vu all over again.”
“Uh-huh. You’re telling – yes, I know,” Bloomfield responded.
Bloomfield then assured the commission that he is working on a “parallel track” with plans to improve his existing plant.
If the new plant does not come to fruition, he said Concord Steam would remain on the New Hampshire Hospital campus and “rebuild, essentially, and put a new boiler and a new turbine into the existing site we have here.”
The current facility is aging, and Bloomfield said the equipment would be replaced.
“Being in the old plant is not something we hope to do, but we’re willing, we can still make it work,” he said. “So, that’s our backup to the South Main Street site.”
Concord Steam still plans to use waste heat to provide a snowmelt system for sidewalks on Main Street, Bloomfield told the PUC.
Bloomfield, who did not return phone messages left this week, appeared before the PUC last month to request a rate change for Concord Steam. The commission approved his request to reduce rates slightly – bills will decrease 0.58 percent, according to PUC documents.
The cost of steam heat should “drop significantly,” if the new plant is built, Bloomfield said, and he would hope to attract new customers. The company now provides steam heat to 102 customers, according to PUC documents.
Though the utility’s project has been delayed for years, Duprey said the year-end deadline is final.
“There is an enormous amount of work happening, but no final conclusion has been reached,” Duprey said. “Although . . . it will come to a conclusion one way or the other within the next month, just because of the year-end deadline.”