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Connecting Clear will cost us: High power prices, new heat plant make buying GVEA electricity unwise

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Posted: Thursday, October 18, 2012 2:31 pm

Community perspective

The News-Miner published an article Sept. 16 titled “Grid plan prompts questions” regarding the Air Force plan connecting Clear Air Force Station to the Golden Valley Electric Association network. We would like to provide information resolving some of those questions.

The Air Force used the figure of $8.8 million as the operating cost of the Clear AFS Central Heat and Power Plant in both its feasibility study and discussions with Congress on its plan to lease the operation of the plant. Here are figures the American Federation of Government Employees Local 1836 and Clear AFS plant management have jointly arrived at, which should cause taxpayers and GVEA ratepayers to question the truth of the Air Force’s projected savings and which show the resulting increases in costs.

Minimum summer load (power consumption) for Clear Air Force Station is 1.6 megawatts. During winter, an additional 2 megawatts are necessary. Using a seasonally adjusted mean rate of 4 megawatts (4,000 kilowatts per hour) and multiplying by 8,766 (the hours in a year), we arrive at 35.064 million kilowatts annually. With completion of the radar upgrade at Clear, this requirement will increase an additional 2 megawatts.

Using the GVEA bill calculator on its website, 35.064 million kilowatts at the GS-2P rate, the commercial rate applicable if Clear becomes a GVEA customer, equals more than $6.45 million per year for Clear’s current power requirements.

GVEA provided 20.3 cents as the average cost to generate 1 kilowatt using oil-fired turbines. GVEA’s cost to generate 35.064 kilowatts on oil is therefore $7.12 million, for a difference of more than $670,000 between the billing rate and the generation cost. This difference, rising as fuel costs increase, will be shared by all GVEA members through higher fuel surcharges.

The plant at Clear is a cogeneration plant, meaning the plant provides heating steam after it has been used to drive the turbines generating electricity. This is a very economical way of providing heat and is employed at Eielson Air Force Base, Fort Wainwright and UAF.

Part of the Air Force’s plan involves switching from this byproduct steam to oil-fired steam heat. The Air Force’s heat loss study determined a need for 23.5 million btu. One mbtu equals 1,000 pounds of steam and it takes 7.14 gallons of No. 2 fuel oil to generate 1,000 pounds of steam. Multiplying a seasonally adjusted mean heating load of 11.75 mbtu by 7.14 results in roughly 84 gallons per hour of fuel oil needed. This times $3.80 a gallon, times 8,766 hours per year results in a minimum annual heating cost of almost $2.8 million. As the price of fuel oil increases, so will the cost of this source of heat.

The grand total for Clear to purchase electricity and heating oil is $9.25 million without considering the cost of constructing an electrical intertie connecting to the grid or oil-fired heating plant or operation and maintenance costs of the new plant, for personnel, repairs, etc. These costs should be included when calculating any proposed savings. 

The Air Force originally claimed a new oil-fired heating plant would cost $15.3 million to build. Since providing that estimate, the required heat load estimate has increased more than three times the original, but they have failed to increase construction costs reflecting this change. Those intimately involved in the Air Force’s meetings on the subject believe actual construction costs could exceed $30 million.

If construction costs are amortized over 20 years, it works out to $1.5 million per year. Addition of the amortized construction costs to the purchase costs of electricity and heating fuel for Clear under the Air Force plan results in an annual cost of $10.75 million, far exceeding the $8.8 million current operating costs.

Remember the Air Force has presented no hard numbers to support its claimed savings. The Air Force doesn’t even have a designed, shovel-ready project. How can someone stipulate to actual cost without a construction design? Can anyone say “Figures lie, and liars figure”?

In these times of sky-high electrical bills for GVEA customers, it makes no sense for us to subsidize Clear’s plan to become a GVEA customer. We have appealed to the Borough Assembly requesting it approve a resolution asking the Air Force postpone its plan until cheaper electrical energy is available in the Fairbanks area.

We have been working with Sens. Lisa Murkowski and Mark Begich, lobbying them to conduct a critical cost analysis of the Air Force’s plan, ensuring any action taken by the Air Force is in the best interest of national security, the American taxpayer and GVEA members. To us, the Air Force’s plan doesn’t make sense.

George Bennett, a Fairbanks resident since 1971, is legislative action coordinator for AFGE Local 1836, representing employees at Eielson Air Force Base and Clear Air Force Station. He is a pipefitter by trade and worked on Eielson from 1988 until retiring last year. He was AFGE Local 1836 president from 1998 to 2010.

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