MEA plans for months-long power plant delay

EKLUTNA — Despite delays that will potentially require buying power through March 2015, Matanuska Electrical Association officials said they still consider its power plant project a success story.

Construction continued apace at the plant Friday morning. Bunches of wires hung from control panels. Parts of the plant echoed with the cacophony of men at work. The large natural gas-fueled engines were all in place in the generation halls, though plastic-wrapped packages of large bolts rested on top of them.

Plant workers energized — trade jargon for being connected to a source of electricity — a switchyard near the plant, and subcontractor employees were preparing to energize a part of the plant responsible for transferring current from the generators to four large conduits running outside the plant.

Several parts of what will become the MEA’s transmission system have been energized recently, including a substation near Mat-Su Regional Medical Center and a transmission line stretching across the Palmer Hay Flats, according to company spokesman Wes Lindsey.

Remaining work largely focuses on cable terminations and testing, Lindsey said.

“We’re down to just cable terminations,” he said. “Primarily the remaining work is commissioning and testing. All the equipment we’ve worked over the past year to put in place will be commissioned and tested.”

Officials anticipate as many as four units in the plant’s four-unit north generation hall should be operational by late December or early January 2015, with the six-unit south generation hall expected to go online before March 31, 2015.

The Regulatory Commission of Alaska filing for a billing cost associated with interim Power Sales Agreement contains language extending the contract to that date, with a potential extension for three additional months after that, according to filing documents.

The agreement means Chugach Electric Association — from whom MEA currently buys power — will receive $10 million in additional revenue based on the company’s base rate. At the same time, the company will incur approximately $4 million in additional expenses, excluding fuel, under provisions that require Chugach to purchase electricity generated at up to four of the Eklutna station’s natural-gas filled units.

When fuel costs are factored in, the annual anticipated impact to Chugach revenues is an estimated $35 million decrease between 2014 and 2015, according to the regulatory commission filing by Chugach. Fuel and other costs incurred to Chugach will be billed to the MEA, according to the filing, allowing officials to pay only for the fuel they need before the plant comes online.

An interim power agreement also includes language indicating that MEA officials have known about potential delays at the Eklutna station since at least August.

MEA also announced a rate increase of about 20 percent starting in the fourth quarter of 2014, and said construction at the plant, as well as changes to natural gas rates brought about by the renegotiation of 30-year contracts for producers of Cook Inlet natural gas, were the primary reasons.

“MEA notified Chugach on Aug.12, 2014, that it anticipated that the Eklutna Generation Station power plant would not be completely online by Jan. 1, 2015, and that MEA needs another power source, probably through March 1, 2015,” the agreement reads in part.

The interim power sales agreement was a precautionary measure, Lindsey said.

“The interim agreement was negotiated as a precautionary measure to ensure members have power in the event of a delay in the project,” he wrote.

MEA customers will not see any additions to their bills, company officials said. However, Chugach officials are asking commissioners for a cost increase.

The agreement does not include information about why MEA requested the delay. Pressed for a response, Lindsey was circumspect.

“Electrical progress on the project has been slower than expected, pushing final completion to early 2015,” he wrote, in an email. “Construction is wrapping up and commissioning progress will now drive the final completion date.”

Considering the Eklutna site, which now houses a large mostly-completed industrial facility, had no buildings as late as April 2013, progress at the site was “impressive,” Lindsey said.

Planning for the plant has been in the works for years, and officials have long said the Dec. 31, 2014 end date for a long-term power sales agreement between MEA and CEA was a hard deadline, included when the agreements were first signed in 1989.

Contact Brian O’Connor at 352-2269 or brian.oconnor@frontiersman.com.

Note: An earlier version of this story incorrectly stated the amount of an expected rate increase, as well as the year construction started at the Eklutna site.