po 30114-unuoD REGULAR CALENDAR
May 2, 2018
HOUSE OF REPRESENTATIVES
REPORT OF COMMITTEE
The Majority of the Committee on Science, Technology and Energy to which was referred SB 365,
AN ACT (New Title) relative to the use of renewable generation in default service. Having considered the same, report the same with the following amendment, and the recommendation that the bill OUGHT TO PASS
WITH AMENDMENT.
Rep. Herbert Richardson
FOR THE MAJORITY OF THE COMMITTEE
Original: House Clerk Cc: Committee Bill File MAJORITY COMMITTEE REPORT
Committee: Science, Technology and Energy
Bill Number: SB 365 . Title: (New Title) relative to the use of renewable generation in default service. Date: May 2, 2018 Consent Calendar: REGULAR Recommendation: OUGHT TO PASS WITH AMENDMENT 2018-1701h
STATEMENT OF INTENT
This bill is critical to the six independent biomass power plants and the 900 statewide jobs in the forest products industry the plants support. Based on testimony, the continued operation of these plants and the jobs they support are in dire jeopardy due to the region's over-reliance on natural gas-fired power. One plant has closed, and owners of another two plants have informed employees that, due to significant financial losses over a number of years, they will close those plants this year absent legislative action to maintain operation and to protect these jobs. Losing these plants and 900 jobs means a loss of over $250 million dollars of economic activity each year statewide. Loss of 900 jobs also means loss of timber tax revenue, Business Enterprise Tax revenue, fuel tax revenue, and a likely hit to NH's Unemployment Trust Fund that could potentially trigger an increase in costs to every employer. The consequences of plant closures will also have a significant ripple effect because the plants are an important market for the forest product industry's low-grade wood which is critical to the health of our $1.4 billion forest products industry. This bill, as amended, is a temporary three-year solution to help prevent the closings of the plants while the Office of Strategic Initiatives undertakes the study on biomass mandated in last year's budget bill. The bill involves the purchase of power by the local utility at a 20% discount from the retail rate approved by the Public Utilities Commission. This approach is consistent with federal law and a recent 2016 United States Supreme Court case (Hughes v. Talen Energy) addressing lawful actions states may take in developing energy policies. The bill also addresses the critical issues at the state's only waste-to- energy plant that serves many of our communities which is also struggling in the natural gas dominated energy world. The bill is aligned to other bills this year that seek to incentivize and help our homegrown renewable energy generators in this state that are having a difficult time operating in the current energy market. If we let these plants fail, not only do we lose all the local jobs, forestry benefits, municipal benefits, environmental benefits, and economic activity, but we will in fact increase our electricity prices. The committee heard testimony that the loss of these plants' generating capacity means NH's annual share of regional generating capacity costs will increase by $17 million in the future. Also, at a time the operator of the regional electric grid is warning about future electric generation capacity and reliability issues, loss of the electricity these plants produce would also exacerbate those issues. It truly is a case of pay now or pay later. The bill's support of biomass and waste-to-energy preserves fuel diversity in New Hampshire, saves hundreds of jobs affecting thousands of workers and their families, and provides a hedge against escalating regional capacity costs which all ratepayers will bear. There has been bipartisan support for this bill throughout the legislative process.
Original: House Clerk Cc: Committee Bill File REGULAR CALENDAR
Science, Technology and Energy SB 365, (New Title) relative to the use of renewable generation in default service. MAJORITY: OUGHT TO PASS WITH AMENDMENT. MINORITY: INEXPEDIENT TO LEGISLATE. Rep. Herbert Richardson for the Majority of Science, Technology and Energy. This bill is critical to the six independent biomass power plants and the 900 statewide jobs in the forest products industry the plants support. Based on testimony, the continued operation of these plants and the jobs they support are in dire jeopardy due to the region's over-reliance on natural gas-fired power. One plant has closed., and owners of another two plants have informed employees that, due to significant financial losses over a number of years, they will close those plants this year absent legislative action to maintain operation and to protect these jobs. Losing these plants and 900 jobs means a loss of over $250 million dollars of economic activity each year statewide. Loss of 900 jobs also means loss of timber tax revenue, Business Enterprise Tax revenue, fuel tax revenue, and a likely hit to NH's Unemployment Trust Fund that could potentially trigger an increase in costs to every employer. The consequences of plant closures will also have a significant ripple effect because the plants are an important market for the forest product industry's low-grade wood which is critical to the health of our $1.4 billion forest products industry. This bill, as amended, is a temporary three-year solution to help prevent the closings of the plants while the Office of Strategic Initiatives undertakes the study on biomass mandated in last year's budget bill. The bill involves the purchase of power by the local utility at a 20% discount from the retail rate approved by the Public Utilities Commission. This approach is consistent with federal law and a recent 2016 United States Supreme Court case (Hughes v. Talen Energy) addressing lawful actions states may take in developing energy policies. The bill also addresses the critical issues at the state's only waste-to- energy plant that serves many of our communities which is also struggling in the natural gas dominated energy world. The bill is aligned to other bills this year that seek to incentivize and help our homegrown renewable energy generators in this state that are having a difficult time operating in the current energy market. If we let these plants fail, not only do we lose all the local jobs, forestry benefits, municipal benefits, environmental benefits, and economic activity, but we will in fact increase our electricity prices. The committee heard testimony that the loss of these plants' generating capacity means NH's annual share of regional generating capacity costs will increase by $17 million in the future. Also, at a time the operator of the regional electric grid is warning about future electric generation capacity and reliability issues, loss of the electricity these plants produce would also exacerbate those issues. It truly is a case of pay now or pay later. The bill's support of biomass and waste-to-energy preserves fuel diversity in New Hampshire, saves hundreds of jobs affecting thousands of workers and their families, and provides a hedge against escalating regional capacity costs which all ratepayers will bear. There has been bipartisan support for this bill throughout the legislative process. Vote 14-6.
Original: House Clerk Cc: Committee Bill File Majority Blurb —
This bill is critical to the 6 independent biomass power plants and the 900 state-wide jobs in the forest products industry the plants support. The continued operation of these plants and the jobs they support are in dire jeopardy due to the region's over-reliance on natural gas-fired power. One plant has closed, and owners of another two plants have informed employees that, due to significant financial losses over a number of years, they will close those plants this year absent legislative action to maintain operation and to protect these jobs. Losing these plants and 900 jobs means a loss of over $250 million dollars of economic activity each year statewide. Loss of 900 jobs also means loss of timber tax revenue, business enterprise tax revenue, fuel tax revenue and a likely hit to NH's unemployment trust fund that could potentially trigger an increase in costs to every employer. The consequences of plant closures will also have a significant ripple effect because the plants are an important market for the forest product industry's low-grade wood they are critical to the health of our $1.4 billion forest products industry. SB 365, as amended, is a temporary three-year solution to help prevent the closings of the plants while the Office of Strategic Initiatives undertakes the study on biomass mandated in last year's budget bill. The bill involves the purchase of the power by the local utility at a 20% discount from the retail rate approved by the PUC. This approach is consistent with federal law and a recent 2016 United States Supreme Court case addressing lawful actions states may take in developing energy policies. The bill also addresses the critical issues at the state's only waste-to-energy plant that serves many of our communities which is also struggling in the natural gas dominated energy world. SB 365 is aligned to other bills this year that seek to incentivize and help our homegrown renewable energy generators in this state that are having a difficult time operating in the current energy market. If we let these plants fail, not only do we lose all the local jobs, forestry benefits, municipal benefits, environmental benefits and economic activity, but we will in fact increase our electricity prices. The committee heard testimony that the loss of these plants' generating capacity means New Hampshire's annual share of regional generating capacity costs will increase by $17 million in the future. Also, at a time the operator of the regional electric grid is warning about future electric generation capacity and reliability issues, loss of the electricity these plants produce would also exacerbate those issues. It truly is a case of pay now or pay later. Senate Bill 365's support of biomass and waste to energy preserves fuel diversity in New Hampshire, saves hundreds of jobs affecting thousands of workers and their families, and provides a hedge against escalating regional capacity costs which all ratepayers will bear. There has been bipartisan support for this bill throughout the legislative process.
1A 21,c-
Rep. Richardson, Coos 4 April 23, 2018 2018-1701h 10/04
Amendment to SB 365
1 Amend the title of the bill by replacing it with the following: 2 3 AN ACT relative to the use of renewable generation to provide fuel diversity. 4 5 Amend the bill by replacing all after the enacting clause with the following: 6 7 1 Findings. New Hampshire's and New England's electricity supply is heavily dependent upon 8 natural gas-fired generation, which is subject to pricing volatility and risks of fuel availability. In 9 its 2018 Operational Fuel-Security Analysis, the independent system operator of New England 10 (ISO-NE) expressed concerns regarding the need for fuel diversity in the regional generation mix, 11 given the amount of natural gas-fired generation in the mix, and noted that renewables can help 12 lessen the fuel-security risk. The effect of natural gas pricing volatility on energy prices can be the 13 closure of New Hampshire renewable generators and the loss of jobs and other statewide economic 14 benefits, as well as the loss of fuel diversity derived from using indigenous renewable fuels. The 15 general court finds that the continued operation of the state's 6 independent biomass-fired electric 16 generating plants and the state's single renewable waste-to-energy generating plant are at-risk due 17 to energy pricing volatility. These plants (i) are important to the state's economy and jobs, and, in 18 particular, the 6 biomass-fired generators are vital to the state's sawmill and other forest products 19 industries and employment in those industries, and (ii) these indigenous-fueled renewable 20 generating plants are also important to state policies because they provide generating fuel diversity 21 and environmental benefits, which protect the health and safety of the state's citizens and the 22 physical environment of the state. The general court finds that it is in the public interest to 23 promote the continued operation of, and the preservation of employment and environmental 24 benefits associated with these sources of indigenous-fueled renewables, and thereby promote fuel. 25 diversity as part of the state's overall energy policy. 26 2 New Chapter; The Use of Renewable Generation to Provide Fuel Diversity. Amend RSA by 27 inserting after chapter 362-G the following new chapter: 28 CHAPTER 362-H 29 THE PRESERVATION AND USE OF RENEWABLE GENERATION 30 TO PROVIDE FUEL DIVERSITY 31 362-H:1 Definitions. In this chapter: 32 I. "Adjusted energy rate" means 80 percent of the rate, expressed in dollars per megawatt- 33 hour, resulting from the default energy rate minus, if applicable, the rate component for compliance
Amendment to SB 365 - Page 2 -
1 with the renewable energy portfolio standards law, RSA 362-F, if that rate component is included in 2 the approved default energy rate. 3 IL "Biomass" means plant-derived fuel including clean and untreated wood such as brush 4 stumps, lumber ends and trimmings, wood pallets, bark, wood chips or pellets, shavings, sawdust 5 and slash, agricultural crops, biogas, or liquid biofuels, but shall exclude any materials derived in 6 whole or in part from construction and demolition debris. 7 III. "Commission" means the public utilities commission. 8 IV. "Default energy rate" means the default service energy rate applicable to residential 9 class customers, expressed in dollars per megawatt-hour, as approved by the commission from time 10 to time, and which is available to retail electric customers who are otherwise without an electricity 11 supplier. 12 V.(a) "Eligible facility" means any facility which produces electricity for sale by the use, as a 13 primary energy source, of biomass, or municipal solid waste; provided that: (1) the facility's power 14 production capacity is not greater than 25 megawatts excluding station service needs; (2) the facility 15 is interconnected with an electric distribution or transmission system located in New Hampshire; 16 and (3) the facility began operation prior to January 1, 2006, or if the facility ceased operation and 17 then later returned to service after that date then prior to January 1, 2006 the facility operated for 18 at least 5 years regardless of the current operational status of the facility. 19 (b) "Eligible facility" shall not include: (1) any facility, while selling its electrical output 20 at long-term rates established before January 1, 2007 by orders of the commission under RSA 362- 21 A:4; and, (2) any municipal solid waste facility less than 10 megawatts in size and which was not in 22 operation on January 1, 2018. 23 "VI. "Primary energy source" means a fuel or fuels, or energy resource either singly or in 24 combination, that comprises at least 90 percent of the total energy input into a generating unit. A 25 fuel or energy source other than the primary fuel or energy source may be used only for start-up, 26 maintenance, or other required internal needs of the facility. 27 362-H:2 Purchased Power Agreements. To retain and provide for generator fuel diversity, each 28 electric distribution company that is subject to the commission's approval regarding procurement of 29 default service shall offer to purchase the net energy output of any eligible facility located in its 30 service territory in accordance with the following: 31 I.(a) Prior to each of its next 6 sequential solicitations of its default service supply after the 32 effective date of this chapter, each such electric distribution company shall solicit proposals, in one 33 solicitation or multiple solicitations, (from eligible facilities. The electric distribution company's 34 solicitation to eligible facilities shall inform eligible facilities of the opportunity to submit a proposal 35 to enter into a power purchase agreement with the electric distribution company under which the 36 electric distribution company would purchase an amount of energy from the eligible facility for a 37 period that is coterminous with the time period used in the default service supply solicitation. The
Amendment to SB 365 - Page 3 -
1 solicitation shall provide that the electric distribution company's purchases of energy from the 2 eligible facility shall be priced at the adjusted energy rate derived from the default service rates 3 approved by the commission in each applicable default service supply solicitation and resulting 4 rates proceeding. 5 (b) The solicitation shall also inform the eligible facility that: (1) the electric 6 distribution company's purchase from the eligible facility shall be at the eligible facility's 7 interconnection point with the electric distribution company; (2) the purchase shall be from the 8 eligible facility's net electrical output and not from the output of another unit; and (3) the electric 9 distribution company's purchase would be for 100 percent of the eligible facility's net electrical 10 output. 11 II. Each eligible facility's proposal in response to such solicitation shall provide a non- 12 binding proposed schedule of hourly net output amounts during the term stated over a mutually 13 agreeable period, whether daily, monthly, or over the term used in the default service supply 14 solicitation for the applicable default energy rate and such other information as needed for the 15 eligible facility to submit and the electric distribution company to evaluate the proposal. 16 III. With each eligible facility solicitation, the electric distribution company shall select all 17 proposals from eligible facilities that conform to the requirements of this section. The electric 18 distribution company shall submit all eligible facility agreements to the commission as part of its 19 submission for periodic approval of its residential electric customer default service supply 20 solicitation. 21 IV. All such eligible facility agreements shall be subject to review by the commission for 22 conformity with this chapter in the same proceeding in which it undertakes the review of the 23 electric distribution company's periodic default service solicitation and resulting rates. 24 V. The electric distribution company shall recover the difference between its energy 25 purchase costs and the market energy clearing price through a non-bypassable delivery services 26 charge applicable to all customers in the utility's service territory. The non-bypassable charge may 27 include recovery of reasonable costs incurred by electric distribution companies pursuant to this 28 section. The recovery of the non-bypassable charge shall be allocated among Eversource's customer 29 classes using the allocation percentages approved by the commission in its docket DE 14-238 order 30 25,920 approving the 2015 Public Service Company of New Hampshire Restructuring and Rate 31 Stabilization Agreement. In the first filing proceeding at the commission under this chapter 32 applicable to each other electric distribution company, the commission shall determine and apply an 33 allocation based on the foregoing allocations for any other electric distribution company subject to 34 this chapter, but reasonably adjusted to account for differing customer classes if any from those of 35 Eversource. 36 3 Effective Date. This act shall take effect upon its passage. Amendment to SB 365 - Page 4 -
2018-1701h AMENDED ANALYSIS
This bill requires electric distribution companies subject to the public utilities commission's approval regarding procurement of default service to offer to purchase the net energy output of eligible biomass and waste-to-energy facilities located in its service territory. REGULAR CALENDAR
May 2, 2018
HOUSE OF REPRESENTATIVES
REPORT OF COMMITTEE
The Minority of the Committee on Science, Technology and Energy to which was referred SB 365,
AN ACT (New Title) relative to the use of renewable generation in default service. Having considered the same, and being unable to agree with the Majority, report with the following resolution: RESOLVED, that it is INEXPEDIENT TO LEGISLATE.
R p Michael Vose
FOR THE MINORITY OF THE COMMITTEE
Original: House Clerk Cc: Committee Bill File MINORITY COMMITTEE REPORT
Committee: Science, Technology and Energy Bill Number: SB 365 Title: (New Title) relative to the use of renewable generation in default service. Date: May 2, 2018 Consent Calendar: REGULAR Recommendation: INEXPEDIENT TO LEGISLATE
STATEMENT OF INTENT
Abundant and low-cost natural gas has driven down the wholesale cost of electricity to a level that makes it more difficult to cost effectively generate power with other fuels. The passage of SB 129 last year sought to help the state's wood-burning electricity generators by increasing their revenues from the sale of renewable energy certificates. It failed. This bill provides another attempt to provide an infusion of cash to keep these biomass plants and associated jobs (the loggers, truckers, and equipment vendors who rely upon them) alive. But this new plan suffers from four major' flaws: 1) It violates federal law by ordering state utilities to pay more than an avoided cost price for electricity sold in an interstate grid market; 2) It violates the spirit of the state's restructuring statute that stipulates, "generation services should be subject to market competition and minimal economic regulation" (RSA 374-F:3, III); 3) It lacks transparency by forcing one state utility to purchase all the output from the state's biomass plants at over-market prices and then sell that power on the open market and use the utility's stranded cost mechanism to recover it's losses; and 4) It lacks fairness by purporting to provide benefits to all the citizens of our state (better forest management, improved wildlife habitats, enhanced recreational spaces) but requires only the customers of one utility to pay for these benefits. Obtaining benefits like finding a productive use for low-grade wood and keeping our electricity generating fuel supply diverse may be desirable goals, but paying for these benefits needs to be lifted off the shoulders of electricity ratepayers. The minority feels that bills such as this one get in the way of finding a solution that does not hurt ratepayers, especially those business ratepayers attempting to provide a robust economy for our state. As the state's new 10-year energy strategy warns, "The risk with any policy is that it misidentifies the most efficient source of achieving the policy goal."
Rep. Michael Vose FOR 'PM MINORITY
Original: House Clerk Cc: Committee Bill File REGULAR CALENDAR
Science, Technology and. Energy SB 365, (New Title) relative to the use of renewable generation in default service. INEXPEDIENT TO LEGISLATE. Rep. Michael Vase for the Minority of Science, Technology and. Energy. Abundant and low-cost natural gas has driven down the wholesale cost of electricity to a level that makes it more difficult to cost effectively generate power with other fuels. The passage of S13 129 last year sought to help the state's wood-burning electricity generators by increasing their revenues from the sale of renewable energy certificates. It failed. This bill provides another attempt to provide an infusion of cash to keep these biomass plants and associated jobs (the loggers, truckers, and equipment vendors who rely them) alive. But this new plan suffers from four major flaws: 1) It violates federal law by Ordering state utilities to pay more than an avoided cost price for electricity sold in an interstate grid market; 2) It violates the spirit of the state's restructuring statute that stipulatesc.. "generation services should. be subject to market competition and minimal. economic i:egulation" (RSA 374-F:3, III); 3) It lacks transparency by forcing one state utility to purchase the output from the state's biomass plants at over-market prices and then sell that power on the open market and use the utility's stranded cost mechanism to recover it's losses; and 4) It lacks fairness by purporting to provide benefits to all the citizens of our state (better forest management, improved wildlife habitats, enhanced recreational spaces) but requires only the customers of one utility to pay for these benefits. Obtaining benefits like finding a productive use for low-grade wood and keeping our electricity generating fuel supply diverse may be desirable goals, but paying for these benefits needs to be lifted off the shoulders of electricity ratepayers. The minority feels that bills such as this one get in the way of finding a solution that does not hurt ratepayers, especially those business ratepayers attempting to provide a robust economy for our state. As, the state's new 10-year energy strategy warns, "The risk with any policy is that it misidentifies the most efficient source of achieving the policy
Original: House Clerk Cc: Committee Bill File
Stapler, Carol
From: Richard Barry
Mike: Looks good to me. Joel: if it ok with you, it's ok with me. If so, please let Carol know. Thank you.
Richard Barry
From: Michael Vose
Rep. Michael Vose for the Minority: Abundant and low-cost natural gas has driven down the wholesale cost of electricity to a level that makes it more difficult to cost effectively generate power with other fuels. Last year's SB129 sought to help the state's wood-burning electricity generators by increasing their revenues from the sale of renewable energy certificates. It failed. SB365 provides another attempt to provide an infusion of cash to keep these biomass plants (and the loggers, truckers, and equipment vendors who rely upon them) alive. But this new plan suffers from four major flaws: 1) It violates federal law by ordering state utilities to pay more than an avoided cost price for electricity sold in an interstate grid market; 2) It violates the spirit of the state's restructuring statute that stipulates, "Generation services should be subject to market competition and minimal economic regulation" (RSA 374-F:3, III); 3) It lacks transparency by forcing one state utility to purchase all the output from the state's biomass plants at over-market prices and then sell that power on the open market and use the utility's stranded cost mechanism to recover it's losses; 4) It lacks fairness by purporting to provide benefits to all the citizens of our state (better forest management, improved wildlife habitats, enhanced recreational spaces) but requires only the customers of one utility to pay for these benefits. Obtaining benefits like finding a productive use for low-grade wood and keeping our electricity generating fuel supply diverse may be desirable goals. But paying for these benefits needs to be lifted off the shoulders of electricity ratepayers. The Minority feels that bills like SB365 get in the way of finding a solution that does not hurt ratepayers, especially those business ratepayers attempting to provide a robust economy for our state. As the state's new 10-year energy strategy warns, "The risk with any policy is that it misidentifies the most efficient source of achieving the policy goal." Voting Sheets
Rep. Richardson, Coos 4 April 23, 2018 2018-1701h 10/04
Amendment to SB 365
1 Amend the title of the bill by replacing it with the following: 2 3 AN ACT relative to the use of renewable generation to provide fuel diversity. 4 5 Amend the bill by replacing all after the enacting clause with the following: 6 7 1 Findings. New Hampshire's and New England's electricity supply is heavily dependent upon 8 natural gas-fired generation, which is subject to pricing volatility and risks of fuel availability. In 9 its 2018 Operational Fuel-Security Analysis, the independent system operator of New England 10 (ISO-NE) expressed concerns regarding the need for fuel diversity in the regional generation mix, 11 given the amount of natural gas-fired generation in the mix, and noted that renewables can help 12 lessen the fuel-security risk. The effect of natural gas pricing volatility on energy prices can be the 13 closure of New Hampshire renewable generators and the loss of jobs and other statewide economic 14 benefits, as well as the loss of fuel diversity derived from using indigenous renewable fuels. The 15 general court finds that the continued operation of the state's 6 independent biomass-fired electric 16 generating plants and the state's single renewable waste-to-energy generating plant are at-risk due 17 to energy pricing volatility. These plants (i) are important to the state's economy and jobs, and, in 18 particular, the 6 biomass-fired generators are vital to the state's sawmill and other forest products 19 industries and employment in those industries, and (ii) these indigenous-fueled renewable 20 generating plants are also important to state policies because they provide generating fuel diversity 21 and environmental benefits, which protect the health and safety of the state's citizens and the 22 physical environment of the state. The general court finds that it is in the public interest to 23 promote the continued operation of, and the preservation of employment and environmental 24 benefits associated with these sources of indigenous-fueled renewables, and thereby promote fuel 25 diversity as part of the state's overall energy policy. 26 2 New Chapter; The Use of Renewable Generation to Provide Fuel Diversity. Amend RSA by 27 inserting after chapter 362-G the following new chapter: 28 CHAPTER 362-H 29 THE PRESERVATION AND USE OF RENEWABLE GENERATION 30 TO PROVIDE FUEL DIVERSITY 31 362-H:1 Definitions. In this chapter: 32 I. "Adjusted energy rate" means 80 percent of the rate, expressed in dollars per megawatt- 33 hour, resulting from the default energy rate minus, if applicable, the rate component for compliance
Amendment to SB 365 - Page 2 -
1 with the renewable energy portfolio standards law, RSA 362-F, if that rate component is included in 2 the approved default energy rate. 3 II. "Biomass" means plant-derived fuel including clean and untreated wood such as brush 4 stumps, lumber ends and trimmings, wood pallets, bark, wood chips or pellets, shavings, sawdust 5 and slash, agricultural crops, biogas, or liquid biofuels, but shall exclude any materials derived in 6 whole or in part from construction and demolition debris. 7 III. "Commission" means the public utilities commission. 8 IV. "Default energy rate" means the default service energy rate applicable to residential 9 class customers, expressed in dollars per megawatt-hour, as approved by the commission from time 10 to time, and which is available to retail electric customers who are otherwise without an electricity 11 supplier. 12 V.(a) "Eligible facility" means any facility which produces electricity for sale by the use, as a 13 primary energy source, of biomass, or municipal solid waste; provided that: (1) the facility's power 14 production capacity is not greater than 25 megawatts excluding station service needs; (2) the facility 15 is interconnected with an electric distribution or transmission system located in New Hampshire; 16 and (3) the facility began operation prior to January 1, 2006, or if the facility ceased operation and 17 then later returned to service after that date then prior to January 1, 2006 the facility operated for 18 at least 5 years regardless of the current operational status of the facility. 19 (b) 'Eligible facility" shall not include: (1) any facility, while selling its electrical output 20 at long-term rates established before January 1, 2007 by orders of the commission under RSA 362- 21 A:4; and, (2) any municipal solid waste facility less than 10 megawatts in size and which was not in 22 operation on January 1, 2018. 23 VI. "Primary energy source" means a fuel or fuels, or energy resource either singly or in 24 combination, that comprises at least 90 percent of the total energy input into a generating unit. A 25 fuel or energy source other than the primary fuel or energy source may be used only for start-up, 26 maintenance, or other required internal needs of the facility. 27 362-H:2 Purchased Power Agreements. To retain and provide for generator fuel diversity, each 28 electric distribution company that is subject to the commission's approval regarding procurement of 29 default service shall offer to purchase the net energy output of any eligible facility located in its 30 service territory in accordance with the following: 31 I.(a) Prior to each of its next 6 sequential solicitations of its default service supply after the 32 effective date of this chapter, each such electric distribution company shall solicit proposals, in one 33 solicitation or multiple solicitations, from eligible facilities. The electric distribution company's 34 solicitation to eligible facilities shall inform eligible facilities of the opportunity to submit a proposal 35 to enter into a power purchase agreement with the electric distribution company under which the 36 electric distribution company would purchase an amount of energy from the eligible facility for a 37 period that is coterminous with the time period used in the default service supply solicitation. The
Amendment to SB 365 - Page 3 -
1 solicitation shall provide that the electric distribution company's purchases of energy from the 2 eligible facility shall be priced at the adjusted energy rate derived from the default service rates 3 approved by the commission in each applicable default service supply solicitation and resulting 4 rates proceeding. 5 (b) The solicitation shall also inform the eligible facility that: (1) the electric 6 distribution company's purchase from the eligible facility shall be at the eligible facility's 7 interconnection point with the electric distribution company; (2) the purchase shall be from the 8 eligible facility's net electrical output and not from the output of another unit; and (3) the electric 9 distribution company's purchase would be for 100 percent of the eligible facility's net electrical 10 output. 11 II. Each eligible facility's proposal in response to such solicitation shall provide a non- 12 binding proposed schedule of hourly net output amounts during the term stated over a mutually 13 agreeable period, whether daily, monthly, or over the term used in the default service supply 14 solicitation for the applicable default energy rate and such other information as needed for the 15 eligible facility to submit and the electric distribution company to evaluate the proposal. 16 III. With each eligible facility solicitation, the electric distribution company shall select all 17 proposals from eligible facilities that conform to the requirements of this section. The electric 18 distribution company shall submit all eligible facility agreements to the commission as part of its 19 submission for periodic approval of its residential electric customer default service supply 20 solicitation. 21 IV. All such eligible facility agreements shall be subject to review by the commission for 22 conformity with this chapter in the same proceeding in which it undertakes the review of the 23 electric distribution company's periodic default service solicitation and resulting rates. 24 V. The electric distribution company shall recover the difference between its energy 25 purchase costs and the market energy clearing price through a non-bypassable delivery services 26 charge applicable to all customers in the utility's service territory. The non•bypassable charge may 27 include recovery of reasonable costs incurred by electric distribution companies pursuant to this 28 section. The recovery of the non-bypassable charge shall be allocated among Eversource's customer 29 classes using the allocation percentages approved by the commission in its docket DE 14-238 order 30 25,920 approving the 2015 Public Service Company of New Hampshire Restructuring and Rate 31 Stabilization Agreement. In the first filing proceeding at the commission under this chapter 32 applicable to each other electric distribution company, the commission shall determine and apply an 33 allocation based on the foregoing allocations for any other electric distribution company subject to 34 this chapter, but reasonably adjusted to account for differing customer classes if any from those of 35 Eversource. 36 3 Effective Date. This act shall take effect upon its passage. Amendment to SB 365 - Page 4 -
2018-1701h AMENDED ANALYSIS
This bill requires electric distribution companies subject to the public utilities commission's approval regarding procurement of default service to offer to purchase the net energy output of eligible biomass and waste-to-energy facilities located in its service territory. HOUSE COMMITTEE ON SCIENCE, TECHNOLOGY AND ENERGY
EXECUTIVE SESSION on SB 365
BILL TITLE: (Second New Title) relative to the use of renewable generation to provide fuel diversity.
DATE: April 24, 2018
LOB ROOM: 304
MOTIONS: INEXPEDIENT TO LEGISLATE Moved by Rep. Vose Seconded by Rep. B. Duch Vote: 7-13
MOTIONS: OUGHT TO PASS Moved by Rep. Richardson Seconded by Rep. Oxenham AM Vote: 191
Amendment # 2018-1701h
MOTION: OUGHT TO PASS WITH AMENDMENT
Moved by Rep. Richardson Seconded by Rep. Cali-Pitts Vote: 14-6
CONSENT CALENDAR: NO
Statement of Intent: Refer to Committee Report
Respectfully submit
Rep Douglas Thomas, Clerk
HOUSE COMMITTEE ON SCIENCE, TECHNOLOGY AND ENERGY
EXECUTIVE SESSION on SB 365
BILL TITLE: (New Title) relative to the use of renewable generation in default service.
DATE: 421(
LOB ROOM: 304
MOTION: (Please check one box)
0 OTP KITL 0 Retain (Pt year) tion of Amendment # - L71:417 O Interim Study (2nd year) (if offered)
Moved by Rep. ,6 `..; Seconded by Rep. kit/4" L Vote: 7— /3
MOTION: (Please check one box)
OTP 0 OTP/A 0 ITL 0 Retain (1st year) 0 Adoption of Amendment # 0 Interim Study (2nd year) (if offered)
Moved by Rep. RL Seconded by Rep. ax t"-N, Vote: 1. '7—
MOTION: (Please check one box)
❑ OTP r&LOTP/A 0 ITL 0 Retain (Is' year) 0 Adoption of Amendment # O Interim Study (2nd year) (if offered)
Moved by Rep. te"--;(4.A 15, g-) Seconded by Rep. C.4 /417(s Vote: /I/
MOTION: (Please check one box)
0 OTP 0 OTP/A ❑ ITL 0 Retain (Pt year) 0 Adoption of Amendment # O Interim Study (2nd year) (if offered)
Moved by Rep. Seconded by Rep. Vote:
CONSENT CALENDAR: YES t/ NO
Minority Report? L. Yes No If yes, author, Rep: ‘5.5-(f. Motion /IL
Respectfully submitted: Rep Douglas Thomas, Clerk STATE OF NEW HAMPSHIRE 5/8/2018 9:58:42 AM OFFICE OF THE HOUSE CLERK Roll Call Committee Registers Report 2018 SESSION
ST&E
Bill #: 513 3 65 Title: Re/4,1-i vs to tit e c...) t. .dc ew.alLie er4 1 :(.4 2 5,, e r wet,' PH Date: Exec Session Date: / a Motion: OTPA Amendment #:
MEMBER YEAS NAYS
Barry, Richard W. Chariman 6 Richardson, Herbert D. Vice Chairman ( 1461T-otaker-David-K. at( eic& s el• le7") Al i Vadney, Herbert R. Z'L N4tter-r4eal94-44-114. Rfce ic.,, i-e-}: ...c- it ,,,- 04" 4-. ;Z X Aldrich, Glen C. mo de t.4 , j, ji 0 3 .14 Thomas, Douglas W. Clerk Vose, Michael 2 Ammon, Keith 4- .8- Kuch, Bill 3-,,kr . Sfffithr Gr-eger -er: in, t. 44 ;. ‘,.. Le/ a I .5" ..e Merner, Troy 6 Backus, Robert A. 7 Cali-Pitts, Jacqueline A.
Harvey, Suzanne 7 Mann, John E. 1d Moffett, Howard M. i( Shepardson, Marjorie J. 1 2... Oxenham, Lee Walker / '3 Samassid4rPet-er—F-1- Vincent, Kenneth S. /4 TOTAL VOTE: /17` 6
Page: 1 of 1
STATE OF NEW HAMPSHIRE . 1/5/2018 10:32:21 AM OFFICE OF THE HOUSE CLERK Roll Call Committee Registers Report 2018 SESSION
ST&E
Bill #: 5e Title:
PH Date: Exec Session Date:
Motion: /1,-6/3 t Amendment #: g - 1 70 f
MEMBER YEAS NAYS
Barry, Richard W. Chariman 11 Richardson, Herbert D. Vice Chairman i Kur-gtakerDavid+7 a.,Lia 5 i'' 4 / Vadney, Herbert R. 3 IskAter-rgeri*Re-M. P-41e-k.ir,i, st,ek-b-i 4v, zi A44r4c-1:)rral4414-G, m,,i(e. 0 / e 6,4 c". Thomas, Douglas W. Clerk 6 Vase, Michael i Ammon, Keith 7 Kuch, Bill <1 SFAiti t-G. MD .#:{2e f, mt-e-tiq e ( Merner, Troy t o Backus, Robert A. t I Cali-Pitts, Jacqueline A. i 2_ Harvey, Suzanne /3 Mann, John E. e 4 Moffett, Howard M. s- Shepardson, Marjorie 3. /4, Oxenham, Lee Walker i 7 SOIIISSielirRat4r—P: . Vincent, Kenneth S. i TOTAL VOTE: (1 1
Page: 1 of 1 STATE OF NEW HAMPSHIRE 1/5/2018 10:32:21 AM OFFICE OF THE HOUSE CLERK Roll Call Committee Registers Report 2018 SESSION
ST&E Bill #: se Title: el; AP tom.. 4e4lea-A,46_ PH Date: / Exec Session Date: Motion: 4474- / Amendment #: .0,„aagc=r4zZet -
MEMBER YEAS NAYS
Barry, Richard W. Chariman 7 Richardson, Herbert D. Vice Chairman i 14wDavid-0-take, K. .8,(,t,,, s-, ,,, 4 / t Vadney, Herbert R. a Ngitter, Jeanine M. P,A6e vs," 5 tv, er,k10:V7 3 Akir-i-Gle• i4 e_lfi e VI, .1 ei (:1 V7 . efF Thomas, Douglas W. Clerk ...._ - Vose, Michael Ammon, Keith • il Kuch, Bill . ..s—
Sc=41%G-Feigi to „ ffet int'llete Merner, Troy 5— Backus, Robert A. 6- Cali-Pitts, Jacqueline A. • 7 Harvey, Suzanne Mann, John E. cl Moffett, Howard M. r0 Shepardson, Marjorie 3. i 1 Oxenham, Lee Walker 11- Soffissie17-13er F. Vincent, Kenneth S. /3 TOTAL VOTE: 7 7 -I
Page: 1 of 1 Full Committee Work Sessi n HOUSE COMMITTEE ON SCIENCE, TECHNOLOGY AND ENERGY
FULL COMMITTEE WORK SESSION on SB 365
BILL TITLE: (Second New Title) relative to the use of renewable generation to provide fuel diversity.
DATE: April 18, 2018
Subcommittee Members: Reps. Barry, Richardson, D. Thomas, Murotakc, Vadney, Notter, Aldrich, Vose, Ammon, B. Kuch, G. Smith, Merner, Backus, Cali-Pitts, S. Harvey, Mann, FL Moffett, Shepardson, Oxenham, Somssich and Vincent
Comments and Recommendations: Sen. Bradley submits draft 2018-1610h. Based on concerns about default services from providers. All hydro and solar and the other renewables removed. Only applies to the 6 wood plants and Wheelabrator. Q: Rep. Marjorie Shepardson - Does this affect more than residential ratepayers? A: Yes, it now includes all ratepayers. Q: Rep. Robert Backus - Does this affect restructure provisions? A: Less so than original bill. Primary goal is to protect jobs. Q: Rep. Michael Vose - Does proposed sun et send message that this is not the best solution moving forward? A: May or may1b be the best solution. The three years could give some certainty as we seek a better solution. Q: Rep. Doug Thomas - To clarify, does this satisfy all the providers' concerns on the default market? A: It should. Eversource has no issue. Haven't spoken to UNITIL. Q: Rep. Marjorie Shepardson - Why include Wheelabrator as renewable? A: Most states consider trash burning as renewable. Q: Rep. Richard Barry - Does total cost $20-25M remain the same? A: Should be the same, no changes. Rep. Vose - Would like to hear from Eversource. Donna Gamache, Eversource - This amendment removes prior concerns. Up to legislature to decide on proper policy. Q: Rep. Backus - Does this amendment affect robustness of default service bidding? A: Not qualified to answer, but have heard no issues. Rep. Herb Richardson - Would like to hear from Wheelabrator on pollution controls. Matt Hughes, Wheelabrator: Describes comprehensive pollution control system used over 30 years. Trash needs to go somewhere if not burned into electrical energy. Q: Rep. Thomas - Can you describe how you meet federal and state emission levels? A: Continuous monitoring every 10 seconds, frequent DES inspections and scrubbers keep us within standards. Joe Fontain, DES: Supports Wheelabrator's emission claims. No issues. Discusses state policies on managing solid waste. Wheelabrator is only waste-to- energy plant in the state. It is higher in hierarchy than land fills to manage solid waste. DES supports Wheelabrator. Marc Brown, NERA - Much better bill, but still costs about $27M, so cannot support it. Suggests opening books and repealing SB 129 (2017). Stephanie Lamb, BIA - Would like opportunity to review amendment before commenting on it. Lori Lerner, NHWW: Has initial thought that we are offering Wheelabrator advantages reserved for renewable RPS programs. Frantz, PUC: Amendment has positive effects on default service. Need time to review it. Q: Rep. Cali Pitts - Why continuous default service? A: It's for those who choose not to go to other energy providers for various reasons. Affects residential customers, 70-80% who stay with default service. Rep. Backus - Why does this have a positive affect? A: ? Doug Patch - Encourages a hearing next week. UNITIL: Neutral, but concerns about Wheelabrator; need more time. David Schwartz - Legal firm for Wheelabrator. Bill does not intrude on FERE jurisdiction. Cites two Us Supreme Court decisions.
Chairman Barry considers extending work session to next Tuesday. Rep. Vose feels he can make a decision today. Rep. Richardson agrees with Rep. Vose. Rep. Shepardson feels more time is needed. Rep. Backus may submit an amendment to eliminate Wheelabrator.
Respectfully submitted,
Rep. Douglas Thomas Subcommittee Clerk
HOUSE COMMITTEE ON SCIENCE, TECHNOLOGY AND ENERGY
FULL COMMITTEE WORK SESSION on SB 365
BILL TITLE: (New Title) relative to the use of renewable generation in default service.
DATE: 1( y/(r
Subcommittee Members: Reps. Barry, Richardson, D. Thomas, Murotake, Vadney, Natter, Aldrich, Vase, Ammon, B. Kuch, G. Smith, Merner, Backus, Cali-Pitts, S. Harvey, Mann, H. Moffett, Shepardson, Oxenham, Somssich and Vincent
Comments and Recommendations:
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MOTIONS: OTP, OTP/A, ITL, Retained (1st Yr), Interim Study (2nd Yr) (Please circle one)
Moved by Rep. Seconded by Rep. AM Vote:
Adoption of Amendment #
Moved by Rep. Seconded by Rep. Vote:
Amendment Adopted Amendment Failed
MOTIONS: OTP, OTP/A, ITL, Retained (1st Yr), Interim Study (2nd Yr) (Please circle one)
Moved by Rep. Seconded by Rep. AM Vote:
Adoption of Amendment #
Moved by Rep. Seconded by Rep. Vote:
Amendment Adopted Amendment Failed
Respectfully submitted,
Rep. Subcommittee Chairman/Clerk k./ j et.1;‘,6R. ( GI bES.
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FULL COMMITTEE WORK SESSION on SB 365
BILL TITLE: (Second New Title) relative to the use of renewable generation to provide fuel diversity.
DATE: April 24, 2018
Subcommittee Members: Reps. Barry, Richardson, D. Thomas, Murotake, Vadney, Notter, Aldrich, Vose, Ammon, B. Kuch, G. Smith, Merner, Backus, Cali-Pitts, S. lIarvey, Mann, Moffett, Shepardson, Oxenham, Somssich and Vincent
Comments and Recommendations: Rep. Vose submits 2018-1710h. Cites four major problems with Senate bill and explains why. Included: violates federal law, lacks transparency, only Eversource customers pay while all of NH benefits and describes how 171.0h would work. Establishes a fund by increasing SBC for all taxpayers. Fund would be used to keep bioplant open. Would take one year to implement; corporations behind bioplants would fund them one more year to keep them open until the plan takes affect. Rep. H. Moffett believe amendment is non-germain and needs to be discussed in next session. Takes issue with all problems stated; points to an amendment he will submit, is less complex. Points to jobs needed all over state, Rep. J. Cali Pitts - why is this bill different from last bill passed on Burgess Bio Plants? A: Does same effect as Senate bill, but different way...a more transparent way that doesn't violate federal law. Rep. R. Backus - We can't be inconsistent and turn down help from them. Shares concerns but too much to deal with this now. Rep. S. Harvey - Concerned about creation of new fund this late in session. Rep. D. Thomas - wouldn't Senate bill delay help since its against federal law? A: Many bills violate federal law and if someone does not bring a law suit, there would be no delay. Rep. John Mann - Believe the proposed fund would be picked at and raided. Rep. Cali Pitts - Why not a public hearing? A: No time. Sen. Bradley - conceptually agrees with amendment, but points to SB 577 just passed. Doesn't see it as a problem. Issue with dates. Takes many months. Not enough time to when some bio plants would close. It's almost certain jobs would be lost before it takes effect. Rep. K. Ammon - If SB 129 had worked would we need this bill? A: No. but feels this will work. Rep. Vose - reason for submittal was to collect comments. Feels he achieved that . Will take amendment to OSI to work the concept. Rep. Richardson discusses his amendment 2018-1701h. Changes original bill from four years to 3 years. This complements Senate amendment 2018-1610s. Page 2, line 31 (f3 sequential vs. 8 sequential.) Closed 4:35 pm.
Respectfully submitted,
(')"? Rep. Douglas Thomas Subcommittee Clerk
HOUSE COMMITTEE ON SCIENCE, TECHNOLOGY AND ENERGY
FULL COMMITTEE WORK SESSION on SB 365
BILL TITLE: (New Title) relative to the use of renewable generation in default service. . 3 - DATE:
Subcommittee Members: Reps. Barry, Richardson, D. Thomas, Mitret-ake, Vadney, Net-te.r, Vose, Ammon, B. Kuch, Merner, Backus, Cali-Pitts, S. Harvey, Mann, H. Moffett, Shepardson, Oxenham, Somssich and Vincent
Comments and Recommendations:
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MOTIONS: OTP, OTP/A, ITL, Retained (1st Yr), Interim Study (2nd Yr) (Please circle one)
Moved by Rep. Seconded by Rep. AM Vote:
Adoption of Amendment #
Moved by Rep. Seconded by Rep. Vote:
Amendment Adopted Amendment Failed
MOTIONS: OTP, OTP/A, ITL, Retained (1st Yr), Interim Study (2nd Yr) (Please circle one)
Moved by Rep. Seconded by Rep. AM Vote:
Adoption of Amendment #
Moved by Rep. Seconded by Rep. Vote:
Amendment Adopted Amendment Failed
Respectfully submitted,
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-7 Hearing inuteL, HOUSE COMMITTEE ON SCIENCE, TECHNOLOGY AND ENERGY
PUBLIC HEARING ON SB 365
BILL TITLE: (Second New Title) relative to the use of renewable generation to provide fuel diversity.
DATE: April 11, 2018
LOB ROOM: 304 Time Public Hearing Called to Order: 10:30 am
Time Adjourned: 2:38 pm
Committee Members: Reps. Barry, Richardson, D. Thomas, Mali-eta-k-e, Vadney, Notter, Vose, A.namen, B. Kuch, Gr74434.i.th, M.e.r-n.et-;-Backus, Cali-Pitts, S. Harvey, Mann, H. Moffett, Shepardson, Oxenham, S.o.m.sgi.eh and Vin.c.e-nt
Bill Sponsors: Sen. Innis Sen. Avard Sen. Bradley Sen. Fuller Clark Sen. Sanborn Sen. Giuda Sen. Ward Sen. Kahn Sen. Feltes Rep. Shepardson Rep. Backus
TESTIMONY
* Use asterisk if written testimony and/or amendments are submitted.
Sen. Jeb Bradley, co-sponsor - Introduced the bill. One of 3 bills that protects NH renewable jobs. If jobs lost, tax revenue lost, impacts unemployment fund. Fuel diversity an issue. Helps energy capacity and helps to better manage fore:.1t. Bill would take indigenous renewable energy and make it default service at 80% of winning bid. There is a cost, about $20-$25 M. Believes it a manageable cost. See pie chart. Can be offset if pull out hydro and solar and takes costs down to about $13M. Biomass plants: $2B subsidy; comes from federal grants and avoided Eversource costs.
Q: Rep. Michael Vose - Cites bureau of labor statistics: average biomass plant employs 15.7 people; add clarity to 1000 jobs involved? A: It's total industry, loggers, chippers, sawmills, etc. Q: Will all lose jobs? A: Maybe not immediately. If there is no market, jobs will go.
Rep. Mike Harrington - Opposes. Refers to $1B payments. That was real money. Projected costs were never met. Plants were born on subsidies. Will still get big subsidies if bill is not passed. Arguments are made about economically inefficient business. About 18% thermal efficient. Disagrees with the impact on capacity market; ISO-NE projects capacity increase. Plants get 45% subsidies; bill won't work. Refers to last part of bill. Will result in higher default service rates.
Q; Rep. Herb Vadney - See any way if one plant closes, others more productive? A: No, also much wood comes from Massachusetts. Q: Rep. Jacqueline Cali Pitts - Is wood industry a dead industry? A: No, always a need fin: wood, but better-waYs to get jobs for money spent.
*Rep. Clyde Carson, Warner - Supports. See written testimony.
Q: Rep Vose - Is Wheelabrator in danger of closing without bill? A: Not at present, but contract with Eversource (ES) expires soon and. it could be at risk.
Tom Frantz, PUC No position. Fiscal impact statement in progress. There's an increase in risk; and a question on legal issue. Bill only affects residential. customers. Tough bill to analyze costs, but cost would increase.
Q: Rep. Doug Thomas - Is there a tipping point when enough ratepayers jump to another energy provider that could effect primary utility? A: Don't think so as residential customers are slower to jump and currently at around 20%. Would be an issue if there was a failed bid.
Marc Brown, NE Ratepayers Association - Opposes. Has disproportionate impact on low income. Takes us away from competitive market. Risks other in- state energy providers which could loose more jobs. At some point, a tipping point will be reached. Wood industry has skills that could be transferred.
*William O'Brien, Mont Vernon, NH - Opposes. Free market brings prosperity. Government involvement hampers and picks winners and losers. None of biomass plants are owned in state. Four are owned by oversees companies. These owners have a lot of money, enough to not charge NH ratepayers more. These plants are not required to show books to prove they need the bill. Provides written testimony.
*Jim Ginnetti, Wheelabrator - Supports. See testimony. Bill affects default service, for ES, will increase about $0.004. Statement on death spiral is unfounded. Residential ratepayers tend to stay with default service.
*Mark Driscoll & Darin Hawkins, Bethlehem, Pinetree Power Plant - Support. See written testimony. Financial positives discussed.
Q: Rep. Herb Richardson - How much chips come from NH? A: Not sure, some come from Vermont.
Q: Rep. Thomas - How will bill effect bottom line? A: Based upon historical data, plants would break even. It would be enough to keep open.
Q: Rep. Herb Vadney - Gross sales? A: Can't say now, under negotiation. It would come out. Current net loss is about $2+M last year.
Q: Rep. Cali Pitts - What if time limit placed on bill? A: Plants too spread out to combine for efficiency.
Maurice Kreis, OCA - Opposes bill reluctantly. Not in position to support policy that raises residential rates. Problem is it applies to only residential customers. Overall impact is $34 per year at 700 kwh/month. Challenges Wheelabrator claim on capacity payments. If SBC is a tax, then this bill is a tax. Very regressive tax for ratepayers.
Q: Rep. Vose - If different method used that helps RECs, could you support bill? A: Would be fairer and would be neutral.
*Michael O'Leary, Bridgewater Power - Supports. See written testimony. Will. close one month in May. Periodic closures possible. Losses of $1M yearly. Distribution utilities well aware of finances.
Q: Rep. Thomas - Thoughts on towns giving property tax breaks? A: different utility property tax methods used and taxes have gone down; not much help.
*Jason Stock, NH Timberland Owners Assoc. & Hunter Carbee, Granite State Society American Foresters - Both support. See written testimony for both. Forest industry is the third largest industry in the state. Many cities have connections with the industry. Wood chips too expensive to truck far. Typically 30- 40 miles to power plant is limit. Wood ash is benefit for farmers. Logging would be greatly downsized. Forest health affected. Diseased trees burned in biomass plants.
Joyce Rose, Chuck Rose, Inc. - Supports. Cuts on many lots over much of state. Discusses where money is spent to run business, employment, use of trucking, fuel, etc. Equipment is expensive inventory, depends on biomass plants About 35% dependent upon biomass plants.
*Karla Garland, Garland Lumber - Supports. See Written testimony. Covers all of NH. Discusses areas and types of trees, not only North Country. NH is 84% forested, second only to Maine.
*Doug Patchy RESA Opposes. See written testimony. Bill could create conflict with Eversource settlement agreement. Violates spirit of agreement. Very bad timing. Disproportionate impact on those needing financial assistance. Refer to SB 129 (2017) if it didn't work, should be repealed. Consider letting ratepayers know what they are paying.. Consider establishing biomass metrics. Unknown effects of bill.
Carlton Simpson, UNITIL - No position. Outline default service process.
Q: Rep. Lee Oxenham - What is risk of time delay? A: Refers to market condition; lag between RFP and award. Huck Montgomery & John Warshaw, Liberty Utilities - Oppose. Believes method is harmful, intent is good. - Residential customer would bear the cost. Default service solicitation process is at risk. Affects the bidding process. Believes many would feel too risky to bid.
Q: Rep. Thomas - Why is that bad? A: Bidder could bid higher to cover uncertainty or back out, so less competition. Would raise rates, outcome uncertain.
Q: Rep. Mann - What is complication? A: Biomass plants are not figured into bids. This bill would now need them to be considered by bidders. Unknown risk.
*Bill Gallagher, Cornish, representing self Supports. See written testimony. concern on having trash incinerator in bill. Suggests deletion of Wheelabrator from bill.
Q: Rep. Oxenham - Experience on environment? A: 30 years experience; trash burning releases several toxins.
*Lisa Linowes, Lyman, representing self - Opposes. Eligible facilities. Not solar that predates 2006. Municipal solid waste is not a class 3. Wheelabrator is not class 3. Creating special class. Is Wheelabrator eligible for subsidies? Not eligible for RPS; in direct conflict with deregulation RPS. We risk gutting Class IV are required to have fish passage to be eligible. This bill doesn't protect in NH; Commerce Claus conflict? Special treatment again. Adjust energy rate 80% standard offer...after you back off separates energy from REC. Backwards lookers in REX department. REC prices upwards $50 range per megawatt. Add to that we're not being told that by proponents of the bill. Who's paying? Ratepayers. Gave scenario of megawatts, capacity pump and other info not being given to us. Stressed again that small class of people suggested having it distributed to all, not just small group. Look to Maine at their biomass plants. World is not going to end if this bill doesn't pass. No one can say all 6 plants will go down; all jobs lost...market will respond.
Q: Rep. Vose - Asked why class 1 & 3 will go into shortage next year. A: We have surplus in all of New England, under mandate, Class 3 RECs will suck up Class 1. When Class 1 in Connecticutt are used up, ours goes there. Ms. Linowes passed out handout.
*Shelagh Connelly, RMI - Supports. See written testimony. Cites IOS-NE report including biomass as part of mix. Should be thought of more as an economic hub instead of just an electrical generator. Need to find a way forward to help industry. Wood ash very beneficial to NH.
John Tuthill of Acworth, NH - Opposes inclusion of solid waste as a renewable.
Donna Gamache, & Rick Labrecque, Eversource - Oppose. Issue with how it will affect default market. Oppose method, not intent. If policy is to help industry, . • • have all ratepayers involved, not just one class; will work to find another way. Previously briefed in Senate as a $30M cost. If bill increases rate by $0.01/kwh, BAE would need additional $1M in sales. Bill benefits 24 projects, about 1M megawatt hour/year. 90% goes to biomass trash. Would increase $6-7/month default cost for residential customers based on $0.011 increase. Gives no criteria to PUC for auctions.
Q: Rep. Suzanne Harvey - Same information given to the Senate? A: Yes. would be passed through residential customers.
Q: Rep. Michael Vose - Certain of the costs described? A: Yes, as stated with market RECrs.
Q: Rep. Jim Webb - How much NH electricity alloted to biomass/hydro? A: About 10%.
Blue Sheet: Pro, 62; Con, 4
Respectfully submitted:
Doug Thomas, Clerk HOUSE COMMITTEE ON SCIENCE, TECHNOLOGY AND ENERGY
PUBLIC HEARING ON SB 365
BILL TITLE: (New Title) relative to the use of renewable generation in default service.
DATE: 4/11 4 7
ROOM: 304 Time Public Hearing Called to Order: /0 230,x
Time Adjourned: .1.
(please circle if present)
Committee Members: Re ardson Aide o Ammon, G. Smith, Merner, Somssich and Vincent Bill Sponsors: Sen. Innis Sen. Avard Sen. Bradley Sen. Fuller Clark Sen. Sanborn Sen. Giuda Sen. Ward Sen. Kahn Sen. Feltes Rep. Shepardson Rep. Backus
TESTIMONY
* Use asterisk if written testimony and/or amendments are submitted.
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Chairman Barry, members of the committee, thank you for this opportunity to appear before you today.
My name is Lisa Linowes. I am a resident of the State of New Hampshire and executive director of the Windaction Group, a national organization that tracks and reports on policies that incent renewable energy development.
I am here today to speak in opposition to SB 365. My comments are brief.
IL PROBLEMS SB 365
There are fundamental flaws with SB 365 which are so basic that I have to ask whether the sponsors understand the impacts of this bill and how, as written, the bill contradicts RSA 374-F (deregulation) and impairs RSA 362-F (RPS). I apologize for being so direct with my sentiment. I hope that when I point out some of the issues, you will see the risks.
Findings Provision
It's not often I am compelled to address the findings of a bill, the wo ing in this case is disturbing.
The findings provision states: "The general court finds that: the continued operation of the state's 6 independent biomass- fired electric generating plants and other indigenous-fueled renewable generating plants, such as small hydroelectric generation, are at-risk due to energy pricing volatility."
I would like to contrast this very specific, myopic statement with the preface from RSA 374-F:1 which states "The most compelling reason to restructure the New Hampshire electric utility industry is to reduce costs for all consumers of electricity by harnessing the power of competitive markets." .. It goes on to say "Competitive markets should provide electricity suppliers with incentives to operate efficiently and cleanly, open markets for new and improved technologies, provide electricity buyers and sellers with appropriate price signals, and improve public confidence in the electric utility industry." SB 365 is the antithesis of our unregulated market.
The market at the moment is sending a price signal that we have plenty of capacity in the region and we have a highly efficient power market. It is telling us that for the moment, we have a significant surplus of renewable energy relative to the mandates, our markets are working, and that means prices are low. To jump in again with highly reactive legislation, without appreciating what the market is doing, as was the case with SB 129, is exactly the wrong thing to do.
Let's get specific.
Eligible Facilities
The sole purpose of this bill is to protect our older Class III biomass plants located in the state. There is no justification to add the other fuel types to this bill. For example:
Solar: Solar is mentioned but there is no solar in the state, to my knowledge, that predates 2006. Solar is already the beneficiary of net-metering and Class II subsidies.
Municipal solid waste: The only plant in the state that meets the definition of "Municipal solid waste" is the 14 MW Wheelabrator Concord plant. For the record, Municipal solid waste is not a supported renewable under the NH RPS. How does this resource satisfy the Findings provision? Is it an "indigenous-fueled renewable generating plant?" Is it at risk due to low energy prices? Do we know how many jobs might be lost if the plant closes? For that matter, since this plant is not receiving any subsidies under the RPS, why would we now make the Wheelabrator Concord plant a protected resource? Small Hydro: The RPS requires that hydro plants that are between 1 MW and 5 MW in size have fish passage before they are eligible for Class IV treatment. This bill gives these hydro plants special treatment without mandating any environmental improvements. As with Wheelbrator, we are offering a subsidy where none exists today? Why? Further, if this bill offers a better price for the energy than Class 4 RECs and net metering, we may find our small hydro plants that are RPS eligible moving over to SB 365. This would gut our Class IV and raise prices with no apparent justification. A pure handout.
In general, the interaction between the RPS policy and SB 365 has been ignored in this bill. That alone shows how poorly crafted SB 365 is.
Interconnected with an electric distribution or transmission system located in New Hampshire: I don't know whether this might trigger a commerce clause action, but I want to be sure to put that concern on the table. There are at least two biomass plants, one in Vermont and one in Massachusetts that might find in-state favoritism a problem.
Adjusted energy rate
The adjusted energy rate represents 80% of standard offer less RPS costs. That means biomass plants still receive REC prices. When REC prices go back to $55, which is likely to happen sometime in 2019, biomass generators will earn the 80% standard offer price AND REC revenues approaching over $40 million. The largess will be staggering.
Next year, when Class I goes short, it will force a shortage of NH Class III and NH Class III RECs will jump to $55. At that point, the biomass generators would earn BOTH the 80% standard offer under SB 365 and $55 in REC pricing bringing the grand total (using current PSNH numbers of $79/mwh and $8.40/mwh RPS) to $111 per MWh. This is not an extreme instance. This is the reality we are looking at in 2019 and later.
Further, the bill is silent on whether capacity payments are included in the standard offer. Capacity payments right now are $7.01 per KW month and jumping to $9.55 per KW month in June. At $9.55, in-state biomass plant will earn roughly $18 per mwh on top of energy and REC revenues. How are capacity payments being treated within the bill? That is an important question that needs to be answered.
Who Pays
One of the most unfair elements of the bill is that the authors hang this albatross on the necks of the standard offer customers. This who have not, or cannot move off standard offer pay the highest bills. And based on the location of the plants, it appears ert. cost will fall primarily to PSNH ratepayers. PSNH or any distribution company will be forced to purchase the energy at ,p ig above market rates. If the energy is not needed, they will sell the energy at a loss and standard offer customers will pay the price.
If the sponsors of this bill really believe there is benefit in paying millions more in above market prices to enshrine these 6 biomass plants, than the cost should be socialized to all ratepayers in the state and allocated to the T&D side of the electricity bill. To be clear, I think it is a horrible idea to impose yet another cost on ratepayers in this state, especially in this case where the bill is so contrary to our other existing policies, but to lay the bill at the feet at one class of buyers, is flatly wrong.
Fears Overblown
Finally, I have testified before that the RPS market is a binary market. When we have a shortage in ally class, REC prices drop. As demand goes up, so do prices. If a few of the Biomass plants were to shut down due to low energy prices and REC prices, this would create a shortage of NH Class III and REC prices would go up.
The idea that all of the plants would close is hyperbole of the worst kind as it is intended to scare, not inform. The REC surplus and low prices was predicted several years ago. I've testified about to you and I informed Senator Bradley. No one should be surprised. I can also tell you that as of today, it appears we will experience a Class I shortage next year which will impact Class III. This will be due to actions by the state of MA.
Do not pass SB365. Do not disrupt the standard offer market and raise costs on the basis of fear and ignorance. Wait for the market to recover. It's possible there may be a short-term closure of one or a few more biomass plants. Prices will go up and the problem will be resolved. If that situation is unbearable, than let's have a serious discussion that targets protections for the biomass plants and whether the RPS is the right policy. SB 365 is exactly the wrong thing to do. LUMBER
Logging Land Clearing Chipping Complete Excavation & Sitework Master Logger Certification # 23-02-01-0168
April 11, 2018
Representative Richard Barry, Chairman NH House of Representatives Science, Technology and Energy Committee New Hampshire Legislative Office Building, Room 204 Concord, NH 03301
RE: SB 365
Dear: Chairman Richard Barry,
My name is Karla Allen-Garland and I am a NH Licensed Forester with Garland Lumber Co.; Inc. I have been working in the industry for 22 years. The first 12 years of my career I worked in the southern part of the state for a sawmill. At that time, I only partially understood the importance of low grade markets in the state. I saw the forest health aspect. Chipping was a tool for me to manage forest for health. Most commonly I use chipping operations on stands with dense tree suppression, insect and disease infestations which allow the removal of the dead and dying timber to prevent the spread of the infestation and decrease the potential of forest fire. It is also used to maintain or create early successional habitat for wildlife. Biomass permits me to do what is right environmentally while generating revenue for landowner's and town's. This tool for management would most likely not exist or be unaffordable to most landowners without this market.
Ten years ago, I moved to North Conway, NH and began working as the forester for Garland Lumber a logging company owned by my husband and father-in-law. I now operate throughout the entire state of NH and see the full extent of the importance of biomass. When I began Garland's, payroll was $2 million dollars and currently is $700,000 dollars. A calculated downsizing as we have faced lower prices and volume constraints. Approximately, 70% of our production is low grade wood. What incentive is there to invest into new equipment? Besides the numerous effects to loggers, sawmills, foresters, landowners', towns and so forth. What will the forest we all enjoy today look like? If you choose to end this program, be ready for what you get.
Sincerely, •ee‘ wziLf Karla Allen-Garland NH LPF#367
636 East Conway Road, PO Box 3184, North Conway, NH 03860 Tel. (603)356-5636, Fax (603)356-5663 Karlaagarlandlumber.net GarlandLumber.net New Hampshire House Science, Technology and Energy Committee SB 365 relative to the use of renewable generation in default service.
Testimony on behalf of Retail Energy Supply Association My name is Doug Patch. I am an attorney with the law firm of Orr & Reno here in Concord. I am here today on behalf of the Retail Energy Supply Association ("RESA")' to speak in opposition to SB 365, An Act relative to the use of renewable generation in default service. RESA members, as retail energy suppliers, are active participants in the retail competitive markets for electricity, including the New Hampshire retail electric market, and many of them are potential providers of electricity in response to RFPS issued by electric distribution companies for default service. RESA appreciates the opportunity to provide comments regarding this bill. As you recall there was a Settlement Agreement that was signed in 2015, the purpose of which was to complete the divestiture of the Eversource/PSNH generating facilities. The Legislature put its blessing on this Agreement when it passed SB 221 in 2015, permitting the PUC to issue finance orders authorizing the issuance of rate reduction bonds to implement the Settlement Agreement. The idea was to move past the utility ownership of generation in part to lower the rates available to default service customers. That Settlement Agreement contained provisions which required that Eversource/PSNH complete the transition to a competitive procurement process for default service. This bill clearly violates the spirit of that agreement in that it takes a large chunk of what would be obtained through an RFP process and gives it to the biomass power plants and others at a higher than market rate. Moreover, this legislation will result in higher costs to default service customers at a time when those rates have just come down. It comes on the heels of the first successful solicitation by PSNH following divestiture, a solicitation that was approved by the PUC in docket DE 18-002 within the last two months. The timing of this legislation could not be worse from this perspective. One important point is that the higher rates which result from this bill will only impact default service customers, and in doing so it will disproportionately impact income eligible customers who receive financial assistance to pay their electric bills from the EAP, the state electric assistance program. Those customers cannot obtain assistance from the EAP program unless they are default service customers, in other words they cannot go to the market to get a lower rate. So this bill will take money out of the pockets of those EAP customers.
'The comments expressed in this filing represent the position of the Retail Energy Supply Association (RESA) as an organization but may not represent the views of any particular member of the Association. Founded in 1990, RESA is a broad and diverse group of more than twenty (20) retail energy suppliers dedicated to promoting efficient, sustainable and customer-oriented competitive retail energy markets. RESA members operate throughout the United States delivering value-added electricity and natural gas service at retail to residential, commercial and industrial energy customers. More information on RESA can be found at www.resausa.org.
1 This legislation comes less than a year after the Legislature passed SB 129, which was designed to prevent the biomass power plants from failing. It is my understanding that the stakeholders who support this legislation started meeting last summer, when the ink wasn't even dry on that legislation. If in fact SB 129 did not accomplish what it was supposed to, and they apparently knew this within a month of it taking effect, then wouldn't it make sense to repeal that legislation if you are going to pass this bill? How many laws do you want on the books that provide them a subsidy to continue operating? My next point is what I would call truth in advertising. I know you have debated this session, and in many prior sessions, putting disclosures on customer bills about various programs that increase their rates. If in fact you are going to pass this legislation, shouldn't electric customers have the benefit of knowing that they are paying to subsidize this industry and if so how much it is costing them to do so? There is a fundamental point associated with this legislation that has been raised every time it comes up. That is, if you are going to subsidize this industry don't you as legislators, and don't ratepayers, have a right to know whether through that subsidy you are providing them sufficient funds to make them financially viable, or whether you are giving them too much or too little, to do so? Shouldn't they have to open their books and show what their financial status is to justify this request? Under typical utility regulation along with the benefit of being entitled to collect fixed rates comes the responsibility of opening your books to review by the regulator. It is my understanding that in Maine, instead of hiding subsidies in rates they appropriated money from the general fund for this purpose, but they also required that biomass power plants that wanted the benefit of these subsidies had to meet certain performance metrics before they could obtain them. A recent ruling by the Maine PUC determined that at least one of them was not entitled to as much of the subsidy as requested. If you are going to do this shouldn't you follow the lead of what was done in Maine and establish some performance metrics or other standards that they would have to meet to justify the subsidy? I have attached to my testimony a copy of an article about a recent PUC ruling on this issue that provides more background on this. During the debate in the Senate I heard an argument in support of the bill to the effect that passing this legislation will keep the money in New Hampshire as opposed to it going to out of state interests. How do you know that? Do you know who owns these facilities and where the profits go? For the aforementioned reasons, RESA strongly opposes SB 365 and encourages the Committee to find it inexpedient to legislate. Thank you. Douglas L. Patch Orr & Reno, P.A. 45 South Main Street, P.O. Box 3550 Concord, NH 03302-3550 Phone: 603-223-9161 [email protected] April 11, 2018 2076792_1
2 Maine regulators approve partial subsidy to keep biomass power plants alive
t prosheraid.com/201B/04/04/pc-votes•to•approve-tiomas,Abrady/ By Tux Tu.-140 April 4, 2018
Maine's struggling forest and wood-energy industries received a boost Wednesday when the Public Utilities Commission voted to approve a portion of a subsidy meant to keep two stand-alone biomass power plants alive, as well as the jobs linked to them.
In making the determination, the three commissioners agreed with staff findings that Stored Solar LLC failed to meet all the performance metrics required to get the full subsidy, but had provided enough benefits to get 25 percent of what was possible, or roughly $1.2 million.
WEST ENFIELD, ME - AUGUST 29: The Stored Solar plant that operates biomass generators. (Staff photo by Brianna Soukup/Staff Photographer) Controversy had been growing for weeks over whether Stored Solar has adequately met the terms of a 2016 contract, part of a $13.4 million taxpayer-funded bailout approved by the Legislature.
The PUC staff has spent months trying to determine whether Stored Solar has created an agreed-upon number of jobs, purchased enough wood fuel and made sufficient capital improvements at its plants in West Enfield and Jonesboro to earn its share of the money.
But Stored Solar fell far short of what it could have received.
Stored Solar was supposed to buy 500,000 tons of low-grade wood from logging contractors, maintain more than 40 jobs and invest $2.5 million in the plants, The PUC staff found the company largely met the jobs goal, but bought only 40 percent of the wood and invested only 60 percent of the required money.
Based on that, the staff recommended trimming the subsidy, resulting in a payment of roughly $1.2 million.
DETAILED REVIEW OF DATA
During deliberations, PUC Chairman Mark Vannoy pointed out that if the company had reached 100 percent of those targets last year, it would have been eligible for $4.6 million. To get to the $1.2 million payout, Vannoy chronicled the scrutiny undertaken by the PUC staff. That included reviewing scale reports and check stubs for wood delivery, asking for sworn statements from suppliers, and confirming planned and forced generation outages with ISO-New England, the region's grid operator.
The PUC also disallowed credit for wood delivery that it determined didn't meet the standards of the contract, as well as more than $900,000 that Stored Solar had spent on logging equipment that it wanted to book as capital improvements.
Despite these disallowances, one of the principles in the company, Fahim Samaha, said he appreciated the PUC's decision and was grateful to the company's employees and suppliers. He pledged to make the plants self-sufficient contributors to Maine's emerging bioeconomy.
"Stored Solar reopened two shuttered biomass-fired generating facilities and brought back good-paying jobs to economically challenged areas in Penobscot and Washington counties," Samaha said.
But the PUC's decision was not embraced by some logging contractors and allied lawmakers, both Democrats and Republicans. They say the company failed to maintain the number of logging and trucking jobs that were the prime intent of the taxpayer subsidy. They have readied a bill, L.D. 1745, aimed at preventing the PUC from giving Stored Solar its subsidy. The bill also seeks to have the Attorney General's Office investigate the company.
NEXT LEGISLATIVE STEP UNCERTAIN
The next step for that legislation wasn't clear Wednesday. But one of Stored Solar's chief detractors, Rep. Seth Berry, D-Bowdoinham, expressed disappointment that the company received any money. He said it's counter to the accountability benchmarks sought by the Legislature.
"We now have clear, undisputed evidence that Stored Solar didn't make good on its commitments," Berry said "So why would we not withhold these funds? Taxpayers rightly expected Stored Solar to pay its bills, to purchase the true amount of fuel required by their contract, and to be a good corporate neighbor and support rural Maine."
Wednesday's action had attracted sharper scrutiny after Fahim Samaha and his wife and partner, Kimberly Samaha, charged a day earlier in the Press Herald that their . - . - I. - . by unsubstantiated charges made by the head of Maine's logging trade group. They claimed that Dana Doran, executive director of the Professional Logging Contractors of Maine, had been spreading false rumors that the Stored Solar's biomass plants are in financial trouble and have laid off most of their workforce.
A PLANNED SHUTDOWN
The Samahas told the newspaper that the plants are currently in a planned shutdown because an early mud season has made timber harvesting difficult, and because demand for electricity has tapered off with mild weather. The plants will ramp up again in a couple of months, they said, along with timber harvesting activity, to deliver fuel for high summer power demand in New England.
Doran declined to comment Tuesday on the allegations, and said he hadn't received a Jan. 25 letter from Stored Solar in which it accused him of making false public statements that the company owes loggers and suppliers money.
He also declined Wednesday to comment on the PUC's decision.
The Samahas acknowledge problems making payments to suppliers as well as past-due property taxes early in 2017. Those cases have been well-documented in the media. But they say accounts now are current, and Doran's persistent comments appear to be part of an orchestrated campaign to harm Stored Solar.
Maine's biomass power plants use leftover wood from forestry operations and sawdust from lumber mills to make electricity. They're a crucial outlet for low- grade fiber and a source of employment for hundreds of logging contractors and truckers in rural areas where paper mills have closed.
But outdated technology means the plants can't compete with wholesale electric prices in New England without subsidies. The two-year bailout was intended to be a temporary bridge, to give plant owners time to diversify.
Stored Solar says it's transforming West Enfield and Jonesboro into combined heat and power facilities that won't need government support. It said it will break ground this spring on a shrimp farm that will use excess heat and power from the West Enfield plant,
Making the plants profitable will take a combination of hard work and luck, said Eric Kingsley, vice president of Innovative Natural Resource Solutions, a forestry consulting firm in Portland.
"They need to find enough co-location partners to make one or two of those facilities viable in the long term," he said.
Kingsley also said that while the company only harvested 199,000 tons of biomass last year, rather than the 500,000 ton target, every ton of wood kept some loggers working. Looking to 2018, Kingsley said low wholesale power prices and a warm winter following the January cold snap poses an ongoing challenge.
"Whether they can they fulfill their obligations this year depends on what happens in the broader wholesale electricity market," he said.
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< Previous Testimony of William L. O'Brien, Mont Vernon on SB365
Mr. Chairman and Members of the Committee,
Free markets, driven forward by open competition and unconstrained by burdensome regulations, have been the surest route to prosperity.
Dedication to this principle distinguished New Hampshire from its neighbors and led to the most vibrant state economy in the Northeast.
We allowed companies to succeed or fail without government support and that brought decades of low unemployment, strong and thriving communities, and a shared belief that this state was an ideal home.
We were the envy of the Northeast and an example to the nation of how small, limited, and non-intrusive governments freeing markets for competition is the genius of the American experience.
Unfortunately, over the years, we too often have lost this focus. Yet, I am sure, we continue to understand the superiority of free markets unfettered by unnecessary government involvement.
And I am also sure we have not forgotten that government efforts to choose market winners and losers end up being not just harmful to the disfavored — the losers — but also self-defeating for the winners - winners like the biomass industry, who know 0 can exist only on government subsidies.
But if it were only small, mom and pop operators who were being propped up, then we might say, "OK, it's not really that good, but it is limited and local and not so bad."
But that is not the case for the 6 biomass generators favored by government-mandated inflated payments under SB365. Just look who they are:
None of them is locally owned. None are mom and pop operations.
One Bridgewater — is a wholly owned subsidiary of a Newark NJ based holding company
A second — Alexandria — is owned by another out of state company — Illinois-based Indeck Energy
But at least for those two, you might say, the inflated rates paid by default electrical service customers will stay in the country. The other four generators however are foreign owned.
Tamworth and Bethlehem are each owned by GDF Suez, a French company that has 162 billion euros in assets. That's over $200 Billion Dollars. They don't need to pick the pockets of NH ratepayers to provide green energy. Testimony of William L. O'Brien, Mont Vernon on SB365
- The last two —Whitefield and Springfield — are owned by the largest electrical utility in Korea, East-West Power. Now, East West Power is majority-owned by the South Korean government and has $162 billion in assets.
$200 Billion and 160 Billion in assets. It sounds like the Korean taxpayers just like French stockholders — are being well taken care of without having to wring more money out of some of the highest burdened electrical rate payers in the United States -the NH electrical power consumers.
And what is the financial argument for these foreign corporations getting more money? Why do they need it?
We don't know, and they won't tell us. Even though many of these plants having already received $2 billion in subsidies from your constituents since the 1980's, they have never shown you or us their financials.
Understand what this means. If you or your neighbors hit on hard times and must apply for welfare, you will be scrutinized to ensure it is needed.
But it you are a French or Korean utility company and you want billions in corporate welfare, all you need do is say the phrase "Green Energy" and corporate welfare paid by ratepayers is paid without any showing of need or purpose other than greed.
This must end, and you can end it.
We must return to the free markets that will allow the true mom and pops in their small businesses and in their homes to prosper, freed from the burden of yet more corporate welfare driving up their electric rates.
It does not benefit us at all to send yet more money to electric utility investors and government owners in Paris and Seoul, while NH businesses and consumers suffer under job-destroying electric rates. Now is the time to stop that and an ITL on SB 365 is where to begin.
Thank you.
April 11, 2018 BEFORE THE NEW HAMPSHIRE GENERAL COURT
SCIENCE, TECHNOLOGY AND ENERGY COMMITTEE
APRIL 11,2018
TESTIMONY OF DANIEL ALLEGRETTI
ON BEHALF OF
CONSTELLATION NEWENERGY, INC.
SENATE BILL 365
Chairman Barry, members of the Committee, my name is Daniel Allegretti. I am a Vice President for State Government Affairs —East with Exelon Corp., a Fortune 100 energy company and parent of Constellation NewEnergy Inc., a leading competitive retail electric supplier currently licensed and doing business in New Hampshire. Constellation opposes SB 365 as amended in the Senate..
Constellation is a leading competitive electric supplier to businesses across New Hampshire. In addition we are a frequent respondent to solicitations conducted by PSNH, Unitil and Liberty for default service supply.
SB 365 would allow certain biomass producers to sell electricity to New Hampshire electric utilities for incorporation into their default service supply based on a fixed price discount off of the default service rate. At first look this would appear to be a good deal for consumers. What is not as obvious, however, is the potential for this bill to create distortions in default service rates, to increase costs for consumers and to alter the current role of utilities in the provision of default electric service. These consequences flow from the fundamental difference between the supply of wholesale electric power and the provision of retail electric service.
In New England there is a ready wholesale spot market for energy and capacity. Wholesale energy and capacity can also be bought and sold on a longer term basis through an over the counter wholesale trading market. Constellation participates in these wholesale markets every day as both a buyer and a seller. The prices in these
1 Testimony of Daniel Allegretti on behalf of Constellation NewEnergy, Inc. House Science, technology and Energy Committee April 11, 2018 markets change from day to day and even hour to hour reflecting changes in supply and demand. In this respect, these markets function much like other commodity markets.
Retail electricity, however, can be thought of as less like a commodity and more like a service. This is because retail customers do not schedule deliveries of electricity in advance but instead look to their supplier to produce electricity upon demand without notice. When Constellation provides retail electric service to its customers or when it provides default service to one of the State's utilities it is providing the on-demand "service." To do this Constellation must manage a portfolio of energy purchases with varying terms and quantities and must constantly adjust its portfolio to match customer demand relying on wholesale purchases and sales in both forward and spot markets. To do this we rely on models, weather forecasts market forecasts, analyses and a 24- hour trading desk to constantly make these adjustments. Managing all of this uncertainty comes at a cost which accounts for much of the difference in price between wholesale electricity prices and retail electricity rates. Today, New Hampshire's utilities have largely left the energy supply business and are in effect outsourcing the provision of default service through solicitations for this service. These outsourcing contracts insulate consumers from the risk of sudden price spikes in the spot price for energy which can occur in the wholesale market by transferring that risk to a supplier.
SB 365 provides for payments to biomass producers for electricity that is not provided "on demand" but instead on an as available or a fixed schedule basis. The product they are supplying is a wholesale commodity, not a retail "on-demand" type service. For this reason it is inappropriate to base payments for it on default service rates. The appropriate way to value the output from these biomass plants is through the wholesale markets. If the revenues that are available in these markets are inadequate to support continued operation of these plants then the committee can choose to provide additional support through a charge on electric bills. The committee should not, however, assume that the bill as drafted will produce lower default service costs for consumers. Nor should the committee interfere with the procurement of default service at the lowest cost to consumers by requiring utilities to incorporate deliveries of wholesale power from biomass plants into a retail supply portfolio which they no longer manage but instead outsource. For these reasons Constellation urges the committee to vote no on SB365. April 6, 2018
To: Members of the House Science, Technology & Energy Committee
RE: Senate Bill 365
Dear Committee Member:
Senate Bill (SB) 365 concerns the use of renewable energy generation in default services. The proposed legislation includes any facility which uses municipal solid waste as a "primary energy source."
I submit these comments to oppose inclusion of the Wheelabrator waste incinerator in Concord as an eligible facility that would benefit from this proposed legislation. To include Wheelabrator sends a message to the public that burning trash is good for the environment. The opposite is true.
The enclosed statement details pollution from the Concord incinerator and raises again the risk associated with Wheelabrator's use of construction and demolition wood as an alternative fuel.
The Wheelabrator incinerator in Concord is not environmentally friendly, and the energy it generates is not green. The Department of Environmental Services' decision to renew Wheelabrator's operating permit is presently under appeal.
Legislators must not misrepresent incineration as an acceptable source of electric energy. Please vote NO on SB 365.
Sincerely,
Katie Lajoie, RN 429 Wheeler Rand Road Charlestown, NH 03603 603-826-4803 ilje23 ghotmail .com
Enclosure Copy: Rep. Thomas Laware, Rep. Steven Smith, Sen. Martha. Hennessey, and committee secretary Carol Stapler for submittal of these comments to the SB 365 public record
Page 1 I. Waste incineration is a threat to public health and the environment.
II. Part VII of SS 365 indicates Wheelabrator's use of construction and demolition wood as an alternative fuel could only occur during "start-up, maintenance, or other required internal needs of the facility." Start-up is a time when excess emissions may occur and when emission standards do not apply.
III. Recycling consumes less energy and imposes lower environmental burdens than sending recyclable materials to a landfill or incinerator, even after accounting for energy that may be recovered from these materials at either type of facility.
DISCUSSION
I. Waste incineration is a threat to public health and the environment.
On January 2, 2018, the New Hampshire Department of Environmental Services (DES) released
Findings of Fact and Director's Decision (Findings and Decision) and issued another operating permit
for the Wheelabrator incinerator in Concord.' The permit is presently under appeal.'
The Findings and Decision state the following:
• Page 2: Wheelabrator is subject to the Title V Operating Permit Program because it is a
major source of air emissions.
• Page 7: Cumulative toxic effects from incinerator emissions are "essentially impossible
to evaluate given the limits of today's science."
• Page 8: Wheelabrator is categorized as a major source of greenhouse gas emissions under
Title V.
The incinerator smokestack continuously emits dioxin, lead, mercury, cadmium and other toxic chemicals in a form that can be easily inhaled and ingested, thereby increasing exposure risks. It is important to note that incineration creates dioxin and that toxic elements such as cadmium, lead, and
'State of New Hampshire, Department of Environmental Services, Air Resources Division. "Findings of Fact and Director's Decision In the Matter of the Issuance of a Title V Operating Permit to Wheelabrator Concord Company, L.P." January 2, 2018. https://www4.des.state.nh.usiOneStopPubfAir/330130010214-0175Tv-peFindingsOfFact.pdf 2 Docket No. 18-02 ARC- "Anthony Caplan, et al. Appeal." https://www4.des.state.nkus/Legal/Documents/Appeals/Air%2OResources%20CouncilfDocket%.20No.%2018- 02%2OARC°./020-%20Anthonv%20Capian,%20e/020a1.%20Appeal/02-01-18%20- °/020Notice/02003/020Appeal.pdf Page 2 mercury remain in the environment once dispersed via an incinerator smokestack. They do not
biodegrade but remain toxic forever. The cadmium, lead, and mercury that the incinerator has emitted for
the past 29 years continue to accumulate in our environment (toxic loading) and in our bodies (body
burden).
Dioxin, lead, mercury, cadmium and other persistent toxic substances present an ongoing and
cumulative threat to people and the environment.
Compliance with regulatory standards does not ensure public safety. For example, the Centers
for Disease Control and Prevention have stated "no safe blood lead level in children has been identified."3
The New Hampshire Department of Health and Human Services states a municipal incinerator (such as
Wheelabrator's in Concord) "may increase the likelihood of [lead] exposure for children in the
surrounding community."'
II. Part VII of SB 365 indicates Wheelabrator's use of construction and demolition wood as an alternative fuel could only occur during "start-up, maintenance, or other required internal needs of the facility." Start-up is a time when excess emissions may occur and when emission standards do not apply.
The legislature granted Wheelabrator's request to use construction and demolition (C&D) wood
as an alternate fuel. Part VII of SB 365 indicates the C&D wood "may be used only for start-up, maintenance, or other required internal needs of the facility."
Excess emissions can occur during start-up and "can make serious contributions to overall air pollution." 5 The Environmental Protection Agency defines an excess emission as "an air emission rate which exceeds any applicable emission limitation."6
3 Centers for Disease Control and Prevention. "Lead." 2017. https://www.cdc,govinceh/lead/ 4 New Hampshire Department of Health and Human Services, Healthy Homes and Lead Poisoning Prevention Program. "New Hampshire Childhood Lead Poisoning Screening and Management Guidelines." 2015, p.14. https://www.dhhs.nh.gov/dphs/bells/cIppidocumentsiscreenixig.pdf 5 Indiana University. "Excess Emissions Make Significant Contribution to Air Pollution." ScienceDaily, February 14, 2018. www.scieneedaily.com/releases/2018/02/180214093833.htm 6 Environmental Protection Agency. "Policy on Excess Emissions During Start-Up, Shutdown, Maintenance, and Malfunctions." Memorandum from Kathleen M. Bennett, Assistant Administrator for Air, Noise and Radiation. February 15, 1983. httus://wmv.eua.govisites/production/files/2015-08/documents/19830215.pdf Page 3 According to Table 5, Item 4(a) of Wheelabrator's proposed Title V permit (page 8), "emission
standards apply at all times except during periods of startup, shutdown and malfunction."' DES'
Findings and Decision concerning this permit are presently under appeal.
III. Recycling consumes less energy and imposes lower environmental burdens than sending recyclable materials to a landfill or incinerator, even after accounting for energy that may be recovered from these materials at either type of facility.
Given what we know about incinerator pollution, and given the availability of safe alternatives to incineration, it is apparent the Wheelabrator incinerator in Concord presents an unacceptable and unnecessary risk. It is prudent to chart a new course. A commitment to close the incinerator and replace it with a recycling-based system would show bold leadership on DES' part and would be a welcome change for New Hampshire residents. The transition could occur within a two-year period with input and direction from all interested parties, including Wheelabrator, DES, public health advocates, and recyclers.
A professional facilitator could assist with the process.
A transition plan that closes the Wheelabrator incinerator by 2019 would help DES get on track with the state's solid waste hierarchy. Conservation, reuse, recycling, and composting would be the priorities instead of allowing Wheelabrator to turn valuable resources into toxic air emissions and ash.
Recycling "consumes less energy and imposes lower environmental burdens" than sending recyclable materials to a landfill or incinerator, even after accounting for energy that may be recovered from these materials at either type of facility.'
Incineration is not green energy and does not belong in SB 365. ' el CA Katie Lajoie, RN April 6, 2018
7 Department of Environmental Services, Air Resources Division. "Proposed Title V Operating Permit No: TV-0032 for Wheelabrator Concord Company, L.P. 11 Whitney Road Penacook, NH 03303." January 2, 2018. 8 Morris, Jeffrey. "Comparative LCAs for Curbside Recycling Versus Either Lang:Ming or Incineration with Energy Recovery." The International Journal of Life Cycle Assessment. 10.4 (2005):273-284. Web. September 3, 2011. http://www.springerlink.com/content/m423181w2hh036n4/. Cited in Working on Waste. "The Wheelabrator Incinerator in Claremont, NH: A Working on Waste Report." 2011, Addendum 2015, p. 11. www.americanhealthstudies.orp,/wheelabrator-claremontpdf
Page 4
Granite State Division SOCIETY OF AMERICAN FORESTERS
Representing the forestry profession in New Hampshire
54 Portsmouth Street, Concord, NH 03301
April 11, 2018 Hunter Carbee Policy Director, Granite State Division Society of American Foresters
The Granite State Division of the Society of American Foresters (GSD-SAF) is comprised of over 195 practicing professional foresters in the state of New Hampshire. We are part of a national scientific and educational association representing the forestry profession in the State of New Hampshire.
Biomass plants have been operating in New Hampshire now for thirty years. During this period, great transformation developed within the forest industry. Foremost, it gave foresters a great tool to be able to better manage our forests, which in turn greatly increased the value and productivity of our woodlands. To this day other areas of the country look at the northeast and New Hampshire with envy as for years we have enjoyed diversified markets for our timber products. But now that is all at great risk.
The biomass plants form the foundation of New Hampshire's $1.4 billion dollar forest industry. Although the remaining paper markets are recovering, they are too far away. The Groveton and Berlin paper mills have been closed for years now. If this bill does not pass, the biomass plants will close and our fourth largest industry in the state will face near total collapse. Landowners will lose the ability to properly manage their lands. Property values will drop and like our struggling farms of the past three decades, todays' prime forestlands land will be sold off to development.
An entire host of externalities has developed over the past thirty years due to the economic advances of biomass generation. First, let's define what externalities are: a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved.
Future Land Development
How will industriallcommercial lands get cleared for future development? These properties, such as future industrial parks, shopping malls, retirement housing, etc. are usually cleared of all trees. Today, depending on the size of the development, biomass actually has some value. Land developers enjoy a system of fast, low-cost land clearing to facilitate construction processes. That will end.
You will not be able to pile all the brush and burn the wood waste. These would be massive piles that would present public safety hazards and risks with smoke and containment. Moreover, federal law restricts the burning of any wood over 5 inches in diameter. Biomass cannot be buried as that would be a hazard to groundwater and would undertake an area as large, or more as the one being developed. Thus ...... ......
wood will have to be hauled away at high cost. There are thousands of acres cleared every year to development which translates into hundreds of thousands of tons to be handled.. This burden translates into millions of dollars extra cost burden for future projects, all the way from industrial parks to the single home owner.
Forest Fires
Forest fires will increase. Not all loggers will go out of business if the biomass plants close. Instead, tops of the trees will be cut off and left to rot in the woods. With drought conditions that seem to be occurring more often, all this slash will bring the potential for increased forest fire risk to occur at great cost and loss to local communities. Moreover, the loss of the ability for professional foresters to thin our middle- aged, maturing forests will cause forest stands to grow thick and stagnate; providing extra fuel for forest fires. We will enter a realm albeit smaller, but similar to what our western states are currently experiencing.
Insects and disease.
Due to a global economy, our forests are under constant threats from outside pests and disease. As the second-most forested state in the country, the potential for massive economic loss in our forests as compared to our neighbors is further compounded. Our biomass plants have proven time and time again that we are a great solution to infestations and disasters. Ten years ago, an infestation of Asian long horned beetle (ALB) was discovered in Worcester MA. This was of major concern to all three northern New England states as well as Canada. Asian long horned beetles kill sugar maple trees. Sugar maple is highly prized for both lumber and syrup to our economy and comprises the largest forest-type in acreage in our state. A massive ALB eradication effort has been underway for the last ten years. The success is attributed by incineration in biomass plants. Although ALB is in control to date, it has not yet been totally eradicated.
There are many more insects and diseases pressuring our northeastern forests. Emerald ash borer, Hemlock woolly adelgid, red pine scale, bark beetles and just recently, oak wilt disease was detected in eastern New York State. Red oak wilt is a fungus that can kill a red oak tree in just six weeks. This will be devastating if it reaches New Hampshire. Science has proven that the healthiest forests are managed forests. Taking away the tools to be able to properly thin our forests will have devastating economic impacts in the future.
Natural Disasters
In July 2008, a massive tornado struck New Hampshire, passing through five counties before it petered out in Maine. Total forest destruction occurred in its' wake. Most of the wind-torn wood was chipped and consumed by the biomass plants. The biomass plants proved an integral force for salvaging of timber from an ice storm in the Monadnock Region in 2008 and foremost, in 1998 when a massive ice storm wreaked havoc on thousands of acres of forestland in New Hampshire. An estimated 800,000 acres of forestland were damaged from this event; 14 percent of our total forestland. Landowners actually got paid for this waste wood. Without the biomass plants, landowners would have endured great loss and the threat of forest fires and increased insects and disease would have been greatly enhanced. Again, we are talking tens of millions of dollars to the benefit of New Hampshire citizens due to the location and ability of these plants to maintain operations. Social Costs
When these independent biomass plants close, hundreds of jobs will be lost throughout the forest products sector, in our state. This will entail a considerable increase in unemployment and welfare benefits as well as further social cost to our society. Loss of jobs brings high stress to families. Divorce. Alcohol and drug abuse. Domestic violence. This will come at great cost to our New Hampshire citizens.
Wood Ash
In a positive development, an entire new industry evolved when these biomass plants came online. Burning wood creates ash. Biomass ash contains a great source of organic potassium and helps raise soil ph so that other nutrients can be more readily absorbed by plants. And the beauty to farmers? Natural biomass ash is cheaper and more organic than the chemical counterparts.
In conclusion, we should be proud of the advances and the immense public benefits that biomass has brought to New Hampshire. Biomass plants provide the best protection for our New Hampshire forests to continue active management contributing to our $1.4 billion dollar industry. The Granite State Division Society of American Foresters asks that you please support SB 365.
February 14, 2017 To the Senate Energy and Natural Resources Committee: OTP SB 129 - Keep RPS alive in NH
There are six wood-fired power plants (biomass plants) in New Hampshire that are in danger of being shut down. They are located in Alexandria, Bethlehem, Bridgewater, Springfield, Tamworth and Whitefield. These plants burn wood chips and produce green, local electricity. Another I thing they produce is wood ash, which comes from the - WI. combustion of wood chips — just like your home wood stove 'ter 1110: produces wood ash after burning wood. This wood ash ir Sib • ";*64; "by-product" is a valuable fertilizer for farmers throughout New Hampshire. It may not seem like a big deal to most people, but the wood ash from these biomass plants is a very important natural fertilizer produced locally and used by hundreds of New Hampshire farmers annually. Farms have come to rely on the potassium and lime value from wood ash as a cornerstone to soil fertility and crop yields. From loggers and foresters, to haulers and plant operators, these power plants directly employ over 500 people throughout our state and contribute $100+ million dollars to the NH economy EVERY year. The • • ei A.0•4_ • p „ • - ow additional indirect benefits go far beyond that — the tax dollars paid to - • 4 towns, groceries and fuel purchased, community involvement and timberland management. Most importantly to me though, is the wood •-1 1,444s, 41F- ,••• ash fertilizer that will no longer be available to farmers if these biomass plants shut down. Why are these biomass power plants in danger of being shut down? 25 years ago the NH legislature "went green" and passed legislation to encourage the development of the biomass industry — this was a good decision for consumers, the timber and trucking industries, and farmers. Since then NH passed the Renewable Portfolio Standard (RPS) law which enables biomass plants to sell renewable energy certificates (RECs) to cover their operating costs and remain viable. Recent changes in wholesale electricity markets coupled with changes in neighboring state RPS laws is putting these plants at risk of closure. Without a strong New Hampshire RPS, these power plants will have to shut down. Senate Bill 129 is a New Hampshire solution that will support New Hampshire businesses. Closing these power plants would be terrible for New Hampshire. Hopefully this legislature will continue to champion jobs, especially in the North Country, by supporting Senate Bill 129. Elected officials must focus attention on ways to keep these biomass plants operating and producing clean, local power for New Hampshire, and the added benefit of clean wood ash fertilizer for New Hampshire farmers.
Shelagh Connelly, President Resource Management, Inc. (RMI) *RMI recycles the wood ash for four of these power plants
1171 NH Route 175 603-536-8900 Ho1derness, NH 03245 RMI RMlrecycles.com N H TOA NH TIMBERLAND OWNERS ASSOCIATION
April 11, 2018
Rep. Richard Barry, Chairman N.H. House Science, Technology and Energy Committee Room 304, Legislative Office Building Concord, NH 03301
RE: Senate Bill 365, AN ACT relative to the use of renewable generation in default service
Dear Chairman Barry and members of the Committee:
The New Hampshire Timberland Owners Association (NHTOA) thanks you for the opportunity to speak in support of Senate Bill 365. Founded in 1911, the NHTOA represents forest landowners and the forest products industry in New Hampshire. This sector of New Hampshire's economy represents the third-largest sector of manufacturing in the state. The total forest products industry in New Hampshire employs more than 7,700 people directly, and contributes nearly $1.4 billion dollars to the state's economy.
The NHTOA supports the biomass provisions in this bill, as they will assist in the continued operations of the state's six independent biomass power plants. LoSing these biomass power plants, and the low-grade timber (trees unsuitable for lumber) markets they provide will negatively impact;
• Hundreds of jobs, • Economic activity in many N.H. communities, • New Hampshire's forest products industry, • Sustainable forestry and timberland/stumpage values.
Jobs and Economic impact In 2016 the NHTOA retained Plymouth State University's College of Business Administration (PSU) to conduct a study to estimate the economic contribution the six independent biomass electric power plants make to the New Hampshire economy.
This study shows:
• The grand total of the direct effect (the six independent biomass electric power plants), indirect effect industries), and induced effect (service sector) economic activities is approximately 932 jobs ($50.9 million in payroll). And the total economic output to the state's economy is $254.5 million each year.
• The six biomass plants contribute $7.3 million in tax revenues to state and local governments from all sources (direct, indirect and induced effect). 5 4•PORTSMOUTH ST., CONCORD, NH 03 301 603-2 2 4-9 6 9 9 • FAX 603-2 2 5-5 8 9 8 • WWW.NHT0A.ORC. Lzadenh Or /Vav HainfiJhire:t This economic impact is statewide and occurs in many communities without the benefit of a large tax base. According to the New Hampshire Department of Revenue Administration's (NH DRA) timber tax data, during the 2014/2015 tax year 1,349,018 tons of biomass was harvested in 209 towns in New Hampshire.
Broader Forest Products industry Besides timberland management, biomass markets also play two important roles for New Hampshire's sawmill industry (an industry whose annual output exceeds $445 million) by:
• Providing an outlet for sawmill wastes (saw dust and chipped slabs), • Improving forest management for future saw log production, and • Improving overall logging operations/output.
Forest management and stumpage values According to the U.S. Forest Service's Forest Inventory Analysis (FIA) data, almost two-thirds of the standing timber in New Hampshire is considered low-grade. Without markets for low- grade timber, landowners and land managers are unable to economically improve forest health and vigor. This will hinder many forest management activities practices common in New Hampshire,
• Watershed management projects, (managing tree canopy evapotranspiration), • Wildlife habitat work (e.g. installing food plots, etc.), • Recreation management (installing motorized and non-motorized trails), • Pest management (e.g. Emerald Ash Borer control).
Timber markets make timberland ownership economically viable. Loss of saw log and low-grade timber markets directly impact stumpage values and ultimately the timberland's overall real estate value.
For these reasons, the NHTOA is asking you to support Senate Bill 365. Again, thank you for allowing me to testify on this important piece of legislation.
Sincerely,
------_____, Stock ive Director
Attach
CC: N.H. House of Representatives Science, Technology, and Energy Committee MADISON LUMBER MILL PO BOX 224 WEST OSSIPEE NH 03890
April 9, 2018
Rep. Richard Berry, Chairman N.H. House Science, Technology and Energy Committee Room 304, Legislative Office Building Concord, NH 03301
RE: SB 365
Dear Chairman Berry and Committee Members:
I am the Log Procurement Forester for the Madison Lumber Mill, Inc. (MLM), located in Madison, NH. MLM is a White Pine sawmill with 53 employees. Some additional information about MLM is as follows:
• Purchase sawlogs from all counties in New Hampshire • Annual lumber production of 20 million board feet. This is enough lumber to build 1300 conventional houses • Annual payroll of $3.5 million dollars • 55 Log suppliers • In 2017 paid loggers $6.6 million dollars for sawlogs delivered to the mill • Over $64 million dollars in lumber and wood sales in 2017 • Produced 20,000 tons of chips as a byproduct of producing lumber (630 tractor trailer loads)
I am also a licensed professional forester with degrees in forest and wildlife management. I have been practicing forestry in New Hampshire for over 30 years having worked with private landowners and industrial landowners. I am testifying today in support of the SB 365 and its importance to Madison Lumber Mill, New Hampshire's forest products industry, and New Hampshire's economy. The changes to NH's Renewable Portfolio Standard (RPS) made last year by SB129 have not had any positive impact on NH's biomass plants. SB365 is intended to provide the necessary rate structure critical to the future operation of NH's biomass plants. This bill is an investment in New Hampshire, its' economy and its' way of life. It is an investment with a real and measurable payback.
New Hampshire's forests are naturally dominated by low grade trees and parts of trees. Our logging industry is dependent on the ability to remove and economically market all parts of the tree. NH's biomass market allows loggers, foresters and landowners to practice exemplary forest management by removing diseased, rotten, and poor quality trees that would otherwise not be possible. Biomass harvesting produces healthy forests AND other forest products such as sawlogs, pulpwood and firewood. Without biomass, much of this harvesting would not occur and other sectors of the industry would be greatly diminished or disappear. There is no alternative market able to absorb this low grade material.
Historically New Hampshire's sawmill's and forest industry have relied heavily on New Hampshire's biomass plants and Maine pulp mills as markets for its low grade material. The recent mill closures and paper production curtailments in Maine (over 4 million tons since 2012) have essentially eliminated it as a significant consumer of low grade wood from New Hampshire, especially softwood species. This situation has placed an even greater reliance on New Hampshire's biomass plants. If NH's biomass plants were to close, or reduce operating hours, much of New Hampshire's forest products industry would disappear in a short period of time.
With the evaporation of low grade markets in Maine, many of New Hampshire's sawmills, including Madison Lumber, have also become heavily dependent on our biomass plants to sell our residual chips. Sawmills do not waste any portion of the logs that we saw. For every 1,000 board feet of lumber sawn, a ton of chips is produced from slabs and board ends (taking the log from round to square). Traditionally, these chips went to make paper in Maine. Currently only a small fraction of New Hampshire paper grade chips from sawmills go to Maine. Most of this material is now being consumed by our biomass plants. If sawmills can't move their residual chips, they will shut down. Stock piling chips is not an option, not to mention the loss of revenue. SB365 seeks to preserve the continued operation of our biomass plants. Without the successful passage of this bill we could very well see the forest products industry collapse in New Hampshire. In the 30 years that I have been in this industry, I have never seen our industry brought to the brink of collapse, but I can assure you, we are there now!
The loss of the biomass markets would deal a devastating blow to the entire forest products industry, including sawmills, landowners, loggers, foresters and firewood producers. I would like to ask you to support SB365 and the economic activity that it will ensure into the future. Add in all of the other benefits including: healthy forests, improved forest and wildlife management, maintaining open space, energy independence, clean energy, etc., and it seems that this bill is a wise choice for New Hampshire. Bipartisan legislative and gubernatorial support for the biomass industry has a long history in New Hampshire. I am hopeful that you will continue to support the biomass industry, the forest products industry and our way of life!
If you have any questions please call me at 603-651-9912. Thank you for your time.
Sincerely,
Edward G. Witt, Sr. Log Procurement Forester eNGie
Science, Technology and Energy Committee, April 11, 2018
SB 365: Statement of Darin Hawkins on behalf of Pinetree Power-Bethlehem and Pinetree Power-Tamworth
My name is Darin Hawkins, and I am Director, Asset Management at ENGIE North America, which is the parent company for the Tamworth and Bethlehem biomass facilities. In my position I am responsible for marketing the power and renewable energy credits (RECs) of the facilities and administering all other commercial activities. In this role, I am constantly monitoring the financial statements of the facilities and have a complete understanding of the historical and forecasted financial metrics. I am here today to address the financial condition that causes my company to close the two facilities this year, absent some state action, such as SB 365.
These plants have operated at a loss during the last two years. In 2016 and 2017, the cash loss of the two plants collectively was $5.3 million or approximately $2.65 million per year. The projection for calendar year 2018 is even greater. In 2018 each plant is projected to have negative cash flow of $2.1 million for a combined loss of $4.2 million for the single calendar year. This means during the period from 2016 through 2018 cash losses are expected to approach a collective total of $9.5 million.
The projection for 2019 through 2021 has each plant losing more than $2.0 million per year for a combined loss over the three-year period of greater than $12.0 million. In total from 2016 through 2021 the actual and forecasted losses equal $21.5 million These losses can mainly be attributed to two factors — declining wholesale energy rates and declining REC pricing.
The declining wholesale energy rates can be attributed to declining natural gas prices, mild weather, and declining consumer demand. On the REC side, last session's SB 129 did not result in the adequate increase in New Hampshire Class Ill REC pricing we expected. ENGIE is quite active on the marketing front regarding the sale of RECs from these facilities and regularly participates in the utility RFPs. The current market price for 2018 is less than $20, if an opportunity to transact even exists.
As Mark Driscoll stated, these plants need approximately $50/MWh just to cover fuel expense. Current energy and REC prices combined provide only a slight margin above the cost of fuel. In addition to fuel, the plants have O&M and maintenance capital cost that ultimately result in both plants losing money. This alone will force my company's management to close both facilities. Long-term market uncertainty, loss of qualified operators, and the loss of important fuel suppliers will result in both plants never reopening once they are closed.
Thank you. Pinetree Power, Inc„ 1241 Whitefield Road • Bethlehem, New Hampshire 03574 • (603) /114-9993 Fax (603) 444-6476
April 11, 2018
House Hearing on SB 365: Statement of Mark Driscoll for Pinetree Power- Bethlehem and Pinetree Power-Tamworth
Thank you for the opportunity to speak on the need for this legislation. My name is Mark Driscoll and I am the manager of the 15 MW Pinetree Power biomass power plant in Bethlehem. I have been the manager of that plant since 1992. I am here today on behalf of that plant and its employees, and our affiliated biomass plant and its employees, the 22 MW Pinetree Power-Tamworth plant.
The Bethlehem and Tamworth plants have been in continuous operation since 1986 and 1987, respectively. Collectively these plants employ 40 people in direct power plant operations. These are good paying jobs and many of our employees have been with the plants for over 20 years.
Because the plants produce electricity by combusting biomass, they also have a significant employment effect in the forestry sector and related business sectors. Based on the analysis done by the Plymouth State University for the NHTOA, every 1,000 tons of wood harvested equates to one-half of a full-time job. Collectively, the Pinetree plants combust approximately 500,000 tons of biomass annually. This represents another 250 jobs supported by our plants, for a total employment of 290 jobs.
Our plants contribute to the NH economy. Among other benefits, collectively the two plants spent $13.4 million in 2017 on wood procurement and spent $4.5 million for in- plant payroll and benefits in 2017, or approximately $19 million annually for just those two operating expense items.
These jobs, the economic benefits, and the continued operation of our plants are at significant risk.
The plants sell energy into an energy market that continues to post low prices that do not sustain our operation. Average energy prices in 2017 were $38.7 per MWh. The prices in the REC market have not covered the difference we need to sustain operations. In fact, we see quotes for NH class 3 RECs at or below $15. Based on the recent ISO capacity auction, capacity prices will also decline significantly with a resulting revenue decrease to the plants.
------Renewable Energy for New Hampshire The plants pay about $ 27.00 per ton for their biomass fuel; this means the plants need $ 48.6 per MWh sold just to purchase the biomass fuel used in generation.
Our management has informed me, and the plant manager of the Tamworth plant, and the employees of both plants that, absent the success of a legislative policy initiative like SB 365 this session, these two plants will close. The jobs will be lost, and NH will lose 37 MWs of locally produced renewable generation and the economic benefits associated with that generation.
One biomass plant in Alexandria closed last Spring. Including our two plants, there are 5 plants of our size still operating in the state. I cannot speak for them, but I know we all operate in the same market and face the same uncertainties.
As you can see, there is a lot at stake in this legislation for many. There is a lot at stake for my employees and their families and the employees and families of the hundreds of other workers in the forest and other business sectors who both support and rely upon the operation of our power plants. Homegrown New Hampshire energy, New Hampshire jobs, New Hampshire families.
On my behalf and on theirs, I ask that you vote this bill "ought to pass".
Thank You
Mark Driscoll, Plant Manager THE TESTIMONY OF JAMES A. GINNETTI BEFORE THE HOUSE SCIENCE, TECHNOLOGY, AND ENERGY COMMITTEE ON BEHALF OF WHEELABRATOR TECHNOLOGIES, INC. ON NH SB 365 APRIL 11, 2018
Good morning, my name is Jim Ginnetti1 and I appear before you today on behalf of Wheelabrator
Technologies, Inc. (Wheelabrator) to speak in support of Senate Bill 365 (SB 365). I will first provide a
summary of my testimony and then speak of some of the benefits that New Hampshire will receive from
SB 365 and describe what I believe to be the impact on the Default Service rate charged by the electric
distribution companies (EDCs) as a result of this bill.
Summary and Conclusions
.1. Based on the ISO-NE recent capacity auction if 100 megawatts (MWs) of renewable generators dose, then the cost to New Hampshire ratepayers for capacity will increase by $17 million annually, starting in 2022. 2. I estimate that Eversource's recently approved Default Service rate has about 26% mark-up for risk premiums and profit. For example, Eversource's 7.9 cents/kilowatthour (kWh) Default Service rate is based on 2.9 cent/ kWh energy while the rest is for capacity, mark-up for risk management and profit, and some ISO-NE costs. Some of these are avoided by purchases under SB 365. 3. The bill's cost is also offset by line losses. The New Hampshire renewable generators are closer to the uses of the electricity. 4. The net bill result is about 0.4 cents per kilowatthour (kWh) for Eversource Default Service customers and 0.2 cents/kWh for Unitil. This net result is before considering the $17 million annual capacity cost increase which would be avoided by retaining the New Hampshire
liim Ginnetti, the Principal of Jim Ginnetti Consulting, LLC, has over 41 years of experience in New England's electricity business. He has held executive positions with competitive generators as well as with Northeast Utilities, where he oversaw the pricing of the company's wholesale and retail sales for more than 10 years. He also spent the early part of his career at what became ISO-NE, where he held executive positions in system planning, engineering, and system operations. Jim holds Bachelor and Master Degrees in Electrical Engineering from Northeastern University and Iowa State University, respectively. He also holds a MBA from Western New England College.
1 renewables. Taking that cost savings into account means the bill cost is neutral as of the time of the avoided capacity increase. 5. Those that claim this bill will create turmoil and rate increases in the Default Service market have not examined the data. The renewable generators' plants are highly reliable with very predictable output around the clock that the Default Service supplier can use for the total supply.
Benefits of SB 365
SB 365 will provide important financial relief to the renewable electric generators in the State who use
biomass and municipal solid waste as a fuel source. Although consumers are benefitting from the
lowest wholesale electricity prices since 2003, these low prices, due primarily to inexpensive natural gas,
are causing financial distress to generators, including the State's renewable electricity generators.
There are several very good reasons to support this bill:
1. The renewable electricity generators that this bill will help provide hundreds of jobs, property
tax revenue, and other benefits in a number of municipalities throughout the State. Their
closure would have a significant negative financial impact on the State and the municipalities in
which they reside. The magnitude of this negative financial impact is being addressed by other
witnesses.
2. Due to the design of the electric capacity market of ISO-NE, the federally regulated regional grid
operator, the closure of 100 MWs of the State's renewable electric generators would increase
the capacity costs in New Hampshire by approximately $17 million each year. The $17 million
per year translates to approximately $16 per megawatthour2 (MWh) that the renewable electric
generators produce. To put this $16/MWh in perspective, it is approximately half of the average
hourly energy cost in New Hampshire during 2017 of $33/MWh.
My capacity cost increase estimate is based on data from the ISO-NE's most recent Forward
Capacity Auction 12, which took place in early February. In that Auction, generation supply was
purchased for the year starting in June 2021 to May 2022. If a subset of the renewable electric
generator were to announce that they would close before June 2022, the capacity costs paid by
all of New Hampshire's consumers would increase starting in June 2022. These increased costs
2 The renewable generators are expected to produce approximately 879,914 MWh per year, made up of 778,000 MWhs from biomass and 101,914 MWhs from municipal solid waste.
2 would exist regardless of what other generators left or entered the market. In all cases, the loss
of 100 MWs of New Hampshire's renewable generators would increase capacity costs to all the
State's consumers by $17 million each and every year compared to where they would be if the
renewable generation remains in service. To the degree that SB 365 can help avoid those
closures, it would prevent significant capacity cost increases to all the State's electricity
consumers in future years.
3. ISO-NE has recently published a paper' outlining its concerns that the amount of non-gas
generation in New England is insufficient to prevent multiple and widespread rolling blackouts
during winter months starting in the 2024/25 year. Due to the lack of natural gas pipeline into
New England, ISO-NE is concerned that some gas generators may not be able to obtain gas
during extreme weather during winter months. And, increasingly stringent environmental
regulations in neighboring states make burning oil as a backup fuel more difficult. The entire
goal of SB 365 is to help preserve these renewable generators and maintain the fuel diversity
that now exists. Failure to pass SB 365 and support the renewable electric generators in the
State would exacerbate the loss of non-gas generation and make the ISO-NE's fuel diversity
concern grow.
4. By virtue of the fact that the renewable electric generators are interconnected on the
distribution system near consumers, they help reduce the amount of electrical losses that the
EDCs incur in supplying customers' load. By providing support for these generators, SB 365 will
assist in keeping the electrical losses incurred in the State at the current level and not cause the
losses, which consumers must ultimately pay for, to increase.
5. Lastly, the renewable electric generators provide electricity that is carbon neutral, over the long
term, and, therefore, help the State and region meet carbon reduction goals. The loss of these
plants to retirement would retard current carbon reduction progress.
While the price that SB 365 would have the Default Energy supplier pay the renewable electric generators is above the market rate for energy, there are some offsets that will mitigate the impact on the rate.
3 1SO-NE Operational Fuel Security Analysis, January 17, 2018. https://www.iso-ne.com/static- assets/documents/2018/01/20180117 operational fuel-security analysis.pdf
3 When potential suppliers construct their offers at which they are willing to provide Default Service, they
justifiably include costs to help them manage their risk associated with serving that load. One of the
risks that they face is the approximately two week time period between the submittal of their offer to
the EDC and the time when the NHPUC approves the new rates and the EDC can finalize a contract with
the supplier. The forward markets for electricity and fuel (for those suppliers that own generation) are
very volatile and prices can significantly move in a two week time period. This means that by the time
the contract is approved by the NHPUC, the price could have increased significantly from what the
supplier included in its offer to serve the load. In order to prevent the incurring of losses when it is able
to buy the electricity or fuel, suppliers can either build in a significant cushion into their price or
purchase call options that give them the right to buy the electricity or fuel at the price that was included
in their offer to the EDC. These call options can be expensive depending on the time of the year, the
span of time between buying the option and when it can be struck, and other factors.
SB 365 removes a portion of this risk for suppliers by ensuring that a significant portion, approximately
23%, of the energy that they need for Default Service will be provided by the renewable electricity generators. It is not possible to know exactly how much of a risk premium individual suppliers are including in their offers as each supplier has various risk policies and procedures that dictate what level of risk they can accept. But, based on the recent results of Eversource NI-1's Default Service RFP for the
April-July 2018 period, I believe that the portion of the Default Service rate to cover risk premiums, profit markup, and other miscellaneous costs are significant.
I make that statement after comparing the filed Default Service rates with my calculations based on the known elements, namely the price of on-peak and off-peak strips of energy available in the forward market as of February 7th, the date the offers to supply Default Service were submitted to Eversource, the cost of Renewable Energy Credits (RECs), and the price of capacity that the supplier will be charged for the Default Service customers. Based on my calculations, approximately 26% of the Default Service rate is to provide suppliers revenue for risk premiums, profit markup, and other miscellaneous costs.
SB 365 provides that the renewable electric generators will be paid a known percentage of the Default
Service rate, adjusted for the REC costs, for the energy they will provide. Since the supplier will know that the supply from the renewable electric generators will be available at a known price, it will no longer need to add a risk premium to cover the potential for a higher price into the Default Service offer for that share of the energy.
4 I estimate that approximately 16% of the price of Default Service can be avoided on the share of the
energy provided by the renewable electric generators. By buying supply from the renewable electric
generators, suppliers can avoid costs to risk manage the price during the two week period before the
NHPUC can give final approve of the Default Service rates, and because the renewable generators are
interconnected on the distribution system near customers, suppliers can avoid costs to protect against
potential congestion costs to transmit the supply from remote locations in New England into New
Hampshire, and can minimize electrical losses incurred in the delivery.
Some have argued that SB 365 will lead suppliers of Default Service to radically increase their prices due
to the uncertainty of supply from the renewable generators. I believe this fear is unfounded. The
amount of "turmoil" that the bill would cause Default suppliers will depend on the predictability of the
amount of generation from the eligible facilities. Under SB 365 as passed by the Senate, renewable
generators that will be selling output to the Default Service supplier will provide a proposed schedule of
deliveries prior to the selection of the Default Service supplier. The supply from the renewable facilities
is very predictable, as they are plants with high availabilities and few forced outages. Also, since the
supply is coming from a portfolio of resources, a forced outage at one of the renewable generators
would reduce, but not eliminate the total supply in any hour.
Based on my calculations, SB 365 may increase the Default Service rate by approximately 0.4 cents/kWh
in Eversource's territory and 0.2 cents/kWh in Unitil's territory. These increases will cause a separation
between the Default Service rate and market rates that are available from competitive retail suppliers.
But, this separation is small compared to the gap that has existed between Eversource's Default Service
rates and market rates for years. For example, in June 2016 the NHPUC approved a 10.95 cents/kWh
rate from July-Dec 2016 while the New Hampshire Electric Coop, whose rates better represents market prices, had recently announced a 5.3 cents/kWh rate for the period May-November 2016. That difference was more than 100% and did not cause the "death spiral" with Default Service customers fleeing and leaving a decreasingly small number of customers to pay higher costs that some fear would occur if SB 365 is passed and signed into law. During the last five years, the percentage of the total
Eversource retail load served by competitive suppliers has remained approximately 55%. With the recent changes that relieved Default Service customers of solely paying for Eversource's stranded costs, the Default Service customers are benefitting from a very significant rate reduction compared to past rates. If SB 365 is enacted, the reduction in Default Service rates will still be dramatic, just to a slightly
4 PUC approves a rate increase for Eversource, New Hampshire Union Leader, June 29, 2016
5 lesser degree. Another reason why I don't think SB 365 will lead to a "death spiral" is that the rates that
competitive retail suppliers are offering to residential consumers are not in all cases lower than the rates
offered by the EDCs. I base this statement on the Massachusetts Attorney General's recent study that
her office found that residential consumers in her state actually paid $180 million more to competitive
retail suppliers than if they had remained on supply from the EDCs.5
The increases in the Default Service rate as a result of SB 365 are completely offset by the estimated $17
million per year increases that all the State's consumers will pay in higher capacity costs in future years,
starting in 2022 should 100 MWs of the renewable electric generators be forced to shut down, taking
with them all of the financial benefits that others have addressed from these renewable electric
generators.
In summary Wheeiabrator urges you to pass SB 365 because it is good for New Hampshire in that it supports the renewable electric generators, which are local businesses that provide jobs, tax revenue, and numerous other significant benefits to the State. Also, support that will keep the renewable electric generators in business will save all New Hampshire consumers millions of dollars per year through ISO-
NE's Forward Capacity Market, help provide needed non-gas electric generation in New England during extreme winter weather, and contribute to the State's and region's carbon reduction progress.
This completes my testimony.
James A. Ginnetti
April 11, 2018
5 An Analysis of the individual Residential Electric Supply Market in Massachusetts: Are Consumers Benefitting From Competition, Massachusetts Attorney General's Office, March 2018
6 Board of Selectmen TOWN OF WARNER P.O. Box 265 Kimberley Edelmann - Chairman Warner, New Hampshire 03278-0265 Clyde Carson John Dabuliewicz Telephone: (603)456-2298 Fax: (603) 456-2297 Town Administrator Jim Bingham
April 9, 2018
To: Members of the House Science, Technology and Energy Committee
Letter of support for SB365 relative to the use of renewable generation in default service
The Town of Warner is a member of the Concord Co-op which consists of 16 New Hampshire municipalities in the Concord area. The Co-op has been delivering waste to the Wheelabrator Concord waste- to-energy facility since the facility began operations in 1989. The Warner Board of Selectmen strongly supports Senate Bill 365, which will assure that there will be a local buyer for the electricity produced by this facility.
Senate Bill 365 will enable Wheelabrator Concord to remain a viable solid waste disposal solution in the State of New Hampshire and continue to serve my town and the other Concord Co-op communities as it has for the past 30 years. Warner delivers over 1000 tons of solid waste to this facility per year. If the facility were to close, the cost of waste disposal for Warner and the other Concord Co-op communities would increase as we would be forced to transport our waste to disposal locations much further away. This increase would fall directly on Warner taxpayers as well as the other Concord Co-op taxpayers. We urge you to vote in favor of SB365.
Sincerely, Warner Board of Selectmen Kimberley Edelmann - Chairman John Dabuliewicz Clyde Carson Senate Bill 365 — Estimated Costs
• SB 365 seeks to protect New Hampshire's in-state energy facilities that are either struggling or facing closure due to record low natural gas prices in the wholesale energy market. SB365 seeks to protect local jobs and fuel diversity. o There are 6 biomass plants — 100 MW (* includes Alexandria which is currently closed) o There is one waste-to energy plant —14 MW o There are 56 small hydro plants —48 MW
• These facilities are in the Eversource & Unitil service areas. The bill does not affect Liberty or the NH Electric Coop service areas.
• Below is a table of estimated costs and offsets. The table also includes an estimate of costs should the 56 small hydro facilities be dropped from the bill. Small hydro facilities will benefit from this Committee's work on SB 446 and thus may not need to be included in SB 365. SB 365 could be focused on just the 6 small biomass plants and the one waste-energy plant.
With Hydro In With Hydro Out EVERSOURCE kVERSOURCE Wood MWHs 778,000 0 778,000
Waste-to-E MWhs 0 101,914 0 101,914
Hydro MWhs 142,909 46,930 0 0 cost before offsets $27.6 million $4.11 million $23.3 million $2.9 million less risk premium avoided due to renewable supply ($7.27 million) ($1.49 million) ($6.1 million) ($1.022 mil) less avoided line losses ($4.36 million) ($0296 thousand) ($3.689 mil) ($0.613 thousand) cost with offsets** $1.5.9 millionhr $1.72 mill'on/yr $13.5 rnillion/yr $1.27 million/yr
o ** Note; If 100 MW of NH energy production is lost (i.e. biomass facilities close) there is an added cost to New Hampshire of approximately $17 million in annual capacity cost payments in the future. SB51 - RPS Study Committee Public Utilities Commission Sustainable Energy Division September 5, 2017
Eversource Components of Electric Rates for 625 kWhs of Consumption as of January 1, 2017 iSample Electric Bill System Benefits, $2.23, 1.8% Electricity Consumption Rate Impact Charge, $0.34, 0.3% Stranded Cost Recovery, $0.63 0.5% Energy $68.22
RGGI Allowance $0.19 Transmission, RPS $1.40 5t;toner arge $12.89 Delivery $26.29 Transmission $14.94 Stranded Cost Recovery $0.63 livery, $26.29, 20.7% System Benefits $2.23 Electricity Consumption Charge $0.34 Total Charges $127.1..3 Customer Charge, $12.89, 10.1% RPS is approximately 1% of average residential RGGI Allowance, $0.19, 0.2% electric bill. RPS, $1.40, 1.1% Handout #13 Renewable Portfolio Standard (RPS) Costs
RPS Compliance Costs RPS Costs & Average Rate Impact (REC Costs and. ACP Costs) (Costs in $ Millions)
$40 Average
$35 Compliance Total Total Total RPS per kWh Year REC ACP Compliance Rate $30 Costs Costs Cost Impact 2008 $6.6 $4.5 $11.1 $0.0011 4 $25 2 2009 $15.1 $1.3 $16.4 $0.0016 $20 2010 $15.5 $2.6 $18.1 $0.0017 0 2011 $8.7 $19.1 $27.8 $0.0026 $15 2012 $15.7 $9.3 $25.0 $0.0023 48 $10 2013 $10.6 $17.5 $28.1 $0.0026 2014 $25.8 $4.7 $30.5 $0,0028 $5 2015 $33.5 $4.2 $37.7 $0.0035 2016 $28.1 i3.6 31.7 $0.0030 $o I 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total $159.7 $66.6 $226.3 Compliance Year Average Rate Impact from 2008 to 2016 Total RPS Cost = Total REC Costs + Total ACP Costs $0.0023 per kWh .11P
September 12, 2017 New Hampshire Public Utilities Commission Sustainable Energy Division April 6, 2018
To:: Members of the House Science, Technology & Energy Committee-
RE: Senate Bill 365
Dear. Committee Member:
Senate Bill (SB) 365 concerns the use of renewable energy generation in default services. The
proposed legislation inchides any facility which uses municipal solid waste asa "primary energy source?'
I submit these comments to oppose inclusion of the Wheelabrator waste incinerator in CancOrd as
an eligible facility that would benefit from this proposed legislation.. Tb include Wheelabrator sends !a
message to the public that. burning trash is good for the environment, The opposite is true.
The enclosed statement details pollution from the Concord incinerator and' raises again the risk associated with Wheelabrator's use of construction and demolition wood as an. alternative fuel.
The Wheelabrator incinerator in Concord is not environmentally friendly;. and the energy it generates is not green. The Department of Environmental Services' decision to renew Wheelabrator's operating. permit is presently under appeal.
Legislators must not misrepresent incineration as an acceptable source of electric energy. Please vote NO on SR 365.
Sincerely, , 1 4 (74/ c} std Katie Lajoie, RN 429 Wheeler. Rand Road Charlestown, NH 03603 603-826-4803 [email protected]
Enclosure Copy:. Rep, Thomas Laware, Rep. Steven Smith, Sen. Martha Hennessey, and corrmittee secretary Carol Stapler for submittal of these comments to the SB 365 public record
Page 1
I. Waste incineration is a threat to public health and the environment.
IL Part VII of SB 365 indicates Wheelabrator's use of construction and demolition wood as an alternative fuel could only occur during "start-up, maintenance, or other required internal needs of the facility." Start-up is a time when excess emissions may occur and when emission standards do not apply.
III. Recycling consumes less energy and imposes lower environmental burdens than sending recyclable materials to a landfill or incinerator, even after accounting for energy that may be recovered from these materials at either type of facility.
DISCUSSION
I. Waste incineration is a threat to public health and the environment.
On January 2, 2018, the New Hampshire Department of Environmental Services (DES) released
Findings of Fact and Director's Decision (Findings and Decision) and issued another operating permit
for the V/heelabrator incinerator in Concord.' The permit is presently under appeal .2
The Findings and Decision state the following:
• Page 2: Wheelabrator is subject to the Title V Operating Permit Program because it is a
major source of air emissions.
• Page 7: Cumulative toxic effects from incinerator emissions are "essentially impossible
to evaluate given the limits of today's science."
• Page 8: Wheelabrator is categorized as a major source of greenhouse gas emissions under
Title V.
The incinerator smokestack continuously emits dioxin, lead, mercury, cadmium and other toxic
chemicals in a form that can be easily inhaled and ingested, thereby increasing exposure risks. It is
important to note that incineration creates dioxin and that toxic elements such as cadmium, lead, and
'State of New Hampshire, Department of Environmental Services, Air Resources Division. "Findings of Fact and Director's Decision In the Matter of the Issuance of a Title V Operating Permit to Wheelabmter Concord Company, LP." January 2, 2018. bitts://www4.desstatenkus/OneStopPub/Airj330130010214-0175TypeFindingsOfFactpdf 2 Docket No. 18-02 ARC- "Anthony Caplan, et al. Appeal" fittps:tiwww4.desstatelthris/LegaliDocuments/AtmealstAir°1020Resources°7020CotmeilIDocket%2ONo.%2018- 02%20ARCV620-%20Anthany%20Caplau.%20et%20a1.%20Appeal/02-01-18°/020- °/020NolicelY0200Y020Apuealpdf Page 2 According to Table 5, Item 4(a) of Wheelabrator's. proposed Title V permit (page 8), "emission
standards apply at all times except during periods of startup, shutdown and malfunction."7 DES'
Findings and Decision concerning this permit are presently under appeal.
III. Recycling consumes less energy and imposes lower environmental burdens than sending recyclable materials to a landfill or incinerator, even after accounting for energy that may be recovered from these materials at either type of facility.
Given what we know about. incinerator pollution; and given the availability of safe alternatives to
incineration, it is apparent the Wheelabrator incinerator in Concord presents an. unacceptable and
unnecessary risk. It is prudent to chart a new course. A commitment to dose the incinerator and replace
it with a recycling-based system would show bold leadership on DES' part and would be a welcome
change for New Hampshire residents. The transition could occur within, a two-year period with input and
direction from all interested parties, including Wheelabrator, DES, public health adVocates, and recyclers..
A professional facilitator could assist with the process.
A transition plan that closes the Wheelabrator incinerator by 2019 would help DES get on track
with the state's solid waste hierarchy. Conservation, reuse, recycling, and composting, would be the
priorities. instead of allowing Wheelabrator to turn valuable resources into toxic air emissions and ash.
Recycling. "consumes less energy and imposes lower environmental burdens" than sending recyclable
materials to a landfill or incinerator, even after accounting for energy That may be recovered from these
materials at either type of facility..a.
Incineration is not green energy and does not belong in SB 365.
Katie Lajoie, RN 11 April 6; 2018.
7 Department of Environmental Services, Air Resources Division.. "Proposed Title V Operating. Permit No.:. TV-0032 for Wheelabrator Concord Company, L.P. 11 Whitney Road Penacook, NH 03303:" January 2, MS,. & Morris, Jeffrey. "Comparative LCAs for Curbside Recycling VersusEither-Lanlfilling or Incineration with Energy Recovery..". The International Journal of Life Cycle Assessment, 104. (2005):273-284.. Web.., September 3, 2011. http://www.snringerlinkcomicontentim.423181w2b11036n4/. Cited- in Working on Waste.. "The. Wheelabrator Incinerator in Claremont NH: A. Working on Waste Report" 2011,, Addendum 2015, p. 11. wvirw.americanhealtbstudies.orgiwiteelabrator-claremont.pdf
Page 4 RMI BUILDING HEALTHY 50115
April 11, 2018
House Science, Technology and Energy Committee Legislative Office Building Room 304
Re: SB 365 Requiring electric utilities to purchase a portion of their default power needs from instate biomass or small hydroelectric power sources — Ought to pass
Members of the Committee:
Resource Management Inc. (RMI) recycles 30,000 tons of wood ash annually from five biomass plants in NH. The wood ash is used as a potassium fertilizer and is approved for organic growers. We have been recycling wood ash from biomass plants in NH for the past 24 years. I have testified before you many times, most recently in support of SB 129 and SB 51 last year for very similar reasons, including the importance of investing in the forest products industry.
This bill is a utility proposal that will help the state's biomass power plants by requiring electric utilities to purchase a portion of their default power needs from instate biomass or small hydroelectric power sources. Because this proposal will support the continued operation of these facilities and renewable power sources in general, our company is supportive of SB 365.
I believe that SB 365 is another step needed to shore up biomass security in NH. There have been recent independent assessments regarding the importance of biomass in our energy security and by extension, our working forests. Two significant documents were published in 2018 and I had the benefit of learning some different information and would like to briefly share some highlights as follows: 1. Operational Fuel Security Analysis published January 17, 2018 by ISO-NE Public. This document was presented at the BIA during their monthly Manufacturing & End Users Policy Committee Meeting in February.
ISO-NE, the entity who oversees the operation of New England's electrical power and transmission system, shared the results of their recent study, Operational Fuel-Security Analysis, which assesses whether existing fuel resources will be sufficient to ensure reliability through the winter especially with our current weather trends. The study predicts rolling blackouts for the winter of 2024/2025.
The Report focuses on five variables that are likely to be key factors in power system reliability, including 1) Resource retirements: coal and oil-fired, and nuclear generators; 2) LNG availability during winter; 3) Oil tank inventories; 4) Imported electricity; and 5) Renewable resources.
1171 NH Route 175 603-536-8900 Heart & Soil Holderness, NH 03245 Ag Products RMIrecycles.com "Renewable resources in New England are powered by water, sun, wind, biomass, and trash," and "often have the benefit of state and federal financial incentives, as well as long-term contracts sponsored by states seeking to expand their clean energy portfolios."
2. On February 13, 2018 Scott Pruitt, EPA Administrator came to NH and hand-delivered a letter to Governor Chris Sununu regarding a Policy Update on EPA Programmatic Treatment of Biomass and the Forest Products Industry. His letter stated: "Unquestionably, by providing for the treatment of biomass throughout the Agency's permitting decisions, the use of biomass energy will be bolstered, to the benefit not only to the forest products industry but the environment as well, while furthering the Administration's goal of energy dominance." And further, "As you and l both recognize, continuing to be responsible stewards of our nation's forests and lands while utilizing all domestic forms of biomass to meet our energy needs are mutually compatible goals. By further incorporating these sources into an "all of the above" energy portfolio, the Agency will expand the economic potential of our nation's forests, while at the same time ensuring states like New Hampshire are able to determine the best energy sources to meet their local economic and environmental needs."
I see these two recent documents as clear directives that this is not just New Hampshire grappling with the benefits of investing in biomass, but it is larger and a growing sentiment across the country. Here in New Hampshire we are in a position to be leaders in this initiative, and we should set a strong and positive example.
At the end of the day, I am committed to environmental stewardship and will continue to recycle wood ash from the biomass plants here in NH for as long as NH keeps these power plants alive. Farmers count on the wood ash to grow their crops. Please find a way to keep these power plants open in NH to produce clean, green local power and the wonderful wood ash that results from burning the low grade wood that would otherwise have no home.
Thank you for your time and consideration of these comments.
Respectfully submitted,
Shelagh Connelly President
603-536-8900 1171 NH Route 175 Holderness, NH 03245 RMI RMIrecycles.com Amendments
Rep. Vase, Rock. 9 Rep. Vadney, Belk. 2 April 24, 2018 2018-1710h 10/01
Amendment to SB 365
1 Amend the title of the bill by replacing it with the following: 2 3 AN ACT establishing a renewable generation protection program to provide fuel diversity. 4 5 Amend the bill by replacing all after the enacting clause with the followi 6 7 1 Findings. New Hampshire's and New England's electricity s sply is heavily dependent upon 8 natural gas-fired generation, which is subject to pricing volatility rid risks of fuel availability. In its 9 2018 Operational Fuel-Security Analysis, the independent sys m operator of New England (ISO- 10 NE) expressed concerns regarding the availability of genera on in the near future. The effect of 11 natural gas pricing volatility on energy prices can be the closure of New Hampshire renewable 12 generators and the loss of jobs and other statewide eco r omic benefits, as well as the loss of fuel 13 diversity derived from using indigenous renewable 'uels. The general court finds that the 14 continued operation of the state's 6 independent bio s ass-fired electric generating plants and the 15 state's single waste-to-energy generating plant are t risk due to energy pricing volatility. These 16 plants are important to the state's economy jobs, and, in particular, the 6 biomass-fired 17 generators are vital to the state's sawmill and o er forest products industries and employment in 18 those industries. These indigenous-fueled rent wable generating plants are also important to state 19 policies because they provide generating fue diversity and environmental benefits, which protect 20 the health and safety of the state's citizens nd the physical environment of the state. The general 21 court finds that it is in the public int rest to promote the continued operation of, and the 22 preservation of employment and env ronmental benefits associated with these sources of 23 indigenous-fueled renewables, and thereby promote fuel diversity as part of the state's overall 24 energy policy. 25 2 New Chapter; The Preservation and Use of Renewable Generation to Provide Fuel Diversity. 26 Amend RSA by inserting after cha ter 362-G the following new chapter: 27 CHAPTER 362-H 28 THE PRESERV A TION AND USE OF RENEWABLE GENERATION 29 TO PROVIDE FUEL DIVERSITY 30 362-H:1 Definitions. In is chapter: 31 I. "Biomass" mea s plant-derived fuel including clean and untreated wood such as brush
Amendment to SB 365 - Page 2 -
1 stumps, lumber ends and trimmings, wood pallets, bark, wood chips or pellets, shavings, sawdust 2 and slash, agricultural crops, biogas or liquid biofuels, but shall exclude any materials derived in 3 whole or in part from construction and demolition debris. 4 IL "Commission" means the public utilities commission. 5 III.(a) "Eligible facility" means any facility which produces electricity for sale by the use, as 6 a primary energy source, of biomass, or municipal solid waste; provided that: (1) the facility's power 7 production capacity is not greater than 25 megawatts excluding station service needs; (2) the facility 8 is interconnected with an electric distribution or transmission system located in New Hampshire; 9 and (3) the facility began operation prior to January 1, 2006, or if the facility ceased operation and 10 then later returned to service after that date then prior to January 1, 2006 the facility operated for 11 at least 5 years regardless of the current operational status of the facility. 12 (b) "Eligible facility" shall not include: (1) any facility, while selling its electrical output 13 at long-term rates established before January 1, 2007 by orders of the commission under RSA 362- 14 A:4; and, (2) any municipal solid waste facility less than 10 megawatts in size and which was not in 15 operation on January 1, 2018. 16 IV. "Expenses" means all documented costs of operation of the eligible facility to the extent 17 that the commission deems such costs to be reasonable and prudent. 18 V. "Primary energy source" means a fuel or fuels, or energy resource either singly or in 19 combination, that comprises at least 90 percent of the total energy input into a generating unit. A 20 fuel or energy source other than the primary fuel or energy source may be used only for start-up, 21 maintenance, or other required internal needs of the facility. 22 VI. "Renewable generation protection program fund" or "fund" means the funds collected 23 from a surcharge to be included in each utility's system benefits charge sufficient to generate 24 $15,000,000 annually. 25 VII. "Review period" means the participation period and the amount of months preceding 26 the start of the participation period that the commission deems appropriate. 27 362-H:2 Renewable Generation Protection Program; Implementation. A renewable generation 28 protection program is hereby established. The purpose of the program is to provide an eligible 29 facility with a means to receive a subsidy if the facility elects to participate in the program and the 30 books and records of that facility demonstrate that the facility is unable to meet its variable costs of 31 production after using reasonable efforts to market and sell its energy, capacity, and environmental 32 attributes. Within 6 months of the effective date of this chapter, the commission shall commence a 33 proceeding to develop an expedited process for administering the program. 34 362-H:3 Participation by Eligible Facilities. 35 I. Not later than March 31 for the following July through December and September 30 for 36 the following January through June, an eligible facility may elect to participate in the renewable 37 generation protection program for a participation period by proving written notice to the Amendment to SB 365 - Page 3 -
1 commission. 2 II. As part of its notice and ongoing participation in the renewable generation protection 3 program, an electing eligible facility shall produce all books, records, and other information, 4 including fuel and operational information, deemed necessary and relevant by the commission, and 5 the electing eligible facility shall respond to all discovery questions deemed elevant by the 6 commission. Information required to be provided pursuant to this paragraph sh be exempt from 7 public disclosure under RSA 91-A only to the extent that similar information rovided by a public 8 utility would be entitled to such an exemption from public disclosure. 9 III. If an electing eligible facility fails to comply with paragraph , or otherwise fail to 10 comply with directives of the commission, the facility shall be denied payme r is from the fund. 11 362-H:4 Program Standards. 12 I. A facility that can demonstrate that its combined revenues f om the sale of electricity, 13 capacity, and environmental attributes are insufficient to meet the facility's ongoing costs of 14 operations and maintenance shall be eligible for payments from the fun 15 II. Payment amounts shall be determined by the commission or each facility and shall not 16 exceed the difference between a facility's revenues and the facility's v riable costs of production. 17 III. The commission shall determine payment amounts for R participation period, but shall 18 only make payments monthly following daily operations at an 80 p rcent capacity factor or greater 19 for a full calendar month. Payments shall not be made for parti— months of operation, unless the 20 facility was offline for scheduled maintenance or repair or s a result of a transmission or 21 distribution level outage. 22 IV. The facility's books and records and operational i formation for each 6-month period 23 during which payments are received shall be subject to audit the discretion of the commission. 24 V. The commission shall allocate payments amo' g electing eligible facilities for any 25 participation period based on projected megawatt hours .f production to the extent the total 26 requested funds under the renewable generation protection program exceeds available funds. 27 VI. The commission shall determine payments f r all electing eligible facilities within 60 28 days of the last day to elect for any participation period. 29 362-H:5 Renewable Generation Protection Program und.
30 I. On request of the public utilities commissio r the state treasurer shall maintain custody 31 over system benefits surcharge funds collected under this chapter. All funds received by the state 32 treasurer pursuant to this section shall be kept eparate from any other funds and shall be 33 administered in accordance with terms and c nditions established by the public utilities 34 commission. 35 II. The fund shall have an annual target f riding of $15,000,000. 36 III. The fund shall be funded by increasi g the system benefits charge established by RSA 37 374-F:3, VI to be charged by each electric distribution company subject to the system benefits
Amendment to SB 365 - Page 4 -
1 charge in an amount deemed necessary to collect $15,000,000 annually. 2 IV. The commission shall direct each electric distribution company to deposit its 3 proportionate share of the $15,000,000 annual payment, as determined by the commission, with the 4 state treasurer beginning January 1, 2019. 5 V. Subsidization payments approved by the commission pursuant to the renewable 6 generation protection program shall be authorized by the commission and paid by the state 7 treasurer from the fund during the calendar year preceding the participation period. 8 'VI. If any funds remain in the fund after all approved subsidization payments have been 9 made for a calendar year's participation payments, the remaining funds shall be used as a credit to 10 each electric distribution company's system benefits charge under RSA 374-F:3, VI with each 11 distribution company receiving its proportionate share. 12 3 Application; Implementation of Chapter. 13 I. Imposition of the system benefits charge surcharge established in RSA 162-H shall take 14 effect beginning on January 1, 2019. 15 II. Elections by eligible facilities to participate in the renewable generation protection 16 program required by RSA 162-H:3 may initially be made no earlier than the January 1 that occurs 17 one year following the imposition of the system benefits charge surcharge established in RSA 162- 18 H:5. 19 4 Prospective Repeal; 2022. RSA 162-H, relative to the preservation and use of renewable 20 generation to provide fuel diversity, is repealed. 21 5 Effective Date. 22 I. Section 4 of this act shall take effect January 1, 2022. 23 II. The remainder of this act shall take effect 60 days after its passage. Amendment to SB 365 - Page 5 -
2018-1710h AMENDED ANALYSIS
This bill establishes a 3-year renewable generation protection program to provide fuel diversity, funded by a surcharge in the system benefits charge for the provision of electricity. Bill as Introduced SB 365 - AS AMENDED BY THE SENATE 03/21/2018 1084s 2018 SESSION 18-2720 10/08
SENATE BILL 365
AN ACT relative to the use of renewable generation in default service.
SPONSORS: Sen. Innis, Dist 24; Sen. Avard, Dist 12; Sen. Bradley, Dist 3; Sen. Fuller Clark, Dist 21; Sen. Sanborn, Dist 9; Sen. Giuda, Dist 2; Sen. Ward, Dist 8; Sen. Kahn, Dist 10; Sen. Feltes, Dist 15; Rep. Shepardson, Ches. 10; Rep. Backus, Hills. 19
COMMITTEE: Energy and Natural Resources
AMENDED ANALYSIS
This bill requires the solicitation of default electricity service by the state's electric distribution companies to include certain renewable electricity generation supply.
Explanation: Matter added to current law appears in bold italics. Matter removed from current law appears [ Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
SB 365 - AS AMENDED BY THE SENATE 03/21/2018 1084s 18-2720 10/08
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eighteen AN ACT relative to the use of renewable generation in default service.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 1 Findings. New Hampshire and New England electricity supply is heavily dependent upon 2 natural gas-fired generation, which is subject to pricing volatility. The effect of natural gas pricing 3 volatility on energy prices can result in the closure of New Hampshire renewable generators and 4 the loss of jobs and other statewide economic benefits derived from using indigenous renewable 5 fuels. The general court finds that: the continued operation of the state's 6 independent biomass- 6 fired electric generating plants and other indigenous-fueled renewable generating plants, such as 7 small hydroelectric generation, are at-risk due to energy pricing volatility. These plants (i) are 8 important to the state's economy and jobs, and, in particular, the 6 biomass-fired generators are 9 vital to the state's sawmill and other forest products industries and employment in those industries, 10 and (ii) these indigenous-fueled renewable generating plants are also important to state policies 11 because they provide generating fuel diversity and environmental benefits. The general court finds 12 that the use of these indigenous renewable resources as part of electric default service will promote 13 the continued operation of, and the preservation of employment associated with, the 6 biomass-fired 14 power plants and the other sources of indigenous-fueled renewables and, therefore, is in the public 15 interest. 16 2 New Chapter; The Use of Renewable Generation in Default Service. Amend RSA by inserting 17 after chapter 362-G the following new chapter: 18 CHAPTER 362-H 19 THE USE OF RENEWABLE GENERATION IN DEFAULT SERVICE 20 362-H:1 Definitions. In this chapter: 21 I. "Adjusted energy rate" means 80 percent of the rate, expressed in dollars per megawatt- 22 hour, resulting from the default energy rate minus, if applicable, the rate component for compliance 23 with the renewable energy portfolio standards law, RSA 362-F, if that rate component is included in 24 the approved default energy rate. 25 H. "Biomass" means plant-derived fuel including clean and untreated wood such as brush 26 stumps, lumber ends and trimmings, wood pallets, bark, wood chips or pellets, shavings, sawdust 27 and slash, agricultural crops, biogas, or liquid biofuels, but shall exclude any materials derived in 28 whole or in part from construction and demolition debris. 29 III. "Commission" means the public utilities commission. 30 IV. "Default energy rate" means the default service energy rate applicable to residential 31 class customers, expressed in dollars per megawatt-hour, as approved by the commission from time
SB 365 - AS AMENDED BY THE SENATE - Page 2 to time, and which is available to retail electric customers who are otherwise without an electricity 2 supplier. 3 V. "Default service provider" means the entity or entities approved by the commission, from 4 time to time, to provide default service to the residential class of electric customers for each electric 5 distribution company which is subject to commission approval of default service procurement. 6 VI.(a) "Eligible facility" means any facility which produces electricity for sale by the use, 7 as a primary energy source, of biomass, municipal solid waste, solar, or hydroelectric resources or 8 any combination thereof; provided that: (1) the facility's power production capacity is not greater 9 than 5 megawatts, excluding station service needs if the facility is a hydroelectric facility, and the 10 facility's power production capacity is not greater than 25 megawatts, excluding station service 11 needs for all other facilities; (2) the facility is interconnected with an electric distribution or 12 transmission system located in New Hampshire; and (3) the facility began operation prior to 13 January 1, 2006, or if the facility ceased operation and then later returned to service after that date, 14 then prior to January 1, 2006 the facility operated for at least 5 years. 15 (b) "Eligible facility" shall not include: (1) any facility's kilowatt hours actually sold or 16 used in a net energy metering project under RSA 362-A or any similar law; (2) any facility, while 17 selling its electrical output at long-term rates established before January 1, 2007 by orders of the 18 commission under RSA 362-A:4; (3) any municipal solid waste facility less than 10 megawatts in 19 size and which was not in operation on January 1, 2018; and (4) any hydroelectric facility that is the 20 subject of divestiture in commission docket DE 17-124. 21 WI. "Primary energy source" means a fuel or fuels, or energy resource either singly or' in 22 combination, that comprises at least 90 percent of the total energy input into a generating unit. A 23 fuel or energy source other than the primary fuel or energy source may be used only for start-up, 24 maintenance, or other required internal needs of the facility. 25 362-H:2 Default Service Short-Term Purchased Power Agreements. Each electric distribution 26 company that is subject to the commission's approval regarding procurement of default service shall 27 include as a condition in each default service procurement for the residential electric customer 28 class, the requirement that the selected default service provider agrees to offer to purchase, for use 29 as part of its default energy supply, the net energy output of any eligible facility located in the 30 electric distribution company's service territory in accordance with the following: 31 I.(a) Prior to each solicitation of its default service supply, each such electric distribution 32 company shall solicit proposals, in one solicitation or multiple solicitations, from eligible facilities. 33 The electric distribution company's solicitation to eligible facilities shall inform eligible facilities of 34 the opportunity to submit a proposal to enter into a power purchase agreement with the electric 35 distribution company's selected default service provider, as approved by the commission, to sell an 36 amount of energy to the default service provider for use in the provision of default service for a 37 period that is coterminous with the time period used in the default service supply solicitation. The 38 solicitation shall provide that sales of energy from the eligible facility shall be priced at the adjusted
SB 365 - AS AMENDED BY THE SENATE - Page 3 - 1 energy rate derived from the default service rates approved by the commission in each applicable 2 default service supply solicitation and resulting rates proceeding. 3 (b) The solicitation shall also inform the eligible facility that: (1) the output of the 4 eligible facility shall be delivered to the default service provider at the eligible facility's 5 interconnection point with the electric distribution company; (2) the eligible facility's contract 6 generation must be from the eligible facility's net electrical output and the eligible facility shall not 7 replace its output with that of another unit; and (3) the eligible facility must agree to deliver all of 8 its net electrical output to the selected default service provider, to the extent electrical output is not 9 committed for use in a net metering program. 10 II. Each eligible facility's proposal in response to such solicitation shall provide a proposed 11 schedule of hourly net output amounts during the term stated over a mutually agreeable period, 12 whether daily or over the 6-month term and such other information as needed for the eligible 13 facility to submit and the electric distribution company to evaluate the proposal. 14 III. As part of its periodic residential electric customer default service supply solicitation 15 the electric distribution company shall inform potential default service providers of the 16 requirements of this chapter and provide each with the results of the applicable eligible facility 17 solicitation. As a result of such solicitations, and as a condition of commission approval of the 18 default service provider's contract with the electric distribution company for default service, the 19 default service provider shall select all proposals from eligible facilities that conform to the 20 requirements of this section and enter into power purchase agreements for an internal bilateral 21 transaction for market energy pursuant to the independent system operator of New England (ISO- 22 NE) market rules with the selected eligible facilities for unit contingent energy for periods 23 coterminous with the period of time used in the default service supply solicitation. The form of 24 power purchase agreement to be used shall be the EEI Master Power Purchase and Sale 25 Agreement, version 2.1. The default service provider shall act as the lead market participant for 26 any selected eligible facility that is not a member of ISO-NE and requests such service. The eligible 27 facility agrees to pay a reasonable fee for such service. 28 IV. Any such power purchase agreement shall be subject to review and approval by the 29 commission in the same proceeding in which it undertakes the review and approval of the electric 30 distribution company's periodic default service solicitation and resulting rates. The commission 31 shall issue a decision on such agreements at the same time it issues a decision on the default service 32 solicitation and resulting rates. 33 V. The costs incurred pursuant to purchases under this section shall be recovered by the 34 electric distribution company in the same manner as recovery of default service charges. Such costs 35 may include reasonable costs incurred by electric distribution companies pursuant to this section. 36 3 Effective Date. This act shall take effect 60 days after its passage. Fiscal Note LBAO 18-2720 Amended 4/23/18
SB 365- FISCAL NOTE AS AMENDED BY THE SENATE (AMENDMENT #2018-1084s)
AN ACT relative to the use of renewable generation in default service.
FISCAL IMPACT: [ X ] State [ ] County [ X ] Local [ ] None
Estimated Increase / (Decrease) STATE: FY 2019 FY 2020 FY 2021 FY 2022 Appropriation $0 $0 $0 $0 Revenue $0 $0 $0 $0 Expenditures Indeterminable Indeterminable Indeterminable Indeterminable X 1 General [ Education X ] Highway• X ] Other - ' 'Funding Source Various Governnaental funds
LOCAL: Revenue $0 $0 $0 $0 Expenditures Indeterminable Indeterminable Indeterminable Indeterminable
METHODOLOGY: The Public Utilities Commission (PUC) indicates this bill would establish an obligation for the three regulated electric distribution utilities in New Hampshire to purchase net energy output from any eligible renewable electric generating facility located in their respective utility service territories. The energy output purchased would be used to supply default service to residential retail electric customers who choose to remain with their distribution utility for electricity supply. The cost of purchasing the renewable energy supply would be included in the default service rates charged to residential customers. None of the renewable supply costs would be included in the commercial and industrial customer classes for companies remaining on default electric service. The cost of this additional renewable power would be priced separately for each utility and set at 80% of the utility's default service rate. Based on discussions with suppliers currently bidding in the default service market, and years of experience with default service procurements for Liberty and Unitil, the PUC has determined that purchase of this additional renewable electric supply would likely increase residential customer default service prices for several reasons: • The added supply would not be load-following or scheduled, and therefore suppliers would not know ahead of time when the power would be available. The electric distribution utility would not know ahead of time how much power would participate in the default service solicitation process and the amount and type of renewable power could vary dramatically from one solicitation to another. The uncertainty would be a risk factor that would be incorporated into rates paid by default service customers. • The power inserted into the market by this bill, which would be priced at 80% of retail electric service rates, could be difficult for some suppliers to hedge or incorporate into their supply portfolios. It would also be 3-4 cents per kWh higher than average wholesale rates in the New England region. Adding costs and reducing the suppliers' ability to hedge increases the risk of higher cost supplies. That uncertainty would likely result in higher default service bid prices. • Analyzing the renewable offerings and including them in the default service bids would add days to the bidding process. Delay adds risk and cost to bidding suppliers. • Increasing the actual bid price for residential default service would increase the risk of customer migration, which adds additional load risk and costs. • Fifth, the risk factors outlined above may cause some suppliers not to bid on default service supply making the bidding less competitive which, in the worst case, could result in a failed solicitation.
It is not possible to determine the magnitude of cost increases, but this bill would increase residential customer default service rates. To the extent that the State, County or Local government units have residential electric accounts on default service, this bill would increase costs for those governmental accounts by an indeterminate amount.
The Department of Administrative Services determined based on the Fiscal Year 2017 data from the Enterprise Energy Management System, that there are roughly 27 state-owned residential accounts. The estimated total KWH for the 27 accounts is 403,279 and estimated total annual cost is $69,090.
The New Hampshire Municipal Association states it is fairly common for a municipality to own a very small number of residential properties, typically because the municipality has taken the property by tax deed. The municipality may, and frequently does, rent the property until it disposes of it. This could also happen, although less frequently, if a municipality has taken a property by eminent domain for a future development project. The Association assumes, overall, there probably are quite a few municipally owned residential accounts around the state, although it would be a tiny number on a percentage basis. In addition, several municipalities have housing authorities that own housing units for rental to low-income residents. A housing authority is a separate entity from the municipality, but is still considered a local government entity. Electric service provided to these properties may also be considered "residential accounts."
The New Hampshire Association of Counties contacted all 10 counties and no county has residential electric accounts on default service. The Association believe this bill would have no impact on county revenues or expenditures. AGENCIES CONTACTED: New Hampshire Public Utilities Commission, Department of Administrative Services, New Hampshire Municipal Association and New Hampshire Association of Counties