CEA files gas contract for GVEA supply

Chugach Electric Association has asked the Regulatory Commission of Alaska to approve a new gas supply contract with Hilcorp Alaska, for gas for power generation for the supply of electricity to Fairbanks utility Golden Valley Electric Association, or GVEA. GVEA purchases some of its power from Chugach Electric to reduce its needs for expensive oil-fueled power generation in Fairbanks.

The new gas supply contract covers the period April 1, 2013, to Oct. 31, 2015, and has gas prices starting at $7.75 per thousand cubic feet, rising to $7.90 on Nov. 1, 2013, and stepping up to $8.06 on Nov. 1, 2014.

Although this new contract provides Chugach Electric with some assurance about the source of gas for its future sales of power to GVEA, the contract does not resolve concerns about tightening gas supplies from the Cook Inlet basin — Southcentral gas and power utilities are making plans to import gas into the region in the winter of 2014-15, to guard against the possibility of local gas supplies running short during periods of high winter demand.

Lee Thibert, senior vice president of Chugach Electric Association, told Petroleum News Nov. 28 that Chugach Electric works with GVEA as part of the Alaska Railbelt.

“We feel they’re part of the team,” Thibert said.

Chugach Electric plans to purchase gas under the new contract during the summer, placing gas in storage on the Kenai Peninsula for winter use and not impacting winter gas deliverability, Thibert said. And the power supply contract with GVEA is not guaranteed: In the event of a gas shortage in Southcentral Alaska Chugach Electric has the option to curtail the GVEA supply, he said.

Chugach Electric says that, as well as enabling GVEA to reduce the price of electricity for its customers, the revenue generated from the power supplies to GVEA will benefit Chugach Electric’s customers in Southcentral Alaska by reducing Chugach Electric’s electricity rates.

If Chugach Electric were forced to curtail its supply to GVEA, GVEA would presumably have to revert to more expensive power generation in Fairbanks.

—Alan Bailey