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Paul Doscher: Gov. Sununu’s veto of biomass bill carries long-term consequences



For the Monitor
Thursday, July 12, 2018

Thinking and planning long term has always been challenging for politicians. When they have to think of their future in two-year increments, it forces them to focus on short-term actions with short-term results.

Gov. Chris Sununu’s recent veto of an important biomass energy bill exemplifies this kind of thinking. His rationale, while difficult to criticize from a short-term perspective, of lowering electric rates now will have long-term consequences that will ripple through the state and our economy.

First, let’s consider the impact on the forest. Our state is more than 80 percent forested and most of that forest is owned by what could be called woodlot owners. These are not big timberland investors but people like me who own smaller properties. There are tens of thousands of us.

My own woodlot is modest but very productive. It wasn’t always.

Nearly three decades ago I had a forester help me do a long-range plan for the forest and then we had a logger remove a substantial quantity of poorly growing or low-grade trees. It produced a very modest financial return compared to what it would have if we took out the best quality trees we left to grow instead. It was financially feasible because at the time there was a market for low-grade pine (a box mill that has since closed) and wood chips for biomass burning at the Concord Steam plant (also now closed).

A couple of years ago, after the “improved” forest stands had plenty of time to mature, we had another forester come, mark and inventory the trees and do another timber harvest. This one produced primarily higher-quality pine and hardwood logs, some of which were the premium quality veneer logs that are sent off to plywood mills where the wood often finds its way into high quality furniture. The value of the wood harvested per acre in this recent cut was, even considering inflation, 10 times the value per acre of the earlier “low grade” harvest.

Thus, the market for low-grade wood, primarily for biomass, helped create a greater return from the forest, higher quality forest products, jobs for a forester, logger, trucker, mill workers and furniture craftsmen.

Others have adequately described the multiplier benefits of this kind of forest management and the importance to the forest economy and jobs in our state. The foundation of good forestry is based on having markets for low-grade wood, so we can remove it and favor long-term production of higher quality trees. That alone seems sufficient reason to keep the existing biomass energy plants running even at the cost of a tiny increment of increase in electric bills.

But let’s consider electricity costs. The governor has placed his priority on lowering our electric rates in the short term. He points out that high rates hurt senior citizens and low-income families. He’s also concerned about the impact of high electricity costs on business development and expansion. There is seemingly nothing wrong with any of this.

Except, electricity costs are not just about “rates.” Simple economics tells us that when prices for commodities go lower, people consume more, and when they go higher, they consume less.

It turns out that New Hampshire consumers know this. We have high energy costs, not only for electricity but other fuels as well, and overall New Hampshire ranks 41st in energy use per capita. Places like Wyoming and Louisiana, where energy is relatively cheap, consume more than four times as much per capita (data from the U.S. Energy Information Agency).

Yes, rates are high compared to much of the country, but New Hampshire does not have the highest residential electricity rates in the country or even New England. As of March 2018 our average retail price (includes all fees) was 19.93 cents/kilowatt hour. Massachusetts (22.49), Connecticut (21.04) and Rhode Island (20.22) were all higher than New Hampshire. If you want the highest rates, move to Hawaii, but they are 48th in total energy consumed per capita.

What this tells me is that while we have high rates, we are pretty good at figuring out how to use less. Simple logic says that if you want to pay less for electricity, use less and you’ll be more successful than trying to use public policy to incrementally reduce the rates.

So, the governor is sacrificing what could be hundreds or perhaps thousands of jobs in the forest products industry, in a state that is 80 percent forested, for cheaper rates. If he really wanted to save us money, his No. 1 priority should be energy efficiency so we would simply pay for less electricity.

Then there’s real long-term thinking that is missing from this current debate. If we wanted to stabilize our energy costs over the long term, we’d be finding more ways to become less dependent on the fossil fuel pipeline that we have absolutely no control over. Natural gas prices are low now, but any serious look at history will show that gas prices rise and fall over time, and they will eventually rise again. When they do, our dependence on gas will come to bite us, and hard.

It may seem a stretch, but consider another place with high electricity costs. South Australia is a long way away, but it’s not entirely dissimilar from New Hampshire. The population is very similar (1.7 million) but they pay nearly double what we do per kilowatt hour. They have local coal, gas and oil, yet the government there has created major new incentives to both conserve and generate renewable power.

When a major coal plant went offline a couple years ago, creating a crisis in the grid, instead of building more power plants and more transmission lines they contracted with Tesla to build a 100 MW battery storage plant. It was completed in just one year, and when another power plant disruption occurred recently, the battery facility came online so quickly and effectively that there was no disruption.

To address the question of affordability, the government recently announced it will subsidize the installation of 50,000 solar and battery systems for homes, with a priority for the houses of low-income and senior citizens. The Tesla “Power Wall” will come with each system so excess power generated in the daytime is stored and useful at night, thus reducing the demand for power from the grid.

I’m not suggesting that this approach is perfect for New Hampshire. What I am saying is that thinking long term, both about ensuring a vibrant forest economy, lower costs for energy (not rates) and more energy self-reliance are what should be the core of our state policies.

It’s hard for politicians to think this way. But we need to pressure them to figure out how to do it and hold them accountable when instead they focus primarily on the next two years.

(Paul Doscher lives in Weare. He is a retired environmental scientist. Thirty years ago he authored a study on New Hampshire’s renewable energy resources.)