Monday, May 03, 2010 9:37:23 AM
You folks should enjoy this, after all you are used to getting the run around! ;)
STATE OF NE\ü HAMPSHIRE SITE EVALUATION COMMITTEE
SEC DOCKET NO. 2OO9.O2
Application of Laidlaw Berlin Biopower, LLC, for a Certificate of Site and Facility for a
70MW Biomass Fueled Energy Facility in Berlin, Coos County New Hampshire
LAIDLAW BERLIN BTOPOWER, LLC'S RESPONSE TO
FIRST DATA REOUESTS OF COT]NSEL FOR THE PUBLIC
Preliminarv Statement and General Obiections
All responses contained herein are subject to these general objections.
Laidlaw objects to each data request to the extent it seeks information that is irrelevant,
immaterial, not within Laidlaw's possession, custody or control, attorney-client privilege and/or
work product privilege protected information, business confidential information andlor
information that is in the public domain and equally available to Counsel for the Public and
Laidlaw.
Laidlaw objects to questions pertaining to the availability of wood and the manner in
which the proposed facility would acquire its wood, such as whether the supply would be
"sustainable". The "Availability'' question addresses the issue of whether there is enough wood
for the proposed facility to operate. The fuel procurement issue involves the manner in which
the proposed facility will obtain its wood. Laidlaw believes those issues are beyond the Site
Evaluation Committee's purview. Nevertheless, without waiving its objections, Laidlaw
believes there is unquestionably more than enough wood supply for the proposed facility.
Laidlaw has provided and will provide information to support that position. Regarding the
procurement issue, without waiving its objection, Laidlaw intends to propose a Certificate
condition that it believes will address this issue.
Responsive documents and communications are being provided in these responses.
Documents or coÍrmunications relating to ongoing negotiations, however, are irrelevant,
immaterial and therefore nonresponsive.
Laidlaw reserves the right to supplement its responses to these data requests upon
discovery of additional responsive data.
Responses
1. Please provide all documents included in the Application that were not
produced in the copy of the Application provided to Counsel under the
explanation f r Confidential Treatment Requested. "
Response: The Site Evaluation Committee has a copy which is subject to a
Protective Order. Applicant is not opposed to Public Counsel having access to
that document subject to that Order.
2. Please identify each of the persons or entities that hold an interest in PJPD,
LLC and Aware Energy, LLC. Please provide copies of all documents
concerning any relationship between the Applicant and either of the two
entities.
Response: As the chart below illustrates, PJPD Holdings, LLC ("PJPD") is
wholly owned by Aware Energy Funding, LLC, a Delaware limited liability
("Aware"), which in turn is wholly owned by NewCo Energy, LLC, also a
Delaware limited liability company ("NewCo"). Each of these companies is a
single purpose entity ("SPE"), formed solely for the purpose of the Project. PJPD
will own the assets and issue the debt; Applicant will execute all construction
contracts and operating agreements; and Aware is providing funding which comes
from NewCo and its investors. While complex, SPE status is designed to preserve
and protect the Project and the other collateral from extraneous, non-project risks.
PJPD is a party to a confidential Development Agreement with Applicant that
provides for funding of the initial development activities until construction
financing is put in place. These arrangements are highly sensitive and confidential
and Applicant will only provide copies if an appropriate confidentiality order or
agreement is in place.
-" Lease of Facility
The majority of NewCo investors are individuals indirectly affiliated through past
arrdlor present employment with Accenture PLC, as more particularly described
Laidlaw Berlin
BioPower. LLC
2
in the Application at Section H(5) . The NewCo investors have invested in
numerous other projects with similar structures and have provided all Project
financing to date and have indicated a willingness to invest in the Project. The
following individual investors in NewCo provide advisory services to facilitate
the Project:
Keith Mueller
Mr. Mueller recently retired as a managing director from Accenture after 2J
years. He held numerous roles at Accenture including leading the North America
Utility organizalion with over 500 consultants, leading the firm's Global Utility
industry with responsibility for managing the industries go-to-market strategy and
coordinating over 2,000 individuals. Mr. Mueller also managed the P&L for the
Resources Industry (energy, utility and natural resources industries) for North
America, was responsible for leading all of Accenture sales efforts and for
defining the strategy and the development of Accenture's Business Process
Outsourcing Industry solutions. Mr. Mueller sat on the firm's executive
committee and was also responsible for compensation and hiring for the United
States with over 10,000 hires per year.
David Hill
Mr. Hill is a retired senior managing director from Accenture where during his24
years his client work spanned a number of industries including financial services,
transportation, retail and consumer goods. These programs were multi-year,
technology enabled change programs with both outsourcing and consulting
initiatives including organizational, human performance, process and IT
components. In addition Mr. Hill held several management roles from 2002 until
2005 when he had P&L responsibility for the Consumer and Industrial Products
practice across North and South America and the Systems Integration practice. In
both of these roles, he supervised investment activities, technology alliances,
training development and oversaw the global development and deployment of
3,500 technology consulting personnel.
Richard Golden
Mr. Golden spent 28 years with Accenture where he managed large, complex
business and information technology consulting projects for Global 1000
companies. He specializedinthe manufacturing, retail and defense & aviation
industries. He also held various executive management roles including: Managing
Director - Sweden and Finland; Managing Partner - Retail Industries in Europe
and Africa; Managing Partner - Ventures & Alliances for the Product Operating
Unit; Managing Partner - Global Operations for the $2.1 billion Products
Operating Unit; and as Corporate Chief of Staff where he helped manage the
transition of Accenture from a global partnership to an international corporation.
-JMr.
Golden most recently was Managing Director of Alumni Capital Network, a
private equity firm specializinginbuying and building small to mid-sized
businesses. He managed fundraising for the firm's $68 million fund and is
currently a board member. Mr. Golden also serves on the boards of "Biflex
Intimates Group", a New York City company that designs, manufactures and
distributes private label apparel to large box retailers.
Michael C. Loulakis, Esq., DBIA
Mr. Loulakis is President and CEO of Capital Project Strategies (CPS), a
specialized consulting firm that provides strategic procurement, contracting and
risk management advice to clients who develop and construct capital projects.
Prior to forming CPS, Mike practiced law for almost 30 years with the national
construction law firm of Wickwire Gavin, P.C. where he served as its president
and chairman until its merger with Akerman Senterfitt in 2006. He has extensive
and diverse experience in representing both public and private sector owners in
the transportation, power, petrochemical and process industries, particularly on
projects using design-build and EPC contracting. Mr. Loulakis is widely
published, and is the author of several books on design-build and project delivery
that are being used by both universities and industry. He holds a civil engineering
degree from Tufts and a law degree from Boston University.
Please identify the number of tons of carbon that the Project will emit into
the environment on an annual basis.
Response: The facility is not subject to any regulations or requirements with
respect to carbon emissions and therefore this request seeks irrelevant and
immaterial information.
The USEPA's guidance document *AP-42, Compilation of Air Pollutant
Emissions Factors" provides factors that can be used to estimate COz emissions
from a variety of combustion sources such as the Project's wood fired boiler.
Using the COz emission factor presented in AP-42 for wood fired combustion
sources (AP-42, Section 1.6), and assuming that the boiler operates at the annual
average heat input rating for 365 days per and24 hours per day, the estimated
annual COz emissions would be approximately 796,000 tons per year.
Babcock & Wilcox (B&W), Laidlaw's technology provider for the fluidized bed
system to be installed in the boiler, has estimated COz emissions based on the
chemical analysis of wood that may be supplied to the Project. As presented in
the emissions sunmary tables contained in Appendix A of the Air Permit
Application (Appendix C of the Application for Site and Facility), that analysis
suggests that the maximum COz emissions from the boiler are approximately
895,000 tons per year.
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4.
Both of these estimates ignore the widely and long accepted premise that
combustion of biomass such as that to be used by the Project is not considered to
contribute to global greenhouse gas levels as discussed is response to data request
4 below.
Please quantify overall carbon emissions versus carbon sequestration or
other positive impacts related to atmospheric carbon that demonstrate that
the Project will be t'carbon neutral.tt
Response: The facility is not subject to any regulations or requirements with
respect to carbon emissions and therefore this request seeks irrelevant and
immaterial information.
The National Renewable Energy Laboratory published a report summarizing their
findings regarding the COz emissions associated with a variety of energy
generation technologies (NREL/TP -5 I 0 -3257 5, J anuary, 2004). The NREL study
included a life-cycle analysis that considered upstream processes necessary for
feedstock procurement, including collecting biomass, transportation, and any
construction of equipment (NREL Report at iii). NREL's Report concludes that
direct fired biomass energy generation has a negative global warming potential
(GWP) of 410 grams of COz equivalents per kilowatt-hour of energy produced.
The US EPA's emissions factor guidance document AP-42 as cited in response to
Data Request 3 above, states with regard to wood residue combustion in boilers
(AP-42, Section 1.6),"CO2emitted from this source is generally not counted as
greenhouse gas emissions because it is not considered part of the short term COz
cycle of the biosphere."
In addition, Laidlaw notes the following regulatory programs that confirm the
carbon neutrality of biomass energy generation:
o The Model Rule developed by the multi-state Regional Greenhouse Gas
Initiative (RGGI) exempts biomass energy facilities from the requirements of
obtaining CO2 emissions allowances.
o NHDES regulations establishingaCO2 Budget Trading Program (Env-A
4600), with a stated purpose of stabilizing and reducing emissions of CO2,
exempt facilities combusting eligible biomass fuel from the need to obtain
allowances. Notably, the regulations specify that "Biomass combusted at
Schiller Station, as permitted effective March 7,2006, qualifies as eligible
biomass." Env-A 4602.38. The biomass used at PSNH's Schiller Station
comes from similar sources that will provide biomass fuel to Laidlaw's
project.
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5. With respect to question #4, please describe the scope of the analysis
including whether secondary carbon sources such as vehicle emissions were
considered. If a source or factor was excluded from the analysis, please state
why it was excluded.
Response: The facility is not subject to any regulations or requirements with
respect to carbon emissions and therefore this request seeks irrelevant
information.
See response to data request 4 above.
Please state the expected lifespan of each of the major components of the
facilify.
Response: The two principal items of equipment are the boiler and the steam
turbine generator. Both of these have useful lives expected to be in excess of 40
years, given appropriate operation and maintenance. Similar lives can be expected
for other major equipment including the air pollution control equipment, cooling
water system, boiler feed pumps and motors, boiler fans and motors, step up
transformer and auxiliary transformer etc.
Please describe the impact of the facility's wastewater upon the
Androscoggin River because of thermal loading if the facility is not able to
recycle hot water by its reuse at the Cascade Flats mill. Provide copies of any
reports or studies in your possession or control regarding those impacts.
Response: Whether the Project recycles hot water or not makes no difference
to the Project's thermal loading to the River as only stormwater will be
discharged directly to the river. Although such heat recovery may alter the
wastewater discharge temperature slightly, this effluent will be discharged to the
Berlin Waste Water Treatment Facility. The Project's wastewater discharge is not
expected to alter the discharge of the WWTF as it will be controlled to less than
150oF, will combine with other waste waters is it travels nearly a mile through the
sewer system to the W-WTF, and will then combine with all other municipal
wastewater in the WWTF's treatment tanks.
Please provide a maintenance and replacement schedule for all major
components of the facility.
Response: The basic philosophy of the facility will be to develop a
preventative and predictive maintenance program and to normally schedule an
annual major maintenance shutdown. The timing and duration of the annual
shutdown will be coordinated with PSNH in consideration of peak generating
periods. Specific maintenance tasks for the annual shutdown will be developed
and scheduled in accordance with the equipment manufacturers
6.
7.
8.
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recommendations. We anticipate that the following work tasks will be typical of
the annual major maintenance shutdown:
Boiler:
o Annual boiler work and inspections as required and as recommended by the boiler
manufacturer.
o Sootblowerinspections.
o Steam drum intemal inspection.
o Hydrostatic pressure test.
o Auxiliary fuel and burner inspections.
Turbine/Generator: (Minor inspection):
o Annual minor T/ G work and inspections as recommended by T/G manufacturer.
o Borescope inspection of steam path.
o Bearing inspection.
o Test over speed trip function
o Generator Hi-pot or Doble power factor test.
Turbine/Generator: (Major inspection):
o Every 5 to 7 years the major maintenance shutdown will include a major
turbine/generator outage which will be scheduled with a work scope as
recommended and co-ordinated with the T/G manufacturer.
o Typically, at this time the turbine rotor and generator field is removed and the
entire steam path is cleaned.
Electrical:
o IR survey ofelectrical connections.
o Calibration testing and resistance measurements.
o Insulation resistance testing.
o Doble power factor transformer testing.
o Station baIfery load test.
Balance of Plant:
o Annual work and inspections as required and as recommended by the equipment
manufacturers.
Replacement schedule of components will be developed as determined by the
predictive maintenance program, the component operating history and the work
and inspection results obtained during the annual maintenance shutdown.
7
9. Please specify whether capital improvements beyond the normal operation
and maintenance budget will be needed to keep the Project viable and
operational for twenty-five (25) years after operation commences. Do the
same for fifty years (50), seventy-five years (75), and one hundred (100)
years.
Response: The basic philosophy of the facility will be to develop a
preventative and predictive maintenance program and to normally schedule an
annual major maintenance shutdown. This comprehensive maintenance program
will be designed to maintain the facility in a safe, environmentally compliant
condition in order to meet its production goals throughout its operating life. Any
capital improvement project, as determined to be needed by the predictive
maintenance program, the equipment operating history and the work and
inspection results obtained during the annual maintenance shutdown, will be
planned, developed and included in the normal annual budget. Certain capital
projects, such as those associated with technological advances, productivity and
efficiency improvement may be economically advantageous to implement,
however, no major capital project is expected to be required during the first 25
years of operation. The same maintenance philosophy is intended to be applied
going forward beyond 25 years. Predicting what capital improvements might
needed 50, to 75,1o 100 years out is very difficult, if not impossible, to forecast.
Please describe the life expectancy of the Project without additional capital
expenditures.
Response: Certain capital projects, such as those associated with
technological advances, productivity and efficiency improvement may be
economically advantageous to implement, however, no major capital project is
expected to be required during the first 25 years of operation.
Please state the number of tons of ashes that the facility will produce on a
monthly basis. Describe in detail the procedures that the facility will employ
to manage and dispose of those ashes. Include in your description maps and
diagrams showing the location and design of any ash holding structures or
locations. Provide copies of any documents relating to your plans to sell any
such ashes for reuse.
Response: Using an ash in fuel figure corresponding to the current available
knowledge of the feedstock mix, together with a design feedstock moisture level
it is anticipated that the ash arising from the boiler will be in the order of 130
tons/week or approximately 560 tons/month when firing at l00o/o MCR
(annualized plant capacity factor -90%). These figures are subject to revision as
more representative statistics on fuel analysis are obtained.
10.
11.
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12.
13.
t4.
15.
Fly ash will be continuously collected from the electrostatic precipitator and
mechanical dust collector hoppers using a dry mechanical system. Collected fly
ash will be conveyed to a dry storage bin inside of the boiler building. While the
design of this system has not yet commenced, it will be sized to provide storage
capacity sufficient to accept twelve to twenty four hours of full-load operation.
Ash from the elevated storage bin will be processed through a pug mill which
mixes dry fly ash with water to produce a wet cake that minimizes dust generation
during subsequent handling. The wetted fly ash will then be loaded onto trucks
and transported offsite for disposal or for beneficial re-use in agricultural land
applications.
Please provide copies of all power purchase agreements ("PPA") with
respect to any energy to be produced by the Project.
Response: At this time, Applicant does not have an executed power purchase
agreement.
If the Applicant has not yet entered into a PPA, does the Applicant anticipate
entering into a PPA prior to the close of the SEC process? Please provide
copies ofany correspondence, term sheets, letters ofintent or draft
agreements regarding sales of power to be produced by the Project.
Response: Applicant anticipates that a PPA will be executed before the SEC
process is concluded. Correspondence, term sheets, letters ofintent and draft
agreements relating to the PPA are highly sensitive and confidential business
information the disclosure of which would cause direct harm to the competitive
position of the Applicant. Such drafts and related documents are irrelevant and
immaterial. Moreover the Applicant is under an obligation to keep this
information confidential and cannot release such information at the present time.
The Applicant will only make the PPA available if an appropriate confidentiality
order or agreement is in place.
Is a PPA necessary in order to make the Project financially viable?
Response: Yes.
Please provide forecasts for earnings/losses through 2010,
Response: As discussed in more detail in22. below, Applicant does not
forecast any earnings or losses through 2010 as Applicant remains in the
development phase of the Project.
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16. Identify the source of funds now on hand and previously expended for costs
of the Project.
Response: Since acquiring the property in January,2009, PJPD has expended
approximately $12.1 Million on Project development and property acquisition. In
addition, PJPD has $3.3 million in available funds and PJPD has committed $2
Million of those funds in Project development funding to Applicant.
State the amount of unrestricted cash held by the Applicant.
Response: As indicated in #16 above, PJPD has provided commitments to the
Applicant of an additional $2 Million in Project development funding.
State the amount of cash on hand for the Project. State the amount of cash
needed in the next 36 months, by quarter, for the development of the Project.
State the amount of income, including loan proceeds or equity, projected for
the Project in the next 36 months, by quarter, and the sources of such. State
the complete basis for such projections.
Response: Applicant believes the Project will be financially viable, howevet,
at this stage, it is impossible to provide accurate projections over the next 36
months, especially when the following key elements have not been finalized: (i)
construction agreements; (ii) process and technology agreements; (iii) fuel supply
agreements, (iv) ratified revenue sources, including finalizingthe PPA; (v)
determined the cost of capital; (vi) determined final cost of interconnection costs,
and (vii) determined various other engineering and maintenance costs. All of
these items are actively being worked on and should be finalized in due course of
Project development. At this stage, we anticipate approximately 30+l- months of
continued development and actual construction and commissioning activity. As
indicated previously, PJPD has committed an additional $2 Million to develop the
Project to the point of construction funding, thereafter; we anticipate construction
funding to provide all other costs to construct and commission the facility.
During the next 36 months we do not anticipate any measurable income and we
anticipate the entire project construction and related activities to be fully funded
and capitalized in the construction funding. As we indicated in our response to
question 20, we anticipate the construction funding to be a combination of debt
and equity.
Identify any loan applications, requests, or proposals for financing made by
the Applicant for this project and provide copies. Identify and provide copies
of any term sheets or commitment letters for such loans. Provide copies of
any loan documents associated with such loans.
Response: The funding to date has been provided by PJPD pursuant to the
Development Agreement and it is anticipated that the $14.1 Million will be
sufficient to carry the Project through to receipt of final permits. At that time,
t7.
18.
19.
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20.
PJPD, in close cooperation with the Applicant, will seek a combination of debt
and equity financing. Preliminary discussions have been held with investors and
lenders, but no formal applications, requests or proposals have been made, nor
have any term sheets, commitment letters or loan documents been generated. In
the experience of PJPD and Applicant; investors and lenders are not willing to
make commitments until such time as permits and other deliverables are in hand.
Please specify the amounts of debt and equity that the Project will need.
Describe all material terms with respect to the debt and the equity,
respectively. Identify the sources of such debt and equity.
Response: The Applicant and PJPD expect that construction of the Project
will be financed through a combination of (i) Senior and Subordinated secured
debt of approximately $120 Million that will be privately placed with Institutional
Investors, most likely a combination of life insurers and investment banks; and
(ii) approximately $40 Million in equity related contributions originating with
NewCo. The percentage of debt will depend upon final documentation and
contracts, but is commonly around 10-80% of total project costs.
How much capital for the Project does the Applicant have committed
through financing or equity as of the hearing date?
Response: Applicant has committed financing for the Project in the amount of
$14.1 Million from PJPD. As of this date, Applicant has expended in the
development of the Project approximately $12.1 Million, with $2 Million
remaining for further development.
Please provide consolidating balance sheets and income statements for each
of PJPD, Homeland Renewable Energy Inc., Homeland Laidlaw Energy,
LLC, and Fibrowatt Operations LLC.
Response: Attached are the balance sheets as of December 31 , 2009 and
March 31, 2010 and the related statements of operations for the year ended
December 31,2009 and three months ended March 3I,2010 for PJPD Holdings,
LLC (a development stage enterprise).
The other financial statements requested are still in the process of being prepared
and finalized for the year ending December 37,2009. When they are completed
they can be made available to Public Counsel with adequate provision for
confidentiality of these documents.
21.
22.
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23. Please provide legal organization charts for each entity that will own any
interest in or operate the facility, the Applicant or the land on which the
project will be constructed.
Response: Exhibit 1 to the pre-filed testimony of Michael B. Bartoszek shows
the organizational chart of the entities that have ownership interests in the
Applicant (Laidlaw BioPower, LLC and Homeland Laidlaw Energy, LLC) and
who will operate the facility (Applicant, Homeland Laidlaw, LLC, Fibrowatt,
LLC and Fibrowatt Operations, LLC).
PJPD is 100% owner of the Facility and the land. Pursuant to the confidential
Development Agreement with Applicant, Applicant and Fibrowatt will construct
the Facility. Upon completion, the Facility will be leased to Applicant, who will
be the operator of the Facility. The terms of the lease will give control of the
operations of the Facility to Applicant.
Please provide a copy of the Project's financial model showing the
Applicantrs fÌnancial assumptions and projections on a going forward basis
through to complete amorfuation of all debt.
Response: At this stage of the Project, the Applicant believes that any
financial model through the amortization of all debt (which Applicant assumes to
be twenty years) would be purely speculative and Applicant has prepared no such
model, for the reasons set forth in response to question 18. The Applicant intends
to develop an accurate financial projection with the assistance of an independent
engineer in the coming months.
If, one year after the Project commences operation, the cost of fuel,
transportation of fuel, maintenance and all other costs exceed the amount of
revenue obtained through the sale of energy, will the Project continue to be
operated?
Response: While this is purely a hypothetical question and assumes a highly
unlikely scenario, energy projects of the type being developed by Applicant
typically maintain reserve funds to meet shortfalls in cash for operations, major
maintenance and debt service and are generally required to do so by their lenders
and investors. Moreover, the offtake agreements of projects of this type often
involve adjustments to mitigate some of the hypothesized exposures.
At this stage, it is simply impossible to predict what actions would be taken if the
Facility operated at a loss during its first year.
24.
25.
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26. Please describe all impacts that may result if, due to an increase in fuel costs
the size of the woodbasket were reduced to that within a 2- hour drive, a I lz
hour drive and a l-hour drive radius around the Project. Include in your
answer assessment of environmental, financial, orderly development of the
region, and aesthetics impacts of these reduced dimensions.
Response: This is an extremely difficult question to answer due to the
dynamic complexities of the Northeast fiber market. For example, a local
contractor could be conducting an integrated timber harvest within 30 miles of the
plant and can afford to dedicate trucks to deliver woodchips to the facility;
however that same contractor might take a job 80 miles away and decide to
deliver roundwood to the plant because he can "back-haul" logs from a
concentration yard thereby cutting his costs of delivery. Furthermore the notion
that fuel costs would rise without corresponding increases in revenue somehow
forcing the plant to restrict fuel deliveries to mile limitation is unrealistic. Since a
majority of the electrical generation in the Northeast is provided by natural gas
there is a direct correlation between fossil fuel price increases and electricity
pricing. Prior to the recent recession and corresponding drop in electrical pricing
the Northeast was experiencing very high electricity pricing due to the high cost
of oil and natural gas. Biomass is a locally produced commodity indirectly
connected to fossil fuel pricing which creates stability with respect to global
energy markets.
To understand how changes in variables that underlie the economics of the
Northeast wood market affect the region, one only has to look back andrealize
that the current forest is abundant and healthy in spite of a century of wood
consumption. Moreover, the region is suffering economically due to the loss of
markets that accompanied the pulp and paper industry.
27. Please indicate all assumptions used by Landvest with respect to
transportation costs.
Response: The Landvest study did.not examine pricing of fuel to the facility
which would include an analysis of transportation costs. Applicant expects to
conduct a detailed econometric modeling analysis in the fall of 2010 which will
include all costs.
28. Please describe all impacts upon the Project if the cost of transportation of
fuel were to increase over a ten-year period by respectively 5o/o,lÙVorzÙo/o,
50o/o, and 1007o. Include in this assessment impacts on the price of power in
the State.
Response: The project anticipates that its fuel supply agreement will be
structured in such away to incentivize suppliers to provide fuel at the lowest price
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29.
then available. Transportation of fuel is only one component that factors into the
overall delivered price per ton of fuel.
The Applicant's project, like most energy projects that involve commercial
financing, look at various operating scenarios to assess how the project will
perform financially in various operating environments, including generally
"worse case scenario" assumptions. We believe the project will be able to operate
profitably in a various economic circumstances, but this project like just about
any other business is subject to commercial risks and no assurance can be
provided that it will not encounter an economic scenario that renders it
unprofitable. Trying to state a price point where the project becomes uneconomic
is purely a hypothetical exercise subject to changes in the underlying assumptions
of the energy markets over the next20 years that cannot be reasonably predicted.
In order to mitigate economic risk to the project, however, energy projects of the
tlpe being developed by Applicant typically maintain reserve funds to meet
shortfalls in cash for operations, major maintenance and debt service and are
generally required to do so by their lenders and investors. Moreover, the offtake
agreements of projects of this tlpe often involve adjustments to mitigate some of
hypothesized exposures.
Please provide an analysis using the approach suggested in the last
paragraph of page 9 of the comments of The \ililderness Society (TWS),
dated April 2,2010.Include in that analysis the map TWS suggested.
Response: The method that the'Wilderness Society suggests is unrealistic due
to the variables underlying wood procurement for facilities that are physically
located or have woodsheds that theoretically reach into the defìned area of supply.
The unknown is how the deficits would be met by these facilities considering the
realities of the market: trucking distances; expansion to regions with less
competition, existing fiber agreements etc. The reality is that the woodsheds look
more like legislative districts than circles as the Wilderness Society suggests.
Due to the shutdown of the Berlin, Groveton and Gilman mills, a lot of low-grade
wood is either left in the woods or trucked to existing facilities, many of which
are outside of New Hampshire. Once the plant is on-line many of the contractors
that are currently sending material to outside facilities will supply us resulting in
more wood remaining in the wood basket. These are the underlying assumptions
that make the Landvest model work.
Identify what construction activities are planned before the end of 2010 and
the source of all funds for those activities.
Response: V/ork will begin on the conversion of the existing recovery boiler
to a bubbling fluidized bed (BFB) boiler. The EPC contractor will mobilize to the
site and begin installation of the projects temporary power and communication
30.
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systems. Final grading of the site will start as will the foundation work for the
new turbine generator building. This work will be funded by the financing
described in response to # 20.
31. Please state the reasons that construction of the Project will take 2 to 3 years
to complete.
Response: The overall duration of the project is somewhat controlled by the
delivery schedule of the longest lead item. In the case of the Laidlaw Berlin
BioPower project the long lead item is the manufacturing and delivery of the
steam turbine generator which is projected to be between 18 & 20 months. The
erection schedule for the steam turbine generator is 4 months after which time the
final commissioning of the facility can begin.
32. The Applicant has stated a desire to work with the local community in terms
of project design, planning, and integration into the local landscape. To the
extent that the Applicant reaches an agreement with the City of Berlin or
other community groups, does the Applicant anticipate that these will be
outside agreements or does the Applicant anticipate that it will consent to
have these agreements become part of the SEC permit?
Response: Applicant has already been working with the City to address its
concems. At this time Applicant expects that it will consent to have any
agreement it reaches with the City become part of the SEC Certificate.
33. Please state from where the labor used for construction of the Project will be
obtained.
Response: The final determination of where the labor for construction for the
Project will be made by the selected EPC Contractor, however the Applicant
expects there is a high probability that amajor portion of total work will be
locally supplied through the NH Building Trades Council.
34. Does the Applicant plan on maximizing the use of New Hampshire labor to
construct the Project? If so, please describe what steps the Applicant will
take to ensure that use of New Hampshire labor will be maximized.
Response: Applicant and its EPC Contractor will work closely with the New
Hampshire Building Trades Council and will make efforts to maximize the use of
New Hampshire and local Berlin area workers. Additionally, Applicant will work
with its EPC Contractor to make every effort to employ these qualified workers
from the Berlin and surrounding areas.
35. Does the Applicant plan on maximizing the use of New Hampshire citizens to
operate, manage, and maintain the Project? If so, please describe what steps
-15-
36.
the Applicant will take to ensure that employment of New Ilampshire
citizens to operate, manage and maintain the Project will be maximized.
Response: Our policy is to hire from the local community and every effort
will be made to recruit local people for employment at the plant.
Prior to the start-up and commissioning phase, we will begin to recruit the
permanent plant staff. Adequate notice will be provided on our web site and in
local newspapers before we begin recruiting candidates. Our plan is to offer
employment candidates the ability to apply for a plant position on line, by mail or
in person.
Please set forth any conditions to a certificate that the Applicant would
propose for the Project to protect the sustainability of New Hampshire's
forest resources and the natural environment therein.
Response: As Applicant noted in its objection, the wood procurement
practices of large end-users are not regulated. Applicant does not believe there is
any basis to single out its use, which is substantially smaller than some other endusers
of New Hampshire forest resources, and regulate its acquisition of wood.
Notwithstanding its objections, Applicant will propose a Certificate condition to
address this issue.
Provide copies of all documents that relate in any way to any of the questions
stated above and your responses thereto.
Response: All relevant, material and non confidential documents responsive
to these requests are attached. Drafts are considered irrelevant and immaterial
and therefore are not attached.
Please identify the person responding to each of the foregoing data requests,
include their name, address, title, and experience and qualification for
answering the data request.
Response: Responses to the foregoing data requests were prepared by and at
the direction of the following individuals, whose experience and qualifications are
set forth in their testimony submitted in conjunction with the Application, in
consultation with counsel:
Michael B. Bartoszek
CEO Laidlaw Berlin BioPower, LLC
90 John Street, 4û Floor
New York, New York 10038
Carl Strickler
37.
38.
-t6-
Senior Vice President and Chief Operating Officer
Fibrowatt LLC
One Summit Square, Suite 200
17 17 Langhorne-Newtown Road
Langhorne,PA 19047
Raymond S. Kushe
Principal
Laidlaw Berlin BioPower, LLC
20 Island Park
Yarmouth, ME 04096
Louis T. Bravakis
Lead Developer
Laidlaw Berlin BioPower, LLC
45 State Street
Montpelier, VT 05602
Dammon Frecker
Vice President of Energy & Industrial Services
ESS Group,Inc.
888
'Worcester
Street, Suite 240
Wellesley, li/.A02482
On behalf of PJPD Holdings, LLC, in consultation with counsel:
Richard Cyr
130 Clinton Street
Portsmouth, NH 03801
-17 -
PJPD, ttG (a Development Stâge Enterpise)
Statement of Operetlons
fort'he year ended Decembe¡ 31, 2ût9 and Three Mo¡rths Ended March lL,2oilo
(unaudlted)
RevEnues - Management Fees
Dir€Gt Pro¡ect Costs and Expenses
Land, buifdings and equipment
Project Requisition Expense
Legal, Consulting & Underwrlting
Travel &subsistence
Occupancy & office
Project Management
Capitalized lnterest
Operatiru income or (expense)
Other lncome or expense
Capita lized Project costs
lncome (Loss) before tax
For the Year
Ended
Decemebr 31,
zoo9
s
6,203,3t8
1,152,890
549,936
43,L95
5,4r5
t,430,957
950,000
70,335,770
(10,335,770)
For üte Three
(3) Montfis
Ended March
3L 2010
s
427,986
98,150
3,143
42
984,549
250,950
1,7Ø,82O
(!,7æ,820)
t0,335,77O
10,33s,770
t,7u,87O
7,7U,82O
ss
-
PJPD, ![C ( a Developrnent Stage Enterprise)
Balance Sheets
As of December 31, 2fl)9 and March 31' 2010
(unaudited)
ASSETS
Currert Assets
Cash and cash equivalents
Loan proceeds receivable
Total Current Assets
Property and EquiPment, at cost
Construction in Progress - Land and Buildings
Construction in Progress - Equipment
Constructíon in Progress - Development Costs
Total
Other Assets
Security Deposits
TOTAL ASSEÍS
UABII.JTIES AND MEMBERS' EQUITY
Current Liabilities
Accounts payable
Accrued lnterest
Total current liabÍlities
Loan Payable - Related Party
Memberc'Equ¡ty
Members capítal accounts
Equity Formation Costs
Retained Earnings - unallocated
Total Equity
Total Liabilities and Members' Equity
L2tstlz}Oe il}ilzüt0
s 100
3,346,636
3,346,736
5,579,577
623,801
4,732,392 5,897,272
LO,315,770 t2,100,590
21.4?9 27,439
5,579,577
623,8OI
a [o.zsl.zog s 15,468,765
(560,606)
950,000 1,200,950
389,394 1,200,950
10,000,000 14,300,000
100 100
132.2851 p2,28sl
(32,185) (32,L851
s 10,357.209 S t5,468,765
STATE OF NE\ü HAMPSHIRE SITE EVALUATION COMMITTEE
SEC DOCKET NO. 2OO9.O2
Application of Laidlaw Berlin Biopower, LLC, for a Certificate of Site and Facility for a
70MW Biomass Fueled Energy Facility in Berlin, Coos County New Hampshire
LAIDLAW BERLIN BTOPOWER, LLC'S RESPONSE TO
FIRST DATA REOUESTS OF COT]NSEL FOR THE PUBLIC
Preliminarv Statement and General Obiections
All responses contained herein are subject to these general objections.
Laidlaw objects to each data request to the extent it seeks information that is irrelevant,
immaterial, not within Laidlaw's possession, custody or control, attorney-client privilege and/or
work product privilege protected information, business confidential information andlor
information that is in the public domain and equally available to Counsel for the Public and
Laidlaw.
Laidlaw objects to questions pertaining to the availability of wood and the manner in
which the proposed facility would acquire its wood, such as whether the supply would be
"sustainable". The "Availability'' question addresses the issue of whether there is enough wood
for the proposed facility to operate. The fuel procurement issue involves the manner in which
the proposed facility will obtain its wood. Laidlaw believes those issues are beyond the Site
Evaluation Committee's purview. Nevertheless, without waiving its objections, Laidlaw
believes there is unquestionably more than enough wood supply for the proposed facility.
Laidlaw has provided and will provide information to support that position. Regarding the
procurement issue, without waiving its objection, Laidlaw intends to propose a Certificate
condition that it believes will address this issue.
Responsive documents and communications are being provided in these responses.
Documents or coÍrmunications relating to ongoing negotiations, however, are irrelevant,
immaterial and therefore nonresponsive.
Laidlaw reserves the right to supplement its responses to these data requests upon
discovery of additional responsive data.
Responses
1. Please provide all documents included in the Application that were not
produced in the copy of the Application provided to Counsel under the
explanation f r Confidential Treatment Requested. "
Response: The Site Evaluation Committee has a copy which is subject to a
Protective Order. Applicant is not opposed to Public Counsel having access to
that document subject to that Order.
2. Please identify each of the persons or entities that hold an interest in PJPD,
LLC and Aware Energy, LLC. Please provide copies of all documents
concerning any relationship between the Applicant and either of the two
entities.
Response: As the chart below illustrates, PJPD Holdings, LLC ("PJPD") is
wholly owned by Aware Energy Funding, LLC, a Delaware limited liability
("Aware"), which in turn is wholly owned by NewCo Energy, LLC, also a
Delaware limited liability company ("NewCo"). Each of these companies is a
single purpose entity ("SPE"), formed solely for the purpose of the Project. PJPD
will own the assets and issue the debt; Applicant will execute all construction
contracts and operating agreements; and Aware is providing funding which comes
from NewCo and its investors. While complex, SPE status is designed to preserve
and protect the Project and the other collateral from extraneous, non-project risks.
PJPD is a party to a confidential Development Agreement with Applicant that
provides for funding of the initial development activities until construction
financing is put in place. These arrangements are highly sensitive and confidential
and Applicant will only provide copies if an appropriate confidentiality order or
agreement is in place.
-" Lease of Facility
The majority of NewCo investors are individuals indirectly affiliated through past
arrdlor present employment with Accenture PLC, as more particularly described
Laidlaw Berlin
BioPower. LLC
2
in the Application at Section H(5) . The NewCo investors have invested in
numerous other projects with similar structures and have provided all Project
financing to date and have indicated a willingness to invest in the Project. The
following individual investors in NewCo provide advisory services to facilitate
the Project:
Keith Mueller
Mr. Mueller recently retired as a managing director from Accenture after 2J
years. He held numerous roles at Accenture including leading the North America
Utility organizalion with over 500 consultants, leading the firm's Global Utility
industry with responsibility for managing the industries go-to-market strategy and
coordinating over 2,000 individuals. Mr. Mueller also managed the P&L for the
Resources Industry (energy, utility and natural resources industries) for North
America, was responsible for leading all of Accenture sales efforts and for
defining the strategy and the development of Accenture's Business Process
Outsourcing Industry solutions. Mr. Mueller sat on the firm's executive
committee and was also responsible for compensation and hiring for the United
States with over 10,000 hires per year.
David Hill
Mr. Hill is a retired senior managing director from Accenture where during his24
years his client work spanned a number of industries including financial services,
transportation, retail and consumer goods. These programs were multi-year,
technology enabled change programs with both outsourcing and consulting
initiatives including organizational, human performance, process and IT
components. In addition Mr. Hill held several management roles from 2002 until
2005 when he had P&L responsibility for the Consumer and Industrial Products
practice across North and South America and the Systems Integration practice. In
both of these roles, he supervised investment activities, technology alliances,
training development and oversaw the global development and deployment of
3,500 technology consulting personnel.
Richard Golden
Mr. Golden spent 28 years with Accenture where he managed large, complex
business and information technology consulting projects for Global 1000
companies. He specializedinthe manufacturing, retail and defense & aviation
industries. He also held various executive management roles including: Managing
Director - Sweden and Finland; Managing Partner - Retail Industries in Europe
and Africa; Managing Partner - Ventures & Alliances for the Product Operating
Unit; Managing Partner - Global Operations for the $2.1 billion Products
Operating Unit; and as Corporate Chief of Staff where he helped manage the
transition of Accenture from a global partnership to an international corporation.
-JMr.
Golden most recently was Managing Director of Alumni Capital Network, a
private equity firm specializinginbuying and building small to mid-sized
businesses. He managed fundraising for the firm's $68 million fund and is
currently a board member. Mr. Golden also serves on the boards of "Biflex
Intimates Group", a New York City company that designs, manufactures and
distributes private label apparel to large box retailers.
Michael C. Loulakis, Esq., DBIA
Mr. Loulakis is President and CEO of Capital Project Strategies (CPS), a
specialized consulting firm that provides strategic procurement, contracting and
risk management advice to clients who develop and construct capital projects.
Prior to forming CPS, Mike practiced law for almost 30 years with the national
construction law firm of Wickwire Gavin, P.C. where he served as its president
and chairman until its merger with Akerman Senterfitt in 2006. He has extensive
and diverse experience in representing both public and private sector owners in
the transportation, power, petrochemical and process industries, particularly on
projects using design-build and EPC contracting. Mr. Loulakis is widely
published, and is the author of several books on design-build and project delivery
that are being used by both universities and industry. He holds a civil engineering
degree from Tufts and a law degree from Boston University.
Please identify the number of tons of carbon that the Project will emit into
the environment on an annual basis.
Response: The facility is not subject to any regulations or requirements with
respect to carbon emissions and therefore this request seeks irrelevant and
immaterial information.
The USEPA's guidance document *AP-42, Compilation of Air Pollutant
Emissions Factors" provides factors that can be used to estimate COz emissions
from a variety of combustion sources such as the Project's wood fired boiler.
Using the COz emission factor presented in AP-42 for wood fired combustion
sources (AP-42, Section 1.6), and assuming that the boiler operates at the annual
average heat input rating for 365 days per and24 hours per day, the estimated
annual COz emissions would be approximately 796,000 tons per year.
Babcock & Wilcox (B&W), Laidlaw's technology provider for the fluidized bed
system to be installed in the boiler, has estimated COz emissions based on the
chemical analysis of wood that may be supplied to the Project. As presented in
the emissions sunmary tables contained in Appendix A of the Air Permit
Application (Appendix C of the Application for Site and Facility), that analysis
suggests that the maximum COz emissions from the boiler are approximately
895,000 tons per year.
-4-
4.
Both of these estimates ignore the widely and long accepted premise that
combustion of biomass such as that to be used by the Project is not considered to
contribute to global greenhouse gas levels as discussed is response to data request
4 below.
Please quantify overall carbon emissions versus carbon sequestration or
other positive impacts related to atmospheric carbon that demonstrate that
the Project will be t'carbon neutral.tt
Response: The facility is not subject to any regulations or requirements with
respect to carbon emissions and therefore this request seeks irrelevant and
immaterial information.
The National Renewable Energy Laboratory published a report summarizing their
findings regarding the COz emissions associated with a variety of energy
generation technologies (NREL/TP -5 I 0 -3257 5, J anuary, 2004). The NREL study
included a life-cycle analysis that considered upstream processes necessary for
feedstock procurement, including collecting biomass, transportation, and any
construction of equipment (NREL Report at iii). NREL's Report concludes that
direct fired biomass energy generation has a negative global warming potential
(GWP) of 410 grams of COz equivalents per kilowatt-hour of energy produced.
The US EPA's emissions factor guidance document AP-42 as cited in response to
Data Request 3 above, states with regard to wood residue combustion in boilers
(AP-42, Section 1.6),"CO2emitted from this source is generally not counted as
greenhouse gas emissions because it is not considered part of the short term COz
cycle of the biosphere."
In addition, Laidlaw notes the following regulatory programs that confirm the
carbon neutrality of biomass energy generation:
o The Model Rule developed by the multi-state Regional Greenhouse Gas
Initiative (RGGI) exempts biomass energy facilities from the requirements of
obtaining CO2 emissions allowances.
o NHDES regulations establishingaCO2 Budget Trading Program (Env-A
4600), with a stated purpose of stabilizing and reducing emissions of CO2,
exempt facilities combusting eligible biomass fuel from the need to obtain
allowances. Notably, the regulations specify that "Biomass combusted at
Schiller Station, as permitted effective March 7,2006, qualifies as eligible
biomass." Env-A 4602.38. The biomass used at PSNH's Schiller Station
comes from similar sources that will provide biomass fuel to Laidlaw's
project.
-5-
5. With respect to question #4, please describe the scope of the analysis
including whether secondary carbon sources such as vehicle emissions were
considered. If a source or factor was excluded from the analysis, please state
why it was excluded.
Response: The facility is not subject to any regulations or requirements with
respect to carbon emissions and therefore this request seeks irrelevant
information.
See response to data request 4 above.
Please state the expected lifespan of each of the major components of the
facilify.
Response: The two principal items of equipment are the boiler and the steam
turbine generator. Both of these have useful lives expected to be in excess of 40
years, given appropriate operation and maintenance. Similar lives can be expected
for other major equipment including the air pollution control equipment, cooling
water system, boiler feed pumps and motors, boiler fans and motors, step up
transformer and auxiliary transformer etc.
Please describe the impact of the facility's wastewater upon the
Androscoggin River because of thermal loading if the facility is not able to
recycle hot water by its reuse at the Cascade Flats mill. Provide copies of any
reports or studies in your possession or control regarding those impacts.
Response: Whether the Project recycles hot water or not makes no difference
to the Project's thermal loading to the River as only stormwater will be
discharged directly to the river. Although such heat recovery may alter the
wastewater discharge temperature slightly, this effluent will be discharged to the
Berlin Waste Water Treatment Facility. The Project's wastewater discharge is not
expected to alter the discharge of the WWTF as it will be controlled to less than
150oF, will combine with other waste waters is it travels nearly a mile through the
sewer system to the W-WTF, and will then combine with all other municipal
wastewater in the WWTF's treatment tanks.
Please provide a maintenance and replacement schedule for all major
components of the facility.
Response: The basic philosophy of the facility will be to develop a
preventative and predictive maintenance program and to normally schedule an
annual major maintenance shutdown. The timing and duration of the annual
shutdown will be coordinated with PSNH in consideration of peak generating
periods. Specific maintenance tasks for the annual shutdown will be developed
and scheduled in accordance with the equipment manufacturers
6.
7.
8.
-6-
recommendations. We anticipate that the following work tasks will be typical of
the annual major maintenance shutdown:
Boiler:
o Annual boiler work and inspections as required and as recommended by the boiler
manufacturer.
o Sootblowerinspections.
o Steam drum intemal inspection.
o Hydrostatic pressure test.
o Auxiliary fuel and burner inspections.
Turbine/Generator: (Minor inspection):
o Annual minor T/ G work and inspections as recommended by T/G manufacturer.
o Borescope inspection of steam path.
o Bearing inspection.
o Test over speed trip function
o Generator Hi-pot or Doble power factor test.
Turbine/Generator: (Major inspection):
o Every 5 to 7 years the major maintenance shutdown will include a major
turbine/generator outage which will be scheduled with a work scope as
recommended and co-ordinated with the T/G manufacturer.
o Typically, at this time the turbine rotor and generator field is removed and the
entire steam path is cleaned.
Electrical:
o IR survey ofelectrical connections.
o Calibration testing and resistance measurements.
o Insulation resistance testing.
o Doble power factor transformer testing.
o Station baIfery load test.
Balance of Plant:
o Annual work and inspections as required and as recommended by the equipment
manufacturers.
Replacement schedule of components will be developed as determined by the
predictive maintenance program, the component operating history and the work
and inspection results obtained during the annual maintenance shutdown.
7
9. Please specify whether capital improvements beyond the normal operation
and maintenance budget will be needed to keep the Project viable and
operational for twenty-five (25) years after operation commences. Do the
same for fifty years (50), seventy-five years (75), and one hundred (100)
years.
Response: The basic philosophy of the facility will be to develop a
preventative and predictive maintenance program and to normally schedule an
annual major maintenance shutdown. This comprehensive maintenance program
will be designed to maintain the facility in a safe, environmentally compliant
condition in order to meet its production goals throughout its operating life. Any
capital improvement project, as determined to be needed by the predictive
maintenance program, the equipment operating history and the work and
inspection results obtained during the annual maintenance shutdown, will be
planned, developed and included in the normal annual budget. Certain capital
projects, such as those associated with technological advances, productivity and
efficiency improvement may be economically advantageous to implement,
however, no major capital project is expected to be required during the first 25
years of operation. The same maintenance philosophy is intended to be applied
going forward beyond 25 years. Predicting what capital improvements might
needed 50, to 75,1o 100 years out is very difficult, if not impossible, to forecast.
Please describe the life expectancy of the Project without additional capital
expenditures.
Response: Certain capital projects, such as those associated with
technological advances, productivity and efficiency improvement may be
economically advantageous to implement, however, no major capital project is
expected to be required during the first 25 years of operation.
Please state the number of tons of ashes that the facility will produce on a
monthly basis. Describe in detail the procedures that the facility will employ
to manage and dispose of those ashes. Include in your description maps and
diagrams showing the location and design of any ash holding structures or
locations. Provide copies of any documents relating to your plans to sell any
such ashes for reuse.
Response: Using an ash in fuel figure corresponding to the current available
knowledge of the feedstock mix, together with a design feedstock moisture level
it is anticipated that the ash arising from the boiler will be in the order of 130
tons/week or approximately 560 tons/month when firing at l00o/o MCR
(annualized plant capacity factor -90%). These figures are subject to revision as
more representative statistics on fuel analysis are obtained.
10.
11.
-8-
12.
13.
t4.
15.
Fly ash will be continuously collected from the electrostatic precipitator and
mechanical dust collector hoppers using a dry mechanical system. Collected fly
ash will be conveyed to a dry storage bin inside of the boiler building. While the
design of this system has not yet commenced, it will be sized to provide storage
capacity sufficient to accept twelve to twenty four hours of full-load operation.
Ash from the elevated storage bin will be processed through a pug mill which
mixes dry fly ash with water to produce a wet cake that minimizes dust generation
during subsequent handling. The wetted fly ash will then be loaded onto trucks
and transported offsite for disposal or for beneficial re-use in agricultural land
applications.
Please provide copies of all power purchase agreements ("PPA") with
respect to any energy to be produced by the Project.
Response: At this time, Applicant does not have an executed power purchase
agreement.
If the Applicant has not yet entered into a PPA, does the Applicant anticipate
entering into a PPA prior to the close of the SEC process? Please provide
copies ofany correspondence, term sheets, letters ofintent or draft
agreements regarding sales of power to be produced by the Project.
Response: Applicant anticipates that a PPA will be executed before the SEC
process is concluded. Correspondence, term sheets, letters ofintent and draft
agreements relating to the PPA are highly sensitive and confidential business
information the disclosure of which would cause direct harm to the competitive
position of the Applicant. Such drafts and related documents are irrelevant and
immaterial. Moreover the Applicant is under an obligation to keep this
information confidential and cannot release such information at the present time.
The Applicant will only make the PPA available if an appropriate confidentiality
order or agreement is in place.
Is a PPA necessary in order to make the Project financially viable?
Response: Yes.
Please provide forecasts for earnings/losses through 2010,
Response: As discussed in more detail in22. below, Applicant does not
forecast any earnings or losses through 2010 as Applicant remains in the
development phase of the Project.
-9 -
16. Identify the source of funds now on hand and previously expended for costs
of the Project.
Response: Since acquiring the property in January,2009, PJPD has expended
approximately $12.1 Million on Project development and property acquisition. In
addition, PJPD has $3.3 million in available funds and PJPD has committed $2
Million of those funds in Project development funding to Applicant.
State the amount of unrestricted cash held by the Applicant.
Response: As indicated in #16 above, PJPD has provided commitments to the
Applicant of an additional $2 Million in Project development funding.
State the amount of cash on hand for the Project. State the amount of cash
needed in the next 36 months, by quarter, for the development of the Project.
State the amount of income, including loan proceeds or equity, projected for
the Project in the next 36 months, by quarter, and the sources of such. State
the complete basis for such projections.
Response: Applicant believes the Project will be financially viable, howevet,
at this stage, it is impossible to provide accurate projections over the next 36
months, especially when the following key elements have not been finalized: (i)
construction agreements; (ii) process and technology agreements; (iii) fuel supply
agreements, (iv) ratified revenue sources, including finalizingthe PPA; (v)
determined the cost of capital; (vi) determined final cost of interconnection costs,
and (vii) determined various other engineering and maintenance costs. All of
these items are actively being worked on and should be finalized in due course of
Project development. At this stage, we anticipate approximately 30+l- months of
continued development and actual construction and commissioning activity. As
indicated previously, PJPD has committed an additional $2 Million to develop the
Project to the point of construction funding, thereafter; we anticipate construction
funding to provide all other costs to construct and commission the facility.
During the next 36 months we do not anticipate any measurable income and we
anticipate the entire project construction and related activities to be fully funded
and capitalized in the construction funding. As we indicated in our response to
question 20, we anticipate the construction funding to be a combination of debt
and equity.
Identify any loan applications, requests, or proposals for financing made by
the Applicant for this project and provide copies. Identify and provide copies
of any term sheets or commitment letters for such loans. Provide copies of
any loan documents associated with such loans.
Response: The funding to date has been provided by PJPD pursuant to the
Development Agreement and it is anticipated that the $14.1 Million will be
sufficient to carry the Project through to receipt of final permits. At that time,
t7.
18.
19.
-10-
20.
PJPD, in close cooperation with the Applicant, will seek a combination of debt
and equity financing. Preliminary discussions have been held with investors and
lenders, but no formal applications, requests or proposals have been made, nor
have any term sheets, commitment letters or loan documents been generated. In
the experience of PJPD and Applicant; investors and lenders are not willing to
make commitments until such time as permits and other deliverables are in hand.
Please specify the amounts of debt and equity that the Project will need.
Describe all material terms with respect to the debt and the equity,
respectively. Identify the sources of such debt and equity.
Response: The Applicant and PJPD expect that construction of the Project
will be financed through a combination of (i) Senior and Subordinated secured
debt of approximately $120 Million that will be privately placed with Institutional
Investors, most likely a combination of life insurers and investment banks; and
(ii) approximately $40 Million in equity related contributions originating with
NewCo. The percentage of debt will depend upon final documentation and
contracts, but is commonly around 10-80% of total project costs.
How much capital for the Project does the Applicant have committed
through financing or equity as of the hearing date?
Response: Applicant has committed financing for the Project in the amount of
$14.1 Million from PJPD. As of this date, Applicant has expended in the
development of the Project approximately $12.1 Million, with $2 Million
remaining for further development.
Please provide consolidating balance sheets and income statements for each
of PJPD, Homeland Renewable Energy Inc., Homeland Laidlaw Energy,
LLC, and Fibrowatt Operations LLC.
Response: Attached are the balance sheets as of December 31 , 2009 and
March 31, 2010 and the related statements of operations for the year ended
December 31,2009 and three months ended March 3I,2010 for PJPD Holdings,
LLC (a development stage enterprise).
The other financial statements requested are still in the process of being prepared
and finalized for the year ending December 37,2009. When they are completed
they can be made available to Public Counsel with adequate provision for
confidentiality of these documents.
21.
22.
- 11-
23. Please provide legal organization charts for each entity that will own any
interest in or operate the facility, the Applicant or the land on which the
project will be constructed.
Response: Exhibit 1 to the pre-filed testimony of Michael B. Bartoszek shows
the organizational chart of the entities that have ownership interests in the
Applicant (Laidlaw BioPower, LLC and Homeland Laidlaw Energy, LLC) and
who will operate the facility (Applicant, Homeland Laidlaw, LLC, Fibrowatt,
LLC and Fibrowatt Operations, LLC).
PJPD is 100% owner of the Facility and the land. Pursuant to the confidential
Development Agreement with Applicant, Applicant and Fibrowatt will construct
the Facility. Upon completion, the Facility will be leased to Applicant, who will
be the operator of the Facility. The terms of the lease will give control of the
operations of the Facility to Applicant.
Please provide a copy of the Project's financial model showing the
Applicantrs fÌnancial assumptions and projections on a going forward basis
through to complete amorfuation of all debt.
Response: At this stage of the Project, the Applicant believes that any
financial model through the amortization of all debt (which Applicant assumes to
be twenty years) would be purely speculative and Applicant has prepared no such
model, for the reasons set forth in response to question 18. The Applicant intends
to develop an accurate financial projection with the assistance of an independent
engineer in the coming months.
If, one year after the Project commences operation, the cost of fuel,
transportation of fuel, maintenance and all other costs exceed the amount of
revenue obtained through the sale of energy, will the Project continue to be
operated?
Response: While this is purely a hypothetical question and assumes a highly
unlikely scenario, energy projects of the type being developed by Applicant
typically maintain reserve funds to meet shortfalls in cash for operations, major
maintenance and debt service and are generally required to do so by their lenders
and investors. Moreover, the offtake agreements of projects of this type often
involve adjustments to mitigate some of the hypothesized exposures.
At this stage, it is simply impossible to predict what actions would be taken if the
Facility operated at a loss during its first year.
24.
25.
t2-
26. Please describe all impacts that may result if, due to an increase in fuel costs
the size of the woodbasket were reduced to that within a 2- hour drive, a I lz
hour drive and a l-hour drive radius around the Project. Include in your
answer assessment of environmental, financial, orderly development of the
region, and aesthetics impacts of these reduced dimensions.
Response: This is an extremely difficult question to answer due to the
dynamic complexities of the Northeast fiber market. For example, a local
contractor could be conducting an integrated timber harvest within 30 miles of the
plant and can afford to dedicate trucks to deliver woodchips to the facility;
however that same contractor might take a job 80 miles away and decide to
deliver roundwood to the plant because he can "back-haul" logs from a
concentration yard thereby cutting his costs of delivery. Furthermore the notion
that fuel costs would rise without corresponding increases in revenue somehow
forcing the plant to restrict fuel deliveries to mile limitation is unrealistic. Since a
majority of the electrical generation in the Northeast is provided by natural gas
there is a direct correlation between fossil fuel price increases and electricity
pricing. Prior to the recent recession and corresponding drop in electrical pricing
the Northeast was experiencing very high electricity pricing due to the high cost
of oil and natural gas. Biomass is a locally produced commodity indirectly
connected to fossil fuel pricing which creates stability with respect to global
energy markets.
To understand how changes in variables that underlie the economics of the
Northeast wood market affect the region, one only has to look back andrealize
that the current forest is abundant and healthy in spite of a century of wood
consumption. Moreover, the region is suffering economically due to the loss of
markets that accompanied the pulp and paper industry.
27. Please indicate all assumptions used by Landvest with respect to
transportation costs.
Response: The Landvest study did.not examine pricing of fuel to the facility
which would include an analysis of transportation costs. Applicant expects to
conduct a detailed econometric modeling analysis in the fall of 2010 which will
include all costs.
28. Please describe all impacts upon the Project if the cost of transportation of
fuel were to increase over a ten-year period by respectively 5o/o,lÙVorzÙo/o,
50o/o, and 1007o. Include in this assessment impacts on the price of power in
the State.
Response: The project anticipates that its fuel supply agreement will be
structured in such away to incentivize suppliers to provide fuel at the lowest price
-13-
29.
then available. Transportation of fuel is only one component that factors into the
overall delivered price per ton of fuel.
The Applicant's project, like most energy projects that involve commercial
financing, look at various operating scenarios to assess how the project will
perform financially in various operating environments, including generally
"worse case scenario" assumptions. We believe the project will be able to operate
profitably in a various economic circumstances, but this project like just about
any other business is subject to commercial risks and no assurance can be
provided that it will not encounter an economic scenario that renders it
unprofitable. Trying to state a price point where the project becomes uneconomic
is purely a hypothetical exercise subject to changes in the underlying assumptions
of the energy markets over the next20 years that cannot be reasonably predicted.
In order to mitigate economic risk to the project, however, energy projects of the
tlpe being developed by Applicant typically maintain reserve funds to meet
shortfalls in cash for operations, major maintenance and debt service and are
generally required to do so by their lenders and investors. Moreover, the offtake
agreements of projects of this tlpe often involve adjustments to mitigate some of
hypothesized exposures.
Please provide an analysis using the approach suggested in the last
paragraph of page 9 of the comments of The \ililderness Society (TWS),
dated April 2,2010.Include in that analysis the map TWS suggested.
Response: The method that the'Wilderness Society suggests is unrealistic due
to the variables underlying wood procurement for facilities that are physically
located or have woodsheds that theoretically reach into the defìned area of supply.
The unknown is how the deficits would be met by these facilities considering the
realities of the market: trucking distances; expansion to regions with less
competition, existing fiber agreements etc. The reality is that the woodsheds look
more like legislative districts than circles as the Wilderness Society suggests.
Due to the shutdown of the Berlin, Groveton and Gilman mills, a lot of low-grade
wood is either left in the woods or trucked to existing facilities, many of which
are outside of New Hampshire. Once the plant is on-line many of the contractors
that are currently sending material to outside facilities will supply us resulting in
more wood remaining in the wood basket. These are the underlying assumptions
that make the Landvest model work.
Identify what construction activities are planned before the end of 2010 and
the source of all funds for those activities.
Response: V/ork will begin on the conversion of the existing recovery boiler
to a bubbling fluidized bed (BFB) boiler. The EPC contractor will mobilize to the
site and begin installation of the projects temporary power and communication
30.
14-
systems. Final grading of the site will start as will the foundation work for the
new turbine generator building. This work will be funded by the financing
described in response to # 20.
31. Please state the reasons that construction of the Project will take 2 to 3 years
to complete.
Response: The overall duration of the project is somewhat controlled by the
delivery schedule of the longest lead item. In the case of the Laidlaw Berlin
BioPower project the long lead item is the manufacturing and delivery of the
steam turbine generator which is projected to be between 18 & 20 months. The
erection schedule for the steam turbine generator is 4 months after which time the
final commissioning of the facility can begin.
32. The Applicant has stated a desire to work with the local community in terms
of project design, planning, and integration into the local landscape. To the
extent that the Applicant reaches an agreement with the City of Berlin or
other community groups, does the Applicant anticipate that these will be
outside agreements or does the Applicant anticipate that it will consent to
have these agreements become part of the SEC permit?
Response: Applicant has already been working with the City to address its
concems. At this time Applicant expects that it will consent to have any
agreement it reaches with the City become part of the SEC Certificate.
33. Please state from where the labor used for construction of the Project will be
obtained.
Response: The final determination of where the labor for construction for the
Project will be made by the selected EPC Contractor, however the Applicant
expects there is a high probability that amajor portion of total work will be
locally supplied through the NH Building Trades Council.
34. Does the Applicant plan on maximizing the use of New Hampshire labor to
construct the Project? If so, please describe what steps the Applicant will
take to ensure that use of New Hampshire labor will be maximized.
Response: Applicant and its EPC Contractor will work closely with the New
Hampshire Building Trades Council and will make efforts to maximize the use of
New Hampshire and local Berlin area workers. Additionally, Applicant will work
with its EPC Contractor to make every effort to employ these qualified workers
from the Berlin and surrounding areas.
35. Does the Applicant plan on maximizing the use of New Hampshire citizens to
operate, manage, and maintain the Project? If so, please describe what steps
-15-
36.
the Applicant will take to ensure that employment of New Ilampshire
citizens to operate, manage and maintain the Project will be maximized.
Response: Our policy is to hire from the local community and every effort
will be made to recruit local people for employment at the plant.
Prior to the start-up and commissioning phase, we will begin to recruit the
permanent plant staff. Adequate notice will be provided on our web site and in
local newspapers before we begin recruiting candidates. Our plan is to offer
employment candidates the ability to apply for a plant position on line, by mail or
in person.
Please set forth any conditions to a certificate that the Applicant would
propose for the Project to protect the sustainability of New Hampshire's
forest resources and the natural environment therein.
Response: As Applicant noted in its objection, the wood procurement
practices of large end-users are not regulated. Applicant does not believe there is
any basis to single out its use, which is substantially smaller than some other endusers
of New Hampshire forest resources, and regulate its acquisition of wood.
Notwithstanding its objections, Applicant will propose a Certificate condition to
address this issue.
Provide copies of all documents that relate in any way to any of the questions
stated above and your responses thereto.
Response: All relevant, material and non confidential documents responsive
to these requests are attached. Drafts are considered irrelevant and immaterial
and therefore are not attached.
Please identify the person responding to each of the foregoing data requests,
include their name, address, title, and experience and qualification for
answering the data request.
Response: Responses to the foregoing data requests were prepared by and at
the direction of the following individuals, whose experience and qualifications are
set forth in their testimony submitted in conjunction with the Application, in
consultation with counsel:
Michael B. Bartoszek
CEO Laidlaw Berlin BioPower, LLC
90 John Street, 4û Floor
New York, New York 10038
Carl Strickler
37.
38.
-t6-
Senior Vice President and Chief Operating Officer
Fibrowatt LLC
One Summit Square, Suite 200
17 17 Langhorne-Newtown Road
Langhorne,PA 19047
Raymond S. Kushe
Principal
Laidlaw Berlin BioPower, LLC
20 Island Park
Yarmouth, ME 04096
Louis T. Bravakis
Lead Developer
Laidlaw Berlin BioPower, LLC
45 State Street
Montpelier, VT 05602
Dammon Frecker
Vice President of Energy & Industrial Services
ESS Group,Inc.
888
'Worcester
Street, Suite 240
Wellesley, li/.A02482
On behalf of PJPD Holdings, LLC, in consultation with counsel:
Richard Cyr
130 Clinton Street
Portsmouth, NH 03801
-17 -
PJPD, ttG (a Development Stâge Enterpise)
Statement of Operetlons
fort'he year ended Decembe¡ 31, 2ût9 and Three Mo¡rths Ended March lL,2oilo
(unaudlted)
RevEnues - Management Fees
Dir€Gt Pro¡ect Costs and Expenses
Land, buifdings and equipment
Project Requisition Expense
Legal, Consulting & Underwrlting
Travel &subsistence
Occupancy & office
Project Management
Capitalized lnterest
Operatiru income or (expense)
Other lncome or expense
Capita lized Project costs
lncome (Loss) before tax
For the Year
Ended
Decemebr 31,
zoo9
s
6,203,3t8
1,152,890
549,936
43,L95
5,4r5
t,430,957
950,000
70,335,770
(10,335,770)
For üte Three
(3) Montfis
Ended March
3L 2010
s
427,986
98,150
3,143
42
984,549
250,950
1,7Ø,82O
(!,7æ,820)
t0,335,77O
10,33s,770
t,7u,87O
7,7U,82O
ss
-
PJPD, 
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