Over a year after a downtown developer installed the world’s largest clean-energy generator in an apartment building, it’s operating at only a fraction of its full capacity—thanks to a tangle of government red tape.
Developer Bruce Becker installed a new fuel cell at downtown’s 360 State high-rise in May 2010, with hopes to provide electricity to the 500 apartments in the building. Becker said Thursday he still is not using the fuel cell (pictured above) as he planned.
Due to a variety of regulatory hurdles, Becker said, it simply doesn’t make sense to run the fuel cell at full throttle. He said after three years of negotiations with the state and over a quarter million dollars in legal fees, he’s been unable to convince the state utility regulators to allow the building to meter and charge its tenants for the fuel cell power they consume, thereby recouping the costs of installing, running, and maintaining the $4 million generator.
Phil Dukes, spokesman for Public Utilities Regulatory Authority (PURA), acknowledged Thursday the board has denied a fuel cell metering request by 360 State. He cited concerns about consumer protection that may arise when a company other than a public utility is metering and charging for electricity. He also stressed that PURA doesn’t make the rules, it simply interprets them.
On Thursday, Becker got a chance to take his complaints about fuel cell regulations straight to the top, when Gov. Dannel P. Malloy and Dan Esty, commissioner of the state Department of Energy and Environmental Protection (DEEP), stopped by for a visit at 360 State.
Becker told Malloy he is grateful for the state’s cooperation and partnership on developing the new building at the corner of Chapel and State streets. But he also asked for changes in the way the state regulates fuel cells. He contrasted Connecticut with New York, where his architecture firm completed a similar project and got fuel cell metering approval in “basically a one-day process.”
In Connecticut, that same process is in its third year.
The saga of 360 State’s fuel cell dates back to when the building was still in its design phase as an innovative “green” building.
On Thursday, Becker highlighted the completed building’s environmentally-friendly features while touring Gov. Malloy and his entourage around the building. 360 State is built with recycled materials. It’s designed to conserve energy, with internet systems that allow tenants to monitor their water and heat use. And Becker put the building close to the State Street train station to encourage tenants to take public transportation.
In keeping with Becker’s green aims, he built 360 State with a 400-kilowatt fuel cell, a source of clean power and heat.
With all the infrastructure involved, the fuel cell cost a total of about $4 million, Becker said. Almost a million of that came from a grant from the Connecticut Clean Energy Fund.
It costs about seven cents per kilowatt for the fuel cell to produce power, Becker said. In order to make the fuel cell economically viable, 360 State needs to charge its tenants for the electricity they get from the fuel cell.
“The most obvious way to do that is just to permit sub-metering,” Becker said. That means 360 State would have installed its own meters for each apartment to monitor and bill for on-site power generation.
But PURA shot that plan down. The state has a policy of not allowing sub-metering, said Dukes, the PURA spokesman. The agency denied permission in 2008, back when it was known as the Department of Public Utility Control (DPUC).
Dukes said the state does allow sub-metering in some limited capacities, like boat slips in marinas and RV hook-ups in campgrounds. Since sub-meters are not put in by a public utility company, the danger is that consumers are not then entitled to the same consumer protections they would have with a regular utility meter, Dukes said.
Becker said other states have had sub-metering for years without difficulty. He said 360 State has a “sister building” in New York built by his architecture firm, Becker + Becker. That building, called The Octagon, was the second apartment building in the world to contain a fuel cell and has been sub-metering without any problem.
“We haven’t had a single complaint,” he said.
The Octagon uses a third-party company to read the meters, he said. “We have the same or even greater [consumer] protections in place” as public utility meters.
After the DPUC denied the sub-metering plan, Becker tried a different tack. He formed an “electricity cooperative,” a collectively owned entity that would have been in charge of power generation at 360 State and empowered to collect revenue. But when he went to the commission for approval, “the DPUC deadlocked,” Becker said. The panel, missing a member, split 2-2 on approval in February 2010. (Read more about that here.)
PURA spokesman Dukes said he’s not “in a position to interpret” that DPUC decision.
Becker appealed in state Superior Court. The judge urged 360 State to work out a deal with United Illuminating, Becker said.
After negotiations, UI and 360 State came to an agreement: 360 State would sell fuel-cell electricity to UI, the power company would sell it to 360 State tenants, and some of the revenue would come back to 360 State, Becker said.
The agreement required the approval of PURA, which did vote to OK it, but only after changing the terms of the deal, said Becker. 360 State and UI had agreed to a rate at which the building would sell its excess power to UI. PURA’s decision, which came out last month, cut that rate in half, making it not economically viable to run the fuel cell at full capacity, said Becker.
A UI spokesperson didn’t return a call for comment by press time.
Dukes said he wasn’t familiar with the decision.
“I’ve had an expensive education in utility regulation,” Becker said. It’s taken over a quarter million dollars in legal fees to work through the process so far, he said. That’s enough to discourage other developers from trying to put in fuel cells, he said.
As it stands now, 360 State’s fuel cell is operating at only 55 to 60 percent of capacity, said Michelle Lauterwasser, a developer and architecture associate at Becker + Becker.
At one point during testing, the fuel cell had been producing enough power to feed some back on to the grid, but the lack of an agreement with UI meant that 360 State got no credit or money for the power it was producing, Becker said.
The generator is now powering only the building’s common areas—corridors and lobbies—Becker said.
A fuel cell is “the pinnacle” of on-site power generation, Becker said. The heat from power generation is reclaimed for climate control in the building, so you’re conserving the fuel that would otherwise be used for heat, he said. It’s a dramatically more efficient heat and power system, Becker said.
While certain parts of state government are promoting that kind of environmental technology, the regulations don’t seem to have caught up with it, Becker said. He said he is optimistic that Commissioner Esty will be able to improve the regulatory system.
Part of the problem is that PURA approval is a “quasi-judicial process.” Where other state agencies are set up to help people find resources, with PURA, “it’s almost like you have to sue the foundation to get a grant.”
“We are a courthouse. We are not a standard agency,” Dukes said. PURA’s role is simply to interpret state statutes that have very specific statutes, he said.
Part of the reason 360 State has encountered difficulty with it’s applications to PURA on a variety of green initiatives is that it’s a larger and more complex project than state statutes anticipated, Dukes said.
“There are some issues if you’re sub-metering if you’re generating power on your own,” Dennis Schain, spokesman for the DEEP said on Friday. “Current statutes and regulations did not ever contemplate that kind of approach.” Schain echoed Dukes’ concerns about consumer protection.
“It’s certainly an issue that’s on our radar screen,” Schain said. Commissioner Esty and DEEP will be discussing the matter with the state legislature to see if it can “open doors.”
Gov. Malloy’s Thursday visit to 360 State was part of jobs tour he’s undertaken in recent days. After being greeted outside by Becker, and leaving his car parked in the driveway of the building, Malloy landed in the “Club Room” on the sixth floor, along with a number of other government officials, reporters, and employees of 360 State and Becker + Becker. He settled into a plush armchair in the lounge, which opens onto a rooftop lawn.
Becker said the building’s construction created 1,000 jobs. Another 100 jobs are opening up as part of the new Elm City Market, food co-op which will open on the building’s first floor, he said.
Malloy said he was “just looking to learn.” He said the housing development, jobs, and environmental concerns of 360 State are “all attributes ... we’re anxious to bring to bear on the economy.”
He noted that Connecticut is the epicenter of the fuel cell economy. “We want everyone to use fuel cells.”
At the end of his tour of 360 State—after visiting a model apartment, the fuel cell itself, and the site of the new food co-op on the ground floor—Malloy promised to look into the DPUC difficulties. He said the state could do more to encourage “innovative technology” in housing.