Providing coverage of Alaska and northern Canada's oil and gas industry
October 2021

Vol. 26, No.43 Week of October 24, 2021

Southcentral utilities make progress in pooling power generation

Alan Bailey

for Petroleum News

Southcentral Alaska electric utilities Chugach Electric Association and Matanuska Electric Association have been making significant progress in implementing what is termed a tight power pool, in which the utilities reduce the cost of electricity for their customers by jointly making maximum use of their most efficient power generation units. The ultimate objective is to combine the utilities’ service areas into a single load balancing area, in which efficient power generation is shared and continuously balanced against the varying electricity load. In an Oct. 13 presentation to the Regulatory Commission Alaska executives from the two utilities overviewed progress in achieving the tight pool.

A pooling agreement signed in August 2020 went into effect with the start of tight pooling on April 30, 2021, Mark Fouts, Chugach Electric vice president for fuel and corporate planning, told the commission. The pooling arrangements are now in a one-year transition phase, with full implementation of the single load balancing area scheduled for completion by April 30, 2022, Fouts said. Savings for each utility from the pooling arrangements up to the end of September have amounted to around $740,000.

Use of most efficient power generation

The general concept is to make maximum use of the most efficient power generation plants. In Anchorage these consist of two state-of-the-art combined cycle gas fired power stations operated by Chugach Electric: the Southcentral Power Project and Plant 2A. To the north of Anchorage MEA operates the modern Eklutna Generation Station. The two combined cycle plants work most efficiently when operating at maximum capacity. MEA’s EGS plant uses an array of gas-fueled reciprocating engines, an arrangement that enables the rapid ramping up and down of power output, to follow variations in power demand or power output from other generation facilities.

Both utilities also make significant use of hydropower, primarily from the Eklutna hydroelectric power plant, north of Anchorage, and the Bradley Lake hydroelectric power plant in the southern Kenai Peninsula. The hydropower, while relatively cheap, is subject to supply limitations related to the amount of water available in the hydro reservoirs.

Several complications

A complication in utility power pooling is the need to regulate the power supplies in response to the varying electricity load, to ensure that the voltage and frequency of the supplied power remains within required limits. In addition, the utilities need to retain what are referred to as “spinning reserves,” as contingency generation should there be an unplanned interruption in output from one of the scheduled power generation plants.

The utilities also need to be able regulate “non-dispatchable” generation resources, in particular wind and solar, which are subject to the intermittent nature of wind and solar resources.

Another complication arises from the procedures whereby either Chugach Electric or MEA can make what are called “economy energy sales” to Fairbanks based Golden Valley Electric Association. Essentially, GVEA can sometimes purchase power at attractive rates from Southcentral, for delivery to Fairbanks over the Railbelt electricity transmission system.

In addition to all of this, it is necessary to maintain an acceptable procedure for distributing the cost and benefit of the shared electricity generation between the two utilities.

Given all of the various complications, the two utilities have hired subject matter and project management experts to help develop the power pool program. Eight working committees, overseen by an operating committee, build and operate the required procedures. An executive committee from the two utilities makes policy decisions.

Operating procedures

Ed Jenkin, MEA chief operations officer, told the RCA that at this stage of the tight pool transition the utilities try to run the two combined cycle gas-fired generation plants at full capacity, while bringing generation units within the EGS facility online as required to meet demand, subject to a limitation that a minimum of three generation units in the EGS system must be in operation. The two utilities share the output from the three gas-fired plants, while each utility separately schedules the required gas supplies necessary to meet its generation needs.

“By operating in this way we do manage to avoid starting less efficient peaking units and provide a general dispatch that is more efficient and burns less gas for the combined pool,” Jenkin said.

Hydropower will become fully part of the tight pool arrangement by the end of the transition period. However, at present the hydro resources are combined for the benefit of the power pool, but with each utility setting its own targets for hydro production.

Similarly, the incorporation of spinning reserves and power supply regulation into the pooling arrangements is a work in progress, to be competed by the end of the pooling transition period. Some spinning reserves are maintained at the hydro facilities, and some in gas-fired power stations.

A single scheduling service

The operation of a tight pool clearly requires a single power scheduling service, rather than having each utility conduct its own scheduling, as in the past. During the tight pool transition period, Chugach Electric is conducting the joint scheduling, although this is expected to transition to MEA once the single load balancing area is in full operation.

Jenkin explained how the scheduling procedure operates. Each day the scheduling service develops a draft power generation schedule for the following day, based on the anticipated electricity load profile for the day. The objective is to provide the greatest value for the electricity consumers, with each utility reviewing the dispatch schedule before it goes into operation.

GVEA can request and agree economy on energy sales from either utility independently. The requirements of any agreed sales are incorporated into the generation schedule - if the resulting schedule causes any degradation in the efficiency of the pooled power generation, the utility selling the power must hold the other utility harmless while also factoring the efficiency impact into the economy energy sales price.

Obviously the actual electricity loads during the course of a day will differ to some extent from the loads anticipated in the planned generation schedule. Jenkin said that, although the utilities may be able to accommodate these differences using any available capacity in online generation units, they tend to manage load deviations using hydro resources. The objective is to conform to the planned power generation unit commitment as closely as possible, he said.

Jenkin presented data that demonstrated the operation of the tight pool arrangements, as they have been implemented to date. On Oct. 7, for example, all generation units at Southcentral Power Project and Plant 2A were in full operation for the full 24-hour period. EGS output increased in the morning, as the regional electricity load increased, dropping lower again in the late evening. Hydropower from Bradley Lake and Eklutna continued throughout.

The accounting procedure

Fouts then described the accounting procedure for the power generation, and for calculating the power generation cost savings from the tight pool. The daily savings from the pooled operations are calculated by running a model for determining the amount of fuel each utility would have used if operating independently, and then running the model for the joint dispatch arrangements. The difference in the fuel costs represents the cost savings from the power pooling for the day. The savings are equally split between the utilities. A settlement committee completes the settlement process by close of business on the following day, with an operating committee approving a monthly settlement used in billing each utility for the month. The billing process also includes a procedure for each utility to reimburse the other utility for its share of the operation and maintenance costs for each utility’s power generation equipment.

Significant benefits

For the period April through September, preliminary results, using procedures as they currently stand, indicate that total fuel cost savings from the tight pool amounted to $985,000. Operations and maintenance savings resulting from each utility’s partial use of the other utility’s generation equipment totaled nearly $500,000. The sum of these savings divided equally between the two utilities resulted in that total value of about $740,000 for each utility.

Jenkin said that next steps to be taken during the tight pool transition period include the implementation of more comprehensive scheduling software and the development of methodologies for transacting spinning reserves and power regulation. Hydropower will become part of the tight power pool. The utilities also need to develop auditing procedures for the power pool.


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