Electric Utilities


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.

I’ve often noted the oxymoronic expression “Clean Coal”. It’s why I refer to the DOE/State of Alaska funded “experimental coal fired power plant in Healy” instead of the “clean coal technology” power plant. It may just be less dirty than its neighbor plant. By the time GVEA gets done with the rehab though, I’m not sure if it will still be true.

A commercial now airing on some cable channels also takes on this topic, by the Coen Brothers.
http://www.huffingtonpost.com/2009/02/26/coen-brothers-direct-new_n_170196.html

Reading the Nov. 10, 2007 ADN, MEA (Matanuska Electric Association) announced it is canceling efforts to build a large coal plant in Matsu. They do have issues with not having any of their own generation, but this idea seemed ill advised.

It was reported that MEA will stop pushing this coal plant idea due to poor economics. This seems like face saving. What should be apparent is that, forward looking, there will be less economic incentive to burning coal with CO2 emissions factored in. A wise decision, for whatever the stated rationale.

If those proponents for coal are so gung-ho, why haven’t they worked to buy power from the AIDEA-GVEA-Usibelli experimental coal plant in Healy that cost the state and feds nearly $400 million? Of course, that’s only a 50 mw plant.

Long term decisions need to be made with carbon footprint considerations. We’re all on the same planet (some more than others) and share a common future with climate change mitigation and adaptation. Coal might be plentiful, but about the most destructive form of non-renewable energy in terms of CO2 and toxic emissions.

Seems like a natural gas bridging solution for just in-state use would allow us about 500 years of stability. What’s the big push to export?

That being said, I hope someday MEA will get be able to be less political and confrontational in its approach to getting things done. They may feel besieged, but maybe there is a reason.

Electrical utility plans need to have a full accounting for environmental costs, especially considering the challenges of CO2, climate change and the costs we will bear in the future for having changed so much of our environment.

Matanuska Electric Association is now going out to members to ask about siting for a coal fired power plant, justified by a new state prison to be built. This was recently reported in the Anchorage Daily News. There are a number of members who believe a coal plant has environmental concerns that have not been taken into account. The CH2M Hill Integrated Resource Plan (IRP) commissioned by MEA is not available to the members, so they have no way to review it. I’m happy that GVEA hasn’t been so secretive with their IRP and having it available to members for review can lead to a better report. Members don’t charge for their input.

In a recent study commissioned by the University of Alaska Fairbanks to look at meeting future power needs, they also came out with a recommendation to build (another) coal fired power plant on campus. Having access to the report helped point out that the economic analysis didn’t include any carbon cost analysis, no substantive consideration of alternatives and a near-total wash on further conservation/demand side reductions. You can download the Utility Development Plan at the bottom of the linked page in 3 different sections.

When GVEA performed an Integrated Resource Plan in order to justify the experimental coal plant in Healy in the 1990s, the study found that conservation would cost 1.5 – 2 cents/kwh vs. 3.5 -4.5 cents for a new plant. What the MEA IRP found is anyone’s guess. The irony of UAF’s plan to add a coal plant is that a coal plant is either on full time or it isn’t. There is no load balancing one can do without hours or days for starting a plant. If one builds a 20 mw plant, the most efficient use of that plant is to use 20 mw, not less. This is actually a disincentive for conservation.

I also notice that Governor Palin just awarded Usibelli Coal an award for exporting large quantities of coal to Korea. Rewarding a company for exporting a product that creates pollution that alters our environment? This is the same governor who just created a sub-cabinet level group to find ways that the state can reduce its “contribution” toward climate change.

With all the recent ramp up in discussion over climate change and the added CO2 that coal puts out, it seems like the discussion and research being performed demonstrating all the hazards aren’t being translated into action.

With the State of the Union coming soon, the buzz is that George Bush will talk about enhancing “nucular” power as a means of combating global warming and increasing our energy independence.

Nuclear power has been given some incredibly large incentives in the last few congresses under the Republicans. I ran across an article that explains a lot more than I could.

The push for nuclear energy is compelling except for the fact that accidents are extremely deadly and that we don’t have safe places to put spent fuel that remains radioactive for thousands of years. It takes hubris to think we could be smart enough or know enough about what the future holds for a section of the earththat far ahead. That hasn’t stopped them from trying.

A story more close to home is a plan hatched by Toshiba to put a sodium based nuclear reactor in Galena Alaska, a mostly native village and formerly a forward Air Force base housing a handful of fighter jets. What I find particularly interesting is that this reactor can’t be licensed to be installed in Japan, home country of Toshiba, so they suggest it for the Indians of rural Alaska? Smallpox infested blankets anyone?

I’d be more inclined to support fusion over fission, as that would leave us without the nasty radioactive byproducts. We haven’t figured out how to do this yet, but the sun has. Maybe we could spend a large portion of our nuclear subsidies to subsidize solar energy? Hello? Is anyone there?

It seems like a long effort on my part, but it is time to re-evaluate and move forward.

Here are the vote results for the two ballot issues submitted to members:

* * * * * * * *

For transferring assets to the GVEA G&T
Yes 2653 41%
No 3878 59%

Vote fails. GVEA G&T assets remain with GVEA.

* * * * * * * *

For allowing all but board member and spouses to participate in GVEA alternative energy programs (e.g. SNAP)

Yes 4304 66.4%
No 2180 33.6%

Vote passes. All but board members and spouses may now participate.

* * * * * * * *
Check out the more detailed vote tally

See http://gvea.blogspot.com for comment on this or further GVEA issues.

The GVEA website now includes links to the GVEA G&T, under board of directors. We’ll see how long it stays there.

After announcing results of the vote Mon. night of the G&T proposal vote, I would like to move GVEA discussions over to a separate blog http://gvea.blogspot.com so we can work to get two way communications between the GVEA organization, board and membership.

It will also allow this blog to get back to other things without being buried in GVEA issues. There is life after GVEA (:-).

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