• Nonprofit moves to provide fully self-generated power
By Carey Restino
Homer Electric Association plans to be generating all its own power as of Jan. 1, 2014. That’s the good news. The bad news? Rates are expected to jump at the same time.
HEA’s move to become independent of power generated by Chugach Electric comes to fruition with the start of the new year, but that doesn’t mean the nonprofit is free from the rise and fall of natural gas prices. And unfortunately, prices continue to climb and there is little end to that trend in sight.
Association spokesman Joe Gallagher said the average home will see a jump of about $13 per month starting Jan. 1 – bringing their bill from $133 to $146 per month. The increase will occur in the cost of power adjustment portion of the bill and will be an increase of 2.069 cents.
Gallagher said the price increase doesn’t come as a surprise. When the association analyzed the switch from purchasing power from Chugach Electric to running their own power generation facilities, they knew it was going to essentially be a wash financially. The one big perk was that they would be able to employ local workers instead of paying for labor in Anchorage.
Gallagher said the price increases would have been similar had HEA stayed with Chugach Electric. HEA built generation plants in Nikiski and Soldotna, and purchased the Bernice Lake Power Plant. The Soldotna facility isn’t online yet — it’s expected to be completed next spring — but the others, as well as a share of the Bradley Lake Hydroelectric Plant, currently provide for the peninsula’s electric needs. He said the entire cost of the project — around $180 million — is spread over a 30-year period with a low-interest loan and therefor has only a minimal impact on rates.
“What’s driving the rate increase we see now in January is the cost of fuel,” he said. “We would have seen that regardless of whether we stayed with Chugach Electric or not.”
The new facilities will employ some 20 to 25 positions that run the gamut from plant operators to additional office staff, the later of which will likely be in the Homer office.
Gallagher said HEA is exploring alternative energy generating options including tidal energy and a possible second hydrogenation facility in Moose Pass. The Moose Pass hydro project isn’t a large one — it would produce an estimated 5 megawatts, but that’s 5 percent more power that isn’t tied to natural gas prices. Currently, HEA’s share in Bradley Lake is 11 percent of the association’s power needs.
“Without Bradley, rates would be a lot higher than we see,” he said.
Gallagher said a massive power outage last month that spanned much of the peninsula during a stormy afternoon was the result of an extraordinary set of circumstances and not a flaw of the new power generation system. Essentially, a transmission line in Girdwood was down, “islanding” the peninsula from the power grid. A trip in Nikiski’s plant was strong enough to drop the Nikiski plant and Bradley Lake simultaneously. Gallagher said though the association will be producing its own power, it will still be connected to the grid, providing more stability in the system.
“That was a bit of a perfect storm,” he said.
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