FAIRBANKS -- While the state says it is close to a deal allowing access for field studies on Native land proposed as the site for the Susitna-Watana Hydro Project, it's not clear if that will be enough to reverse a possible budget cut of more than $100 million on the project.
"We are targeted to receive permit approval or land access approval this month some time," Sara Fisher-Goad, executive director of the Alaska Energy Authority, recently told lawmakers. She said the next step would be to "revisit the budget" and review the status of the giant Susitna project with the governor.
The latest schedule on the proposed 735-foot dam has slipped by more than a year, with a proposed license application now set for December 2016 instead of September 2015. Field studies proposed for 2014 have been moved on the timetable to 2015.
A little more than a year ago, the state estimated that funding for the dam over the next fiscal year would total $124 million, but Gov. Sean Parnell has proposed cutting that amount to $10 million. Parnell said the lack of land agreements prompted him to slash Susitna.
"I told AEA I want to see more significant progress on land access agreements before we committed a significant amount of money," Parnell said at a December press conference.
More money for Susitna needed in coming years
Whether land agreements with the corporations will prompt Parnell to restore some or all of the money is not known. It's also not clear what this means about the level of state commitment to the dam, a $5 billion project that is expected to generate about half the electricity needs of the Railbelt.
This is an election year and Parnell is under self-imposed pressure to hold down the deficit, which is already likely to grow beyond the figures he announced in December. Since the schedule on the Susitna project has already slipped, it would be easier to postpone the budget discussion than to hold it now.
If the state delays the decision, however, the budget challenge to keep Susitna going will only increase, as the state projects an appropriation of $217 million would be needed in 2016 and $100 million in 2017.
Parnell told reporters in early February that he doesn't know yet if he will back an increase beyond $10 million for the fiscal year that starts in July.
"My plan is to make sure that substantial progress or completion of those land access agreements has been made. Once we're to that point I can make a determination of what it is necessary to ask the Legislature for," he said at a press conference. "Until that time I don't have a basis to go ask legislators for more money."
The proposed Susitna-Watana Dam would be on Native land along the Susitna River, access to which has been a big point of contention with Cook Inlet Region Inc. and five village corporations -- Chickaloon Moose Creek Native Association, Knikatnu, Inc., Ninilchik Natives Association, Salamatof Native Association, Seldovia Native Association, and Tyonek Native Corp. Questions about safety, indemnification and trespass arose following 2012 incidents in which contractors trespassed on Native land, the groups said.
Fisher-Goad told lawmakers that the 58 studies that began in 2013 cover a range of environmental issues necessary before an application is filed with the Federal Energy Regulatory Commission.
"We really know what we need to do to complete the studies; we just don't know when we're going to complete it and that is subject to the budget issue, which again gets back to needing to make sure we have the access," she said.
Reservoir would be 42 miles long
The 2013 field season was a success, AEA officials said, because researchers made solid progress on all the studies. Though they didn't have access to 2,000 acres owned by the corporations, they did have agreements to work on much of the land covered by the project.
"We made a decision to conduct the studies on areas that are not on village corporation lands. So we have work-arounds for many of those studies," Susitna project manager Wayne Dyok said at a legislative hearing Feb. 5 before the House Energy Committee.
Overshadowing the scheduling challenge is the bigger question about whether the state may once again lose interest in Susitna, as it did a quarter-century ago after oil prices crashed. The project is in competition for state support with a host of other big-ticket items, headed by the latest incarnation of the gas pipeline. The schedules for the gas line and the hydro project are almost concurrent, with each envisioned as coming online in a decade or so.
The dam is proposed for a site about 120 miles northeast of Anchorage and about 110 miles southwest of Fairbanks, about 32 miles upstream of Devils Canyon. The dam would create a reservoir about 42 miles long, with an average width of 1 to 2 miles. Construction costs are estimated at $5 billion, and the project would bring long-term stability to electric rates, proponents believe.
Anchorage Rep. Andy Josephson asked Fisher-Goad if the agency reviews the issue of whether the dam would duplicate the gas line -- providing energy supplies to the Railbelt -- or if it is like the Knik Arm Crossing, a project that is "not going to second-guess itself."
Fisher-Goad said the hydro project and the gas line are not in competition, they are complementary. She said hydro is about meeting the goal of generating 50 percent of electricity with renewable sources, while in-state gas supplies would be better suited as a fuel source for heat.
Dermot Cole can be reached at dermot(at)alaskadispatch.com. Follow him on Twitter at @DermotMCole.