A bill is pending in the state House that would put the state’s hammer on the six “railbelt” utilities that have been squabbling for years over uniform reliability standards and how to efficiently move power up and down the regional power transmission grid.
Also, independent private power producers complain they are stymied in selling their power to customers through the grid by having to pay tolls all through the system. In some cases these have added up to some sales of private power uneconomic by the time the electricity reaches the customer.
Be patient – we’re working on it, the state’s largest utilities told state legislators in Juneau last Thursday, April 5. “We appreciate the pressure. The heat is on us,” Julie Estey, spokeswoman for Matanuska Electric Association, told the committee.
Rep. Adam Wool, D-Fairbanks, who chairs the committee, has introduced House Bill 382, which would establish a Railbelt Electric System Authority that could order reliability standards, dispatch of the most economical power and open-access rules for independent power producers.
Estey said the utilities oppose Wool’s bill because they believe those goals can be achieved voluntarily. A lot of progress has been made already, she said.
The utilities have been working on plans for closer coordination since a 2015 letter from the Regulatory Commission of Alaska, or RCA, that was a thinly-veiled warning to the utilities to develop plans for coordination voluntarily or the Commission might pursue some form of a compulsory order.
Recent progress, all voluntary, was outlined in a letter to the committee by the chief executive officers of four of the major utilities: Tony Izzo of Matanuska Electric in Palmer; Lee Thibert of Anchorage’s Chugach Electric; Cory Borgeson of Golden Valley Electric in Fairbanks and Brad Janorschke of Homer Electric.
The four executives told the legislators that they have collectively hired a consulting firm, GDS, Inc., to help develop a plan for unified railbelt operations systems. The company has extensive experience with independent system operators and regional transportation systems, the letter said, and will help “stakeholders” in the railbelt get over obvious biases.
GDS will recommend an operational model for reliability standards, open access and regional planning, “and will further efforts to study the benefits of a single-system economic dispatch,” of power through the grid. The results of the GDS work will be submitted to the Regulatory Commission of Alaska, or RCA, in the next two months.
“Their solution (will be) one where none of the parties will get exactly what they want, but each has a path forward they can live with,” the letter said.
Several other steps have already been taken, all the result of voluntary collaboration. “After considerable modeling effort involving unprecedented information-sharing, we now have a model detailing the value of economic dispatch that all railbelt utilities agree to,” the letter said.
Chugach, MEA and ML&P have also entered into a Memorandum of Understanding to move forward with contractual economic dispatch, with a contract that would guide when and how the lowest-cost power is to be shared. It would be filed with the RCA later this year, the letter said.
All the utilities have signed onto an agreement with American Transmission Co. to discuss a regional transmission company that could jointly own the major transmission systems, creating an entity that could develop improvements for the overall system and the financial structure to accomplish it.
Chugach, ML&P and MEA are also now operating a “loose” power pool, an informal arrangement to share generation capacity among the three. This is already saving ratepayers in Southcentral Alaska millions of dollars annually, Estey told Wool’s committee. It is a step toward a “tight” power pool, or one driven by tighter contractual agreements.
“We’re moving toward this, running tests of the system as if the tight power pool existed and how costs are settled out,” she said. Power dispatches are now done informally, using the telephone, but a tight pool requires more automation and software upgrades will be needed, she said.
Estey told the committee that the railbelt now has assets in place they didn’t have previously which will make efficient power sharing more feasible. One is MEA’s new Eklutna power plant, which has the capability, unique in the railbelt, of efficiently dispatching small increments of power to match swings in load demand.
Other new assets include Municipal Light & Power’s new “Plant 2A” as well as the Southcentral Power Plant jointly owned by Chugach and ML&P, which, because of new technology, are the most fuel-efficient natural gas generation plants in the railbelt. “This is important because 40 percent of our cost is fuel, so if we burn less it has real impact on the ratepayers,” Estey said.
Having uniform reliability standards is obviously important when power is transferred through the grid and the railbelt utilities are now in close agreement on what they should be. But there are some complications that mostly result from the small size and geographic spread of the railbelt utilities.
“A lot of it has to do with redundancy,” or having backup capacity, Estey said. “How much do we need? How will we pay for it?”
In practice, this is handled by having “spinning reserves,” or generators running at low speeds that can be throttled up fast if generators in another part of the grid go down.
Large batteries can also supply short-term bursts of power. Golden Valley Electric in Fairbanks has a battery-backup.
The Alaska handicap is that utilities in the railbelt must maintain a 30 percent spinning reserve to have adequate backup capacity in the system. What gets complicated is how this backup is maintained among the different utilities, which have different needs.
“We’re 90 percent there,” in an agreement on reliability, Estey said, and having assets like the Eklutna generating station and the new Plant 2A will go a long way in ensuring a reliable system once the power-sharing arrangements are worked out.