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Mining News: AIDEA aims to end Healy clean coal deal Authority took action in ongoing efforts to return experimental power plant to operation; Homer Electric says it’s not over yet Rose Ragsdale For Mining News
The Alaska Industrial Development and Export Authority said it served notice to Homer Electric Association that it is terminating a 2006 agreement with the utility to place the Healy Clean Coal Project in operation.
AIDEA said it is taking the action as part of its continuing efforts to get the mothballed experimental clean coal plant up and running. The termination will be effective on August 20, 2009.
Construction and testing of the clean coal project was completed in the 1990s with nearly US$300 million in federal and state funding, including a US$120 million grant from the U.S. Department of Energy. The project has not been in operation since 2000.
“Until recently, AIDEA believed it was on a timely path to place HCCP into operation and to provide HCCP power to Railbelt consumers,” the authority said.
AIDEA, HEA and Golden Valley Electric Association, a Fairbanks utility, had agreed in January to jointly develop the Healy plant. Under terms of the January settlement, AIDEA agreed to sell the plant to GVEA, and two utilities would obtain its power. The agreement also would have ended litigation between AIDEA and GVEA.
Under terms of the agreement, the Healy Clean Coal Project will be sold to Golden Valley for US$50 million. AIDEA will finance the sale at 5 percent interest and provide Golden Valley with a US$45 million line of credit at 6.5 percent for the clean coal project’s restart costs. Both loans will be amortized over 25 years. The agreement also provides that Homer Electric will purchase from Golden Valley half of the plant’s energy and capacity, starting in 2014.
“HCCP is a valuable energy generating asset that is capable of providing reliable, economic power to help meet the Railbelt’s ever-increasing energy needs. The public interest requires that HCCP be developed as soon as possible. AIDEA continues to work towards its goal of placing HCCP on-line for the benefit of Railbelt electric consumers,” AIDEA said in a July 20 statement.
The January settlement also obligated the parties to meet an Aug. 1 deadline to conclude all definitive agreements required to implement the sale of the Healy plant.
AIDEA said the parties had made good progress in reaching these agreements when Homer Electric’s board directed the utility’s general manager May 12 to “transition [HEA] away from involvement in HCCP.”
“After this action, work stopped on the negotiation of the definitive agreements,” AIDEA said.
The quasi-state-owned authority repeatedly asked Homer Electric to clarify the meaning of the board’s action, but received no response that indicated the utility wished to have any further involvement in the HCCP project.
Ready to move forward “As a result of today’s termination notice, AIDEA and GVEA will be able to continue to expeditiously develop HCCP,” AIDEA said.
AIDEA Project Manager Karsten Rodvik said the authority will now focus on moving HCCP forward with Golden Valley. “We’re sticking with the same timeline in the original agreement. The objective is to get this plant on line for the benefit of railbelt consumers,” he said.
Dave Gardner, Golden Valley Electric’s marketing manager, said that the Fairbanks utility is aiming for startup of the Healy plant in January 2011.
“HEA has agreed to buy half the power from the plant. Now, we’re going to just use it all,” he said.
Gardner said Alaska has such an abundance of coal, and it should be used. “If this clean coal plant helps us use the coal to generate power in a responsible manner, then we should use it,” he added.
Still in the picture Homer Electric July 21 said its board and management will review AIDEA’s notice terminating the project development agreement regarding the Healy project, but the pact is still in effect.
In a statement, the utility said the 2006 agreement contained a number of provisions aimed at having Homer Electric restart the plant and purchase the power it generated. But “after a change in administration at AIDEA,” the state agency determined in January 2009 that it would instead sell HCCP to Golden Valley, with Homer Electric being allowed to purchase power from the facility.
The Homer Electric board’s order to transition away from involvement in the Healy project is a process that is ongoing, “but as of today the Project Development Agreement the two entities entered into in November 2006 still remains intact,” the utility said.
“Homer Electric Association will continue to review the best steps it can take in regards to the Healy Clean Coal Project and protect the interests of its members,” said Homer Electric General Manager Brad Janorschke. “Homer Electric reserves the right to continue to review all the issues surrounding this matter before relinquishing any legal rights established in the November 2006 Project Development Agreement.”
Janorschke said the Homer Electric board had not reviewed the termination notice and will discuss its options after doing so.
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