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Chugach Electric update
Southcentral utility reports to the RCA on the evolving electricity situation
Alan Bailey for Petroleum News
In a June 25 meeting of the Regulatory Commission of Alaska Chugach Electric Association, the Anchorage based electricity utility, reported on the current electricity supply situation and the various initiatives and projects that the utility is engaged in. Among the topics presented, the utility talked about its sources of electrical power, pending shortfalls in Cook Inlet natural gas supplies, its generation diversification initiatives and improvements to the electricity transmission line connecting Anchorage to the Kenai Peninsula.
Gas fueled power generation Currently the utility obtains nearly 80% of its power from gas fueled generation, in particular through the Southcentral Power Project power station in mid-town Anchorage and the George M. Sullivan plant off the Glenn Highway. The utility also still operates the older Beluga Power Plant on the northwest side of Cook Inlet. However, this plant is now only used for contingency situations, to back up other more efficient power supply options, Andrew Laughlin, Chugach Electric chief operating officer, told the commission.
The remaining 20% of the utility's power comes predominantly from wind energy and hydropower.
Al Rudeck, Chugach Electric chief strategic officer, told the commission that the utility obtains 50% of its gas from the Beluga River gas field, in which Chugach Electric has a two-thirds working interest ownership. The remainder of the utility's gas supplies come from Hilcorp Alaska.
'Ownership of the BRU continues to be of very strategic importance to Chugach,' Rudeck said. 'Member savings from BRU production, comparing it to the price of our Hilcorp contract in 2025 alone, have been over $5.4 million.'
In addition, the Beluga River field was the top producing gas field in the Cook Inlet basin last year and has continued as the top producer this year, Rudeck said. Chugach Electric has been talking with Hilcorp about the future possibility of drilling into a deeper potential gas resource below the current field, but at present no plans for doing this have been finalized, Rudeck said.
Chugach Electric has updated its power supply dispatch center and built a new control center, to act as a backup in the event of a problem with its normal dispatch center, Dustin Highers, vice president of corporate programs, told the commission. The utility is also consolidating its current two dispatch centers, dating back to the merger with Municipal Light & Power a few years ago, into a single dispatch center adjacent the Southcentral Power Project facility, Highers said.
Pending gas supply shortages Along with other Railbelt electricity utilities and Enstar Natural Gas Co., Chugach Electric is having to deal with issues that arise from pending shortages in gas supplies from the Cook Inlet basin. As part of its risk management strategy to deal with this situation, Chugach Electric has entered into a gas underlift agreement with Hilcorp. Under this agreement, 80% of any Hilcorp gas volume underlifted from the field by Chugach Electric will be supplied by Hilcorp during a 48-month period following the expiration of the utility's contract with Hilcorp on March 31, 2028.
In addition, Chugach Electric now has a gas exchange agreement with Marathon Petroleum Co., owner of the oil refinery at Nikiski on the Kenai Peninsula, to supply 1 billion cubic feet of gas per year to Marathon until March 31, 2028, and then recover all of that gas from Marathon over the subsequent 36-month period, Rudeck said, characterizing this agreement as a form of free gas storage.
LNG importing Given the pending shortfalls in natural gas supplies from the Cook Inlet Basin, Chugach Electric has been working with Hilcorp affiliate Harvest Alaska and Marathon Petroleum on a project designed to convert Marathon's existing LNG export facility on the Kenai Peninsula into an LNG import facility. The facility has long been mothballed for the export of LNG, given declining gas supplies from Cook Inlet.
'Chugach will be an anchored customer for Harvest LNG import and regassification services,' Rudeck said. Harvest will own, develop and operate the terminal and related infrastructure, he said. Harvest's front-end engineering design work is underway, with an expectation that LNG importing will be able to start in the second half of 2027, Rudeck said.
Matthew Clarkson, Chugach Electric chief legal officer, commented that since there is a plan to expand the facility somewhat, there is a question over whether the requisite National Energy Regulatory Commission permitting will trigger the need for a full-blown National Environmental Policy Act process.
Rudeck commented that, given the steps that the utility is taking, Chugach Electric feels well positioned to meet its gas needs, both near term and in the medium to longer term.
Gas storage Gas storage has also become a very important component of the gas supply situation, in particular for maintaining adequate gas deliverability during the winter when demand is high, Rudeck said. And storage will continue to be important, even if liquefied natural gas is imported to bolster local gas supplies, given the potential timing of LNG deliveries, he commented.
Currently, in addition to storing gas in the Cook Inlet Natural Gas Storage Alaska facility on the Kenai Peninsula, Chugach Electric is discussing with Hilcorp the potential to use Hilcorp's gas storage facility in its Kenai gas field. Chugach Electric is also evaluating the possibility of storing gas in the Beluga River field.
'We've identified a (Beluga field) container that looks very promising geologically and we're evaluating the cost effectiveness of that right now,' Rudeck said.
Energy diversification In addition to its efforts to maintain adequate gas supplies for its gas fueled generation, Chugach Electric has been seeking to diversify into other energy sources, including wind and solar power. The utility currently obtains some of its power from the Eklutna Lake hydroelectric power plant, north of Anchorage, the Bradley Lake hydroelectric power plant in the southern Kenai Peninsula, the Cooper Lake hydroelectric facility, also on the Kenai Peninsula, and the Fire Island Wind Farm offshore Anchorage.
Highers talked to the commission about Chugach Electric's efforts towards further generation diversification. A primary objective of the utility is to reach a 35% reduction in its carbon intensity by 2030 and a 50% reduction by 2040, Highers said. In the short term the utility has a series of action plan goals and projects, he said. Completed to date are small solar generation facilities incorporated into the Southcentral Power Project power station and the George M. Sullivan plant. The utility also has a 40-megawatt battery energy storage system in its Anchorage campus. The battery storage enables more efficient use of the utility's combined cycle gas fueled power plants, Highers said. The utility is also under contract with the Alaska Energy Authority to use the battery system to manage oscillations in the Railbelt electricity grid, he commented.
Chugach Electric is in the process of completing the implementation of a community solar farm which has been open to subscribers and has been significantly oversubscribed by Chugach Electric members. Chugach Electric Communications Director Julie Hasquet said that the 1,540-panel solar farm has 260 members signed up to use the facility, with a waiting list of 54 members. Consequently, the utility is proposing to construct a second community solar farm at a different location, Highers said.
Upcoming projects And there are a number of other energy diversification projects in the planning stage. One of these is a potential solar farm at the Beluga gas field. There are also some hydro and wind options, including the proposed Dixon Diversion expansion to the Bradley Lake hydropower facility. Also being planned is a compressed gas storage facility at the Sullivan plant, to assist with dealing with fluctuations in power supplies from renewable energy sources.
Then there are other potential projects that are at the proposal stage. These include Golden Valley Electric Association's Shovel Creek wind farm and Alaska Renewables' proposed Little Mount Susitna wind farm.
Transmission upgrade Long distance power transmission lines are also critical to Chugach Electric's operations. In particular the single transmission line connecting the Anchorage area to the Kenai Peninsula is used to serve the utility's customers in the northern Kenai Peninsula and to ship power from the Bradley Lake facility.
Laughlin talked about a multiyear project to upgrade the transmission line to the Kenai Peninsula. The upgrade involves increasing the voltage level of the line from 115 kilovolts to 230 kilovolts and improving the line's resilience to natural factors such as avalanches and rock falls. Another objective is to improve resilience to vibrations that can occur in the line, Laughlin said.
With an expected eventual cost of around $100 million, the utility has so far spent more than $57 million on the project. The project began in 2012 and is now more than 50% complete, Laughlin said. Chugach Electric is also assisting Alaska Energy Authority and Homer Electric Association with the reconstruction of a transmission line sector between the Quartz Creek and Soldotna substations in the northern Kenai Peninsula.
A drop in demand In the background to all of Chugach Electric's activities the utility is also having to deal with an overall drop in electricity demand ' annual demand has dropped by around 5% in the past year, for example. A primary driver of the reduced demand has been warmer weather, with lower than average temperatures in 2024 and higher than average temperatures in 2025, Clarkson told the commission, adding that he understands that his has been a consistent trend over a number of years.
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