State seeks to revive East Millinocket mill by allowing Cate Street to sell electricity

The East Millinocket mill.
Kate Collins | BDN
The East Millinocket mill. Buy Photo
By Nick Sambides Jr., BDN Staff
Posted Feb. 12, 2014, at 7:45 p.m.

EAST MILLINOCKET, Maine — Gov. Paul LePage’s staff and state legislators met Wednesday to explore allowing Cate Street Capital to partner with the owner of several hydroelectric dams to sell electricity and create new revenue that could help restart the Main Street paper mill.

Democratic and Republican state legislators, government administrators and Cate Street leaders met in Augusta to further refine an idea broached between LePage and mill owner Cate Street Capital two weeks ago, which could result in a bill in 48 hours, said George Gervais, commissioner of the Maine Department of Economic and Community Development.

The bill would lift a state law that since 2002 has allowed dams on the Penobscot River owned by Brookfield Asset Management subsidiary Brookfield Renewable Energy Partners to generate power only for the East Millinocket paper mill, said Patrick Woodcock, Maine’s energy director. The dams generate about 48 megawatts, he said.

The change would allow Cate Street to negotiate with Brookfield to resell electricity at an increased price to the New England power grid, Gervais said — thereby creating a hefty economic boost to the mill’s ability to compete as a papermaker.

“It would allow Cate Street to access a highly lucrative electrical market that New England experiences in the winter months,” Woodcock said.

Woodcock declined to say how much Cate Street pays Brookfield per kilowatt-hour for electricity, but he did say that it was well below present market rates, which have held at about 15 or 16 cents per kilowatt-hour over the last month or so.

The meeting with LePage’s staff was one of two Cate Street had scheduled Wednesday in response to its subsidiary, Great Northern Paper Co. LLC, laying off 212 of its 256 workers at its already idled Main Street facility on Feb. 6. The company has said it planned an up to 16-week shutdown to allow it to address high energy and production costs that reduce its competitiveness in the newsprint and book paper markets.

Another meeting occurred late Wednesday afternoon between Cate Street officials and U.S. Sens. Susan Collins, R-Maine, Angus King, I-Maine, and U.S. Rep. Mike Michaud, D-Maine, in Washington, D.C. The trio of delegation members released a joint statement about 7 p.m. briefly describing what occurred.

“We had a productive meeting with the leadership of Cate Street and Great Northern Paper in which they stated that they have a plan for restarting the mill in East Millinocket with the hope of returning some workers by May 1st. We look forward to reviewing the plan and staying in touch with Cate Street as they implement it,” the statement read.

The return of the workers would coincide with the approximate 16-week layoff.

If the mill is allowed to sell electricity to the market, it would join the Verso paper mill in Bucksport and several others in Maine that generate electricity as an adjunct to papermaking, Woodcock said.

“We are allowing new options for the mill to find viability in papermaking through the energy market that a lot of other mills have taken advantage of,” Gervais said.

Woodcock and Gervais cautioned that the idea is far from complete. The Legislature must approve the bill, which legislators and LePage administration officials are still crafting, and negotiations between Cate Street and Brookfield must satisfy both parties.

Several legislative committees must review and approve the measure before LePage can sign it into law, Woodcock said. No timeline has been set for either effort.

LePage already supports the initiative, said his spokeswoman, Adrienne Bennett.

“We have to find a resolution that benefits the economy of the [Katahdin] region,” Bennett said. “That’s the most important thing right now, working together to find that solution.”

Woodcock and state Rep. Barry Hobbins, D-Saco, praised members of the Legislature, particularly members of the Energy, Utilities and Technology Committee, for working together with LePage to save the mill’s furloughed jobs. The committee, of which Hobbins is co-chairman, has jurisdiction over the bill.

Legislators crafted the 2002 law restricting electricity sales to the East Millinocket paper mill so that Brookfield, which owned the East Millinocket and Millinocket mills at the time, would keep papermaking a top priority, Hobbins said.

“I think it is workable,” Hobbins said of the bill his committee will review. “The irony of this is the original [2002] bill was put in to ensure that the owner of both facilities wouldn’t just spin off the power part of it and then strip the mill and not have paper being made in the mill.”

“I think this bill will give some equal footing when it comes to the power generation issue and make sure that we tie in any type of situation with Cate Street and the idea that they will produce paper,” Hobbins added. “When you produce paper you produce and preserve jobs and that is what this is all about.”

Cate Street bought the two mills from Brookfield Asset Management in September 2011.

Brookfield owns 38 dams on the Penobscot, Androscoggin and Union rivers in Maine, purchasing nine dams in November. It had scooped up several in the past year. It acquired 19 dams in December 2012 from NextEra Energy Resources, which brought the number of dams it operates in Maine to 29 and its total generating capacity to 270 megawatts.

The nine new dams increased its capacity to 340 megawatts. The total generating capacity for all Maine hydroelectric facilities is roughly 762 megawatts, according to the Maine Department of Environmental Protection.

Hobbins encouraged other legislators to support the bill.

“This is an opportunity to demonstrate that people here can put politics at the doorstep and do what is best for the people of Maine,” he said.

BDN Business Editor Whit Richardson contributed to this report.

 

http://bangordailynews.com/2014/02/12/business/state-seeks-to-revive-east-millinocket-mill-by-allowing-cate-street-to-sell-electricity/ printed on November 23, 2014