|
GRETC & RIRP still to reach Legislature Draft legislation to change the management and operation of Alaska Railbelt power supplies should be in legislators’ hands soon Alan Bailey Petroleum News
An Alaska Railbelt power and gas utility task force has largely completed its review of proposed legislation to establish a Greater Railbelt Energy and Transmission Co., or GRETC, for the Alaska Railbelt and has come up with a set of recommendations to place before a committee of the Alaska Legislature, Joe Balash, special assistant to Gov. Parnell for energy and natural resource development, told Petroleum News Feb. 26. Committee consideration of the recommendations has still to be scheduled but is likely to happen soon, Balash said.
The legislators have also asked Gov. Parnell for his thoughts on the proposed legislation.
“We’re hoping to sit down with him on that in the very near future and be able to give some feedback to the legislators on the bill,” Balash said.
Major change If passed, the GRETC legislation would bring about a major change in the management and operation of electrical power generation and transmission in the Alaska Railbelt, a region that extends from the southern Kenai Peninsula, north through Anchorage and the Matanuska and Susitna valleys, and up to the Fairbanks area in the Alaska Interior.
The aging Railbelt power infrastructure needs upgrading and the region faces significant future power generation issues as gas supplies tighten from the aging Cook Inlet gas fields.
Currently six independent power utilities provide power generation and transmission services in the region, but a 2008 study commissioned by the Alaska Energy Authority concluded that the funding required for electrical infrastructure upgrades far exceeds the funding capabilities of the existing utilities. A single entity to manage and operate power generation and transmission in the Railbelt is needed both to act as a fundraising conduit and to achieve economies of scale in Railbelt power supplies, the study found.
Private cooperative
The GRETC bill, as currently drafted, would mandate by statute the formation of a nonprofit, privately owned cooperative to manage and operate the Railbelt power generation and transmission grid. GRETC would buy or build its own power generation facilities, or could possibly purchase power from independent power producers. Utilities that join GRETC would continue to manage and operate the local distribution of power delivered to consumers within each utility’s region of the Railbelt, but would obtain their power from GRETC over the GRETC-operated transmission grid.
The intent is that the power from each power generation facility would have its own, uniform or “postage stamp” cost, wherever supplied from the Railbelt grid, with individual utilities able to buy power through GRETC from whichever combination of generation facilities the utility opts for.
And although the existing utilities would not have to join GRETC, there would be major incentives to do so: GRETC would provide the only means of obtaining state financial assistance for major power projects; it would be able to obtain funding more cheaply than individual utilities; and major projects sponsored by GRETC could achieve economies of scale probably unachievable otherwise.
Palin introduced proposal Gov. Sarah Palin introduced an initial version of the GRETC bill to the Legislature in March 2009, but the proposed legislation raised a number of issues that could not be resolved within the time remaining in the 2009 legislative session. The latest version of that bill, with the recommendations of the Railbelt utilities task force, now has the support of five of the six Railbelt utilities, with Anchorage utility Municipal Light & Power still taking issue with some specific provisions of the bill.
In particular, Municipal Light & Power, owned by the Municipality of Anchorage and the only Railbelt utility to be a department of local government, has said in the past that it takes issue with the lack of regulatory oversight of the proposed GRETC; a likely lack of transparency in GRETC business transactions; and GRETC’s proposed power of eminent domain for requisitioning land.
But since, as in 2009, the Legislature will not be considering the GRETC legislation until March, is there any reasonable possibility of the legislation passing this time around?
While accepting the pending time crunch in the current Legislative session, Balash thinks that, given the wider level of utility agreement than was apparent a year ago, it could now be possible for the legislators to deal with the bill more quickly than before. On the other hand, the legislators also have a large number of other issues to deal with in what remains of the session.
Integrated resource plan The other major issue facing the Alaska Railbelt power grid is the mix of energy sources that would be appropriate for future power generation: The high cost and long timeframes involved in permitting and building new power generation facilities require long-term strategies for energy supplies.
The GRETC legislation requires GRETC to adopt an integrated energy resource plan for the Railbelt, to specify that long-term energy-supply strategy, Balash said.
And the integrated resource plan would likely form the basis for decisions on appropriations by the Legislature for funding assistance for GRETC development projects. All state governors, from Gov. Knowles onwards, have required that state funding for Railbelt energy initiatives be directed at projects with a regional purpose — the governors have vetoed state Railbelt energy appropriations for individual projects for individual Railbelt utilities, Balash said.
In December, the Alaska Energy Authority published a draft Railbelt integrated resource plan that proposed a major shift toward hydropower for Railbelt power generation, with a recommendation for a new major hydropower system, either at Lake Chakachamna, near Mount Spurr, west of Anchorage, or on the Susitna River south of the Alaska Range.
Following a public comment period for the draft plan, the AEA board is meeting March 17 to decide whether to approve the plan, Balash said. If approved, the plan will go before the Legislature for consideration. And the state would expect GRETC to follow an integrated resource plan, or any other relevant state energy policy, or to provide a compelling explanation for going down some different route for supplying power for Alaska consumers, Balash said.
| 