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To read the testimony that Jasen Stock, the NHTOA's executive director, presented today (Feb. 14, 2017) to the Senate Energy and Natural Resources Committe on Senate Bill 129, click here.
If passed, SB 129 shores up support for New Hampshire's biomass power plants. Facing historically low wholesale electricity prices, and with Renewable Portfolio Standard (RPS) laws in adjacent states phasing out the eligibility of New Hampshire biomass plants, SB 129 seeks to bolster the Class III (existing biomass power plants) portion of New Hampshire’s RPS. This will enable the state’s six independent biomass power plants to continue operations.
Terrible weather outside could not keep landowners, loggers, foresters, sawmill operators, and others in the forest products industry from showing up in force on Tuesday, Feb. 7, 2017, in Representatives Hall in the New Hampshire State Capitol to tell the House Science, Technology, and Energy Committee why HB 225 is a bad bill. More than 40 people testified on the bill, almost all of them in opposition.
The proposed legislation would repeal the Renewable Portfolio Standard law, causing the industry to lose a valuable market for wood chips and pulp, as biomass energy plants that burn pulp and chips depend on the RPS law. The law provides economic incentives for the development and retention of renewable energy power plants (e.g. biomass electric power plants, biomass thermal plants, solar, small hydroelectric) by creating a marketplace for the sale of and the purchase of renewable energy certificates (RECs) by utilities and competitive energy suppliers.
Marcella Perry, retired chief financial officer at LaValley-Middleton Building Supply and DiPrizio Pine Sales, explained to committee members why HB 225 would be so devastating to the industry: "Having a viable wood chip and pulp market means we have viable lumber markets. And those markets mean jobs, plain and simple."
In prepared testimony, the New Hampshire Timberland Owners Association stated:
"These power plants provide a key market for low-grade timber. According to the U.S. Forest Service’s forest inventory analysis (FIA) data, almost two-thirds of the standing timber in New Hampshire is considered low-grade (unable to produce a sawlog). Without markets for low-grade timber, landowners and land managers are unable to economically improve forest health and vigor, and in many instances entire woodlots go unmanaged; weeding and thinning of diseased and malformed timber does not occur, weakening these woodlots both environmentally and ecologically. Worse, timber lots are sometimes 'high-graded,' where the logger 'cuts the best and leaves the rest,' resulting in genetically inferior timber stands with poor growing stock."
"When low-grade timber markets diminish, New Hampshire’s sawmill industry suffers for two reasons: log supply and mill waste disposal. As mentioned above, when low-grade timber markets are devalued or disappear, entire woodlots do not see any management. With no timber, including sawlogs, being harvested from these woodlots, sawmills have difficulty procuring sawlogs to mill. Secondly, when low-grade wood markets shrink, mills are unable to find homes for their chipped slabs and sawdust. Currently, we are seeing some mills already stockpiling chips and sawdust, because their delivery quotas to biomass power plants or the few remaining pulp/paper mills have been cut."
Since 2007, New Hampshire has had a Renewable Portfolio Standard law (RPS). This law requires N.H. electricity suppliers (i.e. regulated utilities and competitive suppliers) to purchase renewable energy certificates (RECs) from eligible renewable power plants for a certain percentage of the power they supply to New Hampshire customers. It also requires N.H. electricity suppliers to make a payment to the state, called the Alternative Compliance Payment (ACP), for each REC the utility fails to purchase. And renewable power plants to must meet certain environmental clean air standards to be eligible to sell RECs. Among other power plants, the INDECK plant in Alexandria, Pine Tree Power’s Bethlehem and Tamworth plants, Bridgewater Power, and the East West Power plants in Springfield and Whitefield must reduce air emission levels to below that allowed by federal and state law to be eligible in the RPS and must do so every calendar quarter to be allowed RECs.
The purpose of the RPS is to diversify New Hampshire’s energy mix, keep fuel and energy dollars in the local economy, create and maintain jobs in NH, support existing and new renewable power producers (such as biomass power plants), and provide a hedge for NH ratepayers against volatile fossil fuel prices.
To achieve these policy goals, the RPS has four renewable energy classes that can produce a REC:
I. New renewable energy production (e.g. Schiller Station, Berlin Biomass, Lempster Wind, Alexandria biomass). Class 1 also contains a thermal energy provision for pellet, wood chip, solar and geothermal energy.
II. Solar electricity projects.
III. Existing biomass power plants (the plants noted above) and existing landfill methane gas.
IV. Existing small-scale hydropower.
A market provision built into the law to help control REC values is the ACP. The ACP is a payment a supplier of electricity can make to the Public Utilities Commission’s Renewable Energy Fund in lieu of purchasing RECs. The New Hampshire Legislature establishes the ACP payment schedule for each Class. Because a supplier of electricity can make an ACP in lieu of purchasing RECs, the ACP sets a ceiling price for any New Hampshire RECs. In other words, a supplier of electricity would never pay more for a REC than they would pay as an ACP.
Of particular interest to New Hampshire’s timberland owners and forest products businesses is the impact that RPS Class III has on the state’s six independent biomass power plants noted in (c) above. Given the very low wholesale electricity prices since 2015, having an adequately priced REC market makes the difference between a biomass power plant’s ability to run economically or shut down as economically unviable. To insure the REC market is adequate, in 2017 the NHTOA seeks and supports legislation to modify the RPS. To put it simply, without a working RPS law in place, loggers, landowners, and wood processors will lose markets for low-grade timber as biomass power plants close. Moreover, in such an event, New Hampshire will lose all the jobs and economic activity these power plants and their fuel suppliers provide.
Why now and what is the fix?
Three factors drive the need to act now.
1. Wholesale electricity prices are at historic lows and do not even cover the cost of purchasing biomass fuel
2. New Hampshire’s RPS cannot sustain the existing biomass power plants, and the associated fuel procurement jobs in 2017, unless the Class III ACP is adjusted. As presently written, the ACP will decrease significantly in 2018.
3. RPS markets in other states are generally not available to the pre-2006 vintage existing biomass power plants (e.g. Massachusetts precludes them by definition). They have been eligible in Connecticut but that state has passed a law to phase-down REC values for those plants in the near term which could be 2018
Combined, these factors mean that continued operation of these biomass plants is at risk. To fix this, the Class III ACP value needs to be adjusted upward. Increasing Class III ACP values will increase Class III REC values, which will help counter the effects of the low wholesale electricity prices and scheduled Connecticut REC value declines.
Senate Bill 129 is the fix
Senate Bill 129 seeks to modify two portions of the RPS, Class II solar and Class III biomass. The NHTOA strongly endorses the Class III modifications and takes no position on the Class II modifications. The Class III modifications will:
a. Increase the Class III ACP from $45/REC to $55/REC. This will make New Hampshire’s ACP values consistent with Connecticut and at a level that should produce REC values needed for biomass power plant continued operations.
b. Modify the eligibility standards to limit the amount of landfill gas (methane) that will qualify for Class III. This modification will help to provide capacity in Class III for biomass power plants and smaller landfill gas power producers, like those in N.H.
Senate bill 129 is currently being heard in the New Hampshire Senate Energy and Natural Resources Committee. Please take a few minutes and send the committee an email,
1. Thank them for sponsoring Senate Bill 129 (all the committee members are co-sponsors),
2. Express your support for the biomass provisions of the bill, and
3. Explain why biomass is important to you and your business
Here are the committee email addresses:
Address your email to:
Senator Kevin Avard, Chairman
Senate Energy and Natural Resources Committee
New Hampshire Statehouse, Room 103
Concord, NH 03301
In your email:
1. Thank the Chairman and members of the committee for co-sponsoring Senate Bill 129
2. Introduce yourself and company
- Town you are based in, and towns where you work (we want to show that biomass harvesting occurs across the state),
- # employees (gross pay roll figure would be good),
- # of subcontractors your business supports (e.g. how much you spend for repairs, fuel, how many logging crews you keep busy, etc.),
- Volume of wood you move or mill annually,
- Acres of timberland you manage.
3. Clearly state you support Senate Bill 129, as it will ensure the continued operation of the state’s biomass power plants. The success of your and your client’s business depends on them to help:
- Execute forestry prescriptions,
- Cash-flow timber sales,
- Conduct wildlife habitat work,
- Manage forest pest outbreaks,
- More aesthetically pleasing timber sales,
- Create recreational trails,
- Manage your mill waste.
The New Hampshire Timberland Owners Association is pushing the N.H. Legislature to designate House Bill 225, which seeks to eliminate the N.H. renewable portfolio standard (RPS) law, as "inexpedient to legislate," which would effectively kill the bill.
A hearing on HB 225 was held at the State House in Concord on Tuesday, Feb. 7, 2017, with dozens of timberland owners, loggers, foresters, sawmill operators, biomass energy plant owners and operators, and others in the forest products industry showing up to urge legislators to stop the bill in its tracks. The NHTOA's testimony can be read here.
The RPS law is important to NHTOA's membership and the forest products industry because it is designed to support the continued operation of NH‘s independent biomass power plants. That law does so by providing economic incentives for the development and retention of renewable energy power plants (e.g. biomass electric power plants, biomass thermal plants, solar, small hydroelectric). It does this by creating a marketplace for the sale, by e.g., biomass power plants, of and the purchase of renewable energy certificates (REC) by utilities and competitive energy suppliers.
In talking points presented at the Feb. 7 hearing, the NHTOA pointed out:
· House Bill 225 seeks to eliminate the N.H. renewable portfolio standard (RPS) law. The RPS law is important to our membership and the forest products industry because it is designed to support the continued operation of NH‘s independent biomass power plants.
· The RPS provides over $186 million annually in economic benefit to the State according to an analysis done by the NH Timberland Owners Association. The RPS supports over 500 jobs throughout the state in forestry, power plants and clean energy technology.
· The RPS supports diversity in energy generation and supports NH’s own renewable energy industry, including its wood-to-energy plants, small hydro plants, solar, biomass thermal and forestry industries. Businesses need stability and certainty if they are going to make investments. Diversity is important so we are not so reliant on natural gas for electricity with its winter price increases.
· Dismantling the RPS program WILL NOT help lower energy bills by any noticeable amount. The issue driving up energy prices is the escalating transmission and distribution expenses (according to the N.H. Public Utilities Commission these expenses have increased by 374% over 11 years), and the lack of adequate natural gas for generation in cold winter months; that gas scarcity drives up the cost of the gas that is available. Dismantling the RPS will not resolve these problems. Given the recent and planned reductions in power generation in New England (e.g. closure of Vermont Yankee, and other fossil fuel and nuclear generation), now is not the time to pass legislation that would risk closure of more power plants.
· The Legislature should NOT attempt to “send a message” about lowering electricity prices by taking an action that will not resolve the issue but will HARM existing NH jobs and industries that are providing economic benefits throughout the state.
· The renewable portfolio law’s benefits are significant, ranging from encouraging schools and hospitals and a county complex to install wood pellet boilers to homeowner and municipal solar installations to the state’s largest biomass plant having been built in Berlin, and to the retention of the state’s existing hydroelectric facilities and existing biomass plants and associated forestry jobs.