|
Utilities have fuel, facilities issues Southcentral electrics tell chamber natural gas needed, but also major plant, transmission upgrades, total of $13.5 billion by 2025 Kristen Nelson Petroleum News
If you thought declining reserves of natural gas in Cook Inlet were the only issue for Southcentral Alaska energy users, you needed to hear the area’s major electric utilities talk about the monies that will be needed for replacing aging plant and transmission systems at the Anchorage Chamber of Commerce Oct. 25.
Chugach Electric Association, Matanuska Electric Association and Municipal Light & Power officials talked about work under way — and work needed — to bring aging power generation and power transmission facilities up to date.
They agreed replacement fuel will be needed for declining Cook Inlet natural gas, but said as a general rule renewable energy isn’t cheap — and hydro, the big source of power that could really help fill the gap, has costs beyond what the individual utilities can absorb.
And in the short term, barring miracles, as ML&P General Manager Jim Posey said, Southcentral utilities are going to need to import liquefied natural gas to meet peak needs.
Electricity goes first Addressing concerns about immediate Cook Inlet natural gas deliverability problems. Phil Steyer, CEA government relations and corporate communications manager, said power interruptions are the last thing that would happen.
Systems operations first use options including making more power with hydro; moving more power than normal on a transmission line to get it into a region; stopping sales of power to Golden Valley Electric Association; buying power from GVEA; or getting natural gas from the liquefied natural gas plant on the Kenai Peninsula, which can divert deliveries.
Actions by systems operators, Steyer said, have resolved all situations to date. He said the options are all things that have been done over the years.
If that were insufficient, the public would be asked to help by reducing power use.
If that were insufficient, and as a last resort, there would be rolling blackouts of a thousand customers at a time for about 20 minutes at a time. And that would be selective, he said, excluding hospitals and the airport.
Why do the electric utilities cut back, instead of Enstar Natural Gas Co., which sends gas directly to customers?
“We can turn you off and … we can turn you back on. We can do it all automatically” via computer at CEA, Steyer said.
But if Enstar loses pressure, customers have to be turned back on — one at a time — by Enstar going door-to-door.
That, Steyer said, is a situation we don’t want to get to.
Cost of future energy supply Joe Griffith, general manager of MEA, said the energy challenge Southcentral faces is “the cost of our future energy supply.”
Fuel supply for power generation is one challenge, he said, but another is the cost of generation and transmission facilities.
“There’s nothing inexpensive about these new facilities and we don’t have any choice but to replace them because they’re old and worn out,” Griffith said.
Southcentral has to start seriously thinking about these issues because “the inexpensive energy that we have known for the past 40 years in Cook Inlet is what has made our economy.” Without that inexpensive energy, “the economy will suffer.”
The combined load in the Railbelt is less than 900 megawatts, he said, and while that may sound big, it’s about the same size as two city blocks of New York City.
In addition to energy supply, the age of facilities in the area is a big issue, Griffith said, with 67 percent of the area’s generation capacity going to be retired within the next 15 years and every bit of that needing to be replaced.
The Railbelt Integrated Resource Plan done by the Alaska Energy Authority and the Alaska Industrial Development and Export Authority projected that generation projects needed through 2025 would cost $13 billion; transmission needs add about another half a billion, Griffith said.
Renewables not cheap Steyer said the CEA board wants to move from 90 percent gas-fired and 10 percent hydro to 10 percent gas-fired and 90 percent hydro and other renewables.
But it’s a long-term plan, he said.
Short-term fixes include gas storage; mid-term fixes include the Southcentral power project CEA and ML&P are building and renewable projects, but only if they make economic sense; long-term includes hydro, which Steyer said is the best bet to make a long-term dent in natural gas use.
Griffith said hydro projects are his favorites for future power supply, but also said that of the $13 billion AEA and AIDEA projected in needed infrastructure, $4 billion to $5 billion is for a Susitna level project. But, he said, “All of us utilities together could never afford that.”
AEA helped by picking up half the cost of Bradley Lake, Griffith said, and “today it’s the cheapest large source in the state of Alaska.”
The cost of Fire Island wind power is under negotiation between project sponsor Cook Inlet Native Corp. and CEA. Because of those negotiations, Steyer said he couldn’t say much, except to repeat what he’d said earlier, that “it’s not renewables at any price, it’s what are the conditions, what’s the cost and at the end of the day does it make economic sense for customers.”
LNG issue Griffith said MEA thinks “LNG importation is coming and … I don’t think there are any of us that don’t think it’s going to happen.”
Posey said that ML&P is vertically integrated — as one of the owners of the Beluga gas field it produces gas as well as using it for power generation.
“Gas volumes are going down,” he said. “And if we don’t discover a major gas field two years ago or a year ago, we’re going to need to import gas.” By 2013 or 2014, Posey said, “unless there’s some kind of miracle” there won’t be “enough native gas at peak periods,” and those peak periods will be growing to meet future needs.
ML&P is studying the LNG import option, he said.
Steyer said that as Chugach’s volumes of gas under contract decline and out in the future it gets into periods where not all of its forecast needs are met, “all options are on the table.”
| 