FOR 6AM FRIDAY POST Maine's $13M Bailout of Biomass Plants Will Mean Jobs, but at a Cost of $23,700 Each

By Fishell, Darren | Bangor Daily News (Bangor, ME), January 26, 2017 | Go to article overview

FOR 6AM FRIDAY POST Maine's $13M Bailout of Biomass Plants Will Mean Jobs, but at a Cost of $23,700 Each


Fishell, Darren, Bangor Daily News (Bangor, ME)


PORTLAND, Maine -- To keep their share of a $13.4 million bailout over the next two years, two Maine biomass plant operators have promised to keep 87 people employed, according to agreement details disclosed for the first time this week.

The bailout, which was sought by the logging industry after several paper mill and biomass plant closures, also promises to restore employment in the woods. In addition, the companies -- ReEnergy and Stored Solar, which purchased two Covanta plants in Maine -- will invest a combined $4.5 million into their plants.

Each of those 87 biomass plant jobs, according to estimates from the Professional Logging Contractors of Maine in legislative testimony, support about more than two logging jobs. Roughly, this estimate means the bailout could support about 283 jobs, directly and indirectly.

This means $23,700 in taxpayer dollars will support each job, per year of the agreement.

That's about one-third the industry average wage for jobs in biomass generation and about half of the annual wage for jobs in forestry and logging. Those wage estimates include pay and benefits for payroll employees -- not for independent loggers or other sole proprietors.

While the economic study detailing those exact benefits remains confidential, the order released Wednesday summarized a consultant's findings that each dollar of bailout should generate $18.52 back in economic benefits to the state.

Regulators relied on that economic assessment from consultants with London Economics International to compare and identify the bids with the best economic boost.

Harry Lanphear, spokesman for the Maine Public Utilities Commission, said the commission is discussing whether it can make public all or parts of that report, done by London Economics International. He said that the commission will hold both companies to their economic benefit promises, which include quotas for buying wood from Maine loggers.

"We can contractually hold them accountable for those direct jobs," Lanphear said.

The law allows the commission to reduce payments if it determines the agreed-upon economic benefit goals are not met.

The law allowed the commission to use $13.4 million in taxpayer dollars to supplement the price in-state biomass generators get from selling their power to the regional wholesale market.

It also allows regulators to mandate proven economic benefits, such as direct employment and wood purchases, as a condition for getting the subsidies. The contracts project a total above-market cost of $14.3 million, which is in excess of the total fund, but the law allows the commission to curtail payments if the fund runs out of money.

Assessing the costs and benefits

Lawmakers decided on the deal before knowing the economic benefits the deal would provide. And their charge to regulators called only for supporting the biomass industry, which regulators noted in the order issued Wednesday.

"[T]he analysis in this proceeding does not address a basic policy question as to whether the benefit of using $13.4 million to support the biomass industry in the proceeding provides the maximum benefit of that money compared to other possible uses," the order states.

[documentcloud url="https://www.documentcloud.org/documents/ 3416857-Biomass-order-Part-II/annotations/335724.html"]

The commission also noted that it's not used to handling taxpayer dollars, but it followed the Legislature's orders.

"The Commission does not typically administer taxpayer funds and we only do so now in accordance with the directives of the Act," the commission wrote, referring to the Act to Establish a Process for the Procurement of Biomass Resources.

In addition to direct jobs, the contract requires that both companies purchase a combined 1. …

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