PORTLAND, Maine — The Maine Public Utilities Commission on Friday opened bidding on contracts for electricity generated by biomass, in a process that could use up to $13.4 million in tax dollars to pay for two-year, above-market contracts.

The commission set a July 29 deadline for bids in the case initiated to help the state’s logging industry, which with multiple paper mill closures has seen markets for softwood tree species erode steadily.

Regulators could direct the state’s two major utilities to enter contracts for up to 80 megawatts of biomass capacity, as long as those generators have been operating at at least half of their individual capacity for 60 days before the opening of bidding.

Under the law passed earlier this year, those regulators can decide to use the $13.4 million allocation from the state’s rainy day fund to support contracts that come in at above-market prices. Up to 50 percent of the fund can go to generators connected to the northern Maine grid serving Aroostook County, according to the PUC request.

Before approving any contracts, regulators must determine whether the bidding process was competitive. They may reject all of the bids if they find otherwise.

The law directed regulators to consider pricing of the contracts but also the in-state economic benefits. Over the two years, if state utilities regulators find the economic benefits are less than promised, they can reduce contract payments by an equal amount.

Parties involved in the case so far have disagreed about whether bidding can be “competitive,” even if only one company ends up bidding or if the total capacity bid into the procurement adds up to less than 80 megawatts.

Biomass generators, utilities and others argued that broad notice of the process and negotiations between the commission and others could allow it to deem the bidding competitive, even in the case of a limited number of bids.

Darren Fishell

Darren is a Portland-based reporter for the Bangor Daily News writing about the Maine economy and business. He's interested in putting economic data in context and finding the stories behind the numbers.