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Campaign Money Flows as Maine Energy Regulators Weigh Bids for Biomass Bailout

Friday is the deadline for the Maine Public Utilities Commission to receive bids for a controversial contract to bail out the state’s ailing biomass energy plants.

The contract could tap over $13 million in taxpayer funds to assist an industry that some worry can no longer compete on a level playing field. And the potential beneficiaries of the bailout continue to reward the legislators who backed it.

Lawmakers approved a controversial bill to rescue the ailing industry by a margin of nearly 3-1. But many in Augusta weren’t thrilled about it. The ambivalent included Gov. Paul LePage, who quickly, but quietly, signed the bill into law in April.

“When I sign that bill I’m going to have a clothespin on my nose — because it stinks,” LePage told Republicans at the state convention earlier this year.

LePage also says that he was upset with the biomass industry because owners of the plants haven’t invested in upgrades. Those investments, he said, would allow the operators to compete with the oil- and natural gas-fired plants that are currently pricing biomass out of the market.

“They can be competitive if they invest in their plants, but they refuse to. And they’re just milking the plants, just like we’ve seen over the last several years,” LePage says.

The biomass companies may not be investing in their plants, but at least one of them is continuing to invest in the state Legislature. ReEnergy LLC is a New York-based company that owns four of the state’s six biomass plants. The company has donated nearly $12,000 to political action committees since 2011 and more than $7,500 over the last two years alone.

It’s a significant sum, particularly for a company that has testified that it’s financially distressed. The campaign funds are going to PACs run by legislative leaders, or those who aspire to those powerful positions — Democrats and Republicans.

ReEnergy did not respond to calls and emails seeking comment. But its finances were part of the bailout debate last spring.

“Why are we not at least asking for significant investment by the owners of these plants in this industry to make sure there’s a future for those jobs?” says Sen. Chris Johnson, a Democrat from Somerville.

Johnson was one of 49 lawmakers who voted against the bailout. He and others argued that the proposal was ill-conceived.

There were philosophical objections, too. That’s because ReEnergy is a subsidiary of Riverstone Holdings LLC, a New York-based private equity firm founded by two former Goldman Sachs bankers. The company is one of the country’s top private equity firms, and claims to have raised $33 billion in capital since its formation.

ReEnergy, and Riverstone, may also end up as the sole beneficiary of the $13.5 million taxpayer bailout. Covanta Holding Corp., which owns two of the plants, has already indicated that the bailout was structured in a way that won’t save them. Even ReEnergy, which owns the other four plants, has already said that only two of its four plants are likely to survive.

Nonetheless, LePage and lawmakers felt compelled to approve the rescue plan. The governor even defied one of his staunchest ideological positions: no subsidies for energy producers that can’t meet market rates.

He also subverted his own goal to build the state’s rainy day fund, because the bailout essentially intercepts money that would have otherwise gone to that fund.

“We’re trying to save more of our paper industry and more of our people working in the woods,” LePage says.

By working in the woods, the governor means loggers, an iconic workforce that’s part of the state’s blue-collar economy and its cultural identity. The Professional Logging Contractors estimated that the loss of the biomass industry would cost 400 jobs at the plants and potentially 900 related jobs.

Bidders for the two-year biomass bailout contract will have to demonstrate their ability to retain those jobs, according to Harry Lanphear at the Public Utilities Commission. Lanphear said the PUC could not reveal the identities of the companies that have bid, or even if there’s more than one.

So far, ReEnergy is the only operator to submit written comments related to the bid.

Journalist Steve Mistler is Maine Public’s chief politics and government correspondent. He is based at the State House.