CONCORD — Without passage of Senate Bill 271, the Burgess BioPower biomass plant in Berlin would be forced to close, company officials told members of the House Science, Technology, and Energy Committee on Tuesday.
Many people testified about the plant’s importance to the North Country and the state’s timber industry. But others argued the plant is being subsidized by the state’s ratepayers, who they say have been paying $2 to $3 per month on their electric bills to cover the above market rates paid for its power.
Burgess BioPower Asset Manager Dammon Frecker said an independent study found the 75-megawtt biomass plant creates 240 jobs and annually generates over $70 million in economic activity in the state.
In fiscal 2019, Burgess BioPower paid about $1.5 million to the city under a payment-in-lieu of tax agreement or about 12 percent of all real estate taxes in Berlin. Overall, Frecker said Burgess BioPower pays about $5 million annually to the city for taxes, water, and sewer. It also employs 29 people directly.
“The future economic survival of my city depends on the continued operation of Burgess BioPower. Perhaps this sounds a bit dramatic, but that’s how critically important Burgess BioPower is to the city,” said Berlin Mayor Paul Grenier.
Jasen Stock, head of the Timberland Owners Association, said the plant is the largest purchaser of low grade wood in the state, buying 800,000 tons of low grade wood at a cost of about $25 million. He said by providing a market for low grade wood, Burgess is allowing landowners to practice proper forest management and keep their lands open.
The bill, which has passed the Senate, clarifies legislation passed in 2018 that suspended the cap on above market rates paid for electricity produced at the plant. The original power purchase agreement with Eversource allowed Burgess BioPower to be paid above market rates for the electricity generated there until it reached a $100 million cap. When it became clear the biomass plant was going to reach that amount sooner than expected, the legislature passed a bill in 2018 allowing a three year suspension of the cap.
Burgess BioPower Vice President of Public Affairs Sarah Boone said SB 271 would not impose any new costs on ratepayers or ask for additional relief for the biomass plant. She said
Burgess believed the 2018 bill intended that ratepayers would cover the costs that accrued during the suspension. But she said the N.H. Public Utilities Commission had a different interpretation. The regulatory process took 18 months and with time running out, Boone said Burgess BioPower “reluctantly accepted a settlement that deferred costs during the three year period but did not forgive them.”
Now, she said they are being told the approximately $58 million in accrued costs has to be paid back in one year. Boone said the money will be taken out of Burgess BioPower’s monthly energy payments beginning in December and will financially devastate the company.
“The monthly repayment amount will be millions of dollars more than Burgess’ monthly revenue, which means the facility would operate at an unsustainable loss each month and would be forced to close,” Boone explained.
SB 271 calls on the PUC to revise its orders effected the Burgess BioPower plant as necessary to protect its continued operation. Boone stressed that SB 271 imposes no new cost on ratepayers since the money has already been raised.
State Senator Jeb Bradley, (R-Wolfeboro) who is lead sponsor of the bill, noted that last year the Burgess BioPower almost broke even because of higher wholesale rates. He noted that the biomass plant provides what is called baseload power, meaning it is reliable and not dependent on wind or sun like other renewable energy generators. Except for two weeks a year maintenance shutdown, the Berlin plant runs constantly.
The reliability of the biomass plant power was a point picked up by Rep. Edith Tucker (D-Randolph). She spoke about the need for redundancy in power sources and noted the disruption in supply chains as a result of the pandemic and Russia’s attack on Ukraine. Tucker said it was remarkable the state is talking about allowing a modern biomass plant to close, especially one that operates on a locally grown fuel source.
As a resident of the North Country. Tucker also spoke about the plant’s importance to the North Country and the logging business. She pointed out that outdoor activities like snowmobiling and ATV riding depend on large landowners being able to make money off timber.
Tom Frantz, of the state Department of Energy, said 20-year purchase power agreements were designed to provide some financial guarantee for the developer with a cap to minimize the risk of energy generated at costs well over market rates. He said his personal opinion is without a cap, the facility would be “operating at a loss for every megawatt hour they produce.”
When asked the impact of the biomass plant closing, Frantz estimated Eversource ratepayers would see a $2.50 to $3 reduction in their monthly bill. There would also be a savings of around $20,000 in renewable energy credits the plant earns a year.
While Burgess is the fourth largest power plant in the state, Frantz said the state has almost 4,000 megawatts of installed generation.
Frantz was asked about the fairness of the legislature retroactively overruling a PUC decision. He said such an action creates uncertainty in the regulatory world. He said there is a process to file for a rehearing before the PUC or the party can file an appeal with the state Supreme Court.
North Country Representatives Robert Theberge (R-Berlin) and William Hatch (D-Gorham) also attended the hearing and made brief statements in support of the bill.
Frecker also spoke about Burgess BioPower’s efforts to generate economic activity in Berlin. They are working with the city to design a system that can extract thermal energy from its cooling water system and heat the city streets in the wintertime. A commercial greenhouse operator considered locating on the site but ultimately decided to focus on other projects. Now Burgess is talking to White Mountain Paper about supplying the paper company with warm water for its processes.