Profit-sharing sought in wood-fired power measure
The Senate Finance Committee voted 5-1 Tuesday to require a the builder of a wood-fired power plant in the Berlin region to enter into a profit-sharing arrangement with ratepayers .
The amendment, crafted largely by Senate President Ted Gatsas, R-Manchester, imposes on the winning bidder a 50-50 sharing with New Hampshire ratepayers of its profits or losses. It also ups the allowed output of the proposed facility or facilities from 50 megawatts to 60.
Public Service of New Hampshire is currently barred from adding to its generating capacity within the state. Regulators in turn guarantee it a 9.5 percent profit on its total investment, which includes 1,100 megawatts of wood, oil, coal and hydro power plants.
In the last two decades, PSNH has lost $1 billion on construction of the Seabrook nuclear plant and another $1 billion by paying above-market rates for power it bought from small wood-fired power plants around the state. All of those so-called stranded costs went onto customers’ bills.
House Bill 1690 would let the state’s largest regulated utility submit a bid after Aug. 1, when the state sends out its request for proposals to construct the plant in the North Country. Merchant power plants that sell into the open market could compete head to head with PSNH in the bidding process.
All potential participants would have to agree to pass half of any future losses onto their investors and keep only half of any profits. The rest, including any losses, would be covered in the rate structure.
Gatsas said his goal is to make ratepayers almost like partners or investors in the project — unlike today, when they eat all the losses from PSNH and take none of the profits. Sen. Senator Peter Burling, D-Cornish, a co-sponsor of the HB 1690 amendment, warned the profit-sharing clause might keep everyone from bidding, leaving Coos County with a 1.2 million-ton hole in its yearly demand for low-grade wood left by the shutdown this year of two paper mills in the region.
The legislation also lets the state’s five small wood-fired plants vie for the privilege of supplying that power. They currently produce 80 megawatts and burn 1.2 million tons of wood under contracts with PSNH that lapse before the end of 2007.
The bill goes to the Senate floor Thursday, where all sides predict a lively debate. If HB 1690 wins approval, the House can accept the Senate version or trigger a committee of conference. The Senate wording is radically different from the language the House approved before anyone knew Fraser Papers would close its Berlin pulp mill.
A second HB 1690 amendment sponsored by Gatsas failed in a 3-3 vote. He wanted to assure the state has the money this fall to provide fuel assistance to needy families amid continued high prices for gas and oil. Senate Finance Chairman Chuck Morse, R-Salem, said everyone agrees with the need to help Berlin quickly.
“But the floor debate will be complicated enough without this (new) amendment,” he told Gatsas. “We’ll fund fuel assistance. You’ve called us back into session twice to respond to those issues. We’ve done it.”
Nothing in the proposed bill would keep an unregulated company from building any kind of power plant in the North Country. As now, the applicant would just have to show regulators the project is in the public interest. – CHRIS DORNIN/GOLDEN DOME NEWS