Hydro contests EMMC power plan

BANGOR – A Friday hearing to weigh the costs and benefits of a proposed on-site heat and power plant for Eastern Maine Medical Center only added complexity to an already challenging decision for the Department of Health and Human Services.

The department is considering whether to grant the hospital a “certificate of need,” which is required by the state whenever health care facilities make a major investment, in hopes of reducing redundant services and unnecessary spending.

In this case, the hospital argued that the $7 million plant will bring substantial savings, which they will pass on in the form of better health care. A federal grant from the Department of Energy would fund $3 million of the construction costs, and the overall savings to hospital operations could reach $1 million in the first year, according to the hospital’s analysis.

“This is consistent with everything the state is trying to do to reduce health care costs … and savings will only improve as the prices of natural gas and oil continue to grow in the future,” said Jean Mellett, director of planning for Eastern Maine Health Services.

But Bangor Hydro-Electric Co. on Friday questioned EMMC’s numbers and argued that the hospital would lose $500,000 annually, while burdening other electric customers with $800,000 in additional costs each year.

The utility’s analysis predicts that the cogeneration plant would cost the community $20 million over its 15-year life, and that the project would result in about a 1 percent rate increase for other Bangor Hydro customers, Jeffrey Jones, manager of legal and regulatory services for Bangor Hydro said Friday.

“The public savings are questionable,” he said.

The hospital’s plan is to construct a combined heat and power generation plant on its State Street campus, which could either be powered by clean-burning natural gas, or No. 2 fuel oil if gas is not available. A generator would provide electricity, with an output of about 4.6 megawatts, depending on air temperature. Waste heat from the generator would be captured and used to produce steam for heat.

Although the hospital aspires to self-sufficiency, a permanent connection to Bangor Hydro is part of the plan, both as a backup power source, and for the few days when electricity loads exceed the generator’s capacity, said Jeff Mylen, EMMC facilities director.

Most of Maine’s paper mills use the technology, as do more than 50 hospitals nationwide, including the Mayo Clinic.

However, engineers representing the hospital and the utility Friday argued over the proposed efficiency of such a small cogeneration system. If it is not operated at full capacity, the benefits would be greatly reduced, argued Bangor Hydro’s experts.

“The whole goal of a cogeneration plant is to capture all the waste heat. Otherwise, you’re not even operating as efficiently as the big utility companies,” said Stephen Meade, an engineer serving as a consultant for the utility.

The hospital’s engineers countered that the new facility would be as high as 80 percent efficient, providing a range of benefits, including the production of high-heat, high-pressure steam for sterilization, and energy for cooling, as well as heat and electricity.

And the facility would provide much-needed reliability, they argued, citing the example of the ice storm of 1998, when the hospital had to run on emergency generators for 15 hours, despite Bangor Hydro’s efforts to get wires repaired.

“It’s critical for a medical facility to have reliable power,” Mylen said. “When we do take a hit, it’s catastrophic in many ways.”

The company argued that, on average, its power delivery has been shut down less than one minute per month over the past six years.

The disagreements between Bangor Hydro and EMMC are myriad and complex; however, DHHS’s job is only to decide whether the proposed plant would be financially responsible and whether it would duplicate existing services.

Although the rule was designed with medical specialties in mind, Bangor Hydro argued Friday that electricity itself is a service provided by the hospital. Plenty of reliable electricity exists in the region, so spending limited state money to build a new electric generation plant is unnecessary, Jones said.

“The region already has excess [electric] capacity,” he said.

That finances must play a role in the department’s decision is more clear, although the numbers are not. The role of gas and oil prices, of the state’s electricity pricing system, of the proposed plant’s efficiency – all the relevant facts were up for debate Friday.

Now, department staff must consider the dueling analyses and decide what would be best for the state’s health care system. A preliminary recommendation will be published and sent out for a brief comment period, and then the final decision rests with DHHS Commissioner John Nicholas.

The department hopes to reach a decision by Sept. 30, the deadline that EMMC must meet to receive a portion of their grant funding this year.

Written comments may be submitted to the Certificate of Need Unit, 442 Civic Center Drive, Augusta, ME 04333-0011, until 5 p.m. Monday, Sept. 20.