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by Daniel Blackburn
Leaner. Cleaner. Keener.
Is this the future for Redondo Beach's AES power generating station, which for half a century has perched like a concrete monolith at the edge of the Pacific, belching black smoke into the air and obliterating much of the beach city's ocean view?
Or is it headed, like other dinosaurs, for total extinction?
En route from red-haired bastard stepchild to its current status of civic-minded citizen, the 53-acre plant currently is undergoing radical changes that will hugely impact Redondo’s pending Heart of the City redevelopment.
Physical downsizing is in progress: three of the plant's four, 140-foot high concrete stacks have been dismantled, leaving one old stack and four newer ones attached to operating generators. Historic levels of electrical output from the Redondo Beach plant have dropped, coincidentally at a time when California wrestles with the prospect of severe ongoing electrical shortages statewide. (There is -- surprise, surprise -- a good and economic reason for this.)
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The original Redondo Power Generating Stationwas designed in the 1930s with that era’s characteristic concern for industrial art as well as function. The floors were waxed weekly. The green turbine was rated at 77 MW, the equivalent of 103,000-horse power. |
The local facility, built in the 1940s and owned and operated by Southern California Edison (SCE) until it was sold to AES in 1998, figures prominently in the ambitious "Heart of the City" plans of Redondo Beach city officials.
The recently released Heart of the City specific plan shows only only the Whaling wall portion of the plant remaining, with the northern two thirds making room for a green belt and housing. But the obstacles to this plan are significant.
"Heart of the City" was born soon after AES brass announced that electrical production would never be expanded, and that as a consequence, the block-long, 10-story high concrete building at the north end of the plant, which housed units one through four, would no longer be needed.
With a rare and golden opportunity to utilize some of the most valuable real estate this side of Kuwait, city officials jumped with joy. The comprehensive and wide-ranging "Heart of the City" scheme would incorporate some of the plant's acreage and "reconnect Redondo Beach to its waterfront," according to the city's draft plan, and increase coastal access. According to planners, the project would "break up the AES superblock site and integrate... new development into the 'fabric' of the neighborhood." (A draft environmental impact review of the proposed project has just been made public by city officials.)
Walking would be encouraged over driving in the city's new, intimate village environment. As the city's idea presently plays, the plan would require half of the AES plant site -- 26 acres in all -- to be dedicated to public use as an extension of the Hermosa green belt. New, but narrow, streets would cut through the site to improve east-west public access to the waterfront, and to stimulate orderly north-south circulation. Eventually, a parking structure at the site of the old plant, located on the northern half of the AES property, would arise.
Such has been the dream of many Redondo Beach residents ever since city officials, hand-in-hand with clamoring developers, razed the historic downtown area in the early 1960s. Amid public charges of corruption, city officials rubber-stamped the planting of row after row of oceanfront condominiums that effectively blocked ocean views for all but a chosen few.
For a redevelopment plan as ambitious as this to succeed, what remains of the AES plant after its inevitable size reduction must be crafted into a community-minded neighbor that is at once innocuous, and much, much cleaner.
That's where two beach city mayors -- one retired, one current — take center stage.
Clearing the air
Robert Benz is a genuine Hermosa Beach hell-raiser with a surprising genius for mechanical engineering. At the moment, he was beaming affectionately at a hodge-podge of rusty, dusty, abandoned equipment sitting idle in the original section of the AES Redondo plant. Pensively, he sighed.
"That's a sight that used to make mechanical engineers come," he said, gesturing over a complex of interlocked pipes, tubes, valves, regulators and miscellaneous pieces that once produced electrical power for a mushrooming Southern California population.
Benz -- "Burgie" to a legion of friends in the South Bay -- is the unofficial organizer of the notorious Hermosa Beach Iron Man (run, paddle, drink-a-six pack), erstwhile rock and roll-singing Hermosa Beach mayor renowned for a propensity for speaking his mind.
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Robert Benz stands at the entrance to a 10-story tall boiler. The yellow devices were installed by Benz to reduce emissions. |
These days, Benz is using his considerable expertise in his trade to help scrub emissions from the Redondo plant's remaining stacks.
Benz and Galen Brown developed a system called CompuNOx, which dramatically reduces nitrogen oxide (NOx) and carbon monoxide from plant emissions. Benz recently installed CompuNox on one of the remaining Redondo generators, and said the results have been "gratifying." Benz' company, Benz Air Engineering, is working under a $1.8 million contract with AES to retrofit the facility's Unit No. 6 with his CompuNOx process. (Brown now lives in Santa Fe Springs, New Mexico, and is not associated with the current project.)
Benz is at the Redondo plant on a sunny Thursday in anticipation of a regularly-scheduled test of his system's performance.
The test, Benz already knows, will indicate greatly reduced emissions. That, after all, is what his system does. Nitrogen oxide is the main component of smog. Its airborne residue becomes that pesky substance, which Redondo Beach residents used to find blanketing their automobiles, boats, and other exterior possessions in the form of black, sticky gunk. The King Harbor Boat Yard used to sell a cleaning solvent labeled "Edison Off" to boat owners.
Although Benz claims his invention is "a huge advance in technology," works like a charm and provides a comparatively inexpensive solution to the problem of dirty stack emissions, he doesn't mind admitting that he only coincidentally discovered the process. His company was installing a catalyst system on the boiler of a carpet mill when Benz inadvertently cut some tubes that had been placed in the boiler for cleaning purposes.
"Once we started the boiler, we discovered that the NOx was much lower than what regulations called for," said Benz.
At first, he thought he was dealing with a faulty sensor.
"But then we saw burning paint on the boiler exterior and realized we were inducing flue gas into the fan, and essentially creating a simple flue gas recirculation system," he said. "And yet we were able to get much lower Nox readings than the literature ever predicted would be possible."
At the time, most boilers were spewing 150 million parts per million (PPM) of NOx, with bureaucratic orders in place to reduce those to 30 PPM. Benz found emissions from his accidentally-altered boiler initially measured only 25 PPM, and under formal testing dropped to an eye-popping 7 PPM. He knew he was onto something big.
"It was just a simple control process," he said. According to a U.S. Patent Office abstract, Benz' creation is "a process for reducing emissions of nitrogen oxides and carbon monoxide from fuel gas fired boilers."
To accomplish this, Benz' system uses a computer to "closely control the flow rate of combustion air and (by) installing a duct to allow flue gas to recirculate into the air intake of a boiler."
It's a remarkably simple solution to what has been a major technical and sociological problem. Motoring mostly on word of mouth recommendations, Benz Air Engineering has installed more than 200 of the new systems nationwide since he received the patent in 1996.
This talent for cleaning the emissions of boilers all over the country doesn't make Benz a popular guy with boiler manufacturers.
His NOx process is as much as 75 percent cheaper than retrofit installations being performed by boiler manufacturers on their own products. "They really hate me," said Benz of boiler manufacturer representatives. "They threaten to void warranties on their products if I get the retrofit contracts. But it hasn't done them much good."
Benz smiled broadly, then headed for the elevator serving upper reaches of the generating plant. He was having a lot of fun making the South Bay's air a little cleaner.
Corporate good times
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AES boilermakers Bruce Smith, Alex Martinez and Steve Reed. |
AES says right up front that one of its corporate objectives is to "have fun." Says their website (www.aesc.com). "We want all AES people and those people with whom we interact to have fun in their work. AES's goal is to create the most fun workplace since the industrial revolution. In order to create a fun working environment, AES has adopted decentralized organizational principles and practices."
The business of making money is on that corporate list of goals, too, and AES has been doing that regularly by producing power only when prices are high. By limiting production hours, the company also limits its operating costs, allowing profits to become more certain, if not more abundant.
AES (once named "Applied Energy Services" but now simply known by the letters) is the biggest private power company in the world. It owns generation, distribution, and retail supply businesses in 21 nations including Argentina, Australia, Brazil, Canada, China, India, Kazakhstan, Mexico, Pakistan, the United Kingdom and the U.S. The Redondo Beach plant is just one of the Arlington, Virginia, company's 181 generating facilities, which have a combined capability of producing 60,000 gigawatts.
AES Corp. is known for its penchant of organizing its holdings into multiple "shells," or limited liability corporations (llc). This action allows a great deal of flexibility in decision-making and policy setting for local facility operators. The arrangement makes individual holdings almost -- but not quite -- autonomous. A couple of dozen corporate execs hold sway from offices in New York City. That group is headed by Chief Executive Dennis Bakke, a former Hermosa Beach surfer who once thought the Redondo generating plant a huge incongruity.
AES Corp. purchased the Redondo Beach plant shortly after California embarked on its experimental power "deregulation" ride. Power rates at the time were much lower on the wholesale market than either Southern California Edison (SCE) or Pacific Gas and Electric (PG&E) were able to sell it for. That's when state officials capped an artificially high wholesale rate to allow utilities to recover what they termed their "stranded costs." It was, in effect, a government bailout, rewarding the utilities for years of poor management decisions.
But last summer, when the wholesale supply of electricity dipped slightly and the demand remained the same, a sudden imbalance in the market occurred. With PG&E and SCE still capped at the time at 8 cents per kilowatt hour, the wholesale rate began to reflect the shortage, and the price zoomed upward -- way, way over the cap PG&E and SCE had agreed to.
Starting in January, California Gov. Gray Davis began signing long-term contracts, committing the state to buying electrical power at sky-high prices. As a result the state is now paying up to $140 per megawatt hour for power that has dropped to roughly $50 per megawatt hour on the wholesale market. And under the under the contracts’ "take or pay" clauses, the state must buy a fixed amount of power whether it needs it or not. As a result, when demand is low, the state finds itself selling power back to the distributors at a fraction of the cost it contracted to pay for it.
The governor awaits the inevitable political repercussions in a state whose residents now have the most expensive electrical power in the entire nation, bar none. Davis recently announced that he will attempt to renegotiate the long-term contracts.
The steady and considerable drop in power usage is due partly to unprecedented consumer conservation on the part of Californians. But whatever the reason, the business of producing and peddling electrical power quickly became a matter of choreography, rather than of mighty generation.
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The turbine control panel in the original, now decommissioned, generating plant. |
That scenario worked right into the long-range plans for the local AES operation. With four generators in the middle of the plant -- Units 5, 6, 7 and 8 -- working these days, the AES Redondo Beach plant can pump out 1,310 megawatts. The facility specializes in production of supplemental power for the Independent System Operator (ISO) grid. The plant will receive an order from a distributor — Williams Energy owns all of the Redondo plant's output capability -- to produce a specified amount of power. Williams will then sell on the spot market at the best price of the moment. Producers and distributors can maximize profits in this way without incurring unnecessary overhead costs, because often — as is the case with AES Redondo Beach -- the plants simply reduce production when demand is low. It's on-demand, deliver and collect.
In this particular operation, AES is isolated against market swings. But last year when power prices peaked, AES was not in a position to reap financial benefits. With limited generators on line, the plant did not possess significant production capability, certainly not enough to enjoy huge and swift profits.
Local AES officials seem content with their status quo. By virtue of basic economics, they can plan on being part of the Redondo Beach community for a long time. After all, these kinds of electrical power plants cannot be replaced without the expenditure of endless dollars. Expenses related to upgrading and maintaining an existing plant are one-third or less the cost of new plant construction.
Consequently, new owners of old plants, like AES, are putting money into facilities, cleaning up, and increasing overall efficiency of generators.
And, as the AES literature boasts, concentrating on being "responsible community members." According to the corporate web page, "AES is dedicated to providing electricity worldwide in a socially responsible way."
A measure of civic concern is thought by some to be the primary motivation behind the company's pulse-quickening carrot to Redondo Beach officials to permanently shut down half of its generating plant -- an offer on which the "Heart of the City" plan has been hatched.
A convincing argument
When Greg Hill was elected mayor after one term as a council member, he was invited to a meeting hosted by the new generating plant owners. Both parties approached the session with some trepidation.
"I had been making a lot of public statements about knocking down the plant," Hill recalled. "I arrived late, purposely, and promptly told the senior AES guys, 'I'll say right now, it's my position that plant shouldn't be there.'" Hill said he told plant officials his objectives were "diametrically opposed" to theirs, and added, "I don't know what we can talk about."
In response, Hill said the AES officials told him, "We can be your best friend, or your worst enemy. We work in big-time countries, you know."
Hill paused: "They kind of threatened me at the time."
Hill, a onetime gas utility executive, viewed the plant as "outdated, dirty, taking up a lot of space and not working very well."
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Computer screens are replacing the gauges and dials that control room operators Yuri Tankimovich (seated) and Paul Aguilar (at right) have traditionally used to monitor the power plant. |
And with technical advances in generators, such as combined cycle turbine systems, plants no longer need be located near the ocean. Because of his utility experience, said Hill, "I had a very strong belief that that the plant could be removed once the deregulation process got started. I saw the writing on the wall 15 years ago, that the process by which the plant was being protected would change."
As soon as AES bought the plant, Hill said he started the negotiation process -- "all alone. I thought it was a good time to leverage a position to try to see the thing removed completely."
Hill started a series of regular breakfast meetings with local AES president Mark Woodruff, aimed, he said, at working out a compromise that made fiscal sense to everyone. But in reality the new mayor was applying pressure.
"Now that you are a private company," Hill said he told Woodruff, "I think we should re-zone you, not allow you to expand, and tax you with the utility use tax. That would be 4.75 percent of the millions of dollars worth of fuel AES runs through there. For once, we'll get some benefit from what is a potentially hazardous, non-productive part of our city on the coastal zone.
"They didn't like that very much."
But as discussions evolved, AES and city negotiators began to hammer out a development agreement.
"This was a good time, if ever there would be a time, to take a look at the whole harbor area. Instead of developing 26 acres, the city council figured it should take a look at the whole area and see if it makes sense for the other 150 acres of harbor property," said Hill.
So far, city residents appear uniform in their support of "something" being done in the AES-harbor area.
"The devil," said Hill, "is in the details."
Acres of ideas
C.J. Thompson, manager of the Redondo plant, said the company, too, has detailed plans for development of the unused facility property.
"When we signed the memorandum of agreement (with Redondo Beach officials) in late 1998, we said we would take a look at developing that part of the plant that is not being used for electricity," said Thompson.
Planners for the utility have responded with their own scheme -- which may or may not correlate with "Heart of the City" specifications.
"We will be submitting to the city in short order a mixed use project that has a strong residential component, as well as office space and light retail to support the residential component in area," Thompson said.
He stressed the company's desire to keep in place the large concrete box at the north end, which today visually dominates the Redondo site.
"It's a classy building," said Thompson of the eight-story building. "We think we can do something with it to make it a really special structure. Part of it would be utilized for loft apartments -- it's 80 feet high and that would be very attractive. We have made that our objective all along."
The northern section would be residential, the southern part used for office space and supporting parking.
Demons of fate
In the end, the biggest and most unexpected "detail" to cloud all these ambitious plans may by the fiscal health of the AES, itself. The corporation's aggressive growth strategy "now looks like a pipe dream," according to a recent article in Business Week. "A drop-off in new business deals seems likely for the company."
AES enjoyed revenues of $6.7 billion in 2000, double that of its previous year, and the company's money guys told analysts to expect a five-year earnings-per-share growth in the range of 30 percent. Shortly after that, AES stock plummeted 83 percent from its 52-week high of $73 exactly one year ago. ER