HomeMy WebLinkAbout2020-05-20 AEA Agenda and docs
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REDUCING THE COST OF ENERGY IN ALASKA
Alaska Energy Authority
Board Meeting
8:30 a.m. Wednesday, May 20, 2020
AGENDA
*Members of the public, please dial 1-888-585-9008 and when prompted enter 676-392-603#
1. CALL TO ORDER
2. ROLL CALL BOARD MEMBERS
3. ROLL CALL STAFF, PUBLIC
4. AGENDA APPROVAL
5. PUBLIC COMMENTS (2 minutes per person)
6. PRIOR MINUTES - may be distributed prior to meeting date
7. OLD BUSINESS – Battle Creek Construction Update - Summer Schedule
8. EXECUTIVE SESSION
A. Matters Related to Bradley Lake and S/Q Line
9. DIRECTOR COMMENTS
A. Haida Energy Update
B. Snettisham Update
C. Denali Commission Update
D. Bradley Lake Economic Stabilization Proposal (Railbelt Utilities)
E. EV Infrastructure Grant Update
F. Power House Update
G. Community Outreach Schedule
H. PPF Dashboard & Loan Report
I. Build Grant Update, additional information
J. Articles of Interest
K. Next Regularly Scheduled AEA Board Meeting Wed. June 24, 2020
10. BOARD COMMENTS
11. ADJOURNMENT
Persons who wish to make a PUBLIC COMMENT related to agenda, please submit your name and contact
information to publiccomment@aidea.org no later than 4:00 p.m. on Tue. May 19, 2020. Your name will be
called from the list. Thank you.
West Fork Upper Battle Creek Update
For AEA Board of Directors
May 20, 2020
Events
Contractor remobilized to site for snow clearing and camp start up in early April.
Contractor assembled fusing machines and performed test welds.
Pipe being fused into 80’ lengths at sea level.
Pipe sections, anchor blocks, and anchor blocks being trucked to access road.
Pipe transition at outfall being encapsulation by concrete.
Schedule
Completion of diversion structure (additional rip rap and concrete apron) in May.
Fusing and installation of pipe to be completed in June followed by testing and
commissioning of electrical controls and equipment.
Contract substantial completion date July 22, 2020 and final completion date August
31, 2020 has not changed.
Budget
Construction contract bid was $36.476 million. Projected final $37.150 million.
Photo 1: Forebay and flow May 2, 2020
Photo 2: Talon Fusion Machine
Photo 3: Hauling pipe up the mountain
Photo 4: Sluiceway
813 West Northern Lights Boulevard Anchorage, Alaska 99503 T 907.771.3000 Toll Free 888.300.8534 F 907.771.3044
REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG
RGYAUTHORITY.ORG
MEMORANDUM
TO: AEA Board of Directors
FROM: Curtis W. Thayer, Executive Director
DATE: May 20, 2020
RE: Haida Energy Update
At the April 15 board meeting, the board denied Haida Energy’s request for forbearance on their
Power Project Fund loan and encouraged them to make their April payment as scheduled. Haida
Energy was able to remit the payment on that same day and avoid a late charge for the quarter.
Alaska Energy Authority (AEA) staff are continuing dialogue with the borrowers to monitor
construction progress of the Hiilangaay Hydroelectric Project and ensure that loan repayment
will continue despite the schedule delays.
Alaska Power & Telephone Company (AP&T) is currently preparing a plan for completing
outstanding construction tasks while complying with State of Alaska health mandates and
Centers for Disease Control and Prevention guidelines. AP&T expects to finish the plan and
deliver a copy to AEA staff before the end of the month.
813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG
REDUCING THE COST OF ENERGY IN ALASKA
April 7, 2020
Dear Ms. Hulbert and Mr. Mitchell:
The Board of Directors for the Alaska Industrial Development and Export Authority
(AIDEA) and the Alaska Energy Authority (AEA) has recently discussed with staff their
understanding of ongoing efforts you are making to reduce to writings a transmission
agreement and an interconnection agreement. We are aware that to date neither
agreement has been concluded but it is our hope that you are making positive progress on
both. We urge you to prioritize to the greatest extent possible your efforts and we ask you
to keep us informed. If you would like to address us in a regularly scheduled Board meeting
we welcome your contact and will certainly accommodate a status or progress report from
you.
We are also aware that the FERC permission held by Juneau Hydro Power, Inc. may need to
be extended. To that matter it is appropriate to inform you that if an extension is sought,
having discussed it we have determined that it is in the best interest of the State of Alaska
and the general Southeast Alaska region that both authorities support such an extension.
While we respect that in negotiating the transmission agreement and an interconnection
agreement both of your companies have their own preferences as to terms and conditions
it is difficult to understand how after many months those differences cannot be bridged by
mutual concessions whether it be on engineering issues, ownership of assets, location of
facilities, right of way size and location, or payments for costs incurred or which will
necessarily be incurred to design or rebuild systems that and must be paid by one party to
prevent harm to another’s customers.
Surely you acknowledge that there have been many contentious negotiations of
transmission and interconnection agreements elsewhere in the United States that have
been satisfactorily resolved and which have been modified when facts justifying a change
are made evident and are proven to harm one party wrongly. We believe that remedy
should be available to you as well.
Connie Hulbert
President and General Manager
Alaska Electric Light &Power
5601 Tonsgard Court
Juneau Alaska 99801-7201
Duff Mitchell
Managing Director
Juneau Hydro Power Inc.
PO Box 22775
Juneau AK 99802
813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG
If you believe that there is a helpful role that the Alaska Energy Authority can fill in helping
your companies reach necessary agreements please directly inform me or Mr. Thayer,
AEA’s Executive Director. The Board will take the matter up immediately and promptly
advise of our decision if you inform that you wish AEA involved.
It is not our role to list or argue with you for the many benefits that might flow from the
Sweetheart Lake Hydro Project once that projects power is available for Juneau’s docks, for
mining ventures, for adjacent communities, or other customers. It is our role to do all we
can to encourage development in Alaska and to do everything possible to reduce the cost of
energy to Alaskan’s wherever they work and reside.
Sincerely,
J. Dana Pruhs
Chairman of the Board
Cc Dennis Vermillion, Avista President and CEO
Kriss Hart, President and CEO Juneau Hydropower Inc.
Lieutenant Governor Kevin Meyer
AIDEA and AEA Board of Directors
Curtis W. Thayer, AEA Executive Director
TW Patch, AEA Director of Planning
Bryan Carey, AEA Hydro Group Manager
Stefan Saldanha, Alaska Department of Law
Dean D. Thompson, Kemppel, Huffman and Ellis, P.C.
Michael Jungreis, Reeves Amodio LLC
FEDERAL ENERGY REGULATORY COMMISSION
Office of Energy Projects
Division of Dam Safety and Inspections - Portland Regional Office
805 SW Broadway, Suite 550
Portland, Oregon 97205
(503) 552-2700 Office
4/16/2020
In reply refer to:
P-13563-AK
VIA Electronic Mail
Mr. Duff W. Mitchell
Juneau Hydropower Inc.
duff.mitchell@juneauhydro.com
SUBJECT: BOC Meeting Nos. 2 and 3 Reports and Supporting Documentation,
Sweetheart Lake Project
Dear Mr. Mitchell:
This is to acknowledge the following items regarding preliminary design of the
Enabling Works, Phase 1 Dam Design, and the Board of Consultants (BOC) Reports for
the Sweetheart Lake Hydroelectric Project, FERC Project No. 13563:
Date Submitted Item(s)
June 8, 2018 July 2017 Field Investigation Report (2017 Report)
January 25, 2019 December 2018 Seismic Refraction Survey Report
March 24, 2019 2nd BOC Report
June 4, 2019 Enabling Works Design Report
July 8, 2019 3rd BOC Agenda
August 8, 2019 3rd BOC Report
We have reviewed the submitted items and have the following comments:
1. Previous reports concluded that there was deep seated slope failure in the vicinity
of the lower power tunnel portal and powerhouse site. However, the 2017 Report
indicated that that some of these features were believed to be the result of glacial
erosion rather than deep-seated slope failures based on the LIDAR interpretation.
The failure mechanism for these features will need to be verified and addressed
accordingly prior to completion of the final design.
2
2. As stated in the 2nd BOC Report, we are willing to consider a phased design
approach to construction. However, as stated in our June 27, 2018 letter, we
discourage using too many phases as this could potentially cause issues with our
review and could delay the schedule.
3. We find the assumptions made in the Enabling Works Design Report to be
acceptable. The rock-concrete friction angle will need to be verified prior to final
design and construction.
4. The design drawings included with the Enabling Works Design Report are
preliminary. We will not formally comment on the design drawings until the final
design set has been submitted.
5. The 3rd BOC Report stated that the Board concurs that relocating the dam site
approximately 100 feet downstream has resulted in improved conditions for the
foundation. While we concur that it appears to be a better site location, adequate
geotechnical investigation has not been conducted in the proposed dam area.
Therefore, additional geotechnical investigations are necessary before final design
of the dam at the new location can be accepted.
6. The 3rd BOC Report stated that based on the results of the work completed that
construction of the Enabling Works (dock, access, tunnel portals, and tunnel) can
proceed. However, the final design for all these features must be submitted to this
office for our review and authorization to begin construction.
7. The revised design incorporates a closer spacing between the power tunnel and
the diversion tunnel as opposed to the previous option in which they were
positioned further apart. It was noted that an adequate distance between tunnels
will be necessary to avoid leakage between the two. This should be addressed in
the final design.
8. We do not have any comments regarding the other submittals at this time.
The Commission strongly encourages electronic filing. Please file submittals to
this office using the Commission’s eFiling system and, if required, provide two hard
copies to this office. The Hydropower Filing Guide, which is available at the web address
below, contains information on how to use the eFiling system and guidance on which
dam safety submittals require hard copies.
https://www.ferc.gov/industries/hydropower/safety/guidelines/filing-guide.pdf
3
Note: The Portland Regional Office is currently encouraging extended telework
for all staff due to COVID-19. While the office will be OPEN during this time, there may
not be staff present in the office at all times during regular business hours. Since we will
have limited physical presence in the office, we are temporarily suspending the
requirement to send 2 hard copies of the items listed in the Hydropower Filing
Guide. For several types of submittals, we request that you prepare and set aside the
hard copy so you can provide it to us after we return to normal operations; these
items include construction plans and specifications, Public Safety Plans, Emergency
Action Plan Reprints and Revisions, and Supporting Technical Information
Reprints and Revisions. If you have a large document that cannot be e-filed, we request
that you coordinate directly with the project engineer, listed below, to ensure that we are
able to receive the filing.
Thank you for your continued cooperation relative to project safety. If you have
any questions, please contact Mr. Glenn Koester of this office at (503) 552-2721.
Sincerely,
Douglas L. Johnson, P.E.
Regional Engineer
April 24, 2020
Dana Pruhs, Chair
Alaska Energy Authority
813 West Northern Lights Blvd
Anchorage, AK 99503
Chairman Pruhs,
After previously coming to agreement on the body and ratemaking provisions of a transmission services
agreement between Alaska Electric Light and Power Company (AELP) and Juneau Hydropower, Inc. (JHI) ,1 on
January 21, 2020, AELP submitted to JHI a proposal to resolve all remaining interconnection agreement issues
between the parties.
Shortly thereafter, Kriss Hart met with me and notified me that he had been named the President and CEO of JHI,
and that he wanted time to get up to speed on the documents and issues; he stated that once he had done so, JHI
would respond to AELP’s January 21, 2020 proposal.
Yesterday we received a copy of JHI’s letter to you in which Mr. Mitchell stated that JHI would soon be responding
to AELP’s proposal, and just minutes ago, we received JHI’s counter-proposal. We will continue to work with JHI
to resolve the remaining issues. As always, AELP remains willing to come to agreement with JHI, as long as the
interests of AELP’s customers are protected.
I note that Bryan Carey, AIDEA’s Project Manager for the Snettisham Hydroelectric Project, has been involved
from the outset in the negotiations, and I reiterate that there are negotiating topics between AELP and JHI which
involve assets which are solely owned by AELP.
Sincerely,
Constance Hulbert
President and General Manager
cc: Dennis Vermillion, Avista President and CEO
Kriss Hart, President and CEO Juneau Hydropower, Inc.
Lieutenant Governor Kevin Meyer
AIDEA and AEA Board of Directors
Curtis W. Thayer, AEA Executive Director
TW Patch, AEA Director of Planning
Bryan Carey, AIDEA Project Manager for Snettisham Hydroelectric Project
Stefan Saldanha, Alaska Department of Law
Dean Thompson, Kemppel, Huffman and Ellis, P.C.
Michael Jungreis, Reeves Amodio LLC
1 Other exhibits, including detailed operating requirements, remain to be agreed upon.
1
From: Connie Hulbert <Connie.Hulbert@aelp.com>
Sent: Monday, May 4, 2020 3:29 PM
To: Duff Mitchell <duff.mitchell@juneauhydro.com>; Dana Zentz <dzentz@fishbayresources.com>
Cc: Curtis W. Thayer <cthayer@akenergyauthority.org>; TW Patch <TPatch@akenergyauthority.org>; Bryan Carey
<bcarey@akenergyauthority.org>; Kriss Hart <kriss@wmc2775.com>; Dean Thompson <ddt@khe.com>
Subject: [ External Outside Email ] RE: ** EXTERNAL ** follow up
Dana and Duff:
AELP is reviewing JHI’s counterproposals set forth in your April 24, 2020 letter. We will respond
when that review is complete. In the meantime, I wanted to respond to some of the other
suggestions in your letter.
JHI suggestion: In moving forward with discussions, JHI proposes to incorporate the following:
1. That all future meetings be recorded so that it is clear what the parties agree to
verbally can accurately be reflected in the written documents prepared by counsel.
AELP Response: We have discussed this internally and with legal counsel. AELP does not agree to
recording our meetings or teleconferences. First, there have not been any problems with Dean and
Mike accurately reflecting agreement points in the contract drafts. Second, we believe that recording
confidential contract negotiations will inhibit candid discussion and “thinking out loud” exchanges,
which will likely only delay the parties reaching agreement on the few outstanding issues. All
participants are free to take as detailed notes as they desire. That should be sufficient.
Regarding your proposal of using a video platform: we find it much easier to focus on detailed topics
when we aren’t trying to engage in video interactions at the same time. AELP prefers to continue
with telephonic meetings, thank you.
JHI suggestion:
2. Given that the State of Alaska is the owner on record for the Snettisham
transmission facilities and has the certificate of public convenience for the facilities, the
beneficial role of the State must be recognized in this case and optimized. It is important
therefore to JHI to have AIDEA/AEA involvement in the interconnection agreement and
AIDEA/AEA’s complete understanding and support of the other agreements as this will expedite
the Regulatory Commission of Alaska's approval.
2
3. Relating to our upcoming discussions, we are happy that AEA has hired TW Patch, an
esteemed former Chairman of the Regulatory Commission of Alaska. Among his other duties,
JHI expects him to closely follow the discussions to provide constructive and impartial input for
prompt resolutions. His insights and experience will be beneficial as the Parties work toward
mutually acceptable resolution of the outstanding issues and the public interest.
AELP Response: Regarding Item 2: As we have stated on numerous occasions during our
negotiations, AELP recognizes AIDEA’s interest in the JHI interconnection to the Snettisham
transmission line pursuant to the rights and obligations of the Snettisham contracts between
AIDEA and AELP. As you know, AIDEA’s Snettisham Project Manager, Bryan Carey, has been on
most of our negotiation teleconferences and included on the contract draft distribution list. It
isn’t clear to AELP what else JHI is proposing by "have AIDEA/AEA involvement in the
interconnection agreement,” but we agree that it would be beneficial to have AIDEA’s support for
the Snettisham-related portions of the Interconnection Agreement that AELP and JHI agree
upon.
Regarding Item 3: Again, AELP has welcomed Bryan Carey’s attendance on the confidential
AELP/JHI teleconferences. Similarly, AELP does not object if Mr. Patch also wants to attend and
participate in those teleconferences.
Connie Hulbert
President and General Manager
Alaska Electric Light and Power Company
5601 Tonsgard Court Juneau, AK 99801
(907) 463‐6313 voice | (907) 463‐3304 fax
CONFIDENTIALITY NOTICE: The contents of this email message and any attachments are intended solely for the addressee(s) and may contain
confidential and/or privileged information and may be legally protected from disclosure. If you are not the intended recipient of this message or an agent
of the intended recipient, or if this message has been addressed to you in error, please immediately alert the sender by reply email and then delete this
message and any attachments.
From: Duff Mitchell <duff.mitchell@juneauhydro.com>
Sent: Friday, May 1, 2020 10:14 AM
To: Connie Hulbert <Connie.Hulbert@aelp.com>
Cc: Curtis Thayer <cthayer@akenergyauthority.org>; TW Patch <tpatch@akenergyauthority.org>; Bryan Carey
<bcarey@akenergyauthority.org>; Kriss Hart <kriss@wmc2775.com>
Subject: ** EXTERNAL ** follow up
Good Morning Connie,
I would like to follow up from our letter that we sent you a week ago and request an update. We would like to begin re-
engagement and reconciliation of the outstanding issues. Therefore, please provide me an update when you are able in
response to the modifications of our positions.
3
Secondly, and as a go forward, we are proposing video meetings and we are reaching out to you to see what platforms
you are familiar with so we can have AEA, JHI, and AELP/Avista members participate effectively and efficiently regardless
of location and simultaneously being respectful of social distancing. Zoom or other?
Thank you,
Duff
Duff W. Mitchell
Managing Director
Office Phone 907-789-2775
Cell Phone 907-723-2481
duff.mitchell@juneauhydro.com
The information in this email (and any attachments hereto) is confidential. If you are not the intended recipient, you must
not use or disseminate the information. If you have received this email in error, please immediately notify me by "Reply"
command and permanently delete the original and any copies or printouts thereof.
Award No Project Name DC Funding Perf. Period Beg Perf. Period Thru Actions Since Last Report01349-09 RPSU - Togiak-Twin Hills Intertie 4,187,221 2/15/2011 9/30/202101432-08 BFU - Tatitlek 1,472,000 6/1/2013 12/31/202001473-06 RPSU - Clark's Point 2,819,700 6/16/2015 6/30/202001474-06 BFU - Chalkytsik 517,500 6/16/2015 12/31/202001485-04 START Communities Tech Asst 375,000 11/1/2015 6/30/202201492-07 BFU - Beaver 608,000 7/6/2016 12/31/202001500-05 Bulk Fuel Operator Training 750,000 9/1/2016 12/31/202001515-06 Circuit Rider Program 600,000 1/1/2017 12/31/202001516-06 RPSU - Maintenance & Improvement 748,776 10/1/2016 12/31/202001523-05 Miscellaneious Small M&I Projects 520,000 6/1/2017 12/31/202001524-03 RPSU - Port Heiden 1,250,000 7/1/2017 6/30/202001525-04 Power Plant Operator Training 467,514 8/15/2017 9/30/202001544-03 Itinerant Utility Training 500,000 3/1/2018 6/30/202101548-04 RPSU M&I - Statewide 2,550,000 5/1/2018 12/31/202001549-03 RPSU Inventory & Assessment - Statewide 300,000 4/18/2018 9/30/202001550-02 RPSU - Akhiok 1,500,000 5/1/2018 12/31/202001551-04 RPSU - Venetie 250,000 5/1/2018 12/31/2020 Date Extended 01557-02 Barge Headers and Fill Lines 3,976,820 10/1/2018 12/31/202201571-00 BFU - Nunapitchuk 1,852,546 8/15/2019 12/31/202101573-01 BFO In Community Training 40,000 8/15/2019 12/31/2020 Date Extended 01574-00 RPSU - Nikolai 351,050 8/1/2019 12/31/202001575-01 RPSU - Nelson Lagoon 135,455 8/1/2019 12/31/2020 Date Extended 01576-00 RPSU - Rampart 351,050 8/1/2019 12/31/202001577-00 RPSU - Napaskiak 135,455 8/1/2019 12/31/2020 Date Extended 01589-00 2020 Rural Energy Track 10,000 1/1/2020 3/31/2020 In close-out01592-00 BFU - Scammon Bay 300,000 2/17/2020 3/31/2021Total Funding for Active DC Awards:26,568,087 Less Total Spending on Active DC Awards:(11,627,173) Total Funding Remaining on Active DC Awards:14,940,915 Active Denali Commission AwardsAs of 05/06/2020
April 16, 2020
Governor Sean Parnell
Senator Mark Begich
Economic Stabilization Team
Dear Sean and Mark,
Attached, you will find the Railbelt electrical system stimulus proposal developed as a
collaborative effort among all six Railbelt utilities. This proposal uses the excess payments
contemplated under the Bradley Lake Hydroelectric, Project Power Sales Agreement to fund,
via the Railbelt Energy Fund, needed and beneficial Railbelt energy projects. These projects are
nearly shovel-ready and will provide immediate economic stimulus in engineering, permitting,
and subsequently, construction.
We are forwarding this proposal to the currently appointed/selected members of the
Implementation Committee (IC) of the Railbelt Reliability Council (RRC) that includes a variety
of perspectives including independent power producers, state agencies and a consumer
advocacy representatives. At this point, the IC is not yet fully formed; however, in order not to
delay your process, we will submit any comments the existing members may have in a follow-up
letter to the economic stabilization committee.
We would like to thank Governor Dunleavy and the administration for the opportunity to submit
this proposal, and to specifically thank Curtis Thayer and his staff at the Alaska Energy Authority
and the Department of Law for their leadership and assistance in formulating a plan for
addressing the Soldotna to Quartz acquisition and reconstruction.
If you have any questions or comments, please feel free to contact me directly at (907) 351-
1212.
Sincerely,
Tony Izzo
on behalf of the Bradley Project Participants
Bradley Lake Economic Stabilization Proposal
Page 1
Bradley Lake Hydro Electric Transmission Integration Projects
Executive Summary
The project list in Table One (below) represents the Bradley Lake Project Management Committee's
(BPMC) priorities for reliably integrating the Bradley Lake Hydro Electric Project (the Project) into the
Railbelt Grid. As discussed later, these projects have been recognized as necessary for complete project
integration since the 1980s1. These projects will provide significant short-term economic stimulus, as well
as long-term benefits. The short-term economic impact will result from jobs in permitting, engineering,
procurement, and related fields, and then in construction and construction support as we bring these
projects on-line. Sustainable long-term benefits will accrue to Railbelt electricity consumers for decades
to come in the form of reduced fuel consumption, increased ability to integrate non-dispatchable renew-
ables (NDRs), reduced emissions, and increased reliability. From a broader perspective, a more sustaina-
ble lower-cost energy mix will promote regional economic growth well into the future.
These projects require approximately $464 M of funding to complete the entire suite of projects. The
Bradley Lake participants urge the Governor to instruct AIDEA issue a $185M bond offering, using the
Bradley Lake Excess Payments2 of approximately $12.5M/year, through the Railbelt Energy Fund (REF), as
a backstop. After careful review of the project status and shovel readiness, and considering the effect on
consumer electricity rates, the participants have agreed to initiate two projects, and two studies. First,
$70 M for the acquisition and reconstruction (to 230kV) of the Soldotna to Quartz Creek line; and second,
$ 115 M funding for the installation of grid stabilization batteries in each of the regions, the Kenai, An-
chorage Mat-Su and Fairbanks. The two studies consist of a Railbelt Reliability Council (RRC) led Railbelt-
wide Integrated Resource plan3 that will include the re-work of the purpose and need study for the sec-
ond intertie between Anchorage and the Kenai, and other regional solutions including: traditional hydro-
electric, pumped hydro storage, demand side management, other dispatchable and non-dispatchable re-
newables ($2.5M); and, an evaluation of the grid stabilization batteries including design and control anal-
ysis ($1M). Funding these projects will require the use of approximately $10 of the $ 12.5 M in annual
Bradley excess payments4. The Participants respectfully request that the Executive Branch-through AEA,
and the Alaska Legislature retain the remaining $2.5M/yr. (plus accrued interest) to accumulate in the
REF. These funds will be used to fund the remaining transmission integration projects as the relevant
studies are completed. The remaining projects in the integration suite will be further defined and priori-
tized by these studies; and, then finished as funding through the REF and internal Participant’s Capital
Improvement Programs allow.
Fully integrating the Bradley Project into the Railbelt will finally complete this very successful project
which the State and the utilities jointly began over three decades ago.
1 Kenai City Council minutes 2-6-1991, example ARECA Article, HEA letter of support, Kenai City Council 1-15-19 letter to Ak. leg-
islature and resolution 91-2. In addition, significant legislative testimony can be found in the history of the fourteenth and fif-
teenth Alaska State Legislatures, particularly around the passage of Senate bill 468 and House bill 699, and in the text of the Pro-
ject TSA and PSA.
2 Section 29 of the Bradley Lake Power Sales Agreement (see below)
3 To the degree that the efforts related to the IRP are consistent with the recitals of the Transmission Services Agreement and
Section 32 of the Power Sales Agreement, or more broadly to unconstraining Bradley Lake.
4 In today’s economic conditions $12.5M per year will finance roughly $230M (3.5% interest over 30 yrs).
Bradley Lake Economic Stabilization Proposal
Page 2
These projects, as discussed above, will achieve the benefits of reduced fuel, increased reliability, im-
proved integration of non-dispatchable renewables, lower carbon emissions, and the economic stimulus
provided by these projects5. Quantifying these specific benefits under current and projected economic
conditions will require time and will be performed, as needed, as these projects move through their
study and permitting stages.
Irrespective of the proposed studies or future studies, numerous studies of the past thirty years have
shown that this suite of projects has a benefit to cost ratio significantly greater than one, and we are con-
fident that updated studies will reach the same conclusions.
We support the administration moving forward on this as quickly as practical.
Background
The Bradley Lake Project (Project) is owned by the State of Alaska and managed by the BPMC. The BPMC
is comprised of the Alaska Energy Authority (the project owners' representative) and the representatives
of the project off-takers (the Participants)., Chugach Electric Assn. Inc. (Chugach), Golden Valley Electric
Assn. Inc. (GVEA), Municipal Light and Power (ML&P), Seward Electric System (SES), Homer Electric Assn.
Inc. (HEA), and Matanuska Electric Assn. Inc. (MEA). The Project is managed under a series of interlinked
agreements including the Power Sales Agreement (PSA), the Power Bond Resolution, The Agreement for
the Wheeling of Electric Power and Related Services (TSA), the Transmission Sharing Agreement Agree-
ment-as amended, The Amendment for the Sale of Transmission Capability (CA) and numerous subordi-
nate operations and maintenance agreements. The Participants have "take or pay" Project output shares
and, as such, pay all of the costs of the project, including AEA administration. The utility shares of the
Project were based on relative retail electrical loads at the time the project was initiated are as follows:
• Chugach 30.4 %
• Golden Valley 16.9 %
• ML&P 25.9 %
• HEA 12.0 %
• MEA 13.8 %
• SES 1.0 %
Current Delivery System
Currently, the Project's power is delivered through the HEA system to a single 115kV line transmission line
that runs from Soldotna Substation, just east of the city of Soldotna, to University Substation located near
the intersection of Tudor Road and Elmore in Anchorage. In Figure One, below, this is the lime colored line
running from University Substation (see the inset) to Quartz Creek and the Southern-most yellow line run-
ning from Quartz Creek to Soldotna. The northern-most yellow line from Quartz creek to Soldotna repre-
sents the 69kV line, which has been retired and was limited to 15 MW of transfer capability. The 69kV
Right-of-Way still exists and may be useful in executing the 230kV conversion.
The line segment from Quartz Creek Substation to Anchorage was originally constructed in the 1960s to
deliver Chugach's Cooper Lake Hydroelectric Project energy to Chugach members in Anchorage. The Orig-
inal line was limited to 40MW of transfer capability. This line section was tapped in several locations to
5 Non- dispatchable renewables, aka NDRs, are resources such as wind and solar, which generate power based on conditions
(weather) outside the control of the dispatch center. In order to maintain the Generation-Load Balance, and thus system fre-
quency, NDR’s must be balanced by controllable resources such as hydro or thermal generating units
Bradley Lake Economic Stabilization Proposal
Page 3
serve the communities of Cooper Landing, Moose Pass, Seward, Summit Lake, Hope, Portage/Whittier,
Girdwood, and Indian.
The University to Quartz Creek line was upgraded to 75 MW of transfer capability in the 1990s to facilitate
Bradley Lake transfers. The line is currently at maximum capacity for its voltage class and length, and to
further increase transfer capability, Chugach is converting it to 230kV as line sections require reconstruc-
tion, this conversion is approximately 40% complete.
In the early 1980s, the line section from Quartz Creek to Soldotna was upgraded from 69kV to 115kV, by
the addition of a parallel 115kV line. HEA and Chugach originally constructed this line section to provide
access to each other's systems under the-long term wholesale power contract that terminated in 2013.
This line was originally rated at 40 MW, as well, and later upgraded to 75 MW by the Project. This line was
tapped in the early 2000s to feed the community of Sterling. The Soldotna to Quartz Creek line section is
the line section that was removed from service during the Swan Lake fire, causing the northern Participants
to burn millions of dollars in additional fuel in the summer, fall, and winter of 2019.
The Project has a capacity of 120 MW. However, due to transmission losses, mostly on the University to
Soldotna line, the Project is normally operated below 90 MW, unless it is spilling or in imminent danger of
spilling. Spill is the condition where the Lake becomes so full that water "spills" over the dam; this water is
wasted, as it could have been used to make electricity. Bradley Lake has spilled or been in imminent spill
seven out of the last ten years.
Figure One
Bradley Lake Economic Stabilization Proposal
Page 4
The Constraint
The current constraints on the project, caused by the lack of a second higher-rated transmission system,
are that:
1. Transfers off the Kenai are limited to 75 MW. There are over 300 MWs of generation capacity on
the Kenai, and there is 40 to 80 MW of load depending on the season. Over 200 MW of generating
capacity, albeit much of it lower efficiency, is stranded on the Kenai most of the time.
2. When the 120 MW Project is operated above 90 MW, losses on power delivered to University
Substation reach 40%; therefore, we limit the normal project operation at 90 MW. The capacity
limitation reduces regional Hydroelectric capacity by 30 MW. We can increase hydro, thermal, and
NDR optimization if we free-up this additional 30 MWs of Hydroelectric resource. For context, the
Eklutna Project is a 40 MW resource, and the Cooper Lake Project is a 20MW resource. Further,
the addition of grid stabilization batteries will enhance this NDR integration capability and dampen
the damaging natural frequencies that result from disturbances on the grid including the loss of
the University to Soldotna line under heavy Bradley import.
3. We cannot deliver any Project power to the northern Participants when any section of the Univer-
sity to Soldotna line is out of service, for any reason. These outages cause multiple inefficiencies
and reliability challenges:
a. To maintain reliability, HEA must run an additional gas-fired unit, out of economic merit
order, plus one Bradley unit. In this scenario, the Kenai Island is less efficient and less reli-
able. In normal operating mode, due to tunnel dynamics, Bradley Lake alone is not capable
of regulating system frequency.
b. The amount of energy HEA is capable of absorbing limits the output of the Project , thus
increasing the chance of Project Spill.
c. The northern Participants must run less efficient gas-fired units to meet their loads.
d. The communities served off the line are subject to complete loss of power upon the loss
of any other section of the line.
e. The smaller systems formed from the separation of the Kenai and the northern systems
are less stable and more susceptible to cascading blackouts.
Historical Context
As discussed, the projects detailed in this document represent the BPMC's priorities in terms of eliminating
the 75MW single-contingency constraints on the Project, and reliably integrating the Project into a regional
Railbelt transmission grid. As noted above, these shortcomings were understood, and these improvements
have been contemplated since the original development of the Project as early as the 1980s. The introduc-
tory clause to the TSA (December 8, 1987) reads6,
"… WHEREAS, the Parties anticipate that the State of Alaska will take action to use
monies in the Railbelt Energy Fund to fund construction of the transmission facilities
6 Services Agreement for Bradley Lake Energy, pp 1-2, 12-8-1987
Bradley Lake Economic Stabilization Proposal
Page 5
required by the Parties for the purposes, among others, of obtaining delivery of the power
purchased under the Power Sales Agreement, reducing the effective cost to the Parties
and their electric ratepayers of power from the Project, or otherwise benefitting the elec-
tric ratepayers of the Parties for whose benefit the Railbelt Energy Fund was created; and
WHEREAS, construction of the electric transmission facilities sought by the Parties
has not yet been authorized or funded by the State of Alaska; and
WHEREAS, under the circumstances, participation in the Project by all of the Par-
ties can reasonably be achieved only if some alternative solution to the problem of trans-
mitting or otherwise utilizing Project power is devised by the Parties, such alternative ar-
rangements to be terminated if and when adequate alternate transmission facilities are
constructed; and
WHEREAS, the Parties have determined that this Agreement represents an alter-
native solution to the problem of transmitting or otherwise utilizing Project power in the
immediate future, and the best solution that the Parties can agree upon at the present
time after good faith negotiation; and
WHEREAS, the Parties recognize that this Agreement will be superseded by other
arrangements upon construction of certain additional transmission facilities, which all Par-
ties seek, and potentially by agreement among the Parties upon a system of power pooling
of the generation of all Parties, which Chugach and certain other Parties seek;
NOW THEREFORE, IN CONSIDERATION of the mutual covenants set forth herein, the Par-
ties agree as follows…"
Further Section 32 of the PSA (also December 8, 1987) states:
"Section 32. Efforts to Obtain Intertie. The Purchasers recognize the importance of
the completion of a satisfactory high-capacity Fairbanks to Kenai Peninsula transmission
intertie, and of full $218 million funding for the Project, and agree to continue all reason-
able efforts to obtain sufficient state funding for such transmission intertie and Bradley
Lake."
Studies have shown these transmission projects to have significant regional public benefits many times in
the three decades since the commissioning of the Project. These benefits come from both a reliability
and an efficiency perspective. Exhaustive studies have been completed to evaluate reliability benefits,
economic dispatch benefits, socioeconomic benefits, and environmental impacts. In October of 2002, the
Southern Intertie (a somewhat different in design than current thinking) received a positive Record of De-
cision (ROD) by the Rural Utility Services (RUS), the lead agency in the multi-year Environment Impact
Statement (EIS) process.
However, the projects were never built. The failure to construct these valuable assets is primarily due to
the misalignment of regional benefits to regional costs under the current utility structures. This cost allo-
cation challenge has continued to impede completing the projects, for nearly 30 years. However, for all
practical purposes, the participants share allocation as agreed to in PSA Section 29 combined with the
retirement of the GO bonds removes this impediment and, when combined with the current interest rate
Bradley Lake Economic Stabilization Proposal
Page 6
environment, creates a nearly ideal environment in which to see these beneficial projects through to
completion using the proposed annual payment stream.
The Project was originally funded half by general obligation (GO) bonds ($165 M) and half by State grant
funds ($163 M)7. The Project developers, advised by the Railbelt Energy Council, envisioned that once the
GO bonds were paid off, the participants would continue a payment stream to the Railbelt Energy Fund
(via AEA, APA at the time) 8. Contractually this funding source was to be dedicated to the purpose of con-
structing transmission facilities in the Railbelt. This contractual mechanism side-stepped the question of
one legislature binding a future legislature, and there is little discussion of this in the record. However, as
noted, this funding concept was a recommendation of the REC, a council authorized and directed to
make such recommendations in SB 468 of the Fourteenth Legislature.
As envisioned, the anticipated payment stream would be roughly equivalent to the debt service payment
stream on the original GO bonds, less any bonds issued for Required Project Work (a defined term in the
PSA), and capped at $40/MWH. Currently, there are no bonds issued for Required Project Work. The PSA
contemplates a stream of payments roughly equivalent to the debt service on the original $165M in GO
bonds, which is currently calculated at approximately $12.5 M. This $12.5M equates to somewhere be-
tween $31.00 to 33.00 /MWH adding the Bradley Wheeling rate of 8.90/ MWH, this value falls below the
40/MWH cap for delivered energy. Section 29, the "Excess Payment" Section of the PSA9 reads as fol-
lows:
(a) Payments in Recognition of Efforts to Obtain Intertie. In recognition of the
Railbelt Energy Council's commitment to continue efforts to obtain a satisfactory transmission in-
tertie between Fairbanks and the Kenai Peninsula, and the Railbelt Energy Council's recognition of
the importance of such an intertie to the well-being of the Railbelt region and the Purchasers' rate-
payers, and in anticipation of legislative funding of such an intertie, the Purchasers agree to make
the payments described below in excess of actual debt service required for retirement of Bonds
issued to pay Recoverable Construction Costs. The Purchasers' obligations to make payment under
this Section 29 are not contingent upon the success of such continued efforts to obtain a satisfac-
tory transmission intertie between Fairbanks and the Kenai Peninsula.
(b) Calculation of Excess Payment Amount. Subject to the limitations
set forth in Sections 29(e) and 29(f), upon the retirement of all Bonds issued to pay Recov-
erable Construction Costs (and of all Bonds issued to refund such Bonds) and the conse-
quent reduction of Debt Service includable in Annual Project Costs, there shall be added
to and included in Annual Project Costs an amount (the "Excess Payment Amount") calcu-
lated as follows:
(i) The average annual Debt Service on such retired Bonds, less
7 Legislative Research Report, A History of Major Energy Appropriations Including the Railbelt Energy Fund, Report #
15.008 pp 5, 8-14-14
8 Review of the record of the fourteenth and fifteenth Alaska Legislatures indicates that the Railbelt Energy Council
(REC) was a 13-member board authorized in fourteenth( 85-86) legislature, through SB 468 and HB 699 (the same
legislation that established the Railbelt Energy Fund) made up of three senators, three house members and the
seven utilities representatives. The REC had one-year life and was charged with creating an energy plan for the Rail-
belt and reporting back to the fifteenth (86-87) legislature.
9 Bradley Lake Power Sales Agreement pp 28-29, 12-8-87
Bradley Lake Economic Stabilization Proposal
Page 7
(ii) any debt service included in Annual Project Costs that is associ-
ated with bonds or other debt issued to fund Required Project Work.
In no event shall the Excess Payment Amount be negative.
(c) Payment of Excess Payment Amount. Each Purchaser shall pay its
Percentage Share of the Excess Payment Amount as part of that Purchaser's Annual Pay-
ment Obligation so long as that Purchaser continues to purchase Project power under this
Agreement or any renewal thereof.
(d) Disposition of Payments. All Excess Payment Amounts received
from Purchasers, and all additional charges paid pursuant to Section 29(b), shall be paid to
the Authority for deposit into the Railbelt Energy Fund.
(e) Limitation. Notwithstanding any other provision of this Section 29,
no Purchaser's Annual Payment Obligation shall include a charge with respect to any Ex-
cess Payment Amount in excess of four cents ($0.04) per kilowatt hour of Project power
delivered to such Purchaser.
(f) Duration. The provisions of this Section 29 shall not serve to ex-
tend the term of this Agreement or any renewal thereof, and shall cease to be effective
upon the expiration or termination of this Agreement (as the same may be extended
through any renewal thereof).
In relative terms, this payment stream, at today's interest rates, amortized over 30 years, could finance
roughly $230 M. The S-Q line and the Grid Stabilization Batteries project will be fully funded through the
Bond issue.
The Projects
The combined suite of priority transmission projects contemplated by the BPMC are:
• A second intertie from Anchorage-MatSu region to the Kenai Peninsula
• An upgrade of the existing Kenai 115kV transmission line from University to Soldotna Substation
to 230kV
• The addition of an intertie transfer capability, grid stabilization, battery in the Anchorage-MatSu
region
• For completeness sake, a fourth, future project is included in Table One. This project Bradley
Soldotna 115 kV lines and Substation additions most likely will be required if the electrical load in
the Kenai area grows significantly, for example, with the addition of a Large LNG plant at Nikiski.
Given the integrated nature of a transmission grid, the full benefit of these projects flows from the com-
pletion of the entire suite of projects. Individually each provides some benefit, but the Railbelt will
achieve the maximum benefit through completion of the entire integration.
This suite of projects when combined will provide an additional 30 MW of hydroelectric capacity to the
region; reduce losses significantly; increase the ability to regulate non-dispatchable renewables by
Bradley Lake Economic Stabilization Proposal
Page 8
increasing access to hydro; reduces the potential for costly single contingency outages, and improves the
ability to optimize the system's economic dispatch. Single contingency outages result in hundreds of
thousands to millions of dollars of additional fuel costs annually. Recently this single contingency chal-
lenge was highlighted by the Swan Lake Fire; however, the Railbelt incurs these types of inefficient costs
whenever the existing line must be removed from service for maintenance and repair these extended
outages occur on a bi-annual basis.
A stimulus funding package providing $185M in funding combined with the PSA Section 29 assured pay-
ment stream will, over time, ensure completion of these regional projects. It will result in significant ben-
efits to the Railbelt consumers both during the construction phase and following in the operational pe-
riod. As noted above, these projects yield immediate economic benefits, as well as sustainable benefits
like reduced fuel consumption, reduced emissions, and increased reliability and economic growth.
Appendix A provides some background on the Benefit pools associated with these and other transmis-
sion-related projects in the Railbelt.
Bradley Integration Projects and the Railbelt Reliability Council (RRC).
Under the current vertically integrated utility business model, developing inter-regional (Fairbanks - An-
chorage/Matsu - Kenai) projects has been a significant challenge over the past thirty years. These Bradley
projects are no different. The six Railbelt utilities pulled out of the Southern Intertie due to differences in
regional sharing of the risk of potential cost overruns (among other differences). The Northern Intertie
from Healy to Fairbanks was constructed solely by GVEA, used a Railbelt Energy Fund State grant after the
other five utilities pulled out primarily due to differences over cost allocation relative to perceived benefit.
This challenge has spurred the six Railbelt utilities, the RCA, and the Alaska Energy Authority to come to-
gether with stakeholders to develop a statutorily mandated integrated regional planning effort. This effort
is ongoing, and with the signing of the RRC MOU in December of 2019 and the passage of SB 123 in March
of 2020, we are well on our way to establishing the integrated reliability and planning council, the RRC.
The utilities continue to support this process fully and are working to develop and integrate new voices
and processes into our planning.
In the Legislative testimony by several utilities and stakeholders, both written and in-person, surrounding
the drafting of SB123, the utilities raised the question "how will an in-process projects be treated under
SB123?" 10. Our concern at the time was, and remains, will necessary projects be held up by the RRC devel-
opment process, or will they be allowed to continue? Given the historical need and context of this suite of
Bradley integration projects, we consider them to be in process and believe that the RCA and the majority
of stakeholders will support us in this effort.
It is unlikely that the RRC as an organization will be established and technically proficient in the timeframe
required to execute the projects and studies proposed for current funding. However, we believe that the
proposed projects and studies can be planned parallel to the development of the RRC with the support of
the RRC Implementation Committee. Any projects that are subsequently identified in the RRC's IRP will
benefit from increased grid stabilization and reduced losses achieved by reconstruction of the S-Q line. To
realize their full benefit, from both a stimulus and a project optimization perspective, we will work with
our RRC colleagues in scoping and developing these projects and studies. The Legislature directed the RCA
10 Joint House and Senate hearing minutes, 1-27-20, 15:30 pm
Bradley Lake Economic Stabilization Proposal
Page 9
to write regulations to address in-process projects. We expect these will be drafted timely. We have re-
quested feedback from the RRC Implementation Committee, including RCA Commissioners, on this pro-
posal
The utilities believe that working cooperatively they can meet the challenges of future reliability, resiliency,
and efficiency, as they provide reliable, stably priced power to the Railbelt. Over the past several years,
with the cooperation of stakeholders, the Legislature, the RCA, and the Alaska Energy Authority, all six
utilities have been involved in intensive analysis and negotiations of the RRC. We believe that the RRC will
solve the long-standing, long-term, challenges that are associated with future inter-regional planning and
project development11. Using proven models, with long histories of success in the continental US, Canada,
and Mexico as a starting point, the utilities have sought to develop a consensus business model that meets
the Railbelt's unique conditions, plans, delivers projects, for the grid efficiently and rationally. Circum-
stances unique to the Railbelt, such as its geographical size and diversity, relatively sparse population, lim-
ited human and capital resources, are being incorporated into the results of these collective efforts. Com-
pleting the full integration of Bradley Lake into the regional grid will make the challenge faced by this new
organization less daunting and help ensure its long-term success.
Bradley Lake Integration Projects and Project Management
Railbelt utilities use a standard asset lifecycle model in the development of specific projects to achieve
broader plans. This lifecycle process consists of five phases:1) Identify and select, 2) Evaluate and Decide
3) Define and Scope, 4) Execute, 5) Operate and maintain. See Appendix B for additional detail on these
phases. Shovel-ready projects are the ones closest to the "Define and Scope" and "Execute" phase on the
project delivery timeline. The projects presented in this stimulus ranking are ones that precipitated to the
top as priorities for the Railbelt in terms of required repair and replacement, and highest Benefit /Cost
ratio.
Project Phase Status (%)
Project Phase Status, i.e., FEL 1, 2, 3, or 4, will be estimated by power system and economic analysis, design
effort, cost estimation, and permitting effort that has been completed to date and by the next steps re-
quired for the project to move forward. The project's completion status would be categorized by project
phase and percent complete in each stage, with conceptual projects categorized in the Identify and Select
Phase and "Shovel-Ready "projects either near the end of Define or in the lower percentiles of Execute
Phase. These phases are found in Appendix B.
Project Spend ($)
Project spend is high level and determined using typical Front-End Loading (FEL) for electrical utility pro-
jects.
Conclusion
Table One is the summary of projects, costs, and project status. Proposed project cost (as measured from
notice to proceed) is also provided.
11 Challenges discussed at length in the fourteenth and fifteenth Alaska Legislatures as they debated Bradley Lake,
establishment of the REC, Intertie funding through the Railbelt Energy Fund, and the Susitna dam project.
Bradley Lake Economic Stabilization Proposal
Page 10
These projects taken as a whole will fully integrate the Project and increase Railbelt electric grid reliability
and resiliency for decades. Completion of these projects will allow Railbelt operators to operate the system
at the most efficient "variable cost operating point" under all normal conditions and most "likely" single
contingencies (or single element outages). Dispatching the grid with these projects executed and incorpo-
rated into the grid will minimize fuel-consumption, and greenhouse gas emissions, optimize hydroelectric
resources against thermal units, and better facilitate non-dispatchable renewables such as wind or solar.
We strongly urge the administration to move forward on establishing funding for the requested projects
as quickly as practical.
Bradley Lake Economic Stabilization Proposal
Page 11
Table One
Bradley Lake Hydroelectric Project Integration List
1
Soldotna-Quartz 230kV Line
and Sub Additions UCB-SLD-QTZ 230L $70,000 5 3,500 24,500 21,000 11,000 10,000
2
Grid Stabilization Batteries -
Kenai-Anc/MatSu/Fairbanks UCB-46MW-BESS $115,000 3 38,333 38,333 38,333
Tbd Southern Intertie UCB-NIK/BEL(WZF)$185,300 5 37,060 55,590 74,120 10,000 8,530
Tbd University-Daves Creek 230 kV UCB-UNI/DVS-230L $57,500 3 14,375 28,750 14,375
Tbd University-Daves Substations UCB-UNI/DVS-SS $36,300 3 10,890 14,520 10,890
Total $464,100 93,268 158,063 162,348 31,890
TBD
Bradley -Soldotna 115kV Line
& Sub Addns UCB-BL/SLD-115L $50,000 4 2,500 17,500 15,000 15,000
Legend
Prioritization of Projects
These are repair and replace projects for existing infrastructure and are not evaluated on a traditional Benefit/Cost Basis
These are new projects evaluated on a traditional Benefit/Cost basis
Component Dollars
Total l Dollars
Descriptors
Spend
Year 5
($ 000)
Priority
code Project Identifier
Project Construction
Cost
($ 000)
Total Project Duration
(Years)
Spend
Year 1
($ 000)
Spend
Year 2
($ 000)
Spend
Year 3
($ 000)
Spend
Year 4
($ 000)
Bradley Lake Economic Stabilization Proposal
Page 12
Appendix A
Benefit Pools
Project Public Benefit and Shovel Ready Determination
The construction sequence of the Bradley integration projects will be prioritized based on two components,
the greatest public benefit and as near to shovel ready status as possible. The public benefit component
will include the weighted average of four variables:
Reduced fuel usage
Reliability (economic value of lost load)
Reduced emissions
Economic activity multiplier (effect on State GDP)
The Stimulus effect will be evaluated based on
Shovel ready status (proximity to execute phase)
Permitting effort and risk
This weighting can be accomplished in a two-stage process. The first four variables will be weighted ac-
cording to the firmness of the estimating methodology and the perceived certainty of achieving the ben-
efits. Generally, these rankings result in calculated fuel savings receiving the most weight; reliability
weighted next; emissions reductions ranked third, and economic activity multiplier ranked fourth. Given
the stimulus nature of this prioritization, next, this weighted benefit/cost ratio will then be compared to
the project's proximity to shovel ready status, permitting process, and near term spend.
Each of these project components works together to achieve reliability, economic, or social benefits in
part or as a whole. For evaluation purposes, we can allocate each project benefits based on its proportional
cost to total cost. Projects can be constructed in any sequence; however, some benefits may not accrue
until an entire group or subset of a group is completed.
Project Cost Estimates and Benefit/Cost Evaluation
Project Costs
The Project costs identified in Table One are only construction costs. However, in the Benefit/Cost evalua-
tion process, all costs, including O&M and Financing, will be used. Construction Work in Progress (CWIP)
will be assumed to be allowed in the utility rate base as individual components are completed and deemed
used and useful. The estimates provided are American Society of Cost Estimators (ASCE) class 3 and 4 esti-
mates except for those projects at the close of the Define Phase; for these project's these estimates are
ASCE class 2 estimates. These cost estimates are not weighted or adjusted.
Typical Benefit Pools
Bradley Lake Economic Stabilization Proposal
Page 13
Reduced Fuel Usage ($/yr.)
Reduced fuel usage is the public benefit derived from a more efficient economic dispatch12 of generating
units results from reduced fuel usage, variable O&M, and decreased emissions CO2. This data generally has
the highest weighting and is derived from production costing studies benchmarked against historical data.
In certain cases, these also include benefits associated with load and generation frequency regulation,
spinning reserve, and regulation of non-dispatchable resources such as wind or solar.
Average Value of Lost Load (VLL) ($/yr.)
The public benefit derived from reducing lost load is that of increased economic activity, usually reflected
in gross domestic product. The Value of Lost Load (VLL) is a monetary indicator expressing the costs asso-
ciated with an interruption of electricity supply to the greater economy. Among other things, VLL consists
of the opportunity cost of lost economic activity. VLL includes lost economic activity, damage to equipment,
and lost stock or supplies, all related to large regional outages. A Railbelt example might be the economic
harm to a community like Girdwood if a transmission line outage occurred during Spring- Break, one of
Girdwood's most profitable times of the year. Other representative drivers of VLL are shipments that must
be re-scheduled due to unanticipated delays, equipment damaged by power surges, and food lost due to
loss of power to a commercial freezer. There have been numerous studies both in North America and in
Europe to quantify this effect. This factor is usually ranked second in terms of relative weighting.
Reduced Emissions Tons of C02 ($/yr.)
The public benefit derived from reduced Greenhouse gas emissions is usually valued using the EPA stand-
ard valuation of approximately $12/ton and today's economic environment a 5% discount rate.
The social cost of carbon (SCC) estimates willuse the updated versions of the models reported in
the 2010 Technical Support Document (TSD). By way of context, the four13 2020 SCC estimates
reported in the 2010 TSD, in dollars per ton, were $7, $26, $42, and $81 (in 2007 $). The corre-
sponding four updated SCC estimates for 2020 are $12, $43, $64, and $128 (in 2007 $).
The SCC model updates that are relevant to the SCC estimates include an explicit representation
of sea-level rise damages in the DICE and PAGE models; updated adaptation assumptions, revisions
to ensure damages are constrained by GDP, updated regional scaling of damages, and revised
treatment of potentially abrupt shifts in climate damages in the PAGE model; an updated carbon
cycle in the DICE model; and updated damage functions for sea-level rise impacts, the agricultural
sector, and reduced space heating requirements, as well as changes to the transient response of
temperature to the buildup of GHG concentrations and the inclusion of indirect effects of methane
emissions in the FUND model. The SCC estimates vary by year, and the following table summarizes
the revised SCC estimates from 2010 through 2050.14
This variable is usually ranked third in terms of relative weighting.
12 Economic dispatch is the short-term determination of the optimal output of a number of electricity generation facilities, to
meet the system load, at the lowest possible cost, subject to transmission and operational constraints
13 For discount rates of 5%,3%,2.5% and 3%-95th percentile
14 EPA Interagency Working Group on Social Cost of Carbon, United States Government; Technical Support Document: Technical
Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866; Revised July 2015
Bradley Lake Economic Stabilization Proposal
Page 14
Economic Activity Effect of Lower Energy Prices ($/yr.)
The public benefit or cost derived from economic activity effect is the estimate of the likely effects of in-
creased electricity prices on economic production as measured by Gross State Product (GSP), and em-
ployment. Absent other sources, the data could be based on studies like the Gatton Study, a University
of Kentucky15 study that correlated energy prices with changes in GSP and employment. The study de-
veloped these correlations for the overall US economy, a group of energy-intensive states near Kentucky
(Kentucky, Tennessee, and Ohio) combined, and for Kentucky alone. The study's econometric model
evaluates the statistical causal relationship between energy use, energy price, employment and produc-
tion (measured in terms of GSP). The study used observations from each of the contiguous 48 states
from 1970 through 2010 (data from Alaska and Hawaii was excluded due to our unique climate and en-
ergy usage). In broad strokes, the economy of the Railbelt may be more similar to the study groups than
Alaska taken as a whole. We could apply the relationships found in the energy-intensive group to Alas-
kan GSP from the US Dept. of Commerce, Bureau of Economic Analysis. We could use the changes in fuel
consumption due to economic dispatch to estimate the relative changes in economic production and em-
ployment. Given the adaptive nature of the underlying data, this variable is given the lowest respective
weighting. The data used here should be the best available at this time and may benefit from refinement
over the Gatton Study
15 Dr. J Garen, Dr. C Jepsen, and J. Saunoris; The Relationship between Electricity Prices and Electricity Demand,
Economic Growth, and Employment; Kentucky Department for Energy Development and Independence
Coal Education Grant RFP Number 127 1000000441; October 19, 2011
Bradley Lake Economic Stabilization Proposal
Page 15
Appendix B
Electric Utility Project/Asset Life Cycle Phases
Identify and Select
(FEL* 0)
Evaluate and Decide
(FEL 1)
Define and Scope
(FEL 2)
Execute
(FEL 3)
Operate and
Maintain
Pre-feasibility
studies
Business model
development
Preliminary sys-
tem analysis
Triple bottom line
evaluation
Preliminary ben-
efit/ cost analysis
Strategic fit
Risk determina-
tion & analysis
Project Charter
Preliminary pro-
ject Scope
Electrical and
economic feasi-
bility Studies
Concept design
Cost estimates-
ASCE class three
& four
Budgeting and
capital planning
Pilot projects
Preliminary pro-
ject execution
plan (PEP)
Project scope
Preliminary
engineering
and permitting
Site plans
Refined cost
estimates-
ASCE class one
and two
Refined sys-
tem studies
and benefit
cost analysis
Project execu-
tion plan
Project sched-
uling and cost
control
Detailed engi-
neering
Final Permit-
ting
Specifications
Contracting ad
procurement
Installation
and construc-
tion
Check-out and
commissioning
Final energiza-
tion
Project close-
out
Operations and
maintenance
Facility up-
grades
End of life re-
placement
Program man-
agement
*Front End loading
813 West Northern Lights Boulevard Anchorage, Alaska 99503 T 907.771.3000 Toll Free 888.300.8534 F 907.771.3044
REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG
RGYAUTHORITY.ORG
Electric Vehicle Infrastructure Grant Executive Summary
Application Description
The Alaska Energy Authority (AEA), using $1.25 million in Volkswagen Trust funds, teamed with
Chugach Electric Association (CEA), Cordova Electric Cooperative (CEC), the City and Borough of
Juneau (CBJ), Alaska Electric Vehicle Association (AKEVA), Pacific Alternatives, LLC, and Tesla to
pursue a Department of Energy grant to develop a statewide electric vehicle (EV) charging
network and an EV fleet to demonstrate the feasibility of EVs in Alaska.
The goal of the project is to reduce barriers to EV market adoption and to create an ecosystem
for EVs in the state. Primary market barriers in Alaska are range limitations due to a lack of
charging infrastructure; unknown performance in the cold; and high utility demand charges. The
project objectives are to:
Develop a statewide EV charging network. The first phase develops an EV charging
corridor between the Kenai Peninsula and Fairbanks, with fast chargers spaced
approximately 75 to 100 miles apart. The second phase develops EV charging corridors from
Anchorage, Fairbanks, and Valdez to Southeast Alaska via Skagway. The third phase
evaluates the efficacy of the corridors and adds EV chargers as needed.
Install community-based charging stations. To provide a reliable safety net for
unexpected charging needs and destination charging for long day or overnight trips, CEA,
CBJ, and CEC have parterned with AEA to install chargers within their jurisdictions. AEA will
work with AKEVA to install Level 2 chargers in other communities.
Gather site-specific data to identify the attributes that lead to successful siting. Data
will be gathered throughout the project and analyzed by Alaska Center for Energy and
Power (ACEP) to inform optimal siting of infrastructure.
Demonstrate EVs in fleet vehicle applications. Meters of various types will be installed in
locations, including Cordova, Juneau, Anchorage, and Kotzebue, to gather performance data.
ACEP will analyze the data and evaluate the feasibility of various EVs in Alaska’s climate.
Gather relevant data to understand EV users’ needs, usage patterns, costs, and
benefits. ACEP will gather data and produce annual reports for AEA to demonstrate the
impact of EVs on the electric grid, and support utilities in planning and data for rate setting.
Application Support
Letters of Support
1. Alaska Congressional Delegation
2. State of Alaska Governor
3. State of Alaska Department of Commerce,
Community, and Economic Development
4. Alaska Energy Authority
5. Alaska Chamber
6. Alaska Electric Light & Power Company
7. Alaska Independent Power Producers
Association
8. Alaska Power & Telephone Company
9. Chickaloon Native Village
10. Chugach Electric Association
11. City of Seward
12. City of Wasilla
13. Copper Valley Electric Association
14. Denali Borough
15. Golden Valley Electric Cooperative
16. Government of Yukon Territory
17. Homer Electric Association
18. Juneau Commission on Sustainability
19. Juneau Electric Vehicle Association
20. Launch Alaska
21. Matanuska Electric Association
22. Matanuska-Susitna Borough
23. Municipality of Anchorage
24. Renewable Juneau
25. Southeast Conference
26. Talkeetna Chamber of Commerce
27. Tanana Chiefs Conference
Letters of Commitment
1. Alaska Electric Vehicle Association – $234,400 In-kind
2. Chugach Electric Association – $37,500 Cash Match
3. City and Borough of Juneau – $125,000 Cash Match
4. Cordova Electric Cooperative – $375,000 Cash and In-kind Match
5. Pacific Alternatives, LLC – $104,000 In-kind Match
6. Tesla – $3,487,500 In-kind Match
Total Award Sought
$5.3 Million
Term of Project
39 Months
Anticipated Award Announcement
July 2020
1
Table 1. Time Commitment of Key Partners
Entity Staff Task Time
AEA Preliminary
Design and
Environmental
Manager
Oversee and contribute to work associated with
evaluating site locations, fleet opportunities, partner
relations, establishing criteria for evaluating project
economics, and market research and analysis.
Provide outreach and education and participate in
electric vehicle working group meetings.
Yr 1: 240 hrs
Yr 2: 150 hrs
Yr 3: 100 hrs
AEA Project
Manager
Oversee work of the project, coordinate meetings and
associated activities, interface with relevant state and
local government entities, and provide outreach and
education to a range of interested stakeholders as
needed. Assist with project reporting. Track scope,
budget and milestones and ensure reporting is timely
and accurate for the overall grant project.
Yr 1: 150 hrs
Yr 2: 100 hrs
Yr 3: 75 hrs
AEA Assistant
Project
Manager
Assist in drafting contracts, grants, and deliverables.
Filter incoming questions and correspondence,
coordinate activities, meetings, outreach, and assist
in managing partner deliverables.
Yr 1: 112 hrs
Yr 2: 75 hrs
Yr 3: 75 hrs
AEA Director of
Planning
Review, contribute and oversee electric vehicle
initiatives, coordinate with Congressional Delegation
and Governor’s office on project progress.
Yr 1: 50 hrs
Yr 2: 30 hrs
Yr 3: 30 hrs
AEA Outreach
Coordinator
Assist with program outreach and correspondence,
review and edit outreach materials and branding.
Assist project team as needed.
Yr 1: 100 hrs
Yr 2: 75 hrs
Yr 3: 75 hrs
ACEP Research
Engineer
Collect, analyze and report data throughout the
duration of the project.
Yr 1: 239 hrs
Yr 2: 148 hrs
Yr 3: 169 hrs
Cordova Electric
Cooperative
CEO For CEC, oversee and contribute to the work
associated with evaluating site locations, fleet
opportunities, and local partner relations.
Yr 1:12 hrs
Yr 2: 24hrs
Yr 3: 24hrs
Chugach Electric
Association
Project
Manager
Working with interested parties, ensure chargers are
installed as planned. Participate in AEVWG and
partner coordination for the life of the project.
Yr 1: 80 hrs
Yr 2: 40 hrs
Yr 3: 40 hrs
Alaska Electric
Vehicle Association
Executive
Director
Oversee education, demonstration, and advocacy to
accelerate adoption of EV technology in Alaska.
Yr 1: 180 hrs
Yr 2: 50 hrs
Yr 3: 30 hrs
Pacific Alternatives,
LLC
Principal In-kind professional electrical engineering that will
offer services for siting and installing EV chargers.
Yr 1: 300 hrs
Yr 2: 60 hrs
Yr 3: 20 hrs
City and Borough of
Juneau
Engineer Yr 1: 160 hrs
Yr 2: 80 hrs
Yr 3: 80 hrs
2
3
Statewide EV Charging Network Phase 1 – Kenai Peninsula to Fairbanks
Statewide EV Charging Network Phase 2 – Anchorage, Fairbanks, and Valdez to Skagway
Akhiok Rural Power System Upgrade
The existing power plant is a modular unit (24’Lx12’Wx8’H) that was installed in the 1980s by Alaska
Power Systems, Inc. The power plant houses three generator sets (Gensets), One 55kW unit, one 65 kW
unit, and one 100 kW unit. All generators produce 480/277V three-phase power. Power is currently
generated at 480 volt, 3-phase, and distributed at 12.47/7.2 kVA 3-phase via a below grade distribution
system. The system is plagued by severe load imbalance. The existing direct bury cables are severely
corroded and at the end of their useful life resulting in frequent line to ground faults. The corroded
cables also result in excessive line losses in the primary and secondary systems (estimated at 30%).
The new power plant will be a 14’-6” x 42’ modular steel building constructed in Anchorage and shipped
to Akhiok. The two primary engines will be John Deere model 4045FM85 tier 3 marine rated at 100kW
prime power. The third engine will be a John Deere 4045AFM75 tier 2 or tier 3 marine rated at 65 kW.
The steel module used sound insulated construction and the engines will be equipped with critical grade
exhaust silencers to reduce noise. The power plant is being relocated to a lot next to the school to take
advantage of the recovered heat.
The proposed new distribution system will consist of primary cable installed within HDPE duct and
buried to a minimum depth per code. All existing transformers and junction boxes will be replaced with
new, corrosion resistant pad mount transformers and switch cabinets. Existing electrical service meter
bases and meters will remain and be fed by new service conductors in HDPE conduit. The new primary
system will be installed within existing utility rights of way and/or dedicated electrical easements.
Funding:
Denali Commission: $1,500,000
RPSU: $2,000,000
Total: $3,500,000
Concurrent with AEA’s project, Kodiak Area Native Association (KANA) helped the City of Akhiok apply
for and received $1,289,169 from the USDA – Rural Utility Service (RUS) to replace the distribution
system. AEA and KANA agreed to partner on this project to fund a complete power system replacement
to the community of Akhiok.
Status: Module is being assembled at EPC’s warehouse in Anchorage. Located just off Arctic Blvd.
Schedule: CDR November 2019
Module March 25, 2020
Module Assembly July 22, 2020
Site Construction July – December
Powerhouse November 12, 2020
Distribution December 10, 2020
Contractors:
Design and Construction Administration: CRW Engineering
Module Structure: Weona
Module Assembly: Electric Power Contractors, Inc
Site Construction: Sturgeon Electric
813 West Northern Lights Boulevard, Anchorage, Alaska 99503 Phone (907) 771-3000 Fax (907) 771-3044 Toll Free (888) 300-8534 Email info@akenergyauthority.org
REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG
RGYAUTHORITY.ORG
2019/2020 AEA Community Outreach Schedule
Last modified on May 11, 2020
# Status Date Organization AEA Staff
1. Upcoming To Be Determined, 2020 Bethel Chamber of Commerce Curtis W. Thayer
2. Upcoming To Be Determined, 2020 Greater Palmer Chamber of Commerce Curtis W. Thayer
3. Upcoming June 11, 2020 (Postponed*) Seward Chamber of Commerce Curtis W. Thayer
4. Upcoming May 6, 2020 (Postponed*) Kenai/Soldotna Chamber of Commerce Curtis W. Thayer
5. Upcoming April, 21, 2020 (Postponed*) Homer Chamber of Commerce Curtis W. Thayer
6. Past March 10, 2020 Greater Fairbanks Chamber of Commerce Curtis W. Thayer
7. Past February 20, 2020 Greater Wasilla Chamber of Commerce Curtis W. Thayer
8. Past February, 11, 2020 Community & Regional Affairs Committee Curtis W. Thayer
9. Past February 10-14, 2020 Alaska Forum on the Environment AEA Team Members:
9a. Past - Welcome Remarks during Keynote Event: Alaska Beyond Oil Panel T.W. Patch
9b. Past - Renewable Energy & Rural Alaska Powerhouse Panel Bill Price
9c. Past - Bulk Fuel Tank Farm Updates: Construction, Training, & Regulations Panel Bill Price
9d. Past - The Shines in Alaska: Solar Power Projects on the Railbelt Panel Tom Benkert
9e. Past - Harvesting Energy from Wood & Waste: Biomass & Landfill Gas Fuels in Alaska Panel Taylor Asher
9f. Past - Electric Vehicles Panel Betsy McGregor
9g. Past - Solar Power in Rural Alaska Panel David Lockard
9h. Past - The Low-Hanging Fruit of Energy Savings Panel Rob Jordan
9i. Past - New Hydropower Energy for Alaska Panel Bryan Carey
9j. Past - Rooftop Solar in your Alaskan Community Tom Benkert
9k. Past - Capturing the Wind Across Alaska: Large Scale Wind Projects Panel Kirk Warren
9l. Past - Clean Energy Financing Panel Tom Benkert
10. Past February 5-7, 2020 National Association of State Energy Officials Curtis W. Thayer
11. Past February 4, 2020 Southeast Conference Mid-Session Summit Curtis W. Thayer
12. Past January 30, 2020 Senate Community & Regional Affairs Committee Curtis W. Thayer
13. Past January 30, 2020 House Subcommittee Curtis W. Thayer
*These presentations’ date/time has been postponed due to COVID-19 to a date/time to be determined.
Page 2 of 2
14. Past January 29, 2020 Senate Special Committee on the Railbelt Electric System Curtis W. Thayer
15. Past January 29, 2020 Alaska Power Association’s Legislative Conference Curtis W. Thayer
16. Past January 10, 2020 Commonwealth North’s Energy Action Coalition Curtis W. Thayer
17. Past December 18, 2019 Chugiak-Eagle River Chamber of Commerce Curtis W. Thayer
18. Past December 9, 2019 Anchorage Chamber of Commerce Curtis W. Thayer
19. Past December 5, 2019 BIA Tribal Providers Conference Curtis W. Thayer
20. Past November 21, 2019 Alaska Municipal League Annual Conference Jeff Williams
21. Past November 18, 2019 Alaska Municipal League Annual Conference Tom Benkert
AEA LOAN DASHBOARD REPORT
AEA POWER PROJECT LOAN FUND
YEAR TO DATE
07/01/2019 LOAN ACTIVITY EARNINGS
START DATE LOAN CATEGORY STARTING
BALANCE
FUNDS
DISBURSED
PAYMENTS
RECEIVED
ENDING
BALANCE
INTEREST
RECEIVED
LATE FEES
RECEIVED
INTEREST +
LATE FEES
22 AEA POWER PROJECT FUND LOANS 23,690,152 4,575,980 (503,709) 27,762,423 276,157 767 276,924
TOTAL # OF PPF LOANS
0 LOAN PROGRAM SUMMARY
# OF DELINQUENT PPF
LOANS Outstanding Loans per Trial Balance 27,762,423.03$
-$ Uncommitted Cash Balance 10,598,579.00$
LOANS DELINQUENT
AMOUNT ($)Loan Commitments 58,569.36$
0.000%Total Loan Program 38,419,571.39$
% OF DELINQUENT
LOANS TO PORTFOLIO
BALANCE
04/30/2020
END DATE
FISCAL YEAR-TO-DATE LOAN PORTFOLIO ACTIVITY (07/01/2019 - 04/30/2020 )
Waterfall Creek Hydro - King Cove, Alaska
Print Date: 5/5/2020
Page 1 of 2
AEA POWER PROJECT FUND LOANS BY ENERGY REGION & PROJECT TYPE
OUTSTANDING BALANCES & NEW ACTIVITY
ENERGY REGION AEA PPF LOAN
BALANCE
REMAINING
LOAN
COMMITMENTS
NEW
APPLICATIONS
IN PROCESS
# OF AEA PPF
LOANS TOTAL
ALEUTIANS 2,583,291 - 65,000 4 2,648,291
BERING STRAITS - - - 0 -
BRISTOL BAY 464,943 - 514,500 2 979,443
COPPER RIVER/
CHUGACH - - - 0 -
KODIAK 84,089 - - 2 84,089
LOWER YUKON-
KUSKOKWIM 373,000 - - 2 373,000
NORTH SLOPE - - - 0 -
NORTHWEST ARCTIC - - - 0 -
RAILBELT 4,115,937 - - 3 4,115,937
SOUTHEAST 19,951,375 293 924,153 4 20,875,821
27893070.2 YUKON-KOYUKUK/
UPPER TANANA 189,788 58,276 4,083,114 5 4,331,178 10422145.37
58569.36 27,762,423 58,569 5,586,767 22 33,407,759 TOTAL
BIOMASS
$104,794
CONSERVATION
$11,089DIESEL
$981,213
HYDRO
$24,801,776
SOLAR
$801,112
TRANSMISSION
$1,824,285
TANK FARM
$2,258,829
WIND
$2,624,661
AEA PPF LOANS BY PROJECT TYPE -NEW & OUTSTANDING BALANCE
BIOMASS
1
CONSERVATION
1
DIESEL
5
HYDRO
8
SOLAR
1
TRANSMISSION
1
TANK FARM
1
WIND
4
AEA PPF LOANS BY PROJECT TYPE
Print Date: 5/5/2020
Page 2 of 2
Business Case:
Alaska Cargo and
Cold Storage, LLC
January 22, 2020
1
Presentation Overview
•Ted Stevens Anchorage International Airport is a major air cargo hub for cargo
transported between the world’s largest economies.
•Anchorage’s geographic location allows for aircraft refueling in order to
maximize the cargo capacity on trans-Pacific flights.
•This presentation will evaluate Anchorage’s position in the air cargo market
and the business case for the Alaska Cargo and Cold Storage project.
•Presentation is divided into multiple sections:
•Global air cargo overview
•Anchorage airport characteristics
•Historic Anchorage air cargo
•Role of Anchorage in air cargo
•Good shipped through Anchorage
•Route planning
•Competitor airport case studies
•Key value propositions and risks
2
Global Air Cargo Overview
•Air cargo holds a small but high-value niche
in the world trade market.
•It is estimated that air cargo represents less
than 1% of all world trade measured in
tonnage, but 35% of the value. (Boeing)
•Air cargo generally has a high value to
weight ratio, is perishable, delicate, or
urgent.
•Computing equipment, machinery, and
electrical equipment account for the highest
share of airborne trade tonnage versus
containership tonnage.
•Two options for air cargo: dedicated
freighters and the lower holds of passenger
aircraft.
•Freighters dominate the North
America/East-Asia air cargo market.
•Almost all air cargo through Anchorage is on
dedicated freighters.
3
North America and East Asia
•The market between North America and
East Asia is the world’s largest air cargo
market.
•This market constitutes 20.9% of the world’s
air cargo (in tonne-kilometers).
•United States accounts for 93% of air trade
between East Asia and North America.
•Roughly half of the air cargo between US
and East Asia travels through Anchorage.
(BTS)
•This market is expected to grow at 4.7%
annually, resulting in more than doubling of
market size by 2037.
4
Global Air Cargo Key Drivers
•Economic activity and international trade
are key drivers for global air cargo.
•GDP growth has been led by Asian
economies.
•Fuel prices
•Strong growth in e-commerce will play an
increasingly important role in air cargo
markets.
•E-commerce sales were $2.3 trillion in 2017,
double the amount five years prior.
•Mainland China is now the world’s largest e-
commerce market and has grown to over
twice that as the US.
•Difficult to tell how much e-commerce is
transported via air cargo but its rapid
growth and the general demand for quick e-
commerce delivery makes it a major driver
of air cargo growth.
5
Pacific Air Cargo Key Drivers
•Increased Asian industrial production coupled with consumer spending is a major driver of
increased air cargo.
•Mainland China dominates the Pacific air cargo market.
•Much of the Mainland Chinese air cargo is flown through other airports (e.g., Hong Kong).
6
Pacific Air Cargo Outlook
•Boeing forecasts continued strong growth in Pacific air cargo traveling in both
directions.
•Faster growth expected for cargo transported from North America to Asia.
•Result of growing middle-class consumers in Mainland China.
•Increased exports to Mainland China possible outcome of a trade deal.
7
Current US Asia Trade
•In 2018, there were $1.3 trillion of goods traded with Asia transported by air and water.
•Mainland China accounted for almost half of all transported goods.
•$930 million of goods imported and $370 million exported.
•Air cargo represented less than 1% of total weight but 37% of the value.
Total Trade
($millions)
Total Trade
(1,000
tonnes)
Air Cargo
($millions)
Air Cargo
(1,000
tonnes)
Air Cargo
Share
(Value)
Air Cargo
Share
(Weight)
Mainland China 604,316 140,382 200,648 1,693 33%1.2%
Japan 209,270 79,943 67,150 526 32%0.7%
Korea, South 123,634 63,133 40,783 238 33%0.4%
Taiwan 72,041 27,256 31,065 176 43%0.6%
Vietnam 56,930 17,247 13,765 147 24%0.9%
Singapore 55,063 12,410 38,106 157 69%1.3%
Malaysia 49,759 8,590 33,635 102 68%1.2%
Thailand 42,061 14,695 17,636 116 42%0.8%
Hong Kong 42,004 2,703 33,280 140 79%5.2%
Indonesia 27,835 18,205 3,225 57 12%0.3%
Philippines 20,470 8,467 10,005 62 49%0.7%
Others 6,060 1,242 1,200 20 20%1.6%
Total 1,309,442 394,273 490,497 3,434 37%0.9%
Source: US Census Bureau
Asia –US Trade, Total Trade in Both Directions (2018)
8
Asian Air Trade Driven by Mainland China
Historic Asian Air Imports
vs Exports •Asian air cargo has
recovered from the 2008-
2009 recession.
•Recovery has been driven
almost entirely by growth in
Mainland Chinese air trade.
•Non-Mainland China Asia
air trade is 4% lower than
2007 high.
•Mainland China air trade
has grown 45%.
•Asian air imports have
increased from only three
places since 2007:
•Mainland China: 33%
•Vietnam: 217%
•Indonesia: 6%
Mainland China vs Asian Total
Air Import/Exports
Imports Exports Total Trade
Mainland
China Other Asia Mainland
China Other Asia Mainland
China Other Asia
2007 980 940 185 873 1,164 1,812
2018 1,307 868 386 873 1,693 1,741
Change 33%-8%109%0%45%-4%
Air Trade Recovery after Recession (Thousand Tonnes)
Source: US Census Bureau
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2003 2006 2009 2012 2015 2018Million TonnesMainland China Other Asia
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2003 2006 2009 2012 2015 2018Million TonnesImprts Exports
9
Mainland China & Vietnam Air Exports
Growth of Top Five Asian Exporters
•Mainland China is Asia’s largest exporter
and has driven growth in total Asian air
exports.
•Japan, South Korea and Taiwan have
been flat or decreasing the last 16 years.
•Vietnam has grown from the 11th largest
Asian air exporter (32 million tonnes in
2003) to the fifth largest (116 million
tonnes in 2018).
Source: US Census Bureau
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2003 2005 2007 2009 2011 2013 2015 20172003 = 1.00Mainland China Japan South Korea
Taiwan Vietnam Total
10
Anchorage Airport Overview
11
Alaska Cargo and Cold Storage Project
Proposed
ACCS Location
•The proposed Alaska Cargo and Cold
Storage Project (ACCS) is located at the
Anchorage airport.
•ACCS will be approximately 700,000
square feet and provide climate-
controlled cargo facilities for:
•Cold storage
•Warm storage
•General warehouse
•Direct airside and roadside access.
•Proximity to main air cargo parking
area.
12
Anchorage Overview: Infrastructure
•TSAIA is equipped with all necessary infrastructure to
accommodate large amounts of air cargo traffic.
•4,837 acre airport site
•Three ILS equipped runways greater than 10,000 feet in
length.
•CAT 11/111 capabilities
•60-plus aircraft parking positions
•Operates at 95% VMC
•No closures for winter conditions
•Provides ground service, deicing, catering for all size aircraft
•Multiple fuel supplies and a fuel hydrant system for quick
turns.
•Nine 4-million gallon fuel storage tanks
•Fuel pipeline system to refinery and Port of Alaska
•U.S. Customs, INS, and Agricultural inspection available at
all times.
•No curfew -flights can take off and land 24 hours per day.
13
Anchorage Overview: Transfer Rights
Anchorage holds air cargo transfer rights that permit foreign air carriers to conduct starburst, on-
line, and interline transfers through TSAIA on an extra-bilateral basis. These rights are unique to
Alaska and provide a significant strategic advantage when coupled with its ideal geographic
location as an air cargo gateway between Asia and North America.
14
TSAIA vs BTS Air Cargo Data
Source: TSAIA
•The Bureau of Transportation Statistics
collects cargo data for all US airports:
•Cargo tonnage
•Carrier
•Destination and origin airports
•Available from 2003
Domestic International Total
Deplaned 216,334 450,096 666,430
Enplaned 401,442 232,183 633,624
In-Transit 150,115 1,439,432 1,589,547
Total 767,891 2,121,711 2,889,602
Domestic International Total
Inbound 703,992 1,408,477 2,112,469
Outbound 1,515,576 576,776 2,092,352
Total 2,219,568 1,985,253 4,204,821
TSAIA Data (tonnes)BTS T100 Segment Data (tonnes)
Source: BTS T100
•TSAIA collects data for Anchorage:
•Cargo tonnage
•Carrier
•Deplaned and enplaned
•International vs domestic
•Does not indicate origin or destination.
Two different sources are used for air cargo data. Each have different
details but generally support each other with data modifications.
15
Anchorage Overview: Refueling Hub
Source: TSAIA
Domestic International Total
Deplaned 216,334 450,096 666,430
Enplaned 401,442 232,183 633,624
In-Transit 150,115 1,439,432 1,589,547
Total 767,891 2,121,711 2,889,602
2018 Anchorage Air Cargo (tonnes)•TSAIA counts the total tonnage of cargo
through Anchorage in two different ways:
1.deplaned/enplaned
2.in-transit
•Other airports do not report in-transit cargo, it
is unique to Anchorage as a refueling hub.
Deplaned/Enplaned Cargo:
•Deplaned cargo is removed from an aircraft and
enplaned is cargo loaded onto an aircraft.
•Most of deplaned/enplaned cargo in Anchorage
is cargo transferred during refueling, not
separate cargo originating in or destined for
Anchorage. FedEx and UPS handle/sort cargo in
their facilities.
•As a result, most deplaned and enplaned cargo
is the same tonne of cargo counted twice as it is
deplaned and then enplaned during refueling.
In-Transit Cargo:
•In-transit cargo never leaves the aircraft during
refueling.
•Other airports do not count in-transit cargo as it
is not common for cargo aircraft to land with
cargo and then take off again without loading,
unloading, or transferring cargo.
•Over half of cargo tonnage counted by TSAIA is
in-transit cargo.
16
Anchorage Overview: 5th Busiest Cargo Airport
Source: Airports Council International
•Of the top 20 cargo airports, only
Anchorage includes in-transit cargo.
•Over half of Anchorage’s cargo tonnage
is counted by TSAIA as in-transit freight.
•Results in an “Apples-to-Oranges”
comparison with other airports.
•TSAIA’s counting method impacts the
rankings.
•Anchorage has enough cargo traffic
each year to be the second busiest
cargo airport in the world with increased
cargo handling.
•If all the in-transit cargo were
deplaned and enplaned (thus counted
twice) Anchorage’s cargo would
increase to 4.4 million tonnes,
matching Memphis.
*Includes in-transit cargo
Rank
2018
Rank
2017 Airport 1,000
Tonnes
Percent
Change
1 1 Hong Kong 5,121 1.4%
2 2 Memphis 4,470 3.1%
3 3 Shanghai 3,769 -1.5%
4 4 Incheon 2,952 1.0%
5 5 Anchorage*2,807 3.5%
6 6 Dubai 2,641 -0.5%
7 7 Louisville 2,623 0.8%
8 9 Taipei 2,323 2.4%
9 8 Tokyo 2,261 -3.2%
10 13 Los Angeles 2,210 2.4%
11 16 Doha 2,198 8.8%
12 12 Singapore 2,195 1.4%
13 11 Frankfurt 2,176 -0.8%
14 10 Paris 2,156 -1.8%
15 14 Miami 2,130 2.8%
16 15 Beijing 2,074 2.0%
17 18 Guangzhou 1,891 5.0%
18 20 Chicago 1,869 3.6%
19 17 London 1,771 -1.3%
20 19 Amsterdam 1,738 -2.7%
Total 51,375 1.3%
17
Anchorage Cargo Historic Trends
Source: TSIA
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2016 2017 2018 2019Tonnes per MonthEnplaned plus Deplaned by Carrier
All Others
Atlas Air
Polar Air Cargo
Fedex
UPS
•FedEx and UPS have cargo facilities
in Anchorage and handle/sort
cargo between aircraft in
Anchorage.
•Integrated carriers transporting
their own cargo.
•Polar and Atlas recently leased
parking space in Anchorage and
transfer cargo between aircraft.
•Atlas carries cargo for others and
Polar generally carries cargo for
DHL.
•Cargo facilities would facilitate
additional cargo services.
18
Anchorage Cargo Historic Trends
Source: TSIA
-
50,000
100,000
150,000
200,000
250,000
2016 2017 2018 2019Tonnes per MonthIn-Transit Cargo by Carrier All Others
Singapore Airlines
Suparna
Qantas
Western Global
Southern Air
AirBridgeCargo
Air China Cargo
China Cargo
China Southern
Asiana Airlines
Nippon Cargo
Eva
Korean Air
Cargolux Airlines
China Airlines
Sky Lease
Atlas Air
Polar Air Cargo
Cathay Pacific
•Cathay Pacific is single largest
in-transit air carrier.
•Bulk of in-transit cargo is
distributed amongst many
carriers.
•These carriers have no access to
cargo facilities to handle/sort
cargo.
19
Anchorage Cargo Historic Trends
Source: BTS T100 data
•Air cargo traffic between Anchorage and
Asia is used as a measure for the total air
cargo transported through Anchorage.
•Different method than TSAIA data
•Does not account for cargo originating in Alaska
and destined for US or US cargo destined for
Alaska.
•Air cargo traffic peaked in 2006 and 2007 at
2.7 million tonnes.
•Decreased 20% each of the next two years
to under 1.8 million tonnes in 2009. Main
drivers appear to be:
•Global recession reduced all air cargo between US
and Asia by 22% over two year period.
•Northwest and Japan Airlines accounted for 12%
of air cargo in 2007 and both went bankrupt in
2008/2009.
•Reduced air cargo on shorter range B474-200/300
and MD-11 aircraft.
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2003 2005 2007 2009 2011 2013 2015 20171,000 TonnesAsian In-Bound Cargo Asian Out-Bound Cargo
Anchorage Air Cargo to and from Asia
20
Anchorage Cargo Historic Trends
Source: BTS T100 data, US Census
Bureau, and McDowell Group
Calculations
•Leading into the 2008/2009 recession
the share of Asian air cargo
transported through Anchorage
began to drop.
•Reached peak of 95% of all Asian air
cargo in 2006.
•Minimum share of 50% in 2015.
•Stabilized at around 60% the last
three years.
•Combines two data sets.
•Data does not identify the cause.
Possible reasons are:
•Switching to more efficient aircraft.
•Increased air cargo carried in the
belly of passenger aircraft.
Share of Total US –Asia Air Cargo
Transported Through Anchorage
21
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
50
100
150
200
250
300
350
400
450
500
2003 2005 2007 2009 2011 2013 2015 2017 2019 Asian Air Cargo Through Anchorage1,000 TonnesUS Total Anchorage Anc Share
Anchorage Cargo Historic Trends
Source: BTS T100 data
•Air cargo increased by 20% between
2016 and 2018.
•During same period Anchorage’s share of
air cargo to the US increased from about
50% to 60%.
•Atlas Air and China Airlines account for
nearly 60% of the increase.
•Cathay Pacific overtook UPS to become
the largest carrier in Anchorage.
Carrier 2016 2018 Change %
Cathay Pacific Airways Ltd.564 664 100 18%
United Parcel Service 568 604 36 6%
Atlas Air Inc.228 427 199 87%
China Airlines Ltd.188 402 214 114%
Polar Air Cargo Airways 340 349 8 2%
FedEx 283 328 45 16%
Korean Air Lines Co. Ltd.379 297 (83)-22%
Eva Airways Corporation 263 205 (59)-22%
Kalitta Air LLC 46 176 130 283%
Nippon Cargo Airlines 204 145 (59)-29%
China Cargo Airline 118 136 18 15%
Air China 63 102 39 62%
Asiana Airlines Inc.33 72 39 118%
Western Global 5 54 48 879%
Southern Air Inc.40 45 5 12%
Others 196 202 6 3%
Total 3,520 4,207 687 20%
Recent Air Cargo Uptick by Largest Carriers (Tonnes)
22
Anchorage Cargo Historic Trends
Source: BTS T100
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Tonnes per MonthAsia Inbound Asia Outbound
Anchorage –Asia Air Cargo by Month and Direction
23
Anchorage Cargo Historic Trends
Source: BTS T100 data
Anchorage Inbound Asian Cargo by Origin Airport
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Tonnes per MonthMainland China Hong Kong Taiwan Japan South Korea Others
24
Anchorage Cargo Historic Trends
Source: BTS T100 data
Anchorage Outbound Asian Cargo by Destination Airport
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Tonnes per MonthMainland China Hong Kong Taiwan Japan South Korea Others
25
Anchorage Cargo Seasonal Trends
Source: BTS T100 data
•Air cargo, especially cargo coming from Asia, is
highly seasonal.
•Average daily air cargo traffic from Asia is 50%
higher in November than in February.
•September to November increase likely caused by
holiday purchases by US consumers.
•Dip in December is likely a result of post-Christmas
slow-down reducing the monthly average.
•Dip in January and February is likely caused by
Spring Festival (Chinese New Year).
•All Chinese factories and warehouses shut down for
one to two weeks.
•Occurs in late January or early February.
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun2000 -2018 Average Tonnes per MonthOutbound to Asia Inbound from Asia
Seasonal Air Cargo Trends
26
China Trade Tariffs
Source: US Census Bureau
•The growth of US imports from
Mainland China slowed in 2018 then
declined in 2019.
•Trade data is available through
November 2019.
•Average trade for January through
November in 2019 is almost back to
2016 levels, down 11% from 2018.
•Inbound air cargo from Mainland
China is down 8% for the first half of
2019 compared to the first half of
2018
Monthly US Imports from Mainland China
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan -
Nov
AveTonnes2016201720182019
27
Half of All Asian Air Cargo
to the US Travels through
Anchorage
48%
18%
6%6%4%3%2%2%2%
9%
ANC LAX ORD SFO JFK MEM CVG HNL SEA Others
Total Air Cargo between Asia
and US
Asia to US
US to Asia
Source: BTS
28
Top US Airports for Asian Air Cargo
Source: BTS T100
•About half of air cargo between Asia and the
US is transported through Anchorage.
•Los Angeles has the second largest share at
18%.
•No other airport has over 6% of the Asian air
cargo.
•Air cargo tonnage includes cargo transported
both in dedicated freighters and in the belly
of passenger aircraft.
•Nearly all Asian air cargo through Anchorage
is in dedicated freighters.
•About half of the non-Anchorage Asian air
cargo is in the belly of passenger aircraft.
Top US Airports for Asian Air Cargo,
2018 (tonnes)
City Asian
Inbound
Asian
Outbound Total Percent
Anchorage 1,408 576 1,984 48%
Los Angeles 473 265 738 18%
Chicago 168 80 248 6%
San Francisco 118 116 235 6%
New York 89 62 152 4%
Memphis 84 25 109 3%
Cincinnati 44 53 97 2%
Honolulu 77 13 89 2%
Seattle 29 56 85 2%
Others 278 107 385 9%
Total 2,769 1,352 4,121
29
US-Asia Air Cargo Travels
through Anchorage
24%
12%
10%9%
8%
6%5%5%5%
14%
ORD SDF CVG JFK LAX DFW ATL MEM MIA Others
Total Air Cargo between ANC
and US
ANC to US
US to ANC
Source: BTS
30
Anchorage’s Top North America Airports
Source: BTS T100
•Air cargo between Anchorage and the
US is much less concentrated than
between Anchorage and Asia.
•The top five airports only account for
62% of air cargo.
•21 airports with over 10,000 tonnes of
air cargo traffic.
•Chicago is the top air cargo airport,
accounting for 24% of Anchorage’s air
cargo.
•US airports account for 97% of cargo
between Anchorage and North America.
•Over twice as much cargo is inbound to
Anchorage from North America vs
outbound from Anchorage.
City Inbound Outbound Total Share
Chicago 157,028 369,243 526,271 24%
Louisville 58,933 207,567 266,500 12%
Cincinnati 46,469 174,808 221,278 10%
New York 68,854 136,349 205,203 9%
Los Angeles 19,702 156,658 176,360 8%
Dallas-Ft Worth 27,210 96,458 123,667 6%
Atlanta 51,677 64,207 115,884 5%
Memphis 54,741 59,355 114,096 5%
Miami 13,967 87,588 101,556 5%
Ontario 10,351 31,500 41,850 2%
Columbus 491 31,759 32,249 1%
Indianapolis 17,887 12,775 30,662 1%
Seattle 23,310 3,053 26,363 1%
Oakland 19,096 4,454 23,550 1%
Houston 21,082 44 21,125 1%
Portland 19,464 177 19,641 1%
Guadalajara 18,747 401 19,147 1%
Toronto 14,094 0 14,094 1%
Mexico City 31 11,933 11,964 1%
Huntsville 0 10,373 10,373 <1%
Halifax 10,099 0 10,099 <1%
Others 51,565 57,590 82,254 5%
Total 704,797 1,516,291 2,194,187
Anchorage’s Top North America Airports for Air
Cargo, 2018 (tonnes)
31
Anchorage’s Top Asian Airports
Source: BTS T100
•There is almost two and a half times more
inbound air cargo than outbound.
•Anchorage’s Asian air cargo is relatively
concentrated with five airports accounting
for 90% of all air cargo.
•Hong Kong accounts for nearly one-third
of all Asian air cargo between Asia and
Anchorage.
Anchorage’s Top Asian Airports for Air
Cargo, 2018 (tonnes)
City Inbound Outbound Total Share
Hong Kong 449,815 179,816 629,631 32%
Taipei 220,256 103,570 323,826 16%
Seoul 211,635 98,310 309,944 16%
Shanghai 253,259 52,984 306,243 15%
Tokyo 130,434 69,732 200,166 10%
Osaka 52,227 40,589 92,816 5%
Shenzhen 37,291 2,367 39,657 2%
Wuhan 16,269 6,050 22,319 1%
Hangzhou 8,865 4,515 13,381 1%
Nagoya 8,091 5,225 13,316 1%
Guangzhou 3,804 5,596 9,399 <1%
All Others 15,726 7,307 23,034 1%
Total 1,407,672 576,061 1,983,733
32
Anchorage’s Top Asian Air Carriers
Source: BTS T100
Top Air Carrier for Air Cargo between Anchorage and Asian Airports
Airport Top %Second %Third %
Hong Kong Cathay Pacific 53%UPS 12%Atlas Air 11%
Taipei China Airlines 50%Eva Airways 32%UPS 10%
Seoul Korean Air 43%Polar Air 15%UPS 14%
Shanghai China Cargo 22%Air China 17%Atlas Air 15%
Tokyo Nippon Cargo 36%Polar Air 15%Atlas Air 15%
Osaka China Airlines 39%UPS 33%FedEx 28%
Shenzhen UPS 100%
Wuhan Kalitta Air 100%
Hangzhou Atlas Air 100%
Nagoya Atlas Air 67%Kalitta Air 23%National Airlines 7%
Guangzhou FedEx 100%
•Most top Asian airports have a few key carriers transporting the bulk of
the cargo to/from Anchorage.
33
Goods Shipped through Anchorage
•It is difficult to know exactly what commodities are
being transported by air through Anchorage.
•Airlines do not report the type of cargo they transport
through Anchorage to TSAIA or BTS.
•Import/export data is reported at the source the export
originated or the final destination of an import, not the
airports it is transported through.
•Import/export data provides detailed breakdown of air
cargo between US and Asia by commodity.
•Extrapolating US import/export data may provide a sense of
what cargo might be transported through Anchorage.
•This extrapolation represents either the commodities
currently transported through Anchorage or commodities
that could potentially be transported through Anchorage.
•East Asia sends almost 70% more cargo to North America
than it receives.
•Consumer goods drive eastbound air cargo.
•Manufacturing materials drive westward flow.
34
Goods Shipped: Commodity Overview
Source: US Census Bureau
•US Census Bureau reports trade
by commodity.
•Commodities are organized by
HS Code under a hierarchal
system.
•The highest level has 98
different categories (see chart)
•The most detailed level has
over 4,500 categories.
•At the highest level of HS Codes,
the top 13 commodities account
for 77% of US-Asia trade.
•US Census Bureau data differs
from data reported by Boeing as
Boeing includes Canada trade
and mail. It also utilizes
proprietary data.
Export Import Total
HS
Code Commodity
Weight
(1,000
tonnes)
Value
($mill)
Weight
(1,000
Tonnes)
Value
($mill)
Weight
(1,000
Tonnes)
Value
($mill)
85 Electric Machinery Etc; Sound Equip; Tv Equip; Pts 156 50,049 596 145,635 752 195,683
84 Nuclear Reactors, Boilers, Machinery Etc.; Parts 217 35,129 508 86,413 724 121,542
90 Optic, Photo Etc, Medic Or Surgical Instrments Etc 91 26,222 100 17,307 192 43,529
39 Plastics And Articles Thereof 84 2,968 91 2,008 175 4,977
61 Apparel Articles And Accessories, Knit Or Crochet 8 239 137 3,151 145 3,390
62 Apparel Articles And Accessories, Not Knit Etc.6 233 118 3,604 123 3,837
87 Vehicles, Except Railway Or Tramway, And Parts Etc 29 811 54 906 83 1,717
8 Edible Fruit & Nuts; Citrus Fruit Or Melon Peel 65 396 7 26 72 422
73 Articles Of Iron Or Steel 39 1,090 28 502 68 1,592
64 Footwear, Gaiters Etc. And Parts Thereof 13 531 50 977 63 1,508
94 Furniture; Bedding Etc; Lamps Nesoi Etc; Prefab Bd 9 341 43 688 53 1,029
29 Organic Chemicals 28 1,520 24 4,363 51 5,883
33 Essential Oils Etc; Perfumery, Cosmetic Etc Preps 34 1,413 17 353 51 1,766
3 Fish, Crustaceans & Aquatic Invertebrates 36 560 14 145 50 705
38 Miscellaneous Chemical Products 39 3,659 10 2,296 50 5,955
Others 406 54,556 377 42,408 783 96,963
Total 1,259 179,715 2,175 310,782 3,434 490,497
Top Asian Air Cargo Commodities by High Level HS Code (2018)
35
Goods Shipped: Commodity Detail
Source: US Census Bureau
•Top air cargo commodities by the
most detailed HS Code.
•Represent a small portion of total
air cargo.
•Provides insight into the types of
goods transported via air.
•Air cargo imports from Asia are
generally consumer goods.
•Air cargo exports to Asia are largely
split into two categories:
•Perishable goods like cherries and
lobsters.
•High value machinery and
electronics.
•Perishable goods are relatively
expensive to fly but require faster
transportation than marine
shipping.
Top Ten US Air Cargo Exports to Asia, Most Detailed HS Code (2018)
HS Category Weight
(tonnes)
Value
($mill)$/kg
1 Cherries, Fresh, Nesoi 41,439 283 $6.83
2 Machines For Man. Semicondutor Devices/elec Ic 27,357 10,809 $395.11
3 Civilian Aircraft, Engines, And Parts 21,339 17,047 $798.87
4 Food Preparations Nesoi 20,619 472 $22.88
5 Electronic Integrated Circuits, Nesoi 19,499 7,060 $362.08
6 Lobsters, Live, Fresh,or Chilled 19,420 260 $13.41
7 Beauty & Skin Care Preparation, Nesoi 15,571 695 $44.62
8 Composite Diagnostic/lab Reagents, Exc Pharmaceut 13,507 1,989 $147.29
9 Instr & Appl F Medical Surgical Dental Vet, Nesoi 12,264 3,181 $259.41
10 Asparagus, Fresh Or Chilled 10,969 34 $3.06
Total All Commodities 1,259,361 179,711 $142.70
Top Ten US Air Cargo Imports from Asia, Most Detailed HS Code (2018)
HS Category Weight
(tonnes)
Value
($mill)$/kg
1 Port Digtl Automatic Data Process Mach Not >118,173 30,671 $259.55
2 Mach For Recp/convr/trans/regn Of Voice/image/data 103,547 20,307 $196.11
3 Phones For Cellular Ntwks Or For Oth Wireless Ntwk 78,469 51,118 $651.44
4 Parts & Accessories For Adp Machines & Units 54,418 22,609 $415.46
5 Static Converters; Adp Power Supplies 36,716 2,093 $57.01
6 Articles Of Plastics, Nesoi 35,155 955 $27.17
7 Automatic Data Processing Storage Units, N.E.S.O.I 28,520 6,451 $226.21
8 Sweaters, Pullovers Etc, Knit Etc, Manmade Fibers 22,441 479 $21.34
9 Imports Of Articles Exported & Returned, No Change 22,119 11,788 $532.95
10 Sweaters, Pullovers Etc, Knit Etc, Cotton 21,388 470 $21.95
Total All Commodities 2,174,851 310,782 $142.90
36
Goods Shipped: Perishable Cargo
•Cherries and lobster make up most of the known
perishable exports to Asia.
•Cherries are harvested primarily in Washington
and California in the summer months.
•Lobsters are harvested year-round in Maine and
Massachusetts.
Photo: Seattle Times
Source: US Census Bureau
0 10,000 20,000 30,000 40,000
Crab
Raw Cereal
Clams
Animal Feed
Peaches
Strawberries
Asparagus
Lobster
Unknown
Cherries
Tonnes
Produce Seafood Other
Top Food Items Exported to Asia (2018)
Lobster Sorting in Maine “Cherry Express” at SEATAC
37
Goods Shipped: Cherries
Source: Census
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecTonnes
California Washington Others
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecTonnes
To ANC To Asia
Monthly Asian Cherry Exports by State (2018)Monthly Air Cargo from SEATAC (2018)
•Washington is the largest exporter of fresh cherries to Asia.
•Air cargo data indicate that most of the cherries are exported directly to Asia but a portion are
transported through Anchorage.
•Possible opportunity to capture a larger market share of cherries with cold storage facility.
Source: BTS T100
38
Goods Shipped: Seafood Exports
Source: US Census Bureau
Seafood Commodity Alaska Washington Northeast
US Others Total Percent
Lobsters, Live, Fresh,or Chilled 0 17 16,813 2,590 19,420 53%
Clams, Cockles And Ark Shells, Live, Fresh/chilled 110 3,843 2 9 3,963 11%
Crabs, Live, Fresh Or Chilled 0 2,083 184 596 2,863 8%
EEls (anguilla Spp.), Live 0 206 66 1,351 1,623 4%
Crabs, Including In Shell, Frozen 27 984 1 286 1,297 4%
Oysters, Live, Fresh Or Chilled 0 934 0 44 978 3%
Cold-water Shrimp And Prawns, Live, Fresh Or Chill 0 2 6 952 960 3%
Other Shrimp And Prawns, Live, Fresh Or Chilled 0 0 0 894 894 2%
Livers, Roes And Milt, Fresh Or Chilled 379 41 53 50 523 1%
Others 44 359 1,353 2,029 3,786 10%
All Seafood 560 8,469 18,479 8,800 36,308
State Share 2%23%51%24%
Top Seafood Air Cargo Exports to Asia by State (2018) (tonnes)
•Live lobsters from Northeast US account for over half the total seafood exports to Asia by air.
•About 80% of all seafood exported via air cargo to Asia appears to be live seafood (e.g.,
lobsters, clams, crabs, eels, oysters).
•While Alaska accounts for almost three-quarters of total seafood exported to Asia, only 2% is
exported via air cargo, the rest is shipped on marine vessels.
39
Goods Shipped: Lobster
Source: US Census Bureau, Canada Trade Data Online
Lobster Exports to Asia •In 2010, there was almost no live lobster
exported to Asia, now it is the sixth
largest air export air to Asia with almost
20 million tonnes in 2018.
•Mainland China’s share of the total
imports grew until July 2018 when China
imposed a 25% tariff on US lobsters.
•As a result of the Chinese tariff, Canadian
lobster exports to Mainland China have
grown from roughly the same as US
exports to triple US exports.
•Appears at least a portion of this lobster
is transported through Anchorage.
•The recent creation and rapid growth of
the Asian lobster market may indicate an
opportunity to create new markets for
fresh Alaska seafood. $-
$5
$10
$15
$20
$25
$30
$35
$40
$45
Nov 17 Feb 18 May 18 Aug 18 Nov 18 Feb 19 May 19 Aug 19Million USDCanada US
US vs Canadian Lobster Exports
0%
10%
20%
30%
40%
50%
60%
70%
80%
-
500
1,000
1,500
2,000
2,500
3,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 China Share of Asian ImportsTonnesOther Asia Mianland China Mainland China Share
40
Goods Shipped: Business Implications
Analysis of commodities shipped by air between the US and Asia provides key
business insights.
1.The large amount of perishable cargo shipped from the US to Asia may benefit from cold
storage capacity in Anchorage.
•Perishable cargo is generally sourced from only one or two US airports then distributed to many Asian
markets.
•Ability to sort perishable cargo in Anchorage may provide for more efficient shipping from the commodity
source in the US to the multiple final destinations in Asia (e.g., one aircraft full of cherries from SEATAC split
into five aircraft destined for different Asian markets).
2.Growth of the lobster market presents an opportunity.
•Demonstrates the feasibility of creating a new Asian market for a high value US seafood product over a
relatively short period.
•Cold storage and handling of perishable goods in Anchorage could be basis for expanded export of live
Alaska seafood.
3.Perishable goods can be highly seasonal.
•Alaska fresh sockeye has a two to three-month window in the summer, overlapping with cherries.
•Year round sourcing of perishable cargo will maximize utilization of cold storage capacity.
•Most Alaska seafood, such as Pacific cod, halibut, sablefish, and crab, are harvested outside summer months.
41
Alaska Seafood: Year-Round Supply
42
0%
5%
10%
15%
20%
25%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecPercent of Annual HarvestPacific Cod Sablefish
Key Alaska Seafood by
Month of Harvest (2018)•Alaska seafood is harvested throughout the year.
•Most of the salmon harvest occurs in the summer.
•Pacific Cod is harvested year-round with most of the harvest early in
the year.
•Sablefish is harvested from spring through fall.
•The market for “refreshed” seafood allows for seafood to be
marketed year-round.
•Seafood is harvested in season, frozen, thawed, then further processed
and sold to retailers.
•Cold storage is required for the refreshed seafood market.
Alaska Seafood Harvesting Seasons
NOAA Fisheries, Alaska Seafood Marketing Institute
Alaska Seafood: Cold Storage
43
•In 2018, Alaska shipped over 300,000 tonnes of food product to Washington, likely all frozen seafood.
•This seafood was likely destined for cold storage in Washington.
•Much of it will be thawed, further processed, and sold as refreshed seafood.
•Some Alaska seafood is stored frozen in Washington and shipped back to Alaska for processing.
•Washington has significantly more cold storage capacity than Alaska.
•USDA reports four cold storage facilities in Alaska and 50 in Washington.
•Washington has over 280 million cubic feet of cold storage capacity, the second most in the US.
•Much of Washington’s cold storage is focused on the seafood industry, including facilities with dock space.
States with the Most Cold Storage Capacity (mill ft3)
City Facilities
Capacity
(million ft3)
Seattle 6 16.8
Tacoma 3 32.6
Bellingham 2 13.6
Lynden 2 21.9
Cold Storage Facilities and Capacity in
Northwest Washington
Sources: USDA NASS Data,
Global Cold Chain Alliance
Alaska Seafood: Logistics
Port (Proxy Port)
Value
($Millions)
Landings
(Tonnes)
Distance
(Air km)
Dutch Harbor 173 348,775 1,274
Aleutian Islands (Akutan)106 250,590 1,220
Kodiak 152 240,653 407
Ak Peninsula (King Cove)112 121,552 986
Naknek 154 84,619 479
Cordova 65 45,009 257
Sitka 75 41,425 953
Ketchikan 46 34,936 1,247
Petersburg 52 29,401 1,090
Seward*60 22,913 121
Bristol Bay (Other)64 19,283 529
Kenai*32 14,474 95
Homer*14 1,815 189
Anchorage*4 1,724 0
Other 80 24,864
Total 1,190 1,282,033
Alaska Fishing Ports’ Proximity to Anchorage
*Road access to Anchorage
Source: NOAA Fisheries
Alaska’s Top Fishing Ports•Air travel is required to transport fresh fish to Anchorage from most ports.
•Frozen fish can be transported on ship to Anchorage from all ports with
Bristol Bay, Western Alaska, and Southcentral Alaska the primary sources.
•Kodiak is the third largest port in the US and could supply fresh fish to
Anchorage in under 15 hours.
•Nine-hour ferry (or fishing tender) trip from Kodiak to Homer then a four-hour
drive to Anchorage airport.
•Ferries could be supplemented with direct fish deliveries on dedicated vessels.
•In some cases, vessels could choose to deliver to a port closer to Anchorage if
demand at the airport warranted.
44
Alaska Seafood: Bristol Bay Sockeye
•Almost 5,000 tonnes of fresh
sockeye was flown from Bristol Bay
to Anchorage in 2019.
•Sockeye flown into Anchorage
must be immediately loaded into a
truck or plane because of the lack
of cold storage.
•Most is loaded onto trucks bound
for domestic markets.
•Lack of cold storage facilities
prevents fresh Bristol Bay sockeye
from being stored and sorted onto
Asia-bound freighters.
•In 2017 and 2018, fresh Bristol Bay
sockeye sold for a $1.32/lb.
premium over frozen sockeye at
the wholesale level.
Source: BTS T100 Source: COAR
Bristol Bay Air Cargo To
Anchorage
Bristol Bay Sockeye by
Processing Type
-
1,000
2,000
3,000
4,000
5,000
2003 2005 2007 2009 2011 2013 2015 2017 2019Tonnes
King Salmon Dillingham
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2000 2003 2006 2009 2012 2015 2018Tonnes
Fresh Frozen Other
45
Alaska Seafood: Passenger Aircraft Freight
•Relatively little air cargo is transported out
of Anchorage in the belly of passenger
aircraft.
•Most is flown to other Alaska communities.
•Most of the remainder is transported to
other US airports during the summer
months.
•The increase of air cargo during the summer
months suggests that approximately 1,500
tonnes of fresh seafood is transported each
summer in the belly of passenger aircraft to
US markets.
•Small fraction of the total fresh seafood that
appears to be transported through the
airport.
•The quantity might increase with access to
cold storage facilities.
Source: BTS T100
Anchorage Air Cargo to the US in the Belly of
Passenger Aircraft (2018)
-
100
200
300
400
500
600
700
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecTonnes per MonthSeattle Other US
46
Alaska Seafood: Iceland Comparison
•The recent increase in passenger flights to Iceland helped
facilitate increased exports of fresh seafood from Iceland.
•The Iceland seafood industry transported fresh seafood in the
belly of these passenger aircraft, opening markets that were
previously not available.
•Alaska could utilize the existing air cargo traffic through
Anchorage to facilitate growth of fresh seafood exports to Asia.
https://ftalphaville.ft.com/2018/11/15/1542259801000/Iceland-s-tourism-boom-has-a-fishy-by-product/
Icelandair Route Map
Source: Icelandair
47
Alaska Seafood: Iceland Comparison
•The average price of Icelandic cod has increased along
with the with amount of cod exported fresh.
•Fresh cod demands a 60% premium over frozen cod.
•Average premium from 2014-2018.
•Increased from an average premium of 21% from 2004-
2008.
•Transporting increasing quantities of fresh seafood
has increased the value of Iceland’s seafood resources.
0%
5%
10%
15%
20%
25%
30%
35%
-
100
200
300
400
500
600
700
800
900
1,000
2000 2003 2006 2009 2012 2015 2018 % of Cod Exported FreshAverage Price of Cod (Króna/kg)Average Cod Price % of Cod Exported Fresh
Share of Cod Exported Fresh and Price of Cod
-
10
20
30
40
50
60
70
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018Million KrónaCod Haddock Saithe Redfish All Others
Value of Fresh Iceland Seafood Exports
Source: Statistics Iceland
48
Alaska Seafood: Norway Comparison
Norway’s Fresh Seafood
Exports to Asia
•Norway exported over 85,000 tonnes of fresh seafood to Asia
in 2018.
•Nearly all fresh fish likely exported by air.
•More than all US seafood air exports to Asia (36,000 tonnes).
•Most Asian markets are closer to Anchorage than they are to
Norway.
•Norway demonstrates Anchorage is close enough to Asia to
export fresh seafood.
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2009 2012 2015 2018TonnesVietnam
China
Thailand
Singapore
South Korea
Japan
Hong Kong
Source: UN Comtrade Database
0 2,000 4,000 6,000 8,000 10,000
Tokyo
Seoul
Beijing
Shanghai
Taipei
Guangzhou
Shenzhen
Hong Kong
Hanoi
Ho Chi Minh City
Bangkok
Singapore
Jakarta
Anchorage Oslo
Air Distance to Asian Airports (km)
49
Alaska Seafood: Business Implications
Analysis: The Alaska seafood market provides key business insights.
1.Alaska seafood could increase in value if exported fresh instead of frozen.
•Iceland has dramatically increased the value of their cod harvest by increasing the share of cod exported as
fresh product by air cargo. Alaska data shows a price premium for fresh vs. frozen product.
•The ability to earn a higher price would incentivize fishermen and processors to pursue and air cargo seafood
program.
2.Alaska could support a robust refreshed seafood market.
•With cold storage capacity, Alaska salmon could be stored frozen in Alaska and thawed and marketed in the
US and Asia throughout the year as refreshed seafood.
•The refresh market for Alaska seafood currently exists but depends on cold storage in Washington, adding an
additional logistical step and cost.
3.The location of Alaska seafood harvest presents logistical challenges that may be solved
by a cold storage facility.
•Fresh sockeye from Bristol Bay demonstrates that flying fresh fish into Anchorage is possible, but cold storage
is needed in order to efficiently reload the fresh fish onto aircraft for export. Otherwise, it must be
immediately trucked to domestic markets.
•Almost a quarter million tonnes of seafood is landed in Kodiak each year. It may be possible to export fresh
Kodiak seafood through Anchorage by utilizing marine and road transport between Kodiak and Anchorage.
50
Air Cargo Route Planning
The direct route between the world’s two busiest airports travels directly over Alaska.
Stopping in Anchorage adds only 75 km to trip length.
51
Routing Planning: Freighter Hub
Source: BTS T100
•About half of all air cargo between the US and Asia is transported through Anchorage.
•About two thirds of freighter cargo travels through Anchorage.
•747-400F dominate air cargo, especially in Anchorage.
•777F are as likely to fly over Anchorage as they are to land.
Asian Air Cargo by Aircraft Class (2018)Asian Freighter Air Cargo by Aircraft (2018)
-
200
400
600
800
1,000
1,200
1,400
1,600
Lower 48 Anc Lower 48 Anc
Inbound OutboundTonnes
Freighter Cargo Passenger Cargo
-
100
200
300
400
500
600
700
800
900
1,000
Lower 48 Anchorage Lower 48 Anchorage
Inbound OutboundTonnes
747-400F/ERF 777F 747-8F Other
52
Route Planning: Changing Aircraft
Anchorage Air Cargo by Aircraft
•Freighter aircraft are changing.
•The last Boeing 747-400F was
delivered in 2009.
•777F and 747-8F aircraft are becoming
a larger share of the market.
•Changes for Anchorage air cargo
•Recent decrease in other aircraft (MD-
11, B747-200/300) from 15 years ago.
•Growth in B747-8F slowed after Cathay
Pacific switched its fleet from 747-8F
back to 747-400F in 2017.
•Anchorage should plan for growing
share of 747-8F aircraft in the future.
•Impact to Anchorage of 777F growth is
uncertain.
Source: BTS T100
Boeing Freighter Orders (global)
Aircraft Orders Deliveries Unfulfilled
747-400ERF 40 40 -
747-400F 126 126 -
747-8F 107 90 17
777F 232 179 53
Source: Boeing
-
1,000
2,000
3,000
4,000
5,000
6,000
2003 2005 2007 2009 2011 2013 2015 20171,000 TonnesOther
McDonnell Douglas MD-11
Boeing 747-200/300
Boeing B777/B777F
Boeing B747-8
Boeing 747-400/400F
53
Route Planning: Payload and Ranges
B777F
B747-8F
B747-400F
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000Payload (lbs)Range (km)Source: Boeing
Aircraft Payload and Ranges •Max Payload is defined as the
maximum amount of cargo an aircraft
can carry during take off.
•An aircraft can carry a Max Payload up
to a certain range (Max Payload
Range).
•Beyond the Max Payload Range, the
aircraft must sacrifice payload in order
to carry additional fuel.
•If an aircraft carries less payload it can
fly further.
•By decreasing its payload 25%,
freighters can expand their range 37-
41%.
B777F B747-8F B747-400F
Max Payload (lbs.)228,700 292,400 245,500
Max Payload Range (km)9,075 7,778 7,223
75% Payload (lbs.)171,525 219,300 184,125
75% Payload Range (km)12,410 10,947 9,970
75% Payload Range Increase 37%41%38%
54
Route Planning: Ideal Distances
https://www.mapdevelopers.com/draw-circle-tool.
Distance to Anchorage
•The farther from Anchorage the Asian airport, the
greater the payload benefit of refueling in Anchorage.
•Impact diminishes at the upper range of an aircraft’s
range.
•Pearl River Delta and Southeast Asia appear ideal for
B747-8F and B777F, respectively.
B747-8F
B747-400F
B777F
5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Distance to Memphis (km)Payload IncreaseDistance to Anchorage (km)
Increased Payload Resulting from Refueling in
Anchorage vs Direct Flight to Memphis
55
Routing Planning: Key Airports
Proximity to the Top Airports in Asia
City Code Anchorage
(km)
Memphis
(km)
Airport’s
Air Cargo
Tokyo NRT 5,526 10,593 2,261
Seoul ICN 6,112 11,142 2,952
Beijing PEK 6,375 11,254 2,074
Shanghai PVG 6,933 11,962 3,769
Taipei TPE 7,531 12,586 2,323
Guangzhou CAN 8,105 13,089 1,891
Shenzhen SZX 8,150 13,147 1,219
Hong Kong HKG 8,177 13,177 5,121
Hanoi HAN 8,693 13,560 567
Ho Chi Minh City SGN 9,664 14,637 713
Bangkok BKK 9,681 14,495 1,495
Singapore SIN 10,727 15,724 2,195
Jakarta CGK 11,315 16,382 954
Top 13 Total 27,531
•Anchorage’s proximity to Asia means that most major Asian airports can be
reached while sacrificing no or little payload.
•Direct flights to Memphis require significant payload sacrifice.
56
Route Planning: Economic Advantage
Flight Economics Calculator •Operating Revenue includes:
•Payload revenue
•Fuel costs
•Anchorage landing fee
•No other aircraft or crew costs
•Economic inputs are based on general
knowledge (refinement would be
valuable).
•Example provided for a B777F bound
from Hong Kong to Memphis
•Opportunity to increase payload by 44%
by refueling in Anchorage.
•Operating Revenue increases by 78%.
Airport HKG
Aircraft B777F
Distance
(km)
Payload
(lbs.)Fuel (gal)Payload
Revenue
Fuel
Cost
Airport
Fees
Operating
Revenue
Direct 13,177 158,382 43,182 $262,732 $151,136 $0 $111,596
Refuel 13,252 228,700 48,760 $379,379 $170,661 $10,000 $198,718
Difference 75 70,318 5,579 $116,647 $19,525 $10,000 $87,122
Economic Inputs
Payload Revenue Base $1.00 per lb.
Payload Revenue Distance $0.05 per lb. per 1,000 km
Fuel Cost $4.00 per gallon
Airport Fees $10,000 per ANC landing
57
Route Planning: Advantage by Airport
Flight Economics Calculator Results by Airport and
Aircraft (compared to direct flight to Memphis)
To ANC
(km)
To MEM
(km)
Refueling Benefit ($)
B777F B747-8F B747-400F
Tokyo 5,526 10,593 18,617 66,641 80,530
Seoul 6,112 11,142 31,944 85,396 98,748
Beijing 6,375 11,254 33,023 87,015 100,257
Shanghai 6,933 11,962 53,456 115,571 128,080
Taipei 7,531 12,586 70,915 140,000 141,939
Guangzhou 8,105 13,089 84,383 147,694 152,170
Shenzhen 8,150 13,147 86,216 148,681 154,428
Hong Kong 8,177 13,177 87,122 149,005 155,418
Hanoi 8,693 13,560 96,788 144,462 159,806
Ho Chi Minh City 9,664 14,637 115,245 190,866 197,286
Bangkok 9,681 14,495 108,515 175,037 184,916
Singapore 10,727 15,724 141,481 252,501
Jakarta 11,315 16,382 164,698 294,806
B747-8F
B747-400F
NRT
ICN
PEK
PVG
TPE
CAN
SZX
HKG
HAN
SGN
BKK
SIN
CGK B777F
10,000 11,000 12,000 13,000 14,000 15,000 16,000
0
50
100
150
200
250
300
350
5,000 6,000 7,000 8,000 9,000 10,000 11,000
Distance to Memphis (km)Increased Operating Revenue $1,000Distance to Anchorage (km)
58
Route Planning: Business Implications
Route mapping and the economic model provide key business insights.
1.Anchorage will not likely lose significant air cargo traffic in the coming years.
•The distance between most Asian airports and most US airports is still too far for the current aircraft (B777F,
B747-8F) to fly with a full payload without refueling in Anchorage.
•Increased utilization of B777F aircraft have already reduced Anchorage refueling for flights from Northeast
Asia (e.g., Tokyo, Seoul, Beijing) to the US West Coast but Anchorage is not likely to lose anymore market
share.
2.Pearl River Delta is a key market.
•Pearl River Delta is home to 3 of the top 13 cargo airports in Asia and is one of the fasted growing economic
zones in the world.
•Can be reached by all aircraft from Anchorage with little to no payload sacrifice while direct flights to any US
airport will require significant payload sacrifice.
3.Southeast Asia is a potential growth market.
•Vietnamese air cargo exports to the US are growing fast.
•Virtually no direct air cargo between the US and Vietnam in 2018 as they routed through other Asian airports
or through Europe.
•Hanoi is within range of Anchorage with B7774 with no payload sacrifice and Ho Chi Minh City has minimal
payload sacrifice.
59
Case Study: O’Hare International (Chicago)
•O’Hare is the 18th busiest cargo airport in the
world (6th busiest in the US).
•O’Hare is Anchorage’s top domestic air cargo
airport with 24% of Anchorage’s domestic cargo.
•34% of O’Hare’s inbound air cargo comes through
Anchorage and 20% of its outbound.
O’Hare Historic Air Cargo
Source: BTS T100
Airport Tonnes Share
Memphis International Airport 40,346 15%
Dallas Fort Worth International Airport 33,194 13%
Hartsfield Jackson Atlanta International Airport 29,243 11%
Louisville Muhammad Ali Int Airport 27,138 10%
Los Angeles International Airport 20,983 8%
Indianapolis International Airport 16,082 6%
Daniel K Inouye International Airport 15,642 6%
Seattle Tacoma International Airport 15,283 6%
John F Kennedy International Airport 11,792 5%
Others 51,222 20%
Total 260,925
•O’Hare may be a direct competitor for cargo
handling/sorting.
•Cargo transported between Asia and O’Hare through
Anchorage could be handled/sorted in Anchorage.
•May be possible to fly cargo from Anchorage direct to
airport of final destination and save the expense of
routing through O’Hare.
Top Domestic Airports for O’Hare Air Cargo (2018)
-
200
400
600
800
1,000
1,200
2003 2005 2007 2009 2011 2013 2015 20171,000 TonnesOutbound Cargo In-Bound Cargo
60
Case Study: O’Hare
•Different air cargo carriers utilize Chicago differently.
•FedEx uses Chicago as a US distribution hub.
•China Southern and Cargolux account for 75% of the
direct Asian cargo.
•Atlas Air cargo brings six times as much cargo into
Chicago from Anchorage than the reverse.
•Some of the directional trends may be a function of
cargo sharing agreements.
-
200
400
600
800
1,000
1,200
Anchorage Asia Non-Asia
International
United States Total1,000 TonnesInbound Outbound
O’Hare Historic Air Cargo (2018)
Source: BTS T100
- 20 40 60 80
Anchorage
Asia
Int (Non-Asia)
US (Non-ANC)
Anchorage
Asia
Int (Non-Asia)
US (Non-ANC)
Anchorage
Asia
Int (Non-Asia)
US (Non-ANC)
Anchorage
Asia
Int (Non-Asia)
US (Non-ANC)
Anchorage
Asia
Int (Non-Asia)
US (Non-ANC)
Anchorage
Asia
Int (Non-Asia)
US (Non-ANC)UPSAtlasChina AirlinesCargoluxChina SouthernFedEx1,000 Tonnes
Outbound
Inbound
Profiles of Key Carriers (2018)
61
Case Study: Los Angeles Int. (LAX)
•LAX is the 10th busiest cargo airport in the world
(4th busiest in the US).
•LAX has the second largest amount of direct
Asian air cargo of US airports (behind Anchorage).
•LAX competes with Anchorage for direct Asian air
cargo.
LAX Historic Air Cargo
Source: BTS T100
•In 2016, three times as much Asian air cargo flew
through Anchorage than went direct to LAX, by 2018
the ratio reversed with three times more arriving direct.
•Data does not reveal which cargo destined for LAX
refuels in Anchorage (e.g., original source airport,
carrier, or aircraft type).
-
200
400
600
800
1,000
1,200
1,400
2003 2005 2007 2009 2011 2013 2015 20171,000 TonnesOutbound Cargo Inbound Cargo
-
50
100
150
200
250
300
350
400
450
500
2003 2005 2007 2009 2011 2013 2015 20171,000 TonnesAnchorage Asia
Inbound LAX Air Cargo: Anchorage vs. Asian Direct
62
Case Study: Los Angeles Int. (LAX)
Anchorage and LAX Top Asian Airports for Freighter Cargo (2018
City Airport Code ANC Total
(tonnes)
LAX Total
(tonnes)
Distance to
ANC (km)
ANC
Share
Shanghai PVG 306,233 145,570 6,933 68%
Seoul ICN 309,932 123,230 6,112 72%
Tokyo NRT 200,131 56,429 5,526 78%
Taipei TPE 323,824 42,200 7,531 88%
Hong Kong HKG 629,598 28,848 8,177 96%
Guangzhou CAN 9,399 37,004 8,105 20%
Osaka KIX 92,800 12,046 5,922 89%
Shenzhen SZX 39,657 0 8,150 100%
Wuhan WUH 22,319 0 7,355 100%
Others 49,678 2
Total 1,983,571 445,331
Shanghai
Seoul
Tokyo
Taipei
Hong Kong
Guangzhou
Osaka
ShenzhenWuhan
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
5,000 5,500 6,000 6,500 7,000 7,500 8,000 8,500ANC's Share of CargoDistance to Anchorage (km)
Share of Freighter Cargo and Distance
to Anchorage (2018)
•Correlation exists between the proximity of Asian airports to
Anchorage/North America and the likelihood cargo is flying direct to
LAX.
•Likely that all air cargo eventually destined for LAX originating in
closer Asian airports fly direct to LAX.
•Anchorage may be in competition with LAX for Pearl River Delta and
Southeast Asia cargo flying on longer range aircraft.
Source: BTS T100
63
Value Proposition
Three primary value propositions are identified for the Alaska Cargo and Cold Storage facility.
1.Seafood
•Existing perishable cargo, especially lobster, can be anchor customers for cold storage facilities in Anchorage.
•This cold storage can be utilized to facilitate the creation of new markets for fresh seafood in Asia. Alaska
seafood requires Anchorage cold storage in order to be exported from Alaska by aircraft at a meaningful scale.
Otherwise it must be immediately loaded onto trucks.
•Anchorage cold storage could support a refreshed seafood market based in Anchorage instead of Washington
with the refreshed product transported to market from the Anchorage airport.
•The Asian lobster market demonstrates the feasibility of creating new markets for high value seafood.
2.Pearl River Delta and Vietnam
•The Pearl River Delta has one of the world’s largest economies with an GDP of two trillion dollars and because
of its location will never be able to fly over Anchorage with new long-range aircraft.
•Vietnam is the fastest growing air cargo exporter in Asia and within range of B777F aircraft. Vietnam presents
an opportunity to utilize new aircraft to capture a new market and establish Anchorage as Vietnam’s North
America air cargo hub.
3.Starburst
•FedEx and UPS are both large enough to support dedicated cargo facilities in Anchorage and both utilize
Anchorage as a “Starburst” hub to sort cargo between US and Asia in Anchorage.
•Other carriers do not have access to cargo facilities in Anchorage.
•Cargo facilities with third party access and utilizing Anchorage’s liberal cargo rules should target each non -
integrated air carrier.
64
Risks
Three key risks to the success of Alaska Cargo and Cold Storage have been identified.
1.Trade Conflicts
•The recent trade conflict between the US and China have slowed the growth of air cargo trade with China, the
largest single air cargo market in Asia.
•The time horizon of cargo investment likely will outlast any trade conflict.
•Trade conflict may result in a trade deal requiring more US to China air trade.
2.Recession
•The 2008/2009 recession illustrated the devastating impact of a global recession on air cargo trade.
•Recession risk may be hard to mitigate but is not unique to investment in the air cargo industry.
3.Aircraft Switching
•The transition to longer range aircraft has reduced Anchorage’s role in the Asian air cargo market, especially
with regards to trade between Northeast Asia and the US West Coast.
•Anchorage is not at risk of losing market share in Southern and Southeast Asia and the US Midwest and East
Coast with the adoption of longer-range aircraft. Southern China and Southeast Asia are the fastest growing
economies in Asia.
65
Questions?
66