Matanuska Electric sees steady growth in power demand even as natural gas shortage looms

Matanuska Electric Association is seeing a gradual and steady increase in demand for electricity in its service area mainly due to continued population growth in the Mat-Su region.

That brings with it increased demand from small and mid-sized commercial customers who serve new residential areas, says Julie Estey, spokesperson for Matanuska Electric, or MEA.Traditionally MEA’s “load growth” has been about one percent annually but there are signs that could increase in 2025, although it’s too early to really tell, Estey said in an interview.

Much of the new population is in residential subdivisions being developed in Mat-Su. There are asp larger new commercial customers like hotels. But some of the growth is simply people using more power, Estey said. Electric vehicles, either all-electric or hybrids, are increasingly popular and people are also using more power with electronic devices within their homes.

Higher year-around electricity use also means that demand peaks will be higher in cold winter months, which could strain the system. Winter peak demand has typically been in the 136 Megawatt and 148 Megawatt range but cold weather last November and December sent use of power up to 155 Megawatts, which was unusual.

With more people in Mat-Su using more power it’s likely winter peaks could climb even higher. There have also been warmer-than-usual winter months too, like last January and February, but the cold weather periods are most important because MEA must be prepared to meet these peaks of power use. There are other challenges, like windstorms that are not unusual in Mat-Su which affect MEA’s extended transmission lines.

To meet these challenges MEA is investing in new transmission lines and substations to create alternative ways of getting power to people during outages. Mid are now being solicited on a planned extension of transmission lines and new substations in Meadow Lakes and Fishhook Road, two high-growth areas in Mat-Su. A “phase two” of this is also in the works.

The utility is also working on diversifying its sources of energy, Estey said. Natural gas production in Cook Inlet’s aging gas fields are set to decline, and like other utilities in the state’s “railbelt” Southcentral-to-Interior regions MEA is looking for new gas as well as energy from renewable sources.

On this front there has been discouraging news for two larger renewable projects, both wind, the Shovel Creek project near Fairbanks and the Little Susitna project near Mount Susitna on the west side of Cook Inlet.

On Shovel Creek, Golden Valley Electric Association in Fairbanks recently announced that it will not proceed with a contract to buy power from the privately-owned project, at least for now, because of the loss of federal tax credits and President Donald Trump’s opposition to wine projects. This will push the Little Susitna project, by the same company., further back/

Another significant project now on the back burner, this one in Mat-Su, is the Houston Solar Phase II, an expansion of a smaller solar project now operating at Houston. This is also proposed by a private company.The loss of these will push Southcentral Alaska communities more quickly toward imports of liquefied natural gas, or LNG.

Electric utilities like MEA who are serving the region are legally obligated to supply energy to customers as regulated utilities. Importing LNG will raise costs for MEA and Chugach Electric Association in Anchorage as well as Enstar Natural Gas Co., which supplies gas for heating. Higher costs will be passed along to consumers.

However, there is also at least some new gas being found in Cook Inlet, which is encouraging, Estey said. HEX Alaska LLC, an Alaska-based company, has drilled new wells that discovered gas. This won’t be enough to offset the looming shortage but it shows there is more gas in the Inlet and more drilling could at least dent the decline.

MEA uses gas in its Eklutna power plant and is supplied by Hilcorp Energy, the major Cook Inlet gas producer. The contract expires in 2028. Estey said Hilcorp has told MEA that it can possibly supply gas after that but it will not by at the same volume as under the current contact, which is 6 billion cubic feet per year.

It will also likely be more expensive because Hilcorp will have to invest in new wells to get new gas. MEA’s Eklutna plant is also equipped to generate power with fuel oil but this intended to be for emergenies. Longer-term use of fuel oil will be expensive.

However, even with the big wind and solar projects sidelined there are renewable energy projects that may escape President Trump’s wrath. One is the Alaska Energy Authority’s “Dixon Diversion” hydroelectric project that could double the amount of power from Bradley Lake, a hydro facility near Homer that is today the least-expensive source of power for the “railbelt” Southcentral-Interior grid.

Dixon Diversion is now in its final engineering and is planned to be constructed and operating by 2031. MEA would get a share of the new hydro power, Estey said.

There is also geothermal power, and the Cook Inlet region is surrounded by volcanos. Chugach Electric Association is now in discussions with GeoAlaska, a private company, on the possibility of purchasing geothermal-sourced electricity from Augustine Island in lower Cook Inlet. GeoAlaska is now exploring the geothermal resource on Augustine, which is an active volcano.