Alaska editorial: Thoughts on an idle electricity plant

Posted: Friday, August 17, 2007

Here's an item for the heading "Your screwed-up government at work."

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The state of Alaska owns an experimental $300 million electricity plant that is sitting idle, in part because the facility is on someone else's land, and the land owner won't let the state do what it wants with the plant.

This plant is the "clean coal" demonstration project in Healy. It's owned by AIDEA, the Alaska Industrial Development and Export Authority. It sits on land owned by Golden Valley Electric Association.

The partnership between the two sounded good when it started in the early 1990s, but eventually it blew up, and the divorce has been U-G-L-Y. This spat makes Britney Spears and Kevin Federline look like lovebirds.

The agency and the utility moved in together at Healy without knowing how the arrangement was going to work out. Golden Valley already had a small coal-fired plant at Healy. To save costs, the state asked, and Golden Valley agreed, to share facilities like coal handling equipment and operating controls with the experimental plant.

Turns out the sharing arrangements were imprecise enough to spawn years of dispute and litigation. (Guess they should have had a better pre-nup agreement.)

The clean coal technology wasn't as reliable and economical as Golden Valley expected. (There's dispute whether Golden Valley was being unreasonable.) The utility could afford to be picky because it didn't urgently need the power from the clean coal plant.

The utility and the agency apparently reconciled in 2000, when they settled that performance dispute. They looked at the possibility of converting it to a conventional coal plant. But Golden Valley eventually bailed out and built its own, slightly larger plant in North Pole, one that doesn't burn coal.

The state development agency thinks it has finally lined up a new partner to run the clean coal plant, Homer Electric Association. But Golden Valley said, "Not so fast, darlin'. I've got the keys to the house and I'm not letting you and your new sweetie in."

AIDEA went to court nearly two years ago, claiming Golden Valley won't live up to the deal they cut in 2000. The whole matter is mired in mediation. The clean coal plant has been mothballed for about seven years.

As with many a domestic arrangement gone awry, neither side is free of fault. You might say Golden Valley, which was a reluctant partner on the project from the start, was leading the state on and then decided to play hardball. You might say AIDEA was gullible enough to let down its legal guard and failed to ensure it has access rights to a $300 million investment.

Sure would be nice if the two sides could make peace once and for all. The Railbelt is struggling to figure out how the region will get electricity as cheap Cook Inlet natural gas dries up. This endless fighting over a mothballed $300 million power plant doesn't give Alaskans a lot of confidence in how that search will turn out.

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