Palin submits Railbelt utilities plan

subscribe

The six utilities that serve most Alaskans would buy wholesale power through a new state corporation under a bill sent to the Legislature by Gov. Sarah Palin.

Palin announced a statewide energy plan in January and said a single entity is needed to plan, finance and build future power plants within Alaska's Railbelt, named for areas touched by tracks of the Alaska Railroad and covering about 65 percent of the population, to take advantage of economies of scale.

The new entity would be called the Greater Railbelt Energy and Transmission Corp.

"We need a comprehensive approach to energizing Alaska's homes and businesses," Palin said in a statement. "Instead of numerous different utilities heading in numerous different directions, costing consumers untold millions of dollars in the future, I've asked energy experts to find a way to sensibly and economically address Railbelt energy challenges."

The six Railbelt utilities are small by Lower 48 standards and 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 and Cook Inlet natural gas, which has helped keep rates low, is expected to either run low or jump in price. That means substantial investment will be needed for new plants, but energy experts say single utilities do not have the resources to build large projects that could give consumers the best rates.

The call for a centralized power authority follows the recommendation of an $800,000 state study overseen by the Alaska Energy Authority. The Railbelt Energy Grid Authority study, released in September, studied management options and concluded that whether new power is generated by natural gas, coal or a hydroelectric project, a united entity with streamlined management and combined assets could save rate-payers $40 million annually over management by the six utilities.

The six utilities affected are Golden Valley Electric Association in Fairbanks, Matanuska Electric Association, Chugach Electric Association, Anchorage Municipal Light & Power, the City of Seward and Homer Electric Association.

The utilities worked on the development of Palin's proposal but support remains mixed.

Chugach Electric spokesman Phil Steyer said his cooperative supports the concept and the bill itself. Brian Newton, head of Golden Valley Electric Association, told the Fairbanks Daily News-Miner that he was disappointed that the bill carried more stick than carrot as incentive for utilities to join.

The utilities historically have enjoyed state grants to help pay for new power plants or interties but state officials have said that support is less likely in the future unless the utilities work together.

Palin's bill would set up the corporation to operate on a nonprofit basis. Its stated purpose would be to provide adequate and reliable wholesale power to the utilities at the lowest cost, procure a fuel supply and ensure adequate transmission.

The corporation's board would be made up of two representatives from each utility and one member appointed by the governor.

The bill calls for the corporation to adopt a plan for selecting new generation and transmission projects.

The bill calls for the corporation, with the Alaska Energy Authority, to develop a transition and finance plan before Jan. 19 — no small task given that the utilities operate under a variety of state and federal rules, depending on their makeup. They all have long-term obligations for purchasing fuel and paying off debt.

"There may need to be a transition plan for each utility," Steyer said.

Palin's energy adviser, Joe Balash, said the plan envisions the corporation acquiring the power plants of the utilities unless they're near the end of their useful lives or covenants on debts would make them more expensive to acquire than what they're worth. In any case, he said, power they generate would be sold to the new corporation to be dispatched most economically as part of an overall portfolio.

Utilities would have until July 2010 to decide whether to be part of the corporation or continue to operate independently.

The bill calls for a report by Jan. 19 regarding the scope of regulation by the Regulatory Commission of Alaska.

"We need to have somebody keeping an eye on and overseeing this corporation," Balash said. "We want to make sure that the touch is right — not to heavy but not too light."

Related News

Australia PM rules out taxpayer funded power plants amid energy battle

MELBOURNE - Australian Taxpayers won't directly fund any new power plants despite some Coalition MPs seizing on a new report to call for a coal-fired power station.

The Australian Competition and Consumer Commission recommended the government give financial certainty to new power plants, guaranteeing energy will be bought at a cheap price if it can't be sold.

It's part of a bid to cut up to $400 a year from average household power prices.

Prime Minister Malcolm Turnbull said the finance proposal had merit, but he ruled out directly funding specific types of power generation.

"We are not in the business of subsidising one…

READ MORE
us offshore wind

U.S. offshore wind power about to soar

READ MORE

bc electricity demand

BC Hydro Expects To See Electricity Usage Rise This Holiday Season

READ MORE

U.S. renewable electricity surpassed coal in 2022

READ MORE

Manitoba Hydro applying for 5 per cent interim rate increase

Consumers Coalition wants Manitoba Hydro?s proposed rate increase rejected

READ MORE