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Chugach won’t join ART
Says its focus on ML&P acquisition; also questions company as currently proposed
Alan Bailey Petroleum News
Chugach Electric Association has told the Regulatory Commission of Alaska that it will not be participating in Alaska Railbelt Transmission LLC, a company designed to operate the Alaska Railbelt electricity transmission system. Homer Electric Association, Municipal Light & Power, Golden Valley Electric Association, the City of Seward and American Transmission Co. have formed ART and have requested a certificate of public convenience and necessity from the RCA. ART requires a certificate before it can go into operation. The RCA has opened a docket to investigate the certificate request - Chugach Electric’s comments to the RCA were filed as part of that docket.
Another Southcentral Alaska utility, Matanuska Electric Association, has already told the RCA that it will not make a decision on whether to participate in ART until the completion of a due diligence review that MEA is conducting. MEA has a number of concerns about ART, including its funding mechanism, and its status with regard to the operation of some of the Railbelt transmission assets.
Unification moves Since 2015 the RCA has been facilitating moves towards more unified operation of the Railbelt grid, which is owned and operated by six independent utilities and the state of Alaska. Unification potentially involves the formation of a transmission company, such as ART, the formation of an electric reliability organization to oversee the operation of the electrical system, the enforcement of a consistent set of reliability standards and the implementation of economic dispatch across the grid. Economic dispatch involves the continuous use of the cheapest available electrical power.
The utilities have been working together on various unification efforts. They have proposed the formation of a Railbelt Reliability Council, a form of electric reliability organization, and have developed a uniform set of reliability standards. ART is obviously intended as the transmission company component of the various unification efforts.
Purchase of ML&P Chugach Electric Association is currently in the midst of trying to purchase Anchorage utility Municipal Light & Power, a transaction which, if it is completed, would in effect unify at least part of the electrical system. In its RCA filing Chugach Electric told the commission that it supports the transmission company concept but that currently the ML&P acquisition forms its primary focus.
Moreover, Chugach Electric has identified several issues that preclude it from participating in the ART at present. The utility worries that being involved with ART, a for-profit company, would compromise the utility’s tax-exempt status as a member-owned cooperative. The impact of the potential acquisition of ML&P is unknown. There is an issue regarding management authority over the means of shipping power from the Bradley Lake hydropower facility on the Kenai Peninsula, as well as uncertainty regarding the relationship between ART, Bradley Lake agreements and agreements relating to a state-owned portion of the transmission grid. Chugach Electric says that there are inconsistencies between the ART certificate application and a memorandum of understanding for the proposed Railbelt Reliability Council. And the utility worries that the proposed role of the ART may encroach on the role of an electric reliability organization such as the RRC.
Chugach Electric’s view has always been that a transmission company must be implemented in conjunction with a Railbelt Reliability Council and the pooling of power across the Railbelt electrical system, the utility told the RCA. The three concepts are all interrelated, the utility said.
Comments from REAP The Renewable Energy Alaska Project has told the RCA that it is still evaluating the details of the ART concept but that it has some initial concerns.
REAP sees benefits from the transmission company concept in terms of open access for renewable energy sources within a single electricity load balancing area. But ART, as conceived, would have the potential of exclusive authority over transmission planning, a role that should be performed by a system operator such as the RRC - the formation of a transmission company before implementation of a system operator could compromise the formation of a system operator, REAP told the RCA. The fact that not all utilities are participating in the RRC is a problem. And the utility cooperatives have different incentives and tax structures from the privately owned RRC.
It is also unclear whether the ART governing board would be sufficiently independent from the participating utilities, REAP suggested.
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