N.H. lawmakers mull changes to renewable energy standards

What plants should be included, or excluded, as the Legislature rewrites renewable energy portfolio standards?

It’s special interest time, as New Hampshire's renewable energy portfolio standards program starts its race to the legislative finish line and lawmakers grapple with a bill that would cap the state’s Renewable Energy Fund at $4.5 million, partly to return funds as rebates to electricity ratepayers and partly so it won’t be such an inviting target for lawmakers looking to balance the budget.

Senate Bill 148, sponsored by Sen. Jed Bradley, R- Wolfeboro, has already passed the Senate, and heard Wednesday by the House Science , Technology and Energy committee, and several key parts of the bill that either would help or hurt different constituencies inspired much of the testimony.

The proposed REF cap would echo what happened with the Regional Greenhouse Gas Initiative program, which was capped following a $3.1 million legislative raid.  The amount available in the REF is much greater, $19 million (though about $5 million is already spoken for). No one has raided the that fund yet, but with the House granting Gov. Maggie Hassan permission to raid dedicated funds like REF, it is certainly something being considered, even if the Senate budget writers haven’t endorsed that blank check.

Like the RGGI fund, the REF money comes from ratepayers, not taxpayers.  Its source is the fees paid by utilities that don't meet the state's renewable portfolio standard, which requires that almost a quarter of the energy generated in New Hampshire must come from renewable sources by 2025. Utilities that don't meet certain benchmarks must pay penalties.

The demand for biomass power in other states with renewable portfolio standards is the main reason behind the surplus. That demand, particularly in Connecticut, makes it harder for utilities to meet the standards in New Hampshire, so they pay into the REF instead.

Some environmental groups testified against the cap, since it would limit what the Public Utilities Commission could do to support renewable energy. But most groups – such as The Northern Forest Center and the Timberland Owners Association, which are affiliated with the wood industry — were worried about whether the PUC would have enough money would have enough money in the fund to continue to subsidize homeowners who switched to would pellet furnaces.

Jack Ruderman, director of the PUC's Sustainable Energy Division, reassured the industry that the program wouldn’t be entirely eliminated, just cut back.

But several provisions of the bill were even more important to the industry. One would increase the premium biomass plants receive for producing renewable energy.

Utilities are able to buy those payments – in the form of renewable energy certificates — from producers of renewable energy to meet the REF standards, and the producers are able to count them as part of their income.

“I have two products for sale — energy and renewable energy certificates,” said Dennis McKenney, plant operator of Bridgewater Power, a wood-burning facility in Bridgewater. “We need these RECs to sustain our operations.”

Smaller biomass heat and energy facilities being planned by Androscoggin Valley Hospital in Berlin and the Sullivan County government complex (which houses the county jail and nursing home) wanted to make sure that there were enough new thermal heating certificates.

“Let’s cut to the chase,” testified Charlie Niebling, president of the New England Wood Pellet.  “The $80 million elephant in the room is Concord Steam.” 

Concord Steam Corp. is wishing to build a new, more efficient 17-megawatt facility in Concord that would not only generate electricity, but continue to heat downtown and state office buildings.   The company would receive RECs for its electricity, but it was also hoping to get the new thermal RECs for producing heat as well. Under the current law, the company would arguably be eligible, since it is a new facility, but that would eat up all existing credits, at least until 2015.

But SB142  “clarifies” that only new facilities that actually displace fossil fuels can get the credits, and since Concord Steam was already primarily using renewable fuel to produce steam, it would no longer be eligible, and that, argued Niebling, was the legislative intent.

But Concord Steam CEO Peter Bloomfield said that, aside from the economic benefits of the project, combining steam and electricity would greatly increase efficiency, and that is good for the environment.  Instead, Concord Steam was “targeted,” said Bloomfield, “to box us out of the marketplace.  It’s changing the language to exclude us.”

Bloomfield did offer a compromise.  Perhaps the law could be written so no one facility could take more than 75 percent of the credits, enough for the company to assure jittery financiers.  That would ensure there was enough left over for others in 2015, and more than enough as the number of credits grows in subsequent years.

But no compromise seemed in sight for those testifying against another clause that would label waste-to-energy plants of a certain size as producers of renewable energy. The proposal would enable only one such plant in New Hampshire — Wheelabrator’s incinerator in Claremont — to sell RECs.

Michael Fitzgerald of the Department of Environmental Services’ Air Resource Division, said that while the department hasn’t taken position on the matter, his initial research concluded that burning trash was better than burying it.

Opponents of incineration, however, were out in force, arguing that incinerators had little control over the fuel they and that toxic pollutants either go up in the air or are buried in toxic ash.  They also said incinerators discourage municipal recycling, which cuts into their fuel supply.