Hydropower on Prince of Wales hits red tape

Permitting oversight causes delay in island communities' diesel-to-hydro transition

Posted: Friday, August 21, 2009

An attempt to bring inexpensive hydroelectric power to two struggling Prince of Wales Island communities has hit a snag, after Alaska Power and Telephone failed to obtain a permit to run a powerline down a Forest Service road on the island.

The permitting delay means AP&T is likely to lose the entire summer construction season, said Greg Mickelson, the Klawock-based vice-president for power operations for the utility.

"Our hope had been to get started by the end of May, now it is by the end of September," he said.

Depending on the severity of the winter, it won't be completed until sometime next spring or summer.

While Southeast's larger cities have access to hydropower, many of its smaller communities are still struggling with crippling energy costs. AP&T had hoped to change that in the communities of Coffman Cove and Naukati Bay using a combination of loans, grants and customer charges.

"Right now we're self-generating with diesel, and the rates fluctuate with the cost of diesel," Mickelson said. AP&T is one of the state's few for-profit utilities, along with Juneau's Alaska Electric Light & Power.

Power rates in Coffman Cove and Naukati Bay have been as high as 62 cents per kilowatt-hour and are now about 45 cents per kwh, he said. AEL&P's base rates are less than 10 cents per kwh.

The state's Power Cost Equalization program brings that rate down for the Prince of Wales communities, but only applies to residences and only for the first 500 kwh used each month.

"If you are running any kind of business it makes it awfully hard where it is now, and when it gets up to 62 (cents per kwh) it's impossible," Mickelson said.

Naukati Bay resident Gregg Parsley said the Naukati Bay School is one of several on the island struggling to remain viable. It pays $40,000 a year for diesel-generated power, but its bill could be halved with access to hydro.

"We're having problems just keeping these schools open, $20,000 in savings would help a lot," he said.

It would also help the fledgling Naukati Bay shellfish nursery, as well as Coffman Cove's more numerous businesses.

The power itself is relatively cheap to produce at AP&T's Black Bear Lake and South Fork Hydro Projects, but is miles away from the two communities.

Recently built roads on the island now make powerline extensions feasible, and the Alaska Energy Authority earlier this year approved a $3.6 million, 30-year loan for the project.

Power poles and transmission lines have been ordered and were on the roadside ready for installation when AP&T got word from the Forest Service that it would have to complete an environmental assessment before running the lines. While not as elaborate a study as a full-blown environmental impact statement, it can still be a time consuming process.

"It kind of blindsided us that we had to go through this," Mickelson said.

Other road corridors included utility easements when they were turned over to the Department of Transportation, but not this one.

Forest Service permit administrator Melanie Slayton said the utility should have known that it needed a permit and should have obtained the permit before it began placing materials along the road.

"They should not have put that out there without having the document in their hands," Slayton said.

There's no dispute locally that the powerline is needed, Slayton said, and the Forest Service is trying to help get the permit done quickly.

"We haven't asked them to remove (the construction materials,) we want them to put the powerline in," she said.

Parsley said he's unhappy with how the Forest Service has handled the permitting process, but is resigned to another winter of high power rates in Naukati Bay.

"It will cost us a lot less once that power gets here," he said.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.

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