MEA-Chugach partnership makes sense

Bob Dylan wrote the timeless song, “The Times They Are A-Changin’.”

Most of you know by now much is changing in the Railbelt and in the delivery of safe, reliable electricity. Big changes are on the horizon, and some may be the catalyst for new, more effective ways of doing business.

For the past 25 years, Matanuska Electric Association has relied on an all-requirements contract with Chugach Electric Association.

That contract expires in 2014 and then what? The Railbelt’s existing generation and transmission assets are old and generators are approaching the end of their economic and productive life. Our once-upon-a-time limitless Cook Inlet gas reserves seemed secure and lasting. Today, we face declining reserves and a probable importation of liquified natural gas (LNG) at a much higher cost. Railbelt boards and staffs are searching for answers to a changing world. We are all in the same boat on this one. Partnering is key.

Last week, the Joint Utility Task Force agreed to form an all-utility alternative to the state-sponsored Greater Railbelt Energy and Transmission Corp. (GRETC) bill that failed in the Legislature. The task force is considering forming an Alaska Railbelt Cooperative Transmission & Energy Co. (ARCTEC) organization under existing law. This approach will obviate the need to seek legislative approval and give utilities an organization that can undertake all the original initiatives agreed upon in the GRETC bill.

A swifter approach could be a generation and transmission (G&T) made up of just Chugach and MEA. Aside from sharing strong common ties, a Chugach/MEA G&T may provide answers with substantial economic benefits. This innovative forward step could secure our future fuel supplies, diversify and update the generation suite, ensure adequate transmission and be affordable and sustainable. This G&T co-op would generate and transmit wholesale power to Chugach and Matanuska distribution utilities. Other utilities might also want to buy some of the power produced. Chugach and MEA would share economies of scale via economic dispatch of power, benefits of aggregation, financial strength and commonality of purpose — affordable power to our memberships.

MEA lacks G&T experience in constructing, maintenance and operation of power plants while Chugach Electric has strong in-house power-plant operation and maintenance capabilities. Significant economic savings from staffing consolidation and bargaining power with potential fuel suppliers would be assured.

A Chugach/MEA joint effort would result in the lowest cost approach to future power supplies. Neither utility currently has permanent financing in place for new generation.

While moving forward in creating a G&T with Chugach for all or part of MEA’s power-supply requirements, MEA will continue operating as a distribution cooperative. Complete agreement must be reached by November to meet MEA’s deadlines for finding a post-2014 power supply.

Railbelt utilities were asked by the Legislature to bring a unified message to them. In response, a historic pledge was made by all six utilities to get GRETC legislation passed. Unfortunately, it failed. Now the burden of solution falls squarely on the Railbelt utilities, members, boards and managers. Through a new G&T or a combination of approaches that could include new power plants, MEA will step up to the plate.

Keeping our forward momentum lies not just with finding solutions, but together bringing them to fruition. Railbelt managers and boards must join forces. If we do not stay lockstep, then each utility will face these rogue waves alone. Many eyes are watching and failure is not an option.

Joe Griffith is general manager of Matanuska Electric Association.