NORTH SLOPE BOROUGH Department of Public Works P.O. Box 350 Barrow, Alaska 99723

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1 NORTH SLOPE BOROUGH Department of Public Works P.O. Box 350 Barrow, Alaska Phone: Fax: Charlie Sakeagak, Director ATQASUK TRANSMISSION LINE PROJECT INTRODUCTION The continuing and unpredictable cost of imported diesel in the last two decades has prompted the North Slope Borough (NSB) to explore alternative energy, which at this time has focused on the intertie to Atqasuk (see attachment #1) and eventually to Wainwright to displace fuel oil with natural gas supply from Barrow to meet both power and space heating requirements in the village. There have been at least two feasibility studies to explore alternatives to reduce the consumption of diesel in Atqasuk in the last 30 years. Both studies concluded it is technically and economically feasible to build a transmission line with minimal social and environmental impact to the resident. Because of the climbing exorbitant prices of fuel oil in the interior village of Atqasuk, NSB has hired engineering firms in the past to assess alternative energy solutions that will reduce the consumption of diesel fuel and make current power generation systems more efficient. Since Atqasuk was formed in 1971, the delivery of diesel has been difficult because it is one of the two villages in the interior of North Slope not accessible to the marine lighterage system. Fuel is delivered by plane or rolligons each year making electricity doubly expensive for the residents of Atqasuk. The transmission line to Atqasuk is to cut overall operating costs of independent utilities, increase the reliability of power supply, and it will provide the village a savings in fuel consumption. Atqasuk is one of the smaller villages in the North Slope that has bulk tank farms to store diesel and gasoline like all outlying villages in the North Slope Borough (total of 7 villages). The price of diesel fuel delivered to Atqasuk in FY 2010 was $5.16 per gallon. The annual fuel costs graph from 2002 to 2011 is attached. (Attachment #2). The fuel is subsidized by the NSB. The village is not accessible by waterways. If the village runs short on diesel in the summer or fall, airplanes fly in fuel; in the winder months the rolligons are used. There are (5) 17,000 gallon tanks at the power plant and (2) 250,000 gallon tanks. Twenty-two percent is used by the NSB Departments including NSBPW, Health, PSO, Fire Department and Mayor s Department. Twenty percent is consumed by school and residential and 3% by commercial users. The price of diesel landed in Atqasuk is projected to increase at an average annual rate of 1.6 percent.

2 OBJECTIVE The most recent feasibility study assessed the most viable route for a high voltage transmission line and explored maximum utilization of existing infrastructure. The intent of the study was to reduce impact on land owners and find the most economically viable construction methods terms of short term capital investment and long term operations and maintenance. The study addressed data minimizing environmental impact and avoidance of geotechnical hazards by communicating with affected agencies. The preliminary engineering work will finalize the initial construction phase this year and the actual construction should happen within a two year period. There were two proposed routes (see attachment #3) finalized after exhaustive alternative analysis for the power line to the village. The Easter Route (ER2) at 68 miles is the preferred route over the Western Route at 74 miles. (An ice road was not included in the estimates.) The estimated cost of the ER2 is $16,577,142 vs. Western Route (WR1) at $31,787,570. The formal time which will include concerns in engineering, economic, and environmental analyses. The carbon footprint would be greatly reduced but the implementation of the project comes with possible costs for nature, especially bird population. It is anticipated the proposed transmission line will have minimal impact to the overall Barrow Gas Field production rate and reserves. The main gas field near Barrow has a 100 to 160 year reserve capacity. Through the passage of the Barrow Gas Field Transfer Act of 1984 the surrounding villages are able to use the natural gas by gas pipeline or electric transmission. METHODS A 3-Phase Alternating Current (AC) is the recommended power type location. It has good capital costs, greater reliability, better equipment availability and good commercial application capability. In the initial feasibility study made by James West and Associates in 1981, a proposed transmission line of a one wire Single Wire Earth Return (SWER) was built from Bethel to Napakiak in 2008 with N frame fiber glass poles and guy wires. It is experienced deterioration resulting in frequent blackouts and replaced with standard wood poles in The SWER line was known to have a poor conductor of electricity and therefore was a poor ground for electricity. The projected Eastern Route power line would be all overhead construction (at least 60 off ground) and pole spacing (700 to 1200 feet). The transmission line will begin from the Barrow Utilities Electric Incorporated power plant with a recommended structure of a 69 kv transmission line structure. Fiber Reinforced polymer (FRP) pole are the recommended poles but the preliminary engineering work will determined if it is feasible in the Arctic conditions. The winter construction of the intertie is assumed to take place over a 2 year period.

3 BENEFITS In the initial feasibility study, the question: Is the transmission line from Barrow to Atqasuk a cost effective project for the NSB capital investment? The answer is yes. The biggest motivator in the studies have been the high costs of power plant operation and costs of both overland and air delivery of fuel. Converting heating systems to electricity would decrease private sector and public sector heating costs by about 30? As well as reducing the carbon footprint of the community. Construction of the intertie promises to reduce the annual fuel and non-fuel operating and maintenance costs of the Atqasuk power plant and for heating costs as well. Operating life of existing generators will be greatly extended as well, avoiding costs of replacement and major overhauls. The benefit will be the cost savings measured by comparing the costs associated with the existing power generation and heating system in the village against the costs associated with the proposed project. CONCLUSION The intertie will stabilize the cost of energy and cost effective as the cost per kwh is practical in magnitude and is considerably lower than the comparable cost per kwh of the existing system. The Eastern Route is the preferred route as it avoids dens avian nesting areas and populations, utilizes existing infrastructure, and other environmental factors. The proposed transmission line has the least estimated capital costs and the highest possible fuel displacement (power and heat) therefore makes the most of the economic sense based on measuring the net present value of cost savings compared to other alternatives. Based on the recent feasibility study of the 2011 the Net Present Value of cost savings of the intertie project alternative is: Eastern Route with AC Current, a savings of $50.7 million vs. Western Route with AC Current, a savings of $32.6 million. (Source: Northern Economics, Inc.) The transmission line is recommended to be installed in two phases. The first phase would begin sometimes in 2014 and would involve connecting the transmission line to the village power system only. The second segment would begin in 2016 and would involve the conversion of residential homes to electrical space heat.

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