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HomeMy WebLinkAboutRESOLUTION 1991-01Suggested Mayor AR ESOLI~ION OF THE COUNCIL OFT HE CITY OF KENAI, ALASKA, URGING ELECTRICAL INTERTIE CONSTRUCTION SUPPORTED BY STATE FUNDING. WHEREAS, the Interties Reserve Account was established with $100 million in unexpended funds from the Railbelt Energy Fund., which was originally estabXished to be used exclusively to meet the energy needs of Alaskans in the Railbelt Region; and, WHEREAS, the Railbelt Energy Council endorsed use of a portion of the Railbelt Energy Fund to upgrade the Anchorage- Fairbanks electrical intertie system; and, WHEREAS, Alaskans in other regions of the state continue to enjoy the benefits of state-financed energy proJeuts and the Bush continues to receive annual energy cost assistance through the Power Cost Equalization Program; and, · WHEREAS, a study by the North American Reliability Council has determined that the existing Railbelt intertied transmission system is below accepted industry reliability standards in the Lower 48 states~ and, WHEREAS, utility sponsored Studies show that two new sections of 138 kilovolt intertie line will have positive benefit-cost ratios and will yield many millions of dollars benefits; and, in WHEREAS, because of limited existing intertie capacity, the full generation benefits of the Bradle¥'Lake-Mydro'ProJect not be realized without intertie upqrades~ and, WHEREAS, a new electrical transmission line between Healy and Fairbanks will enable the Usibelli Coal Companyes Healy Coal Project to deliver its full output to the Fairbanks electrical load center; and, WHEREAS, the transfer of economical energy between Southcentral general sources will be greatly enhanced with 138 kilovolt Kenai-Anchorage southern intertie; and,. a new WHEREAS, transmission system reliability and increased control over major power outages will be much improved with the addition of a 138 kilovolt southern intertie; and, · -1- Resolution 91-1 ~F~EAS, electric utilities serving the Railbelt have pledged to pay tntertte construction costs above $125 million and make payments to the State beyond the term of debt service throughout the useful life of the lines. NOW THEREFORE, BE IT.RESOLVED. BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that the Leqislature be urged to make an appropriation of $125 million to the Alaska Energy Authority from the Railbelt Interties Reserve Account and other funds for construction of a new 138 kilovolt line between Healy and Fairbanks and the addition of voltage compensation on the existing Anchorage-Fairbanks transmission system, and for construction of a new 138 kilovolt line between Soldotna and Anchorage. BE IT FURTHER RESOLVED, the Governor is urged to support this legislative appropriation in its entirety. ATTEST= PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, the sixth day of February, 1991. ~ (1/21/91) -2- ~[onte~ ~leotzio &ssooiatton. Inc. CENTRAL OFFICE: 3977 LAKE STREET · HOMER, ALASKA 99603 · (907) 235-8167_. January 15, 1991 Mr. John Williams, Mayor and City Council of Kenai City of Kenai 210 Fidalgo Kenai, Alaska 99611 Dear Mr. Mayor: REF: SOUTHERN AND NORTHERN RAILBELT INTERTIES The Railbelt utilities will be making a joint effort to convince the 1991 Legislature to fund the Southern and Northern Interties. It is very important for the Kenai Peninsula that the Southern Intertie is funded and built. A second intertie is absolutely necessary to bring us up to operating standards currently existing in the Lower 48. Having a second transmission line linking the Kenai Peninsula with generation facilities in other areas of the state will increase reliability for electr%cal service on the Kenai Peninsula and will allow efficient operations of the interconnected Railbelt system. We respectfully ask that the City Council adopt a resolution in support of the Railbelt Intertie. (See sample resolution attached to be introduced at the Kenai Peninsula Borough meeting on January 22, 1991.) Please support Keeping Alaska's Future Bright. Sincerely yours, HOMER.ELECTRIC ASSOCIATION, INC. Acting General Manager NLS:en Attachments cc: City council Members Reliable Railbelt Energy Through Intertie Upgrades Intertle proposal The re#belt electrical utilities, representing some 300,000 residential, commercial and industrial to share Intertle costs so this vital upgrade of the Rallbelt energy system ran be built In a timely manner - and without putting a cost burden on consumers or the state. consumers, proposes that 'the state of Alaska provide substantial financing assistance for the Interties make sense construction of two new sections of 138 kilovolt (kV) transmission Intertle line - one between the The Intertles are solid energy projects that stand Kenal Peninsula and Anchorage and a section up to economic analysis while yielding m~ast~ra~_e between Healy and Fairbanks. benefits for some three-fourths of Alaska a Both sections have been estimated to cost $150 population. '-~ million In 1990 dollars. Further cost analysis are ongoing. The 138 kV Kenal-Anchorage southern Intertle would bring Bradley Lake hydroeloctrlc power Into the Rallbelt grid system. The Healy-Falrbanks northern Intertle would allow more Iow-coat power to flow throughout the Rallbelt. Making it work Last session, the Legislature put unappropriated funds from the Railbelt Energy Fund into an · lntertles Reserve Account" within the General Fund. It contains $100 million plus Interest. Utilities serving the Railbelt region are asking the Legislature to appropriate this account to the Alaska Energy Authority (AEA) for construction of the proposed Intertle sections. Additional state funding or financing Is also sought Rallbelt utilities would sign an agreement with the Energy Authority to pay full debt service. The utilities would further make payments to the state after capital costs are paid during the useful life of the lines. Nsc, the utilities will cover costs of maintenance and operation over the life of the new intertles under a separate agreement with AEA, These agreements show the utilities' wllllngnoss Naska Is looking at a window of opportunity to make the best use of Its hydro generation capacity and lock In energy security and reliability for the rallbelt population center. The 90-megawatt Bradley Lake project will be on line In a matter of months. The state has a major Investment In this $330 million hydro project. Upgrading the Rallbelt Intertle grid will allow Bradley Lake to reach its fullest potential. The Legislature has specifically set aside a $100 million account to make sure Bradley Lake achieves its highest and best use and that Naskans. have access to reliable, economical power. The next logical step Is to upgrade the Intertle system so consumers from Homer to Fairbanks can be assured of a strong, stable power transmission system plus access to more Iow-cost generation. Nsc, commercial and Industrial growth hinges on reliable, affordable energy. Upgrading the Intertles through a state-utllltles partnership makes economic sense. The state will pay not one penny of operations and maintenance costs for this energy Infrastructure. Some 300,000 Rallbelt consumers experience no rate shock from this project and reap long-term energy savings. Now Is the time to secure reliable energy delivery for the whole Rallbelt region with state funding assistance for the Intertles. OARECA 1~1 Railbelt Interties Status Report 1990 Legislative Session F E.I.ectric utilities_serving th,e Railbelt region requested state money held in the Railbelt Energy u, na,? pu.t toward construction of two new sections of transmission line t° upgrnde the existing Irltertle system. The four-year-old Railbelt Enernv Fund of $230 milli ............ J - · ---, ', - . . .... .- o~_ o. wu opcnuo to capital project app. ropriauons tn tt~e last Legislature but no money went to buildino · ,t,a_ te_in the session, the Senate approved an app'ropriation measu~re ~l'l'i'n'~' for '~lflfl (o1~ !.he $12~ million sought by. utilitie, s) for lnterti.es construction.. The House' M;j/~r'i~ .declined. to support the inte?.e.s project at that time. but agreed to placing $100 million W. lth interest in a new Railbelt Interties Reserve Ac. count .w~thi?. the general fund. The understanding was this money would go fo.r. future constructmn of Intertle. network upg. rades. The rem. ainder of the Ra~lbelt Ene.r.,gy Fund.was appropriated to a variety of energy and non- energy projects, mostly within the Radbelt region. Interim Work ka E uth,ority is doing work n.ecessary to comply with the statutes and regumu.ons regaro!ng oevelopment ot an ene. rgy pr.o.j, ect. No state, funds were specific, ally approprmted for this purpose. Therefore, the Radbelt utilities are contrsbuting the funds reqmred - about $117,000. 1991 Agenda The Railbelt utilities are again asking the Legislature to help fund and authorize construction of the intertie upgr.ade. The cost of construction was estimated at $150 million in 1990 dollars. Further cost analysm are underway. Go.v. erning bodies of the R. ailbeltutilities agreed last spring to pay for all costs of construction exceeding a state appropriation of $125 million(with interest to follow that principal sum)-. With $100 million plus interest now in the lnterties Reserve Account, further state assistance will.be needed to replace part of the Railbeit Energy Fund monies appropriated by the 1990 Legislature. Role of the Governor .Actions taken by Gov. Walter Hickel will be a key factor in the development of these critically important projects. Specifically, Railbelt utilities will ask the new governor to: 1. Provide I,e. adership to_the Legislature in funding and authorizing the projects. 2. Provide d~rectlon to the AEA as a project development entity. 3. Dire. ct the Office of Mnnagement and Budget to review interties studies and report their.' findings expeditiously. ARECA 1-91 Advantages of an Upgraded Railbelt Intertie System Reliability - Power outages can cost millions of dollars in repair expenses, ' loss of business and loss. of product and perishable goods. Upgrading the Rallbclt power grid with two new sections of 138 kilovolt llne will ease the strain on the system and help decrease the number and severity of transmission-and generation related outagns. Economy Enerf~ Transfer. An impr.oved transmission system wlH allow energy produced at Iow cost in one area to displace higher-cost ener~ in another area. This '*economy encr8~ interchange betwcen Anchorage and Fairbanks, for example, is now limited by the capacity of the existing fully Ioaded'intertie fine. Hydro.thermal Coordination - Thermal power plants operate most efficiently at or near full loading but load demands don't alway~ allow this. Bradley Lake hydro generation can.be used to increase the efficiency of gas*fired plants in the Railbclt by adding to or subtracting from the natural Railbeit elcctriClty demand. This is called reshaping demand. A new Kcnai-Anchorage intertie will increase this hydro.thermal coordination capability, thus creating greater savings through efficient power generation. Less Line Loss - The upgraded intcrtic system can yield savings through more efficient transmission of electricity. This is because thc normal loss of energy in the lines duc to resistance is decreased. Capacity Sharing - Power generation plants serving Anchorage, Fairbanks and the Kcnai Peninsula are designed to produce more power than is normally needed so as to meet peak loads and emergency situations. With the two new intertie sections in service, power producers could share each other's reserve generating capacity. This ability to share excess capacity defers or avoids the need to add new. units or. build expensive new power plants as encr~ nceds increase. An associated benefit comes in savings on standby generation unit maintenance. Capacity sharing allows utilitlcs to usc standby units less oftcn to meet peak loads so money is savcd as units require less scheduled maintenance, last longer, and use less fuel. Associated Benefits Utility Coordination - With a stronger, more efficient transmission grid in place, Railbcit utilities can better coordinate operations and planning functions. Power providers working in harmony Can lower costs for cqnsumers. Fuel Supply Competition. An upgraded transmission system that handles loads better wit allow electric utifitics to access a variety of ener~ sources, thus boosting competition among fuels and suppliers. Summary Building the two new intertic sections in a timely manner will create a stable, reliable and more economical- power delivery system to serve Alaska's major population and support economic growth within the rc&4On for decades to come. OARECA 1-91 Why Interties Now? Here are 10 good reasons! lo The Railbelt region has plenty of electrical generation capacity. More will bo available when tho ~0 mcgawatt Bradley Lake hydroelectric project comes on lin0 in 1991. Tho problem is gcttifl8 that power wi,crc it's needed when it's needed with thc existing transndssion s~stem. Tho Railbdt transmission s~stem has inadcqusto reliability by industry standards in the Lower 48. With Bradley Lake on line, the system will bo woefully unreliable for tho load centers it is oxp~iod Io dollvor power to by today's electrical standards. o o o 0 1.0, A transmission aystcm'a reliability decreases as it ages. System reliability b bound to fall off os Rallbcit load demand pews and maintesanco casts on au aSinl~ sMem oacalato, There are less expemive'Bend.Aid' approaches to Increasinf; transmhslon system reliability. None carry the long-term economic benefits of now interfles and thc short.term savings are largely lost when a ne~v system is finally built, UtUities esn't boar the full cost for interdes construction now because rstepayors would not stand it. Utility customers would have to shoulder tho cost in hi6hor electric bills. Oil production, the source of 85 percent of Alaska's revenue, is on tho decline. Tho state may not bo able to help fund transmission system up~rades in tho )'ears ahead when tho need for rdlablo power becomes oven morn crucial, Power outages are a fact of lifo in Alaska. Those rdolcd to IransmLulon lines are caused by equipment failures, earthquakes, volcanic eruptions, floods, avalauch~ storms or other natural and man*made events. Putting a stronger transmission sptem in place wlil enable unaffected areas to send power to afflicted areas faster, Economic development thrives on plenty of reliable and atTocdablo energy. An area served by & weak power supply system with 1~8h maintenance costs won't attract now business end industv/. Consumer spending power influences business location, thus economic prosperity. People who must spend more on necessities such as electricity have less to spend on consumer 8ooGs and services. The intcflics have been proven to bo economically viable to build now. Their construction will creole jobs. Tho upgraded power 8rld will produce millions or dollars in long. term benefits for consumers throughout the region. Why State Funding of Interties? ' Here are 6 Good Reasons! lo Construcdon of intertic lines from Kenal to Fairbanks is a regional project that spans four boroughs and the service areas of seven electric utilities. Without state funding participation, utility rates would increase dramatically. o Thc LeglslatUro has set aside SI00 million in an Interdo Reserve Account: using'it for intertlea would" fulfill u commitment that began with establishment of the Rallbolt Eanrsy Fund in 1986. 0 Thc state has a Ionghistory ofpacticlpolingin electric utilityinfrostructuro fundingand enerfy propmus. Examples hdude thc four.dam pool, Anchorase-Fabbanks intcrtle, Bradley Lek6 byclro project, and Hesly (::lean Coat Project. Also, the Power Cost Equalization prepare plus weatborlzadon, energ}, dficicncy, and energy audit programs ufo funded within state departments and agenda& o The Alaska Ener~ Authority is tho state agency responsible far tho proposed lntertle projects from baseline studios throu6h design, bidding, construction contract award, construction munafomeot and project acceptance, Various other stole agencies would have right*or*way oversight ns wciL 0 State investment iff a Railbcit transmhston Intcrdo uppndo would bo a cost effective uso of public rends on n benefit-cost nsal~sls basis, ' 0 A stable, reliable Imwcr delivery system would stimulate private business and industrial location and expansion in thc atste*a economic hub area. Economic benefits of a higher capacity Raillmlt intefllo 8rid would translate into an improved tax base, job opportunities, and less dependence on state funding contributions to social and economic programs. OARECA 1-91 0 50 Scale in Miles -HEALY PALMER ANCHORAGE KENAI i HOME · l · Gulf of Alaska DELTA GLENNALLEN ... VALDEZ ./ Railbelt Transmission Systems 'and Proposed Intertles Northern Intertle: Healy-Falrbanks Approximately 97 miles 138 kilovolt rating Southern Intertle: Solclotna.Anchorsge Approximately 70 miles 138 kilovolt rating (Underwater across Turnagaln Arm) mmmm Exletlng TranomleMon Unee Bradley Lake Tmnomleelon Unee Pmpoeed Northern and 6outhem Traneml#lon Uneo