Doyon prepares to take over Alaska Army utility services

Three bases expected to save $800 million over next 50 years

Posted: Tuesday, June 17, 2008

FAIRBANKS - A regional Native corporation is preparing to take over utility services on three Army posts in Alaska.

Fairbanks-based Doyon Ltd. last fall was awarded a 50-year, $3.9-billion contract to take over electricity, water, sewer and heat systems at Fort Wainwright, Fort Greely and Fort Richardson.

The privatization is expected to increase reliability and to modernize aging infrastructure.

The Army projects it will save more than $800 million over 50 years.

Utility privatization was authorized by Congress and mandated by the Department of Defense. A transition period ends Aug. 15.

Doyon President George Gordon said his company is ready for the takeover.

"We're marching right on down the road," he said.

Doyon Utilities, a joint venture between Doyon Properties and Fairbanks Water and Sewer, has spent $35 million over six months on equipment, personnel and other costs. Private investment will total around $100 million the first five years as Doyon rebuilds electrical systems, including poles, wires and substations, Gordon said.

The government will benefit from a new level of service and competitive prices, he said.

The Army anticipates greater security and faster responses to problems. Fort Wainwright public works director Mike Meeks said in an e-mail that a loss of heat would be devastating if not restored quickly.

"Privatization of these utilities decreases the risk of a catastrophic failure," he said.

Steve Roscovius, Fort Wainwright chief of utilities and operations support, said Doyon will not face the same constraints as the military, including annual funding uncertainty.

Each post has unique needs that Doyon Utilities is working to meet, Gordon said.

• A $3 million substation being built to serve Fort Richardson should be operational by Aug. 1, Gordon said. The substation is "sorely needed," he said.

• A similar substation should become online at Fort Greely by December and would significantly expand capacity, Gordon said. During heavy winter demand, Fort Greely supplements grid power with expensive emergency generators about 10 hours per day.

• Fort Wainwright generates much of its own power with a coal-burning plant and a new substation is less urgent. However, Fort Wainwright's infrastructure is aged, creating reliability problems, Gordon said.

At all three posts, Doyon will install utility meters at individual buildings. The chance to track use of electricity, water, wastewater and steam could lead to conservation.

"The Army has started to create energy conservation programs and mandates, and these meters will allow us to hit the ground running once we get marching orders," Roscovius said.

For Doyon, the transition represents an opportunity to add jobs and delve into a new field, Gordon said. The company will employ about 60 people at Fort Wainwright, 20 each at Greely and Richardson, and up to 20 at company headquarters in Fairbanks.

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