Agreement reached on Berlin Station

Berlin Daily Sun – August 24, 2011

By Barbara Tetreault
 
BERLIN — An agreement has been reached between the small biomass plants and Public Service of N.H. that the parties hope will pave the way for development of the 75-megawatt Berlin Station biomass plant.

The settlement agreement was formally announced yesterday afternoon by Gov. John Lynch. Earlier in the day, power purchase agreements between Public Service of N.H. and five of the six Independent Power Producers were filed with the N.H. Public Utilities Commission.  

In exchange, the IPPs agreed to withdraw their state Supreme Court appeal of the 20-year power purchase agreement between Berlin Station and PSNH.

Lynch said the settlement agreement between PSNH and the IPPs will allow the construction of the new biomass plant in Berlin while retaining jobs at the existing smaller biomass plants.

“Given the state of the energy market today, it has become difficult for small wood-fired plants to continue to operate without the stability of contracts to sell their power to a utility company. The Power Purchase Agreements address a short-term problem in a measured and responsible way,” Lynch wrote in a letter to the PUC. “The petition and settlement agreement will also allow the Berlin BioPower project to go forward, which is an important step forward for economic development in Coos County.”

News of the settlement agreement was greeted with enthusiasm by Berlin Mayor Paul Grenier who made his support for the project the centerpiece of his campaign for mayor.

“I just think it’s great news for the city of Berlin and great news for all of Coos County,” he said. “We’ve got the building block for our new economy.”

North Country Senator John Gallus said the settlement was good news for the economy of the region.
“This is really going to help,” he said.

Berlin Station had received its necessary state and local permits but its efforts to construct the biomass plant were stalled when six small biomass plants filed suit in state Supreme Court to overturn the PUC’s approval of its 20-year power purchase agreement. With the appeal pending, Cate Street Capital was not able to complete the financing for Berlin Station.

Grenier credited the efforts of Lynch and DRED Commissioner George Bald in developing the agreement. With the parties at an impasse, Lynch convened a meeting in June with representatives of the IPPs, PSNH, Cate Street Capital, the PUC, DRED, and some key legislators. When negotiations broke down in early July with each side blaming the other for the stalemate, Lynch was able to restart them.  

Grenier noted the settlement agreement also benefits the North Country by providing needed capital to Isaacson Structural Steel as it seeks to reorganize. A major employer, Isaacson earlier this summer filed for bankruptcy protection. According to testimony filed with the PUC, the project will generated $2.75 million in New Market Tax Credits. Of that total, $2.25 million will be loaned to Isaacson to help it through its financial crisis. Those funds could be available to the company soon after Cate Street closes on its financing for the project.

The PUC still has to approve the individual 20-month power purchase agreements for Bridgewater Power Company, Pinetree Power Inc., Pinetree Power-Tamworth, Inc., Springfield Power, LLC., and Indeck Energy-Alexandria, LLC. The sixth company in the lawsuit, Whitefield Power And Light Company, has an existing power contract.

“The existing wood plants appreciate the efforts, including those of the governor and other state officials, that produced the settlement supporting the continuation of the existing wood  plant and forestry jobs and related economic benefits to the North Country. We look forward to PUC approval so that these jobs and benefits are sure to continue,” said Michael O’Leary of Bridgewater Power Company,

Testimony submitted by Thomas Frantz, director of the electric division for the PUC, said PSNH will purchase energy from the facilities at fixed prices and the contracts include a fuel price adjustment. Frantz placed the total above market costs of the power purchase agreements at about $24 million. PSNH would recover the cost through its electric rates, with the average household paying an additional 55 cents per month. PSNH is not required to purchase any Renewable Energy Certificates from the IPPs under the agreement.

“We are pleased that all parties were able to resolve outstanding issues so that the Berlin Biomass renewable energy project can now move forward to the economic benefit of the North Country region and the state, while also providing a basis for the existing biomass plants to continue operations during these difficult economic times,” said Gary Long, PSNH president and chief operating officer.

The settlement agreement calls for the IPPs to withdraw their Supreme Court appeal once Cate Street Capital has met the necessary conditions for closing on its financing. The entire agreement is conditional upon Cate Street closing on its financing by Aug. 30.

Cate Street Capital officials declined yesterday to comment on the agreement, saying they had agreed to allow the governor’s office to release the news.

Construction of the biomass plant is expected to take over two years and employ about 300 people at the height of construction. Grenier said Cate Street has agreed to use local union workers as much as possible and has already signed up some apprentices. Once the plant is operating, it will employ 40 people plus create hundreds of spin-off jobs in the forest industry.

While he said the entire region will benefit from Berlin Station, Grenier said he believes the city is the biggest winner because of the property taxes the plant will pay. The city has negotiated a payment in lieu of taxes for a minimum of $34 million and as much as $43 million over the 22-year life of the agreement.
 
http://www.berlindailysun.com/featured/story/agreement-reached-berlin-station

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