SALEM — A bill moving through the Legislature would use money from a renewable energy trust fund to aid Salem in the likely event future payments drop from the city's largest taxpayer, the coal-and-oil-fired Salem Harbor Station power plant.
Senate Majority Leader Fred Berry of Peabody and state Rep. John Keenan, D-Salem, are the chief sponsors of language in the legislation that would have the trust fund make up the difference between the $4.75 million that plant owner Dominion currently pays to the city and future tax bills, which are expected to be lower.
While stressing that this bill has a way to go before it becomes law, Mayor Kim Driscoll said it would provide welcome relief to a city that has laid off teachers and other employees to close recent budget deficits.
"This is huge — to have an addition in revenue coming in now," the mayor said. "... It means people coming back and restoring some of the public education cuts."
The Senate passed the bill on Tuesday, and the House of Representatives takes it up today.
"I felt strongly that this bill should include a provision that protected the financial interests of host communities, such as Salem," said Berry, who lobbied to keep the Salem aid alive.
"This does not protect the power plant; it's protecting the city," said Keenan, who has spoken to many House colleagues about the bill. "More than anything else, it holds the city harmless. ... The city has hosted the power plant since 1954 and has been a good neighbor to the various other communities on the North Shore who have received the energy from the power plant.
"As they roll out the Regional Greenhouse Gas Initiative and address emission issues and global warming, the city of Salem should not have to take the full financial brunt of that process."
RGGI is a cooperative effort among Northeastern states to reduce the emission of carbon dioxide, a so-called greenhouse gas blamed for global warming. Dominion will have to pay millions of dollars in penalties under RGGI and, as a result, has argued that the value of the plant, and also its tax bill, should be reduced.
The energy bill, including the aid to Salem, appears to have broad support. For example, state Rep. Lori Ehrlich of Marblehead, one of the founders of the North Shore environmental group HealthLink, is on board.
"I think it's appropriate to have the state help the host communities to help protect their tax base," she said.
The current $4.75 million deal between the city and Dominion expires July 1. Company officials have repeatedly told the city that they overpaid for the plant last year and viewed $1.25 million of its total payment as a "community donation."
If Dominion were to pay the city only $3.5 million next fiscal year, the additional $1.25 million — the amount needed to keep the payment the same — would come from a trust fund created under this energy bill. The money in that trust fund, which could be as much as $100 million, will come from "allowances," or payments fossil fuel plant owners like Dominion make for emitting carbon dioxide.
The RGGI Auction Trust Fund is being established to finance renewable and alternative energy projects.
The first auction to purchase those allowances is scheduled for Sept. 10. Although nobody knows what the allowances will cost, Dominion may have to pay anywhere from $10 million to $20 million, Keenan said.
"They're going to be putting in (to the trust fund) a lot more money than we'll be getting out of it," he said.
In a related development, Dominion will sit down with the state Department of Environmental Protection and local environmental groups on July 24 to lay out plans for meeting future emission regulations. Those plans could range from buying a different kind of coal and oil that produces lower emissions to installing new equipment at Salem Harbor Station to meet the state's tougher pollution regulations.
Those potentially high future costs from RGGI and other regulations have been cited by Dominion as a reason for lowering the plant's assessment.
Under the new energy bill, Salem would receive payments for the next three years, or until 2011, Keenan said.
Dominion pays about 7 percent of the city's total tax revenues, which is more than seven times as much as the city's No. 2 taxpayer, Shetland Properties.
