December 18, 2017
Maine Focus Latest News | Poll Questions | Long Creek | Tax Reform | Opioid Epidemic

LePage keeps backing energy firm seeking taxpayer help, despite failings after bailout

By Darren Fishell, BDN Staff

Gov. Paul LePage continues to back a company that, despite having access to millions in taxpayer subsidies, has failed to pay its Maine-based suppliers and left behind a trail of debt, unpaid taxes and broken promises.

Stored Solar LLC is now seeking a fresh round of taxpayer support for a set of new, multimillion-dollar business ventures to turn Maine forests into energy.

Later this month, the governor is scheduled to travel to a San Francisco conference, where the company says he will make an announcement about “the latest activities in the State of Maine for the bioeconomy,” according to a website for its affiliate, Born Global.

A presentation posted online recently by Born Global describes its intentions for two Maine plants that burn wood to make electricity. The plants have sat idle as the company has failed to pay several loggers for wood shipments, even though the state Legislature last year authorized direct taxpayer subsidies for those facilities.

In a radical departure from Stored Solar’s previous plan, it wants to scrap its business in the Washington County town of Jonesboro entirely and turn its biomass facility there into a nonprofit “innovation tourism” destination, according to the presentation.

At its West Enfield biomass plant, in Penobscot County, the company’s plans include building a shrimp farm with the help of a $500,000 loan from Maine taxpayers. It’s also seeking a separate, $5 million loan, backed by Maine taxpayers, to allow the company to fix equipment, buy fuel and have cash on hand.

If ultimately approved, both loans could put taxpayers on the hook if Stored Solar defaults. If the company succeeds, taxpayers would pay from a different pocket through a deal approved by the Maine Legislature to subsidize its electricity production.

The governor’s office declined to comment on the San Francisco trip and the announcement, but it would be the second time LePage has attended such a conference alongside Born Global.

While the company has clued in the governor and will share its plans with the San Francisco audience of biofuel companies and consultants, it’s left suppliers and local officials in the dark.

“I haven’t heard squat one from any of them,” Theresa Thurlow, Enfield’s town manager, said.

‘Power plant waste water to grow shrimp’

Biomass plants support jobs harvesting Maine trees, but low oil and natural gas prices make it impossible for them to compete and turn a profit by producing power alone. To prevent them from closing, the Maine Legislature last year approved using $13.4 million in tax dollars to subsidize biomass electricity at four plants for two years, including the two owned by Stored Solar and two owned by ReEnergy.

The companies need to meet employment and wood-purchasing goals to qualify for the subsidy on power they generate. While ReEnergy has generated power consistently since March, Stored Solar has operated, at best, intermittently, and far below its initial expectations, according to bid documents.

By not meeting its goals, the company lost out on about $1.6 million in potential subsidies while qualifying for roughly $1.1 million in the first nine months of the year.

The subsidies were supposed to make their way into the woods, to help loggers hit hard by the rapid fall of Maine’s pulp and paper industry. A logging trade group says that hasn’t happened.

[Maine’s biomass bailout bill isn’t helping loggers as much as it was supposed to]

Dana Doran, executive director of the Professional Logging Contractors of Maine, said many of his members have gone months without payment for wood shipments, totalling roughly $500,000.

“[Stored Solar has] made some small payments to those suppliers,” Doran said, “but they haven’t crossed the finish line.”

Despite the signs of financial trouble and concerns from regulators and the industry, LePage’s administration has continued to support Stored Solar’s grand, glossy-brochure vision of its plans that clashes with its financial picture and failures in Maine.

While Doran wonders if Stored Solar will pay his loggers in 30 days, the company’s crafted a 30-year vision for investors. At the Advanced Bioeconomy Leadership Conference on Next Generation Technologies in San Francisco, the company will hype a new Bioeconomy 2050 initiative, involving an overhaul of food systems, energy production and waste management.

“We need to move our global economies away from a take, make and dispose industrial model to a circular economy that is restorative and regenerative by design,” the presentation reads.

The nonprofit Born Global Foundation registered with Maine’s Secretary of State in January. Born Global is led by Kimberly Samaha, through Synthesis Venture Fund Partners, where she is CEO. She is married to Fahim Samaha, co-owner of both Stored Solar and its parent company Capergy.

The Born Global presentation offers a description of Stored Solar’s vision “to use power plant waste water to grow shrimp” in West Enfield and to fashion its Jonesboro property into the first “Living Lab” in the U.S., a vacation destination and “hardtech” business incubator housed in hexagonal geodesic domes.

In West Enfield, Stored Solar plans to add a 60-acre greenhouse to grow peppers and tomatoes, three new buildings to farm shrimp and a $240 million refinery to make combustible fuel from wood, using technology from a Shell subsidiary that hasn’t been proven commercially.

[Experts see challenges in pioneering biofuel plant technology]

Last year, the company received a $50,000 grant from the state-funded Maine Technology Institute to put together a federal loan application for such a facility in East Millinocket, at the former Great Northern Paper mill. It didn’t pan out. In the application, Stored Solar said it expected to have closed on the loan for the massive biorefinery last month.

A company spokesman said in June that Stored Solar hit “impediments” getting the federal loan guarantee it had hoped would support about 70 percent of the cost for the biorefinery. The company never bought the shuttered mill, despite suing for the right to buy it.

The Born Global presentation shows just how much the company’s plans have shifted and fills in details that neither state nor company officials would disclose.

But the presentation leaves key questions unanswered. For instance, who will run the shrimp farm? How is the $240 million biorefinery coming together? And, setting aside the question of where all the investment capital will come from, how will the company pay its back bills?

The company evidently thinks help from the state of Maine is part of the equation.

Harrington declined to comment last week to a reporter at the company’s West Enfield plant.

The state loans

The Maine Rural Development Authority in August gave conditional approval to a $500,000 loan to Katahdin Shrimp Farm LLC, a wholly owned subsidiary of Stored Solar West Enfield. The 5-year loan, with a 4-percent interest rate, would help fund design, engineering and construction of three shrimp farming buildings next to the biomass plant, according to Chris Roney, attorney for the Finance Authority of Maine.

Roney and Doug Ray, spokesman for the Maine Department of Economic and Community Development, declined to say what conditions the company has to satisfy before actually getting the loan.

In March, Stored Solar described the shrimp plan differently, telling regulators that it had an agreement for a “shrimp farm operator” to build facilities in both West Enfield and Jonesboro.

It appears Katahdin Shrimp hasn’t yet registered as a business. It is not listed in Maine or Delaware, where Harrington and partner Fahim Samaha registered other related ventures. State officials declined to say whether the company is incorporated.

In addition to the shrimp farm loan, Stored Solar wants the Finance Authority of Maine to insure 90 percent of a $5 million loan for changes at the West Enfield plant, meaning taxpayers could foot the bill if Stored Solar defaulted.

Both loans would use Stored Solar’s land and equipment as collateral, but other parties seeking payment from the company are after their own stake in those assets, to reclaim what they’re owed.

A Lincoln contractor and the town of Jonesboro have filed liens against the company. Wendy Schoppe, Jonesboro’s tax collector, said the company owes $90,000 in property taxes. The town is working on a higher-value lien against the company’s equipment.

She, too, has heard little from the company after it stood up residents and town officials at the annual town meeting, in July. Company officials were scheduled to give a presentation on their plans after the meeting.

“It was one of the biggest town meetings we had in a long time, and it was because of that,” Schoppe said. “Nobody notified me to find out why they didn’t come. All I got was that they weren’t prepared.”

Plans to make the Jonesboro property into a nonprofit tourism destination would remove the property from the town’s tax rolls altogether.

Schoppe said she’s not sure whether the company will settle its debts. Neither are its suppliers.

George Moon, of TJ Timber Products in Hancock, said he and another supplier received a small payment recently, but he’s still owed the lion’s share of $50,000 for wood delivered to the West Enfield plant. He said his attorney was working on a complaint.

“What they wanted to do was shut us up,” Moon said. “It didn’t work.”

Oceanfront in West Enfield

To believe the Bioeconomy 2050 promise, one could rely on the testimonials of the people Born Global calls its “new faces of innovation,” like Karen Byther, of Maine.

The Born Global presentation quotes Byther on a slide titled “Who we serve” as someone who “grew up in a family-owned logging company,” saw the devastation of mill closures in the region and “had 11 years of myself invested into the plants” that have idled.

Byther worked at the biomass plants under the previous owner, Covanta, for 11 years, according to her LinkedIn profile. Her job as an executive assistant ended recently under Stored Solar’s ownership.

She declined to confirm or deny that she made the statement after a reporter read it to her over the phone. Byther was not aware her name was being used in a company presentation. The presentation did not identify Byther as a current or former employee, and Byther declined to comment on her current relationship with Stored Solar.

The presentation also quotes former public utilities Commissioner Jack Cashman praising the Born Global Foundation’s goal of moving University of Maine research into commercial applications. Cashman confirmed the quote but said he hasn’t spoken with leaders of the effort this year.

Beyond the testimonials, the company’s experience with other projects casts doubt on its ability to follow through with the vision it’s touting.

Harrington’s 2013 effort to restart a troubled New York biomass plant failed in 2015, after employees alleged they weren’t paid. The company eventually defaulted on a $6 million mortgage from the Niagara County Development Corp., and contractor Codaco Engineering sued and won a $106,800 judgment.

Dan Cashman, a former spokesman for the company, in June said there’s little information about the company because its principals “don’t like to toot their own horn.”

Born Global describes its work as “a call to action; a bold invitation to take part in an effort to shift the world to a biobased economy. We invite global pioneers to rise up to the challenge of commercializing innovations that will solve the world’s biggest problems in sustainability.”

In bid documents for the subsidy deal approved by Maine regulators, Stored Solar parent company Capergy said it has invested nearly $3 billion outside of the U.S. since 1982.

In 2013, it made its first U.S. biomass investment through Cate Street Capital, the firm whose own grand vision for high-tech wood pellet manufacturing in Millinocket petered out two years into its restart of the Great Northern Paper mill in East Millinocket.

[Cate Street link is part of what’s known about latest redeveloper of shuttered Maine mill]

Capergy US, co-owned by Harrington and Fahim Samaha, put $120 million into a bundle of projects that included a stake in Cate Street’s biomass plant in Berlin, New Hampshire. The Berlin plant’s 20-year contract for power could end up costing ratepayers $100 million in above-market power costs by 2019.

Capergy pulled its money out in 2016 seeing “limited development potential” and shifted attention to plans to amass $500 million for various energy investments in the U.S. and Europe

In April, LePage’s administration said it didn’t have a specific concern about the Cate Street connection.

“Due diligence is ongoing throughout any project as it develops,” wrote Ray, with the DECD. “If any red flags are discovered as part of that process, appropriate action follows.”

LePage is still with them

The governor’s office stated in March, just after news broke of the company’s first unpaid bills, that Stored Solar offers a chance for investment in rural parts of the state.

“They provided a concept to reinvent the forest products industry using Maine’s resources and new technologies,” Peter Steele, a spokesman for LePage, wrote, “and they are making investments toward that goal.”

LePage’s trip to San Francisco marks the second Advanced Bioeconomy Leadership Conference he’s attended with Stored Solar. His administration co-hosted a VIP breakfast event in Washington, D.C., with Born Global during a conference by the same group in March.

The company has touted LePage’s support in various ways, including in a February request for a federal judge to require the owner of the former Great Northern property in East Millinocket to sell the property to Stored Solar for $1.75 million.

LePage also went to bat for the company with state regulators in March, urging them to fulfill Stored Solar’s request for changes to the $13.4 million biomass bailout program, which he signed but later criticized.

Months and many challenges later, he’s still with them. On the agenda for the bioeconomy conference, LePage is the lone governor.

Maine Focus is a journalism and community engagement initiative at the Bangor Daily News. Questions? Write to mainefocus@bangordailynews.com.

Subscribe to the Maine Focus mailing list




Have feedback? Want to know more? Send us ideas for follow-up stories.

You may also like