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Susitna hydro bill goes to governor Legislature gives AEA the authority to move ahead with a project to build a major hydroelectric dam at Watana on the Susitna River Alan Bailey Petroleum News
The final vote did not come until the April special session of the state Legislature, but a bill authorizing the Alaska Energy Authority to move ahead with a major hydroelectric power plant at Watana on the Susitna River is now on its way to the governor’s desk for signature.
“This is a great move forward for us,” said Rep. Lance Pruitt on April 20 when reflecting on the general support for the legislation, in the final seconds before a unanimous House vote to pass the bill.
The legislation gives AEA the authority to acquire and construct power projects, as well as to maintain and operate projects, as at present. And the legislation specifically grants AEA the power to acquire a Susitna River project, “by construction, purchase, gift or lease,” with AEA being able to acquire land for the project by eminent domain, if necessary. However, AEA must submit to the Legislature an annual report summarizing the status of the project.
Presumably in the interests of broadening the scope of the legislation beyond power supplies for the Alaska Railbelt, the legislation approves loans from the Power Project Fund for two hydroelectric projects, provided AEA approves the projects: $11 million for the Reynolds Creek project near Hydaburg in Southeast Alaska and $5 million for the Humpback Creek project near Cordova.
Move to hydropower In November AEA recommended the construction of a large hydroelectric dam on the Susitna River, in remote territory on the south side of the Alaska Range, about 184 river miles upstream of the river’s mouth, as a means of meeting a state objective to generate half of the state’s power from renewable sources by 2025, and to diversify power generation in the Alaska Railbelt away from the use of the natural gas fueled power stations that dominate power generation on the Railbelt grid.
The proposed Watana dam and power plant is a scaled down version of a Susitna hydropower concept that was investigated in the 1980s but which ran aground in the face of declining oil prices. The now-resurrected proposal would, AEA has estimated, cost about $4.5 billion and meet about half of the Railbelt’s power needs.
The high cost and lengthy project timeframe drive a need for state funding assistance, with the successful Bradley Lake hydropower system on the Kenai Peninsula providing a potential financing model. Bradley Lake, completed in 1991, was funded 50 percent through bonds and 50 percent by the state, with the state subsequently receiving revenue from the sale of power from the facility after the retirement of the bonds. AEA owns Bradley Lake, while Railbelt utilities manage the facility.
AEA needs authority But when the AEA board of directors was merged with the board of the Alaska Industrial Development and Export Authority in 1993, AEA lost its authority to establish a development project like Bradley Lake, thus creating a practical problem with progressing the Susitna project. The new legislation, passed on April 20, will restore that authority, thus enabling AEA to take actions such as applying for a Federal Energy Regulatory Commission permit for the Susitna power system.
However, the original version of the bill, introduced by Gov. Sean Parnell in January, envisaged re-establishing AEA as a more independent agency, somewhat more distinct from AIDEA, with AEA having its own employees, having a subsidiary corporation for the Susitna hydropower project and having a new Alaska Railbelt energy fund for holding money for on-going project work. Lawmakers removed those provisions from the bill, although they have made a change to the quorum requirements for the AEA board. They have also removed a provision that would have enabled AEA to establish its own regulations, separate from the state regulations, for the procurement of goods and services.
Widespread support With a general sense that hydropower should become an increasingly important pillar of future Alaska energy supplies, the bill, as passed, enjoys widespread support among legislators.
“I will gladly push the green button on this one,” said Rep. Craig Johnson prior to the April 20 vote. Johnson commented that some lawmakers who had been in the Legislature in the 1980s now regret not having moved ahead with a Susitna hydropower project at that time.
Rep. Les Gara expressed caution about the many project unknowns that remain, including some of the project economics and the potential impacts on salmon fisheries.
“We don’t know whether the costs will pan out. We don’t know whether the cost benefit analysis will work. … Right now we don’t know how expensive energy will be from this project,” Gara said.
However, Gara said that he gained some comfort from the fact that the Legislature retains control over the purse strings for the project, thus giving the Legislature ultimate control over whether the project goes ahead.
Impacts to be investigated Some legislators commented that AEA has committed to meet with communities impacted by the project and that, especially with FERC involvement, government agencies would fully investigate the potential environmental impacts of the hydropower system.
And a dam on the Susitna River could help control river flooding, a perennial, expensive problem in the Susitna Valley in the spring, said Rep. Mark Neuman.
“We’ve got a lot of opportunities in the state but we need energy to make those opportunities happen,” Neuman said. “Let’s let the (environmental permitting) process work.”
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