SalemNews.com, Salem, MA

May 20, 2013

McAllister: Salem's longtime economic hub

Essex County Chronicles
Jim McAllister

---- — One of the most closely watched pieces of real estate in our region today is that longtime hub of the North Shore fuel and energy industries, the Salem Harbor Station.

The property’s connections to those industries dates to 1836, when Stephen Phillips and Stephen C. Phillips purchased India Wharf at the foot of English Street. That same year, the latter outfitted the first of the 11 whaling voyages he would send out over the next eight years. Whale oil, burned in lamps or made into candles, was a major source of fuel for both residential and commercial lighting.

But Stephen C. saw greener pastures in coal. In 1848, he organized the Salem and Lowell Railroad and had built a rail connector to the Lawrence and Lowell Rail Road. Beginning in 1850, coal and other essential raw materials discharged at Phillips Wharf could be reloaded onto trains bound for the booming mill cities of Lawrence and Lowell.

The supplying of coal to fuel-starved mills would prove lucrative enough to entice the Philadelphia and Reading Rail and Iron Co. to build Pennsylvania Pier, which stretched “half way to Marblehead,” just east of Phillips Wharf. The sight of the state-of-the-art coal facility may have been the reason Willard Phillips, Stephen C.’s son, leased his own wharf to the better-capitalized Boston and Lowell Railroad.

From 1874 until 1923, Phillips Wharf would be home to E.H. Knight & Co., which sold coal to the local market. When the wharf passed into the hands of the Boston and Maine Rail Road in 1887, Knight would be joined on the wharf by the Lehigh and Wilkes-Barre Coal Co.

The coal industry would be a vital cog in Salem’s economic engine until the early 20th century when much of its business was lost to Boston. Finally, in 1924, the Salem Terminal Co. acquired the now-depressed stretch of the Salem waterfront. The new owners dredged a 26-foot deep channel into their modernized facility and began filling in the flats between Phillips Wharf and Pennsylvania Pier.

The Salem Terminal Co. never built the electric plant it had planned for the property, but survived by selling imported coal to regional mills, power plants and local dealers. Business was good again; in 1929, the Salem Evening News reported that the weekly tonnage being landed in one week in Salem eclipsed the annual tonnage during the East India Trade era.

In 1949, the Salem Terminal Corporation sold its property to the New England Power Co. which would eventually acquire most of the waterfront from India Street to Cat Cove. Additional dredging and filling (more than half of the present-day 65 acres was created) went on until 1952.

The first electricity generating unit went on line in 1951, the second a year later. Then in 1958, in response to the region’s growing demand for electricity, the company added a new, 140,000-kilowatt unit that doubled the Salem Harbor Station’s capacity.

The Pocohantos Steamship Co. operated the coal facility at the plant, handling the fuel needed to run the NEPCO generating units while also selling coal and oil through dealers in its system. By 1956, thanks to the volume of fuel products coming into Salem each year, the city boasted one of the busiest small ports on the East Coast.

In 1966, NEPCO took over the fuel terminal management and eliminated the wholesale part of the business. But in 1973, the then Pickering Oil Co. relocated its wholesale heating oil distribution operation to the Salem Harbor Station. In between, the NEPCO plant had switched to oil as its primary fuel source and built additional oil storage tanks.

The growth in regional demand for electricity convinced NEPCO to add a fourth unit in 1972. Reflecting the instability of Mideast oil supply, it was to burn low-sulfur coal rather than oil. Between 1982 and 1985, two of the other units were converted back to coal at a cost of close to $100 million.

By the beginning of the 21st century, the Salem Harbor Station was aging and facing stiff competition from newer, more efficient, and cleaner gas-fired plants. Pressure from environmental groups and tough new state environmental regulations (2001) called for expensive retrofitting measures at the coal-intensive plant. The owner at the time, USGen New England, found the economic cost-benefit hard to justify and sold the Salem Harbor Station to Dominion New England in 2005.

Things did not get much better for the new owners, and in 2012 Dominion announced it would close the plant in 2014. While it no longer paid one-third of Salem’s tax revenue or employed 320 area residents, its demise was viewed as a devastating economic blow.

Also concerned was ISO-New England, the entity responsible for overseeing the region’s energy supply. Salem Harbor Station, in addition to power it routinely contributes to the North Shore-Boston grid, is also uniquely situated to provide power on a contingency basis where it is needed.

Encouraged by ISO-New England rulings, Footprint Power Inc. of New Jersey bought the Salem Harbor Station in 2012. The firm plans to build a brand new gas-powered plant that will utilize only 22 acres of the 65-acre property.

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Salem historian Jim McAllister writes a regular column for The Salem News.