Affordable, reliable, predictable and abundant energy is essential to the well being and economic future of Alaska’s citizens.  The expiration of cheap Cook Inlet gas contracts and potential threat to the State’s economic base requires immediate action:  the State and Railbelt leaders must identify new options and commit resources to reverse this trend by adopting a strategy for the future. Alaska Ratepayers are concerned about Railbelt Energy, but recognize that energy is a statewide issue. Following is our vision of Railbelt Energy strategy and considerations for statewide solutions.

This “Railbelt Energy Strategy,” a major element of a Statewide Energy Strategy, provides an outline of short, medium and long term actions to be taken. 

The Railbelt Energy Strategy:

• …Focuses on:
  • Well being of Alaskans
  • Economic development

• …Phases energy investments:
  • Immediate (2009-11)
  • Medium Term (2012-18)
  • Long Term (2019-2059)

• …Supports Medium Term and Long Term projects that meet these criteria:
  • Predictable consumer and business rates
  • Affordable rates
  • 50 year reliable supply
  • Proven technology

• …Encourages rational market segments which generally result in gas used for heat and industrial development, such as value-added gas products, and hydro for electricity and industrial development.

• …Finds that long term energy at predictable prices is worthy of the highest priority and substantial State investments:
  • To achieve long term affordability and price stability the high capital cost requires State equity contribution of at least 50% of the cost;
  • The State must fund both generation and transmission; transmission enables sharing of lowest cost power and provides efficient reliability through redundancy;
  • The Railbelt market is relatively small by national standards and therefore it is not efficient to continue separate G&T functions by multiple utilities;  the State must lead, coordinate, and fund a combined G&T program, including eventual joint ownership and operation;

• …Emphasizes that this strategy is within the means of the State because:
  • The State of Alaska has saved up strong financial resources available to invest in strategic infrastructure such as hydro energy;
  • Existing hydro projects have produced a “return” by providing reliable, predictably priced, low carbon footprint sources of electric energy to Alaska for 100 years;
  • Up front construction costs can be spread out to avoid “rate shock.”  The State should “levelize” rates to the consumer over a 50 or 75 year period;
  • Hydro generates a very long term, reliable revenue source for the State after capital costs are paid;
  • Energy is the top issue facing us:  the future of the State’s economy is in jeopardy--stable, predictable, affordable energy can protect the state’s economy from decline and, moreover, attract new job growth, as demonstrated by experience in the past century;
  
  
• …Requires rebuilding a State agency or corporation similar to proven models such as Alaska Industrial Development and Export Authority, the Alaska Railroad Corporation or the former Alaska Power Authority. This is intended to provide region-wide leadership within the statewide energy strategy to manage planning, construction and operation of Railbelt new generation and transmission facilities. Key features and powers include oversight by an independent board,      legislative policy and appropriation oversight:
  • Authority to plan, design, construct, and finance major projects;
  • Authority to implement a revolving fund to continuously improve and expand the system over time;
  • Authority to acquire, in cooperation with utilities, assets to consolidate an efficient region-wide generation and transmission facility;

• …Recognizes and addresses immediate energy challenges in Cook Inlet that can cause serious interruption of service, and calls for interim steps:
  • Conservation is the method by which one will buy the cheapest gas one will ever purchase.  In our view conservation is the most practical short term and mid term action that Southcentral utilities and customers can take to relieve whatever stress exists on their systems but we need to test its effectiveness. 
  • We support the efforts of Anchorage Mayor Sullivan and his task force to forge an experiment to find the answer with a $150,000 public campaign this winter urging the public to conserve on the use of natural gas.  The results of this campaign, which is being coordinated with local electric utilities and Enstar, are measurable, providing all parties to the current discussion with accurate data.
  • Knowing that the conservation campaign will have at least some positive results, Railbelt Ratepayers feels that policy makers can and should restrain themselves from making precipitous decisions on either the Spur Line or Bullet Line.  We strongly recommend that substantive decisions on those lines should await a combination of an analysis (should be instantly available) of the 2009-2010 winter season's conservation campaign, as well as the 2010 Open Seasons for the "big gas line" projects.
  • Gas storage and compressor weaknesses must be addressed immediately. Recently gas distribution company in cooperation with additional companies is developing a gas storage program.
  • The current LNG export facility acts as a de facto gas storage entity. In fact, operators at the LNG facility, Enstar and electric generating utilities do cooperate during severe cold weather. 
  • State assistance for immediate gas exploration and development targeting this challenge may be necessary.

Considerations for statewide energy solutions

Alaska Ratepayers is developing economic policies and models relating to Railbelt energy that will directly contribute to statewide energy solutions.

The future of Alaska for our children and grandchildren can be very bright indeed…if we take bold steps to prepare and invest and build now.