The McNeil Generating Station in Burlington, seen on Friday, October 11. Photo by Glenn Russell/VTDigger
BURLINGTON — Throughout the last year, environmentalists have been arguing that the McNeil Generating Station, Vermont’s largest in-state power source, should be phased out. While the debate has mostly been focused on the environmental impacts of burning wood, more recently it’s turned to cost — including in a new regulatory filing the plant’s owners published late last week.
In July, environmental advocates Pike Porter and Nicholas Persampieri submitted their case against McNeil in a proceeding that’s playing out before the Public Utility Commission, the quasi-judicial body that regulates Vermont’s utilities.
Porter, a Burlington-based activist, and Persampieri, an environmental lawyer, argued that McNeil is bleeding money, as Seven Days reported at the time — that the plant is not economically viable now and will not be in the future.
McNeil had lost money in seven out of nine years from 2016 to 2024, Porter and Persampieri maintained, totalling roughly $29 million in losses.
At the time, leaders of the Burlington Electric Department, which owns 50% of the plant, couldn’t present a response, they said. They needed to crunch the numbers and carry out their own legal processes, which involved discovery on Porter, Persampieri and Paul Messerschmidt, a consultant who helped the advocates file their argument with the commission.
On Friday, the city’s electric department presented its rebuttal, arguing in a filing with the commission that Porter and Persampieri had not taken into account a number of savings and streams of income that McNeil’s profit and loss statement doesn’t show.
In sum, they contend, McNeil has lost money in some years, but throughout the last decade, the plant has provided a net financial benefit to Burlington Electric Department and its ratepayers.
The department estimates that, with losses accounted for, McNeil brought the department between $7.4 million and $14.8 million from 2014 through 2023.
Darren Springer, Burlington Electric’s general manager, argues that the income is value added to an operation that already serves Burlington ratepayers by providing an alternative to buying electricity on the open market, a more expensive option. It’s also an energy source the department can draw from on-demand, whereas some renewables, such as solar and wind, are less reliable.
For those reasons, “you could make a pretty good argument, even if McNeil was, on average, losing a little bit of money each year, that it was worth it,” Springer said in an interview.
Burlington Electric says the $14.8 million in net economic benefits come from seven different factors, all connected to McNeil’s existence, that provide savings or cash to the utility.
For example, the utility doesn’t have to purchase energy from the often more expensive Ryegate Power Station, another biomass-burning plant in the Northeast Kingdom, a requirement that applies to other utilities in the state. That arrangement saves the utility hundreds of thousands of dollars per year.
A credit that comes from a 1991 agreement with the Vermont Electric Power Company saves hundreds of thousands more, and McNeil exempts Burlington Electric from the Standard Offer Program, which would require the department to purchase energy from other in-state renewable energy projects.
READ MORE
Burlington Electric’s filing with the commission includes two tables that estimate how much money the plant has generated for the utility. The first, which estimates it brought in $14.8 million over the last decade, includes benefits that are loosely connected to McNeil, or do not directly benefit ratepayers. For example, that table includes a payment that McNeil provides annually to the city in lieu of taxes, which doesn’t necessarily benefit ratepayers directly.
A second table, which is more conservative in its analysis, excludes that payment and two exemptions from the state’s renewable energy standard. Without considering those, the utility estimates that McNeil generated $7.4 million over the last decade.
Burlington Electric and the environmental advocates used different years in their analyses, each producing wildly different pictures of the plant’s economic status. Burlington Electric’s analysis starts in 2014, which happened to be a good year: The plant netted more than $7 million.
Porter and Persampieri, who said they didn’t have access to financial information from any years before 2016, included an economic analysis of the time spanning April 2023 to April 2024, which happened to be a bad year for McNeil: The plant cost the utility $4 million then, according to their analysis, which relied on financial statements from Burlington Electric.
Burlington Electric has not confirmed the $4 million loss because it doesn’t have audited figures. Even if it’s true, the department said, figures for the last decade would still be net positive.
Both sides argue the other has chosen years that validate their own argument.
The conversation about cost is taking place within a larger dialogue about the prudence of continuing to run the plant. The debate has been playing out as the city — including the Burlington City Council — and McNeil’s other two owners, Green Mountain Power and Vermont Public Power Supply Authority, decide whether to expand McNeil by adding a district heating system connected to the University of Vermont.
Persampieri, a lawyer who has worked on environmental issues at the Vermont Attorney General’s Office and the U.S. Department of Justice, argued that even if McNeil was “scraping by,” the plant’s environmental record should be weighed heavily in a big-picture conversation about its value.
More generally, he said Burlington Electric’s arguments contain “some holes.”
For example, he pointed to its exemption from the state’s Standard Offer Program. The utility is “relying on the largest source of greenhouse gas emissions in the state” to avoid a program that would require it “to increase its use of local renewable sources,” he said.
While McNeil produces greenhouse gas emissions from its smokestacks, the emissions aren’t counted in the state’s greenhouse gas inventory because the plant is considered renewable: The trees being burned for energy regrow and sequester carbon dioxide from the atmosphere. The topic has been hotly debated, including at Burlington City Council meetings.
“People claim, ‘Oh, it’s carbon neutral, because the trees grow back, so therefore you can ignore the emissions.’ That’s just counter to the latest science,” Persampieri said.
If Burlington Electric were to shut down McNeil and replace it “with a contract for any type of renewable energy,” it could still be exempted from the Standard Offer Program, Persampieri argued. He said he doesn’t know whether that would be possible for the utility, but that its leaders should try.
Springer argues that the biomass conversation is “nuanced.” While what’s burned at McNeil is largely the leftovers from logging operations — tops and limbs, he said — it still provides a benefit to loggers and Vermont’s forestry industry.
While Persampieri argued that, “per unit of energy generated, burning wood emits more carbon dioxide than burning any fossil fuel, even coal,” Springer said that argument excuses the use of fossil fuels such as natural gas.
The argument “ignores all the forestry benefits” and “gives a complete pass to the fossil fuel industry for all of the upstream emissions associated with getting that fossil fuel to that plant, fracking, drilling, extraction, refining, methane leaks and pipelines,” Springer said.
Springer said Burlington Electric wants to buy more renewable energy. But first, renewable energy facilities need to get built in Vermont and more broadly across New England.
“We have to be cautious about simply saying we want to move away from McNeil, if that means moving towards more fossil fuels on the grid, exacerbating our reliance on fossil fuels,” he said. “I don’t think that’s a good outcome economically or environmentally.”
Read the story on VTDigger here: At what cost? Utility leaders and environmentalists debate Burlington’s wood-burning plant .