What is the solution?Lawmakers listen to views on management of the Railbelt transmission grid Alan Bailey Petroleum News
The limitations and risks associated with the Railbelt power grid, the aging electricity artery that connects Alaska communities from Homer in the southern Kenai Peninsula north to Fairbanks in the Interior, have for several years formed the subject of lively debates and not too many decisions. And on Sept. 5, presumably in anticipation of next year’s legislative session, the state Legislature convened an energy roundtable in Anchorage, to again review the various issues relating to the grid and various people’s views on how those issues might be addressed.
AEA study During the roundtable Gene Therriault, deputy director, statewide energy policy development, for the Alaska Energy Authority, or AEA, overviewed a report that his organization published in 2013, recommending major upgrades to the Railbelt grid at an estimated cost in excess of $900 million. Key components of those recommendations included major upgrades to de-bottleneck the supply of relatively cheap power from the Bradley Lake hydropower facility in the southern Kenai Peninsula; some improvements to the transmission system between Anchorage and the Matanuska-Susitna Valley; and major upgrades to the transmission intertie between the Matanuska-Susitna Valley and Fairbanks.
The report said that the recommended upgrades would result in electricity cost savings in the range of $146 million to $241 million per year. The savings would come primarily from what the professionals refer to as “economic dispatch,” the ability at any instant in time to use the cheapest power generation source available anywhere on the grid.
ARTCEC But the utilities have said that, having recently put major funding into building several major new power generation facilities, they do not have the financial wherewithal to pay for major transmission system upgrades. Four of the utilities, Chugach Electric Association, Matanuska Electric Association, Golden Valley Electric Association and Seward Electric, are members of the Alaska Railbelt Cooperative Transmission and Electric Co., or ARCTEC, an organization formed as a vehicle to move towards the pooling of resources and for seeking funding for grid upgrades.
Currently six Railbelt utilities separately manage different sectors of the grid.
David Gillespie, chairman of the ARCTEC board, told the meeting that the big cost savings achievable from economic dispatch form the prime motivation for both upgrading the grid and unifying the way in which the grid is managed. And everybody using the system should be able to access the system on the same terms as everyone else, regardless of who owns what, Gillespie said.
“I think of the transmission system as an enabler, so that economic generation projects can get built in the right places under whatever the right economic and commercial terms might be,” Gillespie said.
Under an appropriate management model, factors such as the “pancaking” of transmission rates, the layering of rates for power carried from one region of transmission jurisdiction to another, could be eliminated. Pancaking clouds the true economics of the grid, preventing energy flowing to and from its optimum locations, Gillespie said.
Need for independence Gillespie said that, when it comes to unified management of the grid, the ability of the managing authority to act independently from any specific interest in some individual component of the system is critical for trust in the management arrangements.
There are proven, successful ways of doing this in operation elsewhere in the United States, Gillespie said. And there have been many examples in the past of the Railbelt utilities working together towards a common goal, such as the implementation of the Bradley Lake power station, he said.
But, in transitioning from a fragmented grid management and ownership situation, as at present, to a unified management model, there will be both winners and losers in terms of how the grid costs are distributed, Gillespie said. And Gillespie cautioned that there are no examples from the Lower 48 of unified grid management being achieved without it being mandated. Self-interest gets in the way of voluntary agreements, he said.
Gillespie also warned that, in changing the management structure of the grid, conducting an effective transition, respecting the myriad of existing contracts and agreements between entities, would be especially complex and time consuming.
Municipal Light & Power James Trent, general manager of Municipal Light & Power told the roundtable that his utility agrees with the principle of better coordinating the operation of the transmission grid.
“ML&P is interested in the Railbelt’s formation of some kind of uniform identity,” Trent said.
But, saying that his primary obligation is to keep the lights on in his utility’s region, Trent expressed strong opposition to the mandating of a governing body for the grid, preferring instead some form of coordinated power pool in which individual utilities would voluntarily contribute their excess power to other users of the grid on a day-to-day basis.
ML&P largely generates its own power using gas-fired power stations.
“Our rates are currently the lowest in the entire Railbelt and we need to keep them that way,” Trent said.
Homer Electric Harvey Ambrose, director of power, fuels and dispatch for Homer Electric, said that his utility is interested in the potential for establishing a management organization for functions such as maintaining the transmission assets, setting a single transmission rate across the system and operating a voluntary energy market. However, he expressed caution about whether management change is needed, given the stability of Railbelt electrical loads and the somewhat static nature of the grid layout.
Ambrose described a series of upgrades that Homer Electric has made to its transmission system, with assistance from state grants, and commented that the utility has filed a proposed transmission tariff that would allow open, non-discriminatory access to the Homer Electric system. While not necessarily opposed to proposals to unconstrain Bradley Lake power, he expressed concern that the upgrades proposed in the AEA study are maybe gold plated, assuming a need for 100 percent availability of Bradley Lake power along the entire Railbelt at all times. He pointed out that the power capacity of the electrical intertie between the Kenai Peninsula and Anchorage is currently more than double Bradley Lake’s output, on average over a year, suggesting the existence of plenty of capacity to carry Bradley Lake power north.
Golden Valley Electric Mike Wright, vice president for transmission and distribution for Golden Valley Electric, the utility for the Fairbanks region, said that the real solution to the energy problem is the provision of cheap natural gas along the entire Railbelt, to balance out the generation costs. He said that his utility supports a current Regulatory Commission of Alaska study into different management options for the Railbelt grid. But he also cautioned against placing too much dependence on a single very large power generation facility in the grid - if that unit were to fail it could black out the entire Railbelt, he said.
For similar reasons, Wright expressed concern about Fairbanks being dependent on obtaining power through the single transmission intertie from Southcentral Alaska, even if that intertie were to be beefed up. Golden Valley Electric has its own power generation facilities in the Alaska Interior, but buys some power from Southcentral. And some of the potential power cost savings identified in the AEA study assume the shipping of relatively cheap power north through the intertie to Fairbanks, he pointed out.
Wright said that unconstraining power transmission from Bradley Lake would enable his utility to make more use of cheap power from the hydropower plant during periods of peak power demand. He also commented that there is a project in progress that plans the shipment of liquefied natural gas from the North Slope to Fairbanks for heating buildings and generating power.
And Golden Valley is in the process of re-commissioning a mothballed coal-fired power plant at Healy, on the north side of the Alaska Range. Once that plant comes on line, the utility will become almost self-sufficient, Wright said.
Wright also cautioned that future distributed power generation technologies may at some time render current concepts for power transmission obsolete.
Chugach Electric Bradley Evans, CEO of Chugach Electric, commented that “fuel is king” and that the transmission system allows people to move benefits of lower cost resources around the Railbelt while also supporting spinning reserves, the pool of reserve power capacity that can kick in if there is a problem with a power plant somewhere. There are questions over how to obtain more benefit from the grid and how to become less dependent on a single energy source, he said, also commenting that the grid needs the flexibility to be able to handle renewable power sources and power supplies from independent producers.
Evans said that, with increasing power generation complexity, there is a need for economic dispatch and that gaining as much benefit as possible from the grid requires a tighter organization than a loose power sharing arrangement.
He also commented that one reason for unconstraining power supplies from Bradley Lake is to reduce the significant and expensive transmission losses that result from limitations in the current transmission routing. And the current transmission intertie is currently fully loaded, making is impossible to obtain spinning reserves from the hydropower facility, he said. He also commented that it is necessary to make variable use of the hydropower, rather than assume a constant, average supply.
Joe Griffith, CEO of ARCTEC and general manager of Matanuska Electric, re-affirmed that ARCTEC and Matanuska Electric support establishing a unified management structure for the grid.
“We have to get down to the nuts and bolts of this,” Griffith said. “Hope is not a strategy … we have to deal with what’s needed today.”
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