Renewable energy is growing in Alaska, but Power Cost Equalization is still a utility’s preferred way to shrink energy bills.
Alaska’s power producers met with Legislators, staff and the public Wednesday for a lunch learning session sponsored by the House Energy Committee. Four speakers represented the four major electrical regions in the state — Southeast, Railbelt, Copper River and Kodiak and the Arctic and Aleutians areas. Utilities from these regions are part of the umbrella group Alaska Power Association.
Tim McLeod of Alaska Electric Power and Light spoke about the Southeast region.
There are 41,000 electric accounts in the southeast, McLeod said. Power is supplied primarily by hydroelectric power and secondly by diesel. Though the utility has looked at many options, these two fuels remain king.
Areas like Juneau, Sitka, Ketchikan and Wrangell have historic hydro resources the tendency for new homes to be constructed with all electric heating, said McLeod. This requires more hydro, which is expensive to build, increasing the costs for all customers.
The Southeast region has benefited from state and federal largess, McLeod said.
The Alaska Energy Authority released a forward-looking report in early 2012 called the Southeast Integrated Resource Plan.
All of Southeast was under one plan so that we were not going to Legislature with a lot of priorities,” McLeod said. The Alaska Energy Authority contracted the report from McDowell Group consultants.
Southeast also benefited from a $15 million federal appropriation that allowed AEL&P to build the Lake Dorothy Hydroelectric Project with minimum impact to its customers.
“It is a perfect example of a project that could never have been built without grant funds,” McLeod said. “It benefits our community $6 million to $7 million … tremendous benefit to Juneau.”
Sitka could receive state funding that could keep the local utility off of diesel and on steady-priced hydroelectric power. AEL&P received $2 million in state funding toward an $8 million project to develop avalanche diverters along the Snettisham Lake transmission line.
Cory Borgeson, president and CEO of Golden Valley Electric Association, said Alaska is in an energy crisis.
“We have got to do something about energy costs,” Borgeson said. Steep energy costs hurt Alaskans and stifles business.
The Fairbanks-based utility benefits from a good mix of fuels, Borgeson said. It has plans to reactivate a 25-megawatt coal-fired power plant in Healy, he said, GVEA’s second at the site.
“We are on board to get that plant going,” Borgeson said.
In addition to coal, GVEA also adds wind and the fossil fuel Naptha into the mix. The Eagle Creek wind farm came on line for GVEA in December. It has 12 turbines that send electricity to Fairbanks’ grid at 55 percent capacity in the winter peak season. The utility expects around 37 percent on average.
Although its newest power plant currently burns a kerosene-like fuel called Naptha the state of Alaska has proposed trucking liquefied natural gas to the plant north of Fairbanks. A $200 million liquefaction plant on the North Slope would supply LNG to $30 million worth of insulated trailers that deliver to a $60 million re-gasification plant near the power plant. The gas could provide heating and cooking energy to Fairbanks homes and even Cook Inlet. Propane extracted in the process could be sent to communities in rural arctic Alaska.
Meera Kohler of rural Alaska’s utility Alaska Village Electric Cooperative, AVEC, said the utility has a scattered and modest customer base.
Despite the large geographic size of the utility it has only about 2,500 meters of transmission.
The utility manages 34 wind turbines that meet 5 percent of the total power demand. The remainder is met mostly by its 160 diesel power plants.
Kohler said that the utility and its communities benefit from programs like the Renewable Energy Fund grant program. However “the Power Cost Equalization is more important,” Kohler said.
The utility has faced problems that Southeast communities can commiserate with. The small isolated towns have trouble building generation systems with cost-saving economy of scale. Interties connecting communities have helped greatly in this effort, she said.
“They are worth their weight in gold,” Kohler said.
The Alaska Energy Authority runs the Power Cost Equalization program.
“The goal of Alaska Energy Authority’s (AEA) Power Cost Equalization program is to provide economic assistance to customers in rural areas of Alaska where the kilowatt-hour charge for electricity can be three to five times higher than the charge in more urban areas of the state,” according to the Alaska Energy Authority website. “PCE only pays a portion of approximately 30 percent of all kWh’s sold by the participating utilities. PCE fundamentally improves Alaska’s standard of living by helping small rural areas maintain the availability of communications and the operation of basic infrastructure and systems, including water and sewer, incinerators, heat and light. PCE is a core element underlying the financial viability of centralized power generation in rural communities.”
• Contact reporter Russell Stigall at 523-2276 or at email@example.com.