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9502
1981
STATE OF ALASKA
LONG TERM ENERGY PLAN
Executive Summary
Prepared For
Jay Hammond
Governor
By
Department of Commerce and Economic Development
Division of Energy and Power Development
.usJ ' Webber
A53 Clarissa Quinlan
Director 1981 t ;sioner
v.3
Augus~ 1~81
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STATE OF ALASKA n;,~
LONG TE.RM ENERGY PLAN
E.XECUT.IVE s-uMMARY
Prepared by:
Applied Economics Associates, Inc.
And
Energy Analysis & Planning, Inc.
Kkk Hall and Associates
l·nformation Services of Alaska
For the
C+·~to of A.I~~IJ.~ V·LO.L'V I ~u;;A.vi'\.Q
Department of Commerce & Economic Development
Division of Energy & Power Development
338 D·enali Street
7th Floor, MacKay Building
Anchorage, Alaska 99501
August 1 981
ARLIS
Alaska Resources Library & Information Services
IJbrary Building, Suite 111
3211 Providence Drive
Anchorage, AK 9950R-4614
1
Executive Summary
The Purpose of Alask:a's
Long-Term Energy plan
The primary purpose of Alaska's Long-Term
Energy Plan is to provide an orderly process for mak-
ing energy decisions. To be successful, the follow-
ing must be accomplished:
• The Plan must be a statement of policy, and set
the State's goals and objectives.
• The Plan must provide basic information about
energy demand, the resource base, and energy
technologies.
• The Plan must coordinate Alaska's ongoing
. energy activities.
• The Pla...'l must standardize and coordinate t.~"'le
process of project/program selection.
This report provides a logical approach to meeting
Alaska's present and future energy needs. The keys-
tone is the availability of accurate and reliable infor-
mation from which decisions are made. The impor-
tance of this element cannot be over emphasized.
Major policy decisions impacting the conservation
and development of conventional and renewable
energy resources will be based on the analysis con-
tained in the Long-Term Energy Plan and its annual
updates.
Perhaps what makes the preparation ofthe Long-
Tt~rm Energy Plan especially noteworthy is that
Alaska is one of the few states with the key ingre-
dients necessary to chart its own energy future. Re-
venue from petroleum and natural gas can be com-
bined with a willing work force and vast energy re-
source potential to provide an array of local energy
supply and conservation options. Since Alaska's
population is less than one half of one percent of the
U.S. total (at the same time that the State provides
10% of U.S. oil supplies), the Alaskan energy future
can be managed to the benefit of all.
1
Most Alaskans are probably not aware of the
State's many activities in energy development and
conservation. Although these tasks are by no means
finished, there have been many accomplishments.
Energy activities, conservation investments and
development projects are being pursued in every re-
gion. of the State.
As Alaska's Long-Term Energy Plan evolves,
criteria for energy decisions and the information
base on which they are made will become more de-
finitive. This year, considerable progress has been
made in each of the major topic areas. The L<Jng-
Term Energy Pla.1"1 is by no means complete. As
energy plann.ing in Alaska is stren.gthen.ed, and as the
reliability and competitiveness of the various energy
options become kinown, the Plan's strategy can be
and should @e revised.
In this report the eNergy data base for the State has
been Uf>dated and analyzed, using a standarized me-
thodology. For the fiFst time, Alaskans will have a
comprehensive breakdown of historic energy con-
sumption by regi0n for the State. Despite this
achievement, the data base is not yet perfect. For ex-
ample, some end-uses of petroleum had to be esti-
mated. Overall, however, a steady advance has been
made.
In this report an attempt has been made to draw to-
gether a specific description of the Alaskan resource
base and the technologies available to transform or
convert the energy. There is a brief description of
energy development projects underway and many of
those which have been proposed.
To date there have @een a number of State and fed-
erally mandated energy conservation programs pro-
posed and implemented. Information on the effec-
tiveness of these programs is very limited. The major·
contribution of the energy conservation section in
this report is to develop a framework for monitoring
the effectiveness of existing programs as well as to
provide some tentative estimates of the potential for
saving energy.
Despite the surplus of crude oil production, the
State has a higher level of vulnerability than other
regions because of the climate and remoteness of
many Alaskan communities. Even a small oil short-
age in Alaska could be very serious. This report in-
vestigates the nature of Alaska's vulnerability to oil
supply disruptions and proposes some options that
the Governor could implement in the event of an
energy emergency. Over the next year this plan will
be refined, in collaboration with federal, state and
local officials, to produce a detailed emergency
energy plan for Alaska.
No long-term energy plan would be complete
without an energy demand and supply projection.
Ultimately, the vast majority of energy decisions
are not made by State or local government. Consu-
mers and private companies make many day-to-day
decisions about which fuels to consume and which to
produce. In addition to its role in developing specific
. community projects and programs, the Alaska State
government's role is to guide individual private deci-
sions. That guidance is made through fiscal and tax
incentives, pricing, the regulatory process, and the
state's energy programs. In other wor9s, a clear,
widely dissewlnated statement of Alaska's energy
policy goals and objectives is often as im.port3.11t in
bringing about desired changes as the State's partici-
pation in energy projects.
This year the Long-Term Energy Plan was pre-
pared by the Division of Energy and Power Develop-
ment and submitted to other agencies and the Gover-
nor's office for review. This process helps to ensure
· that the Administration has a coordinated position on
energy.
However, if Alaska's Long-Term Energy Plan is
really to become an effective tool of decision mak-
ing, its preparation must be tied to the budget pro-
cess. Alaska Statutes require that the plan be submit-
ted to the legislature no later than 1 February each
year, and yet funding for the Plan is not available be-
2
fore the beginning of the fiscal year. Consequently
the preparation of the plan does not coincide with the
normal budget process of the State.
Because of the timing of preparation, the Gover-
nor and the Legislature are unable to review agency
requests in the context of the policies enumerated in
the Plan. The Plan is still in preparation during the
period when the Administration is making decisions
about specific project funding. As a result, the Plan
is not the effective tool for policy coordination that it
could be.
To remedy this problem, the Long-Term Energy
Plan should be prepared in conjunction with the
budget process. To do so will require that the Plan
due in 1982 be presented as a progress repmt on the
status and development of the 1983 (FY 1984) Plan.
Energy decisions, and particularly ones related to
development, are site sp>ecific. An annual report on
state-wide energy issues cannot, by itself, addFe-ss all
of the individual concerns of local utilities, industry,
small businesses, regional authorities, municipali-
ties, cities, boroughs, regional a..1d village COI<p0ua-
tions, village councils, and nolilprofit C@op>euatli.~Ves.
Instead, Alaska's Long-Term Energy Plan is me-
ant to provide th.e information base and institutional
framework to assist Alaskans in gett~g a lecal
energy project or program off the :ground. It is an .es-
sential part of the Long-Term Energy Plan to de-
. scribe the process of how the State governmeDt se-
lects projects or programs for funding and other State
a~sistan.Ge.
The most clearly defined process. of project selec:;-.
tion concerns electric power development.
The .Alaskan Legislature has established th.e Pow-
er Project Fund, under the Alaska Power Authority.
This fund can be used by local communities and pub-
lic utilities to finance p>ower projects. However, b>e-
. fore construction can b~gin, proposed projects must
go through a series of evaluations:
• Reconnaissance ·Study
• Study Review
a Feasibility Study
• Feasib>ility Study Review
• Legislative Approval
• Project Construction
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There are three main limitations to the process of
project selection. First, it emphasizes electricity. Se-
condly, much of the community based research
overlaps and is not standardized. Thirdly, the Office
of Budget and Management of the Governor's office
is responsible for reviewing the reconniassance and
feasibility studies, without extensive in-house
energy planning capabilities; thus, through evalua-
tion is often left to the agency sponsoring the project.
In the long-term, Alaskans will be best served if a
clear distinction is made between energy project/
program advocacy and evaluation. In most states,
private companies or utilities propose projects and
the State government is responsible for evaluating
the proposal through public hearings and internal re-
view. Alaska that process will not woFk because
the State government is heavily involved in most of
the projects.
In the coming years, the pace of project selection
in Alaska will accelerate. It is essential that the State
of Alaska has the capability to evaluate all of tme
proposals fairly and quickly. It would seem log4cal
that this should become one of the more imr>ortant
functions of the Long-Term Energy Plan process.
One of the clear and present dangers of any engo-
ing planning function is the isolation·ofthe planners
from the real world. After a length of time, the plan-
ning develops an inertia and momentum of its own
above and beyond the original purpose and objec-
tives that created the function in the first place.
In order to prevent this and to develop as reas<'>na-
ble and realistic a plan as possible, regular contact
and assistance is needed from outside the immediate
planning sphere. The establishment of an Energy
Advisory Council to obtain needed periodic input,
critical review and recommendations from represen-
. tatives of both the public and private sect0rs is
• needed. Council participants will be dr3:wn from go-
vernment, the fuels industries, utilities, envwon-
mental interests, consumers and business. The
Council's recommendations and endorsements will
be key elements in the planning process.
Alaska's Energy Policy
Alaska's energy policy encompasses six broad
areas: the lease and production of energy resources,
3
the price and availability of energy for Alaskans, the
coordination of energy and economic activity, the
promotion of energy conservati0n, the encourage-
ment of alternative energy development, and the im-
proved coordination and administration of eNergy
matters within the State government.
Alaska expects to continue leasing its land for oil
and gas exploration at a moderate and steady rate. If
oil and gas exploraticm is successful, this should help
to offset the effect of declining State royalties from
severance taxes associated with the depletion of the
Prudhoe Bay oil field. Furthermore, a steady leasing
rate should minimize disruptions associated with oil
and ~as develepmemt.
Alaska's energy p@lli.cy is concerned about the
availability of both electricity and petroleum prod-
ucts. The State's pelicy hlitiatives are aimed at en-
suring that ener,gy is reliably available at reas0nable
prices. The Nighest priecity sheuld be given to the
dispesitien of r0yalty oil and .gas within t~e State.
Emer:geacy fuel assistance will ee pr.ovidecl ,.,in ·S(;)me
'hardship cases attemp.ts wUl be made to uecduce tJliJ.e
high cost of fuel, and 'there will ~be l0ans.fornew b>ulc
fuel storage facilities. Similarly, the State intends 'to
accelerate the cle~el0pm.eNt of Alaskan hyclro power
and to offset seme of the rising cost of electricity
with a short-term subsidy pro~am.
The Alaskan state governmeNt intends to moder-
ate the ecoNomic and social impact of energy de~el
opment in order to preveNt the problems that arise
fr "b b t" . . T hni al . om a . oom or , us act1v1ty. · eo . . . c as·si&tance
will be provided to communities impacted by large
scale energy development. The State will,ensure that
energy facilities are developed in an economically
and environmentally sound maBner.
Alaska is encouvaging energy conservation
through grants and loans. The State offers technical
and educational assistance to individuals and com-
munities. Energy conservation will be incorporated
into the planning, design, and construction of State
owned and funded facilities.
Alternative energy development in Alaska will be
encouraged by research and development activities
and by grant and loan programs.
The State government will improve administra-
. tion and coordination by ensuring the availability of
an adequate energy data base and analytical capabili-
ty for decision makers .. Coordination among all of
the agencies involved in energy production, distribu-
tion and regulation is the responsibility of the gover-
nor's office.
In 1979 Governor Hammond confirmed these ba-
sic principles in a statement on Alaska's energy poli-
cy. In summary, his basic points were:
• Direct and equitable distribution of Alaska's
energy resource wealth to all Alaskans.
• Improved efficiency in the pFOduction and dis-
tribution of electricity.
•' Support for local energy needs by State planned
and funded energy facility construction.
• Technical assistance for community impmve~
ment in eaergy conservatioN and m:anagem<:mt
practice.
• Improved energy conservation practices in
State government buildings and activities.
•' Support for the development of l<ileailily-orient-
ed energy technologies.
• Support for improved community petroleum
product storage facilities.
• Public participation and loGal input in energy
pl~arming de.cisions.
•-Priority for in-state uses of Alaskan eaergy re-
sources.
•" Procurement and delivery of fuels in emergen-
cy situations.
EneFgy End-Use
Alaska's energy end .. use is dominated by the cli-
mate, low population density, aJiid the fact that the
State prodttces eighteea times the final eaergy it con-·
sumes. Furthermore, energy end~use varies signifi-
cantly .within the State. Essentially, there are five in-
dependent energy systems-the Southeast, the Arc-
tic, the Aachorage area, the Fairbanks area, and the
rest of the State.
Each of these energy systems have different re-
source opportunities and, therefore, different ways
of using energy. In addition to the use of petroleum
products, Southea~ has abundant hydro and wood.
resolilfces; Anchorage has natural gas and hydro;
Fairbanks has coal; the Arctic lfas natural gas at Bar-
row and at Prudhoe Bay. The resl of Alaska altuosl
4
totally depends on oil.
There can be no doubt that the Railbelt (Fairbanks/
Anchorage) area dominates energy end-use. Only
14 percent of Alaska's end-use energy is consumed
outside the Railbelt, despite the fact that 29 percent
of the population lives in these regions. Even dis-
counting the ammonia/urea plant on the Kenai Pe-
ninsula, which accounts for 25 percent of total State
energy end-use demand, the Railbelt's per capita
energy consumption is 78 percent higher than the av-
erage of the other regions.
Significantly, the per capita use of energy in every
sector is higher than the U.S. average. On a per-capi-
ta basis, Alaskans consume twice the energy of their
counterparts in other states. Every sector of per capi-
ta energy end-use in Alaska is higher than ia the
Lower Forty-Eight, and the highest, the combined
transportation and marine sectors, are nearly three
times the national average.
Overall, petroleum accounts for 56.8 percent of
the end-use energy consumed in Alaska. This is
slightly higherthan the national average. Natural gas
in Alaska is the second most important fuel, account-
ing for 34-.9 percent of end-use energy. Coal is only
2. J pe:rrceat, and electricity is half the national aver-
age, accounting for only 5.9 percent of the total.
The re,gion, sector, and energy source breakdown
for Alaska is presented in figure 1.
Figure 2 is a graphic presentation of energy flows
in the State of Alaska. The diagram distinguishes be-
tween end'-use energy from primary energy require-
ments by depicting energy sector uses, electricity
generation and refinery losses separately. End-use is
energy that has been transformed or converted and
transmitted for final consumption.
Energy demand growth in Alaska since 1970 has
been erratic -in two years it actually declined and
in another year wew by 24 percent. Over all it has
grown at an average growth of about 7 percent, with
the largest demand growth in natural gas. The fig-
ures reveal how sensitive the Alaskan energy picture
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National
Defense, 63%
Marine, 4.4%
Comme~cial, 5.9%
FIGURE 1
ALASKAN ENERGY END-USE
BY REGION, SECTOR, AND FUEL
1979
Southeast, 6.0%
B,yRegion
By Sector
By Fuel
5
Cordova/Kodiak, 1.3%
Southwest, 4.0%
Interior, 0.9%
Northwest, 1.2%
Arctic, 0. 7%
··"'--;(
1979 Energy End-Use
A LL ALASKA
Hydro 5116
Natural
Gas
FIGURE 111-2
Refining
Energy Sector
Refinery and Generation Losses
30157
Residential
65052
Industrial
80605
Transportation
__________ _. ___ _ -
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250
225
200
175
150
125
100
12
(10 B,tu's)
/
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75~/
N (73.6)
50
FIGURE3
ALASKA ENERGY GROWTH
(By Fuel)
//
/
/
/
/
/l / N (183.8)
//
////
/
//.)N (147.8)
//
//
//
//.)N (11'8.9)
~ / N (228.6)
//
//
//
.Y/
/N (95.6) KEY:
0 = Oil (Petroleum Prod.)
N = Natural Gas
E = Electricity
25 ~-----------' E (
1
;:; E (16.5) E (18.5) E (23.0) E (28.1) E (32.6)
0 --~-------+--------~------~--------~--------~-------85 90 95 2000 2005
7
Year
is to major construction projects such as the Alyeska
pipeline.
Demand growth for the next 25 yeaFs is expected
to be lower than for the past decade, reflecting a low-
er population growth and energy prices rising faster
than the rate of inflation. From 1979 to 1985, energy
demand growth is projected to be 5. 3 percent for all
energy end-use. After 1985, demand growth is ex-
pected to decline so that it averages 3. 9 percent from
1979 to 2025. This is low by Alaskan standards, but
over double the expected growth rate in the Lower
Forty-Eight.
This year's forecast is a long-term forecast. It does
not account for the income cycle, unexpected con-
struction projects, or a cold winter. Thus, the results
shoulcl be interpreted for what they mean, a long-
term secular trend.
Energy Development
Alaska has the good fortune of being rich in
energy resources ranging from the traditional, such
as oil and coal, to the more "exotic," such as a tidal.
However, these resources and the infua.,.structure for
their use are net evenly distributed within the State.
Thus, while State-wide andregi0nal gmdance:can be
provided, energy development d'ecisiens must ulti-
mately be made at the community level.
Traditional Eaergy Resources
Alaska's energy transition has paralleled the gen-
eral evolution of energy resource utilizationin other
regions. Wo0d as a primary fuel was reJi>laced by
coal which was later replaced in part by oil, natural
gas, and hycltoelectric p0wer. Despite increasing in-
terest in alternative technologies, it is clear thatthese
fourtraditional resources will continue to meet most
of the State's energy demand through the end of the
century.
•, Oil. End-use consumption of refined petr0leum
products in Alaska is greater than the end use
consumption of all other energy resources com-
bined. Despite the fact that prices are likely to
continue to increase, this dependence is expect-
ed to continue for many years. Even with the
State's large oil resources, approximately forty
8
percent of refined petroleum products are
imported from the Lower Forty-Eight. In-State
refining is increasingly dependent on State roy-
alty oil as a feedstock. Together with the likeli-
hood of further international oil shortages,
these conditions raise questions regarding the
linking of royalty oil policies to projected in-
State oil needs.
• Natural Gas. Since the Cook Inlet gas fields
are located near Anchorage, it has been possi-
ble for one-half of the State's population to rely
primarily on natural gas for both heating and
electrical generation. In the short-term, use of
natural gas will continue although prices will
increase. Depending upon export policies,
known Cook Inlet resources may not last
through the year 2000. Barrow also uses natural
gas and gas is expected to be available to Fair-
banks through the proposed Natural Gas Pipe-
line from Prudhoe Bay. Natural gas reserves
are estimated to be approximately 32.791 tril-
lion cubic feet (TCF). In addition, the State
contains an estimated 101.2 (TCF) of undisco-
ven~d recoverable resources.
•· Coal.Except for very small local activities, the
Usibelli Mine near Healy is the only operating
coal mine in the State. While a part of the
mine's output is used for space heating the ma-
jority is used to generate two-thirds of Fair-
bank's electrical requirements. Expansion at
Healy and development of . the Beluga Coal
Fields are expected as a result of opportunities
in export markets. The potential also exists for
village use of local coal resources. It is estimat-
ed that Alaska has between 10 and 23 percent of
the world's coal resources.
• Hydroelectric. Hydroelectric resources offer
the potential of meeting the electrical needs of
ninety-five percent of the State's population.
Accordingly, the State has made a major finan-
cial commitment to the development of the re-
source. Projects are currently under study or
construction primarily in the Southeast and
Rail belt regions. The largest of these is the pro-
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posed fifteen hundred megawatt Upper Susitna
Hydro Electric Project. As the cost of oil con-
tinues to rise, so does the likelihood of substi-
tuting hydroelectricity for oil use in heating.
Expanding Energy Options
Given today' s rapidly changing energy condi-
tions, it is important that Alaska keeps its energy op'"
tions open. It is the policy of the State to encourage
the transition away from dependence on petroleum.
While there is growing interest and activity in there-
sources and technologies discussed below, it is im-
portant to keep in mind thatin many cases, reliability
and costs are not yet fully demonstrated.
• Peat. Peat is partially decomposed organic
matter undergoing the lengthly transition from
'biomass to coal. With an estimated 27 million
aeres of peat in nen;,permafrost areas-, Alaska :
contains 51 percent ef the resource in the
United. States. For mmy years, peat has been
used for heating in Ireland and Scandanavia,
and more· recently it has. been used for electrical
generation. Like coal and biomass, peat can be
converted into a. number of liquid onganic fuels.
•· B'iomass·.Biomass is li:v;ing or re.cen.tly living
matter such as. woed or agricuitural products.
Alasl<1a: has extensive biomass resources, but
their pmtential application is generally limited
by a slow rate of grewth and the hi>gh cost of
collection. Major existing applications include
direct use of wood for heating and the use of
wood waste from the pulp mills in Southeast
Alaska for electrical generation. Under investi-
gation for future Alaskan application are alco-
hol and methane production from agricultural
produce and residues.
• Solar. Contrary to common belief, solar
ener,gy is an impoitant resource in Alaska.
Passive solar, which uses proper building de-
sign without mechanical assistance, is in use to-
day and offers significant heating potential.
Economic considerations are the primary con-
straints to utilization of active solar systems,
which include mechanical components. The
technology for these systems is well established
and the components are commercially availa-
ble.
9
Photovoltaic cells, which use a photo-chemi-
cal process to convert sunlight directly to elec-
tricity, are already economical in remote and
special applications. Increased use can be anti-
cipated as production costs decrease.
• Wind. Small wind electrical systems have been
used in Alaska since the 1920's. Today's ex-
panding use of such systems is made possible
by the abundant wind resource along the state's
coastline and in many inland sites. Small wind
machines (up to 8 kw) are commercially availa-
ble, but larger systems are still in the develop-
ment stage and have not yet been proven under
Alaskan conditions.
• Geothermal. Geothermal heating is that which
is derived from the earth's interior. It has been
used• in Alaska for many years in small scale ap-
plications such as hot baths, space heating and
gardening. Recently, there has been increased
exploration and resource assessment activity
aimed at heating and electrical applications.
~AJthough i\laska' s geot.'Iermal resotirces are
vast, the site-specific nature of geothermal
energy will limit its development.
•, 'Eidal. Alaskans have long been facinated by
the potential of ocean energies. This is espe-
cially evident in Cook Inlet, which has one of
the highest tidal ranges in the world. Renewed
interest has resulted in the initiation of two stu-
dies of the potential for utilizing tidal power.
•· Hydrogen. Hydrogen can be obtained from
w:ater using electrolysis or through chemical
conversion of hydrocarbons such as coal and
peat. In the long term, hydrogen may be consi-
dered as a fuel substitute for oil and gas. Of par-
ticular interest is the generatio~ of hydrogen
through electrolysis using hydro power or some
other renewable energy resource such as wind.
•, Other Energy Technologies. Fuel cells, waste
heat recovery systems, heat pumps, and energy
storage systems all offer promise for greater
energy efficiency. With the dramatic rise in the
price of oil in recent years, these and other
energy conserving technologies have received
increasing Alaskan attention.
Resource
Technolosx_ -
PEAT:
Direct Combustion
Steam Boiler
BIOMASS:
Destructive
Distillation
Fermentation
Gasification
Anaerobic Digestion
SOLAR ENERGY:
Passive
Active
Thermal Electric
Photovoltaic
WIND ENERGY:
1-IOKW
w-soo
IMW-3MW
GEOTHERMAL:
High temperature
hydrothermal
MOderate temperature
hydro (less than
i 50 degree C)
Hot dry rock
Magma
Normal Gradient
TIDAL ENERGY:
HYDROGEN:
FUEL CELLS:
ENERGY STORAGE
SYSTEMS:
HEAT PUMPS:
FIGURE4
STATUS OF ENERGY TECHNOLOGIES
Technical
Feasibilit}'_
Engineering
Develop_ment
----------------
----
Commercial
Demonstration Commercial
*Photovoltaic cells are commercially available. butt he development of cells competitive with other forms of electrical pro-
duction is in the engineering demonstration stage_
**When used for space heating assistance.
• Technical Feasibility-Does the technology work (theory)
• Engineering Development-Pilot plant stage (practice)
• Commercial Demonstration -Demonstration at commercial or near commercial size
• Commercial-There are commercially operating types (does not mean economically competitive in all applications),
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Energy Conservation
Energy conservation was defmed in Energy: The
NextTwenty Years as
those energy saving investments, operating de-
cisions and changes in the goods and services
that we buy and use that save mo9ey over the
life of energy consuming products. Money can
be saved by substituting intelligence, pru-
dence, maintenance, better equipment, or dif.:.
ferent equipment for purchased energy; the
substitution should be made up to the point
where the cost of not using the energy is equal
to the cost of energy saved.
Conservation of energy does not require curtailment
of activities or degradation of the quality oflifestyle.
The evolving view of energy conservation as a
source of energy has far more positive implications,
despite the fact that conservation sometimes requires
significant investments. The high initial costs areal-
most always offset by years of benefits.
Energy conservation, then, means increasing the
efficiency of energy and its use. Even with Alaska's
vast energy development potential, conservation,
particularly of petroleum products, could prove
economically effective.
Significant differences exist between the Railbelt
and other areas of Alaska with respect to energy end-
use. For example, nearly half of the energy con-
sumed in Non-Railbe!t AJ~ka is for transportation,
while Jess than J 0 percentis used for industry. In
comparison, for the State as a whole, transportation
accounts for only 38 percent and industry accounts
for 31 percent of the total energy end-use. Besides
the differences in energy end-use, the Railbelt and
non-Railbelt sectors consume different types of
fuels. Non-Railbelt Alaska is almost totally depen-
dent on petroleum products, while the State as a
whole relies on petroleum for only half of its energy
consumption.
Observations drawn from Alaska's energy end-
use profile provide direction for the development of
energy conservation programs. Among otherthings,
this information suggests that in order to obtain sig-
nificant savings, State energy conservation pro-
grams in non-Railbelt Alaska should be directed at
petroleum use-primarily in transportation and for
residential and commercial buildings. The differen-
ces in energy use among Alaska's regions under-
scores the need to localize energy conservation pro-
grams.
In 1980, the State of Alaska developed and legis-
latively approved the passage of one of this country's
more ambitious energy conservation acts. Among
the provisions of Senate Bill438 are:
• Establishment of thermal and lighting effi-
ciency standards for both residential and com-
mercial buildings, as well as for State owned
and operated buildings.
•· Establishment of a tax credit available to
businesses who purchase and install energy
conserving equipment or materials.
., Establishment of a Statewide energy audit
program, including auditor training and test-
ing, subsidized energy audits and informa-
tional materials for participants, and grants l!,lld
loans for energ-j conserv-ation imp,ovements in
audited homes.
•· Provision of matching grants for the federally
funded Appropriate Technology Small Grants
program.
•· Provision of financial assistance for rural edu-
cational facilities for energy conservation plan-
ning, and matching grants for federally funded
energy conservation technical assistance retro-
fit action by schools, hospitals and units of
local government.
• Funding for educational programs, directed at
interested citizens as well as enrolled studies in
classrooms throughout the State.
There are numerous other programs provided for in
this legislation,. which all add up to a significant
State commitment to energy efficiency.
Only by proving that energy conservation is an
energy resource will its benefits be realized. If
energy conservation is to ever reach its full potential
and become an important, viable component of
Alaskan energy policy, current conservation efforts
must be carefully monitored and evaluated for both
energy savings and societal impact. In addition, all
new programs should include a monitoring and
evaluation component when they are planned.
Many energy conservation programs initiated in
Alaska and elsewhere rely on estimates of likely
achievable savings, since little or no historical data
on actual savings are available. As more and more
conservation programs are implemented, it is crucial
that data on measured effectiveness under actual
conditions be carefully collected. Without such a
monitoring and evaluation scheme, there will always .
exist some doubt as to program effectiveness.
Many State and local organizations, both public
and private, are involved with energy conservation
programs. Primary activities include information
dissemination, educational programming, energy
audits and weatherization services for residential .
buildings, and minimal research and demonstration
projects. The impetus for this activity at the State go-
vernment. level is Federal legislation, including
such acts as the Energy Policy and Conservation Act
(EPCA), the Energy Conservation and Production
Act (ECPA), the National Energy Conservation Pol-
icies Act (NECPA), the Energy Extension Service
Act (EES), and the Institutional Buildings Grant
Program. Locally, the initiation of conservation pro-
grams has been based on financial assistance from
State or federal government, consumer demand (as
in the case of utility programs), and federal mandate
(as in the case of utility programs), and federal man-
date (as in the case of Rural Electrification Adminis-
tration requirements for REA member utilities).
Whateverthe reason, energy conservation efforts.are
taking hold in Alaska as n~ver before.
The impact of federal mandates on Alaskan State
programs has been both positive and negative. Fi-
nancial incentives have been provided for almost all
conservation efforts initiated by State agencies, but
there have been myriad rules and regulations. Fre-
quently, there are co~icting requirements and im-
possible deadlines which have added to State frustra-
tions. Most important, perhaps, has been the some-
times poor applicability of federal requirements to
the particular Alaskan geography, climate, and pol-
itical institutions. For example, the Weatherization
Program for Low-Income Pexjsons has been plagued
by funding cuts, delayed payments (which slow
work during decent weatherization weather), and
limitations on spending for administrative costs and
home reparrs.
Federally-funded programs that have been tied to
energy savings-though laudable for their insist-
ence upon energy savings -have brought delays
while bureaucrats have quibbled over numbers. Cer-
tain federal programs have limited applicability in
Alaska. One such example is the Residential Conser-
vation SerVice program, which impacts only two of·
Alaska's largest utilities-Chugach Electric Asso-
ciation and Alaska Gas and Service Company.
Energy Emergency Planning
Given the nature of the Alaskan energy system,
the primary emergency problems that can be ad-
dressed with a statewide planning program are in the
petroleum sector. There are two broad categories of
problems inherent to oil: an international problem
and an unusual distribution problem within Alaska.
Although a state government 'has more contml over
. the internal distribution problem, there are also
measures that can 1x: implemented in the event of an
international oil disruption that will help to moderate
the problem.
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More than any other factor, the risk of oil shor-
tages stems from the inescapable fact that the U .S. is
heavily dependenton imported oil, much ofwhich is
purchased in the turbulent Middle East. There are .a
variety of events that could evolve into ~oil disrup-
tion in Alaska, along with the rest of the cauntr-y: . .
political instability or revolution in the oil exporting
nations, sabotage .of critical foreign or damestic oil
installations, natural disasters, limited warfare be-
tween the producing·countries and their neighboring
nations, a blockade of shipping, and a politically-
based withholding of oil. Given all of these potential
problems, it is essential that State and local officials
become aware of the risk offuture disruptions along
with their probable severity.
Close~:to home, Alaska's unique geography and
popUlation distribution may give rise to isolated spot
oil shortages within the State. Specifically, many
Alaskan Bush communities could experience an oil
shortage due to transportation orfmancial problems.
These problems may not stern directly from an inter-
national oil supply problem, but they could have a
tremendous disruptive effect on the community and
are an important component of Alaska energy plan-
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ning.
Federal Allocation Policy
and Alaska's Royalty Oil
The gasoline shortages experienced by California
and the East Coast were caused, in part, by the in-
flexibility of the federal allocation controls on gaso-
line-and crude oil. This program hasjust been elimi-
nated. by President Reagan (it was originally due to
be phased out in September). Despite the problems
with: allooation, these controls are likely to be imple-
mented again in the event of emergency, because
they do give state and federal governments some
control over the distribution of pe~oleum products.
The-theory of allooation is quite simple. Everyone
is entitled to a set percentage of the petroleum prod,.
ucts.purchasedlast year; So if the· shortfall is 10 per-
cent, everyone is guaranteed 90 percent of supply.
This program can be made to work on the production
and:whelesale distributionlevel. But at the retail lev-
el it becomes unmanageable· because almost no one
keeps. such detailed records.
At the· mement, the federal government has a
standby allocation program under consideration.
The form of this standby program should be of con-
siderable concern to Alaskans. In the event of an
energy emergency, it will determine the trading rela-
tionships between oil producers, refiners, wholesal-
ers and retailers. That, in turn, will affect All Alas-
kans. It could also affect the contractual terms con-
cerning the sale of the State's royalty oil.
Alaska· is the only state to actually own a major
share· of crude oil being produced within its borders.
Consequently, royalty oil can be used by the Gover-
norto moderate or eliminate an oil shortage, which is
a. supply option no other State has. In order to use the
oil during a shortage, any contractual sale should
have· a clause which mandates that the oil must be re-
fmed and sold in Alaska unless it is offset with prod-
ucts from elsewhere. Exceptions to this clause could
be granted during normal market conditions.
If such a plan is to be successful, however, it will
have to be made a part of the federal standby alloca-
tion regulations. Otherwise, purchasers of Alaskan
royalty oil face the prospect of being in violation of
eitherState or federal requirements.
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Options Available to
Manage an Oil Disruption
Following is an abbreviated list of those items that
could be implemented by the State of Alaska in the
event of. a petroleum emergency. These actions as-
sume that there has been a statewide oil disruption; in
addition, there are varying degrees of severity within
the measures. Public comment is solicited regarding
these and other emergency responses which could be
implemented in Alaska.
Measures to· constrain· demand:
•· Reduce· highway speed limits to 50 mph orless.
., Prohibit travel by private autos on different
days. This could be implemented by a sticker
plan, which limits the use of each registered
vehicle one or more days per week.
•· Prohibit driving on Sundays, weekends, or at
other times.
•· Provide additional transit service by operating a
larger pertion of available vehicles and rede-
ploying vehicles to carry more passengers per
vehicle mile.
•• Increase commercial passenger transport air-
craft load factors by rescheduling flights.
•• Mandate a tune-up of vehicles every six
months.
•· Prohibit space heating in commercial buildings
to abeve 65 degrees. This could also apply to
residential buildings.
e: Mandate efficiency_ tests on all oil-bu..-ning in-
dustrial-boilers -and larger commercial heating
plants. Poor efficiency conditions must be cor-
rected.
e: Restrict hours for commercial and industrial
operations.
•· Reduce the work/school week to four days.
., Prohibit or limit the use of private planes for
nonessential uses. _
• Institute publiC'iitformation program.
Measures to manage shortages:
• Odd/Even license plate rationing with manda-
tory service station openings.
• Hot lines for distress or other emergencies.
., Credible, accurate public information.
•· State set-aside for emergency oil allocations.
Measures to provide supplemental supplies:
•· Prohibition of the sale of royalty crude oil out-
side Alas~. unless offset by the sale of,refined
products. The ratio between royalty crude and
petroleum product sales to be determined by
market conditions at the Governor's discretion.
•· Emergency burning of wood or coal wherever
possible.
•, A strategic petroleum reserVe funded and con-
trolled by the Alaska State Government.
RE.C'OMMENDATIONS·
Alaska's .Long-Term Energy Plan and the process
of energy planning it is meant to represent could be
greatly improved by the following changes;
•· Shift the timing of the Plan to be compatible
with and included as part of the State's budge-
tary cycle and process.
•• Establish,acleardelineation between planning,
adv:ooacy and evaluation and. designate· approp-
riate: State agency responsibilities for each.
•· Include within the Long-Term Energy Plan the
responsibility fer technical and economic re-
v:iew and evaluation of all State-financed
energy projects above a minimum scale.
•· During the first quarter of the coming fiscal
year specific guidance as to the technical and
economic criteria to be used in project review
and. evaluations should be developed.
e; Establish an Energy Advisory Council to assist
in: the annual update and refmementofthe Plan.
•; T'ne end,.use·data base should be·improv~dfur
ther, particularly on a regional basis from 1970
to the present. Access to Department of Re-
venue records and other supplementary data
will be required. Reconnaissance studies and
community energy assessments end-use data
should be standardized and incorporated into
the centralized data base.
•' A comprehensive economic and demographic
forecasting model with a regional breakdown is
required. At the present time, the Institute of
Social and Economic Research (ISER) has the
only Alaska long-term econometric model.
Following analysis by Batelle of the ISER
model for the Railbelt Alternative Study a de-
termination should be made of its adequacy for
14
use in the long-term energy planning process.
•' Reliable regional economic and demographic
variables should be developed for use in the ·
energy end-use sectoral analysis and demand
forecasting.
•· In-depth analysis of natural gas and electricity
pricing should be conducted. This year an oil
price· forecast based on OPEC's proposed oil
price index was used to generate the expected ·
changes in key petroieum product prices.
•~ The State of Alas~ should closely coordinate
its royalty oil and gas policies and programs to
insure compatibility with in-State energy-use
forecasts. For example, proposed in-State re-
finery products should coincide with projected
Alaskan fuel requirements.
•• The potential for community use of natural gas
from the propesed natural gas system originat-
ing at Prudhoe Bay should be determined im-
mediately.
•· Pending positive results from ongoing coal use
studies in the Northwest portion of the State,
the development of coal-based community
energy systems should continue.
e• The State should continue its extensive finan-
cial support of economic hydroelectric resource
development.
•· Resource assessments for coal, hydro, peat, bi-
omass, solar' wind and geothermal energy
should continue.
• Alaskan energy research and demonstration
programs should be evaluated and prioritized
based upon resource availability, regional and
state-wide applicability and acceptability, costs
and time frames.
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•· The development and implementation of
energy conservation programs in Bush Alaska
must be addressed separately in order to ac-
count the special needs and problems of rural
villages. Energy conservation efforts should be
looalized. Every effort should be made to allow
communities to ascertain their own conserva-
tion needs. The State should help financial]
and through technical assistance.
•~ An: adequate monitoring and evaluation syste1
for-exdsting and. new conservation programs
should. be· established immediately. A status re-
port· and cost/benefit analysis of these efforts
should be included in the 1982 Long-Term
Enengy Plan.
•~ Spec::ific geals and objectives for the State·' s
enen~ conservation policies and programs
sholilild: be· defined and included. in next year's
plan:. These: shc>UJd be· developed by consider•
mg: E:O.engy Coaserv-atien as mather energy
supply option.
•· Alaska should carefully evaluate further partic-
ipation in federal conservation programs. The
State has many unique conditions not found
elsewhere and its programs need to be suited to
them. In addition, federal conservation funding
will decline significantly in FY 82.
•· The Alaska Energy Emergency Contingency
Plan should be completed and submitted to the
Legislature for approval by January 1982.
• Effort should be initiated immediately to
amend federal standby allocation regulations to
allow an Alaskan Royalty Oil on-state use
clause during national shortages. •i The· proposed legislation developed by the Na-
tional Council of State Legislatures (NCSL) to
provide the Governor with additional authority
to res}*)nd. to energy emergencies should be ap-
proved. (References Appendices J and K).
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~ J;. "•
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