Cook Inlet Region Inc. is making a renewed push to persuade Anchorage's municipal utility to buy power from its wind project on Fire Island, which sits in the Inlet just to the west of the city. But a deal will have to overcome skepticism from the administration of Mayor Dan Sullivan, which is concerned about costs.
CIRI has started construction on the second phase of the wind project, which is scheduled to come online in October of 2015.
Following a meeting between CIRI officials and Assemblyman Bill Starr, the Assembly on Tuesday night passed a resolution directing Municipal Light and Power to enter into negotiations with the Native corporation for a long-term purchase agreement for wind energy.
The city-owned utility serves more than 30,000 customers, who are located mostly north of Tudor Road and west of Boniface Parkway.
ML&P declined to buy electricity from the first phase of CIRI's project, which began producing power in 2012. Former ML&P general manager Jim Posey has said that the cost of CIRI's power -- at around $100 per megawatt -- was not competitive with the utility's generation costs.
Chugach Electric Association, which serves more than 80,000 customers from Anchorage to the northern Kenai Peninsula, ultimately entered into a 25-year agreement to buy the wind power.
Currently, the deal adds about $1 to the average CEA customer's monthly bill. But if there are price increases for natural gas -- which fuels much of Chugach's production -- the agreement with CIRI could end up saving customers money.
After Posey's retirement at the end of last year, Starr said he is hoping the Sullivan administration will reconsider its position on the Fire Island project.
CIRI is looking to seal an agreement within the next month for a utility to purchase the power generated in its second phase. That agreement would help CIRI find investors to finance the project, said Suzanne Gibson, a vice president at the Native corporation's Fire Island wind power subsidiary.
Gibson said that the second phase of the project would generate cheaper power, at roughly $63 per megawatt, since CIRI has already installed necessary infrastructure on Fire Island, like roads and buildings.
Posey has said that ML&P produces power for between $50 and $60 a megawatt.
James Trent, Posey's replacement as general manager, would not disclose ML&P's generation costs in an interview Tuesday evening.
While Trent has not yet met with CIRI officials about the second phase of the Fire Island project, he said that buying any wind power would be "cost-prohibitive."
"It would penalize our ratepayers," he said. "If it doesn't pencil out, dollars and cents, it's a bad deal."
He added that the board members of Chugach Electric Association who approved the purchase from CIRI "didn't quite understand the impact of their decision."
Nonetheless, Trent invited CIRI to discuss their project with him, and added that the Assembly's resolution directing him to do so was unnecessary.
Mayor Sullivan said in an interview Tuesday that he looked forward to talking with CIRI.
"It's strictly going to be a business decision. Of course, we'll engage in discussions any time there's an opportunity for a power source," he said. "Ultimately, it's going to come down to economics."
Gibson, the vice president at the CIRI wind subsidiary, said that the amount of power in play only represents 3 or 4 percent of ML&P's energy requirements, and she noted that wind power could help the utility hedge against increases in the price of natural gas.
ML&P, in fact, is holding a groundbreaking ceremony Wednesday for a new natural gas-fueled power plant in East Anchorage.
Also on Wednesday, the Alaska Center for the Environment is holding a rally at the Chugach Electric Association board of directors meeting, to encourage that utility to purchase power from the second phase of CIRI's project.
Reach Nathaniel Herz at nherz@adn.com or 257-4311.
By NATHANIEL HERZ