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After almost 20 years, Iliamna hydro project finally hits its stride

NEWHALEN -- George Hornberger is a man on a mission: Get his tiny community totally off of diesel fuel power generation.

Hornberger's background isn't in electricity. For years he was a bush pilot for Iliamna Air Taxi, flying people between remote communities in the Bristol Bay region. It's probably fairer to say his background is in efficiency.

After retiring from flying, he admitted he was frustrated after learning that the electric cooperative wasn't running effectively. So he went to his longtime friend, INN Electric Cooperative board president Tinny Hedlund, and told him if he couldn't get anyone to run the hydro plant, he'd do it himself.

Hedlund said to go for it, and now the small village electrical co-op he runs in Southwest Alaska is showing big savings.

Hornberger runs INN -- Iliamna Newhalen Nondalton -- Electric, a tiny village electric cooperative on the north shores of Iliamna Lake. Between the three communities, it serves approximately 600 people, using primarily a hydropower project tucked into the mountains about 12 miles north of the lake's edge.

The project is almost 20 years old and for years has gone through periods of rolling inefficiency.

While renewable energy projects in Alaska are nothing new -- even nearby Iguigig is working to get river power into operation -- they are often met with mixed results. Renewable can be tricky, and if there's any sort of problem, getting experts in to fix the complicated electrical systems can take days, weeks or even months. During those periods that means switching to diesel fuel, which in rural Alaska can run from $6 a gallon to as high as $12.

Hornberger said with a few small changes and a lot of elbow grease, the facility is running more efficiently than ever. Small changes -- like bringing data systems into the 21st century -- have made it easier for the small electric cooperative to react quickly to potential problems.

The numbers speak for themselves. He said they've gone from using 40,000 to 50,000 gallons of diesel fuel a year to less than 5,000, saving thousands of dollars each year.

Without the hydro plant, the communities collectively would use about 180,000 gallons of diesel fuel a year for electricity.

"It's just a matter of someone getting out and doing it," Hedlund said. "We were persistent, and now it's saving us a million dollars a year."

Hornberger is especially proud of that fact.

"Do you hear that?" he said earlier this month, showing Alaska Dispatch News reporters around the diesel generator next to the cooperative's office overlooking Iliamna Lake. It was quiet except for the hiss of tall grass blowing nearby.

"You don't, do you? That's what I like."

Finding efficiencies

The Tazimina River Hydro Electric Power plant was built in 1998 at a cost of about $13 million. It was initially projected to cost $6 million but was caught up in administrative delays.

Hornberger considers the hydro plant the most beautiful in Alaska. The clear, bright blue Tazimina River, which starts in several small lakes north of the village, feeds into the project. The water intake for the plant is located at the top of a 120-foot waterfall on the river, taking advantage of the water's natural horsetail fall.

The two generators that run the project are drilled down into a deep, man-made cavern 92 feet below the surface. There, the water falls through a diversion down into the turbines and out a tailrace at the bottom of the falls. The project has a capacity of 824 kilowatts, expandable to a total of 1.5 megawatts.

At first, the project wasn't a roaring success. In 1998, it only produced 50 percent of the power requirements of the villages. But trial and error, as well as regular maintenance, has helped the project become more efficient. Now the plant produces so much power they've been able to divert that excess to two schools in the region to cover their heating costs. At only 12 cents a kilowatt hour, it's much more attractive, financially, than paying for heating fuel.

To keep that efficiency, Hornberger said he and a handful of workers have to be vigilant about taking care of the project. If something fails, it's up to them to fix it quickly -- something that wasn't always done in the past, leading to higher diesel usage.

Price problems

Despite the renewable project, electricity in the communities is still expensive, at 60 cents a kilowatt hour. For comparison, in Anchorage, Alaska's largest city, 320 miles northeast of the community, electricity costs about 16 cents per kilowatt hour.

The reasons for that are a complicated mix of issues that burden renewable energy projects across the state.

The plant was built with $5 million in Alaska state grant funds and $3.5 million in federal funds, borrowing an additional $3.3 million from the state, along with another $2 million to help cover the cost of diesel generation.

But the cost of power is still expensive for residential users. The overhead cost of maintaining a hydro plant is high, but other factors are also at play.

For example, the community is working to pay off a $2.7 million debt left over from the plant. Split between only 300 people, it adds 5 to 10 cents to each bill.

"It's a crushing load," Hornberger said.

Also, because the plant is so efficient and produces excess power, they receive less funding from the state's power cost equalization program.

The PCE program is designed to bring rural energy prices more in line with what people in Alaska's urban areas pay. In Iliamna, the PCE program covers 19 cents of the cost for every kilowatt hour, which retails at about 60 cents.

In nearby Igiugig, they get a PCE that covers 53 cents for every hour, even though at 81 cents a kilowatt hour it costs more to produce. With the PCE factored in, INN customers pay 41 cents per kilowatt hour to Igiugig's 27 cents, despite the abundance of electricity.

Those costs savings from the PCE go back to the state (though it's worth noting that the PCE program, which paid out $40 million in 2013, is funded through an endowment). The utility sees no economic benefit. The only people who end up paying more are customers.

That's not right, according to Meera Kohler, president and CEO of the Alaska Village Electric Cooperative, a co-op that supplies power to 56 villages in Alaska.

"It's one of those perverse things that has happened that it was not intended to or designed to do," she said. "And now we have to figure out a way to get past that and fix it."

Hornberger said state forgiveness on the loan would be ideal, but he has accepted that after years of trying to lobby for it in Juneau, it might not happen.

Still, he's working hard to make sure the project keeps going. He said if they had to pay for diesel power only, it would cost residents $1 per kilowatt hour. He admitted that the power will never be as affordable as large cities with an abundance of resources, like Anchorage, but he'll try his hardest to keep his small part of the world working.

"My goal is to keep this a viable place," Hornberger said.

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