The energy crisis has affected just about everyone on the West Coast and the Pacific Northwest. A combination of factors contributed to a shortage of energy, driving prices to unprecedented levels. Puget Sound Refining Company (PSRC) is a significant user of electricity. Here are a few facts which outline the background to the issue and what PSRC has done and is doing to ensure a reliable power source and to control costs in a very unstable market.
1. Energy Use
PSRC uses approximately 35 megawatts of electricity to run all plant operations. This is a significant amount of power as approximately one megawatt is typically required to provide power to 1000 homes.
2. March Point Co-Generation Facility
While PSRC is a minority owner of this plant and the facility operates on plant property, PSRC has no control over the power generated at this facility. By contract, the 140 megawatts generated at the plant are fed to the grid through Puget Sound Energy which means that this power is available at the same price and terms as all power from the grid. This does not provide protection against price instability and potential outages due to blackouts.
3. Use of diesel generators.
When skyrocketing energy prices became an issue in fall, 2000, PSRC ordered diesel generators to supply temporary power to the facility. PSRC received an emissions exemption allowing it to operate these emergency power sources for 90 days from the Northwest Air Pollution Authority. As part of this process, PSRC completed dispersion modeling to verify that no harmful health impacts would result from the operation of these generators. For a time, these generators provided most of the power needed by the plant thereby reducing costs and helping ensure a stable energy supply. The exemption permitting use these generators expired on April 17, 2001.
4. Gas turbine generators
When it became clear that the energy crisis would extend beyond the 90 day limit of the exemption for diesel generators, PSRC took steps to install gas turbine generators. The primary advantage of these is units is reduced emissions. Typically, the cost of natural gas has been lower as well but during recent months gas prices have been high and unstable. PSRC leased seven 5 megawatt units for one year and began installation in June. As of the end of June, four of the seven units were operational with all units planned for operation by the end of July. In the interim period, whatever power has not been generated on-site has been purchased from Puget Sound Energy.
5. Puget Sound Energy contract.
In April, 2001, major industrial users in Northwest Washington initiated an action against Puget Sound Energy to provide greater flexibility in their ability to self-generate power. A settlement was reached and PSRC plant manager Tom Smith issued this statement:
"The settlement was made between Puget Sound Energy and large industrial power users in the region. It permits us to purchase power from sources other than Puget Sound Energy and also permits power that we may generate to be sold back to the grid. It is our intention to self-generate power in the short term and evaluate a range of long term solutions.
This agreement opens a wider range of power generation options and should help increase the availability and reliability of power to the residents and other commercial and industrial users in our region."
6. The future
PSRC believes with the recovery of water resources, the addition of new power facilities, and policy changes as a result of this crisis that energy prices will again stabilize and, while perhaps never return to the previous levels, will be more reasonably priced. This long term stabilization may take two years or more. PSRC is committed to maintaining a stable and cost efficient energy supply for the plant in order to ensure on-going operations and the continued employment of plant employees. Existing leases on gas turbines may be extended beyond the current one year lease if needed. In the meantime, PSRC is actively investigating longer term self-generation options including partnering with other industrial users in the region.
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