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RCA wants Fire Island wind power hearing Says that Chugach Electric has not provided enough information to answer concerns about impact of wind power on Southcentral grid Alan Bailey Petroleum News
Buffeted by a gale of comments and questions over Cook Inlet Region Inc.’s proposed sale of power to Chugach Electric Association from a planned wind farm on Fire Island, offshore Anchorage, the Regulatory Commission of Alaska has decided to conduct a hearing into CEA’s purchase agreement for Fire Island power.
“We cannot approve the power purchase agreement based on the existing record,” the commission wrote in an order dated Aug. 8. The commission is inviting various interested parties to participate in the hearing and says that it will expedite a final decision in the matter. CEA and CIRI had requested a Sept. 15 deadline for a decision, to enable construction of the wind power facility to be done in time to secure a federal grant for the project.
Cost concerns In the course of lengthy negotiations between CIRI and various Alaska Railbelt power utilities, the utilities have expressed concern with the initial cost of the wind power, and with the cost and challenges associated with integrating Fire Island wind power into other power sources in the grid.
The integration issues arise from the fact that wind power is subject to the vagaries of varying wind strengths, with the resulting fluctuations in power output having to be balanced from other power sources. The spare generation capacity needed to balance the wind power fluctuations will cost money to maintain and operate.
CIRI has played down the integration issues, saying that the power output from Fire Island would constitute a relatively small portion of the Railbelt grid’s overall generation capacity. And, although CIRI accepts that the initial cost of power from Fire Island would be higher than the cost of power from other sources, the corporation has said that stable pricing from the renewable wind energy would result in long-term cost benefits. However, CEA is the only one of the six Railbelt power utilities to have thus far signed a Fire Island power purchase agreement. And, with the lack of multiple customers for its project, CIRI has scaled down its Fire Island plan.
ML&P statement Anchorage utility Municipal Light & Power, a division of the Municipality of Anchorage, has filed a statement with RCA, spelling out in some detail the problems that it sees with the prospect of CEA purchasing power from the Fire Island wind farm. Issues associated with CEA’s integration of wind power would likely have the knock-on effect of increasing the cost of ML&P’s power, wrote ML&P Manager of Regulatory Affairs, Daniel Helmick, in the ML&P statement to RCA. Before RCA approves CEA’s Fire Island power purchase agreement CEA must file a specification of how it plans to integrate Fire Island power into its operations, with a requirement that CEA eliminate, if possible, any resultant cost to ML&P; CEA should compensate ML&P for any unavoidable cost repercussions, Helmick wrote.
Helmick said that CEA would probably balance the fluctuating output from Fire Island by making rapid adjustments to the power output from a new combined-cycle, gas-fired power plant that CEA and ML&P are jointly building in south Anchorage. Although the new gas-fired plant would be capable of sustaining the required power fluctuations, the resulting operation would make less than optimal use of the plant, with increased wear and tear on the plant also increasing the plant maintenance costs. The end result would likely be an increase in the cost of power from the plant, with part of that cost passed on to ML&P as a joint plant owner and as a buyer of power from the plant, Helmick wrote.
The use of CEA’s existing gas-fired power plants to balance the Fire Island power fluctuations would be relatively expensive because of the inefficiencies of those plants, Helmick wrote.
Gas contract issues In addition, contracts for natural gas supplies in Southcentral Alaska do not include the kind of flexibility in supply rates that would be needed to support required short term fluctuations in power from a gas-fired power station — divergences from prescheduled gas deliveries incur penalty payments, Helmick wrote.
And, although CEA and ML&P both obtain power from the Bradley Lake hydroelectric power station in the southern Kenai Peninsula, it would be difficult for this power station to change its output quickly enough to match wind power fluctuations, Helmick wrote. Moreover, any use of Bradley Lake to balance out shortfalls in power supplies from Fire Island would adversely impact the ability of utilities other than CEA to purchase Bradley Lake power, thus impacting the cost of power for those other utilities, he wrote.
Helmick also questioned the power cost calculations in the CEA power purchase agreement, saying that the purchase agreement understates the all-in cost of integrating Fire Island power into CEA power supplies.
CEA: net benefit CEA, in a subsequent filing with RCA, said that an analysis of the future cost of power had indicated a net benefit to purchasing power from the Fire Island wind farm. Initially, CEA’s customers’ bills would increase by about 2 percent when Fire Island comes on line but within seven to 11 years wind power would render CEA’s electricity less expensive than otherwise, as gas prices rise.
CEA said that it is planning to use the Cooper Lake hydroelectric power station in the central Kenai Peninsula, a power station over which CEA has full control, to balance fluctuations in Fire Island power. As fallback positions, CEA could fluctuate the power output from its share of the Bradley Lake facility or from whichever of its gas-fired power stations are in operation at the time, the utility wrote.
A scaling down of the Fire Island power plant from 52 megawatts to 17.6 megawatts, as a consequence of CEA being the only Fire Island customer, has also resulted in a situation where CEA can contain the wind power integration costs using its own resources, with no additional impact on the operation of the new south Anchorage gas-fired power plant, CEA said.
And CEA said that it is completing a study into its wind power integration arrangements and is willing to file the results with RCA.
However, the commission said in its Aug. 8 order that it does not think that CEA has responded adequately to questions raised over its power purchase agreement and that a hearing is required.
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