Alaska considers utility corporation in Railbelt

Palin says the entity could save rate payers $40 million annually

Posted: Monday, February 09, 2009

FAIRBANKS - Gov. Sarah Palin plans to introduce a bill calling for creating a joint corporation of the six Railbelt electric utilities.

Palin said such an entity could unite a "fragmented group of rival utilities" and could save rate payers $40 million annually.

The utilities are Fairbanks-based Golden Valley Electric Association, Homer Electric Association, Anchorage's Municipal Light and Power, Chugach Electric Association, the City of Seward and Matanuska Electric Association.

Golden Valley cooperative President Brian Newton said the utilities are far from agreeing on a structure after months of talks.

"We haven't quite figured out what the administration is proposing," Newton said. "Even though they may have conceptually what they think is going to work, the utilities haven't agreed to that at all."

Joe Balash, special assistant to the governor, said the administration believes people would be better served by spending more on a large project that could meet all power needs, rather than on smaller-scale works.

The utilities grew separately yet are linked by a transmission system. As their facilities age, most have new projects they want state funding for.

Altogether, the utilities manage an interconnected load of as much as 800 megawatts of electricity, Balash said. That's comparable to a medium-small utility outside the state.

"There may be opportunities to develop large projects that capture efficiencies of scale," Balash said. "The benefits of that mean lower-cost energy to consumers, to businesses and ultimately will lead to better growth."

The proposed corporation could have state bonding power and would oversee generation and transmission. The utilities would remain as local distributors.

Balash said the legislation would establish the corporate structure and provide some startup funds to begin work on a transition agreement.

Still to be determined is how strong the bill's language would be in getting utilities on board.

He said the message is, "Don't come looking to the state for anything until or unless ... you're working together."

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