The Regional Integrated Resource Plan (RIRP) is a 50-year, long-range plan that will identify combinations of generation and transmission (G&T) capital improvement projects in the Railbelt Region of Alaska.

For more information about the RIRP, please visit the Alaska Energy Authority (AEA) website by clicking here. 

The following is Alaska Rate Payers comments on AEA's Regional Integrated Resource Plan:

Alaska Ratepayers, Inc. 

Alaskaratepayers.org

Affordable and Predictable Electric Rates for Alaska

January 6, 2010

Mr. James Strandberg, Project Manager

Alaska Energy Authority

813 West Northern Lights Blvd.

Anchorage, AK 99503

RE:  Comments on the December, 2009 Draft Regional Integrated Resource Plan

            by Alaska Ratepayers, Inc.

Dear Mr. Strandberg:

Alaska Ratepayers, Inc is a non-partisan, non-profit consumer organization interested in predictable, affordable electric energy rates.  Thank you for the opportunity to offer comments from the ratepayer point of view on the December, 2009 Draft of the Alaska Energy Authority’s Regional Integrated Resource Plan (RIRP).   Concerned consumers contributed many hours in reviewing this important report.  Our findings and recommendations are outlined below.

• Eye on the goal:  The goal is electric energy security at an affordable and predictable price to the consumer.  That cannot be achieved with continued reliance on gas for electric generation.  Gas fired generation simply isn’t the best option.  
  • In fact, gas based policies will continue the trend toward ever more expensive, roller coaster pricing of electric energy.  

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  • We agree with legislators and other decision makers with whom we have spoken who recognize the Railbelt should wean itself from gas fired electric generation and use gas for heating and gas fired industrial activity. 

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  • Nor is moderate sized hydro going to cut it.  The report’s recommendation for the base case is to “select” Chakachamna rather than Susitna Phase I is not credible when elsewhere the report demonstrates (even at a low growth rate) that Chakachamna alone would leave us substantially short of demand.  

• Large hydro power as represented by AEA’s updated Susitna Phase I is the best way to achieve predictable base load electric rates for our homes and businesses. 

• While the draft report discusses this topic to an extent, it does not clearly state this fact:  even if somewhat higher priced in the short term, large hydro flat rates are always cheaper in the 50 year time frame.

• Hydro power rates do a lot to attract and expand our economic base.  Some electricity-intensive industries--like the Google data farm that Moses Lake, Washington captured--go to the low cost provider of electric energy.  Mines are also dependent on substantial electric energy. 

• One issue that appears to underlie the RIRP’s economic comparison of gas and hydro is competition for State financial resources.  A concern we have heard is, would State support of large hydro compete with or hurt feasibility of attracting a gas pipeline related industry?  That State support for hydro would “compete” with gas at the resource level to attract industrial development is a myth.  Hydro is primarily for community electric motors and lights.  Continued use of methane for home and business heating is completely understandable.  Methane is also the feedstock for the gas to liquids industry now under discussion.  Natural gas liquids such as ethane, propane, and butane and pentane exist in far greater quantities in North Slope gas than in Cook Inlet.  Ethane is the primary feedstock for petrochemical industries, and it has been the focus of recent trade mission to China as an export commodity.  It is critical that the report should separate clarify, not blend and confuse, the power resource discussion.

• Other specific ways in which the draft report can be corrected, clarified or strengthened include:
  • Increasing the foundational electric energy load growth forecast (.75% per year in the report) to reflect the actual rate of growth in the past 20 years (2.66%).

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  • Presenting energy costs as costs per kWh in addition to annual cost of power (fig. 15-1);  if this is done to show cost per kWh for each resource, it will illustrate that Susitna power over the next 50 years will be the lowest cost production to ratepayers.

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  • Emphasizing in the interest of an “apples and apples” comparison that hydro energy has no fuel cost, in contrast to gas;

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  • Recognizing that low electric energy cost and abundant availability are the essential foundation of a healthy, growing economy, not a shrinking or stagnant economy

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  • To validate the key role of electric energy in economic development, conducting sensitivity analyses and fully considering the higher growth scenarios (2a and 2b); e.g., if just one or two of the possible  electricity- intensive industrial project is built, how would that affect the selection of power sources for the Railbelt?

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  • Revising the conclusions and recommendations which currently do not reflect the analysis to be more useful to the Legislature and Executive branches and more transparent to ratepayers.  E. g., scenarios 1A and 1B appear to show the need for approximately 450MW of new Hydro in 2025.  The conclusions say that this will be met using Chackachamna and Glacier Fork. This amount appears to be in excess of the capacity of those two projects which have a capacity of 405 MW. If Scenario 2A or 2B were to apply or any increment in load above the base case occurs then the additional hydro could only be supplied by a Susitna development. In Scenario 2B this could be initially as large as 1050 MW. In fact the Scenario 1A annual power generation forecast shows the need for roughly 2059 Gwh in 2025 and the combination of Chakachamna and Glacier Fork produce only 1,920 Gwh.  Doesn’t this result in a power supply shortfall if Susitna is not built, even if our recommendation to increase load forecast to more closely track past history (above) is not accepted?

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  • To reflect the importance of predictability of price risks to the whole RIRP, adding a column in Table 14-1 (Resource Specific Risks and Issues-Summary) entitled “Stability of Price Risks,” and filling in the factors accordingly;

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  • Recognizing Scenario 2b requires building both Chakachamna and Ph 1 and 2 of Susitna;

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  • Revising figures 13.1.2, 13.1.3, 13.1.4, and 13.1.5 to use the same scale, so legislators and consumers can better understand and compare the options;

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  • Rewriting the conclusions and recommendations which currently do not reflect the analysis of scenarios 1a, 2a, 2a and 2b in the study; e.g., in sec. 15 #4, Chakachamna is selected in both scenarios, however, even in scenario 1a and 1b the power requirement exceeds the combined capacity of Chakachamna and Glacier Fork facilities;

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  • Working on strengthening the authority and role of the proposed regional G&T entity to address financing, political and technical issues as well enhance the ability to achieve the State’s energy goals;

Alaska Ratepayers recommends these changes in the draft plan to ensure consumers and decision makers have the information to select the best solutions to energy challenges over the next 50 years.  While we attempted to be thorough in the review in the time allowed, we acknowledge that the sheer length of the 300 page report could have resulted

in overlooking relevant information.  However, we believe most of our comments and concerns must be addressed to avoid unnecessary delays and serve the public interest. 

The board members of the Alaska Ratepayers would appreciate the opportunity to meet with you to discuss and explain the reasoning for our recommendations.

Sincerely,

Rich Wilson

Chair, Alaska Ratepayers, Inc.