BRIDGEWATER — Reeling from the impact of Gov. Chris Sununu’s veto of a bill that would have supported biomass energy plants and the 932 associated jobs in the state’s forestry industry, some loggers, truckers and foresters have scheduled a meeting for Thursday night to push for a legislative override of that veto.
Since Sununu’s veto announcement, three of the state’s six biomass plants have said they plan to shut down as soon as they use their current inventory of wood chips, and many logging companies are preparing to follow.
Framed as an attempt to keep electric costs from rising for consumers who already pay some of the highest rates in the country, Sununu said Senate Bill 365 – which would have required electric distribution companies to purchase the power generated by biomass plants – would also place “financial strain on the elderly, those on fixed incomes and the business community.”
In his veto message, Sununu said, “those who supply the wood product have confirmed that the maximum impact to their revenue would be a mere 3.5 percent. It harms our most vulnerable ratepayers and our job creators for the benefit of the select few.”
Michael O’Leary, plant manager at Bridgewater Power Company, sees it differently.
“It’s much bigger than electric rates,” he said. “I look upon the electric rate part as a very small piece. Forest products play a significant role in what makes this state great — it’s sustained by the forest industry. The recreational use of forest land for snowmobiling, hiking, and fishing — to put that in jeopardy to me seems very short-sighted.”
Jasen Stock, executive director of the New Hampshire Timberland Owners Association, agrees. The shutdown of biomass plants would affect not only those directly employed, but also the loggers and truckers who supply and move the wood chips, as well as their suppliers.
A study by economists at Plymouth State University found 120 people employed directly by the plants, with 583 commercial loggers supplying them. It found another 228 employed in service and support positions. Taken together, they amount to a total payroll of $50.9 million and contribute $254.5 million in economic activity in the state.
Stock said that, when the forest products industry is included, there are 7,700 people affected.
Additionally the state's six biomass plants contribute $7.3 million in state and local revenue from property and generation taxes, and communities — especially the smaller ones that do not have large retail or industrial taxpayers — rely on revenue from timber harvests.
Shaun Lagueux of New England Forestry Consultants in Bristol said closure of the biomass plants would deprive loggers and sawmills of a place to get rid of the low-grade trees, slabs, and sawdust that make up more than 40 percent of the timber harvest in the state. Central New Hampshire, he said, would be especially hard-hit because the northern and southern tiers have some options in other states.
When the bill passed with a significant bipartisan majority, the stated justification was to provide “fuel diversity in the regional generation mix” to lessen the impact of any market volatility. Currently, natural gas is relatively inexpensive, but that could change.
Lagueux, the forester, said clear-cut sections provide important wildlife habitat — “early successional habitat” – where weedy areas, grass, shrub thickets, and young forest provide food and cover for animals.
Without a place to send the low-grade wood, Lagueux fears that such stewardship will come to an end, and both forests and wildlife will suffer.
Stock agreed that, without markets for the low-grade timber, landowners may be unable to economically improve forest health.
“I have already had landowners contact me, stating that if this is how the governor treats sustainable forestry and timberland owners, perhaps I should veto his Trails Bureau and Fish and Game Department from using my private land to promote their programs.”
Subsidy or incentive?
Many people view the bill as providing a subsidy to a business that could not survive on its own, but others see it as an incentive.
“I think it’s a good investment," O’Leary said. "All those dollars stay in the state. If you buy from another energy source, all those dollars leave the state. Would you invest a dollar to make 10? I would. The benefit far outweighs the cost.”
He added, “I believe that the veto focuses on the wrong side of the decimal point with regard to rates. According to the New Hampshire Public Utilities Commission, the bill would add less than .05 cent per kilowatt-hour to the rate that is currently 9.5 cents. We [biomass plants] are a hedge against rising delivery costs which are the fastest-growing part of the electricity bill. These transmission and distribution rates have gone up 555 percent since 2005, with another $4 billion increase expected. By using more locally produced power, New Hampshire can better manage its share of regional transmission costs.”
Shortly after the governor’s veto, the Public Utilities Commission approved a rate increase for Eversource that will go into effect in August, with the energy supply charge going from 7.903 cents per kilowatt-hour to 9.412 cents, a 19.1 percent increase.
Amanda Noonan, the PUC spokesman, said the PUC calculated the impact of subsidizing biomass plants to be a $5.15-per-month increase for small business customers. That represents the additional “stranded costs” for requiring electric distribution companies to purchase biomass energy at above-market costs. The PUC did not calculate the impact for residents, but Noonan said that although residential customers are responsible for almost twice as much of the stranded costs, they also purchase less energy than a business would, so the increase in their bills would be comparable.
“The issue is that it’s not economically viable to operate for many months of the year when the power prices in the market are so low,” O’Leary said of Bridgewater’s plant.
That plant employs 20 and has about 25 suppliers, so O’Leary said it supports 100-125 forest jobs.
“Everybody’s looking at the market,” he said, “and we definitely can’t operate under the current market conditions.”
Lagueux said he supports the idea of a free market, “but there’s no such thing as free when it comes to energy. It’s so regulated, and you have the weigh the cost of a small subsidy, versus the cost of not doing it.”
Several state legislators plan to attend Thursday’s meeting of forestry people and the Timberland Owners Association, taking place at Michael Sharp Enterprises in Bridgewater.