October 18, 2018
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As loggers get stiffed, Maine learns a lesson about propping up struggling industries

BDN File | BDN
BDN File | BDN
A truck delivers wood chips to a biomass plant in West Enfield last year. Loggers say they have not been paid for weeks for deliveries to two plants owned by Stored Solar.
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Last year, lawmakers approved a $13.4 million bailout for the state’s biomass industry. The money, collected from Maine’s taxpayers, flows to two companies that generate electricity by burning waste wood at plants in Maine. The aim of the deal was to keep Maine loggers working to provide wood to the biomass plants.

Instead of helping the loggers directly, however, the scheme, which Gov. Paul LePage backed and signed into law — despite his recent claims to the contrary — requires Maine people and businesses to buy electricity produced at the biomass plants at above-market rates. Under its contract, ReEnergy, which has plants in Fort Fairfield and Ashland, will receive a fixed price of $46.50 for each megawatt-hour of electricity it produces. When the market price for its electricity is below that rate, the state fund will pay the difference. If the market price is above that level, ReEnergy would reimburse the state for the difference. The average wholesale market price for Maine in 2016 was $34.71 per megawatt-hour, according to data from the regional grid operator, ISO-New England.

Stored Solar’s contract gives it a fixed subsidy of $13.40, on top of the market price, for every megawatt-hour it generates. Its plants are in Jonesboro and West Enfield.

In exchange for the money, the two companies pledged to keep 87 people, including loggers, employed for two years. They must also buy 1.1 million tons of Maine wood waste each year. The state requires the companies to set up a security deposit to ensure the job and wood purchase pledges are upheld. The deposit is held until the state completes a review, at the end of each year, to ensure the requirements are met. Central Maine Power Co. is holding a nearly $1.2 million deposit from Stored Solar, and the company is expected to deposit another $800,000 next week.

Just a few months into the deal, problems have already surfaced.

On Monday, Bangor Daily News reporter Darren Fishell reported that Gov. Paul LePage had asked the Public Utilities Commission to reduce the amount of money the companies must have on deposit with the state to “provide them more financial flexibility.” He asked them to do that by reviewing the companies’ economic performance more often than just once a year.

On Tuesday, Fishell reported that Stored Solar has allegedly not paid loggers who provide it with wood for weeks.

Dana Doran, executive director of the Professional Logging Contractors of Maine, which advocated strongly for the bailout, said some of his members have not been paid by Stored Solar since early February.

“For them not to be paid upward of four to six weeks, that’s 30 to 50 days beyond what they’re normally paid on,” Doran said. “That’s significant and for many of these family-based businesses, that can put them under. Many are wondering whether they can continue to make payroll.”

For the month of January, the first month of the contract, Stored Solar received $241,479 from the state. For the month of February, it received $184,519, according to a PUC report.

ReEnergy has received no payments because its contract did not begin until March 1.

Because payments to Stored Solar are tied to its sale of electricity, the state must pay the company as long as it produces and sells electricity at its Maine biomass facilities. It should, of course, not ease the security deposit requirements if it has failed to pay its wood vendors. However, withholding money at the end of the year does little to pay loggers to keep them in business now.

The PUC wrote to Stored Solar on Wednesday seeking an update on the status of its payments to loggers and other contractors and employees.

This mess fulfills the concerns raised by lawmakers and others that giving taxpayer money to struggling biomass plants wasn’t the best way to help Maine loggers. Lawmakers and the PUC should take the governor up on his request to revisit the security deposits the companies must make, but they shouldn’t necessarily lower them. The state should review not only the jobs and wood purchase numbers but also ensure the companies are paying their bills at the end of each month. If vendors aren’t paid, the state can use the deposit money to pay them. This will fulfill the hope of the bailout, which was to keep loggers employed.

Longer term, we hope state lawmakers are more prudent when it comes to committing taxpayer dollars to risky ventures that put the interests of out-of-state companies ahead of Maine workers. This is especially true of Stored Solar’s proposal to build a biofuel center in East Millinocket.

 


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