Legislature(2001 - 2002)
04/20/2001 01:46 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 175
"An Act making an appropriation to the Alaska
Industrial Development and Export Authority for power
projects; and providing for an effective date."
STEVE HAAGENSON, ACTING PRESIDENT & CEO FOR GOLDEN VALLEY
ELECTRIC ASSOCIATION, FAIRBANKS testified in support of the
legislation.
The upgrade of the Anchorage to Fairbanks power
transmission intertie, to 230 kilowatts is a very
important project for Interior Alaska. This project, at
a minimum, should, involve the construction of a second
transmission line between Douglas Substation located
near Willow and Teeland Substation located in Wasilla.
The new transmission line would ho constructed to
operate at 230 thousand volts, and would provide the
source, for converting the remainder of the Anchorage
to Fairbanks intertie to 230 thousand volts operation.
The existing line from Douglas to Teeland is a
bottleneck for delivery of power from Anchorage to
Fairbanks. The electrical capacity to Healy would
increase from 70 megawatts to approximately 130
megawatts, after project completion. The increase in
transfer capacity would provide access to both now and
existing gas-fired cogeneration in Anchorage.
Power can flow either direction Oil these transmission
lines. After the natural-gas pipeline is constructed
the transmission capacity increase could allow for
delivery of 130 megawatts of North-Slope gas fired
power to the Anchorage bowl.
The increased capacity will also provide a method to
share spinning reserves, which are not always available
to Fairbanks.
The existing line from Douglas to Teeland has had
numerous faults due to insulator flashovers and other
causes. Every time this line tripsa significant
portion, if not all, of the power in Fairbanks goes
off. The addition of a second circuit will improve
reliability between Teeland and Douglas by providing an
alternative path during faults.
The addition of a second transmission line will reduce
electrical transmission losses between Teeland and
Douglas, as will the voltage conversion from 138
kilovolts to 230 kilovolts will, for the entire
Anchorage in Fairbanks transmission line.
Representative Davies clarified that the estimated amount
needed to build the 26 miles between Teeland and Douglas and
convert other substations to 230 kilovolts is $24 million
dollars.
ROBERT WILKINSON, CEO, COPPER VALLEY ELECTRIC ASSOCIATION
(CVEA), GLENNALLEN testified via teleconference in support
of the legislation:
In 1993, the 18th Alaska Legislature appropriated a $35
million, 50-year, zero-interest loan for an intertie
project. The purpose of the loan was to benefit the
region by lowering electrical rates. After much
effort and expense the intertie project ground to a
halt in 1996. Instead CVEA constructed a state of the
art combustion turbine cogeneration project. That
project has numerous benefits. It is high tech, it is
green, and it turns Alaska crude into kilowatt-hours.
It also adds five megawatts of generating capacity to
Copper Valley's system. Having said that, the project
does nothing to lower the high cost of electricity for
the region. Copper Valley's request accomplishes a
number of things. It reduces the fixed costs of the
Cogeneration project. It replaces 30-year old diesel
fired units, thereby improving system reliability and
air quality. It also reduces fuel and maintenance
expenses. In addition, a project, which recovers heat
from the Glennallen diesel plant to reduce heating
expense for the Copper River School District Glennallen
schools. Finally, it reimburses Copper Valley for the
DCRA intertie feasibility study required by the
Legislature.
NORM STORY, HOMER ELECTRIC ASSOCIATION testified via
teleconference in support of the legislation. He noted that
Homer Electric's appropriation request would replace an
underwater cable that spans 3.8 miles across Kachemak Bay
from Homer to the Southside of the bay [McKeon Flats]. It
would also replace four backup diesel generators that are
approximately 50 years old, which are used during power
outages.
Mr. Story maintained that it is critical that the 700
consumers in villages south of Kachemak Bay continue to have
access to reliable and affordable electric power. The
underwater cable is the only access to the electrical grid.
The people in these communities are doing their part now to
keep electric costs down. The average consumer in this area
uses only 440-kilowatt hours per month per consumer compared
to almost 700-kilowatt hours per consumer north of the bay.
He noted that the general membership of Homer Electric
Association has always subsidized the cost of providing
service to these communities. In the absence of this subsidy
the villages would probably receive Power Cost Equalization
bonds or some other assistance. The calculated rate [without
subsidy] would be .20 cents a kilowatt-hour as opposed to
the current cost of .11 cents. The costs associated with
replacement of the cable and the diesel generators would
have a catastrophic impact on the electrical rates in these
villages. Recovering costs in these small communities
endangers their already fragile economy. They cannot afford
the additional .5 cents a kilowatt-hour. A zero percent
interest loan repaid over 25 years would greatly assist in
lessening the impacts to villages south of the bay.
JOE COOK, VICE PRESIDENT, CORDOVA ELECTRIC COOPERATIVE INC.,
CORDOVA testified via teleconference in support of HB 175.
The Power Creek Hydroelectric project has been a community
priority for the past four years and will be the salvation
of Cordova. Funding is critical, as it will have positive
long-term effects on Cordova's economy, due to reductions in
electrical power rates, which would lower the cost-of-living
and the cost-of-doing business in Cordova. Lower power costs
would improve operating conditions in the community's
economic sectors and increase job opportunities.
SYLVIA LANGE, CORDOVA testified via teleconference in
support of HB 175. She noted that as an owner of a fish
processor facility, that the single greatest impediment to
economic diversity and survival is the exorbitant cost of
electricity. Electric rates including fuel surcharges and
taxes were over .30 cents a kilowatt-hour as compared to .04
cents an hour in Seattle. She maintained that they are
forced to send their product elsewhere for "value added"
processing.
Representative Ken Lancaster, Sponsor testified in support
of HB 175. He clarified that the Anchorage/Fairbanks
Transmission Line Bottleneck project is a state project. The
Power Creek Hydropower project in Cordova would provide a
payback of approximately $600 thousand dollars. He observed
that he will have a technical amendment to add back language
that was inadvertently deleted. The Railbelt Energy Fund was
the initial fund source. The legislation was changed in the
House Labor and Commerce Committee to fund the project from
the Constitutional Budget Reserve.
In response to a question by Representative Hudson,
Representative Lancaster clarified that there would be
sufficient funding in the Railbelt Energy Fund to fund the
projects. He noted that $71 million dollars of interest has
accrued since 1973. However, it was felt that the money
should remain in the fund to be used as leverage or seed
money when the gas pipeline comes to fruition.
Representative Croft clarified that there is approximately
$80 million dollars in the Fund. The appropriations [in the
legislation] total $62 million dollars.
In response to a question by Representative Davies,
Representative Lancaster clarified that the appropriations
would be no interest loans. He noted that the $25 million
dollars for the Anchorage/Fairbanks intertie would be a
state project and the costs would be recovered.
DONALD MAHON, REGIONAL VICE PRESIDENT, ALASKA POWER AND
TELEPHONE testified via teleconference in support of the
legislation. He noted that two of the communities they serve
are on stand-alone high cost diesel generation. The
Tok/Chistochina Transmission Intertie would reduce the
energy cost for these communities by .15 cents a kilowatt-
hour and provide central station power for an additional 100
customers along the highway. He maintained that it makes
good sense to tie these communities to the Tok power plant.
ERIC YOULD, EXECUTIVE DIRECTOR, ALASKA RURAL ELECTRIC
COOPERATIVE ASSOCIATION, ANCHORAGE testified via
teleconference in support of HB 175. He observed that the
Board expressed strong support for HB 175. He added that
Chugach Electrical Association and the Anchorage Municipal
Light and Power Association also support the project. He
asked why the appropriation fund source was changed.
Representative Hudson asked the affect of the legislation on
Power Cost Equalization.
Mr. Yould responded that the Cordova project would be a
grant in exchange for relinquishing their annual $600
thousand dollar PCE grant. The original project structure
would have reduce the Chistochina Mine's PCE amount. Under
the long-term, low interest loan, power costs for Cordova
would be lower but they would continue to receive PCE
adjustments.
Representative John Davies asked what use the Railbelt
Energy Fund would be put to in regards to the gas pipeline.
KATELYN MARKLEY, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT
AUTHORITY (AIDEA) testified via teleconference in support of
the legislation. She noted that HB 238 would address the
concerns of AIDEA. The Alaska Industrial Development and
Export Authority (AIDEA) felt that funding should go through
the Alaska Energy Authority. She stated that all the
projects have merit.
HB 175 was heard and HELD in Committee for further
consideration.
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