PORTLAND, Maine — Because of a bill passed on the last day of this year’s legislative session, as much as $13.5 million in tax dollars could go to biomass generators this year, in the name of helping a forestry industry pinched primarily by mill closures.
But before those two-year contracts for up to 80 megawatts of generation go out, the process depends in part on what regulators determine would make the process “not competitive.”
Seeing trouble ahead in markets for Maine loggers, lawmakers last session approved giving $13.5 million from the state’s projected surplus to regulators to cover the costs of above-market contracts for biomass generators, with conditions. One condition in the law was that bidding for the 80-megawatt solicitation be competitive.
At this point in the process, there’s disagreement among interested parties about what must happen to meet that requirement.
In filings with the Maine Public Utilities Commission this week, the governor’s office, biomass generator ReEnergy Holdings and Emera Maine agreed the process itself could be competitive, even if a limited number of bidders enter the fray.
The Industrial Energy Consumers Group, which represents some large industrial power users, generally disagreed with that interpretation, arguing that having multiple bidders is essential to meeting the definition of having a competitive process.
“The commission has itself determined that the basic premise of competition in bidding is to have more than one bidder,” IECG attorney Tony Buxton wrote in comments to the PUC.
Other commenters said the law should provide regulators the ability to consider other parts of the process to determine whether the process is competitive.
Patrick Woodcock, director of the Governor’s Energy Office, wrote that regulators could address the requirement by requesting financials from a bidder and use existing standards for utilities to determine whether their profits would be excessive.
“The further examination would especially be pertinent if there are limited bidders during the solicitation,” Woodcock wrote.
Emera attorney Sarah Spruce wrote that if less than the full 80-megawatt capacity came in during bidding that it shouldn’t necessarily derail the process.
If generators offer more than 80 megawatts of capacity, “the offers would then need to compete for the contracts based on the cost and benefits to ratepayers and the other considerations set forth in the statute,” Spruce wrote. “Emera Maine does not believe, however, that the statute meant to convey that the solicitation could not be competitive in the event only one or two entities submit bids.”
Jeremy Payne, executive director of the Maine Renewable Energy Association, urged that regulators can influence the process by notifying all possible bidders and ensuring they’ve not colluded on their bids. His statement also assumes multiple bidders to provide up to 80 megawatts of capacity.
In testimony against the bill in March, Public Advocate Tim Schneider expressed concern that the initial proposal for a larger solicitation, at 120 megawatts would not be competitive as only a limited number of in-state generators could meet the bid requirements.
The law requires bidders to have operated at least at half capacity for the previous 60 days and for regulators to consider the impacts on power rates, in-state economic benefits, reduced greenhouse gas emissions, fuel diversity and grid reliability benefits.
ReEnergy urged the commission not to look solely at the number of bids that come in as a basis for determining whether the bidding process is competitive.
The company’s two Aroostook County plants — in Ashland and Fort Fairfield — have been a focus of the bill. ReEnergy was the only biomass generator to offer comments on the question of competitiveness in bidding, suggesting regulators should require assurances against price fixing and solicit out-of-state bids to broaden the pool of potential bidders.
Despite the law’s requirement to consider in-state economic benefits, ReEnergy argued the potential for other generators to bid would increase the competitive nature of the process.
The company also suggested that bidders provide specific pledges that they won’t engage in illegal price fixing or bid rigging by making a sworn declaration that their bids were not established with knowledge of bids from any other parties.
“ReEnergy believes that incorporating such a requirement into the biomass resource bids not only alerts bidders to the antitrust requirements within the bid process, but also mandates complete corporate vigilance,” the company wrote.
In its request for comments on May 17, the commission said it anticipates issuing a request for proposals from biomass generators “in the near future.”