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Following Sununu veto, two N.H. biomass plant plan to suspend operations 



Monitor staff
Tuesday, July 03, 2018

Days after Gov. Chris Sununu vetoed a bill to subsidize New Hampshire’s six biomass plants, two of them are on the brink of shutting down, according to letters sent to suppliers last week.

Pinetree Power plants in Bethlehem and Tamworth – both owned by ENGIE North America – stopped purchasing wood chips from loggers on June 22 and are unlikely to continue operating through the summer, ENGIE announced in its letters.

Instead, the power plants plan to operate under “reserve shut-down status”: ready to start operating again if economic conditions improve or at the request of ISO New England, which operates the regional electric grid.

The move comes after Sununu’s June 19 veto of Senate Bill 365, which would have mandated that the state’s utilities contract with the biomass plants and buy energy at 80 percent of the default energy rate. In announcing his decision to veto, the governor called it an unfair subsidy that would raise electricity prices for ratepayers to benefit a few.

In ENGIE’s letter, officials pointed to Sununu’s veto as one of the catalysts for its decision.

“This decision was necessary due to an ongoing and very challenging economic climate, and also our inability to secure financial support through legislative action,” it reads. A spokeswoman for the company, Carol Churchill, confirmed the plans Monday.

As for the plants’ long-term future, that will be discussed with ISO in September, according to the letter.

ENGIE’s announcement falls a little more than a year after the April 2017 closure of the Indeck Energy plant in Alexandria, whose owners decided to mothball it after struggling to turn profits.

The closures come as the biomass industry – once championed as a strong renewable energy alternative to oil and gas – has suffered significant setbacks. A surge in natural gas has lowered energy prices and rendered the high-cost operations of wood-fueled power plants uncompetitive for long stretches of the year. Long before SB 365, the industry has strained to keep prices low and still stay solvent.

Still, for many in the logging industry, the bill represented a last-ditch lifeline for biomass. Despite weeks of warnings, the veto took many by surprise.

“We found out that the governor vetoed on Tuesday,” recalled Rebecca Crowe, the joint-owner of Timberwolf Logging in Littleton, just down the road from Pinetree Bethlehem. “On Friday at 12:44, they stopped taking wood.”

Crowe and others said the biomass plants, which process woodchips, provided a stable outlet for junk wood collected during logging operations – parts of trees not suitable for planks that otherwise would go to waste. About 40 to 50 percent of Timberwolf’s output involves junk wood, Crowe said, and while the operation has other outlets like pulp and pallets for the cheaper wood, the loss of the power plants was already forcing a rethink of operations of local loggers.

With fewer avenues for the product, loggers would be in a much more competitive environment for offloading the wood, she said, potentially leading to quotas and restrictions.

“The problem is when you close one door, the doors that are still open then go to quotas,” Crowe said.

But in enacting his veto, the governor has put emphasis on a different population: ratepayers. Killing the bill would prevent the utilities from being forced to buy power from biomass companies at higher-than-average prices, costs that get shifted onto those with the bills, Sununu said. And it would head off subsidies of around $25 million a year to the companies, he said.

“Governor Sununu stands by protecting New Hampshire’s most vulnerable ratepayers and trying to turn the tide against our burdensome electricity costs,” Sununu’s office said in a statement Monday.

Political supporters of the governor have joined that argument. Greg Moore, state director for Americans for Prosperity, a conservative group backed by Koch Industries, said the “seen” costs of the veto – the plant closures, the logging disruptions – are outweighed by the “unseen” costs of New Hampshire’s abnormally high energy prices, which he said affect every consumer and business in the state.

“Our focus is trying to get those costs as low as possible,” Moore said, in comments echoed by the state Business and Industry Association.

Critics, meanwhile, pointed to a 19 percent increase in Eversource’s energy charge – which makes up about half the average utility bill – by Eversource, approved by the Public Utilties Commission days after the veto, as evidence that the costs are driven by factors bigger than biomass.

Now, all sides are turning to September, when the House and Senate will reconvene to accept or override the governor’s vetoes. Supporters of SB 365, who include Republican Senate Majority Leader Jeb Bradley, have expressed confidence the veto can be overridden. But conservative stalwarts like former House speaker Bill O’Brien are readying the influence campaign to flip votes in favor of the governor’s decision.

“I think there’s enough Republican representatives who are oriented to free markets, who want to see the governor successful, that they’re going to be able to stand up to these arguments from rent seekers,” he said.

For Sununu, the pitch to legislators is one of fairness.

“Excessive electricity rates prevent new jobs from coming to New Hampshire and stifle the businesses that are already here,” the governor’s office said. “The elderly and low income families would end up paying the brunt of this cost, and that’s not fair.”

But for Crowe, the veto is already set to severely damper the local communities that contain the plants. About 20 people work in each Pinetree location, but the suppliers and truckers that serve the plant number in the hundreds, ENGIE officials said.

“It’s huge,” Churchill said of the closures. “And the trickle-down effect is just – it’s devastating to a local area like this.”

(Ethan DeWitt can be reached at edewitt@cmonitor.com, or on Twitter at @edewittNH.)