FAIRBANKS — By CHRISTOPHER ESHLEMAN
Gov. Sean Parnell said Wednesday he will draft legislation to let the Alaska Energy Authority own a major hydroelectric dam and to pursue financing for the project.
The announcement came minutes after energy analysts recommended such a dam, if built, should go on the Susitna River.
The Energy Authority issued the recommendation Wednesday in the midst of multimillion-dollar studies of the proposal. The backup site will be Chakachamna Lake west of Cook Inlet, it said.
“Our goal has been to identify the project that has the best chance of being built,” the agency’s acting director Mike Harper said in a statement. “A large hydroelectric project for the Railbelt” — which generally follows the state’s highway system — “should not only provide cost-effective, reliable, long-term power; it must help the state meet its goal of producing 50 percent of our power from renewable resources by 2025. We believe the Susitna project does all this.”
The Susitna site would host a rock-fill, embankment dam near Mile 184 of the river. The Energy Authority estimated a 600-megawatt turbine system could be running in 11 years and that the dam would likely cost around $4.5 billion.
Parnell backed the prospect of a major hydroelectric investment this autumn in Fairbanks. He sounded an even stronger note Wednesday.
“In order to provide low-cost electricity for the Interior and the Railbelt and to meet the state’s goal of having half of Alaska’s electricity generated by renewable resources by 2025, we must invest in a large-scale hydro project,” he said in a statement.
The Federal Energy Regulatory Commission would need to review a proposed dam, and the Energy Authority’s recommendation highlights a likely vehicle as organizers prepare an application. The Energy Authority said it compared the “cost, potential environmental impact and energy production” of both sites and other locations, such as Glacier Fork, also near Cook Inlet. It said it kept an eye out for stumbling blocks in all options and found the Susitna River presented the most best all-around choice.
State energy specialists pushed an almost identical project, a multibillion-dollar proposal, in the 1980s before oil prices plummeted. That shift in energy costs, which also drained state revenue streams, contributed to the decision to shelve the project.
The Energy Authority revived studies two years ago, and friendly state lawmakers found money to help. Sen. Joe Thomas, D-Fairbanks, said he’s pleased Parnell thinks the state might look to own the project.
“That’s a great sign,” Thomas said. He said all signs suggest a major dam could lower electric costs for communities across the road system. “Every time you sit down and talk to people and we give our slide presentation, they ... say, ‘wow, we should be building it.’ And I say, ‘Yes indeed we should be.’”
The Energy Authority said Wednesday that neither the Susitna or Chakachamna proposal appears to carry a fatal problem.
“However,” Harper’s statement said, “the studies determined that while the engineering development of the Susitna project would cost approximately 50 percent more than Chakachamna, there is greater risk of significant cost overruns at Chakachamna because of the steep terrain and extensive underground work required.”
Five electric utilities, including Golden Valley Electric Association, said this week they’re teaming on a joint venture to help build and operate major power projects. It was unclear Wednesday whether that plan would relate to a multibillion-dollar hydroelectric project, which would be well out of reach of any single utility’s borrowing capability.
Brian Newton, CEO of Golden Valley Electric Association, said he expects his and other electric utilities will support Parnell’s call for state ownership of a dam. He said a separate joint venture, dubbed ARCTEC, could then help through maintenance, operations and transmission fronts once a dam is built. ARCTEC is being proposed by GVEA and four other utilities.
A dam at the Susitna River, the Energy Authority said, would produce up to three times more energy at a lower marginal cost than one at Chakachamna while presenting fewer environmental risks. The agency said the Susitna site also presents fewer permitting hurdles.
The Energy Authority has posted paperwork related to the study at its website (www.akenergyauthority.org) and will hold public workshops in February. It said it “welcomes written comments” by e-mail (firstname.lastname@example.org), fax (907-771-3044) or mail.
Contact staff writer Christopher Eshleman at 459-7582.