Legislature(2003 - 2004)
10/28/2003 03:15 PM House EDT
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT,
INTERNATIONAL TRADE AND TOURISM
Anchorage, Alaska
October 28, 2003
3:15 p.m.
MEMBERS PRESENT
Representative Cheryll Heinze, Chair
Representative Lesil McGuire, Vice Chair
Representative Nancy Dahlstrom
Representative Vic Kohring (via teleconference)
Representative Sharon Cissna
MEMBERS ABSENT
Representative Pete Kott
Representative Harry Crawford
COMMITTEE CALENDAR
SUBJECT: SECURITY OF THE RAILBELT POWER GRID
- HEARD
PREVIOUS ACTION
No previous action to record
WITNESS REGISTER
JIM POSEY, General Manager
Municipal Light and Power (ML&P)
Anchorage, Alaska
POSITION STATEMENT: Gave a presentation on the state of the
Railbelt power grid, its susceptibility to blackouts, and the
projected demand in the next 10 years.
JOE GRIFFITH, Chief Executive Officer
Chugach Electric Association (CEA)
Anchorage, Alaska
POSITION STATEMENT: Introduced John Cooley and answered
questions during the hearing on the security of the Railbelt
power grid.
JOHN COOLEY, Manager of Power Control
Chugach Electric Association (CEA)
Anchorage, Alaska
POSITION STATEMENT: Gave a presentation on the state of the
Railbelt power grid, its susceptibility to blackouts, and the
projected demand in the next 10 years.
TUCKERMAN BABCOCK, Manager
Government/Strategic Affairs
Matanuska Electric Association (MEA)
Eagle River, Alaska
POSITION STATEMENT: Gave a presentation on the state of the
Railbelt power grid, its susceptibility to blackouts, and the
projected demand in the next 10 years.
HENRI DALE, Power System Manager
Golden Valley Electric Association (GVEA)
Fairbanks, Alaska
POSITION STATEMENT: Gave a presentation on the state of the
Railbelt power grid, its susceptibility to blackouts, and the
projected demand in the next 10 years.
ERIC YOULD, Executive Director
Alaska Power Association (APA)
Anchorage, Alaska
POSITION STATEMENT: Gave a presentation on the state of the
Railbelt power grid, its susceptibility to blackouts, and the
projected demand in the next 10 years.
ACTION NARRATIVE
TAPE 03-13, SIDE A
Number 0001
CHAIR CHERYLL HEINZE called the House Special Committee on
Economic Development, International Trade and Tourism meeting to
order at 3:15 p.m. Representatives Heinze, Dahlstrom, Cissna,
McGuire, and Kohring (via teleconference) were present at the
call to order.
SUBJECT: SECURITY OF THE RAILBELT POWER GRID
CHAIR HEINZE gave a speech before hearing presentations on the
security of the Railbelt power grid. She stated that the
September 11 [2001] attacks on New York and Washington, D.C.,
forced the nation's energy business and policy bodies that
oversee the nation's energy establishment to reassess many old
assumptions. For the first time, a relatively small number of
people who had concerned themselves with securing the nation's
energy infrastructure were thrust into prominence. Energy
security had entered the lexicon of all those involved in the
energy industry. Soon after, policy makers, state energy
officials, public utility commissioners, and emergency
management officials discovered a renewed drive to cooperate
with electric, gas, and petroleum companies to improve the
security of systems that generate, transmit, and distribute
energy.
CHAIR HEINZE said state policy makers [legislators] serve a
crucial role in partnership with industry and local and federal
officials in addressing energy-security vulnerabilities. Energy
security refers to the resilience of energy systems. The
resilient system would be capable of withstanding threats
through a combination of active, direct security measures and
passive or more indirect measures such as redundancy,
duplication of critical equipment, diversity in fuel, other
sources of energy, and reliance on less vulnerable
infrastructure.
CHAIR HEINZE added that the Homeland Security Act and the USA
Patriot Act define critical infrastructure as "systems and
assets so vital to the United States that the incapacity or
destruction of such systems and assets would have ...
debilitating impact on security, national economic security,
national public health or safety, or any combination of those
matters." State policy makers must understand the effect that a
security breach could have on the economy, public health and
safety, and the environment. For example, water pumps rely on
electricity to operate; electricity relies on natural gas as a
fuel, which may in turn, if needed, rely on electricity to run
the compressors. Telecommunications systems serve as a vital
support system for the power grid, and they, too, require
electricity. She said the nation's new high-tech economy
demands reliable petroleum-and-electricity based energy system
to meet its needs. The nation's power plants and transmission
and distribution systems are among the more critical facilities
that are vulnerable to a breach of security.
CHAIR HEINZE continued, saying each part of the electricity
system has different characteristics and should be seen on its
own merits. The network of electricity transmission
infrastructure is an asset of the systems, but that network can
sometimes come cascading down. Power lines could be a target
for terrorists. Transmission lines are almost impossible to
physically protect. Because the electric power system is
interlinked, a failure on a single important power lines can
quickly cascade through the transmission system, causing wide
electrical outages. Electrical substations are a crucial part
of any power delivery systems. The threat that results from a
loss of a substation is primarily economic. Transformers are
the largest and most expensive components of a substation, with
each one costing in the vicinity of $2 million, and can take
nine to eighteen months to build and deliver. The nation's
energy system of power plants, power lines, gas pipelines, and
power facilities is exposed to terrorists' threats. The scope
of the threat is great, but lawmakers can take steps to reduce
the risks.
CHAIR HEINZE noted that the bulk of the nation's energy
infrastructure has some level of risk. The question that
legislators and the industry need to address is: What risks are
unacceptable? The vast majority of power lines fall into the
category of an acceptable risk. Where multiple paths are
sustainable if one power line went down, power could be shipped
over other lines while that one was being repaired.
Unfortunately, multiple paths are not the characteristic of the
Railbelt system. Attacks on some other facilities such as large
power generators, major pipelines, transmission lines, and fuel
storage facilities may qualify as unacceptable risks.
CHAIR HEINZE pointed out that at least 20 states have proposed
legislation that addresses the issue of open records. The bills
look at keeping secret any evacuation plans, emergency response
plans, security measures, or emergency health procedures. Some
states have proposed exemptions from public record
infrastructure such as utility plants, bridges, water lines, and
transportation systems. Across the country there is discussion
at the local level about what should be included in the public
records. She mentioned the review of statues governing freedom-
of-information laws and said there are regulations that provide
exemptions for security-related information.
Number 0050
JIM POSEY, General Manager, Municipal Light and Power (ML&P),
informing members on the current state and future of the
Railbelt power line, stated that ML&P generates, transmits, and
distributes electricity to 30,000 customer accounts in a 20-
square-mile radius. Municipal Light and Power has four physical
plants and one natural gas field. Power purchased in 2002
equaled 968,3776,278 kWh, and economy energy sales to other
utilities totaled 79,625,000 kWh, with total assets equaling
$368,460,050.
MR. POSEY indicated future challenges in three groups. Long-
term, challenges include development of a robust grid,
implementing an integrated resources plan, developing a reliable
source of natural gas, developing wind power, and green pricing.
The three-year horizon involves replacing the aging
infrastructure, maintaining competitive rates, military
privatization, maintaining value of interest in Bradley Lake,
and replacing the aging workforce. Immediate challenges are to
acquire property for Plant III and working with the governor's
energy task force.
Number 0165
MR. POSEY then went on to point out that Alaska's infrastructure
is old: 30 percent of thermal generating capacity in the
Railbelt is more than 30 years old and 50 percent is 20-30 years
old. This makes them both more expensive and more difficult to
run. The Anchorage-to-Eklutna transmission line is 50-plus
years old.
MR. POSEY stressed the need to upgrade the Eklutna line for many
reasons. It is critical to the transmission network and would
provide an alternate connection linking the ML&P and CEA
transmission systems. Also important was the fact that it would
be a more reliable and redundant power source from Palmer to
Anchorage, upgrading a vulnerable system. The legislature
appropriated $19.3 million to complete this upgrade, which ML&P
is managing.
Number 0203
MR. POSEY discussed ML&P's Integrated Resources Plan (IRP) that
compares new technology to "repowering" existing generation
assets as well as the future of Plant I, dual fuel capacity, and
supervisory control and data acquisition (SCADA) needs. Due to
the IRP, several recommendations are being made and implemented
involving investments in new generation; the closure of Plant I;
elimination of dual fuel capacity; postponement of SCADA
enhancements; and replacement of aging underground, overhead,
and substation infrastructure.
MR. POSEY next went on to outline various plans for upgrading
and improving ML&P's ability to provide cheap, reliable
electricity to its customers. These plans included new
generation, military privatization, use of the Beluga River Unit
gas field and re-evaluation of current gas contracts. Also
mentioned was the Southern Intertie project and its importance
to ML&P.
Number 0288
REPRESENTATIVE CISSNA asked if there was a prioritizing of
vulnerability.
MR. POSEY responded, noting that it was a tough question:
Our vulnerability is something we look at as a group
but also through our APA [Alaska Power Association]
organization and individually for us because of the
security concepts that we as a city consider our
vulnerabilities. We have so many diverse forms of
generation of power, from Bradley to Eklutna, to Plant
I to Plant II. There is no one huge plant here in
Anchorage other than Plant II that one could say is
vulnerable, but even that is backed up by what we can
get from other sources-fairly difficult to knock out
but not impossible. Our tie lines connecting the city
to our two hydro powers. Some of our lines are fairly
remote and might be easy to do some activity that
could knock them out. But, once again, you have these
other diverse pieces, so to knock out the whole city
in power distribution or to knock out the whole
Railbelt is difficult, and the keys to doing that are
not readily available to anyone, but they could do
damage to the system. And that is what we work at;
making sure we can depend on each other and that we
have crews that can repair those are the kinds of
things that we do.
We do not run our control systems, especially between
Chugach [CEA] and ourselves, on a web-based program.
Ours is SCADA based and not connected to the web. So
we've done a lot of things and kept things separated
to keep the kind of things that they talk about in the
Lower 48 from being reality here-nothing like in
Northern California and Southern Washington last week
where someone was taking bolts out of the transmission
towers. You will find that that kind of damage is
possible anywhere. But, once again, you have a
diverse flow of energy and a diverse generation
capacity from many different places. The one-punch
knockout becomes more difficult for one to use as a
symbol, I suppose, and that we work on very seriously
up and down the Railbelt.
Number 0403
JOE GRIFFITH, Chief Executive Officer, Chugach Electric,
introduced John Cooley as the person who will give a
presentation on the current state and future of the Railbelt.
JOHN COOLEY, Manager of Power Control, Chugach Electric
Association, began by giving an explanation of basic electric
terms and processes.
TAPE 03-13 SIDE B
MR. COOLEY then discussed the four types of fuel and the
percentage of total power that each generates for the Railbelt,
namely, natural gas, 63 percent; fuel oil, 14 percent;
hydroelectric, 14 percent; and coal, 9 percent. Also mentioned
was the fact that all the generating areas must keep their loads
in balance or the whole system will fail. This is why partial
blackouts occur. When a generator goes off-line, some load must
be shed to keep the frequency at a usable level.
Number 0042
MR. COOLEY also pointed out that the control area dispatch
centers at GVEA, ML&P, and CEA are used to schedule the power
among them to make sure the load matches the need in any given
area. The control areas are staffed 24 hours a day, 365 days a
year. The systems are also monitored for secure operation.
MR. COOLEY next addressed the question of how susceptible the
Railbelt power grid was to blackout. He stated that
transmission infrastructure hasn't kept up with load growth or
market changes and that the system is operated under different
conditions than what it was designed for. The underlying
problems behind these issues were too many people in areas
without power plants due to the NIMBY [not in my backyard]
effect and the fact that security monitors are unable to see the
level of detail needed to know whose load a failure is
associated with.
Number 0234
MR. COOLEY then described the recent Northeast blackout. The
exact cause has yet to be determined but the sequential loss of
several 345 Kilovolt transmission lines in Ohio may have
overloaded others, or perhaps poor vegetation management could
be the reason. Operators were unable to adjust power flows over
other lines before the system became unstable.
MR. COOLEY explained how the Railbelt system was different from
the power grid in the Lower 48. The Railbelt is much smaller.
All Railbelt [utilities] are nonprofit, valuing reliability over
profitability. Their spinning reserves also allow a quicker
restoration, and the utilities control from generation to load
making the system easier to manage. Even so, [a blackout] could
still happen here. In July 1996 Anchorage and much of the
Railbelt blacked out. This happened because one of CEA's three
generators was taken off-line for maintenance. One of the
remaining two generator's lines sagged into a tree and went off-
line as well. The third generator was unable to cope with the
load and tripped, causing the blackout. When the Kenai line
tried to pick up the load, it tripped as well.
MR. COOLEY wrapped up his presentation by outlining the
projected demand on the Railbelt power grid in the next 10
years. From the current usage of 4.5 billion kWh, use will
increase to around 5.5 billion kWh in the next 10 years. Mr.
Cooley then indicated that both he and Mr. Griffin were
available to answer questions
Number 0345
REPRESENTATIVE DAHLSTROM asked whether or not there were any
industry prohibitions to keep new companies from producing gas.
MR. GRIFFITH responded that there were no barriers to drilling
for gas, outside of the state permitting process.
REPRESENTATIVE HEINZE asked whether or not CEA participated in
demand-side management.
MR. GRIFFITH replied that they participated in demand-side
management to an extent. Demand side works best with big
industrial loads. In effect, it means that they can buy back
energy when they need power. On occasion they have to use
[demand-side management], usually in an emergency situation.
They initiate this by calling up a sector and asking them to
reduce power usage to lighten the load on the grid. They had
one case a few years ago when they had to ask the Agrium
facility and the liquefied natural gas (LNG) facility to back
down when one of the compressors failed on the steelhead
platform out in the inlet, so they were unable to supply enough
gas to meet demand. Chugach Electric Association was forced to
ask the major producers on the Kenai to reduce its use of gas.
Number 0460
TUCKERMAN BABCOCK, Manager, Government and Strategic Affairs,
Matanuska Electric Association (MEA), gave a presentation on the
current state and future of the Railbelt.
MR. BABCOCK gave an overview of MEA, emphasizing his company's
rapid growth in miles of power line, new services, and customers
served. Conversely, it has scaled back its workforce from 149
in 1994 to 121 in 2002. This allows MEA to lower its rates when
most Alaskan utilities are increasing their rates.
MR. BABCOCK then went on to outline MEA's relationship with CEA.
Matanuska Electric Association gets all of their power needs
from CEA, purchasing 25 percent of all of CEA's output. Chugach
Electric Association manages MEA's shares in the Eklutna and
Bradley Lake hydroelectric plants. The contract between CEA and
MEA was started in 1989 and ends in 2014. Mr. Babcock also said
that relationships between his company and CEA had been
strained. He stated that CEA attempted to acquire MEA in 1994
and 1995 and that MEA attempted to take over CEA in 1998. He
also stated that he believed that CEA's rates are contract
violations and are too high.
Number 0530
MR. BABCOCK then outlined the differences between his company
and CEA. Differences in rates, miles of distribution line, and
number of consumers were discussed. Mr. Babcock also talked
about the Regulatory Commission of Alaska's (RCA's) order for
CEA to cut MEA's rates by 12 percent and refund millions of
dollars. Chugach Electric Association took the matter to court,
where it is currently being decided.
MR. BABCOCK went on to explain the governor's energy policy task
force, which is made up of nine people. Matanuska Electric
Association's general manager, Wayne Carmony, was appointed to
the board. The task force's goal is to develop a long-term
energy plan for Alaska. The deadline for a Railbelt energy plan
is December 31, 2003. A non-Railbelt energy plan has a March
31, 2004, deadline.
TAPE 03-14, SIDE A
Number 0001
MR. BABCOCK outlined what he thought a comprehensive energy plan
should include. The plan should provide interconnected electric
utility service to regions that don't have it and should lower
the costs for regions that do have it. Mr. Babcock also
proposed that all electric utilities share proportionally in the
benefits of state and federal subsidies. Also, existing
generation and transmission facilities should be grandfathered
in. Power pooling was also offered as a capital plan to improve
electricity generation in Alaska. The Edison Electric Institute
defines power pooling as two or more interconnected electric
systems planned and operated to supply power in the most
reliable and economical manner for their combined load
requirements and maintenance, he reported.
Number 0194
REPRESENTATIVE DAHLSTROM asked whether MEA has had any
preliminary discussions with any of the other utilities that
have been mentioned or with the RCA to see if they would be
amenable to this idea.
MR. BABCOCK replied that MEA had been making presentations.
They presented to RCA on Friday and to other groups as well.
Matanuska Electric Association plans on continuing to present
its idea until a solution is found.
CHAIR HEINZE asked if, along with his presentation of his
pooling idea, Mr. Babcock would be addressing the questions that
this committee asked him to address in the invitation.
MR. BABCOCK replied that MEA felt that pooling would improve the
reliability and security of the Railbelt power line. He allowed
that the other utilities are better equipped to tell the
committee about where the Railbelt is today whereas, MEA is
trying to show where the Railbelt should go in the future.
Number 0235
HENRI DALE, Power System Manager, Golden Valley Electric
Association (GVEA), gave a presentation on the current state and
the future of the Railbelt.
MR. DALE explained that the Railbelt is constructed of aging
components. Most of these are 25-plus years old. He also
stressed that redundancy is the key to security and that
although there are exceptions, most of the Railbelt system is a
radial system. Also, the sheer distance the lines pass through
public right-of-way makes it almost impossible to guard every
section of power line.
MR. DALE mentioned that the most sensitive parts of the power
transmission system are protected, both by secure buildings and
by SCADA systems. As much as they are able, GVEA has protected
itself from attacks on its system.
MR. DALE answered the question of how susceptible they were to a
blackout by saying that they probably have more blackouts due to
the fact that they are on the end of a radial line. Twenty
years ago a few blackouts a year was not uncommon, but now it's
roughly once every two years. He said GVEA is currently testing
a battery backup system, and also has spinning reserves.
MR. DALE pointed out that their demand is projected to grow 2
percent per year. In the near term, there is a 25 percent
growth possibility due to the missile defense system, Alyeska's
interest in electrifying some of its pump stations, and a new
gold mine.
Number 0409
REPRESENTATIVE HEINZE asked whether or not a cascading failure
would affect Fort Greely and whether or not Fort Greely would be
too much of a burden on GVEA's lines.
MR. DALE responded that no, it wouldn't overload GVEA's grid
because GVEA, and all utilities build more generation capacity
to meet their load needs as well as keep their spinning
reserves. Mr. Dale also pointed out that GVEA treats all of its
companies the same, so they wouldn't necessarily look at Fort
Greeley any differently than any other section. Mr. Dale said
he didn't see where Fort Greely would be any worse off or better
off than any other customer. The bottom line is that Mr. Dale
believes GVEA can reliably serve Fort Greely
Number 0489
ERIC YOULD Executive Director, Alaska Power Association (APA),
gave a presentation on the current state and future of the
Railbelt.
MR. YOULD introduced himself and his organization, noting that
the APA represents every electrical utility in the Railbelt
except for MEA, which dropped out several years back. Mr. Yould
also mentioned that the heads of the various utilities
cooperated extremely well together compared with a few years
ago, when getting them all in the same room would have been
impossible.
MR. YOULD noted that Mr. Babcock and MEA have taken an
adversarial stance. Mr. Yould pointed out that MEA is not a
member of the integrated resource planning that all the other
utilities are participating in.
MR. YOULD explained that the Anchorage-to-Fairbanks intertie is
a weak, radial system that is extremely different from anything
in the Lower 48. Another reason the Railbelt is weak is because
there is a 20-mile stretch of transmission line that goes from
Fairbanks to Anchorage that is owned by MEA. The utilities have
been trying to work with MEA to try to upgrade that line or at
least to get MEA to allow them to upgrade it for MEA. Mr. Yould
stated that MEA was not cooperative and the other utilities had
to go to the legislature and say they needed to build around MEA
system. Without MEA's 20-mile segment, the Railbelt won't be
able to transmit electricity north and south. Just this year
MEA served notice to the ADA that it is not going to re-up its
contract to allow utilities to use that transmission segment to
run power north and south. This is why it is imperative to
build around MEA's line.
TAPE 03-14, SIDE B
REPRESENTATIVE HEINZE asked whether or not there is any way to
prevent one of the utilities in the Railbelt from closing down
its section whenever it wants.
MR. YOULD responded that there are avenues and venues where
these problems will be addressed. For example, the opening of
the Anchorage-Fairbanks intertie when the contract expires in
2004 will probably be addressed by the RCA. In addition, one
can always go to court.
REPRESENTATIVE DAHLSTROM invited Mr. Babcock back to the table
to respond to Mr. Yould's remarks.
MR. BABCOCK remarked that he could see that when a utility
decides not to stay a member of Mr. Yould's trade group, there
are some prices to pay. He also stated that two years ago, when
the legislature tried to solve that problem, the highway was too
narrow; it didn't have enough traffic. The legislature decided
to increase the size of that highway so that more power could be
sent north. There was $10 million appropriated to build a
frontage road. Then-Governor Knowles vetoed the appropriation,
leaving MEA responsible for paying for the upgrade and to hold
its members harmless.
MR. BABCOCK said he also thought that another reason is that for
the last 15 years the ratio of the tariff, or the wheeling rate
paid, is such that MEA pays 15 times to use the line and others
pay 1/15 to use MEA's line. Mr. Yould also suggested that the
desire of the other utilities to work together stems from their
desire to see that the $20 million appropriated to upgrade the
Anchorage-to-Fairbanks intertie, the $19 million for the Eklutna
project and the $40 million left over from the southern intertie
gets spent on something.
Number 0644
CHAIR HEINZE declared her intention to form a Digital
Development, Information, Infrastructure, and Management
subcommittee. The subcommittee will be charged with
investigating Alaska's transition to a digital economy, and
asked to make recommendations back to the House Special
Committee on Economic Development, International Trade and
Tourism regarding actions [the legislature] can take to
cultivate this important sector of the Alaskan economy.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, International Trade
and Tourism meeting was adjourned at 6:44 p.m.
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