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Extreme weather a testament to Bow plant's relevance?

Last modified: 7/29/2013 11:57:06 AM
Two o’clock, Wednesday afternoon, Merrimack Station in Bow. Bill Smagula, vice president of power generation at Public Service of New Hampshire, is wearing a hard hat and earplugs, and standing next to a turbine the size of a railcar. The air is uncomfortably hot. Smagula, trying but failing to outcompete the loud drone of the machine, shouts something about megawatts and coal reserves and revolutions per minute.

This is the world that Smagula and the 100 or so employees who operate the state’s largest coal-fired power plant have known for decades. And though the plant runs far less frequently than it did just years ago, due largely to the cascading price of natural gas, on days like these, when temperatures tip into the 90s and energy consumption across New England rises to near-record levels, it’s busy.

“We’re here all the time, but we’re here especially for conditions like this,” Smagula said. “This is our game day.”

Debate has intensified recently over the future of PSNH’s power generating assets: A regulatory report issued last month said the utility’s fossil-fuel plants have “minimal economic value”; legislators met this week to discuss whether it should divest some or all of its power facilities; data released Monday showed that it is hemorrhaging default energy customers. But Smagula and others point to periods of extreme weather, when the demand for energy climbs and gas supplies near capacity, as evidence that plants such as Merrimack still matter.

Energy consumption in New England soared yesterday to nearly 27,000 megawatts – among the 10 highest peaks on record (the highest was Aug. 2, 2006, at 28,130 megawatts).

ISO New England, which manages the region’s energy grid, has requested that residents and businesses conserve electricity in any way they can, be it shutting off lights, adjusting thermostats up a few degrees or postponing laundry and other energy-dependent chores until evening and morning hours. Scheduled maintenance on transmission lines or power plants has been temporarily delayed to free up all available power supplies.

The region has not and is unlikely

in coming days to experience a power shortage, said ISO spokeswoman Marcia Blomberg. Temperatures today are predicted to peak at 96 degrees, with humidity pushing the heat index to a stifling 101 degrees, but conditions are forecast to cool over the weekend. And even if supply did fall short, Blomberg said, there are a number of ways to protect the grid, such as paying large businesses to reduce consumption, purchasing energy from a neighboring region or calling on suppliers such as PSNH to operate their emergency generators.

All three of PSNH’s fossil fuel plants were operating yesterday, as they were Wednesday, and the day before, and the day before that. And that’s significant, Smagula said, because without the hundreds of megawatts they can provide daily during periods of peak demand, the region’s grid would be less reliable.

In addition, by generating its own power, he said, PSNH is less exposed to price fluctuations or a sudden run on natural gas, as happened multiple times this winter.

“We have a diverse fleet (of plants) and diverse fuel source, which includes coal, oil, hydro, biomass and natural gas,” Smagula said. “And that allows us a lot of flexibility . . . during high-load periods like all winter and all summer that save our customers money.”

Companies that solely buy and sell energy hedge against the possibility of a sudden increase in demand, meaning they purchase what they believe they will need for a given period. If they bet incorrectly and demand unexpectedly grows beyond their supply, they are forced to purchase additional power at a market rate, which rises with demand.

In other words, they lose money. And, if repeated over time, those losses can prove sizable.

But not everyone thinks the “insurance” that PSNH provides to the grid and its energy customers is a net positive, including authorities at the Public Utilities Commission, which regulates PSNH and released last month’s report. The concern is that the utility’s electricity prices, though relatively stable, are more costly than those of independent suppliers, which has pushed customers away and left fewer of them to shoulder the high costs of maintaining facilities such as Merrimack Station.

One thing is clear: Coal contributes far less regionally than it once did, and plants, such as Merrimack Station, run at a fraction of the rate than they did a decade ago. Output at Merrimack Station has dropped to about a third of its overall capacity, according to PUC data; five years ago, it was 75 percent. Plant managers haven’t made any large layoffs, but they have significantly cut back on overtime and outsourced labor, said PSNH spokesman Martin Murray.

But Merrimack does play a part, especially during weeks such as this.

On Wednesday, after Smagula finished showing a group of journalists the outdoor components of the plant, he led them back into the quiet, air-conditioned control room where their tour began. An electronic ticker on the wall was flashing the price of energy in real time. In a half hour it had jumped 12.5 cents per kilowatt/hour – evidence of a soaring demand.

(Jeremy Blackman can be reached at 369-3319, jblackman@cmonitor.com or on Twitter @JBlackmanCM.)


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