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Trading barbs over Fire Island wind powerA third floor room in an office building in downtown Anchorage was breezy Tuesday as dark-suited attorneys aired arguments for and against allowing a new wind farm close to Anchorage to sell power to the state’s largest electric utility. Chugach Electric Association, Inc. needs approval from the Regulatory Commission of Alaska to purchase wind-generated power from Fire Island Wind LLC, a subsidiary of the Native corporation Cook Inlet Region, Inc. The two companies have already signed an agreement solidifying their relationship and are pushing for a quick decision from the RCA. Without it, nearly $19 million in grant money available to Fire Island Wind through the American Recovery and Reinvestment Act will expire. That could irreparably sink the deal and any short-term hope of a new $65 million wind farm on Fire Island, 3 miles across Turnagain Arm from Anchorage. The project is expected to provide about 4 percent of Chugach’s annual demand, 90 percent of which is generated from natural gas. On the opening day of the final round of hearings, Chugach was in a lonely position as its sole advocate. Most other comments, including some from the Alaska Department of Law, were unfavorable. The disagreement centers on whether adding wind power to Chugach’s portfolio is good or bad for rate payers. Several days of testimony is expected from experts battling about the future of the Southcentral natural gas market and the soundness of Chugach’s economic forecasts for the project. This summer, Chugach agreed to purchase up to 48,500 megawatt hours of electricity -- enough to power 6,000 Anchorage homes -- from Fire Island Wind each year for 25 years at a fixed cost of $97 per megawatt hour. The deal was the result of “hard nosed” negotiations on price and risk, Todd Glass, an attorney representing Chugach, told the panel of RCA commissioners and an administrative law judge. The large-scale wind project is the first of its kind in Alaska, and Fire Island Wind is assuming most of the risks associated with its development, Glass said. Chugach believes the project will ultimately save rate-payers close to $3 million. Anchorage utility Municipal Light and Power and the Alaska Department of Law are skeptical, however, and among critics who believe the project doesn’t pencil out the way Chugach claims, which could end up costing rate payers money. If bringing wind into Chugach’s portfolio will cost more than the natural-gas-fired energy generation it is displacing, the project must be rejected, they told the panel. “When you listen to our evidence, we think that you will see that Chugach is wrong,” Assistant Attorney General Steve DeVries, who works in the Regulatory Affairs and Public Advocacy division, told the commissioners. “The economic benefits that Chugach claims exist under this power purchase agreement are inaccurate.” Dean Thompson, an attorney for ML&P, testified that where Chugach is pitching a cost-savings, ML&P’s number crunching shows costs could actually increase by millions for Chugach’s electric customers. Chugach attempted to head off this criticism in opening remarks by urging the commission to judge its proposal on whether it was justified and reasonable instead of using an “avoided cost” standard. “It is like driving down the road looking in the rear view mirror,” Thompson explained. “Avoided cost is simply no way to plan for the future.” In addition to concerns about how much money the project will cost users, detractors worried that unforeseen mishaps could make integrating a new source of energy into the grid difficult. How will the variable nature of wind generation affect other power sources used to balance the load? Could compensating for a low wind period overtax other parts of the system, leaving some customers in the lurch?
I give even odds that Chugach will agree to insulate rate payers. That way, they at least get their foot in the door. They will reject the condition, if actually they figured it would end up a loss all along ... which may be why the State is making this the condition. The issues are many and this article barely covers what the RCA must rule on: 1. Are the rates just and reasonable? Is CIRI's wholesale rate of $107 per megawatt hour just and reasonable when compared to CEA's cost of $60 per megawatt hour. 2. Does CEA's future load forecast justify a contract with CIRI? In other words, does CEA need 17.6 megawatts of generation that will only be there when the wind blows? National averages indicate 25-30% of nameplate which would be about 4 to 5 megawatt hours. Thats less than half of CEA's streetlight load for over 65 million dollars and it only generates when the wind blows. 3. And finally, can the rest of the utilities in Alaska handle the variability of the wind generated electricity? And what will be the cost of regulating that intermittency? This presentation by a physicist and environmentalist is an eye-opener for those who would like to learn the truth about wind power. http://www.slideshare.net/JohnDroz/energy-presentationkey-presentation CIRI stands to make approx. 9% on the wind energy from CEA's customers and they get a transmission line to their island paid for by the people of Alaska. Is this a boondoggle? You decide and hopefully the RCA will decide in favor of CEA's customers. If a private business (CIRI) cannot do this without a government subsidy, it should be dropped. CIRI's Margie Brown supported Exxon,BP and Conoco / Parnell’s $2 billion oil tax give away for nothing in return and now Conoco's Parnell is trying to screw CIRI and Margie Brown out of Fire Island windmills. And so the World Truns. |
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