Time to move ahead on steam plant

Like the Hydra, the nine-headed serpent from Greek mythology that grew two heads after one was cut off, the future of the University’s steam plants is clouded by a seemingly invincible bureaucratic monster. After years of study and debate, the renovation of the southeast facility languishes in a legal and political obstacle course.
Currently, the steam plant proposal is adrift in an ocean of paperwork. Although the Federal Emergency Management Agency recently waived flood-control management regulations, the Minnesota Department of Natural Resources is studying the implications of the shoreline management act that regulates industrial development on waterfronts. The Minneapolis City Council recently thrust itself into the debate by proposing a zoning regulation, and the State Attorney General’s Office is investigating the proposal. The Minnesota Pollution Control Agency is still considering the permit required for operating the plant, and the Minnesota Historical Society and other local and federal agencies must agree to any renovation of the southeast plant. The next legislative session is fast approaching, and don’t be surprised if Phyllis Kahn and Larry Pogemiller propose a myriad of bills and amendments intended to save us from ourselves. Rest assured, most of us will graduate before this is settled.
The University first recognized the need to address the deteriorating facilities responsible for heating and cooling all of the buildings on campus in 1988. Experts called in by the Board of Regents predicted that major renovations would be required in the next 10 years. As a precursor of things to come, one of the two steam plants on the Minneapolis campus suffered a mechanical breakdown last fall, crippling the system. Parts are no longer manufactured for the boilers, and Sue Markham, then the associate vice president for Facilities Management, called the old plants a maintenance nightmare.
Assuming students and professors prefer not to don scarves and parkas while in class, action must be taken. However, less than two years away from the prophesied apocalyptic meltdown, special-interest groups are slowly strangling attempts by the administration to move forward on the issue. These well-intentioned people mistakenly think the University is Burger King, and they’re damn serious about having it their way. To date, the forces of righteousness have successfully out-clubbed, out-flanked and out-maneuvered the regents and the administration.
In the proposal currently circulating, the University advocates closing the main steam plant and renovating the southeast facility near the Stone Arch Bridge. Of the three boilers to be added, two will burn a combination of natural gas and sulfur fuel oil, and one will rely on coal or natural gas. The permit being considered by the Minnesota Pollution Control Agency (which governs the operations of the plant) stipulates that the plant must burn 70 percent natural gas during the first five years.
That’s not good enough, however, for the environmentalists. They stridently maintain that nothing less than an off-river, gas-burning plant is acceptable.
That wouldn’t be so problematic if the cost differential between the two options wasn’t so significant. Because of guarantees stemming from the 25-year contract with Foster Wheeler, the company that operates the University’s steam plants, renovating the southeast facility will cost $109 million. Estimates of the cost for a gas-fired plant range from $86 million to $126 million. The real difficulty with the natural-gas steam plant figures, however, is that they exist only as back-of-the-envelope calculations and don’t have the same integrity as numbers from the Foster Wheeler contract.
Proponents of natural gas were given a fair hearing during the bidding process for the University’s energy contract that was awarded in 1992 to Foster Wheeler. But the alternative proposal put forth by NorAm Energy Corporation (Minnegasco’s parent company) was simply more expensive, and the contract didn’t offer fuel cost guarantees.
Earlier this year Phyllis Kahn (yes, the same DFL’er from Minneapolis who scorns Gov. Arne Carlson for violating the autonomy of the University’s land-grant charter) urged NorAm and the United Power Association of Elk River to prepare another proposal. Surprise, surprise, in Minnegasco’s second proposal (which was prepared with the aid of hindsight after losing out to Foster Wheeler in 1992), prices mysteriously plummeted, and the company magically promised fuel-cost controls. Sorry folks, but that’s a case of bad-faith negotiation, and the University is right in refusing to deal.
The Greenpeace crowd conveniently forget to consider co-generation and fuel costs in the financial calculus. Generating electricity simply isn’t as cost-effective with a natural gas plant as it is with a coal-fired facility. Additionally, natural gas is subject to much more volatility than coal in the marketplace, and this translates into an alarmingly high business risk. Over the life of the plant (estimated to be 50 years), small natural-gas price fluctuations are magnified into King Kong-like proportions and cost millions of dollars.
Certainly the environmentalists are justified in harping about the impact of pollution. Sadly enough, though, the tree-lover’s near-sightedness prevents them from seeing the forest beyond the brush. True, by building a gas-fired facility, the University would reduce its emissions of sulfur dioxide (the culprit responsible for acid rain) by 100 tons per year, and lead and mercury emissions would shrink to zero. These levels, however, pale in comparison to the output from the Northern State Power coal-burning power plant in northeast Minneapolis. In 1994, its towering smokestacks belched 5,936 tons of sulfur dioxide, 15,292 tons of nitrous oxides, 316 tons of carbon monoxide and 1,340 pounds of lead. When viewed in the context of the total Twin Cities emissions, both steam options are virtually equal. If the goal of the environmentalist lobby is reducing sulphur dioxide or particulate matter, there are more cost-effective and less-intrusive methods available.
Another troubling issue the off-river crowd blissfully ignores is land. The University’s recent court attempt to secure 300 acres just north of the East Bank failed. An off-river gas plant will minimally require 15 acres of non-polluted land bordering the University, and in a heavily industrialized neighborhood, such a lot is hard to come by at a reasonable price. But the environmentalists aren’t picking up the tab, so why should they care?
Finally, opponents of the southeast steam plant ignore its status as an archeological artifact. When the facility was first constructed 93 years ago, it provided most of the power for the Twin Cities streetcar system. Although the trolleys disappeared, historians ensured that the plant will survive by placing it on the National Historic Register. So if the University backs out of its contract with Foster Wheeler, who will insure that the place doesn’t go the way of the Mayan ruins?
It’s time for the environmental beatniks, legislative wonks, river recreation advocates and NIMBY (Not In My Back Yard) activists to come in from the cold. After eight years of haggling and study, renovating the southeast steam plant still meets environmental safeguards, and it is still the most economically prudent decision.

Greg Lauer’s columns appear in the Daily every Wednesday.