Fire Island wind would be a sound step forward

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.

In January 2009, then-Gov. Sarah Palin set a goal for Alaska of 50 percent renewable electric generation by 2025. The Legislature and Gov. Sean Parnell have since agreed with that goal through legislation adopted in 2010. The state of Alaska has put its money where its mouth is by agreeing to invest $25 million for a transmission line to Fire Island. In February of this year, the Anchorage Assembly unanimously passed a resolution supporting the Fire Island wind project. Study after study has been done to demonstrate the need, the viability and the technical feasibility of the project.

Fire Island was slated to produce more than 50 megawatts of power -- roughly 4 percent of the Railbelt total. This has been cut to 17 megawatts, roughly 4 percent of Chugach's total generation. Chugach Electric, in its testimony before the RCA, stated that the economic impact to its customers would be a net benefit of $20 per customer over the 25-year term if gas prices keep rising. If gas prices don't climb the way they forecast, Fire Island may cost the average ratepayer $57 over the 25-year term. That equals 19 cents a month in a worst-case scenario, or about one-fourth of what my family paid to the RCA last month.

Fire Island is a solid investment in Alaska's energy future. We can no longer pretend that the natural gas that has fueled Southcentral Alaska will go on forever. The RCA needs to approve the Fire Island contract and let Alaska begin to diversify its electricity needs.

Steve Cleary is the renewable energy advocate for the Alaska Public Interest Research Group (AkPIRG).