Ratepayer protections, job losses, environmental concerns at play in Berlin biomass debate
Plants like Burgess BioPower’s Berlin Station are not efficient at all. (Getty Images)
This article was updated at 8:31 a.m. on April 7, 2022 to reflect that Berlin Station generates 75 megawatts of power on an ongoing basis, not per year as was incorrectly stated in a previous version of this article.
A three-year debt on overpriced energy from a biomass plant in Berlin is coming due – and the Legislature is advancing a bill to make ratepayers responsible for paying it all.
Under the plan in Senate Bill 271, rather than have their portion capped at $100 million per year, ratepayers could face $160 million to $170 million in costs. Without that change, the bill’s supporters argue, the plant risks closing – and taking more than 200 jobs with it.
Meanwhile, the plant submitted a report to the state Public Utilities Commission in February showing it nearly broke even in 2021 after keeping its financial information confidential for years. And others are raising separate concerns about the bill’s lack of environmental controls.
Berlin Station has a 20-year contract to sell energy to Eversource at a set price. Depending on energy markets, the energy the station sells to Eversource can be much more expensive than the market price. The contract included a mechanism to protect customers, setting a limit on the amount of over-market energy Eversource can charge customers at $100 million.
When the cap is surpassed, the station is supposed to make it up to customers by selling energy at a less expensive rate. But four years ago, the Legislature intervened, telling the utilities commission to suspend the cap for three years from when it would have taken effect, allowing Berlin to sell the over-market energy and Eversource to charge customers for it, without a limit.
The fear then was that, without the ability to charge more than the going rate for energy, the plant would close. That concern persists.
“This bill is absolutely necessary if the plant’s going to continue to operate,” Sen. Jeb Bradley, a Wolfeboro Republican, told lawmakers during a public hearing on the bill, which he sponsored, in February. The bipartisan bill passed the Senate in March and will have a public hearing before the House Science, Technology, and Energy Committee on April 12.
The plant’s closure would be economically devastating to the region, residents told lawmakers during a public hearing on the bill, at a time when the Berlin area is still trying to right itself from the economic blow of many pulp mills shuttering.
“Our middle-aged middle class exited very quickly as the pulp and paper mills were leaving,” Kathleen Kelly, a resident of Randolph, told lawmakers.
As the timber industry has declined, so has the North Country’s population, according to census data – a problem local leaders say the plant’s closure would exacerbate.
“We no longer have the luxury of another human exodus while trying to rebuild our valley’s economy,” said Paul Grenier, the mayor of Berlin. The benefits of the plant, he said, exceed its cost.
Grenier described the company as a good neighbor that pays around $2 million in property taxes, almost 12 percent of the $17 million Berlin collects in total.
The company takes credit for 240 jobs across the state, 208 of which are in Coos County, a region that’s been hit hard by the exodus of the paper mill industry. That’s left the timber industry in a tough spot, and burning scrap wood for electricity is one of the few remaining markets for low-grade wood. According to a company report, Berlin Station, which is also called Burgess BioPower, spends $25 million a year on low-grade wood, making it the single largest buyer of low-grade biomass in the state. The bill has secured the support of the New Hampshire Timberland Owners Association.
But the measure comes at a cost for Eversource customers who see increases in their monthly electric bills. That’s the main reason the New Hampshire Department of Energy is opposing the bill.
Tom Frantz, director of the regulatory support division at the Department of Energy, estimated that for an average household the extra cost would amount to around $2 to $3 per month on their bill. An ambitious energy efficiency plan was tanked last year because it would have resulted in a similar charge to ratepayers around the state.
The biomass plant in Berlin produces 75 megawatts of energy, enough to power 13,000 New Hampshire homes, according to company executives. Biomass generates what’s called baseload power, energy that can be created on demand unlike wind or solar energy, which are intermittent resources that come onto the grid only when the sun shines or the wind blows.
Extending the suspension of the $100 million cap, passed in 2018, was intended as a stopgap measure pending a permanent solution. “The idea was that at some point someone would think of something to keep the plant viable, and the money would get paid back,” said Consumer Advocate Don Kreis.
That hasn’t happened.
“As we enter the third year of that extension, we’re still not sure what that permanent solution is,” Frantz told lawmakers at a public hearing for the bill. “We wish that there were one. These costs are high.”
Lawmakers are now arguing that they never intended to make Burgess BioPower pay for overpriced energy, but that ratepayers should be responsible.
According to one estimate Frantz cited, this bill would saddle ratepayers with an additional $60 million to $75 million on top of the $100 million cap that was approved in the original contract.
“Over the course of a year, this energy is approximately 20 to 25 million dollars over market,” Frantz told lawmakers.
“Those are additional costs to customers,” he said.
The bill comes in a year where energy costs have risen dramatically. With the increased energy costs have come calls for increased funds for assistance programs to keep energy costs affordable for state residents.
Kreis has not taken a position on the bill but pointed to a potential legal issue in a letter to lawmakers: whether the state is overstepping federal law by passing more costs onto ratepayers.
“The reason I didn’t take a position is, what could I say that would be constructive? All I can do is remind the Legislature that if you do this, the only wallet in the room belongs to the customers of Eversource,” Kreis said in an interview. “Like I said in my letter, whether the public policy requires ratepayers to pony up yet again to prop up that plant, that’s not my department.”
Kreis called the cap-suspension arrangement that began three years ago and has been extended another three years “a goofball way of kicking the can down the road.”
A Cost and Profitability Report Berlin Station submitted to the Public Utilities Commission showed that it broke even in 2021. The company waived its right to keep the report confidential, disclosing information that for years it had insisted be kept secret.
“This year energy markets have gone haywire, which is even better for a merchant generator like this one,” Kreis said in an email. “So – and it’s more than possible I am missing something – why is Berlin Station seeking yet another ratepayer bailout?”
The company reported $70.4 million in revenue for 2021, and spent $68.8 million in operating and maintenance costs, on top of the $2.9 million it paid in taxes and fees to the city.
Biomass is factored into the state’s renewable energy portfolio, and the bill points to state energy goals including “fuel diversity, capacity, sustainability, and energy independence” to justify the subsidy.
But some environmentalists have argued that burning wood to generate electricity is bad for the climate because it emits a lot of carbon into the environment for each unit of energy generated. And, it takes time for trees that sequester carbon to grow back and reach maturity.
Catherine Corkery, director of the New Hampshire Sierra Club, pointed out that the bill doesn’t require new clean air controls, waste heat trapping, or any certification for carbon sequestration when the wood is harvested. She said the bill, which the Sierra Club does not support, comes at taxpayer expense for not much.
Plants like Burgess BioPower’s Berlin Station are not efficient at all.
Joe Fontaine, who works in the air resources division of the New Hampshire Department of Environmental Services, calculated Burgess BioPower’s efficiency at around 25 percent, which means that for every four trees burned, only one is actually converted into electricity. The rest of the energy is just hot air that’s not put to use.
The conundrum isn’t unique to New Hampshire. In neighboring Vermont – where residents are also subsidizing a biomass plant to the tune of around $5 million per year – some lawmakers concluded it would make sense to burn wood for electricity only if that hot air was being used.
Executives from Burgess BioPower told lawmakers they are looking for ways to do so by using the waste heat for projects like heating the streets of Berlin. But there’s no requirement in the legislation that they do so.
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