Gas contract for MEA is good news for Valley

After more than two years of uncertainty over whether Matanuska Electric Association’s new Eklutna power generation plant would be fueled by natural gas or diesel, we’re pleased to see it’s the former.

Since its approval in 2011, the $304 million project has been proceeding on pace to be ready to supply electricity to MEA members Jan. 1, 2015. Up until last week, however, the electricity cooperative hadn’t secured a source of natural gas to fuel the 10 large Wartsila engines that will soon be installed at the site.

Although the engines are capable of running on diesel fuel, that’s far from an ideal solution for MEA or those who rely on the co-op for power. The deal with Hilcorp will provide the estimated 7 billion cubic feet of natural gas a year it will take to turn the engines, which have a capacity of cranking out 170 megawatts of power at any given time. Last year, MEA’s peak power usage came in December at 148 megawatts.

When the MEA Board of Directors first approved the project, our reporter covering the story asked then-new General Manager Joe Griffith if he was concerned about moving forward with construction without having a fuel source lined up. In what we’ve come to expect as typical Griffith fashion, his reply was straightforward and matter-of-fact, “That’s one of the things that makes me not sleep at night,” he said in March 2011.

Aside from using one of Alaska’s most abundant natural resources — natural gas — not having to run this plant solely on diesel fuel from the start is a great relief for ratepayers. Diesel fuel costs a considerable amount more than natural gas, and it doesn’t take an MIT graduate to figure out significant rate increases would come with prolonged diesel use.

We’re also glad to know that this natural gas supply from Hilcorp — the third largest, privately held petroleum exploration and production company in the United States — will all come from Alaska sources.

A point that may get lost in the general news reporting of such a significant contract that affects thousands of local residents is the contribution of Tony Izzo, MEA’s fuel supply manager. Previously, Izzo was president of Enstar, and his knowledge and contacts within the natural gas industry were invaluable in securing the contract, MEA spokesman Kevin Brown said Monday.

But Izzo isn’t resting on his laurels. While we all can breathe a little easier knowing one of the last major questions about this project has been answered, Izzo says he’s already working to secure natural gas past the March 2018 term of the Hilcorp contract.

We welcome this contract, but recognize the balancing act will likely continue for many years to come between Cook Inlet natural gas supplies and consumer demand.