As one who has followed the sad saga of the experimental coal fired power plant project in Healy, Alaska since 1990, some of the editorials advocating for continued investment in it have been missing some critical points.
Usibelli Coal and GVEA championed a $105 million federal grant to build the plant, though neither incurred much risk. Usibelli wanted to market unsalable quality coal to the plant and GVEA wanted a free functional power plant. Their combined efforts got the State of Alaska to take ownership through the Alaska Industrial Development and Export Authority (AIDEA), with an added $25 million direct Legislative appropriation in 1990. The federal Clean Coal Technology program, initially set up to find ways to reduce acid rain from coal plants, ended up providing $105 million to find out if the two technologies tested worked. They got what they needed, leaving AIDEA with cost overruns and legal bills that now exceed about $200 million more for a total of over $350 million.
AIDEA wants to off‐load the plant to GVEA for $50 million as is. GVEA is in a bind as they allowed the plant not only to be constructed on GVEA property, but to be attached to GVEA’s existing 25 mw Healy plant, through which both plants share infrastructure. GVEA and AIDEA, after nearly a decade of suing each other, have signed a purchase agreement which is very hard for GVEA to back out of, barring 3rd party litigation or failing to get their air quality permit approved.
GVEA estimates $45 million to modify the experimental plant to be acceptable for GVEA to own and operate, for a total of $95 million debt for GVEA. One current milestone is receiving an air quality permit from the State of Alaska with concurrence from the E.P.A. , responsible for reviewing such permits. This plant was constructed next to Denali National Park and the original permit was issued in 1994 with added requirements to not impact the airshed of one of Alaska’s and the country’s natural treasures.
While new elements in permitting power plants are not yet regulated (mercury, CO2), newer technology is now available than from 18 years ago when the air quality permits were last issued. This best available current technology would add $20‐$40 million more to the $45 million retrofit price tag, for a total to GVEA members of $125‐$145 million. I don’t see where this increased cost is built into GVEA’s touted savings of 10% on fuel cost (5% of rate‐payers bills).
I recently reminded the GVEA board recently that members just removed a restriction on outstanding debt no more than $450 million ($350 million was outstanding debt) with public promises from the board that they would be cautious in not over‐borrowing. However, in the past few months, GVEA has announced borrowing for $93 million for Eva Creek Wind Project, over $100 million for trucking natural gas to the North Pole generator, and now over $100 million for buying and retrofitting the experimental coal plant in Healy. These loans mean that in less than a year, GVEA will have doubled the debt to the cooperative. Debt service, interest, and depreciation are the major components of rate‐payers’ utility charge. The board will be incurring 20 years of debt for a promise of short term savings, which are likely to be overshadowed by other economic means of cost reduction, such as natural gas, hydro, conservation.
Some argue that coal as a fuel source makes sense because it is cheap. The only reason it is cheap is because the full external cost to the environment is not included. The EPA was already instructed by the Supreme Court to start regulating CO2. Some Congressmen says that’s Congress’ job, but they oppose doing so. Mercury and coal ash are likely to be factors in the near future. There is a reason that the Rural Utility Service doesn’t loan on coal plants any more. GVEA’s purchase of this plant is a 20 year commitment. It is estimated to take 18 months to get on line, within months of when trucked natural gas is scheduled to begin.
Complicated history, but figure this plant, if restarted, will likely have sucked down nearly half a BILLION dollars if allowed to proceed. I understand rate‐payers want relief from high energy prices, but I believe that re‐starting the experimental coal fired power plant in Healy won’t save us in the long term and will remain the boondoggle that everyone agrees it has become.
Photo courtesy Doug Yates
Comity and Common Sense 