Providing coverage of Alaska and northern Canada's oil and gas industry
April 2019

Vol. 24, No.14 Week of April 07, 2019

RCA reviews power generation efficiency

Assesses data provided by utilities on economy energy sales between each other to enable use of most energy efficient facilities

Alan Bailey

Petroleum News

During a March 27 meeting of the Regulatory Commission of Alaska the commissioners heard and discussed a staff presentation on data relating to energy sales between the six Alaska Railbelt electric utilities. The utilities participate in what are referred to as economy energy sales, selling power to each other, to make use of efficient power generation while also ensuring that their power supply requirements can be continuously met.

The presentation came in the context of the RCAís desire that the utilities implement merit ordered economic dispatch, a procedure whereby the utilities would pool their generation facilities and continuously use the most efficient available units. The idea is to minimize the generation costs that are passed onto electricity consumers. This is one of several initiatives that the RCA is facilitating toward a more unified approach to the operation of the Railbelt electrical system.

Evolving situation

In 2017 the three Southcentral Alaska utilities - Chugach Electric Association, Municipal Light & Power and Matanuska Electric Association - announced an agreement to implement economic dispatch across their service areas. The utilities developed protocols for the implementation and conducted some testing of the arrangements. However, all of this came to a halt in 2018 after Chugach Electric embarked on a project involving the purchase of ML&P. Chugach Electric said it was not realistic to try to proceed with the economic dispatch initiative in parallel with dealing with the complications of the ML&P purchase. Moreover, Chugach Electric has said that its merger with ML&P would, in effect, enable economic dispatch across those two utilitiesí service areas. During the March 27 meeting, Tony Izzo, CEO of Matanuska Electric Association, commented that MEA stands ready to recommence the economic dispatch project, once it becomes possible to proceed again.

The RCA commissioners have expressed their frustration with the hiatus in the economic dispatch progress. They ordered the utilities to provide data relating to economy energy sales, to enable an assessment of the extent to which these sales are moving the energy efficiency pendulum towards the economic dispatch model.

More sales, lower prices

James Layne, RCA utility engineering analyst, told the commissioners that the data indicates that, excluding the impact of the startup of Golden Valley Electric Associationís Healy 2 coal fired power station in the third quarter of 2018, the amount of energy transacted through economy energy sales had increased from 12.5 percent to 15 percent between 2017 and 2018. At the same time, the price paid for this energy tended to decrease.

Layne also commented that the Healy 2 startup had caused a significant change in the pattern of economy energy sales: GVEAís purchase of power from other utilities had dropped to almost zero following the startup.

Also of interest is the heat rate of the power generation used. The heat rate is a measure of the amount of energy used to generate power, relative to the energy in the generated electricity: the lower the heat rate, the more efficient the generation. The data show that the average heat rate of power generation used in the Railbelt dropped slightly between 2017 and 2018, an indication that the utilities are working together to generate power with the most efficient units available.

One anomaly in this picture is the third quarter of 2018, when Healy 2 came on line. Healy 2, with a relatively high heat rate, reduced the overall power generation efficiency in that quarter.

Capacity usage

Layne also presented data showing the extent to which the available capacity was used from the two most efficient gas-fired power plants on the grid: the Southcentral Power Project and ML&Pís Plant 2A. There is no obvious pattern in this data, and the capacity factors varied greatly between percentages in the 60s and percentages in the high 80s. Intuitively, these factors should be overall higher in an economic dispatch arrangement, but it would be difficult to say what to expect without running models of the economic dispatch system, Layne commented.

Another issue is the sale and purchase of spin capacity, the capacity that is available as backup, should planned generation not be available. There were many fewer spin transactions in 2018 than in 2017, and the majority of those transactions in 2017 were between GVEA and MEA. Ed Jenkin, director of power delivery for MEA, explained that this apparent anomaly resulted from the manner with which MEA purchases power from ML&P - the purchase of power from ML&P can enable MEA to take a generation unit offline, thus making that unit available for spin capacity.

One oddity in the data is an observation that during three months MEA purchased power from ML&P while also selling power to Chugach Electric at a higher price. This appears to have been a result of factors such as the availability of specific power generation facilities.

Increased cooperation

Commissioner Anthony Scott commented that the data suggest that there has been an increase in cooperation between the utilities in using the most efficient power generation. But, while some aspects of the data are reassuring, there is still concern about the situation regarding economic dispatch implementation. Scott proposed a motion to require the continuation of collection of the power generation data on a quarterly basis, and to publish the continuing results of analyzing this data. The motion was carried.

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