Ely area loggers upset with biomass provisions in energy bill

LOGGING using a chipper by Kuehl Logging in this Echo file photo.

by Nick Wognum -

Ely area loggers could lose millions of dollars in biomass contracts if the jobs-energy omnibus bill passed by the Legislature is signed by the governor.
Gov. Mark Dayton has not yet indicated whether he will sign the bill which contains a provision relating to requiring Xcel Energy to purchase power fueled by biomass.
The jobs-energy omnibus bill is opposed by the Association of Contract Loggers and Truckers.
A provision in the bill would put an end to biomass in northeast Minnesota and cause the loss of hundreds of logging jobs, according to Scott Dane of the ACLT.
“These loggers have invested millions of dollars in equipment and now they’re having the rug pulled out from under them with nine years remaining on the agreement,” said Dane.
The agreement was for Xcel Energy to store radioactive waste in above-ground dry cask storage at its Prairie Island plant. The deal struck at the Legislature included a requirement that Xcel generate or buy 125 megawatts of biomass energy.
Based on that agreement the Laurentian Energy Authority was formed and heating units in Virginia and Hibbing were converted over to be able to burn wood chips also known as biomass.
Contracts were signed with area loggers who went and purchased chipping units. Those contracts are now at risk.
“I talked to a logger that just bought a new chipper in February to support the Laurentian Energy Authority project. He spent $375,000 to buy a new chipper,” Dane said. “The impacts to loggers would be catastrophic.”
The argument from Xcel and some legislators is this is about money. Xcel is looking to reportedly save $100 million per year by switching to natural gas instead of biomass.
“The costs to rate payers are near $100 million a year, the environmental benefits are minimal, and it just hasn’t worked,” said Rep. Pat Garofalo, R-Farmington and chairman of the House energy committee.
Dane said that argument just doesn’t hold water.
“The cost is not any different than it was 10 years ago,” said Dane. “This was in exchange for Xcel being able to store nuclear waste at Prairie Island. That hasn’t changed.”
Rep. Rob Ecklund said he voted for the bill once provisions were included to provide for another two to four years of biomass use and buyouts for loggers to help offset equipment losses.
“I’m gong to continue to work on behalf of loggers and try to get them a better deal,” said Ecklund.
He did say that biomass energy costs are higher and have driven up electricity costs in Virginia.
Dane said the Forest Service has told him the agency is far behind in their forest management and being able to treat timber that has either been damaged by wind storms or is now rotten and past productivity.
“I met with the Superior National Forest Supervisor and the only market for this is biolass. With the LEA biomass market there are no other markets. This will shut down 75 percent or more of the biomass market in Minnesota. This will end the U.S. Forest Service’s efforts to address fire susceptible lands,”
Nine loggers, including Kuehl Logging of Ely, would be affected by the energy bill.
“Directly there are nine suppliers but indirectly it affects many more because they do work for other loggers as well. LEA purchases $6-7 million of biomass annually from those nine loggers. There’s that much revenue lost multiplied by nine years. It would impact hundreds of jobs directly and over 1,000 indirectly,” said Dane.