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HomeMy WebLinkAboutSuWa285Alaska Resources Library & Information Services Susitna-Watana Hydroelectric Project Document ARLIS Uniform Cover Page Title: SuWa 285 Susitna-Watana studies resume after spending freeze lifted Author(s) – Personal: Elwood Brehmer Author(s) – Corporate: AEA-identified category, if specified: AEA-identified series, if specified: Series (ARLIS-assigned report number): Existing numbers on document: Susitna-Watana Hydroelectric Project document number 285 Published by: Date published: [Anchorage, Alaska : Alaskan Publications, 2015] August 16, 2015 Published for: Date or date range of report: Volume and/or Part numbers: Final or Draft status, as indicated: Document type: Pagination: News article 2 p. (pages 11 and 20) Related work(s): Pages added/changed by ARLIS: Notes: Originally issued in: Alaska journal of commerce (August 16, 2015) All reports in the Susitna-Watana Hydroelectric Project Document series include an ARLIS- produced cover page and an ARLIS-assigned number for uniformity and citability. All reports are posted online at http://www.arlis.org/resources/susitna-watana/ August 16,2015 •Alaska journal ofCommerce • Page 11 : Susitna-Watana studies resume after spending freeze lifted By Elwood Brehm er Alaska journal of Commerce Work is resuming on the Susit- na-W atana hydroelectric project under spending guidelines put in place by Gov. Bill Walker's ad- ministration. The overall cost for the pro- posed 705-foot dam in the upper reaches of the Susitna River has been pegged at $5.6 billion in 2014 dollars by the Alaska En- ergy Authority, or AEA. AEA will need $105 million, maybe more, to get through the Federal Energy Regulatory Com- mission licensing process and to construction, authority Executive Director Sara Fisher-Goad said during an Aug. 6 board meet- ing. However, AEA only has the ability to spend the $6.6 million it has in the bank for the project through 2017. That money should get the project to the study plan deter- mination, at which point FERC would rule whether or not the authority has gathered sufficient relevant data to apply for a proj- ect license. The FERC license is the last and largest pre-construc- tion hurdle. Fisher-Goad said AEA will continue to update data with field studies as necessary to prevent work from becoming stale or out- dated. National Marine Fisheries Service officials have questioned the validity of some Susitna-Wa- tana fisheries studies. "The longer we stretch this out, we're losing our economy of scale to be able to have logis- tics support on several studies at one time," she said. "We're doing this in more of an incre- mental fashion." AEA has completed 14 of 58 FERC-approved studies so far, according to Dyok. To date, the project has re- ceived $192 million in state ap- propriations. The Walker admin- istration lifted an administrative order July 6 that halted spending on the dam, one of six large infra- structure projects that were put on hold in late December. After 2017, once AEA has exhausted its funds for working towards a study plan determina- tion, "the project will be revisited in the context of the fiscal envi- ronment and other competing major capital projects," Office of Management and Budget Direc- tor Pat Pitney wrote in a memo to Fisher-Goad. Mike Wood, president of the lead Susitna-W a tan a opposi- tion group the Susitna River Coalition, in a July 16 release, called resuming the project a "slap in the face" to Alaskans AP PHOTo/FRAil Fuvni/Awu EIERGY AIITHORITY Researchers walk alo ng the Susitna River in this 2012 Alaska Energy Authority photo. With a spending freeze lifted by Gov. Bill Walker, work is resuming on the Susitna-Watana hydroe lectric project. However, the authority will need about $100 million in new funding to get through the Federal Energy Regulatory Commis- sion licens ing process and to construction. as state leaders discuss ways to increase state revenue during a time of multi-billion dollar bud- get deficits. "The proposed dam has al- ready wasted hundreds of mil- lions of state dollars and needs to be immediately shut down," Wood said. "It diverts necessary funds for other, more respon- sible and reasonable alternative energy developments, as well as goes against Walker's campaign promises of fiscal responsibility and fish-first policies." AEA has touted the dam, which would generate about 2,800 gigawatts, as a way to pro- vide half of the Railhelt's energy demand with clean energy at long-term stable prices. Continuing at a slower pace to prevent unnecessary spending could end up costing the state if the dam is ultimately built, AEA Project Manager Wayne Dyok said at the AEA board meeting. At $5.6 billion to build today, inflation on project financing could add up to $150 million to the cost each year construction is delayed, he said. If everything goes according to the current plan, AEA will be able to submit its license ap- plication with FERC in 2019, and hopefully begin construc- tion soon after a typical two- year review, according to Dyok. However, if AEA gets the $100 million-plus it needs to submit its application before 2017, that timeline could be accelerated by two years and potentially save the state $300 million. The cost of financing the proj- ect could also have a direct im- pact on long-term electric rates. "What you get out of a con- structed hydro project is this in- flation-proof aspect, but you don't get that until it's constructed and generating," Fisher-Goad said. Dyok said the dam would save Railbelt consumers an average of $224 million per year on en- ergy costs over the first 50 years in production, a total savings of $11.2 billion over that time. Initial electric rates from Sus- itna-W atana -with first power in 2029 -would be in the 13 cents per kilowatt-hour range, AEA estimates. That price would continue to drop to an average of 6.6 cents per kilowatt-hour as about $8 bil- lion in principal plus interest is paid off over 50 years. By contrast, natural gas-gen- erated electricity from the large Alaska LNG Project would be about 11 cents per kilowatt- hour in 2029 and increase to a more stable rate of about 15 cents per kilowatt-hour over several deQades, according to Alaska Center for Energy and Power projections. On the energy savings alone, Dyok said the cost-benefit ratio for the project is 2.39-to-l. When the avoided cost of building new gas-fired generating capacity, generation facility retirement, and greenhouse gas reductions are included, the ratio improves to more than 3-to-1, he said. Roughly half of the project qualifies for a U.S. Department of Agriculture Rural Utilities Service loan, which is conser- vatively projected with 4 per- cent interest, Dyok said. The rest of the project fi- nancing is planned as nearly $4 billion paid in state bonds at 5 percent interest over 30 years a portion of which would be refi- nanced at a lower rate, accord- ing to AEA officials. See Susitna-Watana, Page 20 • · Page 20 • August 16, 2015 • A laska jou rnal of Com merce Susitna-Watana: Econ omic, study impacts As an added bonus, Susitna-W atana would generate billions for Alaska's econ- omy dut·ing construction along with clean, affordable power once its turbines are turning, AEA claims. The dam would have an economic im- pact of $3.4 billion and generate about 1,300 jobs each year during construction, according to a Northern Economics study commissioned by the authority. Preconslruction study work has gener- ated jobs, but also information that is be- ing used by other state agencies. "This project has advanced the state of science for a number of agencies, par- ticularly the Alaska Department of Fish and Game through some of the salmon Continued from Page 11 work," Dyok said . ADFG Mat-Su area spcort fish biolo- gist Richard Y anusz said in an interview that AEA's funding for fis,heries studies has provided significant benefit to the department. He said ther'e is relatively little data on chinook salnnon in the Sus - itna drainage, despite the popularity of the species. AEA's studies in 2013-14 provided drainage-wide albundance esti - mates through radio teletmetry tracking and mark-recapture efforts. According to Yanusz, s,ome of that in- formation had not been gathered since the first time Susitna-Watana was pro- posed in the 1980s. "It's been a long time between those abundance estimates, so having such a basic piece of information is very helpfu l to management," he said. "It is al mos t new information, very rare information, so just having those reference points will be helpfuL" Similar studies were done for coho salmon, the other primary sport fish in the drainage, on the main stem of the Susitna, without including the major tributari es such as the Y entna. Dyok said the Department of atural Resources has also found flow data helpful for other potential projects in the region. Managing flow below the dam has been an issue of contention for those opposed to Susitna-Watana, because of the potential impacts to juvenile salmon, particularly in winter. AEA is developing models to beller project flow regimes throughou t the year, but how much water is let through the dam is ultimately regulated by FERC, accord- ing to Dyok. Average winter flow at the dam site would increase about four times and roughly be cut in half dming the summer to retain water during times oflower electric demand based on early projections, he said. Flow at the dam site currently compris- es about 16 percent of the average annual water in the Susitna. "Fisheries, recreation, and power, you need to balance all of those factors," Dyok said. Elwood Brehmer can be reached al elwood. brehmer@alaskajournal.com.