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Utility seeks electricity rate increase to pay off new Alaska power plant

  • Author: Alex DeMarban
  • Updated: September 27, 2016
  • Published February 12, 2013

What's not to like about the new power plant in west Anchorage, a boxy tribute to efficiency where the sound of thrumming turbines promises cheaper power, reduced emissions and a bit of breathing room from the natural gas crisis bearing down on Southcentral Alaska?

The bad news is ratepayers likely won't experience reduced costs this year, thanks to the debt payments associated with the $369 million Southcentral Power Project, a 70-30 partnership between majority owner Chugach Electric Association and Anchorage Municipal Light and Power.

Plant operator Chugach, the state's largest electric utility, has already filed a request with the Regulatory Commission of Alaska to raise its rates 4 to 6 percent among its 81,000 ratepayers in an effort to begin paying off the debt.

MLP, which gets 30 percent of the plant's 183 megawatts, also plans to seek commission approval for higher rates later this year to help pay for the project, said spokeswoman Ronnie Dent. How much rates might rise isn't known yet. But customers could see savings on their bills in coming years.

Old idea, high-tech approach

The plant, which began full operation on Jan. 31, combines an old idea with the latest hi-tech equipment.

The old idea is co-generation, which involves funneling waste heat from natural-gas turbines to heat water that spins steam turbines. The technique has been used for years, including in Anchorage.

Remarkably, 1981 was the last year Chugach fired up a new turbine of its own. That year, a steam turbine began sucking up waste heat from two natural-gas turbines at the Beluga River Power Plant across the inlet west of Anchorage, said Chugach spokeswoman Sarah Wiggers.

The new steam turbine is more efficient, she said. It uses 800-degree heat from three natural-gas turbines to crank out 39 megawatts of steam power.

Chugach built the Southcentral plant after deciding to invest in new power generation, "rather than pour tens of millions of dollars into equipment more than 30 years old," according to a written statement. "New investment was inevitable," the statement said. "The only question was what millions of dollars was going to be spent on."

Less natural gas used

Added efficiency means the facility will produce power with 25 percent less natural gas than Chugach uses across the rest of its operation, the statement said.

Chugach natural gas consumption should fall by 3 billion cubic feet a year, saving customers about $15 million annually.

That's important for Southcentral Alaska consumers. The 49th state is home to one of the nation's largest basins of untapped natural gas, but it now faces a frightening shortage of the stuff because existing fields are being drained and too few new ones are being tapped. A consultant hired by Chugach and other utilities reported that the state's gas supply may fall short of demand as early as the end of next year.

If that happens, and gas must be imported, prices will rise. And that will mean bigger savings from the new plant, said Phil Steyer, Chugach's director of governmental relations and corporate communications.

Dent, the ML&P spokeswoman, couldn't pinpoint the expected savings to her utility and its 30,000 customers.

"We'll be saving some operations and some fuel costs, but it won't be a net reduction overall," Dent said.

She did note, however, that bigger savings are coming. ML&P is expanding its Muldoon power plant in Northeast Anchorage. The end result should be one of the nation's most efficient thermal generation plants. With that expansion, the utility's fuel costs will fall 20 to 30 percent by 2015, said Dent.

EDITOR'S NOTE: This story was updated Feb. 12, 2012, to clarify that the Chugach Electric steam turbine at Beluga River Power Plant runs on waste heat from two natural-gas turbines, not seven, as was originally reported.

Contact Alex DeMarban at alex(at)

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