Legislature(2011 - 2012)BARNES 124

03/10/2011 08:00 AM House COMMUNITY & REGIONAL AFFAIRS


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08:06:03 AM Start
08:06:11 AM Overview: Railbelt Large Hydro Evaluation Preliminary Decision Document
09:06:14 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Alaska Energy Authority Overview: TELECONFERENCED
Railbelt Large Hydro Evaluation Preliminary
Decision Document
                    ALASKA STATE LEGISLATURE                                                                                  
    HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                   
                         March 10, 2011                                                                                         
                           8:06 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Cathy Engstrom Munoz, Chair                                                                                      
Representative Neal Foster, Vice Chair                                                                                          
Representative Alan Austerman                                                                                                   
Representative Dan Saddler                                                                                                      
Representative Sharon Cissna                                                                                                    
Representative Berta Gardner                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Alan Dick                                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW: RAILBELT LARGE HYDRO EVALUATION PRELIMINARY DECISION                                                                  
DOCUMENT                                                                                                                        
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
BRYAN CAREY, Technical Engineer                                                                                                 
Alaska Energy Authority (AEA)                                                                                                   
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided an overview of the Railbelt Large                                                               
Hydro Evaluation Preliminary Decision Document.                                                                                 
                                                                                                                                
SARA FISHER-GOAD, Executive Director                                                                                            
Alaska Energy Authority                                                                                                         
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During overview, answered questions.                                                                     
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:06:03 AM                                                                                                                    
                                                                                                                                
CHAIR  CATHY  ENGSTROM  MUNOZ  called   the  House  Community  and                                                            
Regional  Affairs  Standing Committee  meeting  to  order at  8:06                                                              
a.m.  Representatives  Austerman, Foster, Saddler,  and Munoz were                                                              
present  at  the  call  to  order.    Representatives  Cissna  and                                                              
Gardner arrived as the meeting was in progress.                                                                                 
                                                                                                                                
^Overview:  Railbelt Large Hydro  Evaluation Preliminary  Decision                                                              
Document                                                                                                                        
 Overview: Railbelt Large Hydro Evaluation Preliminary Decision                                                             
                            Document                                                                                        
                                                                                                                              
8:06:11 AM                                                                                                                    
                                                                                                                                
CHAIR MUNOZ  announced that  the only order  of business  would be                                                              
an overview from  the Alaska Energy Authority (AEA)  regarding the                                                              
Railbelt Large Hydro Evaluation Preliminary Decision Document.                                                                  
                                                                                                                                
8:07:04 AM                                                                                                                    
                                                                                                                                
BRYAN CAREY,  Technical Engineer,  Alaska Energy Authority  (AEA),                                                              
Department   of  Commerce,   Community   &  Economic   Development                                                              
(DCCED), reminded  committee members that AEA originally  began as                                                              
the Alaska  Power Authority  back  in 1976.   Currently, AEA  owns                                                              
the  Bradley Lake  Hydroelectric  and  Alaska Intertie.    Bradley                                                              
Lake Hydroelectric  is the  largest hydroelectric  project  in the                                                              
state  and  generates  120 megawatts  while  the  Alaska  Intertie                                                              
connects Interior  Alaska such that  in times of  energy shortages                                                              
the energy  can be  switched between  the Interior and  Anchorage.                                                              
During the  winter, gas-generated  electricity, which has  a lower                                                              
generation cost,  is used and sent  north.  If there is  an outage                                                              
or  power problems  in Anchorage,  power  can come  down from  the                                                              
Interior to  Anchorage.  He  then highlighted the  following major                                                              
programs  of AEA: the  renewable energy  fund, alternative  energy                                                              
and  energy efficiency,  and rural  energy upgrades.   He  related                                                              
that  AEA has  been  building  various  energy projects  in  rural                                                              
Alaska for  the last  couple of  decades.   In more recent  times,                                                              
there has been  concern with regard to gas  deliverability, rising                                                              
fuel prices,  and the  need to  replace the  major generation  and                                                              
transmission  projects  in  the  Railbelt.   Therefore,  both  the                                                              
state  and utilities  developed  an  integrated resource  plan  to                                                              
review  the   possible  future   electricity  demands   along  the                                                              
Railbelt and how that electricity will be provided.                                                                             
                                                                                                                                
8:09:42 AM                                                                                                                    
                                                                                                                                
MR.  CAREY  directed  attention  to slide  3,  which  relates  one                                                              
possible future  for the Railbelt.   The chart shows a  dip in the                                                              
energy  necessary,  which  he  attributed   to  energy  efficiency                                                              
improvements.       As  the  chart  illustrates,   no  matter  the                                                              
situation  a substantial  amount  of  the Railbelt's  energy  will                                                              
come from  natural gas.  The  chart also illustrates that  in 2025                                                              
a large  amount  of hydro  comes online,  which he  said could  be                                                              
attributed  to  one  of  the  two  large  hydroelectric  projects.                                                              
Although  this chart  doesn't  show much  wind,  it was  reviewed.                                                              
Different  model runs  include or  don't  include wind.   The  two                                                              
large hydroelectric  projects  that could  satisfy the demand  are                                                              
the  Susitna  project  at  Watana   or  the  Chakachamna  project.                                                              
Although  there are  other possible  large hydroelectric  projects                                                              
along the Susitna  River, they were discarded during  the 1970s or                                                              
1980s  due to  fish  concerns.   He  acknowledged  that there  are                                                              
other possible  small hydroelectric  projects along  the Railbelt,                                                              
although  some of  these may  not go forward  due  to the cost  of                                                              
construction and  transmission.  Mr. Carey informed  the committee                                                              
that  today's  overview   will  focus  on  the   two  large  hydro                                                              
projects,  Watana  and  Chakachamna, and  compares  and  contrasts                                                              
them.                                                                                                                           
                                                                                                                                
8:12:19 AM                                                                                                                    
                                                                                                                                
MR. CAREY,  moved on  to the slide  entitled "Susitna  Watershed,"                                                              
which  illustrates the  salmon spawning  areas.   The map  doesn't                                                              
show the  Chinook salmon.  Although  a 1980s investigation  of the                                                              
Watana area  found no salmon for  several years, in  2003 juvenile                                                              
Chinook  salmon were  found above  Watana.  However,  most  of the                                                              
salmon  are below  the dam  site and tend  to go  to the  spawning                                                              
areas highlighted on  the map.  Although the  map illustrates that                                                              
the salmon  do enter the  Susitna River, those  tend to be  not as                                                              
productive as  some of  the tributary streams.   Many  salmon make                                                              
their  way  up  other  rivers,  such  as  the  Yentna  River,  the                                                              
Talkeetna River,  and others to  spawn.  He related  that although                                                              
there is very little  salmon at the Watana site,  there would have                                                              
to be  modifications to  the operations  of the  reservoir/project                                                              
in order to ensure  salmon downstream aren't impacted.   Mr. Carey                                                              
then  turned to  the slide  entitled  "Chakachamna Watershed"  and                                                              
informed  the  committee  that Chakachamna  is  located  about  85                                                              
miles west of Anchorage.   To the west of Chakachamna  is the Lake                                                              
Clark National  Park and Preserve.   The Chakachatna  River, which                                                              
comes out  of the lake,  goes through the  Trading Bay  State Game                                                              
Refuge.   The Chakachamna  is a glacier-dammed  lake and  thus the                                                              
glacier is acting  like a dam to hold the water.   The proposal is                                                              
to construct  a 10-12 mile tunnel  through the mountain  range and                                                              
empty  the water into  the McArthur  River Basin.   However,  with                                                              
the  Chakachamna  there is  the  need  to  reduce the  water  flow                                                              
through the  Chakachatna River  to gain  energy, which  may result                                                              
in adult  and juvenile salmon  not being able  to make it up.   In                                                              
fact,  the  salmon may  only  be  able  to  reach the  Cook  Inlet                                                              
through the power  house tunnel.  Furthermore,  reducing the water                                                              
flow  may  result   in  the  wetlands  drying   and  changing  the                                                              
character  of the  wetlands  to  perhaps a  moose  browse type  of                                                              
area.  He  then directed attention  to the red areas on  the slide                                                              
that illustrate the  known or suspected spawning  areas of salmon,                                                              
per the  1980s studies.   During the [1980s]  there were  at least                                                              
40,000  red/sockeye  salmon  that  passed through  [the  areas  in                                                              
red].  He reminded  the committee that the adjacent  national park                                                              
and  the resource  agencies have  mandatory conditioning  ability,                                                              
and thus  they can institute  standards in the hydropower  license                                                              
including flow  and when flow would  occur.  Those flows  would be                                                              
the  environmental  flows  to  maintain  the  fisheries  or  other                                                              
wildlife.   He  then pointed  out that  the boundary  line of  the                                                              
Lake  Clark National  Park and  Preserve  passes through  Kenibuna                                                              
Lake.   The  national  park  has already  sent  a  letter to  FERC                                                              
expressing  its concern that  Kenibuna Lake  and Chakachamna  Lake                                                              
would be hydrologically  connected.  If the aforementioned  is the                                                              
case, then  any change  in the water  level with Chakachamna  Lake                                                              
would impact Kenibuna  Lake and the park.  The  FERC can't license                                                              
a hydropower project  if the aforementioned occurs.   The only way                                                              
to  license such  a  project  would be  through  a  direct act  of                                                              
Congress.   He then  mentioned that  at the  head of the  Blockade                                                              
Glacier is the volcano Mt. Spur, which is a bit active.                                                                         
                                                                                                                                
8:18:15 AM                                                                                                                    
                                                                                                                                
MR.  CAREY  specified  that  this type  of  project  is  important                                                              
because  of the diversion  from  one river system  to another  and                                                              
the need  to maintain flows in  the existing river system  for the                                                              
salmon  or other  aquatic life.    He then  moved on  to slide  7,                                                              
which  reviews the  environmental  aspects  of the  two  projects.                                                              
For the  Susitna/Watana project  the reservoir  would be  about 39                                                              
miles in length  with a maximum width  of 2 miles.   He noted that                                                              
most  of  the reservoir  has  a  width  that's narrower  than  two                                                              
miles.   Since the 2003 study  found juvenile salmon,  the project                                                              
is  about  30   miles  above  significant  salmon.     The  Alaska                                                              
Department  of Fish  &  Game (ADF&G)  will  perform more  studies,                                                              
which will  be part of  the daily data  set to determine  how many                                                              
salmon  make  it  up  the  [Susitna  River].    From  the  earlier                                                              
studies,  the belief  is that  it's only  several hundred  Chinook                                                              
salmon.   He  noted that  there  would be  some  loss of  wildlife                                                              
habitat because of  the inundation of water.   Although there will                                                              
be  more  studies,  he  opined   that  there  will  be  a  minimal                                                              
fisheries impact.   The impacts will be downstream  and there will                                                              
be both positive  and negative impacts.  Due to  the conditions on                                                              
the license by  the resource agencies, any fisheries  impacts will                                                              
be compensated through mitigation or other measures.                                                                            
                                                                                                                                
MR.  CAREY  then turned  to  the  Chakachamna Project,  which  has                                                              
significant  salmon populations  that travel  through the  lake to                                                              
the Lake  Clark National  Park and Preserve.   It's  also believed                                                              
that  salmon  spawn in  the  lake  along  with lake  trout,  dolly                                                              
varden, and white  fish.  He mentioned that drawing  the lake down                                                              
in  the winter  could result  in some  of the  spawning bed  areas                                                              
freezing.  Furthermore,  the diversion of the water  and change of                                                              
habitat  in the  Trading  Bay State  Game  Refuge  is of  concern.                                                              
There  is also  concern  with regard  to  adult false  attraction,                                                              
which causes  the fish to go up  the McArthur River Valley  to the                                                              
powerhouse location.   The  question then becomes  how to  get the                                                              
fish  back  into the  lake.   Even  if  all  the adults  could  be                                                              
trucked  up  to the  lake,  the  smelt  tend  to follow  the  most                                                              
current and when  a power house is operated the  most current will                                                              
be going down the  power tunnel.  Therefore, he  questioned how to                                                              
ensure  the  juveniles  make  it  back  to  the  sea  without  any                                                              
impacts.   As mentioned  earlier the  Chakachamna Project  may not                                                              
be able to be licensed under FERC.                                                                                              
                                                                                                                                
8:21:18 AM                                                                                                                    
                                                                                                                                
MR. CAREY, in  response to Representative Gardner,  clarified that                                                              
a  hydropower  project  may  not  be licensed  under  FERC  if  it                                                              
impacts a national  park.  Therefore, for the  Chakachamna Project                                                              
the concern is  whether Kenibuna Lake is hydrologically  connected                                                              
to Chakachamna,  which would impact  the Lake Clark  National Park                                                              
and Preserve.   The letter from  the U.S. National  Parks Services                                                              
relates that  it wants  the aforementioned  investigated  prior to                                                              
any other investigations.                                                                                                       
                                                                                                                                
8:22:10 AM                                                                                                                    
                                                                                                                                
MR. CAREY,  continuing his overview,  directed attention  to slide                                                              
8.   He informed  the committee  that the  installed capacity  for                                                              
the  Susitna Project  would  be  approximately 600  megawatts  and                                                              
average  energy in  the amount of  about 2,600  gigawatts  an hour                                                              
per year,  which is close to  50 percent of the  Railbelt's annual                                                              
energy.   He  reminded  the committee  that  the  hydro energy  is                                                              
dependent  upon the rain  and snow  melt each  year; any  year the                                                              
energy produced  could be  plus or  minus 10-15  percent.   In the                                                              
case of  the Chakachamna  Project, the  installed capacity  in the                                                              
preliminary  permit  application  was  300 megawatts.    With  the                                                              
environmental  flows,  the  average  energy  for  the  Chakachamna                                                              
Project amounts  to about  860-1,100 gigawatts  an hour  annually,                                                              
which would  amount to about 20  percent of the  Railbelt's annual                                                              
energy.  He noted  that the average energy figures  won't be known                                                              
until  five years  or  more are  spent  to better  understand  the                                                              
fisheries and wildlife.  Mr. Carey then directed  attention to the                                                              
slide with  entitled "Railbelt  Demand."  The  graph on  the slide                                                              
relates the  Railbelt's approximate  energy  [needs] on a  monthly                                                              
basis.   The peak  [of energy  needs] is  generally in  the winter                                                              
months  whereas [the  Railbelt's energy  needs] are  lower in  the                                                              
summer.]  The  importance of the hydro projects,  particularly the                                                              
Bradley Lake  Hydro Project, is  that such projects can  produce a                                                              
lot of energy in  the winter months when there is  less ability of                                                              
gas wells to deliver  the gas.  The graph illustrates  that during                                                              
the months  of July and August  [the average monthly  power] peaks                                                              
because a large amount  of water flow needs to be  let in order to                                                              
have the normal  river flow.  Therefore, all the  summer time flow                                                              
isn't being  held back.   In the case  of Susitna, all  the summer                                                              
time flow  will pass  through the powerhouse,  which results  in a                                                              
large amount of  energy.  Chakachamna will also  have large summer                                                              
time flows.   The winter separates  the projects, he stated.   For                                                              
instance,  with  Chakachamna  there  is  limited  storage  because                                                              
there would  be no dam  construction at  that outlet of  the lake.                                                              
Therefore, energy  production decreases to less than  50 megawatts                                                              
in the  winter, which  doesn't help the  gas situation.   However,                                                              
the Susitna [would  generate] more than 200 megawatts,  which is a                                                              
substantial portion  of the Railbelt's generation  requirements in                                                              
the  winter.   Mr.  Carey  then pointed  out  that  the amount  of                                                              
energy  produced by  the  projects  would be  less  than what  the                                                              
Railbelt  currently uses.   Therefore,  it would  tend to  replace                                                              
existing  power generation  projects of  the 1970s  and 1980s  and                                                              
the increment  of energy and  power can  still be absorbed  by the                                                              
utilities.    Regardless  of  construction  of  a  hydro  project,                                                              
utilities  and  the state  will  have  to  spend billions  in  the                                                              
coming decades to replace aging infrastructure.                                                                                 
                                                                                                                                
8:26:11 AM                                                                                                                    
                                                                                                                                
MR.  CAREY  directed  the  committee's   attention  to  the  slide                                                              
entitled "Bradley  Lake Hydroelectric,"  which is a  photograph of                                                              
the  Bradley  Lake  Hydroelectric  Project  as an  example  of  an                                                              
embankment  dam.   An  embankment  dam  is  one way  to  construct                                                              
Watana.   He  pointed out  that  there is  no fish  ladder at  the                                                              
Bradley Lake  Project because there  are no fish.   However, there                                                              
is water  flowing from  the bottom  of the dam,  which is  for the                                                              
environmental/fish  flows for where  the salmon  are down  next to                                                              
the  inlet.    Those  who were  involved  with  the  Bradley  Lake                                                              
Project prior  to the  construction of  the dam generally  believe                                                              
there have been  positive fisheries impacts on  the salmon located                                                              
at the  bottom of  the dam  by the  inlet because  there are  more                                                              
salmon  than prior  to the  construction of  the dam.   Mr.  Carey                                                              
told the committee  that most hydroelectric projects  aren't going                                                              
to have  the cheapest power  in the first  10 years  of existence,                                                              
which is  why half  of the  initial funding  for the Bradley  Lake                                                              
Project was  from the state while  the other half was  financed by                                                              
bonds to be paid  by the utilities.  Even when  the utilities have                                                              
paid the  bonds, they  will continue  to make  payments and  those                                                              
payments go to the  state to help repay for its  investment in the                                                              
Bradley Lake Project.    Bradley's cost of power  is substantially                                                              
less than much  of the power generation  on the Railbelt.   On the                                                              
basis  of   the  generation  cost   being  less   alone,  Railbelt                                                              
consumers are  saving close  to $10 million  per year in  terms of                                                              
what  it  would  have  to generate  by  other  means.    Moreover,                                                              
Bradley  Lake Hydroelectric's  ability  to  provide  power in  the                                                              
winter is  critical for Southcentral,  which would  otherwise face                                                              
a much greater gas problem.                                                                                                     
                                                                                                                                
8:28:29 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER related her  understanding that  over time                                                              
all  dams will  silt up.   She  asked  if that  is happening  with                                                              
Bradley  Lake, and  if so  she inquired  as  to how  long it  will                                                              
continue to function.                                                                                                           
                                                                                                                                
MR. CAREY  clarified that  although that's  true, the  time period                                                              
would  be fairly  long.   He said  that  he hasn't  seen the  time                                                              
scale with  Bradley Lake Hydroelectric,  but he estimated  that it                                                              
would likely  be hundreds of  years before it  would silt up.   In                                                              
the case  of a  dam at Watana,  the estimate  for the  full Watana                                                              
height of 885 feet  during the 1980s was that it  would be greater                                                              
than 1,000 years  before there would be enough silt  to impact the                                                              
operations.   Since a  lower height dam  is being considered,  the                                                              
time period  in which  silt would  impact the  operation would  be                                                              
shortened.   Still,  it would  be  hundreds of  years before  silt                                                              
would impact the dam.                                                                                                           
                                                                                                                                
8:29:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked if any of the water  in Bradley Lake                                                              
is of glacial origin.                                                                                                           
                                                                                                                                
MR.  CAREY replied  yes, and  specified  that a  third of  Bradley                                                              
Lake's  water is  from each  of the  following:   rain, snow,  and                                                              
existing glacial  melt.  The Kachemak  and Nuka Glaciers  are both                                                              
providing water to Bradley Lake, and therefore it's "silty."                                                                    
                                                                                                                                
REPRESENTATIVE   SADDLER   recalled    concerns   from   Talkeetna                                                              
regarding whether  glacial silt  or any  rocky matter  would cause                                                              
damage to  turbines.  He  inquired as to  the service life  of the                                                              
turbines at  Bradley Lake.  He  also inquired as to  whether there                                                              
has been any damage to the turbines from glacial silt.                                                                          
                                                                                                                                
MR.  CAREY informed  the  committee that  in  the Andes  Mountains                                                              
there have  been hydroelectric facilities  that are closer  to the                                                              
run of the  river where there  are large particle sizes  that tend                                                              
to  wear  down the  turbines.    He  noted  that there  have  been                                                              
similar  problems at  King Cove  Hydro.   In the  case of  Bradley                                                              
Lake  there  hasn't  been  any   wear  at  this  point,  which  he                                                              
attributed  to the  large size of  the reservoir  that allows  the                                                              
heavy  particles to  settle in the  lake.   Therefore, the  matter                                                              
that passes through  the turbines is more of  a flour consistency,                                                              
which  isn't  that abrasive  and  doesn't  wear on  the  turbines.                                                              
Bradley Lake  Hydroelectric has been  operating for 20  years with                                                              
no problems, in terms of the turbines or the silt.                                                                              
                                                                                                                                
8:31:42 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  inquired as to estimates of  the origin of                                                              
the water in Watana Lake.                                                                                                       
                                                                                                                                
MR. CAREY informed  the committee that Watana Lake  was studied in                                                              
the  1980s  and  at  that  time  the  Alaska  Range  valleys  were                                                              
producing  50 percent of  the water  going into  Watana Lake.   He                                                              
indicated  that  more  studies  would  be  needed  to  answer  the                                                              
question.   The FERC licensing process  is very extensive  and AEA                                                              
will update  all the  studies for  water sources.   He  noted that                                                              
climate change  will also have to  be studied as well  in terms of                                                              
changes to the glaciers in the area and future projections.                                                                     
                                                                                                                                
8:33:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  AUSTERMAN asked  if the  area where  the water  is                                                              
coming out of the  bottom of the dam is the location  of the power                                                              
house.                                                                                                                          
                                                                                                                                
MR. CAREY  clarified that the  water coming  out of the  bottom of                                                              
the dam  is the  fish water  releases.   The power  house for  the                                                              
Bradley  Lake dam  is  located  3.5 miles  away.    The intake  is                                                              
approximately  150 feet down  below the lake  level and  it passes                                                              
through a power  tunnel that is  3.5 miles in length down  to tide                                                              
water.   With the  power house  being located  at tide  water, the                                                              
difference in  the lake and tide  water is about 1,100  feet.  The                                                              
1,100 difference  places the  water under  a tremendous  amount of                                                              
pressure.                                                                                                                       
                                                                                                                                
8:34:27 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  AUSTERMAN inquired as  to the  span of the  dam at                                                              
Watana and  the location  of the  power house  in relation  to the                                                              
dam.                                                                                                                            
                                                                                                                                
MR.  CAREY  informed  the  committee that  the  elevation  of  the                                                              
Bradley Lake dam  is 125 feet while the Watana  Lake dam elevation                                                              
is  700 feet  with  approximately  125  feet being  located  below                                                              
ground in order  to reach the bedrock.  Therefore,  the area above                                                              
the tail  water at the  Watana Lake dam  would be about  550 feet.                                                              
In the 1980s  the proposed location  of the Watana Lake  dam power                                                              
house was an  underground power house  off to the side  of the dam                                                              
and located down  river.  If the dam was constructed  using roller                                                              
compacted concrete,  the power  house would  be located  closer to                                                              
the base  of the  dam and  would likely  not be  underground.   He                                                              
explained  that  the  power  house  would  likely  not  be  placed                                                              
directly on the  dam because doing so would constrain  the size of                                                              
the dam  in the future.   For instance,  the ability to  raise the                                                              
height of  the dam would  be lost if  the power house  was located                                                              
right  next to  the dam.   Therefore,  the location  of the  power                                                              
house needs  to be  far enough  away from  the dam  to be  able to                                                              
increase the size of the dam in the future.                                                                                     
                                                                                                                                
8:36:28 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   AUSTERMAN    related   that   for    the   Kodiak                                                              
hydroelectric  project two  turbines  were installed  with a  slot                                                              
for a  third turbine.   He asked  if such expansion  possibilities                                                              
are being considered with the Watana project.                                                                                   
                                                                                                                                
MR. CAREY  responded  that the original  design  of Watana  was an                                                              
embankment dam  with an underground  power house.  The  notion was                                                              
that the  underground  cavern would  be made  large enough  to add                                                              
more turbines  in the  future.  However,  an external  power house                                                              
makes  it easier  for  expansion, although  there  would still  be                                                              
changes necessary.   The  Watana dam would  be designed  such that                                                              
more turbines could be added in the future.                                                                                     
                                                                                                                                
8:37:59 AM                                                                                                                    
                                                                                                                                
MR. CAREY,  returning to  his overview,  directed the  committee's                                                              
attention  to slide  11 entitled  "Timeline."   He clarified  that                                                              
the timeline  he'll present  is the one  that will occur  once the                                                              
formal FERC  process is reached,  which has not yet  been reached.                                                              
For Watana,  the final application  for license could  be prepared                                                              
and filed  in 3.5 years.   Therefore, after 6.5 years  the project                                                              
could move forward  into the construction phase.   The first power                                                              
would  be generated  in approximately  11 years.   Mr. Carey  told                                                              
the committee that  it's believed that more time  will be required                                                              
at  the start  for  Chakachamna  because it  has  had very  little                                                              
[documentation]  for  it.   Furthermore,  Chakachamna  is  a  more                                                              
complicated  system because  of  the diversion  of  water and  the                                                              
impacts  it  would  have  on the  Lake  Clark  National  Park  and                                                              
Preserve,  the  Trading Bay  State  Game  Refuge, and  the  nearby                                                              
river systems.   The aforementioned will require  more studies and                                                              
time at FERC.   The construction time period  for Chakachamna will                                                              
also likely take  more time because drilling a  tunnel 10-12 miles                                                              
long will take a  substantial amount of time.   Moreover, for both                                                              
projects access  to the  location needs to  be obtained  first and                                                              
then there will  be a couple of years of construction  for access.                                                              
He related  that the  first power  at Chakachamna  will likely  be                                                              
generated in about 14 years.                                                                                                    
                                                                                                                                
8:39:57 AM                                                                                                                    
                                                                                                                                
SARA  FISHER-GOAD, Executive  Director,  Alaska Energy  Authority,                                                              
Department   of  Commerce,  Community   &  Economic   Development,                                                              
related  her  understanding  from  legislators  who  attended  the                                                              
Energy  Conference  that  FERC  has  a  somewhat  more  optimistic                                                              
licensing schedule  of 2-3  years.  Therefore,  AEA plans  to have                                                              
conversations  with FERC  regarding  a more  aggressive  timeline.                                                              
Although AEA isn't  prepared to update its proposed  timeline, the                                                              
aforementioned information was encouraging.                                                                                     
                                                                                                                                
8:41:04 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FOSTER   mentioned  that  he   and  Representative                                                              
Saddler were  part of  the team  that spoke  with FERC  from which                                                              
the  aforementioned   sentiment  was  heard.    He   recalled  the                                                              
discussion relating  that more  of the issues  might lay  with the                                                              
agencies and departments.                                                                                                       
                                                                                                                                
8:41:40 AM                                                                                                                    
                                                                                                                                
MR.  CAREY,   referring   to  the  slide   entitled  "Watana   vs.                                                              
Chakachamna,"  informed  the committee  that  Watana will  produce                                                              
more energy,  perhaps 2.5 times more  energy, at a lower  cost per                                                              
unit and  with fewer geologic  risks.   He noted that  both Watana                                                              
and  Chakachamna  have some  seismic  activity,  but dams  can  be                                                              
designed  around seismic  concerns as  is the  case in  California                                                              
and elsewhere.   However,  the glacial lake  at Chakachamna  is of                                                              
concern because it's  inherently unstable as it's  unknown when it                                                              
will   release.     At  some   point   the  aforementioned   could                                                              
significantly impact  how much water is in storage.   Furthermore,                                                              
how Mt.  Spur will  impact the operation  of [Chakachamna]  in the                                                              
future is also  unknown.  He highlighted that  Watana doesn't have                                                              
river  diversions and  has less  of a  fisheries impact,  although                                                              
there are  some salmon at  the site.   He acknowledged  that there                                                              
are also salmon  down river on the Susitna River,  but the Susitna                                                              
River  tends  to be  used  as a  salmon  highway.   He  noted  the                                                              
presence of  salmon will  be reviewed  with the resource  agencies                                                              
in  order to  determine  how  best to  address  them.   Mr.  Carey                                                              
reiterated  that  it's likely  Watana  will go  through  licensing                                                              
quicker than Chakachamna.   In fact, it's likely  that Chakachamna                                                              
may require Congressional  action prior to licensure.   Watana has                                                              
the ability  for expansion for  future growth and  demand, whereas                                                              
that's not  the case  for Chakachamna.   Moreover, Watana  has the                                                              
ability to provide  significant amounts of winter  energy, whereas                                                              
Chakachamna can't.   Therefore, the [electric energy  from Watana]                                                              
can displace  the gas necessary  in the winter for  generation and                                                              
thus  can  be  used for  home  heating,  etcetera.    Furthermore,                                                              
Watana is  necessary to achieve  the state's 50  percent renewable                                                              
goal.    It's  extremely  unlikely  that  without  a  large  hydro                                                              
project, the  state would achieve  the 50 percent  renewable goal,                                                              
he  opined.    A  large  hydroelectric  project  is  necessary  to                                                              
provide dispatchable  energy, stabilize  the system, and  to reach                                                              
the state's renewable energy goal.                                                                                              
                                                                                                                                
8:45:18 AM                                                                                                                    
                                                                                                                                
MR. CAREY  related that  during the  public workshops,  the desire                                                              
to  review  other  potential  sources  of  energy  was  expressed.                                                              
Although  the preliminary  decision  document  didn't cover  other                                                              
potential  sources  of  energy,  such  as  wind,  geothermal,  and                                                              
nuclear, they were  covered in the integrated resource  plan.  The                                                              
integrated   resource   plan  included   wind,   geothermal,   gas                                                              
generation,  coal generation,  nuclear,  and energy  efficiencies.                                                              
Depending upon  whether there's a  carbon tax and the  growth rate                                                              
estimates  of the  Railbelt, the  mix of  energy sources  differs.                                                              
Unless there is  a large hydroelectric energy source,  most of the                                                              
energy  will be  from gas  with  some wind  and energy  efficiency                                                              
upgrades.   With regard  to questions  about  the cost of  energy,                                                              
Mr. Carey  informed the  committee that  AEA is currently  working                                                              
with a financial  firm to obtain  better numbers.  He  opined that                                                              
the  cost of  energy  [from  a hydroelectric  project]  would  not                                                              
result in  a rate shock.   He further opined  that if the  cost of                                                              
the energy  from the hydroelectric  project is substantially  more                                                              
than gas  or otherwise,  the utilities  wouldn't be interested  in                                                              
receiving  energy  from  such  a  project.   With  regard  to  the                                                              
seismic concerns,  those are fairly  well understood  by engineers                                                              
and  dams   have  been  constructed   in  seismic   active  areas.                                                              
Furthermore, there's  no record of a  modern dam failing  due to a                                                              
seismic event, although it can be damaged.                                                                                      
                                                                                                                                
8:48:12 AM                                                                                                                    
                                                                                                                                
CHAIR  MUNOZ inquired  as to  the point  in the  process when  the                                                              
commitments from  the utilities are determined and  information is                                                              
available to the legislature.                                                                                                   
                                                                                                                                
MR.  CAREY said  that  in  the coming  years  there  will be  many                                                              
discussions with  utilities regarding power sales  agreements.  In                                                              
terms of the price  to utilities, that will be a  give and take in                                                              
relation to the amount of state participation.                                                                                  
                                                                                                                                
MS. FISHER-GOAD  acknowledged that much activity  is necessary for                                                              
a  project of  this size,  and thus  there  will be  a variety  of                                                              
conversations.    There  will  be  an  engineering  and  licensing                                                              
process  once the  preliminary permit  application  is filed  with                                                              
FERC.   The  aforementioned  will help  AEA  refine the  timeline,                                                              
cost,  and schedule.   During  that time,  conversations with  the                                                              
utilities  regarding   purchase  commitments  will   begin.    She                                                              
informed  the   committee  that   AEA  has  already   engaged  its                                                              
financial  advising  firm  to  help  calculate  some  numbers  and                                                              
develop information  sooner than  anticipated.  These  discussions                                                              
have   resulted   in   one  example   using   the   Bradley   Lake                                                              
Hydroelectric model  in terms of  the potential power cost.   This                                                              
example has resulted  in many questions, which  she interpreted to                                                              
mean  there is  a  need  to refine  the  numbers and  obtain  more                                                              
scenarios to  reach the potential  wholesale power cost.   At this                                                              
point, the  power cost  to the retail  ratepayers if  [Susitna] is                                                              
built  is unknown.    Even  with  the Bradley  Lake  Hydroelectric                                                              
project, the rate  that Fairbanks residents pay  is different than                                                              
that  paid by  Anchorage  residents through  their  utility.   Ms.                                                              
Fisher-Goad  stated  that  AEA  owes  the  legislature  additional                                                              
information  regarding the  cost,  although some  of  it won't  be                                                              
available this session.                                                                                                         
                                                                                                                                
8:51:53 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA inquired  as to  the impacts  and costs  of                                                              
these  two different  projects.   She further  inquired as  to the                                                              
impacts of these  projects in the long-term and  the possibilities                                                              
a dam would  afford these communities.   She mentioned  that a dam                                                              
could  impact other  resources beyond  energy  resources, such  as                                                              
agriculture.                                                                                                                    
                                                                                                                                
MR.  CAREY  informed  the  committee  that  along  with  the  FERC                                                              
studies  required  for  licensing  there  will  also  be  economic                                                              
studies in  regard to the potential  impacts, such as jobs,  a dam                                                              
would  have  on  the surrounding  communities.    With  regard  to                                                              
fisheries and siltation  issues, those issues would  be studied as                                                              
part of  the licensing process.   Mr. Carey  pointed out  that the                                                              
resource agencies  have the mission  to protect the  fisheries and                                                              
the  wildlife, and  therefore  they can  place  conditions on  the                                                              
license   to  ensure  that   the  fisheries   are  protected   for                                                              
fishermen.   If the resource agencies  believe there would  be any                                                              
negative impact,  portions of the license include  provisions such                                                              
that the  licensee would pay for  enhancement or mitigation.   For                                                              
instance,  more  wetlands could  be  purchased, funding  could  be                                                              
utilized for  enhancement projects,  or a  fish hatchery  could be                                                              
done.  Therefore, a variety of methods could be utilized.                                                                       
                                                                                                                                
8:56:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA  turned to  the  matter of  oversight,  and                                                              
expressed  the  need  to  relay information  in  a  format  that's                                                              
understandable  for  new  legislators as  there's  often  changing                                                              
players  in the  legislature  and the  administration.   She  also                                                              
expressed  the  need to  work  [on  these  projects] in  terms  of                                                              
providing   long-term  understanding   in  order  that   oversight                                                              
actually does happen.                                                                                                           
                                                                                                                                
8:57:06 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE AUSTERMAN  related his  support for the  Watana Dam                                                              
and the  concept of  generating  more hydro power.   He  mentioned                                                              
the life  span of  a hydro  project, which  is 150-200  years less                                                              
the  time  necessary  to  change  the  turbines.    Representative                                                              
Austerman  also   expressed  concern  with  regard   to  fisheries                                                              
mitigation and  water for  agriculture.  [A  good example]  is the                                                              
Columbia  River system  where  the dams  were  built knowing  they                                                              
were going  to have to  mitigate and destroy  salmon.   Those dams                                                              
were built  to draw water for  agriculture and create  an industry                                                              
that's  dependent on  those  dams.   Therefore,  he cautioned  the                                                              
[state] to be  careful in terms of  what it asks for  as there may                                                              
be a  lot of  opposition to hydro  power.   He then recalled  that                                                              
the  governor's budget  includes $52  million, and  asked if  that                                                              
provides enough funds to get started.                                                                                           
                                                                                                                                
MS. FISHER-GOAD  clarified that the capital  appropriation request                                                              
in the  governor's budget  is approximately  $65.7 million,  which                                                              
is  the  estimated  unobligated  balance of  the  Railbelt  Energy                                                              
Fund.    Although  the  aforementioned  isn't  enough  funding  to                                                              
complete  the full  licensing and  design process,  it's a  start.                                                              
The current  estimate is  approximately $20  million per  year for                                                              
the environmental  and design work.   However, those  numbers will                                                              
be refined  as the  project proceeds.   Ms. Fisher-Goad  clarified                                                              
that this is a multi-year request.                                                                                              
                                                                                                                                
REPRESENTATIVE AUSTERMAN  inquired as to when AEA will  be able to                                                              
come  to the  legislature  with  the specific  construction  cost,                                                              
amount of  wholesale power  that will be  sold, and  whether there                                                              
will be  mitigation  so that the  legislature  can make the  final                                                              
decision.                                                                                                                       
                                                                                                                                
MS. FISHER-GOAD answered  that she would expect there  would be an                                                              
opportunity every  session to  provide the legislature  additional                                                              
information.  Once  the preliminary permit application  was filed,                                                              
the agency would know when it could provide better information.                                                                 
                                                                                                                                
MR. CAREY  interjected that currently  data gap analysis  is being                                                              
performed on aquatics  and wildlife to determine  what information                                                              
will  be needed  to determine  the  potential impacts.   Once  the                                                              
aforementioned  analysis  is  finished,  AEA will  meet  with  the                                                              
resource   agencies   regarding   what  additional   studies   are                                                              
necessary.   He said  that AEA  would have  more information  in a                                                              
couple of months in terms of what the resource agencies want.                                                                   
                                                                                                                                
9:02:08 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER recalled  questions  of reservoir  induced                                                              
seismicity (RIS)  that were raised in the House  Special Committee                                                              
on  Energy  meeting on  the  Watana  project.    He asked  if  the                                                              
preliminary  decision document  considers  the seismic  conditions                                                              
of the  area to be developed.   He also  asked if there is  such a                                                              
thing as RIS.                                                                                                                   
                                                                                                                                
MR. CAREY  said that most of  the seismic activity  occurring when                                                              
there is a  new reservoir is the  earth adjusting to a  new weight                                                              
and the  earthquakes  tend to  be small,  of a magnitude  1  or 2.                                                              
Therefore,  most people wouldn't  even notice  an earthquake  that                                                              
small,  even if  he/she were  standing  on top  of the  dam.   The                                                              
control earthquake,  design earthquake,  for these projects  would                                                              
be earthquakes located  within 10 miles of the site.   In the case                                                              
of Watana,  the control  earthquake  would be  a magnitude  8 with                                                              
less  than a  10 mile  proximity to  the reservoir.   The  control                                                              
earthquakes  tend to  be close  earthquakes that  are very  large.                                                              
Therefore, the reservoir  seismicity tends to be less  than what a                                                              
control earthquake would be.                                                                                                    
                                                                                                                                
9:04:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER opined,  "I fear  that much  the same  way                                                              
that  an endangered  species  or  critical habitat  is  discovered                                                              
near  every development  project, I'm  afraid that  RIS would  ...                                                              
generate a  seismic risk where  one might  not really exist."   He                                                              
then  inquired as  to  whether there  are  hydrologic or  geodetic                                                              
studies regarding where  and how fast the water would  go if there                                                              
was  a leak  in  the  dam.   The  concern,  he specified,  is  for                                                              
Talkeetna downstream.                                                                                                           
                                                                                                                                
MR. CAREY  responded that if  there is to  be water coming  out of                                                              
the dam, that's  studied as part of the FERC licensing  process in                                                              
order to  provide estimates in terms  of time and amount  of water                                                              
that would flow  down.  He pointed out that Talkeetna  is 90 miles                                                              
downriver,  and thus  the water  flow  will be  constrained as  it                                                              
passes  through Devil  Canyon.   Work was performed  in the  1980s                                                              
regarding how  fast the  water would travel  down and  which areas                                                              
would  flood.    Although the  aforementioned  would  be  required                                                              
under  new licensing,  FERC normally  doesn't review  catastrophic                                                              
failure  of a  dam because  it just  doesn't occur.   However,  he                                                              
acknowledged  that there  can  be some  release  of a  dam from  a                                                              
smaller  failure,  which  is  what's   considered  a  more  likely                                                              
occurrence and reviewed.                                                                                                        
                                                                                                                                
REPRESENTATIVE SADDLER  remarked that although he  is intrigued by                                                              
the  possibilities  with these  projects,  he does  hold  concerns                                                              
that he believes should be addressed.                                                                                           
                                                                                                                                
9:06:03 AM                                                                                                                    
                                                                                                                                
CHAIR MUNOZ thanked everyone for their participation.                                                                           
                                                                                                                                
9:06:14 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being  no further business  before the committee,  the House                                                              
Community  and Regional  Affairs  Standing  Committee meeting  was                                                              
adjourned at 9:06 a.m.                                                                                                          

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