Ultrasystems Pins Hopes on Wood Power

Just outside this sleepy hamlet in the shadow of Lassen Peak are all the makings of a low-budget horror movie that could be titled “Attack of the Giant Killer Insects.”

In a clearing, deep in a dense pine forest, a brilliant orange contraption screams like an oversize pencil sharpener as it grinds up whole trees. Barely visible a few hundred yards away, a triangular, three-wheeled vehicle the size of a compact car careens through the woods, slicing off trees at the base with razor-sharp pincers. Every few seconds, a tractor rumbles up the path, grabs a bunch of felled trees with its massive hook and drags them into a clearing to feed the insatiable tree-chipping machine. On a good day, 1,500 relatively small trees meet their demise.

But this is not a scene from a monster flick. Actually, the pieces of equipment--with tongue-twisting names like “whole-tree chipper,” “feller-buncher” and “grapple-skidder”--are tools of the wood-burning energy industry.

Woodsy Settings for Plants

Every month, thousands of trees in California and elsewhere are chipped into quarter-size pieces for fuel to be burned in small electric power plants. Across the country, about 2,400 power plants burn wood.

But Ultrasystems Inc., an Irvine engineering and construction company, has pioneered a new concept--building electric power plants in the middle of forests.

In the last three years, the company’s Ultrapower Inc. subsidiary has aggressively promoted and invested in wood-burning plants. So far, the company has spent $15 million and committed another $38 million because utilities want to buy the economical power produced.

However, the plants have raised the specter of air pollution problems and concern among community residents that the plants will consume wood that otherwise would be destined for home use.

In addition, Ultrapower’s first two plants--in Burney and Westwood, Calif.--have been plagued with expensive start-up problems. About $2.7 million of the company’s $4.4-million loss for the fourth quarter ended Jan. 31 was attributed to start-up problems at the plants, including major repairs to the air pollution control systems.

Ultrasystems’ net income fell dramatically to $394,000 for fiscal 1985 from $5.3 million the year before. Revenue increased 69% to $141 million from $83 million a year ago.

The Burney and Westwood plants were built for about $22 million each under joint-venture agreements with Pacific Lighting Energy Systems, a subsidiary of Pacific Lighting Corp., parent of Southern California Gas. The third Northern California plant, in Blue Lake, is a joint venture with Tucson Electric Co.

Another plant under construction--in Chinese Station, near Stockton--is also a joint venture with Pacific Lighting. And Ultrapower is looking at a site near Fresno.

Cheaper Than Oil, Gas

Two other, larger plants, costing about $44 million each, are planned for Maine.

Pacific Gas & Electric, guided by a longstanding policy of buying alternative energy, has signed contracts to buy as much power as the Ultrapower plants can generate. Generating electricity by burning wood is significantly cheaper than burning oil or gas, according to PG&E; officials.

Under its contract, PG&E; pays Ultrapower about $16,000 a day for electricity produced at each plant. The power is fed into PG&E;’s system by a transmission line running from the plant to an on-site utility pole. At full power, each plant burns about 350 tons of chips a day and produces electricity for about 10,000 residential customers.

In contrast to the furor that usually surrounds a proposed nuclear or coal-burning plant, the wood-chip plants have met with little organized opposition from environmentalists. The Sierra Club has no national policy on wood-burning power plants and has received very little comment on the subject, according to Gene Coan, assistant conservation director.

But individual towns in California have opposed them. Residents of Quincy, the Plumas County seat, so vehemently opposed a proposed plant on grounds that it would pollute a local river that Ultrasystems packed up and moved on.

And neighbors who said little when the company was pursuing government permits for its first two Northern California plants now say they worry about the potential air pollution. They also complain that the plants do not create enough permanent jobs for their economically depressed areas.

Despite the problems, wood-burning plants have strong support from the U.S. Forest Service in Northern California, public utilities that sign long-term contracts to buy the power and landowners who grow timber for a living.

Forest Service officials say the government needs its forests thinned to encourage the growth of bigger, healthier trees. Utilities say they buy the power produced by wood-fueled plants because it is economical. And owners of timber land support the concept because they can make money in two ways: first, by thinning their forests and selling the wood chips for fuel; and, later, by selling the larger trees that remain for a good price to sawmills.

“There is more than an ample supply of wood around here,” said Phil Carlson, district ranger for the U.S. Forest Service’s Hat Creek District. “These power plants do not compete with personal wood supplies.”

Carlson, whose district includes the Westwood and Burney plants, said the government pays chipping crews about $200 an acre to clean up the public forests.

“We are in the business of trying to do right by the taxpayers,” he said in an interview. “Anything we can do to not burn foreign oil, I’m all for.”

$3 to $18 a Ton

Dave Keenan, executive director of the National Wood Energy Assn. in Portsmouth, N.H., said: “There is an unbelievable amount of waste wood in this country.”

The real benefit, he contended, is producing a market for the lowest grades of wood while allowing better quality trees to grow and reproduce. Although wood chips are not the fuel of choice everywhere, chips are much cheaper than oil. Wood chips range in price from $3 a ton for wet chips to $18 a ton for the drier, top quality chips. A ton of chips produces as much energy as 1.4 barrels of oil.

Burning wood chips to generate electricity is relatively new. Because chips have varying moisture contents and are more difficult to store and handle than coal or oil, the first plants built have had a rough start.

In December, Ultrapower’s $920,000 air pollution control system broke down, spewing black ash and cinders across the snowy landscape of Westwood, Calif. Angry residents immediately circulated a petition demanding that the plant be closed until all of the problems were solved.

Then, the Burney plant had problems with its turbine and had to shut down. Both plants were shut for several weeks, but Burney is back in operation and Westwood is scheduled to begin generating power again in early May.

Meanwhile, Maine’s conservation officials are watching what happens in California.

“We’ve got low-quality hardwood coming out of our ears,” said Richard Anderson, commissioner of Maine’s Department of Conservation. “We have been looking hard to find companies interested in building power plants, and Ultrapower emerged as the first successful entrepreneur.”

Burney, a rustic town of 5,000 about 50 miles northeast of Redding, is home to Ultrapower I. The town is economically depressed and dependent on sawmills, paper mills, tourists and hunters for its livelihood.

“The biggest shortcoming was the promise of jobs at the power plant,” said Dean Burkett, a Burney resident.

With state-of-the-art computerized technology, Ultrapower I does not require a big labor force. Eight local residents were among the 19 hired by Ultrapower. However, company officials say about 50 jobs have been created for the chippers, drivers and others who provide services to the plant.

Local reaction to the plant, which began generating power last summer, has been mixed. Although its permit process was widely publicized by a local newspaper two years ago, many residents claim to have heard nothing about it until construction began.

County officials said that the local newspaper wrote about the project and that public hearings were duly publicized.