City-owned Municipal Light and Power (ML&P) is concerned that buying power from Fire Island will cause its rates to rise. Yet, doing nothing will cause rates to rise. Gas is getting more expensive, and scarce. It is well past time to face that fact. Fire Island is one solid step toward an electricity supply that isn't overly reliant on natural gas.
On Feb. 1, the Anchorage Assembly unanimously passed a resolution in support of the Fire Island wind project. Co-sponsored by Assembly member Bill Starr and Assembly Chair Dick Traini, the resolution states that diversification of the local energy supply is in the public interest.
Assembly Member Starr's memorandum goes on to say: "Even more importantly for local government, the timing of the Fire Island Wind Project coincides with municipal needs to diversify local energy supply, improve energy price stability, and enhance system reliability."
Unfortunately, this forward-thinking effort by the Anchorage Assembly was met with delays from ML&P. On March 23, the ML&P board finally voted to present Cook Inlet Region Inc. (CIRI), the wind developer, with a counter proposal. ML&P General Manager Jim Posey provided the details of this counter offer at a press conference on March 31. ML&P's offer came up short, to say the least. ML&P proposes to pay CIRI less than its current cheapest power source. The offer does not make business sense and certainly is not in the public interest.
ML&P has offered to buy power for $30.20 per megawatt hour (Mwh), which equals 3.2 cents a kilowatt hour (kwh). The cheapest power now available to ML&P is from the Bradley Lake Hydro Project, which is $37 per Mwh, or 3.7 cents per kwh. It's going to be tough to stack up next to a dam built 20 years ago with $175 million from the state. With the parameters that ML&P is using, no project can pass muster.
The power from the promising geothermal project at Mount Spurr is estimated to cost 12-13 cents per kwh. The proposed Susitna dam would bring in power at 6 cents a kwh, if the state pays half the cost. That half is currently projected to cost $2.5 billion, and if that subsidy isn't there, the power doubles in price to 12 cents, at least. And that's if the cost of the dam and construction come in on budget, something that rarely happens.
So where does Fire Island fit into this cost calculation? Right in the middle at just under 9 cents per kwh. It's not "too cheap to meter," as the nuclear industry once thought nuclear power would be, but it's a solid common sense step toward a better electrical mix. Most important, it will continue to be 9 cents for the life of the wind turbines -- 25 years. That's the advantage to wind power. That's the advantage that the Assembly sees and why it needs to take over negotiating a power purchase agreement.
One disadvantage is that the wind doesn't always blow. Intermittent sources like wind can't make up 100 percent of our electrical grid. But ML&P needs to realize that Fire Island power can replace more expensive power now and in the future help stabilize the price of power. Just this winter, ML&P was forced to spend more than $8 million on natural gas when supplies at the Beluga River Unit fell short. Shortly after Christmas, when no additional gas was available, ML&P was forced to burn oil. This is the type of gap that energy from Fire Island could fill. Wind blows harder in the winter, when demand peaks.
Clearly, it is time for action. Simply because we want to keep paying the same price for electricity doesn't mean we can. It's time to stop holding our breath until more cheap natural gas fills our pipes. It's not going to happen. We need to diversify and build not only a grid, but a mindset that can handle a more vibrant mix of renewable energy.
Steve Cleary is the renewable energy advocate for the Alaska Public Interest Research Group (AkPIRG).
By STEVE CLEARY