Sen. Murkowski working to get coal-power plant loan

Posted: Tuesday, May 06, 2003

FAIRBANKS - Sen. Lisa Murkowski is working on getting a $125 million loan to the state's development agency to rebuild an experimental power plant in Healy.

Murkowski, an Alaska Republican, secured language authorizing the loan in a national energy policy bill approved by the Senate Energy Committee this week, according to the Fairbanks Daily News-Miner. The full Senate will begin debating the bill next week.

The Senate approved a similar loan in an energy bill passed last year, but negotiations with the House never produced a joint proposal for final approval in each body.

The loan would go to the Alaska Industrial Development and Export Authority, which owns the Healy Clean Coal Project. The Fairbanks-based Golden Valley Electric Association has been pushing for the money. The utility wants to rip out the plant's experimental burners and replace them with ones that are similar to those in the electric cooperative's older, smaller power plant in Healy.

AIDEA and GVEA have tried for years to reach an agreement under which the electric cooperative would operate the plant. That was the plan as it was being built in the mid-1990s. The project was created with a $120 million grant from the federal Department of Energy, a $25 million grant from the state, an $85 million bond sale by AIDEA and contributions from future power producers such as GVEA. AIDEA lists the project's budget at $297 million.

But after startup, GVEA refused to take control of the plant, saying it didn't meet efficiency and safety goals. AIDEA disagreed, and the plant has sat idle since December 1999.

AIDEA applied for but didn't get a $35 million grant from the Department of Energy to do a less comprehensive retrofit.

Steve Haagenson, GVEA president, said Friday that he and AIDEA representatives have met twice in the past two weeks to plan what to do next. The plant needs to be restarted, he said.

"The $125 million would be an excellent way to kick-start that," he said.

The Healy plant is designed to produce 50 megawatts of power. GVEA wants the power because the utility's peak demand is nearing the capacity it has available when its largest generating unit, an oil-fired generator in North Pole, is down.

GVEA's proposed retrofit drew objections last year from the Northern Alaska Environmental Center in Fairbanks. The center contends that GVEA should stick with the experimental burners because they produce cleaner exhaust.

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