SALEM — On the last page of a comprehensive energy bill that passed the Massachusetts House last week is a section unmistakably written with the Salem power plant in mind.
It gives special privileges to gas-powered energy plants that are located at former coal-powered plants — which is soon to be the case at Salem Harbor Station — requiring energy distributors to buy power from those plants for 15 years, regardless of price.
The provision, which was absent in the version of the bill the Senate passed in April, gives the probable new owner of the Salem plant, New Jersey-based Footprint Power, a potential guaranteed financial windfall — some have said “a sweetheart deal” — before the ink on its sales agreement with plant owner Dominion has even dried.
And it’s sparking controversy among environmentalists and business advocates alike.
While the bill would increase profits for plant owners, it would also increase electricity costs for consumers, say critics, who include Associated Industries of Massachusetts, a business lobbying group, and various environmental groups.
“I have never in 15 years of doing this seen AIM and the environmental community united like they are now,” said Jane Bright, a longtime member of HealthLink, a local environmental group that battled for years to close the Salem power plant. “I am not aware that the public should be responsible for someone else’s profit.”
Rep. John Keenan, the Salem Democrat who co-chairs the Committee on Telecommunications, Utilities and Energy and is the lead author of the bill, makes no bones about the fact that this was intended specifically to help Salem Harbor Station transition to a cleaner, natural gas-burning plant.
There is no decommission fund set up to pay for cleanup of the Salem plant when it closes in 2014, Keenan said, and cost estimates for the task are in the tens of millions of dollars. Ensuring a buyer some level of profitability is necessary, he said, so the plant doesn’t sit for years as a dormant eyesore.
“Job No. 1 of that statute is to take down that (plant) building, take down the stacks and clean up the property,” Keenan said. “Some plants take decades to redevelop. This is to enable and give incentive and make it sustainable to clean up sites like this.
“When other parts of the country have close to 50 percent coal, we believe this is an opportunity to show the rest of the country how to transition from an older source of power to a newer one.”
Coal-fired plants in Somerset and Holyoke could also one day benefit from the legislation, he said.
But critics contend that ratepayers in Massachusetts should not be responsible for the cleanup.
“When you’re in the pollution business, you know that it is your responsibility to clean it up,” Bright said. “If Footprint is worried about the cost of the cleanup, they should have negotiated it into the purchase price with Dominion.”
The provision was not written with Footprint’s guidance, nor did the company come to Keenan to ask for the incentives — rather, Keenan said, he saw the writing on the wall as the process was unfolding.
“This is my district, and I have said all along that I will try and help anyone that wants to come in and invest (in the plant),” Keenan said.
“This is one of the primary reasons I wanted to be chair of this (energy) committee. I knew this was going to come up, and I wanted to be able to address this issue,” he said. “I don’t think it surprises anyone that I would try to help my home district, but I also think this is good policy. If this were in Marblehead and the shoe was on the other foot, I would also support this.”
Marblehead Rep. Lori Ehrlich was one of only a handful of Democrats to vote against the bill, despite — like the majority of environmental groups — favoring nearly all of its other provisions, which include measures to lower energy costs, create jobs and encourage more use of renewable energy.
“In terms of policy, (the coal plant section) is anti-competition, and it saddles consumers with higher energy rates by asking them to absorb the risk of the inevitable increase in gas prices,” Ehrlich said. “It runs counter to the spirit of the overall bill.”
It is little more than “ratepayers and taxpayers making financial contributions to the plant owners,” she said.
Footprint released a statement indicating that the bill didn’t influence its decision to buy the plant.
“The finalizing of our agreement with Dominion was coincidental to the timing of the energy bill,” Scott Silverstein, president and COO of Footprint, said in a statement. “Still, we applaud the Legislature for a sound energy bill that includes smart environmental and remediation provisions and ratepayer protections.”
Members of the Associated Industries of Massachusetts disagree.
“While we understand the notion is to promote development at these (former coal plant) sites, decisions such as this should be left to the market to decide,” Robert Rio, vice president of government affairs at AIM, wrote in a letter to House Speaker Robert DeLeo. “This section would saddle the distribution companies with uneconomic contracts, ultimately raising the cost of power.”
Keenan disagrees with that, pointing to language in the law that lets the Department of Public Utilities review any contract and reject it if it will not result in “net benefits in terms of costs to electricity customers ... and the mitigation of environmental impacts.”
It would be up to the Department of Public Utilities to determine what the net impact of the long-term contracts would be, Keenan said.
A conference committee to reconcile the Senate and House versions of the bill is expected to be formed soon. Keenan isn’t sure whether the coal plant section will make it into the final version.
“That’s not something we’ve gotten into yet,” Keenan said. “Sen. (Fred) Berry (D-Peabody) will be an ally on that side, and he is in tune with this. I’ll be relying on his assistance.”
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