Baker’s $175m regulatory gift to biomass

Few municipal light plants actually wanted project

THE BAKER ADMINISTRATION and much of the Legislature is trying hard to give the developer of a controversial proposed wood-fired “biomass” power plant in Springfield everything it wants—especially a regulatory change that could give the plant $175 million in additional cash from Massachusetts electric ratepayers over 20 years.

To those wondering why Beacon Hill is doing so much—despite opposition on emissions and environmental justice grounds from the Springfield City Council, the Massachusetts attorney general’s office, both of our US senators, and five state senators who filed an anti-biomass bill Friday – the answer often comes back that this is what the Commonwealth’s 41 municipal light plants want.

As the story goes, these local electric utilities, anticipating new standards, sought biomass electricity as part of a broader way to meet those standards.

But the actual decisions made by these century-old entities suggest otherwise. When the power contracts for the unbuilt Springfield facility were offered to municipal light plants in late 2019 and early 2020, only eight signed up—and for a total of only 75 percent of the plant’s output—based on information contained in contracts signed in February of 2020.

Low as these numbers are, they overstate the interest. By far the biggest tranche, 25 percent, was taken by the Reading Municipal Light Department, where I am one of five elected commissioners. But the Reading deal was signed at the management level; when our board later learned of this, we voted to examine all options with respect to the contract’s disposition.

In other words, we started looking for exits.

Our board-voted signal meant just seven municipal light plants truly wanted just half of the plant’s output, according to those contracts signed in February 2020.  And though those other local boards were no doubt better informed than ours, it’s not clear how much they knew about the controversy.

If Beacon Hill’s efforts are not answering demands from local municipal electric utilities, the question begging more investigation is why our elected leaders want to shovel so much money to just one developer (no other such plants are currently proposed in Massachusetts) to build a facility wanted by so few.

The developer, Palmer Renewable Energy, first got permits for the plant more than a decade ago. The company prevailed over certain legal challenges – but still needed more than electricity sales at market rates to make a business case to build the $150 million plant. Gov. Charlie Baker and Patrick Woodcock, Baker’s commissioner of the Department of Energy Resources, stepped in to help.

Woodcock, formerly the top energy official under Gov. Paul LePage in Maine, set about gutting the rules for wood-fired biomass plants in the Bay State. The existing ones, in something called the Renewable Portfolio Standard, were stringent. Under them, electricity from the Palmer plant – which would burn 1,200 tons of wood chips per day, hauled in by tractor-trailers potentially from five states—could not be called “renewable.” Only far more efficient versions could do so.

The proposed Baker/Woodcock rewrite puts this giant wood-burning plant on the same “renewable” footing as a fleet of offshore wind turbines or an array of solar panels. And this meant the developer could also sell something called “Class 1 renewable energy certificates,” which is a form of subsidy.

The renewable energy certificates, or RECs, would give the Palmer plant an impressive payday. When you multiply the plant’s projected output by the price (as listed in one of the contracts) of these certificates, the Baker/Woodcock edits could help deliver $175 million to the developer over 20 years, atop the revenue from electricity itself.

Who pays this extra $175 million? Electric ratepayers like you. If municipal light plants buy and keep the RECs, local ratepayers foot the bill.  If another big utility, like National Grid or Eversource, buys some of the RECs (either directly or from a municipal light plant) in order to hit their regulatory targets, those companies’ ratepayers pay the premium.

For an overview of objections to these regulatory changes, check out this letter by Attorney General Maura Healey’s office to the Legislature’s Committee on Telecommunications, Utilities, and Energy. Among other things the AG letter spells out why the claim that the plant will only use “wood waste” is not as benign as it sounds—and hard to enforce anyway.

The Legislature has also misled critics of the plant. When the House and Senate passed a major climate bill in January (called “An Act Creating a NextGeneration Roadmap for Massachusetts Climate Policy”) leaders highlighted last-minute language that would make municipal light plants wait five years to claim biomass toward new greenhouse gas standards enshrined in the bill.  Many lawmakers and journalists initially portrayed this as a blow to the biomass plant.

In fact, the five-year delay had no meaning. That’s because the climate bill says municipal light plants do not have to meet the new greenhouse gas standards until 2030 – nine years from now.  And if municipal light plants want to use biomass to meet these standards, the bill appears to require them to buy and hold the RECs (unless some loophole or later administrative action allows double-counting)—thus making their ratepayers pay Baker’s biomass premium.

We in the municipal light plant community like to tell ourselves we have “local control.” In reality our governing bodies—the ones directly answerable to local voters and ratepayers—weren’t calling the shots here. The technical language creating enormous subsidies from our ratepayer’s wallets, and laughable legislative phraseology saying wood-burning power plants are “non-carbon emitting,” were crafted and sold by lobbyists, Baker aides, and middlemen far from our boardrooms.

But we can still step up and retake real local control, fight for evidence-based climate policy, and do the right thing for the people of Springfield.  We can yet undo the Baker/Woodcock rule-gutting and help identify energy technologies more deserving of $175 million in ratepayer support.

David Talbot is a resident of Reading and an elected member (and 2019-2020 chair) of the board of commissioners of the Reading Municipal Light Department. His comments are his own and are not represented here as being those of the board.