HomeMy WebLinkAboutSusitna Hydropower Proj Summary 2006Susitna Hydropower DRAFT
Susitna Hydropower
Introduction
Chugach management has requested a review of the Susitna hydropower project with
particular emphasis on ways that the project could be scaled down to better meet the
financial capabilities and operational characteristics of Chugach and the rest of the
Railbelt utilities. The following text is based on available public archives, and no attempt
has been made to update that information for comparative analysis with today's energy
options.
Synopsis
Susitna was evaluated in depth by the State of Alaska in the early 1980s, and the State
subsequently submitted an application to the Federal Energy Regulatory Commission
(FERC) for a license to construct the project. The license application was withdrawn in
1985 when the price of oil dropped, thus impacting the economics of the project and the
ability of the State to provide a significant portion of the project's construction funding.
If developed, the Susitna hydropower project would be centrally located between
Anchorage and Fairbanks (Figure 1) and would be capable of providing 1,620 MW of
power and 6,800 GWH of electricity to the Railbelt region by way of two high head dams
and power plants on the Susitna River. The original concept for development of
Susitna's hydropower potential was conceived by the Bureau of Reclamation in the mid
1900s. The Bureau scheme would entail four large dams to be constructed on the main
stem of the upper Susitna River, upstream from the Gold Creek railroad bridge. The
concept was later optimized to its present two -dam scheme as a result of detailed
investigations by the U.S. Army Corps of Engineers in the mid 1970s and later the State
of Alaska in the early 1980s at a cost of $134 million.
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Figure 1 — Susitna Project Location
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Because it was recognized that the first block of power from the project would be very
expensive if totally debt financed, the State made a commitment to an equity contribution
that was sized to offset this huge up front cost. This State contribution formed the heart
of what was termed in Alaska Statute at the time as "The Energy Program for Alaska."
Other elements of this program included all other projects developed by the Power
Authority rolled into a single mechanism that would result in a "postage stamp" electric
rate benefiting all utility customers of the state.
Although not developed, the Susitna project spawned the Anchorage -Fairbanks
transmission intertie, the Bradley Lake hydropower project, and the Railbelt Energy Fund.
The project remains technically viable and could realistically provide its full block of power
for the next 200 years and probably much longer.
The Evolution of the Susitna Project
The energy potential of the Upper Susitna was first reported by the Bureau of
Reclamation in a 1948 reconnaissance report. Then in 1950, the U. S. Department of
the Interior provided funding to the Bureau of Reclamation to conduct studies that served
as the basis for legislation to develop select water resources of the territory of Alaska.
The Bureau's report identified numerous hydropower projects throughout Alaska but
focused on Susitna because of its key location in the populated southcentral part of the
state. The Bureau became enamored with dam sites in the precipitous terrain of upper
Susitna river basin, starting some 45 miles upstream of Talkeetna.
The Bureau Four -Dam Scheme -- In 1961 the Bureau recommended to Congress the
development of an ultimate four -dam scheme (Figure 2) with a first stage development
consisting of Devil Canyon dam in the downstream reach of the upper Susitna River, and
a storage project at the Denali dam site 112 river miles farther upstream from Devil
Canyon. As energy demand in the Railbelt was projected to grow, the Bureau anticipated
recommending to Congress a third dam, named Watana, at the toe of the Devil Canyon
reservoir, and then a forth dam, named Vee, at the toe of the Watana reservoir. Vee
would be built to an elevation that would allow its reservoir to stretch back to the toe of
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the Denali dam. Thus the ultimate Bureau concept for developing Susitna consisted of
three hydropower projects and one upstream storage project for a total river inundation of
135 lineal miles. The 4-dam Bureau scheme would be capable of generating 6,500 GWH
average annual energy.
The Corps Rampart Proiect -- At about that same time, the Bureau's Susitna project got
upstaged by the U. S. Army Corps of Engineers' more ambitious proposal to build a
single giant dam on the Yukon River at Rampart. The Rampart project would be capable
of generating five times as much energy as the 4-dam Susitna basin development. The
Rampart concept captivated Senator Ernest Gruening and the public, thus shelving the
Susitna project for the next 10 years while the Rampart project was evaluated further.
Not only was Rampart found to be way too large for the Alaska market, but its potential
environmental impacts were enormous. The reservoir would have taken 17 years to fill
and would have covered an area the size of Lake Erie, destroying an incredibly large
water fowl nesting area and wildlife habitat and blocking passage of anadromous fish that
normally migrated deep into Canada. The volume of water in the reservoir would be
enough to inundate the entire state of Texas with seven feet of water. There was serious
concern that this large heat sink deep in Alaska's interior would melt permafrost,
stimulate reservoir induced seismicity, and change weather patterns.
The Corps Two -Dam Susitna Scheme -- Finally, in 1972, Senator Mike Gravel succeeded
in getting Congress to include legislation in the U.S. Senate Public Works Committee for
the Corps of Engineers to take a new look at the Susitna project. The Corps came up
with a new approach to Susitna. It found that by raising the height of the second
upstream dam, Watana, an additional 350 feet over the Bureau's 410 foot dam , it could
take advantage of the much broader canyon cross-section of the Susitna River upstream
from Watana, thus, significantly increasing the storage capacity of Watana, flooding out
the Vee dam site, and obviating the need for the Denali storage project. Thus, in one fell
swoop, the Devil Canyon — High Watana scheme would develop more power than the
Bureau's 4-dam scheme, at a lesser cost, and with less impact to the environment. The
Corps' two -dam scheme would inundate only 90 miles of the Susitna River, but more
importantly its reservoir would flood only 58 percent as much area as the 4-dam scheme.
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In 1976, the Corps concluded that the project was economically superior to all future
energy scenarios for the Railbelt and recommended that Congress appropriate funds for
the projects engineering and design.
The State Takes Over -- Senator Mike Gravel, sensing that Congress was getting out of
the hydropower development business and that Alaska was being perceived as the future
"blue eyed Arabs of the North," proposed a novel federal/State partnership for Susitna's
development that would capitalize on the Corps' dam building expertise, but using State
dollars to fund the project.
The 1976 Alaska State Legislature responded by creating the Alaska Power Authority for
that purpose. However, it did not limit the Power Authority's purview to Susitna, and
ultimately the Authority was responsible for most of the new hydropower developed
throughout the State in the 1980s.
The Power Authority quickly became leery of its shotgun marriage with the Corps and
chose to pursue the project on its own in 1979. Using State of Alaska appropriations and
private engineering firms, the Power Authority embarked on detailed feasibility studies
and applied for a Federal Energy Regulatory Commission license to construct the project.
After a $30 million feasibility study, the Authority concluded that indeed the Devil Canyon
— High Watana two -dam scheme was the optimum project for the Railbelt at a 1982
construction cost of $5.5 billion. It then hired a new engineering consortium to thoroughly
investigate all aspects of the project including detailed environmental, geotechnical,
engineering and economic assessments. This culminated in the 1984 submittal of a
FERC license application to construct.
Although the State actually started appropriating large sums for its equity contribution to
the project, the "window of opportunity" slammed shut when the international price of oil
plummeted from $34 per barrel ($83 per barrel in 2006 dollars) down to below $9 per
barrel in the mid 80s. Thus, not only were all of the economic assumptions that drove the
project nullified overnight, but the surplus cash flow needed by the State to fund its equity
contributions entirely dried up. The State's FERC license application was withdrawn, and
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the project was shelved altogether in 1985. The funds previously appropriated for
Susitna were reserved in the "Railbelt Energy Fund".
The Devil Canyon — High Watana Project
Prior to initiation of field studies and FERC license application for the two -dam Devil
Canyon - High Watana scheme, the Alaska Power Authority spent approximately $30
million on alternative studies. The studies focused on the Susitna basin with various
permutations of dam locations and dam heights to find the optimum development of the
basin's potential. In addition to these investigations, the Power Authority also conducted
assessments of other energy projects that could be constructed (see non-Susitna
alternatives, below) and which would comprise the "yardstick" against which to measure
the optimum Susitna project. Later, FERC staff conducted similar independent
assessments during the licensing phase of the project.
Power Authority and FERC studies concluded that, based on load projections at the time,
Cook Inlet natural gas would begin to run out by the turn of the century, and that coal-
fired generation would be the next increment of power for the Railbelt if left to the
financial resources of the utilities. However, financing aside, net present worth analysis
found the Devil Canyon — High Watana hydropower to be economically superior to all of
the alternatives — Susitna and non-Susitna (including coal-fired generation). The ability to
finance the Susitna project was the limiting factor. Individual electric utilities were not
envisioned to have access to financing of the magnitude required to develop the project,
and a large State equity contribution was viewed as essential. Whether the economic
advantage of Susitna over coal would hold today, given advancements in the coal
technology and the potential of an export market form the Cook Inlet fields, is an open
question. However, all studies at the time concluded that the Devil Canyon — High
Watana two -dam scheme was the best long term plan for meeting the future electrical
energy needs of the Railbelt.
Optimum Full basin Development -- The Power Authority's proposed Susitna
development scheme would have Watana built first and then, as demand dictated, Devil
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Canyon would follow years later. In some respect this is the Achilles heal of the two -dam
scheme. Watana is a much larger project than Devil Canyon, but the success of the two
dams project depends on the capacity of the upstream Watana reservoir -- roughly ten
times that of the Devil Canyon reservoir. Collectively the two projects would have an
installed capacity of 1,620 MW. If Devil Canyon were built first, it would largely act as a
very tall run of the river project and be capable of generating only 900 GWH annually.
With the limited storage capacity of Devil Canyon, most of the summer freshet energy
would be wasted. But, with Watana upstream providing reservoir capacity for both
projects, the firm annual energy of Devil Canyon becomes 2,800 GWH spread evenly
throughout the year more closely matching the composite Railbelt utility load curve.
Power from both of the projects would be brought to the Anchorage and Fairbanks load
centers by way of a double circuit double tower 345 KV transmission system, a portion of
which was constructed in 1983. Watana is the more expensive of the two projects, but its
increment of generation would be 1,020 MW, a very large initial component for the
Railbelt utility system to absorb.
The following paragraphs briefly describe each of the two elements of the High Watana —
Devil Canyon project.
High Watana -- Watana would be an 885 foot high rock fill dam with an impervious core,
located at river mile 184, approximately 2.5 miles upstream of the Tsusena Creek
confluence. Figure 3 shows the basic elements of the project. The crest length of the
dam would be 4,100 feet long and the total volume of the structure would be
approximately 62 million cubic yards. Watana would create a reservoir 48 miles long with
a surface area of 38,000 acres and a total storage capacity of 9.5 million acre-feet.
Maximum reservoir drawdown would be 120 feet for a live storage of 3.7 million acre-feet.
The power house would be located underground on the north bank of the river and would
house six 170 MW Francis turbines. Flow to the power house would be by way of six
concrete lined 17 foot diameter penstocks with inflow control provided by a concrete
multi -gate intake structure.
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Three separate outlet structures would have the capability of passing the 50-year,
10,000-year and probable maximum floods respectively. Construction of the project
would be carried out over a nine year period and require a construction camp capable of
housing 3,300 workers and a permanent town capable of housing 130 operations
workers for both of the projects. The total cost of Watana was estimated to be $4,062
million (1982 dollars).
Devil Canyon -- Devil Canyon would be a 646 foot high double curvature thin arch
concrete dam located at river mile 152 on the Susitna River, approximately 14.7 miles
upstream from where the Alaska Railroad crosses the river at Gold Creek and
approximately 32 river miles downstream from Watana. Project development would be
timed to meet growing energy demand in the Railbelt. Upstream Watana would not be
physically or economically dependent on the ultimate development of Devil Canyon, and
Devil Canyon could be delayed indefinitely. The thin arch structure (Figure 4) would tie
into gigantic thrust blocks on each abutment. A 245 foot high rock fill saddle dam would
be tied into a south bank concrete thrust block, providing closure to higher terrain.
The Devil Canyon would form a 26 mile long reservoir with a surface area of 7,600 acres
and a storage capacity of 1.1 million acre-feet. Appurtenant structures would be
designed to accommodate a 50 foot reservoir drawdown yielding a live storage capacity
of 350,000 acre-feet. However, because of the massive storage capacity upstream at
Watana, Devil Canyon would be operated at its full pool elevation to maximize the
project's head. There would rarely be a need to draw down the Devil Canyon reservoir.
The project would include an underground powerhouse in the north abutment housing
four 150 MW Francis turbines for a total installed capacity of 600 MW. As with the
Watana turbines, the Devil Canyon turbines would have a 15 percent overload capability.
Devil Canyon would take six years to construct and would require a camp capable of
housing 1,800 workers. Total estimated cost of Devil Canyon is $1,503 million (1982
dollars).
Site Access -- There is no surface access to the two dam sites at the present time.
Nearest access is by way of the Denali Highway, which traverses the basin about forty
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miles north of the two dam sites, and the Alaska Railroad, which crosses the Susitna
River at Gold Creek, 14.7 miles downstream from Devil Canyon.
Access to the Watana site would include a new railhead at Cantwell, where a 40 acre lay -
down yard would be constructed. From there, road access would be by way of 22 miles
of existing road along the Denali highway and then 41 miles of new road to the dam site.
A permanent airfield would be built at the Watana site to accommodate construction and
eventual operation of the project.
From the Watana camp, a suspension bridge would cross the river downstream from the
dam site, and a new road approximately 20 miles long would connect to the Devil Canyon
site. In addition, a new railroad spur would be built from Gold Creek to the Devil Canyon
Site.
The Alaska Department of Fish and Game anticipated controlled access to the sites, but
it is probable that the recreation value of the sites would be such that public pressure to
gain access to the sites would prevail.
The Upper Susitna Environment and Project Impacts
The Upper Susitna river basin comprises an area of approximately 6,160 square miles
and supports an average annual stream flow at the basin outlet below the Devil Canyon
dam site of approximately 6.5 million acre-feet. Summer stream flow is roughly ten times
that of winter flows. The basin is bordered on the north by the Alaska Range, the
Talkeetna Mountains to the southwest, and flat low relief areas to the southeast. By the
time that the river enters the Cook Inlet, it has grown to be the sixth largest river in Alaska
and is supported by an entire drainage area of approximately 19,000 square miles.
General characteristics -- A description of the upper Susitna area is described in the June
1978 Corps of Engineers Plan of Study (written earlier by E. Yould when employed with
the Corps):
"Most of the basin has a well-defined branching stream pattern with a main
channel emanating from glacial headwaters in the extreme northern segment of
the divide. Below the glaciers, the braided stream traverses a high plateau
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composed of aggraded alluvial sediment, and then meanders several miles south
to the confluence with the Oshetna River. It then takes a sharp turn to the west
and flows through a steeply cut, degrading channel until it exits the basin at Gold
Creek. The contributing glacial area comprises only 4 percent of the entire basin,
but summer glacial melt provides a considerable portion of the total stream flow.
By contrast, the flat, glacially carved Lake Louise area in the southeastern portion
of the basin provides comparatively little flow from its 700-square-mile area.
The mountains within the basin reflect the influence of the Pleistocene Ice Age,
during which glacial advancement over the topography planed the mountains and
gave the basin surface a rounded and smoothed appearance. The highest
elevation within the basin is 13,326 feet, and the lowest elevation is 740 feet. The
basin relief implies a steep channel slope; however, variability of the slope
compared to other mountain streams is somewhat reversed. The aggraded
channel in the upper reaches of the basin has channel slopes in the range of only
4 to 7 feet per mile while the lower basin channel [where Devil Canyon and
Watana would reside] drops as much as 37 feet per mile. The deeply incised river
channel below the Tyone River contrasts with the many traditional Alaskan U-
shaped valleys remnant of glacial advances."
Field Investigations -- In 1980 the Alaska Power Authority established a 100 person field
camp at the Watana dam site for the purpose of supporting field crews investigating
aspects of the project. The camp was brought in during the winter time by way of low
pressure tire "rollagons." In addition to the mobile camp at Watana, tent camps were
established at strategic locations throughout the basin. During the 1981 and 1982 field
seasons, numerous biologic, geologic, seismic, and fish and wildlife investigations were
performed both in the area directly impacted by the projects, and downstream. Extensive
sonar and physical fish counts were conducted during this period. Wildlife inventories
were conducted from the air, and detailed flora and fauna investigations were performed
by scientists on test plots and from the air using infrared technology.
Fish -- All five Pacific salmon species spawn in the Susitna drainage. However, the
strong hydraulic current in the 75 mile canyon stretch of the river above Gold Creek
prevents anadromous fish from ascending the drainage basin above the point in the river
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where the dams would be built. In contrast, the habitat downstream of the project sites
supports a fishery that is heavily harvested by commercial, sport, and subsistence users.
While the dams may not directly impede migration of salmon into the upper basin, post
project physical changes to the flow regime below the projects would impact the
downstream fishery. Impacts would attenuate at locations farther downstream from the
dams as the moderating influence of the rest of the basin begins to dominate project
releases. Impacts would be a result of significant change to the water temperature, and
its resultant impact on salmon fry of those species that winter over before migrating to the
ocean. Impacts would also accrue from a loss of fish rearing habitat due to increases in
turbidity during reservoir filling and from stream channelization and a loss of side sloughs
resulting from the diminution of normal peak runoff events. There would also be the
infrequent impact that fish may suffer from nitrogen supersaturation that could occur
during spillway bypass events.
Conversely, through mitigative measures the dams also would provide the opportunity to
open up the otherwise unused habitat above the dam sites for salmon spawning and
rearing. There was also the potential to establish a world class fish hatchery below the
project sites that could help transform the Cook Inlet fishery into a world class resource.
These mitigative or enhancement measures were not included as part of the FERC
license application.
Seven resident fish species were found throughout the Susitna basin including the
impoundment stretch of the river. The project would directly impact habitat of the
resident fish populations in the impoundment areas as well as downstream from the
projects. As with the salmon species, these impacts would attenuate with distance
downstream from the project sites.
Absent fish hatcheries or propagation of salmon spawning habitat in the basin above the
dam sites, ultimately FERC staff concluded that is was "not possible to assess whether
the Susitna Hydroelectric project would result in an average long term decrease or
increase in populations of salmon presently spawning in the Susitna River Basin." FERC
did conclude that there would be a loss of anadromous fish during the initial filling of the
Watana reservoir. Resident fish impacts would largely be confined to direct loss of main
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stem habitat in the area of the dams and reservoirs, and shifting of these fisheries to
higher elevation lake type environments associated with the project's reservoirs.
Wildlife -- Field inventories indicated that the upper Susitna and project site supports a
diverse wild life typical of southcentral Alaska, including big game animals, fur bearers,
various bird species, and small mammals. Except for the peregrine falcon, which uses
the upper basin as a flyway, no endangered species were found. However, project
features and reservoirs would permanently withdraw habitat from use by various key
wildlife.
Moose are the most important large animal species in the Susitna basin that would be
affected by the project. An estimated 2,200 moose in the project area would be directly
impacted, and as many as an additional 9,000 moose could be indirectly impacted.
The Nelchina caribou herd, with an estimated population of 20,000, ranges throughout
the area, but their total habitat is much broader, extending throughout the Copper River
Basin. As such, the project would create little direct impact on the herd. Brown bear
would suffer a small loss of denning habitat and could have some of their range patterns
inhibited by the reservoirs. They would also loose some moose predation in the reservoir
areas. Black bears could be the most impacted large mammal species in the upper
Susitna basin, as a large amount of their lowland habitat adjacent to the Susitna River
would be lost. The studies estimated that 55% of known black bear dens would be
inundated by the reservoirs.
Dahl sheep, wolves, raptors, water fowl, and other indigenous wildlife would experience
various levels of stress from the project. Enhanced hunter access would put more
pressure on all big game species and birds in the basin, as would be the case for the
fisheries as well.
Alternatives to Susitna
Certainly the Railbelt utilities had the capability to develop coal alternatives, but it was
probably only a State sponsored effort through the Alaska Power Authority that a capital
intensive renewable energy project such as hydropower, geothermal, or tidal power could
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be realized. Thus, to ensure that the two -dam scheme was the best non -thermal
alternative for the Railbelt, the Power Authority and later FERC, looked at a number of
energy alternatives and even attempted to assess the cumulative impacts of some of the
more promising alternatives. Not only did the alternative studies substantiate the
economics of Susitna, but they also allowed the assessment of the cumulative impacts
that would occur if Susitna were not built. Environmental groups often make a compelling
argument regarding the adverse environmental impacts of a Susitna or similar type
project, but they rarely address the adverse impacts that would accrue if the project were
not built.
Geothermal studies focused on areas near the Railbelt that contained hot igneous
systems. These included Mt. Drum and Mt. Wrangell in the Copper River basin, and Mt.
Redoubt (Double Peak) and Mt. Spur in the Cook Inlet area. Most of the geothermal
studies were based on existing research by others, but ultimately all of the sites were
found to be a) very expensive to develop, and b) lacking adequate exploration to prove
up the resource. Little effort was made to assess the environmental impact that might be
associated with any of the geothermal projects.
Tidal power received a more rigorous review. The legislature appropriated $500,000
over and above the Susitna funds to study the tidal power potential of the Cook Inlet
area. The Power Authority, through its contractor, studied 16 sites throughout Cook Inlet
area with cumulative energy potential exceeding 168,000 GWH. The Power Authority
developed conceptual designs for each site and reconnaissance level cost estimates. A
site at Sunshine, on Turnagain Arm, was found to be the best site for tidal power, but the
economics of this alternative were inferior to the Susitna hydroelectric project, and
environmental impacts to fish and whale blockage were deemed potentially significant.
The Power Authority also looked at solar power, peat, and non-structural alternatives
such as energy conservation and load management. It also considered many of these
alternatives as part of coal and natural gas scenarios but later rejected them as inferior to
Susitna.
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The non -thermal alternative that received considerably more attention than those
mentioned above was that of non-Susitna hydropower alternatives. The Power Authority
identified 91 potential hydro sites available to the Railbelt market. After four screening
iterations, the Authority narrowed these sites down to the most promising 18 sites and
ranked them according to environmental impact and economic attractiveness. FERC
staff later selected the top five from this list and evaluated them in depth individually and
in combination against the Susitna two -dam scheme. The following table is a summary
of the hydropower projects selected by FERC for more detailed comparative analysis.
Alternative
Estimated total
cost of project
(Million $, 1982)
Total installed
capacity
(MW)
Average annual
energy demand
(MWH)
Johnson
319
210
929
Chakachamna
905
333
1,300
Snow
305
100
375
Keetna
519
100
420
Browne
681
100
418
No combination of these hydroelectric sites, even in conjunction with thermal alternatives,
proved economically superior to the proposed Susitna plan, and many were predicted to
have serious adverse environmental impacts. Some of these projects were even
analyzed as though they were an element of a staged development of the Susitna
project. For instance, in one analysis Chakachamna was considered as the second
stage development of Susitna in lieu of Devil Canyon.
In summary, the Susitna two -dam scheme was found to be economically superior to
virtually all energy alternatives on the basis of a 50-year net present -worth analysis.
Once again, there is no guarantee that the outcome would be the same if the economic
alternatives analysis were performed today:
• Capital costs have certainly changed with inflation as have the cost of building
materials, not only for Susitna but for other alternatives, as well.
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• Environmental protection laws and sensitivities have continued to evolve,
generally becoming more restrictive.
• Cook Inlet natural gas has proved more abundant than was estimated in the
Susitna studies, but its pricing is estimated to approach "Henry hub" levels within
the next decade.
• More importantly, however, is the international cost of fuel that drives the shadow
value of thermal alternatives to Susitna. In 1984, FERC estimated that the real
cost of oil would escalate at one percent over inflation and that this would drive the
cost of natural gas.
• The cost of coal was not projected to escalate at this same rate as oil, as there
was not viewed to be a significant export market for coal. In fact, in retrospect, the
price of oil in real dollars was higher in the early 1980s than it is today at $70 per
barrel. Cook Inlet coal, on the other hand, is showing signs of establishing an
export market and its cost will likely break out of its historical flat trend.
Could Susitna be Scaled Down?
Like all of the Railbelt utilities, Chugach management is attempting to assess what
generation can best serve its customers' needs in the foreseeable future. Natural gas
availability is projected to decline, and the cost is likely to rise. North Slope natural gas
may become a reality, but there is no guarantee that it will be economically feasible to
bring a spur line to the Cook Inlet area. Coal may well become more available, but the
capital cost of coal generation facilities is high. In addition, the cost of mined coal may
escalate with increased global market demand. Chugach has experienced the benefits of
hydropower options such as Cooper Lake, Bradley Lake and Eklutna, but no other such
options are being considered for the Railbelt at this time. Other renewable energy
options such as Fire Island wind generation may prove beneficial, but such options
cannot be expected to meet Chugach consumers' base load needs.
Susitna could meet all of the needs of Chugach, but does it represent a realistic option?
Susitna is very large, very expensive, and requires a long lead time to develop.
However, much of the front end work has already been done by the State of Alaska. It is
possible that a revised FERC license application to construct the project could be crafted
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from the State's earlier FERC submittal. Putting aside some of the institutional questions
at this time, could Susitna be reformulated to better meet the needs of Chugach and the
Railbelt?
Reformulate Susitna -- If it can be accepted that the Devil Canyon — High Watana
scheme is the optimum basin development, then it must be realized that any deviation
from this scheme will have an economic penalty. On the other hand, a scaled down
version of the project may still prove economically superior to other non-Susitna options
but better fit the present and near term load characteristics of Railbelt utilities and be
more readily financed. Therefore, ignoring the issue of whether Susitna would still be the
superior choice for the long term needs of the Railbelt, what are some of the changes
that can be made to the Susitna project to make it more amenable to development at this
point in time?
The following is a subjective review of changes that could be made to the project. Full
review would require formulation of new cost estimates and reservoir regulation analysis
to test the sensitivity of options.
Build Watana in Two Stapes
The Power Authority actually analyzed this possibility but rejected it for economic
reasons, i.e., the full project fared better in the net present worth analysis. Watana would
first be built to a height of 450 feet and increased to its full proposed height of 880 feet
later, as demand dictated. Under this scenario, the first stage development would be
burdened with a design that would accommodate the larger ultimate development. In
addition, the shorter dam would still need a spillway fully capable of passing the probable
maximum flood. This spillway would then be abandoned in deference to the ultimate
spillway that would accommodate the higher dam. The cost of the oversized powerhouse
and all hydraulic works would accrue to the smaller project. Not only would this impart an
economic penalty on the first project built, but if for some reason the second phase were
not built, the large storage capacity available in the upper elevations would be forgone
limiting the economic benefit of Watana as well as a subsequent downstream Devil
Canyon dam. One advantage of building in this fashion, however, is that it would not
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foreclose the possibility of building Vee and Denali upstream in lieu of the higher Watana.
It must be recognized that it is still an open question, raised by the Power Authority,
whether or not Denali is a viable dam site.
Build Devil Canyon First
As discussed earlier, the Devil Canyon cost was estimated to be $1.5 billion as compared
to Watana's $4.0 billion price tag. However, by reversing the order of construction, many
of the initial project features originally allocated to Watana (as a first project built) would
now be part of the Devil Canyon development cost. At a minimum, this would include
access roads, camp facilities, transmission lines, and hydraulic works to accommodate
floods that might otherwise not occur with Watana upstream. In addition, river closure at
Devil Canyon would entail a significantly increased structural work without Watana
upstream, resulting in higher project costs. As a general rule, it is always best to build
upstream projects first, as these structures can then help control the river during closure
for subsequent downstream projects. In reverse, each closure upstream of a dam is
every bit as complex as the first dam built.
This option also suffers from the limited storage capacity at Devil Canyon. As part of the
two -dam scheme, Devil Canyon could generate 2.8 billion KWH firm annual energy, but
as a first project built, Devil Canyon's inability to store water during the summer would be
such that its firm annual energy would be only 900 million KWH. In essence, it would be
a high head run -of -the -river project. If Watana were never built upstream, it would be an
open question as to whether Devil Canyon would ever pay for itself. A complicating
factor would be the annual sediment load of the Susitna River and its impact on Devil
Canyon's storage capacity. The average annual sediment load flowing past the Devil
Canyon site is estimated to be 5,000 acre feet per year. Over a one hundred year period
of time, assuming that Watana were not built upstream, and further assuming a 100%
trap efficiency, the Devil Canyon reservoir would become almost fifty percent filled with
sediment. Most of this sediment would filter out in the active storage zone, further
reducing the amount of summer storage available to firm up annual power generation.
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Susitna Hydropower DRAFT
Build a Series of Smaller Proiects f,
This option holds the greatest promise for finding a scaled down basin development that
can better meet the demands of Chugach an Railbelt utilities. In its studies, the Power
Authority actually looked at 11 different dam sites in the upper Susitna basin. It even
looked at one scheme that would include High Watana with a 30 mile power tunnel and
the elimination of Devil Canyon. Environmentally, this was found to be a superior
scheme, but it certainly did not lend itself to staged development. Unfortunately, the
Power Authority eliminated the Denali site as a potential project. This decision needs to
be revisited. With Denali storage upstream, any number of smaller projects could be built
downstream, with each dam being built at the maximum reservoir elevation required to
facilitate the next downstream project. There are a number of dam sites that could be
evaluated in the 90 mile stretch of river upstream from Gold Creek. There would
naturally be a tradeoff between multiple small dams and, for instance, the original Bureau
of Reclamation 4-dam scheme consisting of Devil Canyon, Watana, Vee and Denali.
Without a Denali or High Watana type project, numerous small projects on the main stem
of the river would act primarily as run -of -river projects. The almost 7,000 cubic feet per
second (cfs) average annual stream flow that presently flows past Gold Creek would
occur in the ratio of about 20,000 cfs summer flow to 2,000 cfs winter flow. Without
upstream storage capacity, much of this summer flow would go unused. If Chugach and
the other Railbelt utilities were seriously interested in revisiting Susitna, the first order of
business would be to review the viability of Denali as a legitimate dam site. If Denali is
determined to be viable, it would then be prudent to reassess the original 4-dam scheme,
or perhaps a series of smaller projects in the Gold Creek to Vee stretch of river.
Steps to Bring a Scaled Down Susitna to Fruition -- As originally envisioned by the Power
Authority, Susitna hydropower could be an excellent long term option for Chugach and
the rest of the Railbelt utilities. However, Susitna has some obvious drawbacks:
• It is a very capital intensive project.
• Although it may be shown to be the economically superior option for Railbelt
utilities, the initial cost of power, if debt financed, would probably be significantly
higher than the existing cost of power.
• It is beyond the ability of the Railbelt utilities to finance.
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Susitna Hydropower DRAFT
Even if the financial and economic issues could be adequately addressed, it would
require the total commitment of all of the Railbelt utilities to bring the project
forward.
For these and other reasons, it would appear that the only realistic option for
reconsidering a Susitna project is through some sort of partnership with the state
government. The defunct Alaska Power Authority would need to be reconstituted from
the existing Alaska Energy Authority, or a separate Authority could be established
specifically for developing Susitna. Alternatively, if properly structured, the utilities may
conclude that a G&T or JAA could serve as the organizational structure to bring the
project forward, perhaps in partnership with the State. At any rate, the implementing
organization would need the singular focus of bringing Susitna forward. It would also be
absolutely imperative that all of the Railbelt utilities were in agreement that the project
should go forward. Active dissent would torpedo any efforts to enlist Legislative
appropriations for the project.
The State currently has $34 billion in the permanent fund, a surplus source of revenue,
and the prospect for an even greater source of revenue if the North Slope natural gas
pipeline is constructed. A portion of these funds could be dedicated to a substantial
equity contribution to a Susitna project or some other financial mechanism to reduce to
cost of power sold to consumers in the early years after the project starts generating
power. The State could look at the project as the "bricks and mortar" equivalent of the
Permanent Fund, with the benefit flowing directly to Alaska citizens. There is even the
option that the State could be paid back some or all of any contribution that it were to
make to the project at such time that inflation diminishes the impact of the front end cost
of the project. There is increasing pressure to curtail worldwide carbon emissions, to
develop renewable resources, and to decrease dependence on foreign oil. Few
countries or other states have a Susitna project in their backyards. With the high cost of
oil, changing public attitudes toward energy consumption, and prospective financial
resources of the State of Alaska, there may well be a window of opportunity opening up
for development of Susitna -- if Chugach and the other Railbelt utilities choose to pursue
it in earnest.
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