Posts Tagged ‘cogeneration’

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Cogeneration vs. monopoly electric utility service, circa 1909

May 21, 2010

Michael Giberson

The Isolated Plant magazine published “A letter from a New York Correspondent,” in their August 1909 edition:

Mr. Editor:

From the viewpoint of one of the “common people,” the recent issues of your magazine have been striking fire with every telling blow…  The following incident is mentioned as a bit of local history.

Two downtown office buildings adjoining each other on the same side of the street, and carrying the same class of tenants, were not operating under sufficiently even costs.  One of them had its own electric power plant and the other used Edison service.  The man who operated his own plant even had a little power to spare and closed a two years’ contract with the other agent to supply the latter’s building with light at a rate considerably lower than the street service.  A contractor installed a 3 inch loricated conduit carrying three double braid conductors between the generator switchboard through the foundation wall to one side of a three-pole double-throw service switch previously installed.

This switch had been used to supply Edison break down service when the building operated its own plant.  The wiring was installed in full accord with the National Code as adopted by the N. Y. Board of Fire Underwriters, and a certificate of approval was received from the city department.  The contractor received a “violation,” however, from the Fire Underwriters, and any attempt to secure a committed statement from the latter board as to the code rule violated was futile.  This was evidently somewhat peculiar, the contractor had performed his work according to the rules of the board as publicly printed and circulated, yet a certificate of approval was withheld, and he could not receive his payment for the work.  The inspector was called on, he was non-committal … the Chief Inspector was non-commital … [The] Superintendent … quite abrubtly stated that his board would not approve the running of an electric power service through a party line; this ruling being the result of an agreement between his board and the N. Y. Edison Co.

Neither contractor nor agents could understand how any such mutual agreement could affect the fire risk….

The N. Y. Edison Co. also got busy after the contractor and threatened to send him to jail for “interfering with their meters,” which of course was not the case and the contractor was not molested; threat was also made to discontinue the [Edison Co.] service to the elevators, but it also passed over.

Both buildings secured independent insurance, the contractor got his money, and each agent fulfilled their two years’ agreement.

C. J. H.

At a time when cogeneration, smart grids, and decentralized energy resources are creating challenges around the fringe of standard regulated retail power service, it is interesting to see how the battled played out a century ago, when state regulation of monopoly regulated utilities was new and competition between central station power and the isolated plant was ongoing.

The Isolated Plant magazine has been digitized by Google Books.  See also the related post of a week ago, “The central station and the isolated plant.”

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Munson: From Edison to Enron to Casten

May 11, 2009

Michael Giberson

Richard Munson’s book From Edison to Enron provides a pretty engaging run through the history of the electric power business in the United States.  The title actually understates the scope just a bit on each end, with Munson touching briefly on developments before Thomas Edison gets involved and discussing developments after Enron’s 2001 collapse up to the book’s 2005 publication date. The book provides a good background for anyone seeking to understand the current state of the industry including the variety of state and federal regulatory experiments affecting electric power.  Advanced students of the industry will want to go much deeper than Munson does, but Munson’s book offers a good beginning.

David Sicilia offers a more penetrating and critical review of the book on EH.net, pointing out a few flaws and offering alternative interpretations of some episodes.

Sicilia highlights singles out for critique several issues related to monopolization in the power industry. He finds Munson “innaccurate or unpersuasive” on topics of economies of scale, utility regulation, and natural monopoly. I’ll agree that Munson’s discussion doesn’t compel the reader to believe, for example, that no additional economies of scale were available in the industry after 1967.  But Munson is telling a story, not arguing a legal brief, so I’m not concerned that Munson doesn’t beat every point to death with supporting arguments and data.

On this issue of economies of scale and central station power verses distributed power, however, it may bear mentioning that Munson has served as Secretary for the U.S. Combined Heat and Power Association. You can take this fact as indicating either that Munson surely knows what he is talking about, or that he has  may have some sort of financial conflict of interest. Reasonably, I think, you can conclude that his writing and his career reflect a consistent set of beliefs about the present and future of the industry.

Chapter Seven, Entrepreneurs, stands out in the book by being focused primarily on a single individual, Tom Casten, a serial entrepreneur in congeneration and perhaps not coincidently a harsh critic of monopoly regulation of electric utilities.  (By the way, both Lynne and I are fans of Casten’s entrepreneurism in electric power, e.g., see this post.) Perhaps also of note is that shortly after From Edison to Enron was published, Munson left his position as executive director of the Northeast-Midwest Institute to become a senior vice-president at Recycled Energy Development, a cogeneration project developer for which Tom Casten is chairman (and Sean Casten is president and CEO). Perhaps another reason for any reader suspicious of Munson’s narrative to see a potential conflict of interest. To me it just appears as Munson acting in concert with a consistent set of beliefs about the industry.

Whether the book tells a good story or not has little to do with Munson’s interests outside of the book. While the book has its flaws, I find it a good introduction to the history of the industry in the United States.

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Uneconomical cogeneration

April 16, 2009

Michael Giberson

Cogeneration plants, which use a fuel source to produce both electric power and useful heat, can be very efficient projects. Whether particular projects are efficient will depend on the implementation, of course, and whether projects are profitable will depend on fuel and other costs and the revenues from selling power and heat.

From Syracuse, New York, the story of Project Orange illustrates some of the things that can go wrong on the business side of a cogen venture. My conclusion, based only on this and a few other news stories, is that the venture was well designed for the policy and regulatory foundations in place when the project went into operation in 1992 (especially, a PURPA-based contract to sell power to the local utility and a 40-year deal to sell cheap steam to Syracuse University), but regulatory rules-of-the-road changed.  The project wasn’t prepared to accomodate the changes. Litigation ensued.

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