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Has time finally come for a power grid in rural Alaska?

Carey RestinoThe Arctic Sounder

After the dramatic pilgrimage of the Coast Guard icebreaker Healy and the Russian ship Renda’s journey to Nome to deliver fuel to the ice-locked community this winter, few remain oblivious to the energy challenges faced by rural Alaska.

A recent study by Commonwealth North, however, brings the issue into focus. Nearly 80 percent of rural communities in Alaska depend on diesel fuel, and some in those communities spend up to 47 percent of their income on energy — heating fuel, electricity and fuel for their vehicles. The report stated that many rural Alaska families struggle to both heat their homes and feed themselves.

“Because energy has been consistently expensive, people in rural places tend to use less than half as much total energy as people with natural gas or hydro power in Anchorage and Southeast Alaska,” the report stated.

Holistic plan must yield grid

While state programs have been put in place to offset those costs, the report finds that they are ineffective and shortsighted. The answer, they contend, must be holistic — a statewide energy plan, coordination, funding and a huge investment in interconnecting communities with an electric grid.

“For folks in the Bush, this is an endemic problem that needs to be addressed,” said Meera Kohler, co-chair of the group that produced the report.

The status quo of each rural community operating its own diesel generator and power system must be phased out, she said. The duplication of effort and cost far outweighs the cost of establishing a power grid in many areas, she said. According to the report, the capital cost of a new, small 1.2- megawatt power plant is around $4 to $5 million. Interties, however, cost $250,000 to $400,000 per mile, making it less expensive to put in an intertie to communities within 10 to 20 miles of each other rather than building duplicate generation plants.

“We believe that communities need to be connected to each other electrically, she said. “It’s one of the hallmarks of making a meaningful difference in the cost of energy.”

The report says many areas, such as those outside of Bethel, where 12 communities independently produce electricity within a 25-mile radius of the hub, should build a micro-grid. Those micro-grids then get connected into a sub-regional grid followed eventually by a statewide grid system. Also proposed are grids linking the North Slope with the Northwest Arctic Borough.

“The state must recognize that it is no longer practical to expect complex energy systems to be competently operated and managed in small rural communities and instead must adopt regional planning,” the report stated.

Utility costs soar 170 percent

While numerous regional plans are in various states of development, a statewide planning effort is needed to coordinate all the efforts. The report calls for “a statewide entity to coordinate energy generation and transmission … for all regions of the state in a balanced fashion.”

That balance is lacking, Kohler said, with legislators from areas where power is less expensive often offering up the statewide Power Cost Equalization Program as a legitimate effort toward balancing power cost statewide. “The Power Cost Equalization Program is not a long term solution,” Kohler said.

The program, established in 1984, offers a reduction in cost for the first 500 kilowatts used by residents and in community facilities. But schools, commercial establishments and federal or state offices are not eligible. In addition, utility costs have increased by 170 percent the last 20 years. And those eligible have been reduced by more than 40 percent.

Nowhere else in the country has so many small unlinked communities, Kohler said. When nasty weather rolls in, an expensive inconvenience becomes a much bigger problem. A community’s infrastructure can be put at risk by a long-term outage because back-up generation doesn’t exist.

While many millions of dollars in state funds have been pumped into renewable energy projects in Alaska, there are no projects that produce enough power to create a non-diesel-dependent Bush community. A power grid, however, could create more opportunities to use such renewable energy sources, partially because the power could be integrated into a much larger system, and partially because the grid would open up a much larger area where things like wind turbines could be placed.

All these power lines, programs and planning will undoubtedly cost the state a lot of money, which creates resistance among legislators, said Kohler. But there’s a flip side to that argument. At a recent hearing considering an expansion of the Power Cost Equalization Program, Kohler said she testified about the cumulative cost of energy in Alaska over the next 20 years, based on the current-day value of fuel. The cost for rural Alaska totaled around $9 billion, Kohler said. Add in Fairbanks and the number doubles, and if you add in the rest of the Railbelt, the number rises to $30 billion, she said.

“Now we’re starting to talk about some real money,” Kohler said, adding that the reaction of legislators was obvious.

Convincing legislators

When looking at the issue of energy infrastructure as an investment with a 20-year payout, the cost of putting in an electric distribution grid becomes less shocking, she said.

“(The legislators) were blown away by the numbers and that tells me that we are not really taking a hard look at the value of an infrastructure. Hopefully, that’s going to be fodder for contemplation.”

Kohler said she now plans to sit down with state Institute of Social and Economic Research and crunch the numbers on the 20-year cost of providing the current energy service to Alaska. She said once those figures are collected, they may be useful in considering energy grid improvements.

Now that the report is completed, Kohler said she plans to head to Juneau with a stack of them and initiate conversations with legislators.

“I do think that legislators want to find solutions, they are just bedeviled because there are so many different solutions,” she said, adding that while it may be too late in this legislative session to see action taken on the issue. She will suggest an interim task force or committee be set up to consider an energy policy for Alaska. “We definitely need a road map, and we need to find solutions to some big questions, like how are we going to pay for it.”

Kohler said the goals identified in the report are not ones that will easily be achieved, but the investment will be well worth it.

“Those are very exotic, overarching goals but it is our belief that the state needs to adopt goals like that,” she said.

Carey Restino is editor of the Arctic Sounder. Used with permission.