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East Millinocket paper mill’s future at center of hearing on electricity bill Wednesday

Great Northern Paper Co. LLC in East Millinocket in January.
Great Northern Paper Co. LLC in East Millinocket in January. Buy Photo
Posted March 05, 2014, at 11:41 a.m.
Last modified March 05, 2014, at 5:42 p.m.

EAST MILLINOCKET, Maine — As a state legislative committee prepared to meet Wednesday to discuss a bill allowing Great Northern Paper Co. LLC to sell electricity at its Main Street paper mill, the company’s owners and workers reiterated that the bill’s passage is critical to the mill’s restarting by May 1.

“We are not looking for a handout,” GNP President Ned Dwyer said in a statement released Monday. “We are looking to even the playing field and give this business the same access as other mills to earning revenue from selling power — rather than using it during high-price periods.

“As happens most winters, recent market rates for power are sky high due to the cold weather. We would like to have the benefit of those higher rates,” Dwyer said.

The Legislature’s Joint Standing Committee on Energy, Utilities and Technology is holding a public hearing on the bill, L.D. 1792, at 1 p.m. Wednesday in Augusta. Great Northern shut down the East Millinocket mill on Jan. 23. The company said it needed to create a new business plan to overcome high energy and production costs. On Feb. 6, the company laid off 212 of its 256 workers.

The statement GNP officials released Monday through their parent company, Cate Street Capital of New Hampshire, included endorsements of the bill from local leaders and union officials.

“The East Millinocket mill cannot compete against those who have the ability to shed electrical load and sell energy when the Northeast electrical grid sorely needs it to service residential customers,” said Duane Lugdon, a statewide representative of the United Steelworkers International Union.

Lugdon listed the other state paper mills that sell electricity wholesale. Huhtamaki in Waterville, SAPPI in Westbrook, SAPPI in Skowhegan, Madison Paper in Madison, NewPage in Rumford, Old Town Fuel & Fiber in Old Town, Verso in Bucksport and Lincoln Paper & Tissue in Lincoln “all have the ability to enhance their revenue lines in this way,” Lugdon said.

Rob Farrington, a mill boiler operator, local union president and chairman of the Medway Board of Selectmen, also endorsed the bill. The present prohibition of electricity sales at the mill “is now hurting us and jeopardizing our ability to restart,” he said.

Gov. Paul LePage publicly first broached the idea of electricity-sales at GNP on Feb. 12, drawing bipartisan support. 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 paper mill, officials have said. The dams generate about 48 megawatts, he said. The law was created to protect papermaking operations at the mill.

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

They declined to say how much Cate Street pays Brookfield per kilowatt-hour for electricity. An unofficial estimate placed Cate Street’s purchasing price for electricity from Brookfield at 3.5 cents and 4.5 cents per kilowatt-hour, or between $35 and $45 per megawatt-hour, far below the wholesale market rate for electricity during the months of peak demand.

The 2002 law that prevents the sale was originally crafted to keep the mill’s owners from shedding the mill operation in favor of full-time electricity production, Farrington said.

Cate Street officials have said they want Brookfield to agree to renegotiate their current agreement and strike a revenue-sharing deal. Under the new agreement, Cate Street would get a share of proceeds whenever it cuts back on paper production during periods of peak electricity demand and Brookfield instead sells that power on the wholesale market when prices are high. These type of controlled blackouts are called “load shedding.”

This load shedding would be done “in a strategic way” and only when the conditions are right — a few times a year, officials said.

Brookfield has been receptive to the idea, but has warned that any agreement must be financially sensible. State officials admit that Brookfield would make more money selling electricity without Cate Street’s involvement. One said that Brookfield has to be taken at its word that it wants to cooperate.

For live updates, follow BDN reporter Nick Sambides Jr. on Twitter @NickSam2BDN.

Watch bangordailynews.com for updates.

 

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