Burney Forest Power, a biomass plant in eastern Shasta County with about 25 employees, has given notice that it will cease operations around the end of September.
And the plant's closure could be felt beyond the doors of its operation.
Shasta Green sells Burney Forest Power its wood waste and then purchases the steam Burney Forest Power generates. The steam is used in Shasta Green's kiln. Shasta Green and Burney Forest Power also operate on the same property on Highway 299 in Burney.
Danny Osborne, vice president and sales manager at Shasta Green, said they recently received a 60 days' notice from Burney Forest Power that stated the biomass plant would stop supplying Shasta Green with steam.
Burney Forest Power combusts wood waste to produce electricity and has a 30-year contract with Pacific Gas & Electric Co. that ends in 2020. Burney Forest Power and PG&E negotiated to amend the contract last year, which gave Burney Forest Power more money for its electricity.
But the amendment expires Aug. 31, at which time the contract reverts back to the original terms.
Osborne said he's been told by Burney Forest Power that it can't operate under the terms of the original contract because the rate PG&E will pay isn't enough to keep the doors open.
Without the biomass plant, Shasta Green's operation might be in jeopardy. The company operates a logging and trucking arm in addition to the sawmill. All told, Shasta Green has more than 100 employees.
"I don't want to say that it is definite because we are trying to find a path to continue to run without the co-generation plant, but unfortunately that might be the way it goes," Osborne said of the possibility of Shasta Green closing. "The biggest thing is having a source for the steam to power our kiln and even bigger than that is having an avenue to get rid of our wood waste."
Burney Forest Power officials declined to comment for this article.
PG&E needs to get approval from the California Public Utilities Commission to execute new contracts and amend an existing biomass contract.
PG&E spokesman Paul Moreno, who could not go in to the specifics of the contract with Burney Forest Power, said the utility has to justify there is a need for an amendment.
"Bear in mind we have a responsibility to electric customers to purchase power at the most competitive rate possible," Moreno said. "Biomass (energy) is considered higher in price than other renewable resources."
PG&E is the largest purchaser of biomass in California. Of all the biomass contracted in 2015, PG&E purchased 92 percent of that, Moreno said.
Still, the biomass industry is struggling in California because it doesn't get the subsidies that renewable sources like solar and wind receive, said North State Assemblyman Brian Dahle.
Last October, Gov. Brown issued an emergency proclamation to protect the public from hazardous conditions in the state's forests.
The proclamation directed the California Public Utilities Commission to use its authority to extend contracts for existing biomass facilities receiving wood waste from high hazard areas. It also allows the commission to expedite contracts for new biomass facilities receiving feed stock from high hazard zones.
In June, the CPUC approved a dead-tree biomass contract for PG&E to purchase power from Sierra Pacific Industries in response to the governor's proclamation.
The amended contract allows PG&E to purchase a maximum of 186 gigawatt hours of additional energy per year from Sierra Pacific Industries biomass plants in Anderson, Burney, Lincoln, Quincy and Sonora.
Osborne of Shasta Green did not know if Burney Forest Power attempted to renegotiate its PG&E contract under the terms of the governor's proclamation.
Dahle also sponsored AB 590, a state bill that would have given subsidies to biomass power plants in an effort to create a more level playing field with other renewed power generators. The bill worked its way through the legislative process last year but it was never signed into law.
"The problem is PG&E is regulated by the PUC and they can't just go buy power," Dahle said. "Wind and solar are subsidized by the taxpayer and the rates are cheaper than biomass. . . . Right now biomass doesn't get the energy credit or tax credit so it can't compete."
The amount of subsidy Dahle's bill was considering was about 3 cents a kilowatt paid to biomass producers.
Money from the subsidy would have come from the state's cap and trade program that help fund the California Climate Investments Program (formerly the Greenhouse Gas Reduction Fund), which would have been the source of the biomass subsidies.
Dahle emphasized that he doesn't blame PG&E, "they can't pay more than the market rate" for power.
"Here is the real issue, there are 66 million dead trees in the Sierra Nevada that need to be removed," Dahle said. "The taxpayer is going to pay either way. I prefer to pay and create clean energy, create jobs and save our water shed at the same time."
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