BERLIN, N.H. – The decades-long decline of the local paper industry finally did in Berlin’s smoke-belching pulp mill in 2006. The year after the 100-year-old plant closed its doors, thousands gathered to watch a demolition crew topple three of its smokestacks.

Today, the thousands of acres of surrounding forest have some eyeing the city as a future renewable energy hub. The economic stimulus bill passed by Congress is expected to make billions of dollars available for homegrown, renewable energy and has residents of this small city 80 miles from the Canadian border sensing a turnaround.

Two electricity plants that would burn waste timber from the surrounding forest are in the works, as is a plant that would make the wood pellets used as fuel.

But the area needs costly transmission line upgrades before the power plants can be fired up.

State Sen. John Gallus is pitching the upgrades as part of a renewable energy pilot project.

“Every state around is looking for these giant handouts from Washington right now but we’re figuring we have kind of a two-fer going here,” Gallus said. “It’s a big infrastructure improvement and it’s a renewable energy resource. This is two of the incoming president’s big things he’d like to start with and we’d like to help him.”

Known as the city that trees built, Berlin once thrived on its paper pulp mill. Since the mill closed, housing prices have plummeted and Main Street shops have struggled to stay afloat. City leaders have been looking, with little success, for something to give the city an economic boost.

They may have found the answer in the three wood-biofuel projects. Laidlaw Energy Group wants to build a 66-megawatt wood-burning power plant, employing 40, on the site of the former pulp mill. The wood-pellet factory is scheduled to break ground this spring and will create about 35 jobs. The second wood-burning power plant, on the Androscoggin River, will put two dozen people to work.

Company officials say jobs in the plants will indirectly create 700 more jobs over time.

“That all gets spent in the Berlin area,” said Bill Gabler, project manager at Clean Power Development LLC. “Those guys take their wives out to dinner and buy new furniture, so the trickle down effect on the economy in the area is really pretty significant.”

But before the proposed power plants can go online, the electrical transmission line that would carry power from Berlin to the rest of New England may have to be upgraded.

It doesn’t have the capacity to handle the two plants and the other projects proposed for the thinly populated North Country, and upgrading the line is estimated to cost more than $100 million. The state could pay for it or ask regional power manager ISO New England to help get surrounding states to pitch in, but with states slashing spending, Gallus says Washington is the most promising source.

Sen. Jeanne Shaheen wants the power line upgrades included in New Hampshire’s stimulus funds and the region’s congressman, Rep. Paul Hodes, believes increased transmission capacity could create more jobs and bring more affordable energy to the region.

Though residents generally support biomass energy, Laidlaw’s plan to redevelop the old mill site has met with some resistance.

Barbara Guay, owner of Gill’s Flower Shop on Main Street, said after decades of a big, smoke-spewing mill in the center of downtown, she’d rather see a grand hotel or a casino on the prime, riverside plot. But Guay understands that her business can’t survive unless the city brings in more jobs.

“People aren’t going to buy flowers when they need food and fuel,” she said.

Mayor David Bertrand was voted into office in 2007 on a largely anti-Laidlaw platform.

“The demolition of the pulp mill was a very symbolic event in the history of Berlin. When people saw the stacks coming down I think it broke the mold and finally people began to realize, ‘Hey, we’ve got to seek a new direction for the city of Berlin,”‘ Bertrand said.

Dick Huot, who heads economic development for Berlin-based Tri-County Community Action, said the city should add jobs any way it can until it gets back on its feet. He said Laidlaw can help by doing all it can to expand opportunities in the city.

“The biomass plant is like cod liver oil,” he said. “If we have to take it, how can you sweeten it for us?”

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