ELECTRIC GENERATION AND TRANSMISSION IN THE RAILBELT Joe Griffith General Manager, MEA Chief Executive Officer, ARCTEC Commonwealth North November 15, 2013 1
RAILBELT MAKEUP Electrical utilities are all cooperatives or municipalities Anchorage Municipal Light & Power Seward Electric System Chugach Electric Association Golden Valley Electric Association Homer Electric Association Matanuska Electric Association 2
RAILBELT ELECTRICAL GENERATION 1 Eklutna Generation Station (EGS) 2 Bradley Lake 3 Soldotna 4 Nikiski 5 Fire Island 6 SPP 7 ML&P Plants 2 & 2A 8 Beluga 9 Mount Spurr Geothermal Project 10 Watana 11 Eva Creek 12 Healy 2 (HCC) 13 Battery Energy Storage System (BESS) 14 Zehnder 15 North Pole 3
RAILBELT GENERATION SUITE Chugach Beluga, South Anchorage, IGT, Cooper Lake hydro, Eklutna hydro AML&P Plant 1, 2, & 2A (soon to be built), Eklutna hydro GVEA North Pole, Eva Creek Wind, Healy 1 & 2, Aurora (IPP), BESS, Zehnder MEA Eklutna Generation Station, Eklutna hydro, + 2 small IPPs HEA Nikiski combined cycle, Soldotna, Bernice Lake SES Seward plant Note: All above participate in Bradley Lake hydro (state-owned IPP)- 124 mw capacity 4
RAILBELT GENERATION All utilities have or will soon have their own generation capability New generation cost is approximately $1 billion Utility balance sheets are stressed No additional debt-assuming capability 5
SITUATION New generation system changes playing field due to transmission constraints Limits Bradley Lake power deliveries when needed most. Railbelt economy demands reasonably-priced power (as does the rest of Alaska) 6
RAILBELT TRANSMISSION SYSTEM What it does Connects utilities Facilitates economic dispatch Transfers power Shares reserves Two main challenges Physical infrastructure constraints Management 7
AEA TRANSMISSION STUDY Southern section upgrades proposed: Quartz creek to University (AC) Additional conductor from Quartz Creek to Daves Creek 230 kv upgrade from Daves Creek to University s/s DC tie line from Bernice Lake to Beluga 2 nd 115kV line from Bradley Junction to Soldotna Anchorage battery Northern Upgrades 230 kv Lake Lorraine to Douglas upgrade Douglas to Healy upgrade 8
Current Railbelt Transmission System 9
Proposed Upgrades to Transmission System 10
AEA TRANSMISSION STUDY CASES MODELED Scenario 1: All transmission upgrades Scenario 2: Southern transmission upgrades Scenario 3: Northern transmission upgrades Scenario 4: No transmission upgrades 11
AEA TRANSMISSION STUDY NO TRANSMISSION UPGRADES The system operates as 5 separate utilities Each provides its own reserves The interface limit for Kenai North is 75 MW The transfer limit from Stevens (Talkeetna) to Cantwell is 75 MW North Pole combined cycle plant is must-run October through March Bradley Spin is only 10 MW Commitment/Dispatch hurdles exist between all utilities Opportunity cost of over $140 million per year 12
AEA TRANSMISSION STUDY VALUE OF PROPOSED UPGRADES $140,000,000 per year 13
SHORT-TERM ENERGY DELIVERY MITIGATIONS Decongest the transmission system to facilitate optimum use of Bradley Lake energy and capacity Create a single transmission operator Maintain Cook Inlet gas market Foster more exploration in Cook Inlet Import LNG and/or propane 14
ARCTEC 2014 REQUESTS Unconstrain Bradley Lake Silvertip Creek to Hope Substation 115 kv transmission line 4,500,000 Powerline Pass to Indian 115 kv transmission line 5,000,000 Eklutna hydro transmission upgrade 4,000,000 Battle Creek Diversion into Bradley Lake $24,000,000 50/50 Shared cost between State of Alaska and utilities. TOTAL REQUEST: $37,500,000 15
Transco Transco - A transmission owning entity A regulated entity which owns, constructs, and maintains transmission lines used to transmit wholesale power It may or may not handle power dispatch and coordination Secures financing Executes project 16
ISO An Independent System Operator Description An ISO owns no assets It is neutral party responsible for planning, management and control of the electric transmission grid in a state or region Characteristics Ensures non-discriminatory access; Possession of operational authority for all transmission facilities under the ISO s control; and Exclusive authority to maintain short-term reliability. Regulatory Compact Plans, conditions and approves projects 17
The Railbelt Model TRANSCO = Alaska Railbelt Cooperative Transmission & Energy Company (ARCTEC) ISO = Railbelt Reliability Authority 18
ARCTEC as TRANSCO Non-discriminatory open access Existing assets from transmission providers are pooled for joint use with full cost recovery for all users Universal rates based on system load that will encourage economic transfer of generation across network Transition to Full implementation Single control area within 5 years Economic dispatch within 10 years Regional planning for all future transmission 19
Railbelt Reliability Authority as ISO Adoption of IMC Reliability Standards Plan and Condition Projects Enforce Standards Regulatory Compact Ensure Non-discriminatory Transmission Access Single System-wide Transmission Rate Responsible for Short-term Reliability 20
INDEPENDENT POWER PRODUCERS (IPPs) Federal law: Public Utility Regulatory Policies Act (PURPA, 1978) Avoided cost principle for Combined Heat and Power (CHP) utilities Must meet or beat avoided cost (2 types) Firm and non-firm Alaska RCA regulations mimic federal PURPA Rate of return: co-ops 3-5% / IPPs need 10%+ IPPs have filed with the RCA to change regulations IPPs pushing for Alaska statute changes to force utilities to accept their power at the expense of ratepayers 21
CONCLUSION Without a program to rectify transmission shortcoming asap Cost of electricity will continue to rise Possible savings will be forfeited Alaska will not achieve its alternative energy goal Railbelt will be captive to Cook Inlet natural gas pricing and supply issues 22
DISCUSSION / QUESTIONS 23
AEA TRANSMISSION STUDY ALL TRANSMISSION UPGRADES CASE Base Case The system operates as a single pool with a single system reserve requirement The interface limit for Kenai North is 125 MW Anchorage battery is 25 MW Bradley spin is 27 MW 24
AEA TRANSMISSION STUDY SOUTHERN TRANSMISSION CASES Case S1: Remove AC upgrades from Quartz Creek to University The system operates as a single pool with a single system reserve requirement The interface limit for Kenai North is 100 MW Anchorage battery is 25 MW Bradley spin is 27 MW Case S2: Remove DC tie The system operates as a single pool with a single system reserve requirement The interface limit for Kenai North is 75 MW Anchorage battery is 75 MW Bradley spin is 27 MW 25
AEA TRANSMISSION STUDY SOUTHERN TRANSMISSION CASES Case S3: Do both S1 and S2 The system effectively operates as 2 pools Railbelt minus HEA HEA Shared reserves HEA provides its own reserves The interface limit for Kenai North is 75 MW Bradley spin is 27 MW Commitment/Dispatch hurdles exist between all other companies and HEA 26
AEA TRANSMISSION STUDY SOUTHERN TRANSMISSION CASES Case S4: Case S3 + remove 2nd line from Bradley to Soldotna The system effectively operates as 2 pools Railbelt minus HEA HEA Shared reserves HEA provides its own reserves The interface limit for Kenai North is 75 MW Bradley spin is 10 MW Commitment/Dispatch hurdles exist between all other companies and HEA 27