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A critical hearing on Senate Bill 129, which supports New Hampshire's six independent biomass energy plants by shoring up the Renewable Portfolio Standard (RPS) law, will be held on Tuesday, April 11, in Concord at the capitol.

The hearing, to be held by the House Science, Technology, and Energy Committee, is part of the committee's deliberations on SB 129 before recommending passage or defeat of the bill.

The New Hampshire Timberland Owners Association (NHTOA) strongly encourages members to attend the hearing, which will be held in Room 304 of the Legislative Office Building (located just behind the gold-domed capitol), beginning at 1:30 p.m. For comprehensive information about testifying, signing in, and sending or phoning in comments to members of the committee, click here.

Posted below is the letter Jasen Stock, NHTOA's executive director, is sending to Rep. Richard Barry, who chairs the Science, Technology and Energy Committee.

 

Dear Chairman Barry and members of the Committee:

 

The New Hampshire Timberland Owners Association (NHTOA) thanks you for the opportunity to speak in support of Senate Bill 129. Founded in 1911, the NHTOA represents forest landowners and the forest products industry in New Hampshire. This sector of New Hampshire’s economy represents the third-largest sector of manufacturing in the state. The total forest products industry in New Hampshire, which includes the biomass power plants we will discuss today, employs more than 7,700 people directly, and contributes nearly $1.4 billion dollars to the state’s economy.

 

The NHTOA supports the biomass provisions in this bill, as they will assist in the continued operations of the state’s six independent biomass power plants. Losing these biomass power plants, and the low-grade timber (trees unsuitable for lumber) markets they provide, will negatively impact hundreds of jobs and disrupt New Hampshire’s entire forest products industry. These power plants are vital to our membership’s ability to practice sustainable forest management and retain land as forests. The relationship of these power plants with the rest of the forest products industry (e.g. sawmills) means their survival is critical to the economic health of the state’s forest products industry. We can see the vital need for SB 129 in last week’s announcement of the temporary closure of one of the six biomass plants, Alexandria, due to very low energy and renewable energy certificate market prices.

 

Forest management

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. 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 environmentally and economically. 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.

 

In addition to standard silvicultural work, biomass markets are also an important tool for watershed management. Several of the state’s largest municipal watersheds use biomass harvesting to manage their timberlands to ensure clean water. Wildlife and recreation managers also regularly use biomass markets for habitat and recreation work. Installing food pots[A1]  for game and non-game species, creating habitat diversity, and installing hiking or motorized vehicle recreational trails are all accomplished through biomass harvesting. Without biomass markets, this work would be much more difficult and costly.

 

Lastly, in addition to healthier and more vigorous woodlots, clean water, improved wildlife habitat, and recreational trails, the forest management work that biomass markets encourage improves the quality and economic value of timberlands. This makes timberland ownership more economically viable, ultimately benefiting the entire timber supply chain (landowners, foresters, loggers, and sawmills) and the communities these individuals and business are located.

  

Economic impact

To help quantify this economic impact, earlier this year the NHTOA retained Plymouth State University’s College of Business Administration (PSU) to conduct a study to estimate the economic contribution the six independent biomass electric power plants make to the New Hampshire economy. Using a customized economic impact model and actual data gathered from the six power plants, PSU calculated their economic contribution for the 2016 calendar year.

 

This study shows:

 

·         The grand total of the direct effect (the six independent biomass electric power plants), indirect effect (supply industries), and induced effect (service sector) economic activities is approximately 932 jobs ($50.9 million in payroll). And the total economic output to the state’s economy is $254.5 million each year.

 

·         The six biomass plants contribute $7.3 million in tax revenues to state and local governments from all sources (direct, indirect and induced effect).

 

Because all facets of the timber industry are connected to low-grade timber markets, these economic figures are not surprising.

 

·         Landowners: With two-thirds of the state’s forests considered “low-grade,” biomass power plants provide landowners a market for those low-grade trees. This adds value to timberland, which translates into higher productivity and ultimately higher property taxes for local communities.

 

·         Loggers: To cash-flow a timber sale, loggers need markets for all the species and grades of timber on the woodlot. Because biomass power plants can accept any species and grade of timber, it is an important market for many timber sales.

 

·         Foresters: To sustainably manage a forest and improve forest health and forest productivity, inferior diseased and malformed trees must be removed. Because these trees rarely produce sawlogs, biomass power plants are the obvious market for them. This market is also important for management work dealing with the increasing prevalence of new invasive tree pests (e.g. Emerald Ash Borer, Hemlock Wooly Adelgid, and Red Pine Scale).

·         Sawmills: Open burning of slabs is not presently permitted by state law. Instead, sawmills chip their slabs and send the chips to a paper mill or biomass power plant. With the contraction of New England’s pulp and paper industry, biomass power plants are becoming increasingly important for managing this material.

 

This economic impact is statewide. According to the New Hampshire Department of Revenue Administration’s (NH DRA) timber tax data, during the 2014/2015 tax year 1,349,018 tons of biomass was harvested in 209 towns in New Hampshire. On a county-by-county basis, the data shows biomass is an important low-grade timber market for several southern counties.

 

Belknap                       148,046 tons

Carroll                         102,415 tons

Cheshire                      78,303 tons

Coos                            151,346 tons

Grafton                       199,985 tons

Hillsborough               163,472 tons

Merrimack                   261,910 tons

Rockingham                96,311 tons

Strafford                     55,646 tons

Sullivan                       91,886 tons

 

 

Although these county biomass harvesting numbers will vary year to year, we believe these data show the broad land management and positive economic impact that biomass markets have on the entire state. Combining the positive economic impact with the forest management benefits means the total benefits New Hampshire gleans from the biomass industry are significant. For these reasons, the NHTOA requests you vote Ought To Pass on Senate Bill 129.

 

Again, thank you for allowing me to testify on this important piece of legislation.

 

 

 

Sincerely,

 

 

Jasen A. Stock

Executive Director

 

 

 

Attach

 


 [A1]Do you mean plots?

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.

 

Representatives from the New Hampshire Timberland Owners Association (NHTOA) and the Timber Harvesting Council (THC) took issues of concern for New Hampshire’s forest products industry to Washington, D.C., last week as they met with congressional representatives and natural resource agency officials.

Issues discussed with the staffs of Sen. Maggie Hassan (D-N.H.), Sen. Jeanne Shaheen (D-N.H.), Rep. Ann Kuster (D-N.H.), and Rep. Bruce Westerman (R-Ark.) included concerns about the expansion of the Silvio O. Conte National Wildlife Refuge, recognition of biomass energy as carbon-neutral, the proposed Youth Careers in Logging legislation, and support for the Right to Haul Act.

The NHTOA/THC contingent also met with Allen Rowley, director of forests and range management for the U.S. Forest Service, to discuss issues connected with contracting with the Forest Service for logging and also the impacts of a declining Northeast market for wood pulp. In the office of Casey Hammond, interim supervisor of the U.S. Fish and Wildlife Service, the group talked about ways to redirect funding from additional federal land acquisition for the expansion of the Conte Refuge towards land conservation programs that will maintain working forest and traditional uses (e.g. hunting, snowmobiling, hiking, etc.).

“Bringing issues critical to New Hampshire’s forest products industry to the doorstep of our representatives in the nation’s capital emphasizes their importance to our leaders who can make a real difference in helping the industry,” said Steve Patten, NHTOA’s program director and member of the group that traveled to Washington. “We were able to make some real progress on some issues, and we heard a great deal of support for the industry. It was an informative, useful, and excellent trip.”

In the photo, from left: Mike Sharp, Ben Crowell, Shaun Lagueux, Jock Harvey (NELA - Vt.), Chris Goodnow, Errol Peters, Pat Sadler (NELA - N.Y.), Rocky Bunnel, Ron Rich (NELA - Mass.), Gabe Russo (NELA - Vt.). Not pictured: Steve Patten, NHTOA (he took the photo).

 

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.

Take Action

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:

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    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.