New law gives Katahdin mills electric priority

Posted April 06, 2010, at 10:23 p.m.
Last modified Jan. 30, 2011, at 12:03 p.m.

Editor’s note:A story on Page B2 of Wednesday’s paper about a new law regarding power generation facilities on the Penobscot River affecting Toronto-based Brookfield Asset Management contained errors. The story should have said that according to the law, the generator owners may offer electricity not under contract to the Millinocket or East Millinocket paper mills to any municipally owned electricity provider serving the Katahdin region. The story also should have said that Brookfield is working toward reopening the Millinocket mill if certain conditions are met.

MILLINOCKET, Maine — A new state law requires that Brookfield Renewable Energy Inc.’s hydroelectric systems on the Penobscot River keep two Katahdin Paper Co. LLC mills and a proposed public utility as their primary customers, town officials said Tuesday.

Gov. John Baldacci signed LD 543 into law at the state capital on Monday. The law requires that the Katahdin Paper Co. LLC mill on Katahdin Avenue and its sister mill in East Millinocket be the dam’s primary electric customers, with any Katahdin Region utility also getting right of first refusal on the electricity, Town Manager Eugene Conlogue said.

“The town hopes that this bill can serve as a catalyst toward building a closer and stronger relationship with Brookfield Renewable Power and its parent company, Brookfield Asset Management,” Conlogue said in an e-mail Tuesday.

As sponsored by state Rep. Herbie Clark, D-Millinocket, the bill is at least partially a response to Brookfield Asset’s announcing on Aug. 26, 2008, that it was shutting down the Millinocket mill indefinitely and laying off 208 workers later that year.

Brookfield cited the mill’s oil usage and expensive operation.

Led by Town Council Chairman Scott Gonya and Councilor Jimmy Busque, councilors expressed fears that the shutdown, which Brookfield called temporary but indefinite, would lead to Brookfield closing the mill and selling electricity out of state.

Under the law, residents own the water that generates the power and should benefit from its use, councilors said.

The town mill remains closed. East Millinocket’s mill is running.

Gonya also discussed using eminent domain to take over the generators, an idea he admitted was partially coercive. Their proposals showed how deeply the indefinite shutdown is resented in the Katahdin region, a papermaking home for 100 years.

Clark’s bill changed the state law to its pre-2004 language, which mandated that the systems directly support papermaking industries. It was changed when Inexcon Maine was about to sell the hydroelectric generators as part of its plans to continue modernizing the No. 11 paper machine at the Katahdin Avenue paper mill. The machine came online in 2004.

For its part, Brookfield has maintained that it remains committed to reopening the Millinocket mill with a biomass burner.

Brookfield representatives say they await the successful negotiation of a multiyear contract with the Maine Public Utilities Commission to buy surplus electricity from the boiler and the securing of a partner to run the biomass component.

Brookfield Asset is parent of Brookfield Renewable and Katahdin Paper Co. LLC and owns Fraser Papers. Fraser manages the Katahdin Paper mills in East Millinocket and Millinocket.

Conlogue praised Clark and other legislators for passing the bill. He said it would help the town develop its very fledgling plans to create a public utility that would attract businesses to the region with low electricity rates.

Councilors did not respond Tuesday to telephone calls or e-mails requesting comment.

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