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Home My WebLink AboutSutton-Glennallen status report 1998Record Copy CTATE MEF AN I mee || ih |} i¢ His h\ 1 IA A / TONY KNOWLES, GOVERNOR Wuudlb ts Wu IM Lot & TN mM / DEPARTMENT OF COMMUNITY AND tC counmave. SUITE 220 REGIONAL AFFAIRS Se ae, DIRECTOR'S FAX: (907) 269-4645 DIVISION OF ENERGY ENGINEERING FAX: (907) 269-4685 June 3, 1998 The Honorable Irene Nicholia Alaska State Representative State Capitol, Room 501 Juneau, AK 99801-1182 Subject: Sutton-Glennallen Intertie Dear Representative Nicholia: Following is a brief history and status report on the Sutton-Glennallen intertie project: . The 1993 legislature appropriated $35 million to the Division of Energy’s Power Project Fund for a zero interest, 50-year loan to help finance the project. The language of the bill made the appropriation contingent upon completion of a feasibility study and plan of finance deemed satisfactory by the Department of Community and Regional Affairs (DCRA). . The feasibility study and plan of finance were issued by the Division of Energy in spring 1994. This was during the Hickel administration — the Commissioner of DCRA at that time was Edgar Blatchford. In July 1994, Commissioner Blatchford issued a finding that the feasibility study and plan of finance were “satisfactory.” ° In November 1994, the Division of Energy transmitted a loan agreement to Copper Valley Electric Association (CVEA) for the proposed $35 million loan. However, CVEA objected to certain provisions in the agreement and did not sign it. No loan agreement for the $35 million has ever been executed. . Shortly after the issuance of Commissioner Blatchford’s finding, a coalition of environmental organizations filed an administrative appeal in Superior Court. The appeal sought to reverse the finding and block the intertie project. ° When Governor Knowles came into office in January 1995, the previous DCRA finding issued by Edgar Blatchford was suspended while the new The Honorable Irene Nicholia June 3, 1998 Page 2 administration re-evaluated the project. Responsibility for further project review was transferred from the Division of Energy to AIDEA. : In November 1996, with project activity still suspended, CVEA announced that it was no longer supporting construction of the intertie. Enclosed is an article from the Anchorage Daily News dated November 29, 1996, regarding the CVEA announcement. . The administrative appeal filed by the environmental groups was recently withdrawn although they are permitted to file again if project development resumes. . None of the $35 million has been spent — it is still held in the Power Project Fund. According to the terms of the appropriation, the Division cannot spend or loan the money for any other project. Interest earned on the appropriation accrues to the State general fund — it is not retained for the intertie project. Please let me know if there is additional information we can provide to you on this matter. Sincerely, ati Percy Frisby Director Enclosure as stated. Anch Daly Wuws /zqla& Intertie loses backer Utility seeks aid for 4 generators By S.J. KOMARNITSKY Daily News reporter PALMER — The main pro- ponent of the proposed $53 million powerline between Sutton and Glennallen says it no longer supports building the controversial line. Officials with the Copper Valley Electric Association said Wednesday they have withdrawn their support for the project and instead will ask the state for a $15 million grant to buy four new diesel generators. Opponents of the power- line, which include environ- mental groups and some Matanuska Valley residents, hailed the utility’s decision, saying it signaled the pro- ject’s death. “There’s absolutely noth- ing supporting this*-project now,” said Chris Rose, a Sut- ton resident and co-founder of Alaska Citizens for Re- sponsible Energy Develop- ment. Bob King, a spokesman for Gov. Tony Knowles, said the administration had not yet seen the details of the utili- ty’s proposal, and that it was unclear what effect it would have. But, he added, if the main proponent is dropping out, “that’s obviously trau- matic.” The project has been on hold for nearly two years while the Knowles adminis- tration reviews whether to approve a $35 million interest-free loan and up to $25 million in state-issued bonds to build the line. Mike Irwin, commissioner of the state Department of Community and Regional Af- fairs, plans to meet with Cop- per Valley officials sometime Please see Page D-3, LINE a. | Now that Thanksgiving’ Rick Kolodji of Mora, Minn., on his first trip to Ale Diitintman fies aa Tran ealan I- Continued from Page D-1 next week to a the plan, * King said. . ‘ The utility’s * about: face comes after years of stalinch : support for the powerline as’ a way to reduce electric.rates in the Copper River basin. It also came just weeks: after the resignation of general manager Clayton Hurless, a strong proponent of the pro- ject. Glennallen residents pay about 20 cents per kilowatt- hour for power, nearly twice what Anchorage residents pay. The powerline, which would stretch 135 miles from Sutton to Glennallen, would allow Copper Valley to tap into the vast and relatively cheap power supply of the Railbelt utilities. Robert Wilkinson, the utili- ty’s acting general manager, said the change was prompt- ed in part by an internal re- view that showed the intertie would be too expensive, faced public opposition, and might not mean lower rates for customers. ‘Also, crucial was renewed hope for’ a, trans-, -Alaska gas... ' pipeliné; the said. ‘The gas line’ : (,has,been talked about for the past two decades: Recent dis- ¥ ih¢ussions haVe focused on a + “startup date of 2005. -. -If the pipeline is built, the utility could tap into it and ain a cheap source of power, ilkinson said. In the meantime, he said, it makes more sense to go with something small instead of the $53 million intertie. Rep. Gene Kubina, D- Valdez, said he will push the Legislature to make the change, but he acknowledges there are “lots of political problems” with the idea. “The plan is to see if we can’t turn the $35 million loan back and then get a $15 mil- lion grant,” Kubina said. “That's going to take a lot of work and people coming to- gether.” The intertie loan was ap- proved by the Legislature as part of a package that includ- ed money for upgrading lines from Anchorage to the Kenai Peninsula and from Healy to LINE: ‘Utility wants new generators, Fairbanks. ‘That loan is con-° proposal is sketchy, Wilkin- tingent.on.a finding by :the “ison said it would aa pur- Knowles administration : that’ ithe project, is economically | “feasible. ; A prime backer of the in- “tertie \was Rep. Ramona ‘Barnes, R-Anchorage, then speaker of the House. , ts, “I don’t think those tur- "bines do anything for the Railbelt integrated energy system, and that was the pur- pose of the loan in the first place,” Barnes said Wednes- day. i. “If they need those gener- ators, they should sell bonds to pay for them. My thing was not to give them money. My thing was to tie together an energy grid,” Barnes said. While the utility’s current chasing four g placing some of tie “the Petro Star hiner in’, Valdez. ‘ #The new generators would réplace the aging diesel gen- erators,the | utility relies on to, préduce about a third of: the’ power for its 3,100 cus- tomers. They would save the utility money by allowing it to elim- inate some positions, Wilkin- son said. Lower fuel costs could result if the utility were to buy fuel from Petro Star and then pump waste heat to the refinery, he added. Petro Star also may re- main a Copper Valley cus- tomer, Wilkinson said. rops intertie ters, fa e ‘Support “The . company , had an- nounced.earlier this, year that it planned to. produce its own power — the second time of- :fitials have said it would do so. But . Wilkinson. said the company has not yet started _to produce its own power, and recent&&alks with compa- ny officials indicate they might stay on line. Petro Star officials did not return calls left Wednesday at the company’s Anchorage office. The refinery is the utility’s biggest customer, ac- counting for about a quarter of the power usage. Q The Associated Press contributed to this report. seal wer Thil ofa “ that sigr Gu bus Ket al C tos Gui Bla pas and wel tha ing trie reti er: Here are a few of the reasons why t PUTA TT ET SEED ec source of news and information. ead Up to the minute sports Official cable TV guide Extensiv weather Monday hci me 06/03/98 (WE) 10:55 P,.0o0o1 DCRA/DIV OF ENERGY 6907 269 4645 EKKAERATAARLERH REE EE TX REPORT ERK HELEAKELARALARAE LRA ARE TRANSMISSION OK TX/RX NO 2331 CONNECTION TEL 94652197 CONNECTION ID START TIME 06/03(WE) 10:52 USAGE TIME 02'32" PGS. 5 RESULT OK A Fax From The Department of Community & Regional Affairs Division of Energy Mailing Address; Physical Address: 333 West 4th Avenue, Suite 220 333 West 4th Avenue, Suite 220 Anchorage, AK 99501-2341 Anchorage, AK 99501-2341 Main Telephone Number: (907) 269-4625 Director's Fax Number: (907) 269-4645 Engineering Fax Number: (907) 269-4685 Deliver Fax to: (rome Nite lia. 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