South Portland considers creating a city power company to help semiconductor makers

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SOUTH PORTLAND — The city is considering creating its own energy company to reduce operating costs for two semiconductor manufacturers, which employ more than 2,000 residents. 

Assistant City Manager and Economic Development Director Erik Carson, who presented the proposal to the City Council at a workshop Monday night, said another meeting will soon be scheduled to address the specifics of the plan, including potential partnerships, operating agreements and funding.

The proposal would create a 25-megawatt power plant, fueled by natural gas, on the campus of National Semiconductor. The “Combined Heating and Cooling Power Plant” would supply electricity for Fairchild Semiconductor and thermal energy to National Semiconductor at a time when electricity prices are reducing the profit margins for both companies. 

Although borrowing would likely be necessary to build the energy plant, Carson said the initiative should not add to the city’s operating costs and ideally would create a new revenue stream.

Mayor Tom Blake and other councilors offered cautious support for the proposal on Monday night, although some raised questions about whether an energy company is consistent with the city’s mission. Ultimately, Blake said the council will have to prove that the plan is good for the community and not just the two businesses.

“This has to go to the voters,” Blake said. “It will be years before anything is built, if it is at all.”  

South Portland would be responsible for securing the licensing, permitting and ultimately the construction of the power plant. Councilors would have to decide whether to operate the company as a municipal department, or to form a partnership with other groups.

Carson said the city expects to receive a nearly $114,000 grant from the U.S. Department of Energy, about $50,000 of which would be invested into the plant’s preliminary engineering, which is estimated to cost $80,000. The remaining $30,000 would likely come from a private investor. 

The remaining balance of the grant would be used to hire an “energy czar,” who would provide expertise and coordinate the plant’s operations. 

“The energy czar would coordinate with (South Portland Energy Co.), not run the energy company,” Carson said. 

This is the second co-generation power plant proposed in the city. 

A group of independent investors called the Maine Renewable Energy Consortium is already working toward submitting plans for a power plant near Duck Pond, off Highland Avenue near Rigby Yard and Wainwright Farms. That power plant, however, would be fueled by wood chips. The energy would produce butanol, while the remaining electricity would be sold to Hannaford Bros. Co.’s distribution center, Portland Shellfish and the regional power grid. 

Carson said a city-run power plant would reduce Fairchild’s energy cost by 43 percent, or about $1.6 million. National Semiconductor would benefit from the thermal energy, which could run its heating and cooling turbines.

“These are two of the city’s biggest employers,” Carson said. “We need to keep them here. If energy costs are an issue, then we should try to help them with that.”

Carson said the electricity that will be sold to National Semiconductor and, if any remains, to the regional power grid, would be a new revenue stream for the city. He said there are potential environmental benefits, too: a city-run power plant could potentially reduce carbon dioxide emissions by more than 6,200 tons, the equivalent of 4,000 automobiles.

Randy Billings can be reached at 781-3661 ext. 100 or