August 20, 2018
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Lawmakers are right to question subsidies to biomass underperformer

Darren Fishell | BDN
Darren Fishell | BDN
Stored Solar's West Enfield biomass plant was idle on Sept. 27, as it's most often been since June 2017.

A group of lawmakers want to prevent a wood-to-energy company from reaping millions in taxpayer subsidies after it fell short of its promise to restart two shuttered biomass plants and failed to pay many of the loggers the subsidies were intended to help.

The bipartisan effort is the result of a more thoughtful approach to economic development that comes with exacting conditions. It’s an approach that should be encouraged.

Lawmakers sponsoring LD 1745 are taking a strong stance that Stored Solar deserves no tax money. The bill further seeks to deliver subsidy cash directly to loggers and other vendors the bill intended to help and requests that the attorney general sue Stored Solar for that money.

The company asserted last week that it had met the terms of the deal, claiming it operated at 53.5 percent capacity, but that calculation included the equivalent of 275 days during 2017 when the company said it endured “forced or planned outages.”

Whether they pass that bill or not, Maine regulators are due to make a determination about just how much in subsidies Stored Solar actually deserves. That is a notable and welcome level of accountability.

Lawmakers should make such conditions on taxpayer help to businesses a standard practice.

And the conditions should suit the situation. When the ask comes from a legacy industry that’s no better for the atmosphere than the region’s natural gas generators and whose long-term prospects without subsidies are doubtful, it’s fair to set that bar higher than for home-grown startups in industries the state and private sector see as particularly promising, like aquaculture or aviation or advanced materials manufacturing.

The assessment should include how durable those jobs are, and how likely they are to stick around. For instance, call center jobs that require little infrastructure to support are easy to move. The Lewiston Sun Journal’s recent reporting on Carbonite’s steady outsourcing of jobs from Lewiston to Jamaica shows that. The company has qualified for the state’s Pine Tree Development Zone program, which allows it to be reimbursed for 80 percent of its Maine state income tax withholdings on “qualified employees” for 10 years. Qualified jobs are full-time positions that pay above-average wages.

A central problem is that most tax breaks are given with the idea that “but for” those breaks, the business would not have invested more or hired more in Maine. We can’t blame businesses for making that pledge, but it is nearly impossible to disprove.

Stored Solar was in line for a share of a $13.4 million taxpayer fund set aside for it and another generator, ReEnergy.

The bailout program doesn’t solve the problem of the “but for” pledge, but rather sidesteps it by setting specific economic output goals and saying to the company, “if you do this, we’ve got a deal.” At a sticker price of roughly $23,700 per job, it’s debatable whether lawmakers worked out a good deal, but it’s a clear one.

While we think it unwise for the state to continue to use energy policymaking authority for economic development ends rather than a primary purpose of maintaining a reliable grid, the biomass bailout at least provides an example of lawmakers taking a stronger stance on accountability for tax incentives.

It’s one for which the companies can be held accountable. That’s better than watching companies themselves outsource incentivized jobs, leaving Maine taxpayers with little to show for their investments.

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