If there’s no power plant by 2015, the lights go out

As a member of the MEA for nearly 25 years and a person who has had the opportunity to study the Railbelt electric system in detail for over 13 years, I wish to respond to the letter by Shane Lee published April 24. Plainly stated, there is no feasible alternative to construction of a new, natural gas fueled generation plant before Jan. 1, 2015 to serve MEA’s load. It is either that, or the lights go out.

Contrary to the suggestion by Lee, MEA cannot just continue purchasing power from Chugach Electric Association. Chugach has told the Regulatory Commission that by Jan. 1, 2015, it will have retired approximately 65 percent of its current generation plant. They are doing so because that plant is worn out and outdated. It is costing ratepayers a fortune in extra maintenance and fuel just to keep the old units running until 2015.

We also cannot wait for the proposed large renewable projects to come on line. The Chakachamna hydro project developer recently announced it has not raised funds to complete studies required to determine if that project is feasible. Lee thinks spending $400 million on a new gas plant is risky, just think about the risk of spending $1.8 billion on a hydro plant next to an active volcano.

Ormat Technologies, which owns 15 of the 16 Mount Spurr geothermal exploration leases, recently published its five-year capital budget. There is no funding in that budget for exploration to determine if Mount Spurr is a viable geothermal resource. Ormat has estimated for other projects it takes five to seven years to develop a geothermal resource once successful exploration is completed. We do not have the luxury of waiting 10 more years for geothermal generation.

Nor can we wait for the Susitna hydro project. The state has estimated that it will take 17 to 20 years to develop that project, once a FERC license is applied for. That license application has yet to be filed. There is insufficient time to license and build a tidal, nuclear or coal plant before 2015, even if those technologies were to become economically and politically viable. Local wind, randomly available 30 percent of the time or less, is too unreliable without fossil fuel generation as a backup. Natural gas is the only available option.

Chugach is building new natural gas units before Jan. 2015, but only enough to continue serving its own retail customers after the MEA and Homer contracts expire. ML&P is doing the same. They are spending their money on new units because the savings in fuel and maintenance costs justify that expense. The same is true for the new natural gas units to serve MEA’s load.

With a guaranteed return of investment plus margins, Chugach and others would be willing to build the generation plant required to serve MEA’s load in 2015. However, Chugach has made it clear, to me and others, that they are not interested in building or operating a generation plant in MEA’ service territory. So using Chugach as our future energy supplier means MEA’s members will continue to take power from remote generation plants.

Nobody can dispute that MEA’s customers will pay full price for the natural gas generation plant required to serve MEA’s load. Local generation will mean lower transmission costs, lower line losses and greater reliability. Since MEA’s customers will pay for the new plant regardless of who builds it, it seems reasonable that we should get the benefits of local generation rather than have those benefits subsidize service to somebody else.

Finally, the state has abandoned the REGA plan to unify the Railbelt generation and transmission functions for the near term. Golden Valley Electric Association and ML&P have both objected to that plan and have stated they will not voluntarily participate. The governor does not appear willing to fight Fairbanks and Anchorage for mandatory unification and thus the utilities are doomed to continue operating on their own. Legislation currently pending would not result in even a partial unification of the Railbelt’s generation and transmission for 10 years, and MEA cannot delay acting to meet its own load requirements for that long.

I’m sorry if these statements burst the bubble of hope shared by Lee and others. Facts are nasty things that sometimes get in the way of hope, and facts dictate that a new natural gas generation plant must be built by 2015 to meet MEA’s load — or the lights go out.

Jim Walker lives in Palmer.