PORTLAND — Gov. Paul LePage’s office is hoping Maine energy regulators can place a roadblock in front of Verso Paper’s sale of its Bucksport mill to a Canadian scrap metal dealer.
State energy regulators confirmed Tuesday that they are reviewing an inquiry from LePage about whether Verso can transfer its contract to provide renewable power to Central Maine Power through 2016.
Blocking the transfer of the contract would depend on an argument that the power agreement for Verso was contingent upon continued operation of the mill. Those terms aren’t stated specifically in the agreement, which gives CMP renewable energy credits to help satisfy its obligation to buy a certain amount of its power from renewable resources.
Harry Lanphear, a spokesman for the Maine Public Utilities Commission, said Tuesday that the PUC is reviewing the governor’s request along with details of the agreement between Verso’s energy-producing subsidiary in Bucksport and CMP to suss out the intent of that deal.
He could not say whether the PUC review is typically required for transferring such renewable power contract agreements to the new buyer of a particular asset.
Scrap metal dealer AIM Development does also need approval from federal energy regulators to take on permits to operate the power generation assets at the shuttered mill.
In his letter to PUC commissioners, LePage said that the intent of the contract “appears to have been to support paper jobs at the mill.”
In the order directing CMP to enter into that long-term agreement, the PUC mentioned in its decision that Verso had proven the long-term contract was necessary for it to pursue the boiler conversion project to generate power and that it “is necessary for the Bucksport mill to remain competitive in the industry.”
However, the PUC’s ability under state law to require such renewable power purchases is based on demand for new renewable generation, not on associated economic benefits. The steam turbine built as part of Verso’s Renewable Capacity Project has a generation capacity of up to 40 megawatts and cost about $40 million to build.
Patrick Woodcock, director of the Governor’s Energy Office, said his office estimated the power contract will be worth about $4.8 million in 2015 and $4 million in 2016.
In his letter, LePage referred to those payments as “a subsidy” and asked regulators to “take all steps necessary to prevent a company from taking advantage of this contract while not keeping the Bucksport mill operational.”
LePage has long been a critic of the structure of the state’s renewable energy portfolio standard, which requires that supply come from generators putting out less than 100 megawatts, except for wind farms.
That requirement benefits smaller renewable generators such as the biomass generators and the associated steam turbine in Bucksport, which without the cap would have to compete with hydropower dams over that capacity in Quebec and the Canadian maritime provinces.
LePage’s letter to the PUC is the first specific indication of how his administration hopes it might intervene in the sale, something a spokeswoman for the governor said his office was exploring after the sale of the closed paper mill to AIM Development was announced earlier this month.