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Southcentral mayors propose energy policy Tri-Borough Commission wants statewide policy, proposes mix of fossil fuels and renewable energy, suggests regulatory changes Eric Lidji Petroleum News
Following numerous attempts in recent years to better control the energy picture in Alaska, governmental leaders from three Southcentral municipalities proposed a statewide energy policy on Feb. 29 geared toward the state’s population center. (See related story on page 1.)
“Frustrated by the lack of action on the state level, we have decided to act on our own,” Anchorage Mayor Mark Begich said at a press conference.
Touting the report as a different approach to a wide-spread and complex problem, the members of the Tri-Borough Commission — representing the mayors of the Municipality of Anchorage, the Matanuska-Susitna Borough and the Kenai Peninsula Borough — believe this policy, if implemented by the state, would address the price, supply and use of energy in Alaska through a market driven approach, as opposed to government subsidies.
“Specifically, the goal of this document is to establish a logical process to start addressing Alaska’s energy issues,” said Bill Popp, president of the Anchorage Economic Development Corp. and member of the task force commissioned to create the policy.
The policy assumes fossil fuels will continue to fill most of the energy demands of Southcentral Alaska for the near future, but should be augmented by renewable energy, conservation measures and changes to the regulatory structure governing the industry.
Although local governments commissioned the policy, an 11-member task force pulled mostly from the private sector, including oil companies, economists and consultants, utilities and renewable energy experts, created it.
Under just some of the 16 goals of the policy, 30 percent of the electricity generated in the Railbelt by 2018 would come from renewable resources, all publicly funded construction projects would budget energy usage for the life of the building and the state would establish a “School of Energy” at the University of Alaska to study everything from renewable resources to new ways to extract fossil fuels.
Southcentral is not the state While Southcentral Alaska is home to 62 percent of the state’s population, as well as the economic headquarters of several major industries and the base of Cook Inlet oil and gas operations, the region is not beset by many energy-related challenges facing other parts of the state.
And the proposed policy doesn’t address those challenges either.
“It is not designed to be a one-size-fits-all statement for the entire state of Alaska,” Popp said. “It is designed specifically for the Southcentral region.”
For instance, rural Alaska, which covers everything from remote Arctic villages to isolated ocean islands, faces the highest energy costs in the country, often triple the rates paid by urban Alaskans. The task force decided not to tackle those problems, calling them “too complex and unique to be addressed by the Tri-Borough Commission.
Still, Southcentral Alaska faces some unique challenges of its own.
Natural gas production in Cook Inlet is in decline, and several projections indicate a supply gap in the near future, as reserves drop below the volumes needed to keep industrial users in business.
“We saw the tip of the iceberg with the closure of the Agrium fertilizer plant in Kenai,” Begich said.
The Kenai Peninsula Borough is watching this decline happen, said John Williams, mayor of the Kenai Peninsula Borough.
Williams described a recent tour of a new Korean-built tanker designed specifically to deliver crude oil from the Sakhalin oil field in far-east Russia to the Tesoro refinery in Nikiski.
“What it tells us is that we’re not following through as an energy producing state by considering our needs for the future,” Williams said.
To address the needs of disparate parts of the state, Popp said the task force hopes the governor and the state Legislature will combine the proposed Tri-Borough Commission policy with energy plans coming out of other regions of the state.
“What’s being presented today is a piece of the puzzle that can be woven in with these other proposals to help formulate the foundation of a statewide energy policy,” Popp said.
Previous efforts Despite the sense many, including the Tri-Borough Commission, have about a lack of progress on the issue, the energy dilemma in Alaska has not been ignored.
If anything, it suffers from an overabundance of reports and plans.
Efforts on a state and regional level and among the public and private sectors have addressed similar topics in recent years, from the often combative attempts of Railbelt utilities to unite in replacing aging generation and transmission infrastructure, to private-sector attempts in Fairbanks to bring down energy costs in Alaska’s northern hub, to a recent report from the Anchorage Chamber of Commerce called “Hope is not a Strategy.”
Popp and Begich insisted this new attempt is different.
“The document presented today is not a plan. It is a policy — and a set of goals flowing from that policy — to kind of kick start the issue for Southcentral Alaska,” Popp said.
Begich said many previous efforts revolved around specific projects, but this policy would take those projects and “incorporate (them) into a whole integrated plan.”
Those projects include increased production of traditional fossils fuels like crude oil, natural gas and coal; unconventional fuels like heavy oil and gas hydrates; a gas pipeline from the North Slope; and nuclear power.
But the proposed policy also revives several long-discussed and often-studied renewable energy projects: from wind farms on Fire Island and in Healy, to hydroelectric dams on the Susitna River or Lake Chakachamna, to a geothermal project near Mount Spurr, to tidal power in the Knik Arm of Cook Inlet, as well as solar power and biomass.
“We have tremendous opportunity here,” said task force member Eric Yould, a principal with the Wood Canyon Group Inc. “The biggest challenge is going to be deciding what is the best mix of these options for us for the long term. More specifically: How do we all work together to bring these options forward? I think that’s going to be the real challenge.”
One way is through regulations, according to task force member and energy consultant Tony Izzo, formerly of Enstar Natural Gas, who said Alaska suffers from “an inconsistent application of policy from different regulatory bodies” and should re-evaluate regulations to fit “a single vision.” For example, Izzo suggested utility rates based on conservation rather than volume.
Next steps The Tri-Borough Commission presented an early version of the policy to Gov. Sarah Palin, who Begich described as “thankful and supportive” and showing a “strong willingness” to cooperate, and plans to bring the completed document to state lawmakers during the current legislative session.
Begich insisted that the policy must not only be approved, but also approved in conjunction with other regional plans and approved during this legislative session.
But even if lawmakers began considering the policy immediately, they would have less than 40 days left in a regular session already reduced by a month to 90 days.
“The Legislature and the governor need to make that happen and I think what we’re saying is, ‘Here’s a big chunk of work already done,’” Begich said.
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