I bought a bag of wood stove pellets, and have to say they work really well at keeping the smoker lit, but I am not so sure about the effect on the bees.
TIP: Put a piece of screen at the outlet to prevent hot pellets from rolling out of the smoker into the hive. 
I keep a box of dried course grass around and put a handful of that on top of the pellets. For me, that has solved the issue of pellets rolling out the spout. I have pretty much quit using pine needles, because the needles I get off my trees leave a LOT of creosote, even after they were collected brown and stored over winter. I liked the smell though.
