Manager says increasingly expensive Susitna dam could help salmon

The project manager for a proposed dam that would rise 735 feet in the Alaska wilderness said it could improve salmon-spawning habitat on the Susitna River, a statement that drew sharp criticism from opponents.

Wayne Dyok and other officials with the project set 87 river miles north of Talkeetna also said this week that the cost estimate for the Susitna-Watana Hydroelectric Project has risen to $5.7 billion, a $500 million increase from the last estimate and one that comes at a time when the governor is considering cutting such mega-projects.

Seeking to reduce an estimated $3.5 billion deficit caused by plunging oil prices, Gov. Bill Walker recently removed $20 million in capital funding for the project that had been proposed by his predecessor. The state Legislature could seek to add that and other stricken mega-projects back in, but such efforts will face the "utmost scrutiny," Walker's budget director has said.

Legislators will likely discuss details of the hydroelectric project after they convene next month to consider whether it should receive funding to move forward, leaders said on Wednesday.

"We'll look to see if it can continue to move forward or if we put it on hold a couple of years how that will affect the project," said Rep. Mark Neuman, R-Susitna Valley and incoming co-chair of the House Finance Committee.

"Do we waste money and walk away from it, or should we put our shoulder to the stone and push forward because we know in the long term this is the answer for sustainable, lower-cost energy?" asked Sen. Anna MacKinnon, R-Eagle River and incoming co-chair of the Senate Finance Committee.

MacKinnon said she does not currently have a position on the project's future but said it's important to remember it could have important long-term value that includes providing power after the state's natural gas supplies are exhausted. Meanwhile, she said, the plunge in oil prices is a recent phenomenon and one the state will survive as it has done before.

So far, the state has spent about $180 million on environmental studies for the project during this latest effort. The hydroelectric project was also pursued in the 1980s, then shelved during that decade's oil price collapse.

Alaska Energy Authority still has about $10 million in funds for the project that have been not allocated, officials said. That is not enough money to support a full field season of work, said Emily Ford, the project's public outreach liaison.

Getting the project to the phase during which it would file a license application with the Federal Energy Regulatory Commission will require another $100 million, said Sarah Fisher-Goad, executive director of the energy authority, during an update on the dam on Tuesday.

Fisher-Goad said the authority is looking at how to advance the licensing effort with less money.

Dyok said the energy authority and project officials closed the public meeting and met in executive session on Tuesday to discuss strategies on pursuing licensing assuming the state won't provide the full $100 million.

Getting a FERC license to build is important because it's a valuable asset that will be there when the state is ready to move to construction, Dyok said.

Another $230 million is needed for detailed engineering and geotechnical work to take the state to the point of construction in 2018. Michael Lamb, chief financial officer for Alaska Energy Authority, said he believes the state should pay for the upfront costs.

Lamb presented financing proposals showing that after the initial costs are covered, the state could fund the remaining $5 billion by issuing revenue bonds and taking out a low-interest loan from the federal government's Rural Utility Service program. The dam would be operational in 2027, with customers paying back all project costs over decades.

Lamb used a typical mortgage on a house to illustrate how debt would be paid back.

"It'd be great if the first generation paid for the house and (future generations) got to live it in for the utility costs," he said. "We're trying to build a house and essentially have two and a half generations from the end of construction pay for that house."

Economist Gregg Erickson recently released a report for the Alaska chapter of Trout Unlimited, a dam opponent, that said the project costs were underestimated.

He said after the meeting that the estimated project cost has risen by $1.2 billion since January 2012. If costs continue to rise as they have, the cost of the dam would exceed $10 billion if completed in 2029, he said.

"Alaska Energy Authority and its predecessor, Alaska Power Authority, have never had a large hydro project come in under budget," Erickson said.

Dyok pegged the ultimate cost at more than $7 billion, when interest payments are included. He said he would love to sit down with Erickson and walk through his "little analysis" with him. "We see some things quite a bit differently," he said.

In the presentation, Dyok also said the project could potentially improve salmon spawning habitat. That's in part because the dam could reduce sediment downstream, leading to water that is clearer and more productive for feeding because sunlight can penetrate the water and stimulate food supplies, he said after the meeting.

Water levels, water flow and temperatures can also be carefully maintained to protect spawning and rearing salmon, he said. There's still more to learn about how to do that and best protect salmon in the river, but it's possible, he said. "We can develop the project in harmony with the environment," he said.

Sarah O'Neal, a fisheries ecologist working with Trout Unlimited and another dam opponent, Susitna River Coalition, said the dam would be the second tallest in the U.S. and threaten habitat by sharply altering environmental conditions in the river. Sharply fluctuating water levels and flow could leave young salmon cut off from rearing areas or leave spawning grounds dry.

As the dam seeks to increase power output or lower it, depending on the time of day, it would also affect sediment delivery. And the dam will also drastically change water temperatures, including for dozens of river miles downstream that would no longer freeze in winter.

"The water temperature regime will change drastically, and that is something that is very important to fish," she said.

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or