EWEB evaluates future of steam heat system.

Byline: Andrea Damewood The Register-Guard

Like the solid concrete buildings that dot Eugene's downtown, steam heat seemed like a good idea in the 1960s.

Back then, the Eugene Water & Electric Board fueled its steam plant with wood waste from local mills, releasing less pollution into the air than disposing of the waste in open fires would have.

"The original intent was a good one," EWEB spokesman Marty Douglass said. "It was an efficient use of resources."

But what was once a forward-thinking way to warm the heart of a town known for being green has morphed into a leaky, inefficient system that gobbles fossil fuel, expels carbon dioxide into the atmosphere and is becoming prohibitively expensive to operate and maintain.

And EWEB would like to get rid of it. But, EWEB is stuck with the dilapidated system until the utility and its customers find a way to pay the high cost of conversion to in-building heat production.

As the mills closed in the early 1990s, EWEB switched from wood waste to natural gas as a power source.

"We have known for some time that we are kind of in a quandary here," Douglass said. "How long do we want to stay in the steam heat business since we're essentially burning a fossil fuel to create fuel?"

While the rest of the city uses natural gas or electric heat pumps, 92 of EWEB's largest business and commercial customers - including City Hall, Sacred Heart Medical Center and the University of Oregon - rely on the 75-year-old system.

Steam is so inefficient that customers may pay more than three times as much as those who use energy-efficient electric heat pumps, EWEB energy management engineer Will Price said.

But while lower bills pay for a switch in the long run, the high initial price of installing a new system keeps many steam customers on the grid.

Rates will continue to rise

Everyone agrees that steam heat will evaporate. The question is how quickly, and how to pay for a transition to a new heating source. Three or four customers per year are switching to another heat source, Douglass said, and no new buildings downtown use steam heat.

One of EWEB's largest consumers of steam heat, Sacred Heart Medical Center, will leave the grid in 2008, when it remodels. Its parent company, PeaceHealth, will install natural gas hot water boilers to the tune of $1.7 million, Facilities Director Jim Weston said.

"It's a good stewardship of the system in the long run," Weston said.

As larger businesses leave the system, rates for remaining customers will rise, Douglass said.

Creating and transporting steam will cost EWEB $941,000 this year. That price, which changes every year - based on the cost of production and number of steam customers - is reflected in the rates, which the utility also adjusts annually, Douglass said.

When Sacred Heart goes to natural gas, EWEB will reduce steam production, helping to avoid a large rate increase. "It won't be catastrophic," he said.

However, as more businesses drop off the steam grid, the fixed costs associated with creating steam, such as water and natural gas, will be divided up among fewer and fewer users.

"It will affect us as well," Weston said, referring to an inevitable rate increase at another building PeaceHealth owns on Willamette Street. "It's an issue for the community. I think it's an issue that everyone is going to have to grapple with."

While EWEB currently has no plans to eliminate steam, officials have met to discuss the viability of the plant, Douglass said. The last such meeting was held in 2000.

EWEB has also not made a road map for how it would help wean downtown customers from steam, but the company would probably phase it out slowly and perhaps aid some in making the transition, Douglass said.

But in the past five or six years, the utility has moved to providing only necessary repairs on its pipes.

"Older buildings are going to require some pretty significant dollars to retrofit or install a new heating system," Douglass said. "We have not wanted to leave them high and dry."

Expensive to switch heat sources

The city owns six buildings downtown on steam heat, city sustainable operations analyst Lynne Eichner-Kelley said.

With no incentives from EWEB or the government to switch, the high cost to convert other buildings is prohibitive, she said.

City Hall, which the council hopes to replace with another building, either on its current site or in another location, will continue to use steam heat, officials said.

"We have not wanted to invest a lot in efficiency," Eichner-Kelley said. "These measures take 10 to 15 years for a payback and it wouldn't be a wise use of funds if we aren't planning on keeping the building.

"The buildings downtown where we've done whole building retrofits, like the Atrium and the Hult, we have addressed steam use wherever we can," she said.

In its other buildings, the city is considering adding timers and other energy-saving devices, rather than installing its own heating system.

Eichner-Kelley said the city knows steam may eventually be eliminated, but it is waiting for energy technology to advance - and very likely become cheaper - before making any conversions.

And until an affordable alternative is found for businesses and nonprofits downtown, EWEB will likely keep providing steam.

"To crystallize it, we are still in this because of the customers," Douglass said.