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Energy & Environment

Healy 2, UAF Powerplant to Ensure Coal's 'Bright Future' As Interior Energy Source

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Alaska Industrial Development and Export Authority
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Tougher federal pollution-control regulations and competition from cheaper fuels have forced U.S. utility companies to use less coal and more natural gas to generate electricity in recent years. Here in the Interior, the trend seems to be headed in the other direction.

Federal environmental regulators turned up the heat on utilities last month with a new round of regulations that set strict limits on powerplant emissions, especially carbon dioxide, the main culprit behind climate change. In response, many utilities are turning to natural gas, which emits about half as much carbon dioxide as coal, and which is relatively cheap down in the States, due to fracking and other technologies.

But the situation is quite different here in the Interior of Alaska.

“The future for coal in Alaska remains bright,” says Lorali Simon, a spokeswoman for Usibelli Coal Mine, Alaska’s only coal producer. Simon says the company is bullish on its future here in the Interior, where coal remains the cheapest fuel – much cheaper than the expensive fossil fuels that Golden Valley Electric Association uses to generate most of its electricity.

On a per-kilowatt-hour basis, coal is half the cost of natural gas and about a third the cost of naphta, and one sixth the cost of diesel,” she said.

Of course the Interior doesn’t have access to much natural gas, and won’t unless GVEA gets North Slope gas from a proposed project to bring it Fairbanks in tanker trucks. Or, if the state succeeds in building a gas pipeline from the Slope.

But we do have coal – lots of it. Usibelli officials say there’s about 700 million tons of the stuff in the ground around the mine near Healy. That’s about a 300-year supply, at the present rate it’s being used by the six and soon seven coal-fired powerplants here in the Interior.

GVEA president and CEO Cory Borgeson says until gas becomes available here, the co-op must continue to use coal to provide the least-expensive power for ratepayers. Borgeson says that’s the reason GVEA’s board agreed to buy the coal-fired Healy 2 powerplant. He says it’ll serve as a “bridge” until a cheaper, cleaner fuel – like natural gas – becomes available.

“The board of Golden Valley, as they agreed to bring on Healy 2, realized that it might have a short life, that as other fuels become available, Golden Valley would not run the coal plant as often – realizing that both the other fuels may be cheaper and also more environmentally friendly,” he said.

Borgeson says once Healy 2 begins generating, its 50 megawatts will double the amount of coal-generated electricity on GVEA’s system, for a total maximum output of 100 megawatts.

University of Alaska officials also considered using natural gas to generate electricity for UAF as part of a proposed $245 million upgrade to the campus’s aging combined heat and power plant. But UAF spokeswoman Marmian Grimes says officials decided to stick with coal because it’s cheap and plentiful. And because gas isn’t here.

“We did have to look at the availability of gas, and the cost of it, even if it were available. And ultimately when we looked at it those things, we still came back to the same conclusion that coal was still the most economical,” Grimes said.

Environmentalists acknowledge that it’s tough to get people to look beyond the low price of coal and to realize the threat it poses to human health and the Earth’s climate.

Colin O’Brien is an attorney with San Francisco-based Earthjustice, and he says the key is to get people to understand the rest of the economic equation – the part that doesn’t show up on your monthly utility bill.

“People pay the cost of energy in several different ways,” O’Brien said. “One is the bill that they get from the utility. Another might be the money that they pay to their healthcare provider, if they have asthma or another lung or heart condition that’s a consequence of the air pollution that comes from coal production or coal combustion.”

O’Brien says there’s another economic argument against coal: since 1970, every dollar that the federal government has spent requiring industries to clean up to comply with the Clean Air Act has yielded up to 8 dollars in economic benefits such as lower health bills for Americans.