Study Shows Burgess BioPower Pumps Millions into Coos County
Business NH Magazine
A recently released economic impact study shows Burgess BioPower (BBP), the first to utilize the facility’s actual operating data, found the annual economic benefit of the plant throughout NH in 2016 was 221 jobs, $13.9 million in labor income, and $63.4 million in output of goods and services.
The study was developed by economist Brian Gottlob, principal of PolEcon Research. “The principal finding of this report is that the economic and fiscal benefits of the Burgess BioPower facility to the City of Berlin, the County of Coos, and the State of New Hampshire significantly exceed costs associated with achieving environmental and renewable energy portfolio policy and goals established by the New Hampshire legislature,” Gottlob states.
Berlin Mayor Paul Grenier says, “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.”
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 BBP’s construction and its first few years of operation, Coos County stopped losing jobs like it had been over the previous decade. In 2016, BBP’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.
- After years of increasing unemployment in Coos County, this trend reversed itself during the construction of BBP, and the information available indicates a continued decrease in unemployment now as the plant continues to operate.
Tax and Fee Revenues
In fiscal year (FY) 2016, Burgess made payments-in-lieu-of-taxes (PILOT) totaling $750,000 to Berlin. Without this revenue, Berlin’s tax rate would have increased by $1.90, or nearly 5 percent. Because of the PILOT, Berlin taxpayers (with a home at median value of $88,400) saved approximately $168/year in property taxes they would have otherwise paid. In FY 2019, the savings are expected to reach $300/year and increase annually, as Burgess’ PILOT agreement calls for escalating payments to the City through 2033.
BBP also paid $1.08 million to Berlin in water and sewer fees in FY 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 NH.
Coos County Growth
Between 2011 and 2015 (the most recent year for which census data was available), Coos County outpaced the state in several key growth areas. Per capita personal income grew faster in the county (15.7 percent) than in NH (12.8 percent). Had Coos County’s per capita income only grown at the state’s rate, the annual per person income would have been $1,039 less.
At the same time, per capita unemployment compensation payments declined more in Coos County than the state. And Medicaid payments grew more slowly in Coos County than they did in NH overall. If they had grown at the state’s rate in Coos County, Medicaid program expenditures would have been $1.8 million more in the county than they were.
Electricity Price Impacts
The study also examines costs for power generated by Burgess 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 during this time was above the market price.
In 2015, NH’s residential, commercial and industrial electricity consumers paid a total of $1.76 billion for electricity. Less than one percent of that total – $16.5 million – is from the above-market prices that Eversource paid Burgess for electricity.
However, in calculating the true ratepayer costs of BBP’s above-market power, one must also include the “forward capacity market” payments (capacity payments) to Eversource, as well as the sale of “renewable energy certificates” (RECs) as specified in the power purchase agreement. Factoring in these reduced costs for Eversource customers (capacity payments and below market price RECs), the actual impact of Burgess power in 2015 was an additional:
- $13.98/year for residential customers;
- $47.81/year on commercial customers;
- $206.80/year on industrial customers.
Preliminary 2016 data (subject to revision by the U.S. Energy Information Agency) suggest that Burgess’ impact on Eversource’s average residential customer was $44/year, $122/year on commercial customers, and $374/year on industrial customers when capacity payments and REC sales are included.
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.
Gottlob concludes, “The economic impact of Burgess’ above market electricity prices in 2015 was to reduce annual job growth in New Hampshire by about 1/100th of a percent or less. 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.”
For a copy of the study, visit AdvanceNH.com.