MEA kicks power plant contractor to the curb

PALMER — Matanuska Electric Association has parted ways with its contractor and is taking a different route to building a power plant in the Eklutna area.

Until last week, MEA had been shooting for a type of strategy called an EPC. Its contractor would be in charge of engineering, procuring and constructing the power plant, handing over the keys to MEA when it was done.

“That’s a cradle-to-grave type of operation,” MEA General Manager Joe Griffith said.

In March 2010, firms submitted proposals. CH2MHill eventually got the contract with a $228 million bid.

“We thought that ought to be the baseline,” Griffith said.

But then the company realized it couldn’t do the work for that and told MEA the baseline needed to be $270 million.

Griffith said he went down to the company’s Denver headquarters to try and work it out. No dice.

“I said, ‘enough of this.’ We’ve got to get cracking on this otherwise we will be in trouble in 2015,” Griffith said. “That’s why we changed horses and we’re going to be the prime contractor ourselves.”

That year — 2015 — is significant because on Jan. 1 of that year MEA’s contract to buy power from Chugach Electric Association runs out.

“We lost about a year in the process” of working out the contract dispute, Griffith said.

He said he thinks MEA can do it. There’s plenty of experience in the building and while the company itself has never built a power plant, Griffith has during his time at CEA.

“None of that is rocket science,” he said, noting that the plan for 10 17-megawatt natural gas generators is a relatively simple one. “These are conventional engines, they’re not even fancy turbines.”

Griffith said he thinks MEA can get the project in itself at $250 million. That translates to $1,470 per kilowatt of generating capacity.

“That’s a real salable number in the electrical business,” he said.

As for where the project is at now, when the contract negotiations broke down, it was just at the end of the preliminary design stage, putting together what’s called a design basis for the project. The basis essentially tells designers what MEA is looking for in each aspect of the plant to let the designer know what to design.

This past week, the MEA board of directors authorized Griffith to hire Stanley Consultants to help the cooperative through this phase of the project. Stanley will function as what’s called an owner’s engineer.

“It helps us get the necessary bits and pieces together,” Griffith said.

As far as construction work, MEA broke ground this spring, putting in a foundation for an enclosure for the water pumps in the fire system.

“The rules for the air permit said you had to have something done,” Griffith said.

If MEA hadn’t broken ground, it would have had to get a different, much more costly permit.

And what about that elephant in the room? What about gas supplies?

Griffith said he’s cautious about saying how excited he got at the announcement that Escopeda Oil may have found 3 trillion cubic feet of gas in Cook Inlet. That’s a 25-year supply for all of Southcentral Alaska.

It’s a find that’s yet to be confirmed in an area that has frustrated exploration companies before. Griffith said he’s keeping all options on the table, including the possibility of importing natural gas until the state gets a pipeline built from the North Slope.

But if that much gas is there, Griffith said, it’s a game-changer.

“It changes everything about the power game in Alaska and it makes us look real smart for building gas generators,” he said.

Contact Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.