Future unclear for Biomass One

WHITE CITY — Born in response to spiking energy prices of the 1970s, a now maturing and green biomass industry finds itself positioned to play a leading role in the renewable-energy movement.

Biomass technology and its possibilities weren't readily understood when Biomass One was proposed and built on Avenue G in the mid-1980s. Proponents saw it as an investment in the future and a way to deal with wood waste and energy issues. Opponents saw it as a government giveaway and a danger to air quality.

Today, Biomass produces 30 megawatts of electricity — enough to power 5,000 homes — and has become a favorite Rogue Valley recycling site for everything from Christmas trees and hedges to plywood from remodeling projects.

While the plant is both productive and profitable, with 65 employees and indirectly providing another 150 jobs, the future is somewhat murky.

"There are so many things going around in Congress right now and a lot of things proposed that could benefit the biomass industry," said John Brammerman, Biomass' general manager. "Going forward, it's too early to see where all of this is going to wash out."

Energy practices stand to be revamped by the time legislation involving cap and trade, renewable energy and carbon credits turns into law.

"We don't know how it will affect us," Brammerman said.

Congress passed the Public Utility Regulatory Power Act of 1978 in response to the Arab oil embargo, propelling a new industry into existence.

"Almost overnight it created 100 biomass plants," said Bob Cleaves, chairman of the Biomass Power Association in Portland, Maine. "They used rice hulls in Louisiana, sugar cane in Florida and wood waste in Maine, Oregon and Northern California."

Biomass began commercial operations locally in 1987 after acquiring air-quality permits from other industrial users in the area.

"By shutting down boilers from two other wood-products manufacturers we actually reduced emissions by 20 percent," Brammerman said.

Investors poured money into projects on the assumption energy prices would continually climb. Many upstart biomass companies locked in rates for 10 years, anticipating they could boost prices down the road.

"A couple of years later, the energy crunch was over and oil crashed," Brammerman recalls. "The high energy rates they were anticipating from escalating prices over the next 10 to 20 years never materialized."

As a result, many of the biomass plants coming online in the 1980s failed, primarily in the San Joaquin area of California and in rural timber towns associated with sawmills.

"About half those plants shut down or were completely dismantled because of the lower prices," Brammerman said.

The White City plant's ownership managed to avoid the collapse because it locked in rates for 25 years

"Our contract was very unique in the way we structured it," Brammerman said. "We started extremely low and the plant lost money for quite a few years. But our price escalated over the term of the 25-year contract (which runs through 2012)."

After the original contracts expired, regulators required a rate model based on what it would cost to build a facility to produce the power through other means, Brammerman said. At 3.5 to 4 cents per kilowatt hour, operators couldn't even cover fuel costs,

In 1990, Biomass One opened a public drop-off site across the street. In 1993, the company began working with landfills, using its grinders to separate wood waste and then truck it back to White City.

Historically, Biomass One has hauled in wood waste from a geographical area roughly bounded by Coos Bay, Eugene, Redmond and Northern California.

It has 60 suppliers.

But as regional wood-products companies have dropped by the wayside or curtailed operations, Biomass One has had to extend its search for fuel.

"We don't have any long-term contracts," Brammerman said. "Normally, we negotiate price quarterly or semi-annually. We've had to go farther and get creative. We've been getting wood from the cleanup of Central Oregon bug kills and thinning projects."

After 2012, there are no guarantees for the plant. While utility companies are required to purchase certain amounts of renewable energy, the way things stand now, Biomass One wouldn't even fall into that category.

"The way it's written, we don't qualify," Brammerman said. "Only plants 1995 and newer do, although there is no difference between their plant and ours."

Industry lobbyist are trying get a provisions amended into the forthcoming legislation.

Cleaves said there are about 100 biomass plants, down from a high of 120. Only a handful exceed Biomass One's 30 megawatts — Shasta Energy in Anderson, Calif., an Avista plant in Kettle Falls, Wash., and a plant in Newington, N.H., generate 50 megawatts.

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.

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