Legislature(2011 - 2012)BARNES 124
01/27/2011 03:00 PM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Energy Authority | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
January 27, 2011
3:04 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Lance Pruitt, Co-Chair
Representative Bob Lynn
Representative Dan Saddler
Representative Pete Petersen
Representative Chris Tuck
MEMBERS ABSENT
Representative Kurt Olson
OTHER LEGISLATORS PRESENT
Representative Carl Gatto (via teleconference)
COMMITTEE CALENDAR
PRESENTATION: ALASKA ENERGY AUTHORITY
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
MICHAEL HARPER, Acting Executive Director
Alaska Energy Authority (AEA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Introduced Bryan Carey, Technical Engineer
for AEA, and Sara Fisher-Goad, Deputy Director-Operations, for
the Alaska Industrial Development & Export Authority (AIDEA) and
AEA.
BRYAN CAREY, Technical Engineer
Alaska Energy Authority (AEA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Gave a PowerPoint presentation titled,
"Railbelt Large Hydroelectric," that was an overview on the
"Railbelt Large Hydro Evaluation Preliminary Decision Document"
issued by AEA and dated 11/23/10.
RICH WILSON, Spokesperson
Alaska Ratepayers Inc. (Alaska Ratepayers)
Anchorage, Alaska
POSITION STATEMENT: Testified on the presentation by AEA.
SARA FISHER-GOAD, Deputy Director-Operations
Alaska Industrial Development & Export Authority (AIDEA) and AEA
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Reviewed the schedule of the Susitna
Hydroelectric Project and answered questions regarding the
financing of the project.
BILL NOLL, Spokesperson
Alaska Ratepayers Inc. (Alaska Ratepayers)
Anchorage, Alaska
POSITION STATEMENT: Answered a question and commented during
the presentation by AEA.
ACTION NARRATIVE
3:04:26 PM
CO-CHAIR NEAL FOSTER called the House Special Committee on
Energy meeting to order at 3:04 p.m. Representatives Foster,
Saddler, Petersen, Tuck, Lynn, and Pruitt were present at the
call to order. Also in attendance was Representative Carl Gatto
via teleconference.
^PRESENTATION: ALASKA ENERGY AUTHORITY
PRESENTATION: ALASKA ENERGY AUTHORITY
3:05:22 PM
CO-CHAIR FOSTER announced that the only order of business would
be a presentation by AEA on the "Railbelt Large Hydro Evaluation
Preliminary Decision Document" dated 11/23/10.
3:05:37 PM
CO-CHAIR FOSTER introduced committee staff.
3:07:39 PM
MICHAEL HARPER, Acting Executive Director, Alaska Energy
Authority (AEA), Department of Commerce, Community & Economic
Development (DCCED), introduced Bryan Carey, Technical Engineer
at AEA and Sara Fisher-Goad, Deputy Director-Operations, AIDEA
and AEA, who would present the report.
3:08:31 PM
BRYAN CAREY, Technical Engineer, Alaska Energy Authority (AEA),
Department of Commerce, Community & Economic Development
(DCCED), began with a brief history of the two proposed
hydroelectric (hydro) projects. He displayed a map that showed
the locations of the Watana dam site on the Susitna River and
the Chakachamna intake site on the Chakachamna River. In the
early 80's both of the sites were studied by the Alaska Power
Authority. Before the studies were discontinued, the cost of
building the Chakachamna project was estimated at $1.5 billion.
For the Susitna project, the original plan called for building
two dams, one at Watana and one at Devil's Canyon, 30 miles
downstream. Due to declining state revenue, the project was
reconfigured to a three-stage project beginning with building a
lower Watana dam, followed by a dam at Devil's Canyon, and
finally raising the height of the Watana dam from 700 feet to
885 feet during the third stage of construction. The final cost
for the three-stage project was estimated at $5 billion. In
1984 the price of oil dropped to approximately $9 per barrel,
further decreasing state revenue, and there were sufficient
reserves of natural gas in Cook Inlet to provide low-cost
electricity. Since then, gas reserves in the Cook Inlet have
declined and the generation and transmission infrastructure
built by the utilities has aged. Furthermore, last year the
state legislature passed a state energy policy which set a
statewide goal of achieving 50 percent renewable energy use by
2025. Looking at the possibilities to reach that goal, and the
need for new generation along the Railbelt, Mr. Carey advised
the only way to reach the renewable energy goal was to follow
the 2010 AEA Regional Integrated Resource Plan (RIRP)
recommendation and study the two hydro projects. Over the past
year AEA has looked at the cost and impacts of the two projects
in depth. He then displayed a map showing the location of the
Watana dam site and powerhouse 40 miles south of the Denali
Highway and 90 miles upstream of Talkeetna on the Susitna River.
The dam would be approximately 700 feet tall - although it may
be referred to as the lower Watana project - it is a very large
dam, standing 550 feet above ground. He furnished a map showing
the location of the Chakachamna project east of Lake Clark
National Park and Preserve (national park), and upstream of the
Trading Bay State Game Refuge (refuge). This project uses a
lake-tap that diverts the water from the existing Chakachatna
River over to the McArthur River valley through a 10-12 mile
long tunnel. A significant feature of this proposal is the
challenge of obtaining permits to divert water from one river
system to another as resource agencies will require sufficient
environmental flow for existing salmon, and the amount of energy
produced by the project would be reduced proportionately.
3:14:17 PM
MR. CAREY explained the dam on the Susitna River at Watana would
create a reservoir approximately 39 miles long and 2 miles wide,
situated 30 miles above significant salmon habitat; in fact,
previous studies did not find any salmon above the dam location.
In 2003, some Chinook salmon were found, but it is uncertain
whether they are only present in low-water years. Further,
there would be some loss of wildlife habitat as the reservoir
fills, but the fisheries impact is believed to be minimal as
99.9 percent of salmon in the Susitna River spawn below this
area. In comparison, approximately 40,000 red salmon travel up
through Chakachamna Lake to the national park and it is known
that the lake contains Lake Trout, Dolly Varden, Whitefish, and
perhaps spawning salmon. Initially, the diversion of water by
the Chakachamna project could possibly cause the wetlands to dry
out, affecting salmon habitat in the refuge, potentially
blocking migration, and substantially affecting the salmon
downstream. Furthermore, locating the powerhouse in a different
river system may require catching the salmon and trucking them
into the lake or to the proper river system. Another concern is
that juvenile salmon may follow the powerhouse current into the
powerhouse.
3:17:12 PM
MR. CAREY cautioned that the Federal Energy Regulatory
Commission (FERC) licensing for the Chakachamna project may also
be a problem as the U.S. National Park Service notified FERC
that Kenibuna Lake, located within the national park, may be
hydrologically connected to Chakachamna Lake and if so, an act
of Congress is required to issue a FERC permit. Mr. Carey then
compared the energy produced by the two projects: Susitna
installed capacity would be 600 megawatts (MW), its average
energy would be 2,600 gigawatt hours per year (GWhr/yr), and it
would provide about 50 percent of the annual energy use by the
Railbelt. Chakachamna's installed capacity would be
approximately 300 MW, its average energy would be 860-1,100
GWhr/yr, and it would provide about 20 percent of the annual
energy use by the Railbelt - an amount that is unlikely to reach
the state's goal. Slide 7 was a graph titled, "Railbelt Demand"
which indicated that the Railbelt electrical demand for power
peaks during the winter months and decreases during the summer.
Energy output from both proposals also peaks during the summer,
but the big difference between the projects is that Chakachamna
does not have capacity for water storage thus its output during
the winter is likely to be less than that produced by Bradley
Lake Hydroelectric Project (Bradley Lake Hydro); however,
Susitna would produce a significant amount of energy during the
winter. In response to Representative Saddler, he explained
that during the period of high water flow in the summer the
proposed Susitna project could store 25 percent for flow in the
winter.
3:20:37 PM
MR. CAREY displayed slide 8 titled, "Railbelt Energy: Energy by
Resource Type." He explained that the hydro energy shown in
yellow on the graph represents power produced by the proposed
Susitna project, beginning in 2025. He noted that energy
produced by natural gas is still required by the utilities for
the generation of power through 2059. Slide 9 titled,
"Estimated Cost of Power," was a comparison of the cost of power
from three projects, not including operation, maintenance, and
utility distribution costs: Susitna Embankment with 50 percent
state contribution and 30 year bonds; Susitna Roller Compacted
Concrete (RCC) with 50 percent state contribution and 30 year
bonds; Chakachamna with 50 percent state contribution and 30
year bonds. The estimated cost after the Susitna project
constructed with an embankment dam is approximately 6 cents per
kilowatt hour (kW/hr), which is about the same as the present
cost. If the Susitna project were constructed by RCC, the cost
drops to 5 cents per kW/hr. The cost of energy from Chakachamna
would be about 12 cents per kW/hr. The state's contribution to
the chosen project could be handled in many different ways.
3:24:44 PM
MR. CAREY displayed a slide of Bradley Lake Hydro, which is the
largest project in the state and an example of an embankment
dam. There are no fish present in the lake and the water
released is for the benefit of fish below the dam. If built as
an embankment dam, the Susitna dam would be similar, but taller.
He then displayed a slide of the Al Wehdah Hydroelectric Project
in Jordan which was an example of a RCC constructed dam. This
method uses concrete, but the concrete is placed using thicker
layers, which saves time and material. Construction of an
expandable embankment dam at Watana would require 33 million
cubic yards of material, but using RCC construction, only 7.5
million cubic yards are needed and construction time is reduced.
Mr. Carey further explained that raising the height of an
embankment dam by 185 feet would require 30 million yards of
material, whereas he estimated the amount needed to raise a RCC
constructed dam to the higher stage would be 7 million cubic
yards.
3:27:40 PM
MR. CAREY, in response to a question, acknowledged that the
specifications on a RCC constructed dam "are not necessarily as
tight as what the conventional concrete is, but one of the big
differences is ... they are able to put it on in much thicker
layers." Usually, if concrete is applied in thick layers it
begins to heat and must be cooled to prevent cracks. But in the
case of roller compacted concrete, other materials are added and
the roller machine removes all of the air voids with vibration.
3:28:41 PM
REPRESENTATIVE PETERSEN asked for the size of the tallest RCC
constructed dam.
MR. CAREY said there are completed RCC dams over 700 feet, and
some are under design around the world reaching close to 1,000
feet. He related the Susitna timeline: three and one-half
years for licensing and final application document; three years
for FERC processing and follow-up; four and one-half years for
construction; power generation within approximately eleven
years. The next steps for the Susitna project are: hold public
meetings from late February through mid March; begin engineering
and environmental studies including data gap analysis; meet with
resource agencies; mapping; form working groups with
stakeholders and landowners; work on access issues; if
authorization and funding are received, file the FERC notice of
intent and preliminary application document. He observed that
until the project is official with FERC, some of the resource
agencies resist spending time on the project. Further steps
would be undertaking the FERC draft environment study plans,
along with the engineering evaluation of embankment versus RCC
dam construction, and determining the best type and location of
the powerhouse. In response to Representative Tuck, he said
that some of the resource agencies involved in addition to FERC
are the U. S. Fish and Wildlife Service (USFWS), the Bureau of
Land Management (BLM), the U.S. National Park Service (NPS), the
National Marine Fisheries Service (NMFS), the Alaska Department
of Fish and Game (ADFG) and the Department of Natural Resources
(DNR). All of these agencies have mandatory "conditioning
powers" that cannot be easily overruled by FERC. He assured the
committee the probability of getting a license is very good,
although the question is what conditions will be attached.
3:34:28 PM
REPRESENTATIVE TUCK asked how the state would fare with the
federal agencies.
MR. CAREY advised the federal agencies will be diligent
regarding the project, although this project has advantages over
other hydro projects in that there are few fish affected, and it
is a glacial river with less environmental impact than
traditional hydro projects in the Lower 48.
3:35:38 PM
REPRESENTATIVE SADDLER asked whether the Environmental
Protection Agency (EPA) would be involved.
MR. CAREY was unsure, but surmised that 150-200 permits would be
needed for a project like this.
3:36:13 PM
REPRESENTATIVE PETERSEN asked what would be needed to upgrade
the transmission lines to distribute the electricity from the
powerhouse to the current electric grid.
MR. CAREY said the Watana site is approximately 35-40 miles east
of the location of the existing northern intertie. The cost
estimate that was done covers bringing the power lines to the
intertie. Soon upgrades will be required for the intertie,
regardless of whether the project proceeds. The cost of the
upgrades ranges from $500-$800 million and the utilities will
prioritize this task. Mr. Carey then listed the benefits of the
Susitna project: greater than 100 year life; expandable for
future growth by adding dams on the river or raising the height
of the dam; a source of predictable, secure, low cost energy;
insulates the state from impacts of world events; income from
the sale of power stays in the state; necessary to reach the
state goal of 50 percent renewable by 2025; lower cost for
electricity in the long-term.
3:39:59 PM
RICH WILSON, spokesperson, Alaska Ratepayers Inc. (Alaska
Ratepayers), stated that his organization was developed out of
concern over the volatility of electric rates over the last ten
years. Alaska Ratepayers believes the best way to provide
affordable electricity for the Railbelt, for at least the next
100 years, is the construction of the proposed Susitna project
at Watana. His organization also supports the other findings of
the AEA "Railbelt Large Hydro Evaluation Preliminary Decision
Document." Mr. Wilson said that his organization is a group of
informed citizens that over the past two and one-half years has
developed the following goals: endorse the governor's proposed
appropriation of $65 million for the FERC application and an
additional $65 million needed to proceed to the construction
stage; endorse the appointment of an independent agency for the
development, construction, and maintenance of the project by the
authorizing legislation proposed by Alaska Ratepayers; endorse
the immediate building of a project development fund. Mr.
Wilson stated that if the legislature uses the Bradley Lake
Hydro model for financing, a project fund of approximately $2
billion is necessary. The project fund is essential to reach
the goal of a basic infrastructure for the future of many
Alaskans. He concluded that his organization believes this is
an excellent project and wants to be a part of the public
dialog.
3:44:04 PM
SARA FISHER-GOAD, Deputy Director-Operations, Alaska Industrial
Development & Export Authority (AIDEA) and Alaska Energy
Authority (AEA), Department of Commerce, Community & Economic
Development (DCCED), informed the committee that the schedule of
the Susitna Hydroelectric Project indicates how much of the
project can be completed with the FY 2011 funding limit of $10
million, and the proposed $65.7 million appropriation. [The
schedule provided in the committee packet was labeled, "Task
Name: Susitna Schedule," page 1, dated 1/24/11, and prepared by
AEA and Cardno ENTRIX]. She advised that the schedule provides
"a high-level approach in how we would get from where we are now
to constructing the project, but understanding that there's more
detail to be put in here, and there's probably some refinement
to go on."
3:45:44 PM
REPRESENTATIVE TUCK asked Mr. Wilson how Alaska Ratepayers
determined an additional $65 million was needed.
MR. WILSON expressed his understanding that there is a second
phase, after the FERC application, during which the regulators
begin an environmental impact study (EIS) and which will require
a lot of effort on the part of the state. The additional funding
would get the project to the start of construction.
3:47:00 PM
REPRESENTATIVE TUCK then asked whether Alaska Ratepayers wants
an independent agency - outside the state - created.
3:47:20 PM
BILL NOLL, spokesperson, Alaska Ratepayers Inc. (Alaska
Ratepayers), said yes. Alaska Ratepayers looked at the
possibility of expanding AIDEA or AEA, or resurrecting the
Alaska Power Authority for this task; however, the dimension of
the project and the national agencies involved warrant an
independent entity, with staff that "live and breathe this
project and don't ... get distracted when they come to the
office with other important projects or programs ...." Using
its members' experience, Alaska Ratepayers drafted legislation
toward that end.
3:50:23 PM
MR. CAREY, in response to Representative Tuck, clarified that
the average age of dams currently in operation is 50 years and
the average life is unknown.
3:50:38 PM
REPRESENTATIVE TUCK asked about the effect of siltation on the
life of a glacier-fed dam.
MR. CAREY explained that because the lake is almost 39 miles
long, most of the silt will drop out; in fact, it was estimated
the active storage area of the dam would not be affected for 100
years. He was unsure of the effect on the life of the turbine
blades. In further response, he noted that Bradley Lake Hydro
is less than 10 miles from the location of glaciers and the
runners are not being harmed by silt.
3:52:21 PM
REPRESENTATIVE TUCK then asked for the distance to the Devil's
Canyon phase of the project.
MR. CAREY stated that the original Devil's Canyon project is 30
miles downstream from Watana.
3:52:35 PM
CO-CHAIR PRUITT asked whether the effects of siltation further
down the river, and past the dam, would be a concern during
permitting.
MR. CAREY answered that the Chulitna River is the source of much
of the silt in the Susitna River and the flow of the Susitna
affects the distribution of the silt. Additional studies are
needed on this question.
3:53:39 PM
REPRESENTATIVE GATTO asked whether other dam projects have been
considered and rejected.
MR. CAREY answered that one other dam under consideration is
located at Glacier Fork - a project that has little water
storage and that would provide very little energy during the
winter - and any others of significant size in the state have
"fish issues." In response to Representative Gatto's question
on whether the completion of a gas pipeline will nullify the
need for alternative forms of energy, such as hydro, Mr. Carey
said the Susitna project will reduce the amount of natural gas
needed for power generation, but the utilities will still need
gas for power generation in Anchorage and homeowners will still
need gas for heating purposes. The Susitna project will reduce
the amount of gas needed and will bring the state to the 50
percent renewable energy goal.
3:55:48 PM
REPRESENTATIVE SADDLER requested information on the ownership
and classification of the land surrounding the proposed dam.
MR. CAREY indicated identifying all of the landowners in the
area is a task to be completed this year. Known major
landowners are: BLM, the Cook Inlet Region, Inc. (CIRI), and
the Tyonek Native Corporation (TNC). Regarding the population,
he said there are lodges on lakes in the vicinity, but no one
lives where the reservoir would be. In further response to
Representative Saddler, he was uncertain whether there are
mineral deposits that would be covered by the reservoir.
3:56:59 PM
REPRESENTATIVE LYNN asked whether the construction of a gas
pipeline negates the need for the dam, or "can they work
together?"
MR. CAREY expressed the agency's belief that both projects can
occur; in fact, even with the dam, gas is still needed. As a
matter of fact, if a gas pipeline is built without the hydro,
future energy costs will be higher and the state will not reach
its goal of 50 percent renewable.
3:57:57 PM
REPRESENTATIVE GATTO assumed the "all-in" cost is $5 billion,
including the dam and the transmission lines, and asked what the
price of electricity delivered to Anchorage or Fairbanks would
be.
MR. CAREY advised that the retail price would likely be similar
to the present price, depending on the consumers' utility. The
project may lower the cost in Fairbanks and retain the same cost
in Anchorage; however, the retail price would vary within the
region.
3:58:56 PM
REPRESENTATIVE PETERSEN asked whether the proposed dam is
located in a highly seismic area and if an event would put
Talkeetna in jeopardy.
MR. CAREY acknowledged that almost all of the state, with the
exception of the North Slope, is considered to be a high seismic
area and Talkeetna is approximately 90 miles below the dam site.
He assured the committee that of tens of thousands of dams
around the world, the engineers have found only one failure of a
dam and it was actually built on a fault line. There are no
fault lines identified under the proposed site.
4:00:36 PM
REPRESENTATIVE TUCK commented on past proposed dam projects,
going back to the 1950's, and opined they were not completed
primarily because of fish issues. Hydro power will keep the
price of energy level for Anchorage.
4:02:13 PM
MS. FISHER-GOAD addressed the Alaska Ratepayers' suggestion that
an independent agency is necessary to manage the project. She
reported that the House and Senate have introduced proposed
legislation that will allow AEA to establish a subsidiary
corporation for the purposes of owning a specific project. She
opined that the agency, although it has a statewide focus, can
manage a substantial new project in addition to its existing
work. Further, the proposed legislation incorporates a fiscal
note to establish and staff a project office.
4:04:20 PM
MR. NOLL expressed his appreciation for the expertise of Ms.
Fisher-Goad and Mr. Harper.
4:05:12 PM
REPRESENTATIVE GATTO observed that a 40-mile-long lake will be
populated with fish in the future. Once the fish are in the
lake, he inquired whether agencies charged with the protection
of fish will become involved.
MR. CAREY reminded the committee the lake will be very cold and
silty. After the license is issued and the dam is constructed,
its operation will be unaffected by changing conditions for at
least 50 years, until the license is renewed.
4:07:08 PM
REPRESENTATIVE SADDLER asked for the "downside" of this
proposal.
4:07:20 PM
MR. CAREY explained that the project did not proceed in the 80's
because of the lack of financing and an abundance of clean gas
from the Cook Inlet. At this time the state is in a better
financial position. The downside is that the utilities cannot
do this project, or the other generation projects required along
the Railbelt, without a contribution of capital from the state.
4:08:11 PM
REPRESENTATIVE SADDLER pointed out the expected life of the dam
is 100 years or more, and suggested extending the duration of
the bonds beyond 30 years.
MS. FISHER-GOAD advised it is "a bit premature" to talk about
financing. She reported the agency discussed whether the state
would want to buy the power down assuming a 50 percent capital
contribution, or buy the power down to a certain cost at a
wholesale rate. She agreed that a 30-year payback could be
extended. The agency is studying financing using the "Bradley
model" wherein the state participated with 50 percent financing
of Bradley Lake Hydro, and the outstanding debt is being paid
through a power sales agreement between the utilities and AEA.
Under this successful model, after 10 years the utilities will
continue to pay. The "Railbelt Large Hydro Evaluation
Preliminary Decision Document" has been well received, but there
is a lot of work yet to be done; in fact, discussions with
various utilities and appropriate departments within the state
are underway.
4:11:55 PM
MR. CAREY, in response to Representative Tuck, clarified the
chart titled, "Railbelt Demand." In further response, he stated
that all of the extra energy produced in the summer by the
Watana dam on the Susitna would be sold because, during the time
of high output, the utilities would take their other sources of
energy off-line for maintenance.
4:13:53 PM
CO-CHAIR FOSTER thanked the presenters.
4:15:05 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 4:15 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AEA Presentation on Railbelt Large Hydroelectric PowerPoint.ppt |
HENE 1/27/2011 3:00:00 PM |
Alaska Energy Authority Presentation |
| Railbelt Large Hydro Evaluation Preliminary Decision Document, 23 November 2010.pdf |
HENE 1/27/2011 3:00:00 PM |
Alaska Energy Authority Presentation |
| AEA Susitna-Watana Schedule.pdf |
HENE 1/27/2011 3:00:00 PM |
Alaska Energy Authority Presentation |