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Business and Economy

Energy Bill Would Prop Up Maine’s Ailing Forest Products Industry

Gov. Paul LePage has joined with some state lawmakers in trying to find ways to help the state’s suffering forestry industry. That effort could include price supports for electricity produced by biomass energy plants, which have been facing financial difficulties.

The state’s biomass industry has been hit with a double whammy: First, the low-cost of energy produced with natural gas has in turn depressed the margins for higher-cost biomass plants, which make electricity by burning low-quality wood.

And second, in January, Massachusetts tightened its standards for what kind of energy qualifies as “renewable,” shutting off price supports for several Maine biomass facilities that sell power to the Massachusetts electricity market.

The result: more pain in Maine’s forest-products industry, which is already reeling from a disheartening string of paper plant shutdowns.

“We’re losing our livelihood. This is serious,” says Daryl Flagg, who owns a trucking and wood-chipping company in Jefferson.

Flagg spoke this week to a legislative committee that’s considering a measure that would require state regulators to award midterm contracts for biomass energy at above-market prices.

That kind of prop, Flagg and many other speakers say, is sorely needed, given that in just the past few months two biomass plants Maine — in Jonesboro and West Enfield — have shut down, taking with them plant jobs as well as many of the jobs that supply them with tons of wood fuel every day.

“We are going down,” Flagg says. “You’re talking not just loggers, you’re talking a whole community of people. Thousands and thousands of jobs.”

LePage has made helping the rural economy a priority, but as his top energy staffer Patrick Woodcock notes, he has also made it a priority to protect consumers and businesses by holding the line on electricity bills.

“I want to be clear that this is not going to provide the kind of market conditions for the loggers (of) even a year ago,” Woodcock says. “This is kind of mitigating what has been a hemorrhaging in the industry. We’re trying everything that we can do to mitigate that, we’re looking at. But we have to look at what makes sense for loggers but also for ratepayers.”

And for ratepayers, the costs would be significant, although there are varying estimates.

“Our estimate is that it will cost about $40 million a year, every year, for five years,” says Tim Schneider, the public advocate, whose job it is to protect the interests of electricity consumers in proceedings at the Maine Public Utilities Commission.

Schneider says average residential bills would go up by about $2 a month. And industrial users would see a bigger hit.

Jon Fitzgerald, general counsel at Bath Iron Works, one of the state’s biggest energy users, spoke against the bill. He says comparatively low energy costs over the last several years have helped the company compete with boatmakers in other regions — and make new hires too.

“None of us wants to be out of a job,” Fitzgerald says. “But large manufacturing in Maine and the paper mills have obviously suffered some serious blows, and shipbuilding doesn’t want to join them.”

The committee is continuing its consideration of the bill, but given the stakes it seems likely to reach the full Legislature. And lawmakers will face a choice between trying to save jobs in Maine’s forests and preserving lower electricity prices for all Mainers.