Ongoing debate: Gauging value of upgrading power plant

The two sides debating the future of a huge pollution-control device on the state’s dirtiest power plant disagree on more and more as the weeks go by, but they’re in lockstep on one thing: This decision is even more important than its half-
billion-dollar price tag would indicate.

“The state has two monster economic problems. One is obvious: It’s the budget. The second is this one,” said Gary Hirshberg, the high-profile CEO of Stonyfield Yogurt who has become the spokesman for the project to delay work at the 40-year-old Merrimack Station power plant.

“Whenever I put the numbers together, I don’t think people realize how massive this is,” said Gary Long, CEO of Public Service of New Hampshire, the utility that says it has to install the equipment both to meet legislative requirements and to keep an electricity workhorse going.

The two men came separately to The Telegraph in recent weeks to talk about the issue

before the paper’s editorial board, seeking support for their positions.

The move was unusual because the power plant, in Bow, just south of Concord, isn’t anywhere near the newspaper’s circulation area. The question of whether PSNH should spend $457 million to put scrubbers on its smokestacks to clean up mercury and sulfur emissions doesn’t seem urgent enough to bring them to Nashua, even though that cost would be passed on to ratepayers.

But coal-burning Merrimack Station is both the state’s second-largest source of electricity and its largest source of carbon dioxide emissions, which puts its future right at the crossroads of the economic downturn and the desire to cut greenhouse gases.

Environmentalists organize

The immediate spur for the lobbying efforts is proposed Senate Bill 152, which would put the scrubber project on hold for 90 days while the Public Utilities Commission re-examines the installation and determines if it is “the least-cost means” of cutting mercury emissions and is “consistent with the state’s energy policy.”

“Before we commit ourselves irrevocably to spending hundreds of millions, maybe billions, to take a few months seems eminently reasonable,” Hirshberg said.

He says he’s concerned as a businessman who buys $2 million worth of electricity a year. He has assembled a cadre of other New Hampshire corporate leaders, including Segway’s Dean Kamen, into an organization calling itself Commercial Ratepayers Group that is supporting the bill.

Long doesn’t believe it. He notes that high-profile environmental groups such as the Sierra Club have been vocal on the issue from the start, and he paints the action as a backhanded attempt to shut the state’s biggest coal-burning power plant through foot-dragging.

“If you want to make it too expensive to do . . . then if you can delay (construction), it will be a self-fulfilling prophecy,” he said. “In the construction business, you can’t just start and stop. . . . You can’t go there and say ‘Will you wait for us, and will you give us the same price you told us you’d give us?’

“People trying to stop us from cleaning up a power plant, that doesn’t make any sense. How can we get to the new future if that’s the way we’re behaving? . . . The old way environmental groups would act is to stop something,. but that’s not going to get you to the new energy economy.”

PSNH says it has already committed to roughly $230 million in contracts that will be have to covered by ratepayers even if the scrubbers are canceled tomorrow.

In fact, in a memo PSNH sent to major customers urging them to fight the bill, the utility says that if the bill succeeds, “Merrimack Station will close,” forcing PSNH to replace its output with power that’s more expensive and which “could come from sources less environmentally friendly than the enhanced Merrimack Station.”

Further, it says PSNH “will probably sell off all of its power plants” if the bill goes through because of its financial repercussions.

Such a move would be ironic, because PSNH has long been irked by regulations that prevent it from buying or building new power plants, a legacy of deregulation that was designed, largely without success, to create energy competition.
But then again, this whole debate is full of irony.

Most notably, PSNH opposed the idea of scrubbers at Merrimack Station for years and Hirshberg was among those who fought to impose them. Now they’ve switched roles.

History of the plant

Merrimack Station started operation in 1968, and four decades later it remains the day-to-day workhorse of PSNH.

The utility, which provides power to more than two-thirds of the state, says the plant supplies electricity to 189,000 residential, commercial and industrial customers.

Spokesman Martin Murray says Merrimack Station generates about 3 million megawatt hours per year, roughly 40 percent of the 8 million megawatt hours that PSNH sells each year. (PSNH buys much of its power from other providers.)

Merrimack Station is large by New England standards. It creates about one-third of the power as Seabrook nuclear station, which isn’t owned by PSNH, and has many times the output of any other New Hampshire power plant.

The plant uses two huge coal-fired steam turbines, plus two “combustion turbines” (basically, jet engines) that can fire up in an instant to meet spikes in demand.
Murray said the plant burns little more than 1 million tons of coal each year; currently, about 60 percent is mined in the U.S. and 40 percent comes from Venezuela.

Coal is its strength and weakness.

Coal is cheaper than virtually any other fuel, which is why PSNH says curtailing Merrimack Station would make electricity more costly – but it’s also more polluting than virtually any other fuel. By some measures, Merrimack Station produces one-fifth of state’s carbon dioxide, the most common greenhouse gas.

But mercury pollution is the central problem in this debate.

Coal contains mercury, a heavy metal that can cause neurological problems in people. The EPA says burning coal is the biggest source of airborne mercury in the U.S. – causing 40 percent of total emissions – and that this floating mercury eventually ends up in our land, water and living creatures.

New Hampshire is one of 45 states that limit consumption of fish from its rivers and lakes because mercury has entered the food chain. Pregnant women, for example, are warned not to eat fish caught anywhere in the state.

This issue led the state legislature to mandate in 2006 that PSNH reduce mercury emissions by 80 percent from its coal-burning plants. PSNH switched one-third of the smaller Schiller power plant in Portsmouth from coal to wood, but most of this mandate will be met by installing scrubbers to remove mercury – and, as a side benefit, virtually all sulfur – from emissions at Merrimack Station.

PSNH said at the time this would cost about $250 million.

Then, in August, after two years of preparatory engineering work, PSNH’s parent company, Northeast Utilities, released a revised cost: $457 million, an increase of 83 percent that it said was largely because of soaring costs of commodities.

Recent actions

Hirshberg says he was galvanized to questions at this point, when the Public Utilities Commission said it couldn’t legally re-examine the project despite the new, much higher cost, because the project had been mandated by the Legislature.

Hirshberg’s group appealed that PUC decision to the state Supreme Court, where a decision is unlikely for months. In a separate move, state Sen. Harold Janeway, D-Webster, filed a bill calling for the new study. Hearings are coming up next month, hence the lobbying push by both sides.

(The group says it isn’t involved in a House bill that would cap the amount PSNH can collect for the scrubber work at $250 million.)

“This late-coming opposition . . . weren’t involved with any of this earlier. Quite frankly, it has nothing to do with the price; they just don’t like coal,” Long said.

“If your focus is just to cut emissions, you can forbid every car that doesn’t get at least 20 mpg and you can shut down every power plant, but you won’t be able to live the life you’re living – that’s where the practical side of this comes in. PSNH has done more than anybody for alternative power . . . and this will be one of the cleanest (coal) plants in the country when this work is done.”

The ratepayers group has already paid for a study that says the scrubbers won’t meet what seem likely to be tougher mercury standards under the Obama administration, won’t do anything about controlling carbon dioxide emissions as the federal government may soon require and won’t include a cooling tower to reduce the amount of heat added to the Merrimack River. The plant uses river water to cool certain components.

The group says it has ponied up another $100,000 to do preparatory work so a new PUC analysis won’t take longer than the 90 days in Janeway’s bill.

In his argument, Hirshberg brings up another big, expensive power plant: Seabrook. Even though only one of two planned units was built, costs soared tenfold or more, bankrupting PSNH, which owned it at the time, in the 1980s. Its multibillion-dollar price tag is still being paid off.

Hirshberg says that without accounting, Merrimack Station might have similar expensive surprises down the road.

“A wet scrubber usually costs in the low $200 million,” he said. “Where did this 457 (million) come from? The suspicion is that it involves several plant upgrades, essentially to rebuild the plant, that don’t have anything to do with controlling mercury.

“There’s no accountability for what has happened to account for this doubling of cost.”

But PSNH can draw parallels to Seabrook, too. Some of that plant’s unexpected cost came from delays created by environmental critics – who included Hirshberg, incidentally – and it expresses concern that history could repeat itself here.

Out-of-date regulations

Aside from agreeing on the importance of the issue, there is another area where both sides are similar.

They say the regulated economic structure for utilities such as PSNH is out of date, because almost the only way for PSNH to generate income is to produce more electricity, regardless of power source.

“This system is wrong,” Hirshberg said. “PSNH should be allowed to profit from other electricity-generating or transmitting or conserving technologies.

“Why are we living in this Byzantine system where the best solution is to bring back something that’s 40 years old? The fact that the discussion has not moved to that intelligent level in the 21st century is infuriating to me.”

Whether the debate over the Merrimack Station scrubbers will create such discussion is unclear. But the debate is certain to continue.