Montville - A deal struck Tuesday that would create New England's largest utility company appears to have delivered another blow to a $100 million biomass conversion project planned for one of the town's power plants.

A settlement agreement in the $4.7 billion Northeast Utilities-NStar merger, which still needs regulatory approval by April 2, was made without a provision for the merged companies to seek biomass generation projects throughout the state.

Mayor Ronald K. McDaniel Jr. and lawmakers representing the town had called on Gov. Dannel P. Malloy and Attorney General George Jepsen to make such a provision a requirement of the merger.

"Obviously, I'm very disappointed that it wasn't part of the deal," McDaniel said Wednesday. "I think, at a time when we're looking for shovel-ready projects to create economic investments, here was a perfect example. … It would have meant a lot to the town and the state as well."

Montville Power LLC, an NRG Energy Inc.-owned power plant on Lathrop Road, has the permits and approvals necessary to convert one of its generation units into a biomass system that would produce energy by burning clean wood.

The system would provide up to 42 megawatts of electricity and have the capability to go to 82 megawatts by using natural gas. A megawatt serves about 1,000 homes.

The project has stalled because NRG has been unsuccessful in finding a company to purchase the power. The project is expected to create 30 to 35 full-time jobs at the plant and from 75 to 150 construction jobs in the year of construction, NRG officials said.

The biomass system also would help the town add tax revenue since AES Thames, a power plant on Depot Road, filed for bankruptcy and eventually closed. The plant is now for sale.

The merger of Northeast Utilities and NStar requires the approval of the state's Public Utilities Regulatory Authority, a branch of the Department of Energy and Environmental Protection.

Dennis Schain, a spokesman for the DEEP, said Wednesday the state has a number of projects and programs in place to help meet a mandate that 20 percent of energy come from renewable resources by 2020. As a result, Schain said, discussions on the merger were focused on issues other than the biomass provision.

State Rep. Kevin Ryan, D-Montville, said Wednesday that he and other lawmakers representing the town are still hoping to persuade the attorney general and PURA to make the biomass provision a requirement of the merger.

"We definitely would have liked to have had it in there," Ryan said. "Nothing is ever that easy. We're going to have to do a little more work."

NRG spokesman David Gaier said Wednesday the energy company views the biomass conversion as a worthy project that would create jobs and low-cost renewable power.

But the project isn't viable until a company steps forward to purchase the power.

"It's a simple economic model. They have to have a customer to sell their product to," McDaniel said. "We'll have to see where the energy market comes out to see if there's another opportunity for them to sell the power."

jeff.johnson@theday.com