September 24, 2017
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Biomass subsidies, long-term energy contracts aren’t good ways to help Maine loggers

By The BDN Editorial Board
BDN File | BDN
BDN File | BDN
A truck delivers wood chips to Covanta Energy's West Enfield facility in January. The company decided to shut down the West Enfield and Jonesboro plants because of low energy prices.

On its face, it seems like a simple solution: If Maine electricity users pay a bit more each month, Maine loggers can keep their jobs. It’s not that simple, of course, which is why lawmakers are struggling with a bill that would prop up the state’s biomass plants in the hopes of protecting logging jobs.

After a public hearing where dozens of people associated with the timber industry testified in support of the proposal, members of the Energy, Utilities and Technology Committee narrowly rejected it last week.

Lawmakers’ skepticism is well placed. Asking electricity customers to pay higher rates to subsidize inefficient, and polluting, biomass generation is an indirect and inefficient way to provide help to Maine’s loggers and timber industry. Worse, there are no guarantees the biomass plants will remain open and, therefore, buying wood.

Maine’s forest products industry has been hard hit by paper mill closures and declining demand for wood. Biomass energy plants, which burn waste wood to create electricity, remain important customers for Maine’s many timber companies and contractors.

But many of Maine’s biomass plants are inefficient and, thus, have lost the ability to gain renewable energy credits in Massachusetts. In addition, natural gas, the largest source of energy generation in Maine and the region, remains inexpensive. One biomass plant in Maine has closed and another will be shuttered, its owner, Covanta Holding Corp., says. To be most efficient, biomass generators are co-located with manufacturing facilities, schools, hospitals or other large entities. They can use the heat that’s a byproduct of burning wood to create more electricity and heat the facility or hot water. Most biomass plants in Maine are not combined heat and power plants.

To keep Maine’s biomass plants operational — and maintain demand for their wood — loggers and timber land owners are asking lawmakers to pass legislation directing the Public Utilities Commission to solicit bids and negotiate long-term contracts for new sources of renewable power. Although the bill, LD 1676, does not mention biomass by name, its intent is for the contracts to be held by biomass generators. It also erroneously classifies biomass as an energy source that produces “zero greenhouse gas emissions.”

The bill does not set a price for these new energy sources, but as PUC Chairman Mark Vannoy said in testimony last week before the Energy, Utilities and Technology Committee, the payments would have to be above market rates “because the biomass facilities are not economically viable at prevailing wholesale market prices.” The additional costs to ratepayers would range from nearly $16 million in the first year to nearly $22 million in the fifth year, Vannoy told lawmakers.

The increase would be about $2 per month for residential electricity customers, according to Central Maine Power Co. Large industrial facilities, including paper mills, would see much larger increases. Bath Iron Works would pay more than an additional $54,000 per month, the Portland Press Herald reported. An increase in energy prices would make the shipyard less competitive, Jon Fitzgerald, BIW’s vice president and general counsel, told lawmakers last week.

In addition, it could take more than a year for new long-term contracts to be issued, so the bill would offer no immediate help to the timber industry.

Instead of raising electricity rates to prop up biomass plants, which already are subsidized and yet still struggle to remain operational, lawmakers should look for more direct ways to help loggers hard hit by declining demand for Maine timber. Funding for research into new uses for wood and support for job retraining could be more fruitful investments.

 


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