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Questions of cost over Fire Island CIRI says that it is not liable for Chugach Electric’s costs for the preparation of tariffs for a wind farm expansion Alan Bailey Petroleum News
As Cook Inlet Region Inc. continues to promote its proposed phase two extension of its Fire Island wind farm offshore Anchorage, the company has responded to a Chugach Electric Association filing with the Regulatory Commission of Alaska. Chugach Electric had told the commission that CIRI Wind would need to cover Chugach Electric’s estimated cost of $94,000 for responding to CIRI’s interconnection request for the phase two project. CIRI has asked for tariffs for two different phase two options. Chugach Electric said that the $94,000 figure includes $49,000 for a conceptual design and cost estimate for expanding the capacity of the power transmission cables from Fire Island. Tariff request In a Nov. 28 letter to Chugach Electric, Suzanne Settle, CIRI senior director energy development, said that the electricity utility had misinterpreted CIRI’s request as an interconnection request for the phase two development. In fact, CIRI was requesting a tariff for the Fire Island expansion as a qualifying renewable energy facility under the terms of the federal Public Utilities Regulatory Policies Act, or PURPA. Under PURPA, a statute designed to encourage use of renewable energy sources, electricity utilities are required to purchase power under reasonable terms from qualifying, independent renewable power facilities. The RCA has adopted PURPA regulations in Alaska.
While CIRI Wind would accept responsibility for some interconnection costs, should the company move ahead with the Fire Island phase 2 development, Chugach Electric has no authority to impose costs on CIRI Wind for the preparation of tariff filings in association with a qualifying facility tariff, Settle wrote.
Settle also questioned the fact that Chugach Electric had told the RCA that it would not be possible to complete the tariffs for both phase two options within a 60-day deadline for responding to CIRI Wind’s tariff request. Under PURPA regulations Chugach Electric cannot override the 60-day deadline - if the utility cannot respond to the complete tariff request within 60 days, it must apply to the RCA for a waiver of the deadline, Settle wrote.
Promoting phase two For several years CIRI has been promoting a phase two expansion of its Fire Island wind farm but has been struggling to persuade any of the Alaska Railbelt electricity utilities to sign up for further wind power. Chugach Electric has been purchasing power from the existing wind farm since September 2012.
The wind power represents a source of clean energy at a predictable cost. However, the varying output of the power, as the wind strength changes, presents a cost challenge when integrating the power into the Railbelt grid - some alternative power source must counterbalance the varying wind output. In addition, the fragmented nature of the Railbelt transmission grid ownership creates issues for an independent power producer such as Fire Island in that the transmission fees for wheeling power across multiple grid segments tend to stack up or “pancake,” thus adding to the cost of the power.
Agreement with GVEA Settle told Petroleum News that in June CIRI had signed a power purchase agreement with Fairbanks utility Golden Valley Electric Association for power from the proposed Fire Island phase two. The agreement was to have run for 25 years, with an initial power price of 5.9 cents per kilowatt hour. However, the two companies had to eventually cancel the agreement after negotiations for power integration and wheeling services from Railbelt utilities failed. The difference in cost between the agreed Fire Island wind power price and the cost of the power that GVEA purchases from other utilities should have been more than sufficient to cover the integration and wheeling costs, Settle said. A 2016 filing with the Federal Energy Regulatory Commission indicated that at that time GVEA had purchased power from other utilities at an average price of 7.9 cents per kilowatt hour, while GVEA’s most recent RCA filing indicates an average price of power of 8.79 cents.
Utility comments During a September meeting of the RCA, executives from Railbelt utilities commented on the challenges that integrating wind power brings. The utilities said that their generation facilities cannot always fully counterbalance peaks in wind power output and that wind power use may erode into their ability to pool their gas fueled power generation for maximum generation efficiency.
The utilities are moving towards the pooling of their power generation and transmission system usage in an overall transition towards a more unified Railbelt electrical system. One issue to be resolved is the question of having a single operator to oversee the operation of the complete grid and to manage rules and policies for grid usage. Grid-wide policies would presumably include policies for the connection and use of power from independent power producers such as independently owned wind farms.
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