Susitna-Watana hydro project

Courtesy Alaska Energy Authority

Proponents of the massive Susitna-Watana hydro project contend it is the linchpin to making a large-scale shift to renewable energy in Alaska, but it's unclear exactly what it would take for the state to dust off the shelved dam proposal.

Former Gov. Bill Walker suspended the mega project through an administrative order in 2015 when the state was mired in a string of multibillion-dollar annual budget deficits.

While the state's fiscal situation has improved somewhat but is far from cured — the fiscal year 2021 deficit is pegged at roughly $1.5 billion — Gov. Mike Dunleavy lifted Walker's freeze in 2019 as part of his overarching goal for the state to explore the gamut of economic development prospects available to Alaska.

To that end, lawmakers heard from Alaska Energy Authority officials what it would take to restart Susitna-Watana during a Feb. 11 Senate Community and Regional Affairs Committee hearing.

Alaska Energy Authority officials who would lead the restarted project told legislators that they are about two-thirds done with the pre-licensing study work required by the Federal Energy Regulatory Commission before the state-owned authority could apply for the FERC license that would trigger a wholesale environmental and socioeconomic review of the plan.

AEA estimated the 705-foot dam in the upper reaches of the Susitna River valley would cost roughly $5.6 billion in 2014 dollars. The hydro project would generate up to 619 megawatts of electricity — meeting about 60 percent of the Railbelt's electricity demand — and would form a reservoir about 42 miles long and 1.25 miles wide, according to the authority.

AEA Executive Director Curtis Thayer said AEA couldn't resume work on Susitna-Watana without explicit direction from the Legislature and the governor, which would also have to include significant state funding to finish the environmental studies for the project.

The hefty construction cost would be paid up front through bonds that would be repaid once the dam started producing power.

Thayer told legislators he didn't know specifically how much it would cost to get through FERC licensing, but AEA officials said when the project was suspended they needed about $100 million over four years to obtain the key federal construction license.

"If it is greenlighted, obviously determining the licensing status would be the next step and then updating the cost estimate to obtain the license; updating the cost-benefit and economic analyses and then reviewing the data to make sure it remains reflective of the current conditions," Thayer said.

He added that AEA estimates power from the dam would cost about 6.5 cents per kilowatt before transmission costs are factored in, which is about 20 percent less than current costs for natural gas-fired electricity in the Railbelt and about 40 percent more than existing hydropower in the region.

According to AEA Hydro Group Manager Bryan Carey, power would likely start flowing from the project after eight years of construction, though it wouldn't be completely done for a couple years afterwards.

Carey said AEA completed 19 studies and made "significant progress" on another 39 of the 58 total studies FERC approved for the project starting in 2012.

However, dam opponents, led by the Susitna River Coalition point to a lengthy June 2017 determination report from FERC officials on study requirements for the project as indication that advancing Susitna-Watana would require much more work than advocates claim.

That report states that the agency partially approved changes recommended by third parties to 17 AEA studies covering baseline water quality data, the dam's impact to ice formation, in-river sediment, fish passage and other issues.

It notes that AEA has conducted a significant amount of water quality data, but it's difficult to tell if that data represents current conditions because it has not been fully vetted.

"Consequently, we find that in its current state, the (water quality) data are largely unusable, and we are also unable to determine the adequacy of the data to characterize baseline water chemistry, water quality, water temperature and groundwater of the Susitna River," the 2017 FERC determination report states.

The project was essentially frozen at that point.

The report authors additionally state that it would be "premature to require AEA to essentially redo the study as requested by the commenters" until the authority has the chance to support its conclusions.

AEA officials emphasize that while the dam would restrict water flow in one of the state's largest salmon-bearing drainages, it would be upriver of nearly all salmon habitat. That's because Devil's Canyon — about 20 miles downstream of the proposed dam site — acts as a natural fish barrier for all but a few chinook salmon.

However, members of the Talkeetna-based Susitna River Coalition counter that operating the dam to meet energy demand would mean more stable year-round flows in the river that are counter to what juvenile salmon rearing in the river and its back channels have adapted to.

The coalition further disputes claims that the dam would provide decades of clean power by displacing natural gas-generated electricity because the reservoir would inundate many thousands of acres predominantly spruce forests that would release carbon gasses as they decay.