Salem Harbor Station will be dismantled and the entire 60-acre site will be cleaned up by 2017, the state Legislature vowed yesterday in passing an energy bill championed by Salem Rep. John Keenan.
The legislation, embedded in a much larger renewable-energy bill, calls for the formation of a state task force to look into options for “the full financing” of deconstruction and cleanup of the plant. It will also explore how to maintain the jobs and tax revenue lost with the closing of the plant and will work to ensure “the responsible parties are held liable for costs of environmental remediation,” the bill reads.
The 11-member task force, composed of state and local officials, as well as energy industry officials, will be convened by Sept. 15 and report back with a plan by June 2013. Richard Sullivan, the secretary of the Department of Energy and Environmental Affairs, will serve as the chairman.
In addition, the approved bill extends through 2019 millions in annual state aid to Salem to make up for lost property tax revenue as a result of the scheduled closing of the power plant in 2014. Currently, the state ensures the city at least $4.75 million in property taxes. That deal was set to expire in Dec. 31, 2016.
“I’m thrilled with the end result,” said Keenan, who authored the bill and co-chaired the conference committee that worked through the weekend to reach an agreement to amend the controversial section that dealt with the Salem plant.
“The bottom line is the site will be cleaned up whether there is a power plant there or not,” he said. “This task force will ensure remediation by (the end of) 2016, which was what the goal was from the very beginning.”
When asked yesterday afternoon if Gov. Deval Patrick would support the measure, a spokeswoman for the administration said only that “the administration is really looking forward to reviewing the new legislation once it gets to the governor’s desk.”
Keenan is confident the governor will sign the bill given that the conference committee worked closely with administration officials on the compromise over the weekend.
For Salem officials, a full guarantee from the state to clean up the coal plant site by Dec. 31, 2016, is long-awaited relief. There is currently no law on the books that forces coal plant owners to set aside money for cleanup when the plant closes, and local leaders have feared that the shuttered plant might be allowed to languish as a waterfront eyesore for decades.
With yesterday’s vote, the state is close to putting those fears to rest.
“This legislation is a great aid to advance Salem’s economic future,” Salem Mayor Kim Driscoll said in a statement. “I am grateful to Rep. Keenan and Sen. Berry for their work on the energy bill and language to help stabilize Salem’s tax base and encourage the cleanup of Salem Harbor Station. Their efforts serve to address the immediate concern of remediating this site, as well as the future concern of facilitating development on this key portion of our waterfront.”
Driscoll could not be reached for comment on the legislation yesterday.
Sen. Fred Berry of Peabody, who came out as a strong proponent of the initial bill, also supports the compromise.
“I am satisfied with the final version of this very important piece of legislation,” Berry said in a statement.
The task force will look at a number of options to fund the cleanup, including bonding, federal grants, exploring what obligations plant owner Dominion has in cleanup, and exploring incentives for private investment and cleanup on the site. A comprehensive study released last January estimated the total cleanup cost at between $60 million and $85 million.
New Jersey-based Footprint Power has a deal in place to purchase the Salem plant from Dominion, and the company has plans to build a natural-gas power plant on the site. The deal is expected to be finalized within the next month.
Footprint Power did not return phone calls seeking comment yesterday.
Still controversial
The amended legislation that passed the House and Senate yesterday is a substantial change from the version that passed in the House in June. Under the much-maligned original proposal — Section 42 of a much larger energy bill — Footprint would have been responsible for the full cleanup of the plant site and given what some called “a sweetheart deal” in exchange for its cooperation. Energy distributors would have been required to enter into minimum 15-year contracts with Footprint, essentially guaranteeing the new plant owners a level of profitability in exchange for the responsibility of cleaning up the site.
Currently, fossil fuel plants sell power to distributors at constantly fluctuating market rates. Long-term contracts would be a dramatic change to that system, allowing a power generator to sell at a set price for more than a decade regardless of how low rates might fall.
Energy industry leaders, including Associated Industries of Massachusetts and the New England Power Generators Association, lined up against the plan. The latter organization spent “a substantial” sum on radio and print ads lambasting the proposal, “the first time we’ve ever done any sort of campaign like this,” Dan Dolan, NEPGA’s president, said yesterday.
Environmental groups also opposed the plan, as did Senate President Theresa Murray, Attorney General Martha Coakley and Gov. Patrick. A huge concern was that long-term contracts would throw the energy market out of whack and provide an unfair advantage to the new plant operators, resulting in higher power rates. A coalition of groups even staged a demonstration in front of the Statehouse.
The current language does not do away with long-term energy contracts completely, but does add some level of competition and complexity for Footprint if it does hope to get a long-term deal. Under the new proposal, the Department of Public Utilities must first determine there is need for additional power in the region — a task ISO-New England now performs — then power generators in Northeastern Massachusetts would be allowed to submit bids to energy distributors for the right to be awarded the long-term contracts.
“No one can suggest that this is some kind of sweetheart deal,” Keenan said yesterday.
Critics agree that the new language is a vast improvement over the original Section 42, but many are still ambivalent.
“I’m going to vote for it with somewhat mixed emotions,” Rep. Lori Ehrlich of Marblehead, one of the staunchest legislative opponents of the measure, said in an interview before yesterday’s vote. “The language is a huge step forward from what was approved in the House. ... I would have preferred to see long-term contracts for fossil fuels taken completely out of the mix.”
Associated Industries of Massachusetts gave the new bill its approval: “We believe the compromise legislation really does make a difference and make this a much better bill,” AIM’s Sr. Vice President Bob Rio said in an interview.
For the power generators, however, the long-term contracts are a poison pill they cannot stomach. Dolan said the legislation sets a bad precedent for future power suppliers coming into the state who will demand similar lucrative deals. It will also needlessly hurt energy generators who have already invested billions in the state, he said.
“They now face a competitive market where a single entity has subsidies and benefits that none of them have,” he said.
Keenan denies that any of his proposals were a sweetheart deal, and he makes no apologies to those who disagree.
“It’s my job to fight for the city of Salem; it doesn’t matter what corporation throws hundreds of thousands of dollars in ads at me,” he said. “We wanted to clean up the site at a time certain, and now we have that time.”
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