Railbelt utility plan on hold till next session

Posted: Sunday, April 12, 2009

Palin's energy adviser, Joe Balash, told state Senate and House Energy committees Thursday that the administration will let board members from the six affected utilities weigh in on the structure of a new corporation to be known as the Greater Railbelt Energy and Transmission Corp.

Palin's plan called for the Legislature to pass a bill setting up the structure for the new corporation this year, then approve a transition and finance plan next year. Utility board members met Tuesday in Anchorage and wanted more time.

"The boards got together and decided they wanted a little more to say about the details," Balash said.

State energy officials have worked with utility management, Balash said, but board members from some utilities had questions.

"They thought they needed more time," Balash said. "We didn't want to rush anything, cram it down their throats if they weren't comfortable with it."

Palin in January called for a single entity to plan, finance and build future power plants and transmission systems within Alaska's Railbelt, a region stretching from Fairbanks to the Kenai Peninsula.

The concept followed the recommendation of an $800,000 state study that concluded a centralized entity would save rate-payers $40 million annually by streamlining management, combining assets and building power plants that take advantage of economies of scale, such as a major hydroelectric project.

The six Railbelt utilities are Golden Valley Electric Association in Fairbanks, Matanuska Electric Association, Anchorage Municipal Light & Power, Chugach Electric Association, the City of Seward and Homer Electric Association. Small by Lower 48 standards, they together generate a peak load of 875 megawatts, less than some single coal or nuclear plants elsewhere.

Nearly half the existing Railbelt generation capability is scheduled to be retired in 15 years. Cook Inlet natural gas, which has helped keep rates low, is expected to run low or jump in price. Energy experts say single utilities do not have the resources to build large projects that could give consumers the best rates.

The governor's bill would set up a nonprofit corporation with the purpose of providing reliable wholesale power to the utilities at the lowest cost. The corporation's board would be made up of two representatives from each utility and one member appointed by the governor.

The second part of the original plan called for the new corporation to work with the Alaska Energy Authority on issues far more complex, including a transition and finance plan. Cooperatives and municipal-owned utilities operate under varying state and federal rules and have different long-term obligations for purchasing fuel and paying off debt incurred for building current infrastructure.

Balash said the utilities will complete board elections and meet again in June. A task force will review the governor's bill and make recommendations by Oct. 1, Balash said.

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