Legislative committee tables bill deemed critical to East Millinocket paper mill’s future

By Nick Sambides Jr., BDN Staff
Posted March 07, 2014, at 1 p.m.

AUGUSTA, Maine — Two companies that would be forced into a revenue-sharing arrangement by a pending bill aimed at keeping the East Millinocket paper mill in business are trying to work out a deal, officials said Friday.

The Legislature’s Joint Standing Committee on Energy, Utilities and Technology tabled LD 1792, An Act To Protect Jobs in the Forest Product Industry, to allow Brookfield Asset Management and Cate Street Capital to continue the talks. Committee Chairman Sen. John J. Cleveland, D-Auburn, said Friday that the Legislature gave both sides permission to miss the bill deadline to keep working on the deal.

“We have talked to Cate Street regularly, and we continue to talk to them. Usually every few days we talk,” attorney Harold Pachios, who represents Brookfield, said Friday. “They have certain demands, and we have certain business principles at stake, and we discuss them.

“We continue to try to find ways that we can be of some assistance to them while still adhering to our contract, and we want them to adhere to the contract, too,” Pachios added.

Cate Street spokesman Scott Tranchemontagne didn’t immediately return messages on Friday.

Gov. Paul LePage first broached the idea of electricity sales at Great Northern Paper Co. on Feb. 12, partly in response to the temporary layoff of 212 workers at the mill, which is owned by Cate Street, a New Hampshire investor. The bill would lift a state law enacted in 2002 that limits the conditions under which Brookfield, which owns hydropower dams on the Penobscot River, can sell electricity to the wholesale market, officials have said.

Under the present law, Brookfield must sell to the mill all of the electricity generated by its three hydropower dams on the Penobscot River when the mill is operating, but it can sell electricity wholesale when the mill is in temporary or partial shutdown.

The new law would allow Brookfield to sell electricity to the market at all times so long as it shared profit with Cate Street and “as long as there is no reduction in labor force associated with the cessation or reduction of paper production,” the bill states.

Cate Street officials have said they hope to restart the mill by May 1.

Brookfield has made $4 million to $5 million per month selling wholesale electricity since Great Northern Paper shut down the mill, Cate Street President and CEO John Halle said outside the public hearing held in Augusta on Wednesday. Halle estimated that his company would make about $1 million per month during times of high demand for electricity.

Calling the proposed bill unconstitutional, Pachios told the committee Wednesday that the long-term rehiring of the workers must occur before Brookfield will enter negotiations.

Great Northern Paper 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. The layoffs began Feb. 6.

The bill, Pachios said, violates a 10-year power supply contract that Cate Street signed with Brookfield on Aug. 30, 2011, guaranteeing the mill power rates originally set in 2001 during high-cost times such as winter.

“When they read this in the paper, people are going to say, ‘And when are they coming for me?’ Because if you can nullify this contract with Brookfield, you can do it to anyone,” Pachios said.

He described Cate Street as defaulting on a Brookfield energy contract that Brookfield maintains despite the default because company officials hope to see the mill restart.

The bill’s sponsor, Rep. Steve Stanley, D-Medway, has said that LePage could sign the bill into law as soon as next week. If passed by the committee, it would go to both houses for a floor vote.

Stanley said Wednesday that he didn’t know precisely what he would do if the bill failed to pass the committee but indicated he would not give up on the proposal.

Cate Street officials and local labor and town government leaders have said the bill is a key element to the mill’s planned restart.

Pachios was the only speaker at Wednesday’s hearing to oppose the bill.

Sun Journal reporter Scott Thistle contributed to this article.

 

http://bangordailynews.com/2014/03/07/politics/committee-tables-bill-deemed-critical-to-east-millinocket-paper-mills-future/ printed on July 26, 2014