the film forum library tutorial contact

Firms Generate Power by Staff Seattle Times, December 23, 2000

BELLINGHAM -- With no fix in sight for high-priced and scarce electricity, some big industrial users are considering generating their own power.

Georgia-Pacific West's pulp and paper mill here and the BP-Amoco refinery at Cherry Point northwest of Bellingham already are generating small amounts of power themselves, and are exploring ways of producing all their power needs.

Recent huge increases in the market prices of electricity have hurt a number of companies.

Georgia-Pacific and six other companies have asked the Washington Utilities and Transportation Commission to order Puget Sound Energy to provide power at the same rate it charges other industrial customers. The companies currently pay market rates under a contract they had requested from the Bellevue utility.

Georgia-Pacific sent most of its 800 Bellingham workers home starting Dec. 9, when power prices hit levels that company officials said would have forced the mill to run at a loss.

Jim Cunningham, mill general manager, said Georgia-Pacific hopes to run some operations on power from portable diesel generators. Already, two tissue machines are operating and part of lignin production has resumed.

Cunningham said he had no estimate of how many workers have been called back, but that employment probably will be close to 350 people by the end of next week, when a third tissue machine is expected back in operation.

Using small diesel generators to produce about 16 megawatts, Georgia-Pacific is able to turn processed wood pulp into paper, using pulp reserves stored at the waterfront mill. However, it would need more power to convert wood chips into pulp - at full operation, the mill consumes about 40 megawatts.

Cunningham said there appears to be neither a short-term answer nor a long-term strategy for solving the region's power problems. Because of that, he said the most attractive option for Georgia-Pacific is to generate its own power, to ensure a reliable supply and stable price.

At the BP-Amoco Cherry Point refinery, 10 portable generators have been installed to produce 10 megawatts, spokesman Scott Walker said. The refinery uses about 80 megawatts, and more generators are on the way.

The refinery soon should be able to generate about 25 megawatts on its own. BP-Amoco produces diesel fuel at the refinery that can be used to run the generators, Walker said.

Three days of talks between Puget Sound Energy and the seven industrial customers broke off Thursday without results.

Besides Georgia-Pacific, companies taking part in the talks with a Utilities and Transportation Commission mediator were Boeing, Equilon and Tesoro oil refineries in Anacortes, Air Liquide America, Air Products and Chemicals, and CNC Containers.

When the industrial users signed supply contracts with PSE in 1996, market prices were usually below $50 a megawatt. In recent weeks, prices have topped $3,000 and this week were in the $300-$500 range.

At $300 per megawatt, industrial users are paying about five times the rate homeowners pay for electricity.

The small diesel generators may be only stopgap measures because of state air-pollution regulations. Walker said BP-Amoco has been told it can run the generators for no more than 90 days a year. Cunningham said he had not yet been told by the state Department of Ecology whether the 90-day restriction would also apply to Georgia-Pacific.