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Concord Steam: Last-of-its-kind power plant down to its final days

  • This 2007 drawing shows a proposal for a new Concord Steam plant in the former Boston & Main railroad yard on South Main Street. The 2008 financial crisis killed the financing, and the work was never done. —Courtesy

  • This 1939 blueprint shows the steam pipes connected to Concord Steam's original heating plant, located near what is now Bridge Street. That plant was torn down decades ago, but these steam pipes are still operating. The State House is within the rectangular pattern of pipes. David Brooks—Monitor Staff

  • The installation of the original underground steam pipes in 1938 or 1939. The picture was taken looking east toward Main Street; the State House is off to the right. Courtesy / Concord Steam

  • The installation of the original underground steam pipes in 1938 or 1939. This shows the original Concord Steam boiler plant, just off Bridge Street; it was torn down in the early 1980s and is now a parking lot. Courtesy—Concord Steam

  • “The future was bright,” Peter Bloomfield (left) recalled recently, looking back on Concord Steam’s history as he and co-owner Mark Saltsman sorted through paperwork in the Concord offices that will soon shut down. But shifting market forces hit the company hard. Photos by GEOFF FORESTER / Monitor staff

  • A worker from R.H. White Construction works on the temporary steam generator at the State Hospital grounds near the Concord Steam plant off of Pleasant Street in Concord. GEOFF FORESTER—Monitor staff

  • RH White manager John Kelley looks over the new steam piping that will connect to the temporary steam production system when the Concord Steam plant stops on May 31.

  • Concord Steam co-owner Mark Saltsman leans over to show workers a steam valve where the conversion pipes are being connected when the plant switches from Concord Steam to the temporary steam producing equipment on May 31. GEOFF FORESTER / Monitor staff



Monitor Staff
Saturday, May 27, 2017

Ten years ago, Concord Steam was on a roll.

The state’s only municipal district-heating system had plenty of customers, and plans to build a new plant on S. Main Street to produce both heat and electricity. New federal tax breaks and credits for burning wood were on their way, and the company faced little competition because oil and gas were so expensive.

“The future was bright,” Peter Bloomfield recalled recently, looking back on the company’s history as he and co-owner Mark Saltsman sorted through paperwork in the Concord offices that will shut down next month. “We had renewable energy credits, a great financial model, our steam prices would drop, everyone was going to make out great, we’d be able to walk away from this ancient plant and have a brand new plant to operate. It was great.”

A decade later, the story has a different ending.

At midnight on May 31, Concord Steam workers will push a button or two on the controls of the 79-year-old power plant in the state office complex off Pleasant Street and the boilers will go cold, marking the first time in New Hampshire history that a public heating utility will go out of business.

Some 15 people will be out of a job, area timber harvesters will lose millions of dollars of annual business, and a number of customers, including the city and state governments, will be scrambling to install replacement heating systems before next fall.

It’s an ignominious end to one of Concord’s best-kept secrets: An unusual system for heating portions of the capital city by burning wood chips and sending the resulting steam throughout underground pipes.

“To have a district heat system in a city this small, a biomass system, is very unusual,” said Bloomfield. “You just don’t see them.”

Soon you won’t see it here, either.

History

Concord Steam was created in 1938 by a group of businessmen led by Concord Electric Co. President Allen Hollis. They wanted an alternative to the many small coal-fired heating plants operating in downtown buildings, which filled the city with dust and soot.

The first Concord Steam power plant was built near what is now Bridge Street. Pipes carrying steam were buried under sidewalks and roads on the blocks around the State House; the 1939 blueprint shows little more than this one rectangle, with a few side conduits.

Despite those worries about pollution, the plant initially burned coal, and later coal gas. “(Hollis) was quoted as saying he’d put in a tall enough chimney to send the smoke and ash down to Allenstown,” said Bloomfield.

Separately, the state hospital on Pleasant Street also had a district heating system, dating back to the previous century when such systems were relatively common.

The two systems ran separately for decades until 1977, when Bloomfield’s father, Roger, bought the company and launched it on a new course. In 1979, he signed a long-term contract with the state to operate the facility at the state hospital, which would eventually be closed and turned into the Hugh Gallen Office Park.

Bloomfield converted the plant’s two boilers to burn wood chips instead of oil, and the next year put pipes under Pleasant Street, connecting this system to the downtown loop of pipes.

By 1981, Concord had shut the Bridge Street plant, which was eventually torn down and replaced with a parking lot.

Roger Bloomfield died in 1986, leaving the company in the hands of a trust. His son Peter took over operations and bought the company along with Saltsman, who had met Bloomfield when working for a subsidiary, Concord Steam Cogeneration Service, at a Colorado coal plant.

Saltsman had worked in propulsion engineering for the U.S. Navy and “loved the boiler business,” so he was happy to move here and help Bloomfield rejuvenate Concord Steam, which had stagnated under trust ownership.

They added big customers like Concord Hospital and a number of schools.

Saltsman says the company’s good reputation for customer service paid off when luring new clients. “On top of that, we were biomass – a lot of people liked that we were burning something other than a fossil fuel, and a local product. We’re putting 5 to 6 million dollars a year into the local economy. That’s how I was able to market Concord Steam in the ’90s, when we went through a pretty good growth spurt.”

They also faced a big issue: The likely need to retire the aging plant in the Gallen Office Park.

“We started thinking about a new plant in 2004-05,” said Saltsman.

They found a location, near the old railroad yards on S. Main Street, and starting developing plans to build a new $100 million plant that would generate sizeable amounts of electricity from the excess heat, creating two income streams through what is known as cogeneration.

Back then, it seemed likely that after 70 years in business, Concord Steam would remain part of the city for at least another 70.

Gas prices, recession’s toll

So what happened? There’s no single reason for the company’s death spiral, but two factors were crucial.

The most important was the boom in natural gas caused by fracking of U.S. shale-oil fields. It became so cheap that Concord Steam couldn’t compete on price against gas-fired heat. That same issue is also pushing biomass power plants out of business and has even shut down some atomic power plants.

Almost as big a blow, however, was the 2008 recession, which hit just as Concord Steam was getting its financial ducks in a row to build the new power plant.

“Our banker called us and said, ‘I know we thought we were signing papers in the next week or two, but our project financing department has just been totally shut down.’ ” Saltsman said.

“Timing is everything,” he added. “This was bad timing.”

That loss of financing prodded Concord Steam’s biggest customer, the state government, to talk with increasing urgency about switching to gas heat – not justifiably, say the company’s owners.

“The Administrative Services people were convinced that our plant was unsafe, unreliable, that we would not survive. That wasn’t correct. The plant is old and tired and dirty, but the parts that matter work. We’ve never had an outage of any significance,” Bloomfield said.

The state’s doubts weren’t just mechanical, however.

“More than that, they had doubts about our ability to raise the capital,” added Saltsman. “I don’t think we could get them past the hurdle.”

At the time, the state government made up more than one-third of the company’s total customer base, so just the possibility that they would leave rattled everybody and may have prodded some commercial customers to switch to gas, fearing that steam rates would skyrocket if the state bailed.

Every time a customer switched to gas, the remaining customers had to pay slightly more to cover the fixed costs of operating the plant and pipes – making it more likely that other customers would switch.

As years went by, plans for a new plant didn’t go anywhere. Twice, Saltsman says, Concord Steam thought it had financing lined up, only to see it fall through at the last month. The company also delayed maintenance on its existing plant, thinking that they would soon have to ditch it.

The company struggled against a slow death spiral of departing customers, rising rates and increasing losses. Then, at a Public Utilities Commission hearing in 2014, state officials confirmed that they were not going to enter into a long-term contract with Concord Steam when the current contract ran out next year.

“That was news to us. We still thought it was a possibility,” Bloomfield said.

Combined with a 2015 fire marshal’s report that outlined safety and maintenance issues at Pleasant Street, the company’s death spiral got steeper and closure seemed inevitable.

At best, said Saltsman, “We could hold on four or five years … and eventually end up, I hate to say it, bankrupt, at the same time raising our rates astronomically.”

Talking to Liberty Utilities

It became obvious that the only savior could be Liberty Utilities, which in 2012 had bought EnergyNorth’s natural gas business serving Concord and much of New Hampshire.

Other options were floated – most interestingly from Illinois-based GreenCity Power, which has experience with wood-fired district heating and talked about keeping the Concord Steam plant running – but nothing came of them.

Bloomfield and Saltsman say they hoped they could convince Liberty to buy Concord Steam and keep it operating, but the company was only interested in buying the corporate assets – basically the customer list and some easements to help install pipes. Eventually a price of $1.9 million was agreed upon.

That left a quandary, because Concord Steam is regulated by the Public Utilities Commission. Changing a regulated utility that provides an essential service like heating isn’t easy, and the Concord Steam sale was made more complicated by its unique status.

New Hampshire has seen bankruptcies of small regulated water utilities, usually serving a single development, and one heating utility has gone out of business – Claremont Gas, bought in 1994 by Synergy – but in all those cases the existing systems could continue operating under a new owner with little disruption to customers.

Concord Steam’s situation is unique since nobody would keep the steam heat systems running. That meant customers have to install entirely new technologies to heat their buildings and, in a few cases, supply their hot water.

The sale to Liberty Utilities was announced July 20, with a shutdown coming on May 31 – barely 10 ½ months away. Near-panic ensued as its then roughly 180 customers, including a number of nonprofits, scrambled to find tens of thousands of dollars per building to convert to gas heat.

“This has made life a little difficult for most of our customers, but it would have been much more ugly if we had tried to stay open,” Bloomfield said. “Our prices would have gone even higher; we had bank debt coming due – they were calling our notes. We were stuck between a rock and a hard place.”

Liberty Utilities agreed to pay out a $1 million fund to help some of these customers but the idea was killed when the PUC ruled it would be unfair to the company’s ratepayers outside Concord.

Bloomfield said it was Liberty that wanted the purchase finished within a year, so it could better plan for the pipe and other installations needed to bring gas to former Concord Steam customers.

Despite such explanations, plenty of people are unhappy about the whole transition.

In a February PUC hearing, Concord State Sen. Dan Feltes questioned why the commission staff was okay with part of Liberty’s $1.9 million being used to give Saltsman and Bloomfield raises, but not okay with using it to help customers transition. Concord city and school officials have publicly groused about the need for emergency spending to make the transition in time, while the state government has had to install an ugly and noisy boiler on Green Street to keep steam heat in the State House and other historic properties that can’t be converted to forced hot water like newer buildings. Some nonprofits are still struggling to get the money to install boilers before next fall.

The two owners admit that the past year has taken a toll on the good reputation that had built up over the years for Concord Steam as well as for Bloomfield and Saltsman personally.

“It’s not something we wanted to do, but it had to happen at some point,” Bloomfield said. “There have been a few people that are pissed. If they could tell us what we could have done differently, done better …”

“Has some goodwill been lost? Unfortunately, yes,” Saltsman said. “But I have not had one customer demonstrate ill will towards me. I’ve had them upset with the process, but … the majority of our customers have understood the sticky wicket that we were in. People were upset, but not necessarily upset with us.”

No future

Concord Steam Corporation will cease to exist next month, although a holding corporation will hang around to wind up some legal and financial details this summer.

The unused steam pipes, between a couple inches and a foot in diameter, will be filled to avoid future cave-ins. The very first pipes to be installed, those around the State House, will be the last to stay active as the state government takes a couple years to switch over to newer pipes and a newer boiler for the historic buildings.

As for the power plant on Pleasant Street, the boilers will be drained and the machinery shut down, with the building locked up until it is almost certainly torn down at some point. It’s unclear what might replace it; more parking seems the likeliest bet.

Neither Bloomfield, 63, nor Saltsman, 59, knows what their future entails. Wood-fired boilers aren’t exactly a growth industry, as natural gas dominates power production, and district heating is a niche specialty. Both say they are open to options, not looking for retirement.

And both say that when May 31 arrives, they will be sad.

“It’s tough. What bothers me the most is that this happened on my watch,” Saltsman said.

Bloomfield, who pretty much grew up with Concord Steam, the list of what-ifs and if-onlys is long but in the end, he says, he has to take consolation in this: “We did the best we could. We tried.”

(David Brooks can be reached at 369-3313 or dbrooks@cmonitor.com or on Twitter @GraniteGeek.)