One on One is a weekly feature offering excerpts of interviews conducted by The Evening Sun with newsworthy business leaders. Morris O. Hill was named president last month of Baltimore Thermal Energy Corp., the company that has owned and operated Baltimore's downtown steam company since 1985. The Baltimore operation is owned by United Thermal Corp. of New York. Hill, who has been with the parent company since 1985, was named general manager of Baltimore Thermal in 1987.
Q. For people who might not be familiar with the company other than the steam they see rising from the city streets, can you tell me a little bit about what you do?
A. The company supplies steam for heating, hot water, air conditioning and other processes to about 400 customers in downtown Baltimore.
Q. What do the customers actually do with the steam?
A. They use it to heat their buildings in the winter, run air conditioners in the summer, and produce hot water year round.
Q. In terms of heating, does a customer actually pipe your steam through their radiators?
A. It would be blown through a radiator or a series of pipes over which they circulate the air that is distributed through the building.
Q. And air conditioning. That surprises me. How do you cool with hot steam?
A. Well, I think the simplest way to answer that is that your air conditioner in your home uses electricity to run a circular fan. Instead of electricity, assume that steam is driving that fan. In the downtown area, a little quirk of that or a little difference, is that we do use absorbers, which is a chemical process. Lithium bromide is used as a mechanism whereby it will be the chemical that will cool the water. The steam is used to actually boil off the water that gets trapped in the lithium bromide. So, the steam comes into the building, heats lithium bromide. The lithium bromide becomes more concentrated, water free, and then the hot water comes back and is cooled by absorption.
Q. So hot steam comes in one end, cool water comes out the other end, and you can blow air across the cool water in the pipes?
A. Certainly, certainly. Then it becomes a standard air conditioner.
Q. You mentioned there are other uses for the steam besides heating and cooling?
A. Yeah. Hot water. And hospital sterilization. And there's the cooking in hospitals and in restaurants. There's humidification.
Q. Where does the steam actually come from?
A. We derive our steam from the Bresco trash plant and two gas-fired steam plants that we own.
Q. Bresco burns trash and makes steam?
A. Yes. We then produce what steam we can't get from them at our own gas-fired boiler plants, one located in the Spring Gardens area. We also have another plant sitting on the corner of Camden and Eutaw, right across from the new stadium, which we activate during the winter when our demand is high. That plant will be replaced next year by a new permanent plant up on Saratoga Street. This came about because of the sale of our old Camden plant that used to sit on what is now second base of the new stadium.
Q. How you get the steam to the customers?
A. Fifteen miles of buried pipeline. We have main trunk pipelines leaving each one of our plants, and then it starts spidering off into the area of downtown Baltimore. We have two pressure systems, with about 50 pounds and another of about 150. Our main trunk pipe is 24 inches across. The smallest main trunk is about 6 inches. Those run anywhere from 6 feet down to as much as 25 feet under ground. . . . They're ordinary black iron pipe -- carbon steel -- and encased in insulation material and then encased in concrete.
Q. Is this mostly the original piping?
A. Most of it is, yes. If you operate a steam system properly, pipes can last almost indefinitely.
Q. And what's the temperature of the steam?
A. The temperature is about 350 degrees.
Q. How many employees do you have?
A. We have 70 employees here.
Q. What's the outlook? We have quotes from company officials going back a couple of years boasting about doubling the revenues and adding new customers, but your customer base has been about 400 since you acquired it.
A. In January, we acquired the Central Avenue system, a small distribution and steam generating system run by the Housing Authority of Baltimore, and that's going to add over the course of the next three years roughly 300 to 350 million pounds of $H additional steam sales and roughly 3.5 to 4 million dollars of revenue. That will supply steam to five of the major housing developments. Our contract also requires us to supply steam to Broadway Towers, to Monument East Tower and to the Latrobe Homes which sit north of the system. That will add roughly $5 million to our revenues. We have also acquired contracts to supply steam to the City Jail and the state penitentiary. These two will add revenues of about $2 million a year. To hook up all of this new business will require rather expensive pipelines. For example, the City Jail will require about a $9 million pipeline.
Q. What will be the bottom line?
A. On balance we expect over the course of the next four years a revenue growth of 45 to 50 percent over the $14 million we did last year. . . . Our operating income was roughly $2 million. . . . Last year we sold about 1.3 billion pounds of steam.
Q. Do you intend to seek a rate increase from the Public Service Commission to pay for all this expansion?
A. We are now looking at the need to increase somewhat our rates and we are in the process of preparing an application for the Public Service Commission.
Q. Over the past five years you've had a number of accidents. A worker was fatally burned, a portion of a street collapsed, some pedestrians have complained about being burned by steam escaping from manhole covers and a broken pipe badly damaged Brown's Arcade downtown. Has there been an effort to upgrade these pipes?
A. Oh, absolutely. When I took office down here in August 1987, we instituted a rather aggressive investment program designed
to upgrade the system. And I think over the past three years, we've invested over $3 million in just that design to increase the safety and reliability of the system. . . . We're also looking at an ongoing investment requirement of somewhere between $500,000 and $1 million annually.
Q. You say these pipes last forever; what can you do to upgrade the system?
A. One thing that occurs when you deliver steam through a long pipe is that part of it will condense. One of the critical things that we have done in this system is to add what we call a trap to remove that water, which will tend to corrode the line. You have valves that begin getting steam bypassing and so we always have valves that do not hold, and so we're very cognizant of where those are and where they're critical, we shut down the system and replace those. We have what we call expansion joints, which if you cool that line, every 100 feet the pipe will either grow or shrink 3 inches for every 100 feet. And so you must make arrangements for that.
Q. The steam coming out of the manhole covers is actually not leakage, is it?
A. No, the water vapor is not a steam leak. It's normally just secondary water that has either come in from rain, tidal action and comes in contact with the hot pipe. Occasionally a trap will blow into a sewer and have to be cooled. When we do have a leak, we will put [up] a stack. As long as people don't touch that stack, there's no danger. We have our own crews that go out and do our own repairs, 24 hours a day.
Q. Is the system safer now than it was three or four years ago?
A. Indeed. . . . We now have a much more safe and much more reliable system than we did in 1987.
Q. What other cities have systems like this?
A. These are quite common, particularly in the northeast and north central United States, in the snow belt. They were originally developed by local electric companies. Our company has acquired systems in Boston; Philadelphia; Youngstown, Ohio; Cleveland; and St. Louis. . . United Thermal is the second largest producer of steam and seller of steam in the United States. Con Edison in New York, who still own their own system, is the largest in the United States.
Q. Baltimore's system goes back to 1901, but it has changed hands a number of times, hasn't it?
A. The system started in 1901 with a seafood freezing plant which sat right next to the Camden steam plant. Steam was used to help freeze the fish. And then in the early 1920s, Baltimore Gas & Electric came into ownership of the system. In 1978, they placed a moratorium on new customers and it was during that period that the Inner Harbor and the renovation of Baltimore came into being and really began snowballing. In 1985 the owners of United Thermal came in and bought the system for $10 million.