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:
martha.fullerclark@leg.state.nh.us
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.