|
An independent operator for the grid? Efficient and reliable operation of the evolving Alaska Railbelt power transmission grid appears to depend on unified management Alan Bailey Petroleum News
The question of how to better manage the Alaska Railbelt power transmission grid, a recurring topic of debate and concern, came up again at the March 12 meeting of the Anchorage Mayor’s Energy Task Force. Currently various sections of the grid are owned and managed by six independent electrical utilities and the State of Alaska. But, while the grid has worked reliably over the years, there will be costly inefficiencies and potential reliability issues in the operation of the grid unless the grid is upgraded and its management structure unified, officials from the Alaska Energy Authority and electricity utility Chugach Electric Association told the task force.
The grid extends from Homer in the southern Kenai Peninsula through Anchorage and the Matanuska and Susitna valleys, north to Fairbanks in the Interior.
Many roles Bradley Evans, CEO of Chugach Electric, told the task force that the transmission network performs many critically important roles, in addition to the obvious role of carrying electrical power from where it is generated to where it is used. The network, for example, enables the rapid connection of reserve generation from different locations, to enable the continuity of electrical supplies should an operational problem occur somewhere in the system. The transmission network also provides flexibility in hooking up electrical supplies for new applications or facilities requiring electrical power.
“You’ve got a suite of benefits that you really should be thinking about when you think about the benefit of the grid,” Evans said.
Rethink needed But changes in power generation arrangements, including new power stations and the startup of some independent power producers, are driving a need for a rethink of how the grid is managed. As a consequence of new power generation coming on line, for example, the number of utilities involved in handling the dispatch of power around the grid is increasing, thus complicating the manner in which the grid is managed and resulting in disagreements over factors such as grid reliability rules, Evans said.
The current business structure for managing the grid does not support the inter-regional transmission of power; nor does it support the economic and most efficient usage of power generation facilities on the grid. And the management of different segments of the grid by different entities leads to an over-complex layering of the recovery of operating costs through the various tariffs charged for the various grid segments.
While the grid ownership, operation and control is fragmented and decentralized, ideas of somehow integrating the utilities into a single entity have never progressed, Evans said.
Independent system operator Evans argued instead for the formation of an independent organization for operating the entire grid, along the lines of the independent system operators that manage transmission networks in a number of regions of the Lower 48.
“I myself believe this is doable,” Evans said. “I believe we can take an existing model that doesn’t look too weird to my rating agencies, my bond lenders … I think we can scale it down here and make this work.”
Ownership of the various components of the grid by the utilities and the state could remain much as it is at present, but the independent operator would have the authority to ensure non-discriminatory access to the grid; to maintain reliability standards; to plan and approve projects; to develop an efficient system-wide tariff; and to manage the dispatch of power, balancing power generation with power loads throughout the grid.
A board of stakeholders in the grid, including representatives from the utilities, independent power producers and electricity consumers, would provide strategic oversight of the independent operator.
Bills introduced The Regulatory Commission of Alaska, or RCA, would have regulatory jurisdiction over the independent operator: During the current state legislative session bills have been introduced in the House and the Senate proposing that the RCA work with the utilities to prepare a report, assessing whether the establishment of an independent system operator would be beneficial to the operation of the transmission grid and recommending any legislation or regulation changes that would be required to make the independent system operator concept work.
Asked about comparison between these bills and a bill for unification of the Railbelt power grid that the Legislature failed to pass in 2010, Gene Therriault, deputy director of the Alaska Energy Authority, or AEA, told the task force that the 2010 bill encompassed the management of both power transmission and power generation, while the new proposal only considers the transmission network.
And Evans emphasized that the question of establishing an independent system operator for the grid is completely separate from and does not depend on another possibility, the formation of a company to own facilities within the transmission grid and hence to achieve economies of scale in facility construction and operation. By not owning assets in the grid, the system operator can independently adjudicate over issues relating to grid operation, he said.
Need for upgrades Therriault told the task force there are growing issues, both with the way the operation of the grid is governed and with the need for grid upgrades.
He said that an AEA evaluation of the needs for grid upgrades highlighted the way in which the current grid configuration is constraining the amount of power that can be shipped out of the Kenai Peninsula from the Bradley Lake hydropower station, the cheapest power source on the grid. The inability of some electrical utilities to make use of Bradley Lake power at times when they need it results in the use of more expensive power generation, thus increasing electricity costs for consumers, Therriault said. And the movement of power from Bradley Lake around an unduly long transmission route leads to high transmission losses, a wastage that also increases electricity costs.
The AEA study recommended several upgrades to alleviate the Bradley Lake congestion, including the construction of a high voltage direct current transmission line under Cook Inlet, between the northern Kenai Peninsula and the west side of the inlet.
The AEA evaluation also said that some upgrades to the transmission network are needed in the Anchorage and Palmer areas. And the study recommended major upgrades to the transmission intertie between Southcentral Alaska and Fairbanks, to increase the capacity of the transmission system to ship power between Anchorage and the Fairbanks region and to improve the stability of the system.
“What we’re looking for is an improvement in the system to increase the capacity, but also increase the reliability by having some redundancy in the system,” Therriault said.
More than $900 million The AEA study put a total price tag of more than $900 million on its complete list of recommended upgrades. But, although the study estimated electricity cost savings from the upgrades that would more than offset the cost and could thus reduce electricity rates by from 1.5 cents to almost 3.5 cents per kilowatt hour for consumers, the utilities have said that they do not have the financial capacity to meet this huge upgrade bill.
One obstacle to possible state assistance with funding for grid upgrades may be questions over how the improved system is operated to the benefit of the electricity consumers, Therriault commented.
“I think right now perhaps we’re at a little bit of a standoff,” he said. “We know we’ve got these needs to answer some policy questions on the governance side and then we also know we need some investment on the infrastructure side.”
| 