Critics protest Homer deal for Healy power

'LIPSTICK ON A PIG': Slow down and have public discussions, they urge.

January 21, 2009 

Early arrivals gather outside the Homer Electric Association building in Homer on Jan. 21, 2009, to protest the deal between HEA and AIDEA over the Healy coal plant.

TOM KIZZIA / ANCHORAGE DAILY NEWS Buy Photo

HOMER -- Chanting "No coal! No secrets!" through their face masks, more than 75 protesters demonstrated here Wednesday against a new deal that would commit Homer Electric Association to buying half the future output of the Healy "clean coal" power plant.

The protesters questioned the economic projections and lack of public input in the agreement, which was announced last week by HEA, the Fairbanks electric utility and the state's Alaska Industrial Development and Export Authority. Protesters complained the deal requires HEA to buy power for an unknown price, in a future when costs of burning coal will rise because of new environmental regulations.

But mainly they were concerned about getting into coal at all in an era when the nation is starting to back away from coal-burning emissions.

"Clean coal sounds like lipstick on a pig," said one sign at the rally. "Healy Schmealy," said another.

Managers at HEA say they expect coal-fired electricity, even with new environmental rules, to remain cheaper than power from natural gas, the utility's main source. For that reason, other HEA ratepayers -- especially in the Kenai-Soldotna area -- have spoken up in favor of the Healy deal, said general manager Brad Janorschke.

HEA bills have gone up 40 percent since June due to rising gas prices.

"The ratepayers are taking a beating and they're looking for relief," Janorschke said Wednesday.

After an executive session at its Jan. 13 meeting, the HEA board voted 6-3 to accept the new Healy deal worked out between AIDEA and Golden Valley Electric Association of Fairbanks. The board has scheduled another meeting for 5:30 p.m. today in Kenai to take a second look at the deal.

Wednesday's protesters in Homer urged the board to slow down and hold a forum to discuss their cost-benefit considerations in public.

Speakers at the rally said AIDEA appeared to be cutting the Healy deal as a favor to Golden Valley, leaving HEA to pay much of the bill.

"AIDEA has a white elephant they're trying to get off their hands," said Mike O'Meara of Homer, an organizer of the HEA Members Forum. "They're really good at wasting state and federal money. This is a statewide issue that goes well beyond Homer."

The Healy plant was built with some $300 million in state and federal funds in the 1990s and never generated power after a testing phase. Golden Valley refused to run the plant, saying the "clean coal" technology didn't work.

After nearly a decade of legal wrangling, HEA stepped forward in 2006 and offered to buy the power from AIDEA. But Golden Valley still held an interest and ultimately rejected the 2006 plan. Fairbanks interest in the Healy plant had revived as oil prices were spiked.

Under the new deal, AIDEA would sell the plant to Golden Valley for $50 million and lend the utility $45 million to cover restart costs.

Announcing the deal Jan. 14, state Revenue Commissioner Pat Galvin said it would end litigation and get an idled plant back into making electricity.

Critics of the deal complained that former Golden Valley executives now working for the state helped push the deal. Galvin denies that.

HEA is looking ahead to 2014, when its contracts to buy power from Chugach Electric Association end. The Kenai Peninsula utility will need to generate 120 megawatts to cover demand and backup requirements, Janorschke said.

Half the Healy output would bring 25 megawatts of power. HEA now gets 11 megawatts from the Bradley Lake hydro project near Homer and is exploring some small hydro options. But nearly all the balance of the electricity would come from existing or new natural gas facilities, he said.

Healy coal helps the utility "diversify our generation portfolio," he said.

The plant was built to take care of acid rain pollutants that come from burning coal. But it doesn't scrub out mercury, a huge concern from coal plants. Nor does it remove carbon, the greenhouse gas emission now in the sights of Congress as it considers new climate-change rules.

O'Meara, who spoke at the rally Wednesday, said he thinks the "failed coal facility" in Healy puts HEA at risk because bringing it back on line could cost a lot more than the utility expects. He also predicted rising world coal prices and new emission-control requirements will make Healy power more expensive than current projections.

HEA managers say their consultants have taken all those factors into account.

Find Tom Kizzia online at adn.com/contact/tkizzia or call him in Homer at 907-235-4244.

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