An amended proposal shifts the burden of the rescue plan from electricity ratepayers to taxpayers.
By Steve Mistler, Staff Writer
Portland Press Herald news story
AUGUSTA — Lawmakers’ effort to bail out Maine’s six remaining biomass energy plants has shifted from a rescue subsidized by Maine electricity ratepayers to one subsidized by Maine taxpayers.
After a series of private negotiations, the Legislature’s Energy and Utilities Committee voted 10-2 late Thursday to allow the Public Utilities Commission to enter a two-year contract with ailing biomass generators. The contract would draw $13.4 million from the state’s rainy day fund to pay for above-market electricity costs, thereby erasing the projected impact on residential and commercial ratepayers.
The bill is designed to protect plants that have helped retain hundreds of logging and trucking jobs but are costly and inefficient, and are having trouble competing amid low oil and natural gas prices.
The new proposal is as controversial as the original, which would have affected utility ratepayers ranging from individual homeowners to large energy users such as Bath Iron Works and Sappi Paper. The large energy consumers are now spared from financing the bailout.
But the proposal effectively uses taxpayers’ money instead to support biomass plants that are owned by a multinational private investment firm worth an estimated $33 billion and another publicly traded market capital company that reported $1.6 billion in revenue last year.
Gov. Paul LePage has not formally endorsed the proposal, but the governor’s energy director said Friday that LePage is open to short-term assistance for biomass plants. The governor’s acceptance of the current bill would go against his efforts to thwart lawmakers’ attempts to tap into the rainy day fund. LePage also has repeatedly said that energy producers “should be able to stand on their own two feet,” and not be subsidized.
Opponents are critical of a new provision that they say was included to specifically benefit a $100 million wood pellet project proposed by ReEnergy Holdings LLC, which operates four of the state’s six biomass plants, and J.D. Irving, the New Brunswick company that is Maine’s largest landowner.
“It’s bad finance. I think to be bailing out a corporate entity like this is nothing more than corporate welfare,” said Rep. Beth O’Connor, R-Berwick.
O’Connor, who cast one of the two opposing votes on the committee, also expressed concerns that the bill, L.D. 1676, tapped the rainy day fund and would affect the state’s credit rating.
“It really makes me mad that we see Irving meeting with our governor, who is adamant about not taking money out of that (rainy day) fund. Now all of a sudden he’s agreeing to take $13.4 million out of it,” she said.
COMMITTEE TRIES TO STRIKE A BALANCE
Tony Buxton, spokesman for large businesses in the Industrial Energy Consumer Group, echoed O’Connor’s concerns, saying the $100 million wood pellet proposal is troubling because it appears to bypass PUC rules established to keep costs as low as possible for ratepayers.
“Irving is one of the wealthiest privately held companies in North America – it doesn’t need or deserve a subsidy from Maine’s strapped electric consumers,” he said.
Senate Majority Leader Garrett Mason, R-Lisbon Falls, also opposed the bill. But he and O’Connor represented the minority view on a committee that sought to balance the potential unpopularity of a bailout with protecting the jobs of loggers, a symbol of Maine employment, during an election year.
On Wednesday, representatives from the Professional Logging Contractors of Maine and ReEnergy Holdings LLC held a news conference calling on lawmakers to provide stopgap assistance to save the biomass plants. Steve Hanington, an owner of Hanington Brothers Inc. and a supplier to the biomass plants, choked back tears as he predicted that the failure of generators would force him to cut his workforce in half.
“Why did we have to get this crisis to do something? It’s mind-boggling,” he said. “Am I pleading? I’m not pleading for me. I’m pleading for the 46 people who work for me.”
Other loggers made similar calls for assistance during a March 28 public hearing. Lawmakers on the energy committee were reluctant to support a proposal that would force ratepayers’ to pay millions of dollars more on their bills with no guarantee that the state’s six biomass plants will keep running.
The amended bill still doesn’t provide a guarantee that the biomass plants will survive, but lawmakers argued that it protects the loggers.
“This is first and foremost a jobs bill,” House Majority Leader Rep. Jeff McCabe, D-Skowhegan, said in a statement Thursday. “Maine cannot afford to keep losing good-paying jobs. We’re stepping up with a solution that offers a temporary, accountable safety net for our vulnerable biomass industries and the loggers who depend on them without making Mainers foot the bill. We no longer have to make the choice between sending a thousand Mainers home without a paycheck or increasing electric bills for Mainers just trying to get by.”
Rep. Mark Dion, D-Portland, co-chairman of the energy committee, said utilizing the rainy day fund was necessary.
“We have had five mills close in the last three years and these biomass plants are on the verge of shutting their doors. This is a rainy day in the state of Maine and a rainy day for the forest products industry,” he said.
Nick Bennett, a policy adviser for the Natural Resources Council of Maine, took a dim view of the proposal.
“This is a bad idea because they are taking $13 million in taxpayer funds and giving it to a $33 billion corporation that owns four highly polluting and inefficient biomass plants,” Bennett said. “Maine’s taxpayers and Maine’s environment will both suffer because of this.”
ReEnergy Holdings LLC is a subsidiary of Riverstone Holdings LLC, a New York-based private equity firm founded in 2000 by two former Goldman Sachs bankers, Pierre Lapeyre Jr. and David Leuschen. The company, one of the country’s top private equity firms focused on energy and power, says it has raised $33 billion in capital since its formation. ReEnergy operates a 48-megawatt facility in Stratton, a 30-megawatt facility in Ashland, a 37-megawatt facility in Fort Fairfield and a 39-megawatt facility in Livermore Falls.
Covanta Holding Corp. operates the state’s two other biomass plants.
BAILOUT SAID TO BE KEY TO INVESTMENT
Bennett also took issue with a new provision that would allow the PUC to enter an additional long-term contract with a power and heat facility, saying it appeared to specifically benefit ReEnergy and Irving, which owns a timber company and is a major biomass supplier.
Irving representatives did not immediately return calls seeking comment, but O’Connor and other members of the committee said that company representatives briefed the governor’s office and lawmakers on plans to invest $100 million for a wood pellet burning facility in Aroostook County.
Larry Richardson, the CEO for ReEnergy, referred to the new facility during Wednesday’s news conference. Richardson said the bailout bill would allow the company to move forward with a “$100 million investment in Aroostook County.”
Patrick Woodcock, the governor’s energy director, later told the energy committee that the additional contract provision was designed to encourage biomass companies to invest in new facilities in Maine.
Dion said he supported the concept.
“We need to ensure that this is a bridge to somewhere, not just a (stopgap),” he said.
O’Connor, however, questioned why a company would be willing to invest $100 million in a new biomass plant if it cannot survive without taxpayer assistance.
“If it’s such a good investment, why risk ratepayer money? Why risk taxpayer money?” she said.
O’Connor said she agreed with lawmakers’ desire to help loggers, saying that their plight was “heartbreaking.”
“But I’d rather take this money and give it directly to them instead of doing this,” she said. “At least I’d know they’d be able to put food on their families’ tables, not just bailing out a corporation.”
The proposal will next head to the Senate and House for approval.