Eva Creek Operational; GVEA Proposes Rate Hike to Pay for New Wind Farm

Jan 10, 2013

Golden Valley Electric Association’s $90 million wind farm near Healy is finally fully up and running. And GVEA ratepayers will start paying off the tab for the Eva Creek Wind Project next summer. 

GVEA's Eva Creek Wind Project is finally up and running, with 12 262-foot wind turbines like this one, generating a total maximum of 24.6 megawatts -- enough to power some 9,100 average homes in the Interior.
Credit GVEA

The Eva Creek Wind Project is now fully operational – 10 years after the co-op first began studying the proposal, two months after the wind farm near Healy  produced its first few megawatts.

“As of Jan. 7th, the Eva Creek facility had reached full commercial output. It was operating at 100 percent capacity, which was 24.6 megawatts,” says GVEA president and CEO Cory Borgeson.

He said in an interview Monday that the manufacturer of the 262-foot wind turbines at the site last week finished commissioning, or testing, the last two of the 12 turbines at Eva Creek.

“From Jan. 1 through Jan. 6th, we were doing final ramp-up testing, and as of Jan. 7th, they’re fully online and performing quite well,” Borgeson says.

GVEA officials will now seek approval of a plan to begin paying for the $93 million wind farm, the biggest in Alaska. They initially proposed repaying the $84 million in low-interest federal loans by boosting the monthly fuel and purchased-power surcharge. That was to begin last month.

Borgeson says generating revenue through the surcharge would’ve minimized the impact on ratepayers, because the electricity generated by Eva Creek would’ve offset the high cost of the diesel and other types of petroleum that GVEA uses to generate much of its electricity. And, the wind-generated electricity would’ve reduced the need to buy additional power from other railbelt utilities.

The high cost of generating electricity helped drive GVEA’s proposal to build the wind farm, which the co-op’s board of directors approved in early 2011. 

But, Borgeson says the surcharge proposal ran into resistance by consumer watchdogs with the state Attorney General’s office of Regulatory Affairs and Public Advocacy, or RAPA.

Cory Borgeson
Credit GVEA

“The resistance that we got from RAPA had to do with the traditional rate-making process, which says basic generation costs – the cost of facilities and things like that – should be in the rate base,” he said.

Borgeson says that, and a move by the Regulatory Commission of Alaska to convene hearings over the surcharge proposal, convinced GVEA officials they had to come up with another way to repay the 20-year loans.

Borgeson says GVEA’s management team will now ask the co-op’s board to approve repaying the loan through rate increases. He says the first rate hike of about 1 percent would take effect July 1st.  Others would be phased in over the next 18 months, for a total increase of about 3 percent.

Borgeson says GVEA officials still believe that Eva Creek’s output will help limit the impact of the rate hike.

“I’ve been saying it’ll be rate-neutral, or maybe even we think there’s a possibility that our total rates will go down as a result of the wind project.”

GVEA officials say that the electricity generated by Eva Creek so far has already enabled the co-op to avoid buying some 915,000 gallons of fuel, which would’ve cost some $2.7 million dollars.

The head of a local GVEA-ratepayers advocacy group worries that the change in plans on paying for the wind farm may make the co-op’s members lose faith in alternative sources of energy, like wind.

Nancy Kuhn, spokeswoman for the GVEA Ratepayers Alliance, says she’s concerned that the episode reflects what she believes is a lack of understanding, and appreciation, for alternative energy sources.

“The fact that they’re going to raise the rates will anger the population, and that will only give them credibility to say ‘See? Wind power is not free power, because now we’re paying 3 percent more,’ ” Kuhn said. “So in the end, alternative energy will get a black eye because of this.”

Kuhn believes GVEA’s management and board, and ratepayers, must embrace alternative-energy sources, because they’re an essential part of the solution to holding down the cost of generating electricity, which has risen dramatically in recent years due to increasingly expensive fossil fuels made from petroleum.