Diesel power generators readied as energy crisis continues Steve Ernst Staff Writer

With 32 massive diesel generators ready to be fired up, Tacoma Power can make electricity more cheaply than it can buy the stuff. In Bellingham, a Georgia-Pacific mill is already doing the same with 16 diesel generators.

Statewide, energy experts say, businesses and utilities since December have stockpiled an estimated 250 of the large, not-so-clean power sources. Some are already running. Others were standing by this week, in anticipation that Gov. Gary Locke would declare an energy alert that would enable them to run their generators before receiving environmental permits.

The pressure of skyrocketing spot prices for electricity isn't the only consideration to be balanced against the pollution impact of diesel-produced power. With water behind the Pacific Northwest's hydroelectic dams at critically low levels, the use of diesel may benefit the region's endangered salmon runs even as it thickens the air, officials said.

An energy alert is expected to be declared as soon as today in an effort to shelter industrial customers and utilities from the high price of electricity on the wholesale market.

"We are looking at declaring some sort of alert, but no decision has been made," Dave Danner, executive policy adviser to the governor, said at midweek. "We have been working on it for the past few weeks. The real question for us is what are the environmental impacts and how can we mitigate them."

Gov. Locke has several options: He could allow businesses statewide to use diesel generators, or he could target specific businesses and allow them to use diesel generators for a limited time.

Steve Klein, superintendent of Tacoma Power, said the utility's generators would be ready to deliver power this week. He added, "We have been assured by a number of entities that by the time we have our generators in place, we would have - at the minimum - an energy alert declared."

Tacoma's generators, which were made operational last week, won't give the utility complete relief from having to go to the wholesale market for power, where prices have been fluctuating between $350 and $600 a megawatt hour.

Tacoma has budgeted $19 million to rent the generators and run them until September. Despite that price tag, the utility expects to save $500,000 a day by limiting its purchases of electricity on the open market.

Tacoma Power plans to run the generators, which are expected to produce 40 to 45 megawatts an hour, through September. The utility needs to supply roughly 800 megawatts a day to meet its load demands.

"These diesel generators can produce power at $150 a megawatt an hour," Klein said. "Right now we are purchasing power on the open market for between $450 and $600 a megawatt hour."

Some businesses in the state haven't waited for an energy alert to start running on diesel power.

Since mid-December, Georgia-Pacific in Bellingham has been powering its tissue mill with 16 diesel generators. Unless an alert is issued, Georgia-Pacific will only be able to run the generators for 90 days before needing to get a permit, according to the state Department of Ecology.

The company expects to have total of 38 generators running by the middle of February, said Orman Darby, spokesman for Georgia-Pacific.

Georgia-Pacific was one of 13 industrial customers of Puget Sound Energy that will benefit from a Washington Utilities and Transportation Commission decision last week to set a "soft cap" on rates the Bellevue-based utility can charge to industrial customers.

The utilities commission will decide at a Jan. 29 hearing whether to set the "soft cap" at $125 per megawatt hour or $150 a megawatt hour.

But Darby said the mill has no plans to turn off the generators, because even with the price cap it will cheaper for Georgia-Pacific to power its mill with the generators.

Businesses both large and small have been suffering through 10 months of colossally high electrical prices which have shut down many manufacturing business. The high prices have forced Tacoma Power to seek $100 million loan to remain solvent.

The city of Anacortes has been running a diesel generator since Jan. 2 to power its water treatment plant.

In 1999, running the treatment plant cost $700,000. Last year the operating costs of the plant, which serves 250,000 people, jumped to $1.7 million, said Bob Hyde, director of public works for Anacortes.

Hyde said he monitors the spot market for electricity to decide when it's more economical to run the diesel generator, "and so far we have been running it every day since Jan. 2."

Allowing businesses to use diesel-generated electricity could take some of the strain off the electrical grid, as well provide relief to the region's hydroelectric plants, where water levels have been exceptionally low, said Dick Watson, director of power planning at the Northwest Power Planning Council in Portland.

"We are in a situation where every little bit helps," Watson said. "Every bit of power they generate now means we can keep more water behind the dams which can be used later."

Diesel generators would also take some of the financial pressure off companies and municipalities that have to buy the electricity on the open market.

"Tacoma is in a very tight spot," Watson said. "So this would help them out for sure. The refineries will also be helped out because they have been riding on market prices."

Diesel is one of most environmentally damaging ways to generate electricity and has been linked to increased ozone levels, as well as asthma and other respiratory conditions.

One diesel generator running continuously for 24 hours emits fumes equivalent to a heavy diesel truck being driven 6,000 miles, said Dennis McLerran, executive director of the Puget Sound Clean Air Agency.

According to the state Department of Ecology, one diesel generator running continuously for a year produces seven tons of diesel soot, 152 tons of carbon monoxide and 123 tons of nitrogen oxides. California regulators have classified diesel exhaust as a carcinogen.

To limit the generators' harmful emissions, users are running generators on low-sulfur diesel fuel, and installing expensive catalytic converters and filters that catch some pollutants.

Tacoma Power has spent $7 million on environmental controls for its 32 generators.

"This could result in some real serious emissions back-sliding in our region," McLerran said. "So we are working with them (businesses) to run cleaner fuels and use control equipment."

In August, the governor declared a statewide energy alert that allowed Avista Corp. to exceed air emission rules by increasing the output of a natural gas-fired plant in Spokane. Electricity generated from the plant was fed directly to Bellingham Cold Storage, which at the time was on the brink of shutting down due to the high cost of electricity on the wholesale market.

Rules for permitting diesel generators are regulated by the state's seven air pollution control agencies. The state Department of Ecology also regulates use of diesel generators in some parts of the state and for some industries. Each agency has different rules for permitting generators.

In King and Pierce Counties, the Puget Sound Clean Air Agency requires that a diesel generator have a permit before operating. It generally takes at least two months to get a generator approved for use.

Reach Steve Ernst at 206-447-8505 ext. 114 or sernst@bizjournals.com.

http://seattle.bcentral.com/seattle/stories/2001/01/29/story3.html

-- Martin Thompson (mthom1927@aol.com), January 29, 2001