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Railbelt utilities addressing facilities Enstar, Chugach Electric, MEA, ML&P provide updates to Mayor’s Energy Task Force on rates, gas supply, requests for proposals Kristen Nelson Petroleum News
The Mayor’s Energy Task Force got updates Oct. 21 from the major Railbelt utilities - Enstar Natural Gas, Chugach Electric Association, Matanuska Electric Association and Municipal Light & Power.
Southcentral natural gas supplies were a concern when Anchorage Mayor Dan Sullivan created the task force in 2009, and an update on gas supply and rates topped the list of what the utilities were requested to provide.
Enstar
Jared Green, the newly named president of Enstar Natural Gas, said Enstar was fully contracted for its natural gas needs through the first quarter of 2018 and issued a request for proposals in early October for supply for four to five years, with an option for longer term, he said.
Enstar’s rates are based on what it pays for gas and fixed customer and service charges, with fixed charges in place since 2010, Green said. The company’s 2015 rate case calls for an increase from $13.50 per month to $14 per month in the customer charge and an increase in the service charge from 11.01 cents per hundred cubic feet to 11.42 cents beginning in November, an increase expected to average $1 per month per customer. Once the Regulatory Commission of Alaska approves the rates, a second increase would kick in with the customer charge going to $16 a month and the service charge to 13.36 cents, an additional average increase of $4.63 a month.
On the facilities side, Green said Enstar completed a compressor upgrade, added more than 74 miles of 2-inch and 4-inch main in Homer and is completing installation of more than 6 miles of 2-inch and 6-inch main along South Big Lake Road.
Future work includes pigging two lines across Cook Inlet which deliver gas to Anchorage. They have been in place since 1961 and haven’t been inspected since installation. Green said the pigging would help Enstar better understand the condition of the lines. If they need replacement it would be a huge cost, he said, but that won’t be known immediately because Enstar first has to get the lines ready to be pigged.
Chugach Electric Lee Thibert, Chugach Electric Association’s senior vice president of strategic planning and corporate affairs, said the fuel and purchased power component of Chugach’s billing grew as a component of customer bills from 2000 through 2012, while beginning in 2013 the base rate component grew faster. He showed a graph of monthly residential bills which averaged $60 a month in 1993, grew to more than $100 this year and are expected to approach $120 in 2015.
The base rate increases reflect Homer Electric Association leaving the system in 2014 and Matanuska Electric Association leaving in 2015, resulting in fewer customers covering the same base costs.
Chugach Electric’s gas supplies are contracted through the first quarter of 2018, Thibert said, with a request for proposals going out in November. He said Chugach hopes to have longer-term contracts, but Hilcorp, the major Cook Inlet natural gas producer, wants a just-in-time contract window of three to five years.
Thibert said CINGSA, Cook Inlet Natural Gas Storage Alaska, has worked well and the Hilcorp pipeline consolidations will also work well, providing a single rate and making it easier for utilities to nominate gas on a daily basis. He said there is discussion of additional compression in 2015, with backups, which would put redundancies for natural gas delivery into place for the winter of 2016.
Matanuska Electric Joe Griffith, general manager of Matanuska Electric Association, said the Eklutna Generation Station, nearing completion, will turn MEA from a distribution cooperative into a power producer. MEA has obtained some 80 percent of its power from Chugach Electric, the remainder from hydro.
Plans were to have the Eklutna Generation Station operational by the end of this year, but Griffith said they wouldn’t make it by Jan. 1, with only four of the 10 dual-fuel engines, natural gas and diesel, expected to be operational by the end of the year, but all 10 engines expected to be up by the first of March.
MEA is contracted for gas to run the Eklutna plant, and will provide natural gas to Chugach for an interim contract beginning Jan. 1 to fill the gap between the end of MEA’s existing Chugach contract and completion of its new plant, Griffith said. MEA also has an agreement in place with Chugach to coordinate power produced during commissioning of the Eklutna Generation Station. Transmission upgrades from the EGS to the substation near the hospital are about finished, he said, although progress from the hospital substation to Wasilla has been stalled by the Wasilla Planning Commission. MEA is working with stakeholders on alternative overhead routes into Wasilla.
Griffith said MEA is projecting an initial rate increase of 15 to 20 percent over the next 18 months driven largely by new more expensive gas contracts, and noted that a similar increase had been projected for power obtained from Chugach, but occurring a year later.
ML&P Anna Henderson, rates and tariffs supervisor for Anchorage Municipal Light and Power, told the task force ML&P is contracted for its natural gas supply through 2018 out of its one-third ownership of the Beluga River field. It also has a contract with ConocoPhillips into 2019, but Beluga will decline about that time, she said, and ML&P will be going out soon with a request for proposals.
Henderson said ML&P had a 31.25 percent rate increase due to the Southcentral Power Project, SPP, but said that was offset by reduced fuel costs, with an overall 18.52 percent retail increase to customers. However, she said the utility is looking at higher gas costs because of the decline in production from Beluga and more reliance on purchased natural gas and will file a new rate case at RCA in 2016-17 when its new Plant 2A is completed.
Eugene Ori, ML&P acting generation manager, said ML&P’s George M. Sullivan Plant 2A expansion has two combustion turbine generators similar to those at the SPP jointly owned by Chugach Electric and ML&P.
Ori said work at the new plant is expected to be substantially complete by June 2016 with final completion in September of that year.
Bobby Reese, ML&P acting line supervisor, described work required by major outages in downtown Anchorage in August, which required replacing some two and a half blocks of buried cables in the downtown area, replacing cables which were originally buried directly in the ground with cables buried in pipe. Reese said cable testing this winter is designed to catch problem prior to incidents.
Jim Trent, appointed ML&P general manager in April, said the outages were due to antiquated and failing buried cables, a symptom of the utility’s aging infrastructure and said ML&P has close to 5,000 poles in the ground and those will be examined to make sure they are safe.
Greg Eidam, ML&P operations manager, said that in addition to identifying and replacing the most critical portions of the cable direct buried some 40 years ago, ML&P has a big construction planned next year, with more cable replacement at Alaska Pacific University and the second phase of work on C Street.
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