Amid the noise and dust of a sprawling Potomac Electric Power Co. plant at Chalk Point on the Patuxent River, workers are slowly assembling a big, new generating unit -- a hulking contraption that has set off a multi-million-dollar controversy.
"It'll be a $200 million white elephant," says Brian Lederer, the District of Columbia people's counsel, who represents consumers in proceedings before the city's Public Service Commission.
The reason: the new Pepco unit is designed to burn oil -- about 2 million barrels of No. 6 oil a year.
In an era when the Carter administration is pushing electric utilities to switch from costly oil to cheaper coal, the Chalk Point unit runs counter to the trend. It is scheduled to be the last major oil-fueled generating unit built in the United States.
Chalk Point No. 4, as the 630-mega-watt unit is known, also is a dramatic illustration of the way zigzagging economic pressures and changing government policies have pummeled the nation's electric utilities over the past decade, confusing both government and industry officials.
Pepco senior vice president Edward F.Mitchell defends the company's current plan to go ahead with the $195 million Chalk Point unit, partly as a matter of dollars and cents. to convert the unit from oil to coal, Mitchell says, would cost an additional $375 million for purchasing and installing new equipment at today's inflated prices.
Even though oil now costs Pepco more than twice as much as coal, Mitchell argues, the fuel savings would not offset the enormous cost of converting Chalk Point No. 4 into a coal-burning unit.
Mitchell also contends that the new Chalk Point unit, currently scheduled to go into service in 1982, is essential to meet the Washington area's listing engery needs. And he vehemently disputes Lederer's assertion that it may more sense to scrap unit No. 4 altogether. Mitchell warned in an interview that abandoning Chalk Point No.4 would amount to "playing Russian roulette" with the Washington area's future.
The controversy about Pepco's new Chalk Point unit has been simmering quietly for several years -- largely hidden among the complex technical jargon of utility rate-setting proceedings and the massive electrical apparatus of this carefully gauarded Pepco plant, situated at the southeastern tip of Prince George's County.
The issue was briefly, but pointedly, raised early last year in a statement filed with the D.C. Public Service Commission by Robert H. Hartley, an electrical engineering consultant. "To my surprise, I have found that Chalk No. 4 is presently scheduled as an oil-fired unit and suggest this decision be reevaluated in view of the nation's critical oil situation," Hartley said.
Hartley, who was retained by Lederer's office, is expected to provide additional testimony to the commission soon.
From a national standpoint, Chalk Point No. 4 poses some troubling and unanswered questions.
Michael Koleda, executive director of President Carter's Commission on Coal and a leading advocate of converting oil-fueled generating units to coal, said last week that units like Chalk Point No. 4 should be examined carefully to find out whether consumers could save money in the long run by switching the generating equipment to coal. But Koleda stopped short of calling for revamping Chalk Point No. 4.
Chalk Point, moverover, is among just five major oil-fired units throughtout the nation cleared by the Department of Energy to go into service in the furture without switching to coal. Three of the others are in Florida and Texas, where coal supplies are scarce. The fourth is in upstate New York. Chalk Point No. 4 is currently scheduled to be the last of these to go into operation.
Energy Department officals say these oil-fired units have been approved chiefly because they are so close to completion that it would cost too much to convert them to coal. Mitchell says Pepco already has invested $120 million in Chalk Point No. 4, which he describes as 85 percent complete.
Federal officials are nevertheless studying some long-term ways of shifting even these units to coal. One plan is to modify the systems to burn a mixture of coal and oil -- a technique now being tested at a New England Power Co. plant in Salem, Mass. Mitchell says Pepco regards this coal-and-oil mix as "a possibility" for Chalk Point No. 4 in the furture if the method is proven.
A tour through Pepco's Chalk Point plant provides vivid evidence of some of the arguments on both sides of the coal-conversion debate.
Coal is readily available at Chalk Point. Two of the plant's generating units currently burn coal. A black heap of coal spreads across a huge storage area in front of the plant's array of cooling towers, smokestacks and main building. Rail cars bring coal to the center of the plant, where it is mechanically unloaded and transportated on conveyer belts.
On the other hand, Chalk Point No. 4 already stands virtually complete as an oil-fired unit. The plant's main building has been enlarged to house unit No. 4. The unit's huge boiler -- about 160 feet high -- has been installed. Pepco officials say they would have to junk the $52 million boiler if Chalk Point No. 4 were converted to coal.
To shift to coal, engineers say a 60-ton pulverizer -- a device that crushes coal to a powder for burning -- also would have to be installed in unit No. 4. And this, they say, would pose another major obstacle.
"We could not put a pulverizer in this building," said Ron Marth, the engineer in charge of the Chalk Point No. 4 project, during a tour of the plant. "One, we do not have the space. And, two, the foundation wasn't designed to hold such a heavy piece of equipment."
The shifting economic and governmental pressures that brought Pepco face to face with its Chalk Point No. 4 dilemma began in the late 1960s -- a far different era for the nation's utilities than the present. Until 1965, Pepco's plants had burned nothing but coal. Then a series of developments changed the company's outlook.
Oil became cheaper than coal. Air pollution restrictions made coal seem an increasingly undesirable fuel. Demand for electricity rose sharply.
In addition, Pepco officials say, Chalk Point No. 4 was designed during the late 1960s to serve as a "cycling" unit -- a backup generating unit that can be started up or shut down relatively quickly as electric consumption rises and falls. Oil-fired units are more suitable, officaial say, for "cycling" than are coal-burning units.
Then the 1973 Arab oil embargo dramatically altered the electric power industry's outlook. Oil prices skyrocketed. Demand for electricity fell off. Pepco abandoned its plant to build its first nuclear generating station and postponed the startup for other units, including Chalk Point No. 4.
The unforeseen reversal in energy tends prompted Pepco to reconsider whether Chalk Point No. 4 should be built as an oil-fired unit. Pepco's study was carried out in 1975, the year in which the Chalk Point unit had intially been scheduled to go into operation. But Pepco officials say they concluded that shifting from oil to coal, even then, would have been far too costly.
Pepco's arguments have come under heavy attack from Lederer's office in the past two year. Lederer not only questions the company's decision to go ahead with a new oil-burning unit. More fundamentally, he challenges Pepco's contention that Chalk Point No. 4 is needed at all.
In Lederer's view, Pepco has exaggerated the amount of electricity its customers will use during the 1980s and is building more generating units than are needed -- at the public's expense. Lederer argues that Pepco should abondon either Chalk Point No. 4 or another unit scheduled to be built in Montgomery County. That unit, Dickerson No. 4, is designed to be coal fired.
Pepco officials have offered counterarguments to Lederer's challenges. The current disputes between the company and the people's counsel are not expected to be settled by the Public Service Commission for some time, if ever. Yet even Pepco's Mitchell admits to considerable perplexity about Chalk Point No. 4.
We don't exactly know what to do with the plant," he said. "We're not wedded to oil forever."