A New Era, Maybe, At Perryman Plant

COMMENT

November 07, 1993|By MIKE BURNS

Ground was broken in Perryman a week ago for what could be the last power generator built by the Baltimore Gas & Electric Co.

Not that we'll soon stop using electricity, or draw all our energy directly from Old Sol or giant windmills. Our consumption increases about 1 percent a year; no one's turning off the switch.

Rather, the 140-megawatt (that's 140,000 Reddy Kilowatts) natural gas-fired turbine generator at Perryman is the last one that BG&E can build without seeking competitive bids, under a ruling by the state Public Service Commission.

The Baltimore company will ask independent power companies to bid on building the next generator to meet future electricity needs. BG&E has already pledged not to bid against these independent companies for the next 140-megawatt unit that it may need; the bids from these competitors are due next month. The jury is still out on whether BG&E and the PSC will stick to that decision.

The idea is that independents, whose rates and activities are not regulated by the state, can provide needed power cheaper than can BG&E and other regulated power companies.

BG&E would simply buy the power from the independent and pass it along to BG&E customers through its transmission lines. The Baltimore utility would not have to spend money to build the generator and its customers would not have to pay BG&E a "rate of return," or higher rates, to pay for the new plant or generator.

Independents can do this more cheaply, in theory, because they have to compete with other sources to supply the utility like BG&E. They can also use power production heat for "co-generation" purposes, such as heating and cooling buildings incinerating trash. The independent power producers provide less than 10 percent of U.S. utility demand, so the concept is still novel and the cost savings still uncertain.

The Perryman unit now being built by BG&E will cost $110 million and is expected to be in operation in 1996, increasing by two-thirds the capacity of the 720-acre Harford County plant. It will only be used for times of peak demand, usually the hottest or coldest days of the year: Perryman's existing four units were used only 50 days last year.

Twenty years ago, Perryman was envisioned as a major power producer for BG&E. It was first to be a nuclear facility, then a coal-fueled complex. But environmental concerns, shifting consumer patterns and a conscious effort to conserve power delayed and downgraded the role of Perryman to oil-fired backup status.

The 15-year-old plant near Aberdeen Proving Ground still manages to make the news. Last year, it was discovered that about 200,000 gallons of oil had leaked from its underground pipes into an aquifer.

BG&E waited eight months before notifying Harford residents of the serious seepage. The Perryman pool doesn't seem to threaten water supplies yet and is being pumped out. But BG&E consumers will pay for the cleanup, estimated to cost more than $3 million.

Consumers are increasingly being asked to pay the bills for BG&E's mistakes. The Public Service Commission last month decided that customers will be billed for a three-month shutdown in 1989 of a coal-fired generator at the Crane plant in Baltimore County, even though it concluded that BG&E management was responsible. BG&E is also asking its customers to pick up most of a half-billion dollar tab for the two-year shutdown of the Calvert Cliffs nuclear power plant. The PSC has yet to decide that case.

If an independent power company had been supplying the power, it would have eaten the costs itself. And had it sharply jacked up rates to recover the shutdown expenses, BG&E could have looked elsewhere for a cheaper source.

The Baltimore utility has sent letters to nearly 100 potential bidders asking for bids on building its next 140-megawatt

generator. Skeptics suggest that the need may be postponed for a long time -- and that BG&E will emerge the successful low bidder, despite its current disclaimers.

Conservation measures, with consumer financial incentives, have been pushed hard by the company; economic growth is slowing. BG&E is slashing its costs, reducing staff. And the company's 348 megawatts of capacity at Perryman, now tagged only for part-time use, could be more fully employed.

If the aim of power utility deregulation is to promote lower costs for consumers, it would be hard for the PSC to insist on a higher-cost independent producer over a lower-cost BG&E generator.

At any rate, the independent unit will not be built at Perryman; the successful bidder will find its own site.

BG&E was allowed to build the new Perryman unit only because an exceptionally accommodating PSC reversed its earlier decision to force BG&E to solicit competitive bids.

The commission agreed that BG&E should build that new NTC generator itself because of the urgent need for that backup power. Competitive bidding would take too long, the PSC explained.

The PSC curiously finds that independent power companies cannot do it for less than BG&E (if you don't count shutdowns). Over the past year, it rejected plans by a Virginia firm to build a 300-megawatt plant in Maryland and the proposals of a Texas company for building a generator that would match the Perryman addition. So much for competition.

Mike Burns is The Baltimore Sun's editorial writer in Harford County.

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