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New company created to unify Alaska Railbelt power transmission faces resistance

  • Author: Alex DeMarban
  • Updated: March 25, 2019
  • Published March 22, 2019

Four Alaska electric utilities have joined a Wisconsin firm in a move to coordinate power transmission from Fairbanks to the Kenai Peninsula, potentially lowering costs and rates.

But two other utilities, Chugach Electric and Matanuska Electric associations, aren’t signing on to the idea in its current form.

They’ve raised concerns in comments to the Regulatory Commission of Alaska, suggesting the new for-profit company, Alaska Railbelt Transmission, may not be the right entity to manage transmissions for the region’s six not-for-profit utilities.

Also, public interest groups fear a system run by the new company could lead to higher rates if a separate nonprofit planning entity isn’t created to help provide a check and balance.

Alaska Railbelt Transmission was created last month by Anchorage’s Municipal Light & Power, Golden Valley Electric Association in Fairbanks, and electric utilities for Seward and Homer. ATC Development Co., a firm from Wisconsin with power-transmission expertise, is also an owner.

The new company last month applied for a permit from the regulatory commission to operate as a utility. It would run a transmission system along the Railbelt as one grid rather than six separate service areas. It would also plan and build new transmission projects.

The new company would help deliver cost-effective energy, said Eric Myers, its chief executive.

The company’s creation follows years of effort by the six utilities and ATC Development to find a way to better coordinate operations, at the urging of the regulatory commission.

The idea has been thoroughly studied for years, and it’s time to move forward, said Cory Borgeson, chief executive of Golden Valley Electric in Fairbanks.

He called the permit request a “watershed moment.”

“We believe we’ve done a really complete look at this and it works and it’s good," he said. “It’s time to get it out there and have it vetted.”

A review by the five-member commission will offer everyone a chance to fully analyze the concept, he said.

The commission has until April 20 to determine if Alaska Railbelt Transmission’s application is complete, said Grace Salazar, a regulatory commission spokeswoman. It will then have six months to decide if the new company should be permitted.

Matanuska Electric believes the application is “substantively deficient and premature," wrote Tony Izzo, chief executive of that utility, in comments to the commission.

Approving a single company to transmit power along the Railbelt, home to three-quarters of the state’s population, is a “major decision” for Alaska, he said.

He said MEA is studying alternatives to ART, which he called a “no bid, sole-source, for-profit transmission company advanced by ATC.”

A “not-for-profit cooperative solution” should be analyzed, he said.

“There is no technical, regulatory or political reason to rush into a misaligned, long-term business arrangement, with potentially significant down-side risk for all concerned, without a thorough due diligence review," Izzo said in his comment.

Chugach Electric, serving much of Anchorage, told the commission in comments filed Thursday that it’s not ready to support the application.

One concern is how ART’s for-profit status would impact Chugach’s tax-exempt status, said Lee Thibert, that utility’s chief executive.

Chris Rose with Renewable Energy Alaska Project said he agrees with the many reasons to run Railbelt transmission as one grid, including that it could help integrate renewable power.

But he said a separate nonprofit entity also needs to be created, one with public and utility membership, to decide what new transmission projects and upgrades will be built.

Leaving planning decisions up to Alaska Railbelt Transmission would create a conflict of interest, since the for-profit company could have an incentive to build projects that might not be necessary, Rose said.

Transmission planning must be done by an entity that does not have a financial interest in the outcome, he said in comments to the regulatory commission.

The commission issued an order last week taking steps that could lead to the creation of that separate entity.

The Wisconsin company, ATC Development, owns 36 percent of the transmission company, more than the utilities, said Veri di Suvero, executive director of Alaska Public Interest Research Group, in comments.

Without a nonprofit entity to handle planning, Alaska Railbelt Transmission could build projects without sufficient oversight, di Suvero said. Much of the profits would flow to the Outside company, and ratepayers could suffer as they bear the cost of poor decision.

Myers, with ART, said he’s hopeful Chugach and Matanuska will come to support the proposal.

He said ART will work with the nonprofit planning entity once it’s created. That will provide oversight of ART.

Also, the regulatory commission will review and approve future projects before they’re built, adding another layer of protection to ensure projects benefit the public interest, he said.