Burgess BioPower files for bankruptcy, terminating contract with Eversource
A biomass power plant in Berlin has filed for Chapter 11 bankruptcy and terminated its contract to sell power to Eversource, after a years-long controversy over the cost of its electricity.
Eversource, New Hampshire’s largest utility company, is rejecting the company’s termination of their contract, and the company says it will pursue mediation.
Burgess BioPower, which owns the plant, has been selling electricity to Eversource since 2011. The biomass plant generates power by burning low-grade wood. Much of that power has been more expensive than the market rate, and that cost has been borne by ratepayers.
The impact of Burgess’s over-market costs on Granite Staters’ electric bills has been a sticking point for many, including the state’s ratepayer advocate. But the plant has supporters, especially in the North Country. Former Berlin Mayor Paul Grenier said the plant was a “vital” part of the city’s economy –— and the health of Coos County more broadly.
A report paid for by Burgess BioPower but prepared independently found that Burgess supported 240 jobs, and had an annual economic benefit to New Hampshire of more than $43 million. The 2019 report found if Burgess closed, more than 100 people in the forest and wood products industries would lose jobs. The plant provides a market for low-grade forest products, which are not usually used elsewhere.
But in the years Burgess has been selling power to Eversource, biomass plants have struggled across New England. The impact of burning wood for power has received scrutiny from those concerned about climate change and the health of nearby communities. And economics, for Burgess, remained an issue.
The contract between Burgess and Eversource set a limit of $100 million in over-market costs, or the accumulated extra cost of Burgess’s power if it was above the market rate.
Lawmakers suspended that limit multiple times. But last year, Gov. Chris Sununu vetoed a bill that would have given Burgess BioPower a financial lift by relieving it of the responsibility to pay back the over-market costs it accrued over the $100 million cap, about $71 million.
At the time, Burgess BioPower spokesperson Sarah Boone said the veto created a “serious financial event” for the company, and for the northern New Hampshire economy.
Now, Burgess says it’s terminating its contract with Eversource because of the utility’s “failure to make required payments” to the company.
That’s a claim Eversource disputes, saying they started “reducing payments” to Burgess to recover the $71 million in over-market costs they’ve paid to Burgess over the past three years. That reduction in payments is part of the requirements of their contract.
“Eversource is not in default of the contract and rejects Burgess’ unilateral termination of the Power Purchase Agreement (PPA), as well as any claims that our adherence to the terms of the contract forced its bankruptcy,” spokesperson William Hinkle said in a statement.
Burgess disputes that Eversource is allowed to reduce particular kinds of payments, like those for Renewable Energy Certificates, in order to collect back over-market costs.
Hinkle said the utility will pursue mediation and alternative dispute resolution processes to collect that $71 million. Eversource does not profit off of their contract with Burgess, he said, and savings from reduced payments go to utility customers through a decrease in a part of their bill called the Stranded Cost Recovery Charge. Burgess’s announcement that it is terminating the contract will not have an impact on electricity service.
Burgess says it will continue producing power throughout the bankruptcy process. According to company representative Sarah Boone, with court approval, they could sell their power into the region’s wholesale market or to another party.
The company says employees at their Berlin facility won’t be affected by the bankruptcy process, and they intend to reorganize in order to “best position the Company for long-term success.”