New state law on power transmission will help MEA diversify energy supply

Matanuska Electric Association is looking to expand its purchases of energy following the Legislature’s passage of a bill streamlining the regulation of electrical power transmission, an MEA spokesperson said.

Passage of House Bill 307 will be a game-changer for energy projects including wind and solar because developers will be able to sell their power to customers along the Southcentral-Interior “railbelt” energy grid without being disadvantaged by differing tolls charged by utilities who own segments of transmission line, which stretches from Homer to Fairbanks.

Another new development is the long-sought upgrade of the railbelt grid itself with new federal funds. Currently, lack of capacity on transmission lines, some built in the 1960s, limits the efficient movement of power.

The combination of these opens up new possibilities for utilities, said Julie Estey, spokesperson for MEA. That’s because they will be able to buy economical power from independent power producers and other utilities, who are typically private sector, outside their service areas and from anywhere along the transmission line.

Gov. Mike Dunleavy has yet to give thumb’s up on House Bill 307, which secured final legislative approval May 15, but the governor’s okay is considered likely because he originally proposed the legislation and has supported it.

With the bill likely to be approved, and the expansion of the grid itself underway with federal funds, MEA is now exploring the purchase of more renewable power, Estey said.

Most immediately this could likely come from the privately-owned solar energy project now operating at Houston as well as possibly participating with Anchorage’s Chugach Electric Association in buying power from a proposed wind project near Mount Susitna on the west side of Cook Inlet, Estey said.

MEA and Chugach now work together in a “power pooling” arrangement for the supply of increased demand for electricity from the most efficient power plants and in shared ownership of the large Southcentral Power Project in Anchorage as well as backup batteries.

The wind project was initially proposed with a capacity to generate 120 Megawatts of electricity. The first phase of the solar project at Houston now has a capacity of 6 Megawatts and sells power to MEA at less than what the utility pays for natural gas for power generation. The utilities are discussing a larger second phase with the developer.

MEA is working with Chugach Electric to understand how the utilities can manage the variability of more power from both projects. Wind generation can drop, or increase, when wind speeds change and solar power can vary when there are cloudy days.

Typically, utilities manage these problems with sufficient backup power from their existing power generation or with large batteries, and MEA’s Eklutna Power plant on the Glenn Highway is equipped to quickly adjust is output to “follow” any unexpected changes in power from renewable projects, Estey said.

Expanding power options in Southcentral Alaska is important because natural gas production from Cook Inlet is predicted to decline beginning in 2027, according to the state Division of Oil and Gas.

Efforts are underway to find for natural gas in the Inlet but more energy overall will still be needed and clean energy is expected to play a key role.

The most important part of the new HB 307, meanwhile, is that it will end so-called “pancaking” of tolls for transmission of power along the railbelt grid. These tolls now vary because utilities that own segments of transmission line have different costs incurred when they financed construction, typically with debt.

The cumulative effect of the different tolls can make it uneconomic for a power producer in one area to sell to a customer elsewhere along the transmission line. An example often cited is when Cook Inlet Region, Inc., or CIRI, was unable to sell additional power from its Fire Island wind project near Anchorage to a customer in the Fairbanks area, in the Interior.

The additional power sold would have allowed CIRI to increase the number of wind turbines at Fire Island, which is in Cook Inlet just offshore Anchorage. Fire Island now mainly serves Chugach Electric Association in Anchorage.

Under House Bill 307 the state’s Alaska Energy Authority will develop a plan for a uniform toll for power transmission that will allow utilities and independent power producers to have more certainty when they buy or sell energy.

Assuming HB 307 is approved by the governor the AEA is to submit its plan for uniform rates, and for recovery of costs by utilities who own transmission lines, for approval by state regulators at the Regulatory Commission of Alaska.

The railbelt utilities will meanwhile work with the AEA through a finance committee structured like one formed for the existing Bradley Lake hydro project, which is owned by the AEA with its power purchased by utilities.