Utilities Execs Say Alaska Energy Authority’s Power-line Purchase To Promote Hydropower
Golden Valley Electric Association officials and other utility executives around the state say the Alaska Energy Authority’s recent purchase of a power line on the Kenai Peninsula will benefit ratepayers, because it’ll enable more reliable transmission of cheap hydropower to the state’s Railbelt utilities.
When the Swan Lake Fire tore through the Kenai back in 2019, it heavily damaged a 39-mile stretch of power line in the northern part of the peninsula known as the SSQ Line. The damage cut off the flow of electricity from the Bradley Lake Hydroelectric facility, near Homer. Which in turn impacted ratepayers with all six Railbelt utilities – including Golden Valley’s, whose board of directors OK’d a 20 percent rate increase a little over a year ago.
Golden Valley’s Power Systems Manager Pete Sarauer says that shows “the SSQ Line is a critical link in that transfer of energy.”
SSQ refers to the area through which the line runs, from the Sterling Substation to Quartz Creek.
Sarauer says the co-op hiked its Fuel and Purchased Power rate because while the line was down Golden Valley couldn’t get any of its share of cheap hydropower from Bradley, which costs about 4-and-a-half-cents a kilowatt-hour. And neither did utilities in Southcentral, which had to use more of their natural-gas-generated electricity, making that so-called “economy energy” that they’d otherwise sell to Golden Valley unavailable.
“Everything is interrelated,” Sarauer said in an interview last week. “We lost access to Bradley energy. So did all the other utilities that we buy economy energy from. So it wasn’t necessarily the loss of Bradley that was the problem. It was the loss of the economy energy – and Bradley.”
To fill the gap left by the loss of the cheaper energy – including much that’s generated by coal, because of problems with the coal-fired Healy 2 power plant – Golden Valley had to produce more electricity mainly with its liquid-fueled (mainly diesel) generators.
“We really don’t want to run those, unless we have to,” Sarauer said, referring to the most expensive of the liquid-fueled generators.
That’s why board members hiked the Fuel and Purchased Power rate, which they ratcheted back down over the past year. And the SSQ line is back in operation. But Alaska Energy Authority Executive Director Curtis Thayer says the loss of the line cost Golden Valley and the other railbelt utilities a total of $12 million over the several months it was out of commission.
“Southcentral Alaska had to produce more from natural gas generation,” he said, “which is double the price of Bradley Lake power.”
Thayer says the ordeal motivated the energy authority to buy the SSQ line from Homer Electric Association for $17 million in a deal finalized last month. He says the state-owned corporation recently upgraded the 120-megawatt Bradley Lake facility. And he says it’s now working with other utilities on a plan to also upgrade the SSQ line from 75 kilovolts to 230 kilovolts, the same capacity of a Chugach Electric line it would connect up to near the town of Hope.
“The cheapest power that any utility uses is Bradley Lake,” he said in an interview last week.
Thayer says the project is in the early stage of development, and he hopes to have many details worked out by the fall. He says the energy authority is just beginning to work with the Railbelt utilities on planning the project, estimated to cost $70 million to $80 million, which would be financed with bonds. And he hopes to work out a deal with utilities to help pay debt service.
“The more power we can produce off Bradley, and get it to the northern utilities with the least amount of cost, and line loss, is a benefit to everybody,” he said.
Thayer says if all goes well, he envisions work would begin on the project later this decade.