Proposal Seeks to Hold Biomass Energy Plants Accountable for Unpaid Invoices

Feb 9, 2018

Stored Solar LLC, the owner of two biomass energy plants set to receive a slice of a $13.4 million taxpayer-subsidized bailout, is the target of legislation designed to make sure the company’s loggers and contractors are compensated for unpaid bills. The measure also recommends that the Maine Attorney General investigate the company.

The proposal is unusual both because it seeks to penalize a specific company and it effectively terminates its subsidy contract before it’s reviewed by the Maine Public Utilities Commission (PUC). The proposal stems from the ongoing controversy with Stored Solar, which was accused of withholding between $200,000 and $1.5 million to contractors at various points last year.

The bill also shows how some lawmakers are trying to curb fallout from the Legislature’s controversial decision two years ago to use taxpayer money to prop up the ailing biomass industry. Wood-fired generators are struggling to compete with other energy sources, but biomass remains a critical market for sawmill waste and loggers.

While the 2016 subsidy bill received bipartisan support and was signed by Gov. Paul LePage, many lawmakers expressed reservations about approving it. LePage has since said the bailout was a mistake.

The Professional Logging Contractors of Maine, a trade organization representing logging and trucking contractors, backed the bailout in 2016. The organization described it as a lifeline to the loggers who depend on biomass plants to sell waste wood.

Dana Doran, the group’s director, told lawmakers on the Energy and Utilities Committee Thursday that the new bill was necessary to protect the integrity of the subsidy program. Doran said Stored Solar LLC failed to pay contractors, in some cases for 30 days or more. The unpaid bills forced some contractors to take out loans against their businesses or homes, or to seek legal remedy.

Stored Solar described those debts as “invoicing disputes” in a letter to the Public Utility Commission, which approves the contracts with biomass operators and the release of the subsidy.

Doran said the negative publicity – and the pending bill – appears to have forced Stored Solar to start paying its contractors.

“Without this public inquiry, it is unclear whether or when payments would have been made,” Doran told the committee.

Bill Hewitt, an attorney representing Stored Solar, urged the energy committee to reject the bill. He acknowledged that the company had cash flow problems after taking over the aging plants late in 2016, but he said the contractor payments are now current.

Several lawmakers were skeptical of Hewitt’s remarks.

Democratic Rep. Heather Sanborn of Portland asked Hewitt about a letter from the logging company W.T. Gardner & Sons, which said Stored Solar still owes them close to $200,000.

“With regard to W.T. Gardner & Sons, I heard you say it’s complicated. I haven’t heard you say you’ve paid them,” Sanborn said.

Hewitt acknowledged the dispute has not been resolved, but said it wasn’t an invoicing issue, but a broader disagreement.

Other lawmakers argued that the bill wouldn’t be necessary if Stored Solar had made timely payments.

“The fact of the matter is, it’s perceived you haven’t paid your bills,” said Portland Democratic Sen. Mark Dion.

Dion, a former sheriff, also chided the company for using the term “invoicing delays” to describe unpaid invoices.

“I remember when I chased people on the street they called it ‘theft’ and when I put on a suit they called it a ‘financial misadventure,’” he said. “But to the jury, I reminded them that it was still a theft -- just cloaked in something else.”

The proposal has bipartisan support, but not from the LePage administration. The governor’s energy chief Steven McGrath said the bill attempts to resolve a dispute between private entities.

Sanborn challenged McGrath, saying the money flowing to the companies is taxpayer dollars.

Nevertheless, some elements of the bill could face other challenges. As currently written, the proposal would require the PUC to divert funds that would have gone to Stored Solar to its unpaid vendors.

But Paulina McCarter Collins, the PUC’s legislative liaison, told the committee that the agency doesn’t have jurisdiction over contractual relationships between the Stored Solar and logging contractors.

She also noted that the PUC is still evaluating whether Stored Solar met its contractual obligations with the agency and that review won’t likely be finished until early this spring.

The bill would effectively preempt that evaluation by declaring that Stored Solar has violated its obligations, McCarter Collins said.

Stored Solar took ownership of two antiquated biomass energy plants in Jonesboro and West Enfield late in 2016, shortly after the Legislature passed the multimillion bailout.

The PUC approved the company’s bid for a slice of the public funds through a two-year deal that required the operator to take 500,000 tons of biomass each year, while also creating 42 full-time jobs and make $2.5 million in capital expenditures in the first year.

Collins said Stored Solar has yet to receive any public funding.

The energy committee will hold a work session on the bill later this month.