AUGUSTA — Efforts to help move the state’s biomass power industry onto a sustainable financial path are going to be put off until next year, lawmakers decided Tuesday, amid time concerns and proposals that are both complex and controversial.

At the suggestion of the bill’s sponsor, Sen. Tom Saviello, R-Wilton, the Legislature’s Energy, Utilities and Technology Committee voted unanimously to carry over the measure until next session.

Saviello presented recommendations based on the findings of a special study group created last year. They’re meant to improve the economics of the state’s struggling wood-fired power plants. But it was clear during a public hearing that although some of the ideas have support from the forest products industry, they will be opposed by Gov. Paul LePage and Central Maine Power Co.

The core of the disagreement is a familiar one: Whether electric customers should help subsidize power generation that contributes to economic development but increases rates.

Power plants that burn low-value wood play a vital role in Maine’s $8.5 billion forest sector. They provide jobs to loggers and truckers in rural Maine, create a market for sawdust and waste wood from sawmills and generate electricity that’s sold in southern New England. They’ve become even more important lately, after six paper mills closed in three years.

But the plants are old and inefficient, reducing the value of their power and threatening their survival.

To keep them running in the short term, lawmakers last year passed a $13.4 million bailout bill that provides up to two years of taxpayer-funded subsidies. The plan was supported by LePage, who opposes renewable energy subsidies in general but also is under pressure to save forest industry jobs.

Even in its early stages, the bailout program has needed readjustment. One of the two major biomass power owners, Stored Solar LLC, requested and received permission from the Public Utilities Commission in April to rework its contract, amid operational problems at its plant in Jonesboro.

The request put regulators and LePage in a difficult position. Stored Solar is working to locate a greenhouse at its plant in West Enfield that would use waste heat from wood burning, and has broad ambitions to create a $240 million biorefinery to turn wood into liquid fuel at a closed paper mill in East Millinocket. But if the biomass plants fail, the broader ambitions can’t go forward.

One of the recommendations sketched out Tuesday in L.D. 131 is to gradually increase the percentage of biomass energy that qualifies under the state’s Renewable Portfolio Standard, which requires electricity suppliers to make up a certain share of their power sales with renewables.

Another idea is to include large, wood-fired heating systems in the RPS program, an approach taken in New Hampshire and Massachusetts. These so-called thermal credits reward systems heat schools and large businesses, for instance, but don’t produce power.

A third idea would designate an economic development credit as a way to reward power plants for creating direct economic benefits, such as jobs.

This approach was favored by the Professional Logging Contractors of Maine. The group’s executive director, Dana Doran, noted that markets were lost for 800,000 tons of wood in the past few years as paper mills closed. The bill’s proposals would help loggers and truckers stay in business and offer some prospects for growth. Keeping the plants operating can be seen as part of a long-term economic development strategy for rural Maine, he said.

But these and other elements of the bill penalize electric customers, said Angela Monroe, the governor’s acting energy director. The current RPS program costs customers $70 million over five years in above-market rates, she said. Beyond that, an economic benefit credit would be hard to verify and analyze, Monroe said.

“Electric rates are too often used for economic development purposes,” she said, “and the economic drag resulting from higher electric rates is generally overlooked.”

That point was echoed by Joel Harrington, a CMP spokesman. He noted that customers spent $6 billion over 30 years to subsidize renewable power plants, $2 billion of that in above-market rates. If lawmakers want to help the biomass plants, he said, they should do so using taxpayer money as they did with last year’s bailout bill – not through electric rates.

These concerns preview the debate that’s sure to happen next year.

Some industry supporters who testified at the hearing encouraged members of the committee to visit the power plants, sawmills and other forest product facilities over the summer, to gain a firsthand understanding of the issues. With time running out in this legislative session, it was easy for the committee to set biomass aside for now.

Tux Turkel can be contacted at 791-6462 or at:

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