Wind-farm Developer Assails GVEA’s Refusal to Buy More Power, Seeks Regulators' Support

Apr 19, 2017

Lawyers representing the Delta Wind Farm are asking state regulators to deny a tariff filed by Golden Valley Electric Association that argues the utility should not be required to buy more power from the wind farm. It’s the latest in a years-long dispute between the owner of the wind farm, who wants to expand his facility, and GVEA’s board and management, who say the co-op can’t integrate more wind power now
without incurring costs that would be passed along to ratepayers.


GVEA President and CEO Cory Borgeson says the utility’s leadership turned down Delta Wind Farm owner Mike Craft’s offer to produce an additional 13.5 megawatts because, Borgeson says, it would cost ratepayers more money.

Alaska Environmental Power's wind farm near Delta Junction produces about 2 megawatts with its two 900-kilowatt and one 100-kilowatt wind generators.
Credit KUAC file photo

“Right now, we are unable to accommodate any more wind power, because of the cost – significant cost – of backing up wind,” Borgeson said.

Utilities must “back up” wind power with conventional sources to replace the power lost when winds die down. In GVEA’s case, it’s a couple of diesel-fired generators in North Pole that are kept idling – and are throttled up quickly, when needed.

“So, when you have to have other sources of generation prepared and ready to go for when wind cuts out, we have to have these turbines running at very slow speeds,” he said. “And it’s just not very economical, at all.”

GVEA's 24.5-megawatt Eva Creek wind farm near Healy began producing power in October 2012.
Credit GVEA

Borgeson says that inflicts a lot of wear and tear on the aging generators, and it increases Golden Valley’s fuel costs by about 15 percent, or some $20 million, according to a GVEA study. He says the offer was declined to keep those costs from showing up in ratepayers’ monthly bills.

“We told them that because of the significant cost of backing up their wind, that the financial harm to our members would be too great,” he said, “and (that) we’d be unable to purchase any of their power.”

That’s the basis of a tariff GVEA filed March 15 with the Regulatory Commission of Alaska, or RCA, that explains why Golden Valley officials believe the state and federal regulations and policies requiring utilities to buy renewable power whenever possible do not apply in this case.

Craft and his attorney, Teresa Clemmer, say GVEA has failed to make that case.

“We think the assumptions that they use to kind of shoehorn that conclusion are totally without merit,” Clemmer said.

She and Craft say Golden Valley’s tariff is unlawful and, quote, “riddled with outlandish assumptions and false statements.” She argues in a 527-page response she filed with the RCA last week that the utility’s leadership misinterprets and disregards state regulations that were established to help promote renewable-energy sources such as wind.

“It was really just a complete rejection of everything the regulations required,” she said.

Clemmer zeroes-in on Golden Valley’s claim that it can only use the older diesel-burning generators to back-up the wind power that’s produced by the 2-megawatt facility Craft presently operates in Delta, along with GVEA’s own 25-megawatt Eva Creek Wind farm, near Healy.    

“We just think they are misleading the public by trying to say that it’s only the diesel-fired power that’s going to be backing up the wind,” she said. “It’s just ridiculous.”

Clemmer and Craft argue that GVEA can back-up intermittent wind power with facilities that burn, quote, “reasonably priced power,” such as coal. She says the system should have even more capacity when the 50-megawatt coal-fired Healy 2 plant comes online sometime this year.

“They already have enough of their reasonably-priced power on the system to integrate the wind,” she said. “But even if they didn’t, they’re bringing on a brand-new coal-fired power plant that will free up a lot of that reasonably priced power to back up wind.”

Craft says the decision by GVEA’s board members to buy Healy 2 in 2013 and their failure to get the problem-plagued facility up and running after sinking some $175 million in to it, discredits their claim to be protecting members from rate hikes.

“That power plant has cost this community an incredible amount of money,” he said. “And we got nothing out of it.”

Craft says the 13.5 megawatts his expanded facility would produce would enable GVEA to reduce use of its diesel- and coal-fired generators around Fairbanks, which would help improve the area’s air quality.

The RCA commissioners must rule on GVEA’s tariff by May 1.

Editor's note: This story was revised to clarify GVEA officials' view that federal and state regulations intended to promote use of renewable energy don't apply in this case because, they say, adding more wind power to GVEA's system would increase ratepayers' bills.