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Could nuclear subsidies offer blueprint to save New Hampshire biomass plants?

PHOTO BY PSNH / Flickr / Creative Commons

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A new proposal to prop up the state’s biomass power plants is modeled after nuclear subsidies in Illinois and New York.

A ratepayer subsidy used to prop up nuclear power plants in two states is being proposed as a model to save New Hampshire’s failing biomass industry.

The New Hampshire Senate Energy and Natural Resources Committee held a hearing last week on a proposed amendment to provide payments to the state’s six biomass power plants similar to the zero-emission credits awarded to nuclear plants in Illinois and New York and that have survived a federal court challenge.

“That’s how this bill is drafted, exactly like those types of credits,” said Democratic Senate Majority Leader Dan Feltes. “We are on solid ground doing what we are doing, standing up for the industry.”

A New Hampshire law passed last year to aid the plants is currently bottled up before the Federal Energy Regulatory Commission, causing legislators to look for an alternative.

The amendment has wide-ranging bipartisan support but is expected to face similar criticism from ratepayer groups. Marc Brown, president of the New England Ratepayers Association, which challenged the previous subsidy, said the organization is reviewing the proposed amendment.

“Our attorneys say we shouldn’t concede the fact that this is constitutional,” Brown said.

In the past two years, New York and Illinois approved subsidies to fend off threatened closures of nuclear power plants that said they couldn’t compete against cheaper natural gas. Independent power plant organizations and natural gas-fired plant owners challenged the policy in federal court, saying the states were interfering with the wholesale power markets.

Appeals courts in two federal circuits disagreed, and the U.S. Supreme Court a month ago refused to hear the case, leaving the lower court rulings intact.

The New York and Illinois measures were called zero-emissions credits and rewarded the carbon-neutral benefits of nuclear power generation. New Hampshire legislators want to create a “baseload renewable generation credit” to support the state’s biomass plants.

New Hampshire legislators are mostly discussing preservation of the state’s forest products industry as an urgent reason to support the amendment. Energy diversity and adherence to the state’s clean energy goals were also stated.

Republican Sen. Jeb Bradley, who sponsored the amendment, said the plants would counter the region’s overreliance on natural gas.

The path to a late-session amendment to an unrelated issue is a convoluted one. The amendment is being added to a bill that would create a state committee to study the viability of microgrids.

The six money-losing biomass plants that generate a combined 104 megawatts have closed as they await the outcome of a challenge to a state law first passed a year ago that supposed to give them a three-year lifeline.

Gov. Chris Sununu vetoed that bill, saying he was protecting ratepayers from excessive power costs that the plant subsidy would cause. Bipartisan majorities in both houses of the Legislature overrode the veto in September. The law authorized payments to the plants and directed the state’s utilities to enter into contracts with them. That law was challenged at the Federal Energy Regulatory Commission.

Twice the Public Utilities Commission has said it would not act until the dispute is resolved before the Federal Energy Regulatory Commission, which is considering whether the law is preempted by federal regulation of wholesale power markets. Filings were last made in late January, but the federal commission has no deadline to act.

Separately, the plants have also gone to the New Hampshire Supreme Court in an attempt to compel the Public Utilities Commission to implement the law.

One key difference between the recent proposal and last year’s is what the payments would be made for. In the law currently in litigation, utilities would buy energy directly from the plants at above-market prices. Under the proposed amendment, the plants would sell energy into the wholesale electricity market run by ISO-New England for the market price, but then would receive additional payments from “invoices” submitted to the utilities. The credits would be based on the difference between the average market energy prices and the plants’ rates. That cost would be paid for by consumers.

Until either the Federal Energy Regulatory Commission dispute is resolved or the Legislature acts, the plants say they can’t afford to keep operating and lose money. The wood-burning plants are located in Springfield, Whitefield, Alexandria, Bridgewater, Tamworth and Bethlehem.

“Without this legislation, the Bethlehem and Tamworth plants will close,” said Mark Driscoll, who manages the plants for Engie North America.

An economic study by Plymouth State University in 2017 said 931 jobs with an annual payroll of $50.9 million were directly dependent on the plants, including employment at the facilities, by the companies that supply wood and the supporting industries. The total economic impact is estimated at $254 million.

Each plant employs an average of 20 workers, with 583 at suppliers and another 228 in service industries.

In November the New England Ratepayers Association, in a petition filed with the Federal Energy Regulatory Commission, said that the state is setting wholesale electricity rates, which is beyond a state body’s constitutional authority.

“The New England Ratepayers Association has consistently argued that SB 365 was bad policy and was detrimental to electricity end users in New Hampshire,” said Brown when the petition was filed with the commission. “When the state [is] facing some of the highest electricity costs in the country, why would the New Hampshire Legislature overreach its authority to charge ratepayers another $20-30 million a year in excess and unnecessary charges? This Petition seeks to remedy what we believe is bad legislation in violation of federal law.”

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