BANGOR – Eastern Maine Medical Center hopes to save money by going “off the grid” and producing most of its own electricity and heat with a new $7 million power plant on its State Street campus.

The hospital estimates that energy cost savings could reach $900,000 to $1 million in the facility’s first year of operation. The hospital aims to have the facility up and running by the start of 2006.

“It’s big numbers,” EMMC facilities director Jeff Mylen said Thursday. “The savings that we realize can help keep health care costs down. That’s our goal.”

But other energy industry insiders argue that the new private power plant could spark electric rate hikes for the rest of the community. In fact, regional provider Bangor Hydro-Electric Co., which stands to lose a major customer if EMMC goes it alone, has asked the state Department of Health and Human Services to hold a public hearing this morning before giving the hospital its blessing.

The Eastern Maine Medical Center board of directors Thursday gave its official support for the plan to construct a cogeneration plant, in which a natural gas-fueled generator would be used to produce electricity. Meanwhile, heat from the process would be collected and used to create steam for heating the hospital.

“The same amount of fuel input can heat the facility and make electricity,” Marc Cone of the Maine Department of Environmental Protection’s air bureau said Thursday. “It’s a more efficient use of a natural resource.”

Nationwide, businesses that use a great deal of power have shifted to cogeneration in hopes of saving money as fuel prices reach record highs. Most of Maine’s paper mills have cogeneration plants, as do some industrial facilities. In fact, the plants make up a significant portion of the one-third electricity capacity from renewable and efficient power sources that is required by state law.

Proponents of cogeneration praise its efficiency and low greenhouse gas emissions, a factor of the relatively clean fuel. Many also argue that a system of numerous small, independent electricity producers can add stability to an aging electric transmission system that has been blamed, in part, for eight major power outages in the United States in the past decade. And in an era of terror alerts, one megasystem is far more vulnerable to attack.

Both stability – particularly in light of the power outages during the 1998 Ice Storm – and cost led EMMC to start investigating cogeneration technology in the 1990s. In 2001, the hospital commissioned a feasibility study, but didn’t put its plans into action until receiving a $3 million grant from the Department of Energy last year, Mylen said.

And the remainder of the $7 million total cost of the project should be paid off in just three to four years, he said.

“The financial numbers look good … we’re doing what we think is the right thing,” Mylen said.

But whether benefits for the hospital will outweigh the potential for higher electric rates remains to be seen, said Stephen Ward, public advocate for the Public Utilities Commission.

The increase of household rates when large utility consumers assert their independence is a phenomenon that’s occurring nationwide as many large facilities shut down and others seek to economize, he said Thursday. Already, major utilities including Bangor Hydro and Central Maine Power are working with PUC to find means of holding on to their commercial customers, Ward said.

“Any time a customer, particularly a large customer, goes off the grid, it increases the burden … on those that remain,” Bangor Hydro spokeswoman LuAnn Ballesteros said Thursday.

The company could not provide estimates on how much of a rate increase a typical household might see, as some details about the project remain unclear at this time, she said.

Although more autonomy is the goal, EMMC will remain hooked up to Bangor Hydro’s power lines as a backup system and the hospital will continue to buy some power on a regular basis, Mylen explained.

The proposed facility would produce about 4.6 megawatts of electricity with some variation depending on air temperature. That’s enough to cover the hospital’s needs at its State Street facility most days of the year. However, on summer days when air conditioning costs peak, or at times when the cogeneration plant must be shut down for maintenance or repair, EMMC would buy power, he said.

The hospital and Bangor Hydro have been discussing the idea of a cogeneration plant for several years, although both parties said Thursday they are not seeing eye-to-eye.

Today’s hearing likely will weigh the general pros and cons of the project, but it relates specifically to EMMC’s request for a “certificate of need” – a document that DHHS has required medical centers to acquire before beginning any large capital improvement project or equipment purchase. The program was designed to avoid unnecessary spending and duplication of costly medical services within a geographic area. Such duplication has been viewed as a major factor behind skyrocketing health care costs, according to the governor’s health policy office.

Staff from the department’s certificate of need unit must consider the project’s cost-effectiveness as well as its potential effects on health care costs locally and statewide, explained Bill Perfetto of DHHS.

Perfetto said Thursday this would be a new experience for his staff, which more typically considers investments in medical equipment or general construction. Whether effects on all household ratepayers or only effects on other health care providers in the area can be considered is not clear, he said.

“They’re going to have to decide whether the benefits, in terms of medical costs, outweigh the price impacts for other customers,” Ward said. “I just hope they’re willing to consider the facts about electricity prices.”

DHHS staffers are expected to issue a recommendation to the commissioner later this month. If the commissioner approves the certificate of need, the project also will need an air emissions permit from the DEP.

The Department of Health and Human Services will consider the hospital’s request during a public hearing scheduled for 10 a.m. today at the Bangor DHHS office, 396 Griffin Road. Written comments may also be submitted to the Certificate of Need Unit, 442 Civic Center Drive, Augusta 04333-0011, until 5 p.m. Monday, Sept. 20.