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Southcentral power pool makes progress addressing complexities
Alan Bailey Petroleum News
The three Southcentral Alaska electric utilities, Chugach Electric Association, Municipal Light & Power and Matanuska Electric Association, are making progress towards implementing the economic dispatch of generation capabilities across their service areas, utility officials told the Regulatory Commission of Alaska on June 13. Because of the complexities involved in dealing with the various issues associated with implementing the tight power pooling arrangements, implementation of the pool is taking longer than originally envisaged. However, the utilities now anticipate having the pooling agreement approved by the RCA and in operation by the end of March 2019, the officials said.
The term economic dispatch refers to procedures whereby continuous use is made of the cheapest available power generation, thus minimizing the cost of electricity for consumers. In January 2017 the three utilities formed an agreement to jointly implement economic dispatch arrangements. Implementation of the arrangements is taking much longer than originally anticipated and some stakeholders in the electrical system have expressed concern about the length of time being taken.
In 2015 the RCA recommended a more unified approach to the management of the Railbelt electrical system, including the implementation of economic dispatch. The electrical system is owned and operated by six independent utilities and the state of Alaska. The commission has been monitoring voluntary efforts by the utilities to meet its 2015 recommendations - the commission scheduled the June 13 meeting to obtain an update on progress towards economic dispatch.
A commercial arrangement The power pooling arrangement that the Southcentral utilities are developing is essentially a commercial arrangement, to enable all three utilities to make maximum use of the most efficient power generation in the region. This represents a 20-year commitment to lower energy costs through economic dispatch and marks a step change from the day-ahead planning of energy sales by which the utilities currently interchange energy, Mark Fouts, Chugach Electric executive manager for fuel and corporate planning, told the commission.
But the utilities can also buy power from and sell power to other Railbelt utilities that are not part of the Southcentral power pool. Fouts told the commissioners that, having developed procedures for operating the Southcentral pool, the utilities involved in the pool met with Fairbanks-based Golden Valley Electric Association in November of last year to discuss procedures for selling power to a party external to the power pool. That meeting confirmed complexities that had not been catered for within the power pooling procedures. In particular, each external power sale impacts the economic dispatch within the Southcentral pool, and hence impacts the economics of the pool.
By Jan. 26 of this year the utilities in the pool finally arrived at an agreement for external power sales, but the procedures involved were much too complicated, Fouts explained. So, further work was required and that has led to a feasible approach.
The Southcentral utilities now anticipate finalizing the commercial agreement and the power dispatch procedures for the power pool by the end of September. The selection and implementation of suitable computer software for operating the system, together with the training of utility staff, will likely take until sometime in November, with the RCA approval process for the new arrangements potentially starting in October, ultimately leading to the March 2019 completion date for power pool implementation.
Structure and procedures developed At this point the Southcentral utilities have determined an operating structure involving the use of a central power scheduling service, to make maximum use of the most efficient power while operating within the constraints of ensuring supply reliability, Fouts said. Supply reliability requires the availability of spare generating capacity, a constraint that means that generators cannot all run continuously at full capacity, he added.
The utilities have also developed a process for distributing between each other the benefits from the pooling arrangements. This settlement process, the most complex component of the power pool, will be overseen by a settlement process committee and will be subject to an auditing mechanism. There is a methodology for electricity pricing. And the utilities have developed a methodology for conducting the economic dispatch itself. A participants committee and an operations committee will oversee the operation of the power pool.
The utilities are now very close to completing the process of developing the power pooling agreements and procedures, Fouts said. However, the documents need to go to the utilities’ regulatory and legal staff, and before their boards, before final completion, he added.
Maximum use of efficient units In essence the power pooling arrangements would make maximum use of two highly efficient, combined cycle, gas fired power plants, both located in Anchorage, for base load power: ML&P’s Plant 2A and the Southcentral Power Project, jointly owned by Chugach Electric and ML&P. MEA owns the efficient, modern Eklutna Generating Station, which uses gas-fueled internal reciprocating engines that are especially effective for following variable electricity loads. The utilities also own several older, less efficient plants that can be used to help meet peak power demand or can act as backup systems as contingency against problems with other generation plants.
Ed Jenkin, MEA director of power delivery, explained that, under current arrangements, MEA tends to buy power from the combined cycle plants during periods of low power demand, while the other utilities tend to purchase power from MEA when demand is high, to minimize the use of old, inefficient plants.
Jeff Warner, strategic administrative coordinator for ML&P, overviewed the results of two test days, one in July 2017 and one in November 2017, in which the utilities had practiced centralized power scheduling, to assess the impact of economic dispatch implementation. Cost savings were achieved in the July test through the avoidance of any need to switch in older, less efficient equipment. During the November test ML&P’s Plant 2A was not fully operational because of maintenance activities. However, the power pooling arrangement enabled a relatively efficient use of one of the older plants, with output from that plant shared between the three utilities, Warner said.
Homer Electric’s position Larry Jorgensen, director of power, fuels and dispatch for Homer Electric Association, overviewed Homer Electric’s perspective on power pooling in the Railbelt. Homer Electric provides electricity services on much of the Kenai Peninsula and operates its own power generation facilities, including a modern combined cycle, gas fired generation facility at Nikiski. The utility’s system is connected to the Southcentral grid via a single transmission intertie that runs along the north side of Turnagain Arm. Although Homer Electric commonly enters into energy sales agreements with other Railbelt utilities, the Kenai Peninsula utility has in the past expressed reluctance to join the Southcentral power pool, primarily because of dependence on the single intertie.
As do the other utilities, Homer Electric struggles with the balance between economic dispatch and reliability, Jorgensen told the commissioners. To ensure the continuous availability of sufficient power, Homer Electric typically operates with three power sources: the Nikiski unit, some power from the Bradley Lake hydroelectric facility in the southern Kenai Peninsula and power that is available through the intertie to Southcentral. And loss of the intertie requires the startup of a second-generation unit on the peninsula.
The utility manages its use of power from Bradley Lake to optimize power generation from the Nikiski unit. And given the utility’s current constraints and assets, Homer Electric has not been able to identify any additional benefit to be gained from alternative arrangements, Jorgensen said. He commented that the only situation in which Homer Electric sees a likely benefit from participating in the Southcentral power pool would be if the Nikiski generation facility had to be shut down for some reason.
Homer Electric does support a transparent approach to economic dispatch modeling, so that people understand the choices that we make, Jorgensen said. And the utility sees some benefit in the implementation of a transmission company to operate the Railbelt transmission grid, he added.
- ALAN BAILEY
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