Other Information ~ FAQ

Four wood-fired power plants (Biomass plants)

in NH that are in danger of being shut down. 

The supply of wood ash farmers use as an alternative to much higher priced fertilizers is in direct jeopardy of going away.  In all likelihood, one of these plants is in your neighborhood: Alexandria, Bethlehem, Bridgewater or Tamworth.  

These power plants directly employ over 400 people and contribute $44 million dollars to the NH economy EVERY year.  The indirect benefits go far beyond that – the tax dollars paid to towns, groceries and fuel purchased, community involvement and timberland management.  If you live in New Hampshire, you are one of the people who will suffer if they are closed down.

Why are they in danger?  20 years ago the NH legislature “went green” and passed legislation to encourage the development of the biomass industry – this was a good decision for consumers, the timber and trucking industries, and farmers.  The rates that were paid for the electricity generated by these plants were approved by the legislature and the Public Utilities Commission and they were based on projections provided by PSNH.  So what’s the problem? 

Those power contracts have now expired and PSNH has publicly indicated that, at this point, they do not intend to talk with the biomass plants about new contracts – even though these four plants are offering to sell power to PSNH at very competitive rates.  Without new contracts, none of these biomass facilities will be able to stay in business.  They need contracts, and to get contracts they need your help.

Frequently Asked Questions

Q:   Do biomass plants receive a subsidy?

A:    20+ years ago this industry was started with NO subsidies to the Biomass plants. Federal legislation was passed that encouraged the production of green power using a renewable resource or co-generation. This federal legislation created a preference for green power, but did not create, fund, require or otherwise provide a subsidy to biomass plants.

Q:   How did a biomass plant receive a “preference”?  

A:   Utilities that deliver power like PSNH were required to project what their costs would be if they generated the power themselves (“avoided costs”).  If there was demand for new power, and if a biomass plant could produce it at or below this “avoided cost” rate, then that biomass plant got preference. There were no subsidies coming from the public or private sector to any biomass facility under this approach – a biomass facility that could meet or beat PSNH’s own projected costs were given preference to supply the power because it was believed to be in the public’s best interest.

Q.   How were the “avoided costs” determined?

A:   PSNH economists projected their own avoided costs, and these numbers were then approved by the NH Public Utilities Commission (PUC). The biomass plants did not set these rates.

Q:   Who funded the construction of the biomass plants?  

A:   The biomass plants were built using private equity, and those investors took on 100% of the risk. If the biomass plants did not run – then the plants did not get paid. A traditional utility has a guaranteed rate of return after tax, while the biomass plants would lose on the bottom line if fuel costs increased then the bottom line decreased.

Q:   What other legislative actions were taken to support green energy production?

A:   In 2006-2008 NE state legislatures passed Renewable Portfolio Standards. Again, these were not a subsidy. This was to encourage an energy choice and a recognition that renewable generation is more expensive than conventional methods to generate electricity.   To qualify for inclusion under these standards, biomass plants had to inject $5 million of new capital into each plant – which increased daily operating costs but gave citizens their desired choice (renewable power & clean air).

Q:   What do the 4 existing biomass plants want?

A:   Today what the biomass plants are seeking are contracts that put these 4 plants into the PSNH blend of energy supply. This supply is made up of power generated by PSNH, power purchased by PSNH under both longer-term contracts and the spot market (short-term, non-contractual purchases). The combined cost of this combination of energy purchases is referred to as a “blended rate”. 

Q:   What is PSNH’s “blended rate”?

A:   Currently, PSNH’s blended rate is 8.7 cents/kwh.

Q:   What would the 4 biomass plants charge PSNH for their power?

A:  The 4 existing NH biomass plants have offered to supply PSNH with their power at a rate at or below the current blended rate. PSNH’s cost to generate power is above the spot market price. 

Q:   What else do the biomass plants want?

 A:   The biomass plants desire to remain in business, to continue to pay their employees, to continue to purchase goods and services from a wide range of vendors, to continue to pay their property taxes and support the local and state economies.  In order to remain viable, the biomass plants are looking for longer term consideration, not barely surviving on the spot market.

One response to this post.

  1. Please help Resource Management, Inc. in getting the word out to Governor Lynch, the Executive Council and your legislators. Please call the Governor’s office at 603-271-2121 to voice your support of existing biomass in New Hampshire.

    RMI is committed to supporting the biomass industry and is coordinating the delivery of what will hopefully be hundreds of letters to all of the people in a position to help.

    If you want more information or just want to stay informed, please subscribe to this blog and contact RMI at info@rmirecycles.com.

    Thank you for your support.

    Reply

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