Fire Island wind would be a sound step forward
October 10, 2011
By STEVE CLEARY in the Anchorage Daily News:After years of talk, research, negotiation, back and forth and back again — Chugach Electric’s board unanimously approved a contract to buy power from CIRI’s Fire Island wind farm this past June. Since no other utility signed up for the power, the project has shrunk to just one-third of its original size. Chugach has been studying wind generation, at Fire Island and other areas, for the past 15 years. Its decision was carefully made and well-researched.
Yet one big hurdle remains before this important project can move forward. On Monday, the Regulatory Commission of Alaska (RCA) will approve or disapprove the contract. All regulated utilities are subject to the RCA. Look at your gas, water and electric bills and you will see a modest regulatory cost charge each month. For those three bills last month, my family paid a total of 87 cents to have the RCA put its fine-tooth comb to a variety of matters, including the Fire Island wind power purchase agreement.
A key aspect of the RCA decision is what standard should be used for assessing the power purchase agreement — “just and reasonable cost” or “avoided cost.” Municipal Light and Power (ML&P) and the attorney general have argued for strict adherence to avoided cost — meaning that any new power has to be as cheap as or cheaper than power currently produced. That’s an unreasonable standard. Using avoided cost will tie Alaska’s hands, preventing us from choosing energy sources that in long run will benefit us by being stably priced and more secure. For example, using the avoided cost standard, the Bradley Lake hydroelectric project near Homer would never have been approved. Bradley Lake is now one of the cheapest sources of electricity on the Railbelt, costing about a third less than natural gas. That was not the case when it was built in 1991. Then, the hydropower was roughly twice the cost of natural gas. But natural gas prices have risen and are expected to rise further, while the cost of the hydropower has stayed stable because the cost of the fuel — the water — is free.
Chugach has shown, consistently and carefully, that Fire Island is both just and reasonable to its ratepayers in the long run. Fire Island is not a no-brainer. The energy that will be generated will not be too cheap to meter. But Fire Island will be a solid step forward toward an energy future not overly reliant on natural gas. Read more