News from Patrick Flynn

An ADN editorial about the transit resolution I sponsored, which asked the legislature to consider using surplus revenues to boost transit resources thereby reducing energy consumption, marked the first of what I expect to multiple forays into energy-related topics during my tenure on the Assembly. The next one relates to how we generate electricity for Anchorage in the most cost-effective manner.

Last month Mayor Begich introduced an ordinance that would create the Municipal Power Authority. The structure would be very similar to the relatively new board structure at Anchorage Water & Wastewater Utility, wherein the management no longer reports to the Mayor and Assembly but instead to a board of directors, and the MPA would oversee Municipal Light & Power. That said, it’s not a clean break – the employees of AWWU remain municipal employees, budgets must still be approved by the Assembly (after the board approves them) and various business rules still mirror those at MOA. I have some misgivings about that structure, but that’s a topic for another day.

The mayor also announced a South Central Alaska Power Project Participation Agreement (I’ll provide a link once it’s posted) between ML&P and Chugach Electric Association for construction of a new 200-megawatt, natural-gas fired generator on CEA property near Minnesota Boulevard and International Airport Road. Joint ownership and operation of power generation facilities isn’t new, in fact the Eklutna facility owners include not only ML&P and CEA, but Matanuska Electric Association as well. Still, there’s an undercurrent and connection between the two issues that prompted Assembly Chair Matt Claman to establish an ad hoc committee to work on both, as well as some side matters. Dan Coffey is the chair, and Mike Gutierrez, Jennifer Johnston & I round out the group.

We had our first meeting week and learned some basic information:

• Of the 200 MW the new plant will generate, 140 MW will be for CEA customers and 60 MW for ML&P customers.
• The plant will take about four years to build and cost around $400 million (bids are on the street and we’ll know more soon).
• New plants like this one are about 30% more efficient than older facilities currently owned by CEA and ML&P, which will save on natural gas consumption.
• The plant represents about 40% of the total generating capacity the two organizations want to build in the next five to seven years, thereby allowing them to decommission older, less-efficient equipment.

Stirring in the background are the complicated politics of Railbelt energy. There are five major players producing and distributing power in the region: the aforementioned ML&P, CEA and MEA, and also Homer Electric Association (Kenai Peninsula) and Golden Valley Electric Association (Fairbanks & the Interior). Given the level of demand and number of customers in the Railbelt most experts argue that we should only have one power producer and fewer distributors. To that end there have been many efforts at consolidation, including a recent Railbelt Electrical Grid Authority study, but the kids in this particular sand box can’t seem to play nicely together so consolidation is discussed but never executed.

Given this, ML&P and CEA have decided to forge ahead and therein lies the subtext of the MPA ordinance: that organization could ultimately perform all the generation and transmission of electricity in the Anchorage area, a capital-intensive function that would be well-served by access to Anchorage’s tax-free bonding authority, while distribution (getting electricity into your home, for example) could be performed by CEA. None of this will happen quickly, if at all, and passage of the MPA ordinance and approval of the Participation Agreement will not commit us to moving forward. They do lay some groundwork, however, and this is sure to be an interesting discussion. And, of course, alternative energy projects will also be in play but specific details on those remain elusive. With that, I welcome your thoughts!

Regards,

Patrick