Capital Beat: After regulatory challenge, senators try again on biomass subsidies

Monitor staff
Published: 5/11/2019 10:52:31 PM

Last September, Pine Tree Power got what looked like a second chance.

The Bethlehem wood-burning “biomass” power company had struggled for years, facing an uphill competitive battle against cheaper energy from natural gas combustion companies. They had pinned their hopes to a Senate bill to help subsidize their operations – but when the bill was vetoed by Gov. Chris Sununu in June, the plant shut down operations.

That September, a veto override vote by the House and Senate restored those subsidies, and Pine Tree Power began preparing for them.

Then things got complicated. A legal challenge by the New England Ratepayers Association prompted the state’s Public Utilities Commission to put a freeze on the new contracts, and the subsidies accompanying them. Facing further uncertainty, Pine Tree Power and three other plants shut down again in March.

“This is an issue that impacts our families,” said Mark Driscoll, a multi-plant manager at ENGIE North America, which owns the biomass plants in Bethlehem and Tamworth. “The resulting uncertainty for example means some (employees) who wanted to purchase new vehicles or even new homes have put it on hold, because they don’t know if they’ll have a job next week.”

Amid that anxiety, Driscoll added, some employees have already left.

Now, as parties await resolution, some senators are looking for another way to deliver the subsidies. An amendment to an unrelated bill introduced by Sen. Jeb Bradley on Tuesday would provide more direct support to New Hampshire’s biomass industry through renewable energy credits.

Those credits would be produced by biomass companies and “sold” to utilities via invoices, allowing the power plants to make up the difference between the average market energy prices and the plants’ rates.

At a hearing on the amendment, Bradley argued the subsidies would address “the need for energy diversity at a time when New England is overreliant on natural gas” and improve energy security.

According to biomass plant owners, getting assistance is a matter of now or never. “Without this legislation, the Bethlehem and Tamworth plants will close,” Driscoll said, citing 40 direct plant jobs and about 250 surrounding jobs in the timber industry that could be lost.

Michael O’Leary, the asset manager at Bridgewater Power Company in Plymouth, said the company had done all it could.

“We’ve tried to cut our costs to manage through these difficult times and our past years’ losses,” he said. “Our employees have not had raises or bonuses for over two years. We’ve deferred a significant amount of our maintenance, and we have made no capital investments in the plant.”

The plant has also lowered the purchase price of its wood fuel as low as possible to levels that are unsustainable for the forestry industry, O’Leary said. Bridgewater Power company, like the plants in Bethlehem and Tamworth, is shuttered with an uncertain restart date, O’Leary added.

“Our continued operation is dependent on this legislation,” he said.

But not all at Tuesday’s hearing supported the new funding mechanism. Marc Brown, director of government affairs at the New Hampshire Ratepayers Association, argued that supporting biomass companies via utility rates would keep New Hampshire rates high.

“Anyone that’s met with manufacturers know the two things you hear from them are that they have trouble with labor force ... and electricity rates,” he said. “This bill will hit them on both fronts.”

And he argued that the subsidies would tie the state’s electricity customers into a perpetual funding arrangement with an industry that has ceased to be viable.

“This isn’t a three-year fix; this is going to be forever for these plants,” he said. “They’re never going to be economic. They never really have been.”

The path to last week’s hearing was a contorted one. Last year’s Senate Bill 365 was designed to offer a lifeline to an industry buffeted in recent years by changes in the energy industry. Once a stable player in New Hampshire’s energy market, biomass plants have struggled to withstand the infusion of natural gas and its at times unstable effects.

As a cheaper alternative, natural gas is widely available in the warmer months for energy use, undercutting biomass and other energy sources. But much of the gas is diverted for heating use in the winter, creating price spikes and supply challenges that advocates say could be helped by biomass plants.

To prop up the wood-burning plants during the more competitive summer months, SB 365 mandated that the state’s utilities enter into purchase agreements with biomass plants, in which 100% of the energy would be purchased at default rates.

But that approach was controversial from the start, and opponents criticized the solution as keeping biomass companies afloat out of the pockets of ratepayers. Sununu’s office estimated the cost to energy consumers at $25 million a year – a point cited by the governor in his veto.

Speaking on Tuesday, Bradley disputed that calculation, arguing that diversifying the energy market and ensuring multiple sources of baseload power by supporting biomass would help rates in the long term.

Sununu and others have argued that high energy costs have hidden effects on business and job losses that are broader in scope than the specific industries benefiting from biomass.

But with the hearing room crammed to overflow with loggers, lobbyists and plant workers, Bradley centered on the visible impact.

“The room is full of people,” Bradley said. “Their jobs are at risk.”

(Ethan DeWitt can be reached at
369-3307, or
on Twitter at @edewittNH.)

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