Compromise agreement reached on Berlin Station
August 25, 2011BERLIN — Life has been breathed back into the Berlin Station biomass project.
A compromise has been reached and that, if approved by the state Public Utilities Commission (NHPUC), will result in the construction of a wood-burning biomass plant with an up-to-75-megawatt capacity on the site of the Burgess pulp mill, designed to reuse the existing Babcock and Wilcox boiler and stack.
The six independent power producers (IPPs) that burn chips of low-grade wood to generate electricity have agreed to drop their appeal before the state Supreme Court in exchange for various considerations, including 20-month purchase power agreements (PPAs) at above market rates from Public Service of New Hampshire (PSNH).
The Governor's Office has plans to announce the deal after all the paperwork is signed and PSNH files the PPAs on a docket at the NHPUC.
"This agreement will jump-start Berlin's economy," said Cate Street Capital's president and CEO John Halle in a telephone interview.
Gov. John Lynch, DRED commissioner George Bald, the governor's legal counsel Jeff Meyers, and Sen. John Gallus all played important roles in working out this compromise because of their common belief that the biomass plant will bring jobs to Berlin, Coös County, and the North Country, Halle explained.
The in-town biomass plant itself will provide 40 to 50 jobs and many more will be created in the woods for loggers and foresters, plus truckers, haulers and support service providers, he pointed out.
Halle has been so confident that a compromise could be reached that he about a week ago he custom-ordered a $14 million Fuji turbine from Japan.
The visibility that Berlin Station will garner from Cate Street's $300 million investment will serve to attract other investments, especially in the manufacturing sector, he said.
Already Halle is looking forward to bringing a company to the city that is looking to invest $100 million in an industry new to Berlin. "Capital attracts capital," he said. "Berlin has good machinists and high-quality manufacturing labor. It's a great place to invest."
Cate Street bought out Laidlaw in Sept. 2010, and has been involved in the proposed project for over four years, Halle explained. Despite the "considerations" that were involved in reaching a compromise, he said he still believes that Berlin Station can be a profitable venture.
The biomass plant — that is rumored will be renamed Burgess Biopower — should be in operation by the end of July 2013.
Halle took a chance by going ahead with planned demolition activities, including breaking up and removing no-longer-needed concrete foundations to get a three-month jump on what had been expected to be a 27-month construction schedule.
A division of Babcock and Wilcox had also done the necessary detailed logistical planning so that on-the-ground work can soon begin.
Certain projects must get underway before winter settles in.
The financing package looks secure, Halle explained, with $200-plus million in senior debt, $54 million in shareholder debt, $15 million from the New Market Tax Credit program, plus the $30 million that has already been invested.
The negotiating process has been wearing and sometimes contentious with many ups and downs, Halle said.
This past weekend, he said, he and his wife slipped away in their boat to Chebeague Island, 10 miles off Portland, Me., in Casco Bay, to relax and have time together, uninterrupted by business calls and crises.