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Approval Sought for Biomass Power Agreement

PSNH Seeks State Approval of Biomass Power Agreement

65 MW wood-fired plant in Berlin will be state’s largest

MANCHESTER, N.H., July 26, 2010 — Public Service of New Hampshire today asked state regulators to approve an agreement the utility has reached to purchase the output from a proposed wood-fired power plant in Berlin, NH.

Under  the agreement, now pending consideration by the New Hampshire Public Utilities Commission, PSNH would purchase all of the energy, the generating capacity, and the Renewable Energy Certificates (RECs) produced by Laidlaw Berlin BioPower, a 65 megawatt (net) biomass plant which is planned for construction on the site of the former Fraser pulp mill.

In considering the proposed 20-year Power Purchase Agreement, the NHPUC has the responsibility to determine if it is in the public interest.  “Considerable thought over more than two years went into developing this unique  power purchase agreement,” said Gary Long, PSNH president and chief operating officer in pre-filed testimony to the NHPUC.  “I truly believe it is in the best interests of PSNH and our customers over its term.”

The Laidlaw project is expected to burn about 750,000 tons of clean wood chips annually and produce approximately 500,000 megawatt hours of energy yearly.  That is enough energy to power more than 60,000 average homes.

By creating energy through the burning of clean wood products, the Laidlaw facility will be certified by the State as a renewable energy source and will produce Renewable Energy Certificates (RECs).  All providers of electricity in New Hampshire must obtain RECs in order to comply with the state’s renewable energy law and the company expects that the amount of RECs purchased annually from Laidlaw will fulfill a significant portion of PSNH’s “Class I” REC requirements through 2015 and beyond. 

Economic Benefits

Laidlaw’s spending on construction and ongoing operation and maintenance is expected to create significant economic benefits locally and statewide in terms of jobs, sales, Gross State Product and household earnings.  In testimony accompanying the PSNH filing, economist Lisa K. Shapiro, Ph.D., reported:

Jobs:

• The 24- to 32-month construction period is expected to include about 470 annual average NH jobs, including direct and indirect.  This includes a construction work force that may range up to 200 – 300 workers per day during the peak.
• Once complete, the project expects to directly employ 40 permanent workers and support about 200 additional indirect and induced jobs.  Many of the jobs will be in the forestry and logging industry.

Spending:

• Of the $125 million construction cost, about $70 - $80 million is expected to be infused into the local economy.
• The annual operational payroll for plant workers will be about $2 million.
• An estimated $20 - $25 million per year will be spent on biomass fuel purchases.
• More than $1 million per year will be paid in local property taxes and other taxes such as the NH utility property tax.

Sales:

• NH’s average annual sales will rise by about $152 million cumulatively as a result of local spending during the construction period, and Gross State Product (GSP) by about $79 million.
• Annual spending on biomass fuel will increase NH’s average annual sales by about $35 - $44 million and average annual GSP by about $19 - $24 million.

Environmental Benefits

Besides providing PSNH with a resource with which to meet its obligations under the state’s renewable energy law, the Laidlaw project is expected to have a direct positive impact on the environment, with virtually no emissions of sulfur dioxide and low emission levels of nitrogen oxides.  In addition, the energy generated is expected to be considered carbon-neutral, with no requirements to obtain carbon dioxide emission allowances through the Regional Greenhouse Gas Initiative (RGGI).

The addition of 65 megawatts of biomass generation will provide a boost to the region’s energy security and independence.  The fuel source will be an 11 million acre “wood basket” that is within a 100-mile radium of the project, mainly in Maine and New Hampshire, the first and second most heavily forested states in the nation, respectively. 

PSNH’s Renewable Energy Profile

PSNH owns and operates the 50 megawatt “Northern Wood Power” station, which is currently the state’s largest biomass power generation facility, located in Portsmouth.  The company also hosts one of the largest solar facilities in New Hampshire, a 51 kilowatt array in Manchester.  In 2006, PSNH worked with Iberdrola Renewables on the construction of a 24 megawatt wind farm in Lempster, and purchases 90 percent of that project’s energy and RECs. The company is now anticipating the development of Laidlaw’s biomass facility in Berlin, and its production of more than 400,000 megawatt hours of energy annually.  Together with the purchase of energy from smaller existing facilities – mainly biomass and hydro – about 26 percent of the energy consumed by PSNH energy customers will be generated by renewable energy sources once the Laidlaw facility begins commercial operation.