Summary: Berkshire Environmental Action Team (BEAT) has uncovered new data that tells a grim story about capacity payments to Berkshire county’s last highly polluting peaking power plant, Pittsfield Generating. While the company has successfully negotiated decreases in its tax obligations to the city of Pittsfield by hundreds of thousands of dollars per year, Pittsfield Generating won an increase in their annual capacity payment from ISO-New England, our grid operator from about $4.6 million to about $6.5 million. This is money the plant is paid to promise to supply energy when needed, even if they’re never called on to run. Payments for any actual energy produced are over and above this capacity payment. This means that this highly polluting plant is making more money polluting already-burdened neighborhoods with each passing year while the community reaps decreasing taxable benefit and increased pollution as the plant’s technology ages. There are grants available to communities like Pittsfield to transition local emissions-generating infrastructure away from fossil fuel use, but so far the City is not moving on this opportunity.
Overview: Peaking power plants, or “peakers,” are energy production plants that fire up only during moments of peak electricity demand, such as the hottest days of summer or extreme, prolonged cold snaps. They run on dirty energy and are frequently located in densely populated urban centers. Berkshire Environmental Action Team (BEAT) has successfully shut down two of Berkshire County’s three peaking power plants, worked as part of the Massachusetts Clean Peak Coalition to transition a third plant in West Springfield to clean energy (solar and battery storage), and now is working to decommission and convert to clean energy Berkshire county’s last remaining peaking power plant.
The plant, owned by private equity firm Hull Street Energy, has in recent years successfully appealed the City of Pittsfield’s tax assessments of its infrastructure, claiming that its assets have depreciated considerably. In doing so, they have decreased their tax payments by half, hundreds of thousands of dollars.
Meanwhile, the plant’s profits are soaring. BEAT recently learned that Pittsfield Generating’s forward capacity payments received (meaning funds paid to electric generation sites by ISO New England, the regional grid operator, whether they run or not) were $4.6 million in the last auction (a figure confirmed by the analyst group Strategen) and approximately $6.5 million in the most recent auction– a 40% rise in passive income before the plants generate any power at all. This makes the fact that they raised and won an appeal to have their tax payment to the city cut in half just galling.
In reality, the plant’s infrastructure is deteriorating, but so long as the financial incentive remains for it to continue running while raking in capacity payments, the highly polluting effects on the neighboring community are likely to worsen as the plant’s condition declines.
However, there are exciting opportunities for transitioning dirty energy plants of this sort to clean energy. Working as part of the Massachusetts Clean Peak Coalition, BEAT has also engaged with another company, Cogentrix, to decommission two kerosene-fired plants in the Berkshires and transition a former peaker in West Springfield to solar and battery storage. The same transition to this clean energy option could be done in Pittsfield, and there are ample opportunities for federal clean energy grants through the Inflation Reduction Act. These grant opportunities are available for municipalities and community groups to remove emissions sources from impacted communities.
This opportunity for the City and community groups to work with Pittsfield Generating’s owner could keep the business on City tax rolls much longer than the currently diminishing life span of the aging fossil fuel peaker, raise the plant’s tax value, and remove the pollution it produces at the heart of the City.
BEAT met with officials in the Mayor’s office in March to review the possible ways that these funds could be used to partner with the owners of Pittsfield Generating, and figure out how to decarbonize, but as yet, the City hasn’t moved on partnering with BEAT and the Massachusetts Clean Peak Coalition in applying for these IRA grant opportunities, and the deadlines are looming. It’s a fresh opportunity to remove the outdated and polluting power plant, and transition it to modern battery storage as part of meeting the state’s ambitious emissions targets, ensuring a tax base for years to come, and as a viable business strategy.