Buyer steps up for Salem power plant
Would be part of $656m deal
Salem Harbor Station, a major producer of electricity for Essex County, may finally get a financial lifeline to keep the struggling coal and oil power plant afloat.
Dominion, a $21 billion company, is one of the nation's top five energy producers. It has four main lines of business -- electric utilities, power generation, oil and gas exploration, and gas pipeline construction and distribution. It is publicly traded on the New York Stock Exchange under the ticker symbol ''D."
The company entered New England four years ago, buying a nuclear power plant in Connecticut. At least one analyst is not surprised that Dominion bid on US Gen's New England power plants, which also include Brayton Point in Somerset, and a plant in Rhode Island.
''They now have an alternative source to deliver power if their nuclear unit goes down," said Paul Fremont, an energy analyst at Jefferies & Co. in New York. ''We think it looks to be a very good deal for the company, and it looks to be a very good deal for New England" in terms of fuel diversity.
Dominion's offer still must be approved by the bankruptcy court. But there is a 60-day waiting period to see if another potential buyer comes forward offering to pay more for US Gen's assets. The Federal Energy Regulatory Commission -- which separately is reviewing a plan to have consumers pay for an $85 million environmental cleanup of the plant by US Gen -- also must approve the sale.
The promise of stable financial ownership is welcome relief to local government and business leaders. The power plant is the largest taxpayer in Salem, paying $4.5 million this year, roughly 8 percent of the city's total $56.5 million tax base. The plant also has about 175 employees, including many union workers, making it one of the largest private employers in Salem.
Salem Mayor Stanley J. Usovicz Jr. will meet Tuesday with a Dominion representative to talk about plans for Salem Harbor. ''It's very important that we have an owner that at least has the interest of the city on its radar," he said. ''We'd like to see long-range plans, and a commitment. . . . We've lived with a great deal of uncertainty and doubt for a long time."
Regional business leaders, too, hope the sale leads to stability. A study by Salem State College in 2000 found Salem Harbor Station contributed $16.5 million, including salaries and spending, to the North Shore economy. Business leaders also cite a need for reliable energy for the region. Salem Harbor, a 750-megawatt plant, generates electricity for 600,000 homes and businesses in Eastern Massachusetts.
''Salem Harbor is vital to the economy on the North Shore," said Al Foisy, vice chairman of the legislative affairs committee of the North Shore Chamber of Commerce in Danvers. ''They contribute a tremendous amount of real estate taxes to Salem, but they have a larger impact. . . . A stable energy supply is important to the region."
Red Simpson, president of the International Brotherhood of Electrical Workers, Local 326, which represents union workers at the plant, could not be reached for comment. A spokesman for a workers support group said the jobs outlook seems good.
''I would say employment looks stable," said Jamie O'Hara, an organizer of Salem Harbor Alliance for Reliable Energy, a grass-roots group that formed last year to protect jobs. ''As an outsider supporting Salem Harbor, I would say this sale is very good. They would not be spending this kind of money [$656 million] to shut the plant down."
Not everyone is convinced that the pending sale is good news, notably environmentalists. Salem Harbor, one of the state's dirtiest power plants, must cut air pollution by state order, including carbon dioxide and mercury. Environmental groups have routinely targeted the plant in recent years as part of a larger strategy to improve air quality in Massachusetts.
At least one environmental organizer said the pressure will not stop, even with a new owner. ''There might be a few new players around the table," said Lori Ehrlich, an organizer of HealthLink, a Marblehead-based environmental group that led the charge to clean up the plant. ''But we're not giving up. We've made a commitment to our members, and to the communities, to clean this plant up to the strictest possible standard."
Usovicz said Salem shares HealthLink's goal of making sure pollution is cut. ''We want to see an environmentally clean operation, that protects our community. That will help make the plant viable in the long run," he said.
The cleanup of Salem Harbor is nonnegotiable. No matter who owns the plant, pollution must be cut by 2006. Right now, US Gen is still responsible for the cleanup. But the bankruptcy court filing by parent PG&E has complicated the timetable. The financially ailing company says it cannot afford to pay for the $85 million plan.
US Gen has submitted a plan to the Federal Energy Regulatory Commission to pass on the cost of the $85 million to electricity customers. But the plan is opposed by state Attorney General Thomas Reilly, who thinks it could be unfair to ratepayers.
A hearing officer at FERC in Washington is now trying to reach a settlement between the two sides. The settlement hearings will continue, despite the pending sale. ''We will proceed with what we have before us, unless we hear otherwise from Dominion or US Gen," said Barbara Connors, a commission spokeswoman.
Natalie Wymer, a US Gen spokeswoman, said the company has already filed a motion in the federal bankruptcy court in Maryland to approve the sale. The filing will be followed by a 60-day period, during which another potential buyer could make an offer on the three power plants, as long as it is at least $30 million more than Dominion's offer. ''Until then, we're going to continue to seek approval of the funding proposal" from FERC, Wymer said.
Kathy McCabe can be reached at kmccabe@globe.com
