Legislature(2011 - 2012)BUTROVICH 205
01/26/2011 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| Alaska Energy Report | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
January 26, 2011
3:32 p.m.
MEMBERS PRESENT
Senator Joe Paskvan, Co-Chair
Senator Thomas Wagoner, Co-Chair
Senator Bill Wielechowski, Vice Chair
Senator Bert Stedman
Senator Lesil McGuire
Senator Hollis French
Senator Gary Stevens
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Senator Joe Thomas
Senator Cathy Giessel
COMMITTEE CALENDAR
ALASKA ENERGY REPORT
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
MIKE HARPER, Acting Executive Director
Alaska Energy Authority (AEA)
Anchorage, AK
POSITION STATEMENT: Introduced his team.
BRYAN CAREY, Project Manager
Alaska Energy Authority (AEA)
POSITION STATEMENT: Presented the Alaska Energy Report.
SARAH FISHER-GOAD, Deputy Director
Operations
Alaska Energy Authority (AEA)
POSITION STATEMENT: Commented on Alaska Energy Report issues.
ACTION NARRATIVE
3:32:36 PM
CO-CHAIR WAGONER called the Senate Resources Standing Committee
meeting to order at 3:32 p.m. Present at the call to order were
Senators Stevens, French, Wielechowski, Co-Chair Paskvan, and
Co-Chair Wagoner.
^Alaska Energy Report
Alaska Energy Report
3:33:53 PM
CO-CHAIR WAGONER invited Mr. Harper to give his presentation.
MIKE HARPER, Acting Executive Director, Alaska Energy Authority
(AEA), introduced his team. He said that he thinks the best way
to get to the goal of 50 percent renewable energy by 2025 is
with a big hydro project in South-central near the Railbelt
region, and he believes the Susitna hydro project does it.
3:35:01 PM
SENATORS STEDMAN and MCGUIRE joined the committee.
3:35:17 PM
BRYAN CAREY, Project Manager, Alaska Energy Authority (AEA),
said last year the AEA completed a Regional Integrated Resource
Plan (RIRP) that documented the need for a large amount of new
generation for the Railbelt as the current generation is aging
out and the gas supplies in Cook Inlet are decreasing.
Last year, he said, the Alaska Legislature passed a state energy
policy in HB 306 that directs the state to set the goal of
getting 50 percent of electrical generation from renewable and
alternative energy by 2025. The only way you can meet that is to
have a large hydro facility, and most probably on the Susitna
River.
MR. CAREY said they have looked mostly at the Watana location, a
name he would use interchangeably with Susitna. The other large
hydro project identified in the RIRP was a lake tap coming out
of Chakachamna Lake west of Anchorage. Watana is 90 miles up-
river of Talkeetna; the nearest road is the Denali Highway about
40 miles to the north. He explained in the 1980s the Susitna
project also included Devil's Canyon which would have been a dam
flooding back to Watana. Currently they are looking at Watana
only.
3:37:56 PM
MR. CAREY switched to a map of Chakachamna Lake and noted the
Lake Clark National Park and Preserve above its head and the
Trading Bay State Game Refuge below it on the river. In the
Susitna case all the water would go through the dam and come out
on the river; in the case of Chakachamna, since the water is
being diverted from one drainage basin over to another, any
water that is to go across the drainage basin is not going to be
available to go down the river into the Game Refuge. Conversely,
neither is any water required to go down the river to the Game
Refuge available for generation.
He explained that the Susitna reservoir would be approximately
39 miles long and about 2 miles wide; it's 30 miles above
significant salmon. He explained during the 1980s, studies found
that some Chinooks went through Devil's Canyon, but they don't
know where they went, and no salmon were ever found above that
point. More recently in 2003, ADF&G found some salmon above the
Watana location, but how many is still uncertain. It could be a
low number just because very few Chinook can make it through the
Devil's Canyon area.
3:39:23 PM
SENATOR WIELECHOWSKI asked if a dam would make the water
temperature change and if that would impact the salmon.
MR. CAREY answered that you can control the water temperature to
a certain extent by drawing the water from either the top or the
bottom of the reservoir. In the Susitna case, it was thought the
river may lag a little bit on its annual temperature change, but
it was within the natural variability of the river for the
salmon. So, some wildlife habitat would be lost due to flooding.
In the case of Chakachamna, significant salmon populations
travel through the lake to the national park. It's thought that
several species of fish use and spawn in the lake (Lake Trout,
Dolly Varden, White, Salmon suspected).
Diversion of water and change of habitat in the State Game
Refuge downstream is a big concern of the resource agencies, he
said. There is also the concern that when adults return they
would first go up the wrong river because they could go up the
farthest river to the power house and would not be able to make
it back to the lake by the time they figured out that they had
to go down-river another 10 miles. Also, for out-migration to
the sea the juveniles tend to go where there is the most
current. And the most current when you're in the power house is
to go down the power tunnel. So, the amount of juveniles that
would actually make it back down the river is questionable.
MR. CAREY said another concern is that FERC would not license
the Chakachamna project, because a hydrological connection
between Lake Chakachamna and the next lake a mile upriver would
affect the national park, and that would take an act of
Congress.
3:41:01 PM
SENATOR WIELECHOWSKI asked if the state should completely
abandon Chakachamna at this point. Should there be more studies?
MR. CAREY answered that the department is uncertain about the
exact kind of energy they would get from the project. Their
figures might be on the overly optimistic side from talking to
different people at resource agencies. The preliminary decision
document recommended doing further engineering work to better
define what the costs could be or to see if there is a way to
lower the project cost.
3:42:40 PM
SENATOR WIELECHOWSKI asked if environmental people think
Chakachamna would cause severe environmental impacts such that
it couldn't be permitted.
MR. CAREY replied that the environmental impacts would be
substantial as designed in regards to both the fish population
upstream and downstream. Chakachamna might seem to have some
value as a hydroelectric project, but the amount of energy from
a project like that would mostly come during the summer time.
And that would be closer to a run-of-river type of project,
because drawn-down on the lake would be limited.
CO-CHAIR PASKVAN asked if another way of saying it is that
Susitna would be the focus if they want year-round power.
MR. CAREY answered yes. He said installed capacity at Susitna
would be approximately 600 MW, and average annual energy would
be around 2600 GWh/yr, which is approximately 50 percent of the
current annual Railbelt energy consumption. Chakachamna would be
more in the area of 300 MW; the annual estimate of energy of
860-1100 GWh might still be optimistic. That amount is 20
percent of the annual Railbelt energy; so you're still not going
to get up to 50 percent even with other existing projects.
3:45:31 PM
He showed a slide of Railbelt demand that goes up in winter and
down in the summer and Susitna/Watana that together produce more
energy during the summer. A lot of the energy timing has to do
with environmental restraints dictating producing more energy
during the summer to make sure the salmon downriver can get into
other streams. But it still produces a substantial amount of
energy in the winter time. Chakachamna would do less than
Bradley Lake does right now.
His next slide showed 50 energy years if a large hydro like
Susitna came in. It would take a big chunk out of what the gas
usage would be in the Anchorage area, but there would still be
substantial need for heating and generation.
3:47:27 PM
Slide 9 calculated wholesale generating cost of power (not the
cost to the consumer). The last estimate for Susitna/Watana
embankment (not expandable) was $4.5 billion. If there was a
capital contribution of half of that, with the remainder
financed at 6 percent 30-year bonds, debt financing would end up
being a little bit over 6 cents KWh. O&M would add a tenth of a
percent more. He said building Susitna/Watana using the roller
compacted concrete (RCC) method might provide a substantial cost
savings.
CO-CHAIR WAGONER asked him to explain the concept of roller
compacted concrete dams.
MR. CAREY described that RCC dams just started getting built
about 30 years ago; they can be built very quickly and arches
are not needed (although they can be used to save concrete). For
the most part, the concrete is almost like a slurry where you
could just dump a load of it in with a dump truck. It goes in
very quick, and saves time which saves a lot of money.
Another advantage to an RCC dam is you could have a flood half-
way through the construction project going over the top of the
dam and all you have to do at that point is to wait a week or
two for the water to stop and continue working. In the case of
an embankment dam, you have to spend considerably more money to
build a diversion dam because having water going over the top
during construction would set the project back a substantial
amount of time and, therefore, money.
3:50:31 PM
SENATOR WIELECHOWSKI said he had seen widely varying numbers, as
low as 2 cents and as high as 20 cents, on the cost per KWh, and
asked how he came up with this number. Was he counting on the
state giving them a capital appropriation of half the amount?
MR. CAREY answered the amount the state contributes will be
determined at a future date. They could either figure out a
percent of the project cost or set a price target of what the
cost of energy will be that comes out of the project and then
determine its investment. Or the Bradley model could be used.
His estimated costs show anywhere from 5-6 cents if there is to
be a 50-percent capital contribution. If there was to be no
capital contribution, it would be 10-12 cents. But someone
wouldn't be able to go to the financing markets to acquire bonds
without a substantial amount of equity in the project in the
first place, and developing Susitna would require at least 25
percent equity or more.
3:52:31 PM
SENATOR FRENCH asked if his numbers assume no state investment.
MR. CAREY replied they assume 50-percent state participation.
SENATOR WIELECHOWSKI asked if the cost per KWh is the wholesale
cost to utilities.
MR. CAREY replied that it is the cost for debt financing, which
tends to be 90 percent of the cost; and it's a generating cost,
so it's a wholesale cost to the utility.
SENATOR WIELECHOWSKI asked what cost the Fairbanks or Anchorage
consumer would end up paying.
MR. CAREY replied that 6 cents is the current cost for
generation with gas in many cases, and so it would be about 12
cents in Anchorage.
He showed two pictures, one of Bradley Lake, an embankment dam
and the largest hydropower project in the state that is owned by
the state. He said if Watana used the embankment method it would
look similar but taller. Bradley doesn't have a fish ladder
because it doesn't have any fish at the lake. It's still
questionable whether Watana would need a fish ladder or not. The
other picture was of the Wehdah Jordan RCC dam. He explained
that not only can this type of dam be built faster but its
height could be raised while the dam is still in operation.
3:55:33 PM
CO-CHAIR PASKVAN asked if the low Watana dam could be
constructed using the RCC method so that it could be expanded at
a later time with future power demand.
MR. CAREY answered that it could be expanded and if the
geotechnical investigations about an RCC dam continue to be
favorable, that would be the way to go. But he didn't want to
say that would be how Watana would be built for sure at this
time, because the embankment method was investigated much more
fully.
3:58:03 PM
He presented an 11-year timeline of the Susitna project from the
start of licensing by filing the preliminary application
document with FERC to start up on a low Watana expandable, a
fairly aggressive schedule but doable. The detailed schedule of
events was made up by AEA and some contractors, but it will get
refined more in the next couple of weeks.
The next steps for Susitna are to have a series of public
meetings: Fairbanks on February 24, Talkeetna on February 28,
Palmer on March 1, and Anchorage on March 2. During this spring
they will do aquatics and wildlife gap analyses where the
contractors go back and look at all the information from the
1980s and determine what information is missing, what has
changed along the river and where science has gone since then.
When that is done in the spring, he will be able to work with
the resource agencies to direct their study plans on the Susitna
River and then next year a very large study plan would occur.
4:00:41 PM
From an engineering standpoint, Mr. Carey said, they would need
to identify all the current land owners, form various working
groups, do additional geotechnical work (especially if they
consider using an RCC), and do lidar mapping along the Susitna
River to see where the sloughs have changed since then and where
the bars have gone to better know how much storage is in the
reservoir area and how to site the different facilities.
Access would need more study, too. In the 1980s the access for
Watana was to be a 44-mile road off the Denali Hwy. An RCC dam
uses more material than an embankment dam; and thus, it may make
more sense to do a rail spur from Gold Creek directly to Watana
and not build a road to it at all.
MR. CAREY said other things would have to be evaluated like the
type of power house. With the RCC method, the power house is on
the exterior and costs less as well as reduces the chance of
cost increases due to unexpected conditions underground.
He said some of the resource agencies do not want to spend a
substantial amount of time studying wildlife or working on the
project until they know there is an official FERC process moving
forward, because they have done too much work on it already.
Assuming AEA has the funds and the authorization they would be
filing a notice of intent with FERC and the preliminary
application document to start the official FERC process.
SENATOR STEVENS remarked that this is a fairly simple dam that
doesn't require any diversions or tunneling.
MR. CAREY responded that all the tunnels in an RCC dam would be
going through it, so the amount of tunneling would be minimal.
On the flip side power tunnels are needed with an embankment
dam.
4:03:19 PM
SENATOR WIELECHOWSKI asked how many land owners there are, and
if either type dam could be put in an earthquake zone.
MR. CAREY replied the major land owners up there are the BLM,
CIRI, Tyonek Native Corporation, and probably a couple of
smaller owners. He didn't think any houses or cabins would be
flooded out.
In regards to seismic considerations, currently there are large
dams of this size in California which are above 80,000-100,000
people and in other parts of the world as well. Concrete dams
don't fall apart that easily. There are tens of thousands of
dams around the world right now and he could think of only one
failure due to an earthquake - in Taiwan, and that was because
the actual fault went under the dam. No faults have been
identified under this site.
4:05:24 PM
SENATOR GIESSEL joined the committee.
4:05:32 PM
SENATOR MCGUIRE said she is involved with a group in the Pacific
NW Economic Region that just did a study on national security
and long-term viability with dams. Some integrity issues were
identified and suggestions were made on doing things
differently; and she said she would make the study available to
him.
4:06:13 PM
CO-CHAIR PASKVAN asked if there is a difference in expected
useful life in the Susitna project if it was built under the
embankment method as compared to the RCC method.
MR. CAREY replied that the expected life of Susitna/Watana is
greater than 100 years no matter what type of dam is used. The
U.S. has hydropower projects now that are beyond 100 years and
there is no reason to believe Watana couldn't operate for
several hundred years either way.
CO-CHAIR PASKVAN asked for the differences in cost of operation.
MR. CAREY replied there are some differences between the two
because more than 90 percent of the cost would be the financing
cost; the operation and maintenance (O&M) cost would be less
than 2 percent. It's likely that the cost of operations would be
one-tenth of a percent.
CO-CHAIR PASKVAN asked if the RCC method, because it is cheaper
to build, would ultimately make more sense for the
Susitna/Watana project.
MR. CAREY answered yes.
4:08:11 PM
SENATOR WIELECHOWSKI asked if an analysis or coordination had
been done with the bullet line or with the big gas line group.
Is it more economical to build a big line and then generate
electricity off the gas that would provide power for Fairbanks
or South-central?
MR. CAREY answered that they hadn't coordinated with the gas
line, and it's possible that both projects could still be built.
The only difference would be continuing gas generation would
make them give up the goal of 50-percent renewable energy by
2025.
4:09:11 PM
He added that another benefit to Susitna would be that once
hydropower was on line the cost of power wouldn't be affected by
events around the world.
4:10:37 PM
CO-CHAIR WAGONER asked him to hold a meeting on the Kenai for
commercial fishermen and other interested parties.
SENATOR WIELECHOWSKI asked if current electrical infrastructure
would be able to sustain additional power.
MR. CAREY replied that existing infrastructure would need
upgrades in stations north and south and those costs would be
substantial.
SENATOR WIELECHOWSKI asked how financing is proposed. What kind
of discussion was had with the utilities?
MR. CAREY answered that the utilities support this project.
4:12:48 PM
SARAH FISHER-GOAD, Deputy Director, Operations, Alaska Energy
Authority (AEA), responded that it was premature to say how the
project would be financed, but as an example the debt service
that the AEA has on the Bradley Lake hydroelectric project is
paid for by the utilities through a power sales agreement. When
that debt is paid off, the utilities actually still have an
obligation to pay approximately the same amount for an
additional 20 years to the State of Alaska.
She said that Senator Wagoner asked the AEA to give his staff
some information on how the State of Alaska has participated in
some other large projects, so he can get an idea of what options
are out there and what they can do. For instance, the state is
participating in conduit revenue bonds, ownership status (AEA
owns the Snettisham Hydroelectric project in Southeast Alaska),
and AIDEA has provided conduit bonds for Lake Dorothy. The State
of Alaska used to own the Four-Dam Pool project which has been
split up and is now in local ownership. And she would dig up
some of the records on how the state financed that project in
the first place.
SENATOR WIELECHOWSKI asked if they think the cost per KWh (5 or
6 cents) will stay level for the life of the dam. One
presentation said it would start out at 20 cents, and then it
would go down to 2 cents after 50 years.
MR. CAREY replied when that estimate was originally done it was
under the constraints of having to put down 100-percent private
funding with no state contributions, similar to Bradley Lake. In
that case, once you got to the ends of the bonds, the price
would drop down to what the yearly costs are. That is why it
drops dramatically to 2 cents or even less. In the case of
Bradley, you don't have the big drop until at least 50 years
have gone by because once the bonds are paid back, then the
state is getting paid back for a certain amount of its
contribution. It just gets into how you want to finance the
project.
4:15:57 PM
CO-CHAIR PASKVAN asked if the timeline on page 12 starts after
deciding on the type of dam.
MR. CAREY replied that investigating RCC construction would not
push the timeline out. Work that occurs in the early years, like
the EIS, has to be done either way. Some conceptual design using
both methods would be done simultaneously. One or the other
would be dropped for the final application.
CO-CHAIR PASKVAN asked if starting the licensing now poses a
material risk to advancing the project.
MR. CAREY replied no.
SENATOR STEDMAN said it would be interesting especially for the
college representing this in Anchorage to have "a little btu
analysis" generated if they are going to use 12 cents KW because
in the Railbelt a lot of people heat with natural gas. They
should also "throw in oil as a comparison." He also wanted to
know how quickly they anticipate fully loading the capacity of
the dam so it's generating as much revenue as possible.
MR. CAREY responded that the schedule shows 11-12 years for
first power. The nice part about RCC dams is that the reservoir
can be filling up as construction is going on. Embankment damns
aren't ready to generate full power because reservoirs are
located at lower elevations and construction has to happen after
they are filled. RCCs can generate power quicker.
SENATOR STEDMAN said the issue is paying debt service of 50
percent immediately and a couple billion dollars for the utility
line upgrades, and asked for an idea of how quickly they could
sell all the power.
4:20:37 PM
MR. CAREY replied that the Railbelt would be able to absorb all
of the power from Watana on completion, because it will replace
its existing gas generation that is old.
SENATOR WIELECHOWSKI said he would be interested to see how the
new power would be integrated into the old. Chugach and ML&P are
building a new gas-fired plant right now, for instance, and he
wanted to know where the new energy would be going.
MR. CAREY replied that he would come up with a more specific
plan of how it would be absorbed after consulting with the
utilities.
SENATOR STEVENS asked him to reflect on wildlife habitat, and
said Kodiak went through years of discussion over the impact on
the bear refuge, and in the end found that 1.5 bears were
displaced by a smaller dam. That was acceptable to the
environmental community and to the wildlife refuge, but he asked
what kind of wildlife they are talking about.
MR. CAREY replied that environmental issues are very much a
concern, because for one thing the resource agencies have
mandatory conditioning and if they don't like what the project
would do, it won't move forward. Moose, caribou, bear, wolves
and other fur bearers pass through the area. In the case of
flooding an area, you can't get around the impact. So, there
some type of mitigation money would have to be paid, and that
would go towards increasing habitat elsewhere, acquiring habitat
elsewhere or improving habitat.
4:24:16 PM
CO-CHAIR WAGONER thanked everyone for their comments and
adjourned the meeting at 4:24 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AEA Large Hydro 012611.ppt |
SRES 1/26/2011 3:30:00 PM |
|
| AEA Watana Schedule.pdf |
SRES 1/26/2011 3:30:00 PM |
|
| AEA Railbelt Large Hydro Preliminary Decision Document.pdf |
SRES 1/26/2011 3:30:00 PM |