Electric unity for Railbelt utilities

All six of the Railbelt's electric utilities are expected in Juneau next week to pledge unity in future transmission and generation projects -- but the proposal they'll say "I do" to is a much different one than Gov. Sarah Palin proposed a year ago.

A state report in December offered this grave assessment: The Railbelt needs to invest at least $10 billion over the next 50 years to keep the lights on. A big chunk will be needed soon, as 67 percent of the region's generation capacity will hit the end of its useful life within 15 years.

State leaders say they want to maximize every dollar invested, perhaps in a mega-project like a hydroelectric dam. If the utilities will work together, each agreeing to buy power from a big generation project, such an endeavor could pan out, some say. They lack the individual borrowing capacity to do much on their own.

The boards of directors of five of the six utilities have signed off on a new draft bill that will reach lawmakers' desks late this week or early next, forming a corporation for transmission and generation. Chugach Electric Association board chairwoman Rebecca Logan said the utilities have forwarded their changes to Gov. Sean Parnell's administration, which is expected to file a fresh version before the Legislature within days.

Instead of a "give some, get some" plan, the new bill sets a framework for cooperation when the utilities want to work together, without requiring they do so. It's a far cry from Palin's original pitch, made about a year ago.

The new plan is a one-shot deal, said Joe Balash, who works on the issue for the administration. The bill only requires four of the six utilities to sign on, and to a more flexible deal that calls for collaboration on big projects but lets the utilities do their own thing on smaller-scale projects. If individual utilities don't want to buy power from a corporation project, they won't have to. Assets won't be transferred to joint ownership, as originally proposed. And the entity -- plus the power purchase agreements forged with the member utilities -- won't be subject to oversight by the Regulatory Commission of Alaska.

The bill gives a lot of authority to the entity, including the power to own and operate not only generation and transmission infrastructure, but also natural gas fields, pipelines and storage. The bill also includes a statement of its purpose -- that the joint entity, called the Greater Railbelt Energy and Transmission Corporation -- will be the "primary conduit for state assistance," he said.

"It will be, in some ways, a bit of an optional menu," Balash said. "Those who are fiercely independent and want to maintain their independence can do it on their own ... (but) the basic rule remains. If they are looking for state support, they're going to do it through GRETC."

"Juneau gets all these different voices chirping in about what should be done," he said. "The expectation is that when it comes to Railbelt electric matters, GRETC will be the voice for the six utilities."

State law already allows the utilities to come together for those purposes, and even to take state money to do it. However, Logan, with Chugach, said the utilities need the "statutory structure" offered with the new bill.

"You need rules of the road," she said.

Balash noted that the exemption from RCA oversight was a must-have for utilities.

"If there's not a profit motive, the only other thing to really protect consumers from is the potential bloated administration of the organization and unnecessary costs being passed on to consumers," Balash noted.

Three of the utilities bought in readily to the original proposal. Chugach Electric Association, Matanuska Electric Association and the City of Seward saw a chance to gain more than they stand to lose. The intertie from Seward north is in dire need of expensive repairs. Chugach and Matanuska are faced with old generation facilities fueled by natural gas that's in short supply at peak times.