Legislature(2019 - 2020)BELTZ 105 (TSBldg)

01/30/2020 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS

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03:32:12 PM Start
03:33:05 PM Presentation: Hydroelectric Projects in Alaska by Alaska Energy Authority
04:15:21 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: TELECONFERENCED
Hydroelectric Projects in Alaska by
Curtis Thayer, Executive Director & Bryan Carey,
Hydro Power Manager of Alaska Energy Authority
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                        January 30, 2020                                                                                        
                           3:32 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Click Bishop, Chair                                                                                                     
Senator Peter Micciche, Vice Chair                                                                                              
Senator Elvi Gray-Jackson                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
Senator Mike Shower                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION: HYDROELECTRIC PROJECTS IN ALASKA BY ALASKA ENERGY                                                                 
AUTHORITY                                                                                                                       
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
CURTIS THAYER, Executive Director                                                                                               
Alaska Energy Authority                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided an overview of hydroelectric                                                                     
projects in Alaska.                                                                                                             
                                                                                                                                
BRYAN CAREY, Hydro Power Manager                                                                                                
Alaska Energy Authority                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions regarding hydroelectric                                                                
projects in Alaska.                                                                                                             
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
                                                                                                                                
3:32:12 PM                                                                                                                  
CHAIR  CLICK  BISHOP called  the  Senate  Community and  Regional                                                             
Affairs Standing Committee meeting to  order at 3:32 p.m. Present                                                               
at the  call to order  were Senators Gray-Jackson,  Micciche, and                                                               
Chair Bishop.                                                                                                                   
                                                                                                                                
^Presentation: Hydroelectric Projects in  Alaska by Alaska Energy                                                               
Authority                                                                                                                       
Presentation: Hydroelectric Projects in Alaska by Alaska Energy                                                             
                           Authority                                                                                        
                                                                                                                                
3:33:05 PM                                                                                                                    
CHAIR BISHOP announced  that the only order of  business would be                                                               
a  presentation   by  the  Alaska   Energy  Authority   (AEA)  on                                                               
hydroelectric projects in Alaska.                                                                                               
                                                                                                                                
3:33:52 PM                                                                                                                    
CURTIS  THAYER,  Executive  Director,  Alaska  Energy  Authority,                                                               
Anchorage, Alaska, commenced on slide  2 of his presentation, Who                                                               
We Are, paraphrasing the following:                                                                                             
   • Created in 1976 by the Alaska Legislature, the Alaska                                                                      
     Energy Authority (AEA) is a  public corporation of the State                                                               
     of Alaska governed by a  board of directors with the mission                                                               
     to  "reduce  the cost  of  energy  in  Alaska." AEA  is  the                                                               
     state's energy  office and lead agency  for statewide energy                                                               
     policy and program development.                                                                                            
                                                                                                                                
CHAIR  BISHOP explained  that the  Senate Community  and Regional                                                               
Affairs  Committee  will be  more  energy  centric. He  said  the                                                               
Senate  Resources Committee  is  the final  gatekeeper on  energy                                                               
related things, noting  that Senator Micciche is  the chairman of                                                               
that committee.                                                                                                                 
                                                                                                                                
3:35:17 PM                                                                                                                    
MR. THAYER summarized slide 3, What We Do, that read as follows:                                                                
   • Energy Planning  In collaboration with local and regional                                                                  
     partners,  AEA provides  critical  economic and  engineering                                                               
     analysis to  plan the  development of  cost-effective energy                                                               
     infrastructure.                                                                                                            
   • Grants and Loans  AEA provides loans to local utilities,                                                                   
     local governments,  and independent power producers  for the                                                               
     construction  or  upgrade  of  power  generation  and  other                                                               
     energy facilities.                                                                                                         
   • Railbelt Energy  AEA owns the Bradley Lake Hydroelectric                                                                   
     Project  and  the Alaska  Intertie  (both  valued over  $600                                                               
     million).  These   assets  benefit  Railbelt   consumers  by                                                               
     reducing the cost of power.                                                                                                
   • Renewable Energy  AEA provides renewable energy and energy                                                                 
     efficiency grants, analysis, and expertise to benefit                                                                      
     Alaskans. These include hydro, biomass, wind, solar, and                                                                   
     others.                                                                                                                    
   • Power Cost Equalization    The Power Cost Equalization                                                                     
     Program reduces the cost of electricity in rural Alaska for                                                                
     residential customers and community facilities.                                                                            
   • Rural Energy  AEA constructs bulk fuel tank farms, diesel                                                                  
     powerhouses, and electrical distribution grids in rural                                                                    
     villages. AEA supports the operation of these facilities                                                                   
     through circuit rider and emergency response programs.                                                                     
                                                                                                                                
3:35:41 PM                                                                                                                    
MR. THAYER  turned to slide  4, Our Projects, and  explained that                                                               
the  statewide map  illustrates  AEA projects  over  the past  10                                                               
years. AEA  has been involved  in over 300 projects  that include                                                               
geothermal,   hydroelectric,  solar,   wind,  and   biomass.  AEA                                                               
currently has over 80 active projects in Alaska.                                                                                
                                                                                                                                
MR. THAYER  reviewed the following  projects and  programs listed                                                               
on slide 5:                                                                                                                     
   • Bradley Lake Hydroelectric Project,                                                                                        
   • Alaska Intertie,                                                                                                           
   • Bulk Fuel Upgrades,                                                                                                        
   • Rural Power System Upgrades,                                                                                               
   • Rural Utility Assistance,                                                                                                  
   • Power Cost Equalization,                                                                                                   
   • Renewable Energy Fund Grants,                                                                                              
   • Power Project Fund Loans,                                                                                                  
   • Alaska C-PACE,                                                                                                             
   • Alternative Energy,                                                                                                        
   • Energy Efficiency,                                                                                                         
   • Energy Project Development.                                                                                                
                                                                                                                                
MR. THAYER  displayed the state  map on slide 6  that illustrates                                                               
the hydropower  projects in  Alaska that AEA  is aware  of. There                                                               
are three projects in construction,  six in the design stage, and                                                               
51 projects in operation. He  explained that AEA only knows about                                                               
hydropower projects when  the project has reached out  to AEA for                                                               
technical advice, funding, or input.                                                                                            
                                                                                                                                
SENATOR GRAY-JACKSON asked if there are any projects in Akutan.                                                                 
                                                                                                                                
MR.  THAYER  replied  he  will  check  and  follow  up  with  the                                                               
information. He noted that King  Cove currently has a maintenance                                                               
project that AEA is possibly funding.                                                                                           
                                                                                                                                
SENATOR  GRAY-JACKSON disclosed  that she  used to  work for  the                                                               
City of Akutan.                                                                                                                 
                                                                                                                                
CHAIR BISHOP asked what percentage  of power generation in Alaska                                                               
comes from hydropower.                                                                                                          
                                                                                                                                
3:37:53 PM                                                                                                                    
MR. THAYER answered approximately 28  percent. The graph on slide                                                               
7 illustrates  that in  2008 Alaska generated  18 percent  of its                                                               
electric  energy from  hydropower.  That grew  to  27 percent  in                                                               
2017. The  graph also shows  that energy generation from  wind is                                                               
increasing, oil  is staying  the same, natural  gas and  coal are                                                               
both decreasing slightly.                                                                                                       
                                                                                                                                
SENATOR MICCICHE  commented that  it would have  been interesting                                                               
to see  the slide on  a kilowatt load.  He noted that  since 2008                                                               
there has  not been a lot  of variation in the  hydrocarbons, but                                                               
there was a  significant increase in renewables. He  asked if the                                                               
kilowatt  demand  increased and  if  renewables  account for  the                                                               
increase.                                                                                                                       
                                                                                                                                
MR.  THAYER answered  yes. He  explained  that over  the last  10                                                               
years there  has been  an increase  in hydroelectric  and natural                                                               
gas output.                                                                                                                     
                                                                                                                                
SENATOR MICCICHE  asked him to provide  additional information on                                                               
how energy generation has changed.                                                                                              
                                                                                                                                
MR. THAYER agreed to provide the information.                                                                                   
                                                                                                                                
3:39:25 PM                                                                                                                    
MR. THAYER  explained that the  two types of  hydropower projects                                                               
are traditional storage and run of river.                                                                                       
   • Traditional Storage projects tend to be more expensive,                                                                    
     require terrain chokepoints, and require more time for                                                                     
     permitting and construction. These projects include:                                                                       
        o Bradley Lake,                                                                                                         
        o Snettisham,                                                                                                           
        o Susitna-Watana,                                                                                                       
        o Swan Lake,                                                                                                            
        o Sweetheart Lake,                                                                                                      
        o Terror Lake.                                                                                                          
                                                                                                                                
   • Run of River projects are lower cost and tend to be                                                                        
     permitted and constructed quicker. These projects include:                                                                 
        o Delta Creek,                                                                                                          
        o Five Mile Creek,                                                                                                      
        o Gartina Falls,                                                                                                        
        o Humpback Creek,                                                                                                       
        o Knutson Creek,                                                                                                        
        o Nuyakuk River,                                                                                                        
        o Thayer Creek.                                                                                                         
                                                                                                                                
MR.  THAYER  detailed  that a  river  continues  in  run-of-river                                                               
projects.  They tend  to flow  more in  the summertime  when peak                                                               
demands  are greater  but flow  less in  the wintertime,  whereas                                                               
traditional dams store water up in the wintertime.                                                                              
                                                                                                                                
MR. THAYER reviewed the following relevant terms on slide 11:                                                                   
   • Capacity of a generator is measured in megawatts (MW) or                                                                   
     kilowatts (kW) at a single point in time.                                                                                  
   • Project Energy is power over time. Commonly measured as                                                                    
     Megawatt-hours (MWh) or kilowatt-hours (kWh).                                                                              
   • A house on the Alaska Railbelt may use 500-600 kWh per                                                                     
     month energy.                                                                                                              
   • 1 watt equals a single LED.                                                                                                
   • 1 kilowatt (1,000 watts) equals a toaster.                                                                                 
   • 1 megawatt (MW) (1,000,000 watts) equals 1,000 houses.                                                                     
 • 1 gigawatt (1,000,000,000 watts) equals 1,000,000 houses.                                                                    
                                                                                                                                
3:41:12 PM                                                                                                                    
MR.  THAYER displayed  slide 13,  Alaska  Hydropower Projects  in                                                               
Operation:                                                                                                                      
   • 51 operational hydropower projects in Alaska.                                                                              
   • Three projects under construction to increase statewide                                                                    
     capacity by 5.5 MW to be completed in 2020.                                                                                
   • Projects in design and funding to increase capacity by                                                                     
     nearly 491 MW.                                                                                                             
                                                                                                                                
MR.  THAYER  detailed  that  the  Susitna-Watana  Project  is  in                                                               
design, which explains the 491 MW increased capacity.                                                                           
                                                                                                                                
He explained  that the three projects  under construction include                                                               
the  $47 million  Battle Creek  Project that  will divert  Battle                                                               
Creek into Bradley  Lake to increase lake capacity. It  is an AEA                                                               
project  that has  the  support of  the  Railbelt utilities.  The                                                               
nearly  completed   Hidden  Basin  Project  will   also  increase                                                               
capacity. The Hiilangaay  Project on Prince of  Wales Island will                                                               
come online the summer of 2020 and have a 5 MW capacity.                                                                        
                                                                                                                                
3:42:31 PM                                                                                                                    
MR.  THAYER paraphrased  the following  information on  slide 14,                                                               
State Involvement in Hydropower Projects:                                                                                       
   • State of Alaska owns over 40 percent of statewide                                                                          
     hydropower capacity:                                                                                                       
        o Bradley Lake (AEA),                                                                                                   
        o Snettisham (AIDEA).                                                                                                   
   • State of Alaska through AEA/AIDEA has supported the                                                                        
     development of more than two-thirds of statewide hydropower                                                                
     capacity.                                                                                                                  
                                                                                                                                
He  noted that  the  photo  shows Snettisham  on  Long Lake.  The                                                               
Alaska Industrial  Development and Export Authority  (AIDEA) owns                                                               
Snettisham, AEA manages  it, and Alaska Electric  Light and Power                                                               
(AEL&P) in Juneau operates it. Mr.  Carey with AEA is the program                                                               
manager.                                                                                                                        
                                                                                                                                
He  explained that  Bradley Lake  and Snettisham  are state-owned                                                               
assets  that   account  for  42  percent   of  the  hydroelectric                                                               
production in the State of Alaska.                                                                                              
                                                                                                                                
MR.  THAYER  reviewed  the following  information  about  Bradley                                                               
Lake:                                                                                                                           
   • Located 25 miles northeast of Homer and serves Railbelt.                                                                   
   • Capacity of 120 MW.                                                                                                        
   • Completed in 1991.                                                                                                         
   • Funding by State of Alaska and Railbelt utilities.                                                                         
   • Owned by AEA and managed to the maximum extent by Railbelt                                                                 
     utilities.                                                                                                                 
                                                                                                                                
He  said  the  management  committee  for  Bradley  Lake  is  the                                                               
governing body  that meets regularly.  The Bradley Lake  photo on                                                               
slide  15 (taken  the fall  of 2019  during the  Swan Lake  Fire)                                                               
shows  the lake  at near  capacity  and spilling  over, which  is                                                               
never  desirable. Bradley  Lake lost  about $1  million worth  of                                                               
energy when it was at capacity.                                                                                                 
                                                                                                                                
3:44:04 PM                                                                                                                    
CHAIR BISHOP asked if Alaska  is reaping 100 percent benefit from                                                               
Bradley Lake.                                                                                                                   
                                                                                                                                
MR. THAYER  answered no, primarily  because of  constrained power                                                               
due to  line loss  going north into  the Anchorage  and Fairbanks                                                               
areas.  The power  lines  do not  necessarily  have the  built-in                                                               
deliverable  power capacity  that  Bradley Lake  can deliver.  At                                                               
certain  times,  the  line  loss  to Fairbanks  is  close  to  40                                                               
percent. Conversations with the  Railbelt utilities on the needed                                                               
line  upgrades,  specifically  the   fire-damaged  S&Q  line  are                                                               
ongoing. Needed  upgrades would  be from  Bradley Lake  to Quartz                                                               
Creek, which is the Hope Substation.                                                                                            
                                                                                                                                
CHAIR BISHOP asked  if an upgraded line from Bradley  Lake to the                                                               
Hope Substation would allow the state to reap maximum yields.                                                                   
                                                                                                                                
MR. THAYER replied that expensive  venture would require upgrades                                                               
in phases.  He said a  study done 10  years ago, which  AEA would                                                               
like  to  update,  looks  at  $1  billion  worth  of  power  line                                                               
infrastructure.  The  state  owns  a higher  capacity  line  from                                                               
Willow to  Healy, so  the structures are  there. To  maximize the                                                               
benefits, a  parallel line  pole configuration  is needed  in the                                                               
Kenai Peninsula.                                                                                                                
                                                                                                                                
3:46:12 PM                                                                                                                    
SENATOR MICCICHE asked if a subsea  line from Kenai to Tyonek has                                                               
been evaluated, as  opposed to a parallel line. He  noted that if                                                               
there had  been parallel lines  in 2019,  it is likely  that both                                                               
would have been lost in the fire.                                                                                               
                                                                                                                                
MR. THAYER  answered that  the conversation  is ongoing,  but not                                                               
all the utilities  are in support. The utilities  are not pushing                                                               
the conversation in any direction.                                                                                              
                                                                                                                                
MR. THAYER reviewed the following information about Snettisham:                                                                 
   • Located 30 miles southeast of Juneau and serves Juneau.                                                                    
   • Capacity of 78 MW.                                                                                                         
   • Initial completion in 1973.                                                                                                
   • Funded by the federal government.                                                                                          
   • Owned by AIDEA, managed by AEA, and operated by Alaska                                                                     
     Electric Light & Power (AEL&P).                                                                                            
                                                                                                                                
CHAIR BISHOP asked how much lifespan has Snettisham left.                                                                       
                                                                                                                                
MR. THAYER  replied the bond  payoff for Snettisham occurs  in 20                                                               
years.                                                                                                                          
                                                                                                                                
3:47:54 PM                                                                                                                    
BRYAN  CAREY,  Hydro  Power  Manager,  Alaska  Energy  Authority,                                                               
Anchorage,  Alaska, added  that  AEL&P  has hydroelectric  plants                                                               
that  have  been  in  operation  for  more  than  100  years,  so                                                               
Snettisham should be able to operate another 100 years.                                                                         
                                                                                                                                
MR. THAYER  reviewed the following  points on slide 17,  Four Dam                                                               
Pool Power Authority:                                                                                                           
   • AEA sold to local utilities in 2002:                                                                                       
        o Solomon Gulch,                                                                                                        
        o Swan Lake,                                                                                                            
        o Terror Lake,                                                                                                          
        o Tyee Lake.                                                                                                            
   • Proceeds helped establish the Power Cost Equalization                                                                      
     Program Endowment.                                                                                                         
                                                                                                                                
He  said  knowing   where  the  endowment  for   the  Power  Cost                                                               
Equalization (PCE) Program started  is important. The $28 million                                                               
PCE program helps  rural Alaska with high energy  costs. He added                                                               
that  building  the  intertie between  Willow  and  Healy  helped                                                               
Fairbanks save  $40 million.  The investment by  the state  was a                                                               
large sum  of money,  but it  provided a  $40 million  benefit to                                                               
Fairbanks and established the PCE endowment.                                                                                    
                                                                                                                                
3:49:36 PM                                                                                                                    
MR.  THAYER reviewed  the following  information  from slide  19,                                                               
Alaska Hydropower Projects in Construction:                                                                                     
   • Four projects under construction to increase statewide                                                                     
     energy by 5.5 MW to be completed in 2020:                                                                                  
        o Gunnuk Creek,                                                                                                         
        o Hidden Basin,                                                                                                         
        o Hiilangaay,                                                                                                           
        o West Fork Upper Battle Creek.                                                                                         
                                                                                                                                
CHAIR BISHOP asked if the West  Fork Upper Battle Creek will only                                                               
add water to the reservoir.                                                                                                     
                                                                                                                                
MR. THAYER answered correct; it adds capacity but not energy.                                                                   
                                                                                                                                
He explained  that Gunnuk Creek  is located in Kake,  Alaska, has                                                               
0.5 MW capacity, will be completed  in 2020, was funded by an AEA                                                               
grant and  Inside Passage Electric Cooperative  financing, and is                                                               
owned by the Inside Passage Electric Cooperative.                                                                               
                                                                                                                                
Hidden Basin is  located 22 miles southeast of  Kodiak and serves                                                               
the City of Kodiak and  surrounding communities. It adds water to                                                               
the existing dam but zero  capacity. It was completed in December                                                               
2019  and   is  financed  and   owned  by  the   Kodiak  Electric                                                               
Association.                                                                                                                    
                                                                                                                                
Hiilangaay is located 8 miles  east of Hydaburg and serves Prince                                                               
of Wales Island. It has 5  MW capacity, will be completed in late                                                               
summer or early  winter of 2020, and was funded  primarily by AEA                                                               
through grants,  loans, and Alaska Power  & Telephone. Hiilangaay                                                               
is owned by Haida Energy.                                                                                                       
                                                                                                                                
MR. THAYER explained that the  legislature, through AEA, gave the                                                               
Hiilangaay  Project  a $6  million  grant.  The legislature  also                                                               
approved an  additional $20  million loan  through the  AEA Power                                                               
Project Fund  to finance the  bulk of  the project. The  State of                                                               
Alaska  has $26  million  in the  Hiilangaay  Project and  Alaska                                                               
Power & Telephone has money in it as well.                                                                                      
                                                                                                                                
3:51:29 PM                                                                                                                    
CHAIR BISHOP noted that he met  Mr. Thayer on a plane last summer                                                               
and they talked  about hydropower. He asked Mr. Thayer  if he was                                                               
going to the Hiilangaay Project at that time.                                                                                   
                                                                                                                                
MR. THAYER  answered yes and noted  that he took the  photo shown                                                               
on slide 22 during his visit.  He pointed out that Vigor Shipyard                                                               
welders were working on the penstock shown in the photo.                                                                        
                                                                                                                                
MR. THAYER returned  to the presentation and  explained that West                                                               
Fork  Upper  Battle  Creek  is located  2  miles  [southwest]  of                                                               
Bradley  Lake  dam. It  adds  water  to  the  lake but  has  zero                                                               
capacity, will be  completed in summer 2020, is funded  by an AEA                                                               
grant and Railbelt utilities, and is owned  by AEA.                                                                             
                                                                                                                                
MR. THAYER explained that the photo  on slide 23 shows a 62-inch,                                                               
high-density  polyurethane  pipe  that  will  divert  water  into                                                               
Bradley Lake.                                                                                                                   
                                                                                                                                
CHAIR BISHOP  asked if the pipe  used for West Fork  Battle Creek                                                               
is plastic.                                                                                                                     
                                                                                                                                
MR. THAYER answered yes. He  noted that the Hiilangaay Project is                                                               
using fiberglass.                                                                                                               
                                                                                                                                
SENATOR MICCICHE  questioned how capacity is  evaluated because a                                                               
project would not be built if the capacity were zero.                                                                           
                                                                                                                                
MR.  THAYER answered  correct, it  is  the energy  behind it.  He                                                               
deferred further explanation to Mr. Carey.                                                                                      
                                                                                                                                
3:53:27 PM                                                                                                                    
MR. CAREY  explained that  the two  important terms  are capacity                                                               
and energy.  The capacity  is like  the size of  the engine  in a                                                               
truck that has  either four, six, or eight  cylinders. The energy                                                               
tells utilities how long a  certain capacity can be sustained. In                                                               
the case  of Battle Creek or  Hidden Basin, water is  added to an                                                               
existing  lake and  it  increases the  energy  available for  the                                                               
entire year. By comparison, new  hydroelectric projects must have                                                               
a  new generator  so  that is  why they  have  a capacity  number                                                               
attached.                                                                                                                       
                                                                                                                                
CHAIR BISHOP  analogized that the  cubic inches on an  engine has                                                               
not changed, but improved fuel usage has occurred.                                                                              
                                                                                                                                
MR. CAREY answered correct.                                                                                                     
                                                                                                                                
SENATOR MICCICHE asked if a hydro  turbine runs at the same speed                                                               
if there is adequate water for turbine rotation.                                                                                
                                                                                                                                
MR. CAREY answered  that the turbines he is familiar  with run at                                                               
the same speed.                                                                                                                 
                                                                                                                                
SENATOR  MICCICHE suggested  that he  think  of a  better way  to                                                               
explain capacity.  He said Mr.  Carey is saying that  capacity is                                                               
essentially  your horsepower,  whereas  Senator Bishop  described                                                               
capacity as having  more fuel available for the  times when there                                                               
is not adequate fuel due to water supply.                                                                                       
                                                                                                                                
3:55:40 PM                                                                                                                    
MR. CAREY  answered correct. He explained  that an eight-cylinder                                                               
truck will  go through fuel  from a  fixed gas tank  more quickly                                                               
than a four-cylinder truck. He said  for the most part, the lakes                                                               
have a  greater capacity than  the hydroelectric  projects really                                                               
need.  Generators  will  run  at  lower  power  than  the  actual                                                               
capacity. Bradley  Lake, which has  120 MW capacity,  operates at                                                               
42 MW  or 43 MW  on a year-round average  to avoid using  all the                                                               
water.  Monitoring  water capacity  in  a  lake occurs  to  match                                                               
demand where the generator drops down to a lower amount.                                                                        
                                                                                                                                
CHAIR BISHOP asked  what MW capacity Bradley Lake  will have when                                                               
it is  fully operational.  He noted  that Bradley  Lake currently                                                               
operates at 42 MW.                                                                                                              
                                                                                                                                
MR. THAYER answered there will a 10 percent increase.                                                                           
                                                                                                                                
CHAIR  BISHOP  calculated  that   Bradley  Lake  will  ultimately                                                               
operate at 52 percent.                                                                                                          
                                                                                                                                
MR. THAYER  reviewed the Alaska  hydropower projects that  are in                                                               
design listed on slide 25. The slide read as follows:                                                                           
   • Projects in design/funding to increase statewide energy by                                                                 
     greater than 491 MW hours                                                                                                  
        o Nuyakuk River                                                                                                         
        o Susitna-Watana                                                                                                        
        o Sweetheart Lake                                                                                                       
        o Thayer Creek                                                                                                          
                                                                                                                                
MR. THAYER detailed that Susitna-Watana  is projected to increase                                                               
capacity by  459 MW on the  average pool; Nuyakuk River  is about                                                               
12 MW; Sweetheart Lake is 19.9 MW; and Thayer Creek is 0.85 MW.                                                                 
                                                                                                                                
MR. THAYER  explained that the  Nuyakuk River project  is located                                                               
50   miles  north   of  Dillingham   and  would   serve  regional                                                               
communities, the capacity is approximately  12 MW, the completion                                                               
date and  funding are yet  to be determined,  and it is  owned by                                                               
Nushagak Electric  & Telephone Cooperative. Senate  Bill 91, that                                                               
passed in  2019, allows  for the development  and operation  of a                                                               
hydro facility in the state park.                                                                                               
                                                                                                                                
MR. THAYER  said the map on  slide 26 shows that  six communities                                                               
will benefit if  transmission lines are built to  connect to this                                                               
hydro project rather than using diesel generation.                                                                              
                                                                                                                                
3:58:56 PM                                                                                                                    
MR. THAYER  displayed slide 27  and detailed  that Susitna-Watana                                                               
is  located approximately  125 miles  northeast of  Anchorage and                                                               
would serve the  Railbelt, the average capacity  was designed for                                                               
459  MW,  and the  average  annual  energy  was projected  to  be                                                               
2,800,000 MWh.  The completion date,  funding, and  ownership are                                                               
yet to be determined.                                                                                                           
                                                                                                                                
He  reminded  the  committee that  Governor  Walker  shelved  the                                                               
Susitna-Watana project in 2015. No money  has been spent on it to                                                               
date, but  AEA has  completed about  two-thirds of  the licensing                                                               
and engineering.  He emphasized that  this is a valid  project as                                                               
far as construction. AEA's view  is that a stage-gate approach is                                                               
appropriate to  determine what  permits are  still valid  and how                                                               
much  it will  cost for  the additional  licenses. The  state has                                                               
already  spent $200  million  and estimates  for  a FERC  license                                                               
range from $50 million to $100 million.                                                                                         
                                                                                                                                
SENATOR GRAY-JACKSON  asked him  to comment on  the organizations                                                               
that oppose the Susitna-Watana project.                                                                                         
                                                                                                                                
MR.  THAYER communicated  that a  hearing  on the  Susitna-Watana                                                               
project  is scheduled  for  February 11.  He  clarified that  the                                                               
project  is  not  using  state  money;  the  information  in  the                                                               
presentation is  based on  existing information  and the  work to                                                               
date.  He   reiterated  that   completion  is   hypothetical  and                                                               
explained that  when the project  was put into abeyance  in 2015,                                                               
FERC  licensing  looked  to  be  a year  or  two  away.  He  said                                                               
construction time  for this  size of  dam is  close to  10 years.                                                               
Project financing for the $4.5  billion to $5 billion project was                                                               
available in  2000. Updated studies  have not occurred  since the                                                               
project was suspended.                                                                                                          
                                                                                                                                
4:01:28 PM                                                                                                                    
SENATOR  GRAY-JACKSON pointed  out  that  opposition to  Susitna-                                                               
Watana is not  about the funding, but about  the environment. She                                                               
asked his opinion of the opposition.                                                                                            
                                                                                                                                
MR.  THAYER replied  that any  project, but  particularly one  of                                                               
this magnitude,  needs renewed  stakeholder engagement  because a                                                               
lot has changed with hydro-dam  technology. The project will have                                                               
to  go through  every step  of the  permitting process  again. He                                                               
clarified that AEA is not restarting  the project, but if it were                                                               
completed  it  would  take  the Railbelt  to  almost  60  percent                                                               
renewable. That would  meet the governor's goal as well  as a 10-                                                               
year-old state  goal of being  more than 50 percent  renewable by                                                               
2025. He conceded that the dam will not be built by 2025.                                                                       
                                                                                                                                
SENATOR MICCICHE  remarked that he struggles  between the balance                                                               
of  reduced carbon  production of  renewables  versus impacts  on                                                               
anadromous streams and downstream water  flow. He said aside from                                                               
the  cost,  Bradley  Lake  is  producing  at  about  $0.0450  per                                                               
kilowatt  and the  rest  of the  Railbelt,  which is  hydrocarbon                                                               
fueled, is probably $0.1300 per kilowatt.                                                                                       
                                                                                                                                
MR. THAYER concurred.                                                                                                           
                                                                                                                                
SENATOR MICCICHE  said he does  not know where the  balance lies,                                                               
but ongoing public discussions are worth having.                                                                                
                                                                                                                                
MR.  THAYER noted  that when  the project  was first  proposed in                                                               
2014, the  cost per  kilowatt appeared to  be $0.0600  to $0.065.                                                               
The  cost discrepancy  into the  Railbelt is  clear with  Bradley                                                               
Lake  at  $0.045 per  kilowatt,  Susitna-Watana  at $0.0650,  and                                                               
hydrocarbons at $0.0800 to $0.1000 per kilowatt.                                                                                
                                                                                                                                
4:04:05 PM                                                                                                                    
CHAIR  BISHOP  asked if  hydropower  is  classified as  renewable                                                               
energy today or it is under discussion.                                                                                         
                                                                                                                                
MR.  THAYER  answered  that  the   discussion  is  ongoing.  Some                                                               
classify it as renewable and some do not.                                                                                       
                                                                                                                                
MR. THAYER communicated that Sweetheart  Lake is located 33 miles                                                               
southeast  of  Juneau,   the  capacity  will  be   19.9  MW,  the                                                               
completion  date and  funding are  to  be determined,  and it  is                                                               
owned by Juneau Hydropower Inc.                                                                                                 
                                                                                                                                
He detailed that Sweetheart Lake  has a Federal Energy Regulatory                                                               
Commission   (FERC)   license.   AEA  is   working   through   an                                                               
interconnection agreement with Snettisham  to move the power that                                                               
the Regulatory  Commission of Alaska (RCA)  must approve. Funding                                                               
and  a  business model  are  still  needed,  but the  project  is                                                               
feasible. AEA  is helping  through the  first step  of connecting                                                               
with Snettisham, but Juneau Hydropower  Inc. must build their own                                                               
transmission line south of the Snettisham line.                                                                                 
                                                                                                                                
4:05:48 PM                                                                                                                    
MR. THAYER said Thayer Creek is  located 6 miles north of Angoon,                                                               
the  capacity  is   0.85  MW,  the  completion  date   is  to  be                                                               
determined,  funding  is  by AEA,  Kootznoowoo  Inc.  and  Inside                                                               
Passage   Electric  Cooperative,   and  the   dam  is   owned  by                                                               
Kootznoowoo Inc.                                                                                                                
                                                                                                                                
He explained  that AEA  delayed the project  for seven  years. An                                                               
advisory committee put conditions on  the grant money and for six                                                               
years the Alaska  Department of Law argued that  the community in                                                               
Kootznoowoo did  not meet the grant  requirements. AEA reexamined                                                               
the Capital  Project Submission  and Information  System (CAPSIS)                                                               
and  discovered   that  there  were  no   requirements  when  the                                                               
legislature  appropriated  the  money.  Therefore,  AEA  and  the                                                               
Alaska Department of  Law did not have a right  to put conditions                                                               
on the  money. The funding is  not all lined up  but Thayer Creek                                                               
will hopefully be constructed.                                                                                                  
                                                                                                                                
CHAIR BISHOP asked if Angoon would  get 100 percent of its energy                                                               
from hydro once the project is completed.                                                                                       
                                                                                                                                
MR. THAYER answered that he is not  sure and will get back to the                                                               
committee with the information.                                                                                                 
                                                                                                                                
4:07:40 PM                                                                                                                    
MR. THAYER concluded the presentation  reading the following from                                                               
slide 30:                                                                                                                       
   • AEA provides energy solutions to meet the unique needs and                                                                 
     opportunities of Alaska's rural and urban communities.                                                                     
                                                                                                                                
MR. THAYER said  AEA knows of about 90 projects  in the state and                                                               
is involved  in about half.  He offered to share  the spreadsheet                                                               
of  all  the projects  with  the  committee.  He noted  that  one                                                               
project was built in 1904 and  is still in operation and tracked.                                                               
AEA usually  lists projects for  larger communities and  does not                                                               
necessarily list small-demand projects.                                                                                         
                                                                                                                                
CHAIR BISHOP  commented that there are  hydropower projects built                                                               
pre-statehood that are off the grid and unknown.                                                                                
                                                                                                                                
MR. THAYER agreed and explained  that AEA primarily keeps tabs on                                                               
projects that  involve state money  or technical  advice provided                                                               
by AEA.                                                                                                                         
                                                                                                                                
CHAIR BISHOP  asked if AEA has  maintained an archive on  all the                                                               
Susitna-Watana studies dating back to the 1980s.                                                                                
                                                                                                                                
MR. CAREY answered that AEA has  a large library on microfiche or                                                               
portable document format (PDF) for the project.                                                                                 
                                                                                                                                
4:09:43 PM                                                                                                                    
CHAIR BISHOP asked if there  are alternative rivers and potential                                                               
outputs in the Healy and Cantwell area.                                                                                         
                                                                                                                                
MR. CAREY  answered that  there are  alternative rivers,  such as                                                               
the  Nenana  River,  but  they  all have  less  energy  and  less                                                               
wintertime  storage  than  the  Susitna  River.  The  alternative                                                               
rivers  have a  variety  of permitting  and  fisheries issues  as                                                               
well.                                                                                                                           
                                                                                                                                
CHAIR  BISHOP  thanked  Mr.  Thayer   and  Mr.  Carey  for  their                                                               
presentation.  He said  the  committee  might request  additional                                                               
data on Susitna-Watana.                                                                                                         
                                                                                                                                
SENATOR MICCICHE  remarked that the  state has gone  through high                                                               
revenue  years since  the creation  of AEA  in 1976.  One of  the                                                               
greatest challenges in  Alaska is the high cost of  energy and so                                                               
much of  the state  has the  diesel reset  that is  cumbersome at                                                               
best.                                                                                                                           
                                                                                                                                
SENATOR MICCICHE asked if consideration  has been given to having                                                               
a longer-term  statewide energy  plan that  captures the  best of                                                               
the  best regionally  for future  potential between  diesel, gas,                                                               
hydropower, hydrokinetic,  geothermal, wind, solar, or  tidal. He                                                               
said even  a long-term plan will  help in evaluating what  a goal                                                               
may look like. He also discounted  the statement that some do not                                                               
consider hydro as renewable.                                                                                                    
SENATOR MICCICHE stressed  that his question is  not a reflection                                                               
on AEA  because the  legislature has  not made  an energy  plan a                                                               
priority.  He  pointed out  that  Alaskans  are having  the  same                                                               
struggles they have had for 50  years and it seems like there has                                                               
been very little forward motion.                                                                                                
                                                                                                                                
4:12:17 PM                                                                                                                    
MR. THAYER  said AEA  completed a statewide  energy plan  in 2010                                                               
and  it is  time  for an  update  because a  lot  of things  have                                                               
changed since then.                                                                                                             
                                                                                                                                
He  observed  that  the  legislature   made  renewable  energy  a                                                               
priority when prices were high.  He pointed out that $268 million                                                               
flowed  through AEA  into various  projects that  displaced about                                                               
$75 million in diesel per  year. That investment has clearly paid                                                               
for itself, but  as money has dwindled, so have  the projects. He                                                               
remarked that  the state has  a lot of  projects that are  on the                                                               
cusp of being economic.                                                                                                         
                                                                                                                                
MR. THAYER suggested that it is  time to reevaluate and look at a                                                               
statewide energy  plan. Technology  has changed  dramatically for                                                               
solar and wind,  and AEA still has experts in  those fields. Even                                                               
though there have  not been the resources  or prioritization, AEA                                                               
does have a plan, but it is sorely outdated.                                                                                    
                                                                                                                                
CHAIR BISHOP  said he was  part of Governor Palin's  cabinet amid                                                               
the implementation  of the  previous energy  plan. He  noted that                                                               
Senator  Coghill's staff  showed  him a  territorial energy  plan                                                               
from the 1950s  and remarked that there is nothing  new under the                                                               
sun.  He  observed  that  the   same  1950s  project  discussions                                                               
occurred in  2010. He  concurred with  Senator Micciche  that AEA                                                               
should receive direction  to do more. He also  questioned the 10-                                                               
year construction  timeline on Susitna-Watana  when the  2,000 MW                                                               
Hoover Dam took less than five years to construct.                                                                              
                                                                                                                                
4:15:21 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Bishop adjourned the Senate  Community and Regional Affairs                                                               
Standing Committee meeting at 4:15 p.m.                                                                                         

Document Name Date/Time Subjects
AEA Alaska Hydropower Presentation to Senate Community and Regional Affairs Committee 1.30.2020.pdf SCRA 1/30/2020 3:30:00 PM
Hydro Power