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GVEA changes course, OKs Healy 2 shutdown, Healy 1 upgrade

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KUAC file photo
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The 55-year-old Healy 1 power plant, left, and the larger and newer Healy 2 plant are located just outside Healy, about 50 miles south of Fairbanks on the Parks Highway, near the Usibelli Coal mine, which provides fuel for the power plants.

Utility's board cites Healy 2's ongoing problems, costs; approves pollution-control system for older Healy 1

Golden Valley Electric Association’s board of directors voted Monday to upgrade the aging Healy Unit 1 power plant with a new pollution-control system and keep it operating. But in a surprise decision, the board also decided to shut down the newer Healy Unit 2 power plant, because they said it was unreliable and becoming increasingly costly.

For months now, Golden Valley officials have talked about the difficult decision on whether to install a new emissions-control device on the 55-year-old coal-fired Healy 1 power plant or shut it down by the end of 2024. Until Monday night, that is, when a expert hired by the utility said his analysis suggested a third alternative: upgrade Healy 1 and shut down Healy 2, the newer coal-fired plant that’s been problem-plagued since it began commercial operation four years ago.

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Screenshot
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Golden Valley President and CEO John Burns talks with board Vice Chair John Sloan during Hubbard's presentation Monday night. Sloan presided over the meeting while Board Chair Tom DeLong, pictured in the monitor above Sloan and Burns, participated online because he'd been exposed to COVID-19.

“It is more economic to retire Healy 2,” said Mike Hubbard, a utility consultant with Anchorage-based Financial Engineering Company. He’s been working for Golden Valley over the past year since it began a study of its power-generating facilities.

In a presentation to the board Monday, Hubbard said he was hired to advise on the Healy 1 decision and replacement of the co-op’s Battery Energy Storage System, or BESS. But he said it soon became apparent that advances in renewable-energy technology, especially wind power, could solve both problems and provide another source to replace the 50-megawatt Healy 2.

“Go out and get some wind,” he said, referring to wind power, “and you’ll have to do a BESS.”

Hubbard says newer and more powerful battery technology could regulate the intermittent wind power by providing electricity when the air is calm. He said that, and buying more power from Southcentral utilities that could be transmitted up the interties, could enable Golden Valley to avoid further costs of fixing Healy 2 problems that have kept the plant operating at about half capacity. Board Vice Chair John Sloan noted it was offline again on Monday.

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Alaska Legislature
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The cover of one of the presentations Golden Valley compiled outlining the challenges of restarting Healy Unit 2. This was was put together in 2014, a year after the utility bought the power plant from AIDEA.

“We’re looking at replacing coal with gas-fired generation from Anchorage,” Hubbard said.

Healy 2 was completed in 1997 for about $300 million, with funding from the Alaska Industrial Development Authority, or AIDEA, and the federal Department of Energy. The so-called Healy Clean Coal Project was intended to demonstrate technology that proponents claimed would sharply reduce emissions from coal combustion. But it failed to operate consistently, and after numerous problems the project was discontinued and the plant was shut down in 2000.

In 2013, Golden Valley bought the plant for about $44 million, and spent a total of $175 million, including the purchase cost, on repairs and retrofits before the newly redesignated Healy Unit 2 went online in early 2018. But it’s had several other problems since then.

Most of the 18 members of the public who logged-in to Monday’s online meeting expressed surprise and support for the board’s recommendations to shut down Healy 2 and invest in renewable power and additional power purchases from utilities in Southcentral.

Support also was expressed by mining company executives from Northern Star Resources, the Australia-based owner of the Pogo gold mine, and Kinross Fort Knox Gold, the Canadian-owned operation that’s Golden Valley’s biggest commercial customer. They both cited the need for Golden Valley to lower costs and total emissions.

“For us, the current electricity situation at Fort Knox is not sustainable,” said Sunil Kumar, Kinross Fort Knox’s vice president for energy strategy and engineering. He told the board that the company pays substantially more for power here than many of its other operations worldwide. And he said Golden Valley generates much more emissions than its other operations.

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Screenshot/Mike Hubbard
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A slide from Hubbard's presentation compares the performance of Healy Units 1 and 2 since 2018.

Kumar urged the board to adopt an ambitious plan like the one proposed by Hubbard to hold down costs and reduce greenhouse gases, or GHGs.

“The mining industry needs reliable electricity at reasonable prices, but also with low GHG emissions,” he said.

When it came time to vote, all seven members of the board spoke in near-unanimous favor of a plan based on the consultant’s recommendations called the Strategic Generation Plan. Except for board chair Tom DeLong, who disagreed with one part of the plan: spending $26.1 million on the SCR emissions-control system for Healy 1. He said it also should be shut down.

“While the installation of the SCR will allow it to run in the future,” he said, “it is unlikely that it will be economical compared to wind, solar and storage, which are proving to be the least-expensive generating units in the world.”

Board member Gary Newman proposed an amendment to delete the Healy 1 emissions upgrade, but the other board members defeated the amendment 5-to-2, with DeLong joining Newman in support. In the end, the board voted 6-to-1 to move ahead on the plan, with DeLong the lone dissenter.

The vote called for Golden Valley to formulate a plan within 90 days to shut down Healy 2 by the end of 2024. That's the deadline agreed to by Golden Valley officials in 2012 as part of a deal with the federal Environmental Protection Agency and AIDEA that allowed Healy 2 to be restarted after Golden Valley bought it.
Also Monday, the board separately voted to proceed with the installation of the emissions control system for Healy 1.

Editor's note: This story has been revised to include additional information. Also, revision corrects the board member who sponsored the motion to delete the Healy 1 SCR system from the Strategic Generation Plan. That was Gary Newman, not Tom DeLong..

Tim Ellis has been working as a KUAC reporter/producer since 2010. He has more than 30 years experience in broadcast, print and online journalism.