GVEA Considers $10 Million Proposal to Fix Healy 2 Power Plant’s Coal-delivery System

Aug 8, 2017

Golden Valley Electric Association’s board of directors is considering a management proposal to borrow at least $10 million to repair a problem that caused two explosions at the coal-fired Healy 2 powerplant last year.


Healy 2 has been sitting idle since November, when GVEA shut it down after a small explosion damaged the system that feeds coal into a boiler combustion chamber. That was the second such explosion at the problem-plagued power plant last year. In response, Golden Valley brought in engineers and consultants to study the issue and recommend a solution.

Healy 2 was built in the late 1990s by the federal government for $300 million as a demonstration project to showcase technology that would burn low-grade coal and produce fewer emissions than conventional coal-fired power plants. It was shut down in 1999 after failing to operate safely and reliably. It was sold to GVEA in 2013, and operated for about eight months before the co-op shut it down in November after a small explosion damaged its coal-delivery system.
Credit KUAC file photo

“We’ve done an awful lot of work and engineering to see what will need to be done to Unit 2 so we can safely deliver coal to the boiler and not have any additional problems,” says GVEA President and CEO Cory Borgeson. He added that he hopes to get a final report from the consultants in time for the board’s Aug. 28 meeting, when it will consider a $10 million project to upgrade the system.

“We are expecting to be able to go to the board with enough information for them to be able to make a decision to go forward with modifications to the coal-handling system at Healy 2,” he said.

The board last month approved a preliminary measure to include the project in a construction-work plan. Borgeson says he’s optimistic the board will approve the proposed project, but he adds it’s not guaranteed.

“I expect to have some very tough questions from the board,” he said.

Board chair Rick Schikora and members Bill Nordmark and Tom DeLong all were unavailable to comment Monday.

“If we do get approval to move ahead, then we think that we would have the plant operating in April of 2018,” Borgeson said.

He says if all goes well, the plant may begin commercial operation by the middle of next year. He says GVEA ratepayers may see a small increase in their bills as the co-op begins repaying the loan that financed the project. But he says that should be more than offset by the cheap coal-generated electricity that Healy 2 should be producing by then.

The 50-megawatt Healy 2 power plant, and the older 28-megawatt Healy 1, both are located in Healy, about 110 miles south of Fairbanks on the Parks Highway. The red line and red-shaded area demarcates the Denali Borough.
Credit Google maps

“When Unit 2 was running in 2015, our cost of power got down to 6 cents a kilowatt hour,” Borgeson said.

GVEA’s base rate for electricity is now about 10-and-a-half cents a kilowatt hour.

Healy 2 operated for only about eight months before being shut down in March of 2016 after the first explosion in the coal-delivery system. To help pay for repairs, GVEA instituted a temporary rate increase that boosted the average customer’s monthly bill by about 19 dollars.

As of late last year, GVEA had spent about $175 million to buy and retrofit Healy 2 after purchasing it from the Alaska Industrial Development Authority in 2013.

The federal government built Healy 2 in 1999 at a cost of $300 million, but shut it down later that year after it failed to operate reliably and safely. The 50-megawatt plant was intended to serve as a demonstration project to showcase technology that would enable it to generate electricity with low-grade coal while producing relatively little pollution.