Burgess BioPower study shows benefits of biomass plant exceed market cost of power

BERLIN — An economic impact study released Monday shows Burgess BioPower significantly benefits the economies of both Coos County and New Hampshire.

The plant has been the subject of debate because Eversource is paying above market rates for power generated there under the terms of a 20-year power purchase agreement approved by the Public Utilities Commission. The agreement caps the additional cost at $100 million.

The 35-page study was commissioned by Burgess BioPower but the company stresses it was prepared independently by Brian Gottlob, principal of PolEcon Research. Gottlob was given access to the facility’s actual operating data.

The study found the annual economic benefit of Burgess BioPower throughout the State of New Hampshire in 2016 was 221 jobs, $13.9 million in labor income, and $63.4 million in output of goods and services.

“This study’s findings confirm what we have been seeing in Berlin and around Coos County every day, that Burgess — through jobs, taxes and general economic stimulation — is a vital part of our region’s revitalization,” said Berlin Mayor Paul Grenier.

The study presents findings in several areas: jobs and the economy; taxes and fees; socioeconomic impacts; demographics; and electricity prices. Some of its most significant findings include:

• Burgess Has Helped Slow and Reverse the Flow of Jobs from Coos County.

During construction of the biomass plant and its first few years of operation, Coos County stopped losing jobs like it had been over the previous decade. In 2016, Burgess BioPower’s annual operations supported 221 jobs, of which 184 were in Coos County. These jobs accounted for $11.5 million in labor income in Coos County, and another $2.4 million in other parts of the state. Since the plant’s biomass fuel is sourced locally, logging and sawmill jobs accounted for 43 percent of the Coos County jobs supported.

• Burgess Has Generated Significant Tax and Fee Revenues.

Burgess BioPower has greatly contributed to the fiscal stability of Berlin and its residents. In the fiscal year 2016, Burgess made payments in lieu of taxes totaling $750,000 to Berlin. Without this revenue, Berlin’s tax rate would have increased by $1.90, or nearly 5 percent.

The study estimates the average taxpayer saved about $168 a year in property taxes in fiscal 2016. Those savings are expected to reach $300 in fiscal and increase annually, as Burgess’ PILOT agreement calls for escalating payments to the vity through 2033.

The biomass plant also paid $1.08 million to Berlin in water and sewer fees in fiscal 2016. Without this contribution, the water and sewer rates would have increased by approximately 15 percent.

In total, economic activity in 2016 resulting from Burgess BioPower produced an estimated $3.94 million in taxes, fees, and charges paid to the state and its local governments in New Hampshire.

• Burgess’s Benefits Significantly Surpass Electricity Price Impacts.

The study also examines costs for power generated by Burgess BioPower and sold to Eversource customers through a power purchase agreement. Since the price of natural gas is the most significant factor in determining New England’s wholesale market price for power, and because natural gas prices dropped significantly and unexpectedly to 20-year lows in 2015 and 2016, the cost for power generated by Burgess BioPower during this time was above the market price.

In 2015, New Hampshire’s residential, commercial and industrial electricity consumers paid a total of $1.76 billion for electricity. Less than 1 percent of that total — $16.5 million — is from the above-market prices that Eversource paid Burgess BioPower for electricity. The study argues, however, the true ratepayer costs of Burgess BioPower above-market power must also include the “forward capacity market” payments to Eversource, as well as the sale of “renewable energy certificates” as specified in the power purchase agreement. When those are factored in the study claims the actual impact of Burgess power in 2015 was an additional $13.98 per year for residential customer, $47.81 per year on commercial customers and $206.80 per year for industrial customers.

The study notes natural gas prices have risen since 2016, and the U.S. Energy Information Agency projects higher prices for this fossil fuel in the future, reducing the risk that prices for Burgess electricity will exceed the market price.

“Comparing the economic benefits of Burgess to the costs associated with Burgess indicates that the economic benefits (not including socioeconomic and demographic benefits) greatly exceed Burgess’ costs,” Gottlob said.

For copy of the study, go to AdvanceNH.com.