Harvard to Sell Medical School Energy Plant

The University is negotiating to sell one of its most controversial and costly possessions-the Medical Area Total Energy Plant (MATEP).

In a recent joint press release with Harvard officials, Commonwealth Energy System's management said they are working on a purchase agreement with the University, though officials said it would be months before the specifics are worked out.

"This acquisition would offer [our company] the opportunity to provide reliable service to MATEP customers while developing additional economic and environmental benefits through long-term investments," said Leonard Devanna, president of Advanced Energy System, the Commonwealth Energy subsidiary that is spearheading discussions with Harvard.

At a cost of $350 million, the 62-megawatt power plant located in the Longwood Medical Area provides steam, chilled water and electricity to three of Harvard's professional schools and six affiliated hospitals. It is said to be the most expensive construction project Harvard has ever undertaken.

Work on MATEP began in the mid-70s and was completed in 1985 when the final part of the plant went on-line. When completed, the plant was somewhere between $230 and $300 million over budget, depending on what cost estimates one uses.

The University will suffer losses on the sale.

"I can't really comment on the specific price, but it's clear that we will not be recovering the full price of the plant and its overruns, but we're going to do quite well," said Thomas E. Vautin, associate vice president for facilities and environmental services.

Harvard's deans-often irritated by the project and its excessive cost--responded positively to the news.

"I am very pleased that Harvard is bringing this enterprise to a beneficial closure," said Dean of the Faculty Jeremy R. Knowles. "Many people have worked very hard to achieve this."

In large part because of the cost over runs, MATEP became one of the most controversial projects Harvard's central administration has ever undertaken. Some said Harvard was spending too much while others argued that Harvard simply should not be in the power business.

Harvard never planned to own the plant in the long run, but cost overruns left the University with few options immediately after the plant went online, Vautin said.

Selling the plant allows the University to pass financial responsibility for maintaining and upgrading MATEP to the buyer, while protecting an affordable, reliable source of electricity, chilled water and steam for the plant's current clients through long term contracts.

"The simple way of saying it is that Harvard has full financial responsibility for the plant but only 20 percent of its output goes to Harvard," Vautin said. "Quite honestly, we think Harvard capi- tal should go toward research and teaching."

Harvard designed MATEP to replace another Harvard-owned power plant that had served the Longwood Medical Area since the turn of the century.

Conceived during the energy crisis of the 1970s, the plant uses the energy wasted from one conversion process to produce another form of energy.

In addition to the political discord MATEP caused at Harvard, the plant also raised controversy at the state and city level.

When Harvard proposed the project in 1977, the plant met state regulatory requirements.

Still, area residents responded harshly, and state agencies backed away from their original approval.

For the next eight years, state officials repeatedly tightened their regulations and Harvard redesigned its project-a process that cost millions.

However, once completed, the plant was one of the most environmentally sound power plants in New England.

"It was a little bit ahead of its time," said Carter M. Wall, manager of energy strategy for the University. "It's a beautiful plant...and we're leaving the buyer a very well-run plant.

Harvard designed MATEP to replace another Harvard-owned power plant that had served the Longwood Medical Area since the turn of the century.

Conceived during the energy crisis of the 1970s, the plant uses the energy wasted from one conversion process to produce another form of energy.

In addition to the political discord MATEP caused at Harvard, the plant also raised controversy at the state and city level.

When Harvard proposed the project in 1977, the plant met state regulatory requirements.

Still, area residents responded harshly, and state agencies backed away from their original approval.

For the next eight years, state officials repeatedly tightened their regulations and Harvard redesigned its project-a process that cost millions.

However, once completed, the plant was one of the most environmentally sound power plants in New England.

"It was a little bit ahead of its time," said Carter M. Wall, manager of energy strategy for the University. "It's a beautiful plant...and we're leaving the buyer a very well-run plant.