At what cost?Railbelt utilities comment on valuable but expensive grid upgrade ideas By Alan Bailey Petroleum News
The six electricity utilities that operate the Alaska Railbelt power grid have responded to ideas presented by the Alaska Energy Authority, or AEA, on needed upgrades to the grid, saying that, while the AEA concepts have much merit, the utilities do not have the means to fund the more than $900-million price tag that AEA has estimated for the upgrades. And, during an Aug. 14 public meeting of the Regulatory Commission of Alaska at which the utilities presented their comments, one of the utilities, Chugach Electric Association, requested that the commission take a pro-active role in facilitating resolution of some of the issues that the transmission grid upgrades would address.
Generation changes These issues relate to changes in Railbelt power generation arrangements.
Essentially, with Homer Electric Association bringing new gas-fired power generation facilities on line on the Kenai Peninsula; with Matanuska Electric Association building a new gas-fired power station at Eklutna, north of Anchorage; and with Chugach Electric Association and Municipal Light & Power having recently started up a new gas-fired power plant in south Anchorage, replacing an aging power plant at Beluga on the west side of the Cook Inlet, there are major convulsions underway in the arrangement of points at which power is injected into transmission grid. And with those convulsions come issues around the efficient transmission of power to places where it is needed and around the arrangements for back-up power, or “spinning reserves,” to maintain continuity of power supplies should a power plant suffer an unplanned outage.
“There are going to be some real issues that will crop up quite quickly,” Mark Johnson, corporate counsel for Chugach Electric Association, told the commission.
Commission authority Johnson told the commission that Chugach Electric thinks that under state statutes the commission has the authority to step in and help find solutions to the pending problems with the transmission grid.
“We also believe that the commission fundamentally has the authority and the powers to help shape solutions to the institutional problems that are now coming to the forefront,” Johnson said.
Bradley Evans, CEO of Chugach Electric, said that one significant concern is the impact of the re-alignment of the power generation facilities on the aging operating protocols and associated technologies that the utilities have agreed amongst each other for preventing power outages — as electrons are re-routed around the transmission network, what changes are needed in arrangements for the pooling of generation capacity and in other mechanisms designed to maintain reliability standards, Evans questioned.
Bradley Lake All of the utilities appeared to agree that a major concern is future access to power delivered from the state-owned Bradley Lake hydropower facility in the southern Kenai Peninsula, an important and relatively cheap source of power for the Railbelt. New generation coming on line on the peninsula will create bottlenecks for the transmission of power from Bradley Lake, potentially limiting the amount of hydropower that can be delivered and causing the hydropower electrons to be channeled though less than optimum transmission routes.
Mike Wright, vice president of transmission and distribution for Fairbanks-based Golden Valley Electric Association, or GVEA, told the commission that the availability of Bradley Lake power delivered through a power transmission intertie to Fairbanks is of particular importance in minimizing power costs for his utility. Although GVEA enjoys adequate and reliable power generation within its own region, a significant portion of that generation capacity comes from highly expensive oil-fueled generators, Wright said.
Wright also commented that future constraints on the routing of power from Bradley Lake would likely increase transmission losses, thus decreasing the efficiency with which the hydropower could be delivered and hence increasing the cost of the power.
Line to Beluga One major component of the AEA recommendations, a component characterized as “deconstraining” Bradley Lake, addresses the Bradley Lake issue primarily through the construction of a new subsea high voltage direct current transmission line between the northwestern Kenai Peninsula and Beluga, on the west side of the Cook Inlet. This line would connect to a Chugach Electric transmission line between the utility’s old Beluga power station and Anchorage.
And a prime purpose of the AEA recommendations is to tackle the notorious fragility of the Railbelt grid, with single points of failure in remote lines connecting different regions that the grid serves. The subsea line to Beluga would eliminate one of those single points of failure — the dependence on a single transmission intertie that runs along the Turnagain Arm — by providing a second transmission route between Anchorage and the Kenai Peninsula.
Other components of the recommendations consist of increasing the capacity of the northern part of the transmission grid and activating an unused transmission line segment between Anchorage and Eklutna.
But while in general the utility executives at the RCA meeting endorsed AEA’s desire to make the grid more reliable, two of the executives expressed caution that any plans for introducing redundancy and duplication into the transmission arrangements need rigorous cost-benefit analysis. Wright said that ensuring transmission reliability in some sections of the grid through effective transmission line maintenance would likely prove more cost effective in preventing power outages that duplicating the transmission lines. And Brad Janorschke, general manager of Homer Electric Association, said that, given the lack of a robust transmission system between different parts of the region, the Railbelt had for 50 years depended on distributed generation, with power plants located relatively close to electricity demand centers.
How funded? And the executives questioned who would meet the nearly $1 billion dollar bill that AEA estimated for the transmission upgrades.
“It’s a number so large that no-one in the state has sponsored that kind of investment going forward,” said Jim Posey, general manager of Municipal Light & Power, adding that the State of Alaska should help bear the cost of deconstraining Bradley Lake, given the state’s ownership of the hydro facility.
AEA has estimated potential annual cost savings of $146 million to $241 million from its recommendations, primarily from the more efficient use of power generation facilities. Evans said that, while these benefit figures require further careful scrutiny, they are too large to ignore. But, because the benefits would come from cost savings rather than increased revenues, the benefits could not be used to service any debt raised by the utilities to fund the upgrades, he pointed out.
Economic dispatch AEA thinks that much of the benefit would come from “economic dispatch” — the unified management of power transmission around the beefed up and highly reliable grid — with the ability to switch rapidly between different power sources along the grid to maximize generation efficiency and minimize power costs. But achieving that objective and overcoming economic obstacles for upgrade projects would likely require unified operation of the grid, rather than the segmentation of the grid between multiple utilities, as at present, Evans said. As things stand, it is difficult or impossible to achieve agreement among the utilities over a project that, for example, only benefits one utility but brings net benefits to the system as a whole, he said.
Organizational model Brian Hickey, Chugach Electric executive manager, grid development, presented a possible organizational model, used in several places elsewhere in the United States, in which an “independent system operator” would operate the entire grid, dispatching power around the grid, operating a market for power delivered to the grid and managing upgrade projects. A second entity, a transmission company, probably managed by the interconnected utilities, would operate and maintain some of the facilities, recovering its costs through the system operator. The system operator would in turn be able to recover its costs, including the costs of grid upgrades, through the utilities, Hickey said. Those costs would presumably be offset by savings in the cost of the power that the utilities would buy.
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