Cooperation could save co-ops cash

JUNEAU — A bill making its way through the Legislature aims to reduce electricity costs for Alaskans living along the Railbelt by creating a new group that would manage the system as one unit.

House Bill 187 and Senate Bill 105 were introduced this season, but lawmakers say that the plan is to give the utilities to spend the summer working out the details.

Julie Estey, spokeswoman for Matanuska Electric Association, said her boss, MEA General Manager Joe Griffith, has been working to create economic dispatch in Alaska’s Railbelt for 20 years.

The way it would work, Estey said, would be that when a power company like MEA needs more electricity to feed some part of its grid, the cheapest available power source at the time — a Chugach Electric Association plant, the wind farms on Fire Island, a hydroelectric dam or MEA’s power plant at Eklutna, or any number of other sources — would get routed to that demand.

There are various ways to accomplish that, but one option, Estey said, is to set up some kind of independent group to run the system. That group would have its own board of directors and its own staff, and its mission would be to administer the system fairly so that one power company isn’t given an advantage over the other.

“MEA is definitely in favor of exploring an independent system-operator concept,” Estey said.

MEA’s plant at Eklutna would probably fare well in that system, she said, since it’s unique in the Railbelt in its ability to adjust power production to meet demand.

Another idea making the rounds in electricity cooperative circles is to form an entity that would take care of transmission in the Railbelt. Electric companies break what they do into three big components: generation, transmission and distribution.

Generation is self-explanatory. But the difference between transmission and distribution is one of scale. Distribution is small scale — power running from a substation to a person’s house over relatively small lines. Transmission involves large amounts of power usually moving between communities or between a power plant and a substation. It involves big power lines on tall poles.

Right now, the Railbelt electrical system is linked between Homer and Fairbanks. But a lot of that infrastructure is aging. That’s where the idea to create a transmission cooperative, or a transco comes in.

“The reason why some folks are interested in a transco is our transmission system is pretty desperately in need of an upgrade,” Estey said.

So where do the cost savings come in? Beyond the obvious — that dispatching based on economics means cheaper day-to-day power costs — Estey said that electric companies teaming up like that also could work to negotiate lower costs for natural gas from gas producers.

MEA’s rates have been steadily climbing recently, Estey said, and 70 percent of that increase has been due to increases in the price of natural gas.

Of course, this isn’t the first time that Railbelt electric cooperatives have tried to work together. One of those efforts resulted in the formation of the Alaska Railbelt Cooperative Transmission and Electric Company. That company, referred to as ARCTEC, could play a role in this latest effort, Estey said, possibly as the vehicle that would do the economic dispatch.

That is one of many details to be hammered out as the legislation moves forward.

“It is important to state that this bill is a starting point,” said Rep. Jim Colver, R-Mat-Su. “We are starting a conversation that I hope results in a more efficient use of our power generation and transmission systems on the Railbelt. Our goal is to lower the costs of energy to consumers. I look forward to working with the (Regulatory Commission of Alaska) and engaging with all stakeholders.”

Estey said that the formation of any kind of organization is at least a couple of years out.