Generator prices are up, but interest remains high

Environmental air quality regulations pushed the cost of stationary power generators more than 40 percent in the past four years, just as demand for back-up electricity spikes following Connecticut’s two large-scale power outages.

A business buying a commercial generator in Connecticut can expect to pay $25,000 to $150,000 for one unit, or more depending on the size, said Mark Holzner, vice president of Bridgeport-based Northeast Generator Co. The Bridgeport Health Care Center recently put in a $500,000 generator.

The cost increase comes as interest in generators from residents and businesses rose 50 percent following Tropical Storm Irene in late August and the Oct. 29 snowstorm, Holzner said.

“That will fade out,” Holzner said. “But before that, interest was still steady. People don’t want to live without power anymore.”

Starting in 2009, the U.S. Environmental Protection Agency, phasing in different air quality regulations depending on the size of each generator. The various tiers of generators — tier 1 through tier 4 — basically call for engines that emit fewer pollutants.

By 2011, all new generators except for the smallest ones must had a tier 4 engine — the least polluting — on an interim basis. By 2015, all generators must have tier 4 engines operating on a permanent basis.

Despite the corresponding increase in cost as a result of the new regulations, the demand in the state industry remains unchanged; and in fact has increased, Holzner said.

The Whole Foods Market North Atlantic Distribution Center in Cheshire — providing food for 52 Whole Foods stores from New Jersey to Maine — bought two portable generators for $250,000 each in November. The facility had lost power from Berlin electric utility Connecticut Light & Power both in August and October following the storms.

“They provide power when CL&P can’t,” said Jim Doyle, the distribution center facility team leader.

Whole Foods decided on two large portable generators because they not only can provide power to the distribution facility, but they also can be trucked to any of the 52 stores in case they lose power.

The distribution center holds millions of dollars of product that must be kept frozen or refrigerated, such as meat and seafood, produce and other groceries, Doyle said. The stores all have the same product.

“We not only want to protect our product, but we want it to be the best it can be,” Doyle said. “We have made our name on quality product.”

If the temperatures inside the freezers and refrigerators rise slightly, Whole Foods technically can sell the food safely, but the quality of the product suffers. By using generators during an outage to keep foods at their ideal temperatures, the company remains proud of what it sells.

“There is more of an emphasis on quality, and our customers have expectations of our product that we want to exceed,” Doyle said.

The generators also give Whole Foods an advantage over the competition. Its Glastonbury location has a fuel cell generator, which the facility used to keep foods preserved during the Tropical Storm Irene outage. As a result, that stored opened its doors earlier than other competing grocers and had more product on the shelves.

“It is really a prudent investment for us,” Doyle said.

On a national scale, the rising cost of generators has led more businesses to lease before they buy them, said Eric Johnston, CEO of Miami-based American Generators, who sold the $250,000 generators to Whole Foods in Cheshire.

“Because of the price increase, they are holding off making these purchases,” Johnston said.

Leasing options made possible through companies such as Fairfield-based GE Energy Financial Services allows companies to spread out payments and use leasing to make use of tax advantages before taking ownership of the generators, Johnston said.

The lower cost, less EPA-restricted generators most likely would be flying off the shelves now, Johnston said. His company is still allowed to sell those style generators to facilities in foreign countries, a market that has increased 400 percent over the past four years.

But in Connecticut, left in the dark for more than a week twice since August, the cost is less of a deterrent, Holzner said. The EPA regulations aren’t going away, and generators still are needed for back-up power.

“If someone has a need for a generator, they need a generator,” Holzner said. “In this day and age, people are buying generators in case of an emergency.”