AIDEA issues distribution loans

The board of the Alaska Industrial Development and Export Authority has approved two loans meant to expand natural gas distribution infrastructure in the Interior region.

The loans came from the Sustainable Energy Transmission and Supply Development Fund, as part of the Interior Energy Project, which is a public-private initiative to building a North Slope liquefaction plant and truck liquefied natural gas to the Interior.

The first is a $15 million loan to Fairbanks Natural Gas LLC to fund the current year of expansion of its existing distribution system in the Fairbanks region. The program involves 32 miles of distribution lines to connect 100 businesses and 2,500 residences. The private utility recently lost a bid to expand its system into other corners of the region and is not asking state regulators to free it from filing bi-monthly status reports about its activities, specifically its attempts to replace its strained Cook Inlet natural gas supply.

The second is an $8.1 million loan to the Interior Gas Utility to develop their initial distribution system, which includes engineering design, permitting and management.

Having recently received a Regulatory Commission of Alaska certificate to provide distribution service to the city of North Pole and other less populated segments of the Fairbanks North Star Borough, the municipal utility is looking to build a broad system.

The utility hopes to begin construction by mid-2015.

The loan is no-interest for 20 months, followed by a negotiation, according to the Interior Gas Utility. Without a negotiation, the loan would jump to 3 percent over 40 years.

—Eric Lidji