GVEA moves ahead on Healy proposal
Coal plant permit faces scrutiny

Fairbanks Daily News Miner
Key passages from a much longer article, 7/13/92

A Fairbanks utility company may be close to obtaining state approval for a new coal-fired power plant that officials say will be a key to the region's energy future.

Critics say, however, that the plant is unnecessary, unclean and that it might drive up power rates in Southcentral.

If built, the Healy Clean Coal Project would become one of the state's largest construction projects this decade.

Lawyers, executives, consultants, and economists were on hand Thursday as the Alaska Public Utilities Commission wrapped up three days of testimony in Anchorage.

The commission must decide if the proposed $208 million plant will help or hurt power customers.

Don Schroer, APUC chairman, said he thought the commission will decide with a month whether to issue permits. He would not say if approval was expected.

But Mike Kelly, manager of Golden Valley Electric Association in Fairbanks, said the project has solid support. GVEA would operate the plant and buy much of the power. The Alaska Industrial Development and Export Authority, a state agency, would build it.

"In the end, GVEA, AIDEA, and the APUC commission staff all absolutely agreed in the conclusion that the power plant should be built and it is the cheapest available power. Normally you don't come in with that absolute agreement," Kelly said.

Almost half the plant's cost would come from a federal program to promote clean coal-burning technology. The rest would come mostly from a state grant and a bond issue by AIDEA.

The 53 megawatt plant would be built at Healy, where Golden Valley already operates a coal-fired power plant about half as powerful.

It would burn coal from the nearby Usibelli Coal Mine.

Opponents say gas-fired and hydroelectric plants around Anchorage and on the Kenai Peninsula can send enough power north to keep the lights burning in Fairbanks for years to come.

Kelly acknowledged that the plant may come on line several years before the power is needed. Plans call for the new plant to begin operating by 1997 and Golden Valley's existing coal-fired plant at Healy and two North Pole oil-fired plants, which between them make up most of GVEA's capacity, won't be ready to retire until 2007, Kelly said.

But he likened the proposed coal-fired plant in Healy to an unbeatable offer from a car dealer - "You can either wait and pay full price or you can buy it now and we'll give you 50 percent off," Kelly said.

Also he noted, the time for a new plant in the Interior is not that far off, even though GVEA has about 200 megawatts of capacity now and its peak demand in the winter was only about 100 megawatts this year.

According to its own policies, GVEA must have enough capacity to cover peak demand even if its largest unit - a 60 megawatt oil-fired generator in North Pole - is broken down. So even now, GVEA mush have a minimum of 160 megawatts capacity, Kelly said.

And he expects that the Fort Knox gold mine, being developed by Amax Corp. on Cleary Summit, will increase demand here by 35 megawatts at startup time in a few years. That in itself will bring GVEA close to needing more power, even without expected overall growth in the Fairbanks area, he said.

Tje state's ;argest power utility, Chugach Electric Association, opposes the new Healy plant, but did not testify during last week's hearing.

Chugach operates the huge gas-fired Beluga plant on the west side of Cook Inlet. The plant supplies much of Anchorage.

Dave Highers, Chugach general manager, said the state will end up with far more power-generating capacity than it needs and that could drive up rates for some consumers.

Highers said Golden Valley buys about $2 million in power over the intertie line from Chugach annually. If those sales dry up, Chugach would have to pay higher rates for customers in Southcentral, he said.

Kelly said GVEA customers shouldn't be obligated to contribute to Chugach's profits when they have the opportunity to obtain cheaper, more reliable power here. Besides, he said, GVEA will continue to use substantial amounts of Chugach power if the Fort Knox mine comes on.

Randall Weiner, executive director for the environmental law firm Trustees for Alaska, condemned the construction of another coal fired plant that would sit near the entrance to Denali National Park.

He said Alaska should use its clean-burning natural gas reserves and avoid burning coal despite federal grants targeted for the fuel.