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Vol 21, No. 36 Week of September 04, 2016
Providing coverage of Alaska and northern Canada's oil and gas industry

Railbelt pool plan moves

Utilities think Southcentral power pool should be operating around turn of year

ALAN BAILEY

Petroleum News

A new power pooling arrangement in which Anchorage electric utilities Chugach Electric Association and Municipal Light & Power will make optimum combined use of their most efficient power generation facilities should go into operation in the fourth quarter of this year or the first quarter of 2017, utility executives told the Regulatory Commission of Alaska during an Aug. 24 commission meeting. Matanuska Electric Association expects to join the pool shortly afterwards.

The idea is to meet the continuously varying electricity load by making as much use as possible of the utilities’ cheapest sources of power, thus minimizing the cost of electricity. The procedure, referred to as “economic dispatch,” involves using an automated computer system to control the operation of the generators and then use an agreed settlement procedure to apportion the cost of the generation between the utilities involved.

The commission has asked the utilities to pursue voluntary efforts to achieve economic dispatch across the Alaska Railbelt transmission grid, which stretches from the southern Kenai Peninsula to Fairbanks in the Interior. As reported in the Aug. 28 issue of Petroleum News, the utilities propose using a stepwise approach, starting with the Anchorage pool and then progressively expanding this pool to incorporate other utilities.

New power plants

Chugach Electric and ML&P are especially anxious to achieve cost savings through maximum use their new high-efficiency, gas-fired, combined-cycle power plants: the jointly owned Southcentral Power Project and ML&P’s Plant 2A. The new Plant 2A has yet to go on line - full implementation of the Anchorage pool is contingent on this plant being in operation. When Matanuska Electric joins the pool, its new power plant at Eklutna, north of Anchorage, will join the economic dispatch power mix. The Eklutna plant has 10 modern internal combustion engines that can be switched in and out, to meet a varying power load.

The Southcentral utilities have been discussing their pooling arrangements with the utilities farther afield on the grid and have said that the pooling method can be expanded across the entire grid. Lee Thibert, CEO of Chugach Electric Association, told the commission that it would likely be possible to bring utilities on the Kenai Peninsula and Fairbanks into the pooling system within a year or two.

Single transmission lines

Apparently one complication in expanding the pool beyond the Anchorage and Matanuska and Susitna valleys area is the fact there are just single transmission lines linking this area to the Kenai Peninsula and Fairbanks. These single lines form single points of failure in the transmission system, requiring adequate power generation capability in each of the regions to ensure continuity of power supplies should one of the single lines break.

Thibert commented to the commissioners that the need for must-run generation units at the far ends of the single transmission ties causes some complications but that these complications can be worked out.

Mark Fouts, Chugach Electric executive manager of fuel and corporate planning, said that the procedures that have been developed in conjunction with the upcoming Anchorage power pool take into account the single transmission tie issue, but that it is essential to ensure that the system works for the other utilities. It may be necessary to operate a looser pool arrangement for the utilities connected to Southcentral via single transmission ties - the prize to be gained is a Railbelt pool that is as optimal as possible, Fouts commented.

Grid upgrades?

There have been discussions over the years about upgrading the transmission grid, including the construction of additional intertie lines, to eliminate the single point of failure problem. And the utilities are moving towards the formation of a single transmission company to operate the grid and hence make investment in grid upgrades more practical.

Tony Izzo, general manager of Matanuska Electric, expressed concern that the benefits to be gained from forming a transmission company must outweigh the associated costs. Izzo commented that, given the current economic challenges that the state faces, there are questions over how much should be spent on grid upgrades. In 2013 the Alaska Energy Authority issued a report suggesting upgrades, including duplication of the interties to the Kenai Peninsula and Fairbanks, at a total cost of more than $900 million. Izzo said he could not envisage coming remotely close to being able to justify that level of expenditure in the current economic climate.

Full use of new power plants

In response to commissioner questions about possible ratepayer concerns that, under economic dispatch, utilities would not make full use of some of the new generation capacity built in recent years at considerable cost, Fouts said that all of the new generation capacity would be required. The various units would all be running, although different units might run more than others, depending on their relative efficiencies.

Mark Johnston, general manager of ML&P, commented that the investments in the generation units continues to be needed and that the selling point for the new pooling arrangement is that electricity consumers will end up saving money.



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