When chicken producers on the Delmarva Peninsula look at chicken litter — a combination of chicken waste, wood chips and saw dust — they’re starting to see something electric. Two poultry companies — Allen Family Foods and British-owned Fibrowatt — are planning to build power plants fueled by chicken litter in Maryland’s Dorchester County.

The approach was conceived in part because of new state and federal regulations that tighten restrictions on the use of chicken litter as fertilizer. Poultry waste has been blamed for polluting Chesapeake Bay tributaries and causing fish kills.

Chicken giant Perdue Inc. has found another way to use the waste so it doesn’t end up on Eastern Shore farm fields. The company is building a $12 million plant on the outskirts of Blades, DE to turn chicken litter into fertilizer pellets for Midwestern farms.

“This is precisely what we had hoped would happen,” said Mike Hirshfield, vice president of the Chesapeake Bay Foundation. He said the regulations have forced companies to seriously consider technologies previously overlooked.

The multibillion-dollar poultry business is one of the largest on the Delmarva Peninsula, which has more than 6,000 chicken houses, each one holding about 25,000 birds. The chickens create as much as 800,000 tons of litter a year, much of which is spread on farm fields as fertilizer.

But runoff from those fields carries waste into local waters, leading to declining water quality, algae blooms, and potentially, pfiesteria outbreaks that kill fish and harm people.

After an outbreak of pfiesteria in 1997, the Maryland General Assembly passed legislation requiring farmers to develop nutrient management plans by 2004 that could prohibit some from using chicken waste as fertilizer. That might put farmers who have no other way to dispose of the waste out of business.

Gov. Parris N. Glendening angered chicken farmers and processors alike recently when he announced that processing companies in Maryland — Perdue, Allen Family Foods and Tyson Foods Inc. — will be issued permits requiring them to help farmers under contract in disposing of their excess manure. The permit requirements will take effect by the end of January.

Jill Satterfield, executive director of Delmarva Poultry Industry Inc., an advocacy group, argued that the permits unfairly make large poultry companies responsible for their farmers, who are “independent businessmen.”

But power plants could create another option for disposing of the waste.

The Dorchester County Chamber of Commerce has endorsed plans for a 40 megawatt power plant that would burn 300,000 tons of poultry litter purchased from local farmers and 100,000 tons of forest waste a year — producing enough electricity to power all of the county’s homes.

The plant would be operated by Fibroshore, the U.S. subsidiary of Fibrowatt, which runs three chicken waste power plants in the United Kingdom.

Dorchester County Commissioner Glen Payne has voiced concerns about smokestack emissions, costs and ash disposal.

But Mike Pilcher, an Allen Family Foods vice president in Seaford, MD, calls the plants a “pretty dad-blamed good source of electrical power” that doesn’t burn the fossil fuels said to contribute to climate changes.

Allen Family Foods is planning a chicken litter-to-energy plant in Hurlock, MD that would produce about four megawatts of power. Half of that would provide electricity for a chicken-processing facility and the other half would be sold to commercial power companies.

Electricity from chicken litter can cost three or four times as much as power from a coal-burning plant.

William R. Miles, the U.S. representative for Fibrowatt, said those rates make it tough to compete as utility companies strive to cut costs. He said he hopes the state will provide tax credits offered to companies creating jobs in depressed communities.

“We propose a huge alternative to the land application (of chicken waste),” Miles said.