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Vol. 19, No. 39 Week of September 28, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

HEA general manager says utility left ARCTEC because of lobbying

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In a Sept. 15 letter to state Rep. Doug Isaacson, Brad Janorschke, general manager of Homer Electric Association, said that his utility had quit the Alaska Railbelt Cooperative and Electric Co., or ARCTEC, in early 2013 because, rather than pursuing cost-saving projects that would jointly benefit ARCTEC’s member utilities, ARCTEC’s sole purpose seemed to have become lobbying for grant funding from the state Legislature. A desire of some ARCTEC members to hire a CEO for the organization had also factored into Homer Electric’s decision, Janorschke said.

Five of the six Alaska Railbelt electricity utilities formed ARCTEC in early 2011, as a means of collectively addressing the management and upgrading of the Railbelt power grid. The formation of ARCTEC followed the failure of the Alaska Legislature to enact the formation of a company to maintain and operate power generation and transmission in the grid. Anchorage utility Municipal Light & Power was the one utility not to join ARCTEC.

When Homer Electric subsequently resigned from ARCTEC in 2013, Homer Electric’s board of directors informed ARCTEC by letter that it was leaving the organization because it needed to be able to focus its efforts on what it called its “independent light” program, a major program of facility upgrades, including the implementation of new gas-fired power generation capabilities. Because of upcoming changes in power generation on the grid, Homer Electric had to be able to generate its own power by the beginning of 2014, rather than purchase most of its power, primarily from Chugach Electric Association, as it had done in the past.

Response to question

Janorschke’s letter to Isaacson emanated from an energy roundtable meeting that the Legislature had convened on Sept. 5, to discuss the various issues facing the Railbelt grid. At that meeting Rep. Craig Johnson had asked why Homer Electric had withdrawn from ARCTEC. Janorschke’s letter has responded to that question.

“After two years of existence ARCTEC had yet to either begin or act as a catalyst for a project, implement joint planning efforts, or attempt any collective effort towards securing fuel,” Janorschke wrote. “Instead it seemed as though the sole purpose for the organization was to lobby the legislature for grant funds to benefit its individual members and sustain it as an organization.”

Janorschke is presumably referring to ARCTEC’s requests to the Legislature in recent years for funding assistance for upgrades to the Railbelt’s aging transmission grid.

Joe Griffith, ARCTEC CEO, told Petroleum News Sept. 23 that, while concerns about the cost of hiring of a CEO may well have motivated Homer Electric to leave the organization, Janorschke’s accusations that ARCTEC had become purely a lobbying organization were essentially “balderdash.”

“Are we doing things? You bet we are,” Griffith said.

Griffith explained that, with major decisions over future power generation in the grid having been made prior to ARCTEC moving into operation, the organization has been focusing on the transmission aspects of the grid, trying to redefine the power load balancing areas of the main utilities and to put together an organization to manage the transmission network. The organization has received briefings from potential creators of an appropriate transmission management company - the utilities that are members of ARCTEC own substantial amounts of the transmission network, Griffith said. And ARCTEC put much effort into supporting the development of Railbelt grid operating and reliability criteria, an exercise that had not been accomplished prior to ARCTEC’s involvement, he said.

Griffith also commented that ARCTEC had obtained $56 million of the $92 million in state funding that it had requested for transmission upgrades, and that Homer Electric had received $18 million of that funding.

- Alan Bailey



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