A state regulatory agency has essentially given the green light for a large-scale wind power project on Fire Island.

Three of the five commissioners with the Regulatory Commission of Alaska -- Paul Lisanskie, Robert Pickett and Jan Wilson -- issued a ruling late Monday saying the state's largest electric utility, Chugach Electric Association Inc., can purchase power from Fire Island Wind Inc., a subsidiary of a regional Native corporation.

Under the deal blessed by the RCA, Chugach will purchase 48,500 megawatt hours of electricity from 11 turbines to be built by Fire Island Wind, at a 25-year fixed cost of 9.7 cents a kilowatt hour. The $65 million project in Turnagain Arm, three miles west of Anchorage, will provide about 4 percent of Chugach's power, enough to power 6,000 homes, and reduce its reliance on natural gas.

Fire Island Wind parent company Cook Inlet Region Inc. had argued that the deal would die if it didn't get a favorable decision this week, because it needs to build the wind turbines' gravel pads as soon as possible in order to secure $19 million in federal funding and make the project economically viable.

Construction, with concrete bases and turbines set to rise next summer, will employ dozens of workers, said CIRI spokesman Jim Jager. Chugach has estimated the project would save the company nearly $3 million over 25 years, or about $20 a ratepayer. It currently has more than 60,000 customers.

The RCA granted its approval with conditions, including that Chugach would reimburse other Railbelt utilities for costs that might result from integrating wind into the power grid.

Commissioners don't usually comment on decisions, but the ruling sent to media included concurring statements from Pickett and Lisanskie. Pickett called it "one of the most challenging and frustrating dockets I've been involved with during my tenure as an RCA Commissioner."

The commissioners had to weigh varying and complicated economic forecasts related to the price of natural gas and other costs associated with the project. Anchorage Municipal Light and Power and the state Department of Law, through its Regulatory Affairs and Public Advocacy division, submitted a proposed order to the commission that said Chugach would lose $12.9 million over 25 years.

In his statement, Pickett wrote that Chugach has chosen a higher cost option in the near term. "The overall impact on Chugach ratepayers will be approximately $2 per month." And in the long-term, even using Chugach's estimates, the benefits are "economically marginal, at best."

But strong legislative support for the program, including the Legislature's decision to give $25 million to help pay for the cost of transmission lines, helped influence him. 

"At the end of the day, I have allowed my interpretation of legislative intent expressed in the two bills and one capital appropriation to strongly influence my decision," he wrote.

Advocates of the plan, including Alaska Conservation Alliance and Alaska Center for the Environment, lauded the decision in a statement sent to media.  

"This is a huge step toward energy diversification and price stability in the Railbelt,” said Steve Cleary with Alaska Public Interest Research Group. “Whereas other proposed energy sources are many years away, Chugach customers can now expect to be using renewable wind power as early as 2012."

Find the RCA ruling here by clicking on the Documents tab.

Contact Alex DeMarban at alex(at)alaskadispatch.com