Wednesday, August 13, 2008

Energy bill doesn’t lower peninsula costs, stop utilities from looking ahead

By Jenny Neyman
Redoubt Reporter

A portion of the Alaska Legislature’s $1 billion energy relief package aimed at lowering utility costs won’t have any effect on Homer Electric Association or Enstar Natural Gas customers on the Kenai Peninsula.

The legislation calls for giving everyone eligible for an Alaska Permanent Fund dividend a $1,200 resource rebate, suspending the state’s 8 cents a gallon fuel tax, allowing rural villages to borrow up to $750,000 for buying bulk fuel, and putting more money into the Power Cost Equalization program, which helps rural Alaskans pay high utility costs.

The bad news is, the PCE portion of the bill passed Thursday night won’t lower utility costs for peninsula residents.

“I know it was being discussed. The Senate version (of the bill) would have expanded it to include HEA, but that was obviously abandoned,” said Rick Eckert, manager of business development and regulatory affairs for HEA.

The good news is, the reason the PCE change won’t lower bills on the peninsula is because they’re already too low to qualify for the program.

As it is, Eckert doesn’t expect the legislation to impact HEA. But the extra $1,200 going to HEA members may have an indirect impact on the electric co-op, simply because it may make it easier for people to pay their bills.

Utilities in Alaska aren’t allowed to shut off service over bill delinquency when temperatures are below freezing. There is a state heating assistance program to help with those situations.

“I would imagine it’ll be easier for everybody to cover their bills this winter, and that probably will help HEA,” Eckert said.

Curtis Thayer, director of corporate and external affairs for Enstar, said the natural gas utility also won’t be affected by the energy legislation package, except, perhaps, indirectly, like HEA.

“Our delinquency rate always goes up in the winter months when people are struggling to pay their bills. I would hope this encourages people to come in and take care of the problem ahead of time,” Thayer said.

Enstar offers a $25 credit to customers paying their bill a year in advance. But Thayer doesn’t expect to see a mass of people directing their resource rebates toward their gas bill.

“I would anticipate we will be competing against Best Buy and Cal Worthington Ford for people to use those checks,” he said.

Thayer said he expects the rebates will be helpful to people pinched by rising energy costs, but he would like to see the state seek a more long-term solution to the situation.

“They’ve already awarded the $1,200, so rather than get into a debate about whether that was a good idea, they still have billions of dollars as surplus and now is the time to look at what they could invest in,” Thayer said.

There’s buzz in the state about developing renewable resources, like hydro, solar, tidal or wind power. But for Thayer, the answer is natural gas.

“It’s real easy to talk about renewables, but at the end of the day you still have to heat your homes,” and gas is an inexpensive way to do that, he said.

“The big ideas about hydro, or coal to liquids technology, they all cost billions of dollars. But let’s look to see about adding more turbines and expanding the natural gas grid that we already have,” he said.

Thayer would like to see the state dedicate some of the wealth it has amassed from high oil prices to beefing up and expanding the state’s natural gas infrastructure, as well as investing in an in-state natural gas pipeline from the North Slope to Southcentral.

“Maybe there’s a way. Maybe there’s a spot for the state to encourage that or invest in that line to bring low-cost energy down into Fairbanks and south to Homer,” he said.

An in-state natural gas pipeline, potentially hooking up with a line proposed by Trans-Canada or the North Slope oil producers, could provide a sustained source of gas to Southcentral areas like Anchorage and the central Kenai Peninsula, as well as allow other parts of the state to take advantage of the relatively cheap fuel.

“For Southcentral it would be an assured, long-term supply and possibly revitalize the Agrium plant, and provide for the heating needs of residents,” Thayer said.

The gasline plan Enstar is looking at investing in would cost an estimated $3 billion, he said, and now’s the time to consider it.

“We should talk about our state as far as what the next best step for us is,” he said.
For HEA, improving infrastructure is an important step for the state to take.

“I’m a significant proponent of infrastructure — new technologies, transmission lines. These things set us up for the future,” Eckert said.

There are infrastructure projects on the peninsula in need of funding. Eckert said HEA had asked for $250,000 in the state budget to cut beetle-killed trees outside their utility right of way to protect power lines, but was turned down. Also vetoed was funding for a $900,000 project to redesign and fix issues with old lines on the south side of Kachemak Bay, he said.
HEA’s largest item to make it into, then get cut out of, the state budget proposal this year was $12.5 million for upgrades and improvements to the power transmission system, primarily through the industrial area between Soldotna and Nikiski, Eckert said.

Without state money, these projects have the potential to increase HEA electric bills, “because we’re going to have to spend the money. It’s eventually going to have to be done, whether we get a grant for it or not,” he said.

HEA has received funding to study four low-impact hydro projects in the Cooper Landing area and has an agreement with a wind development company that’s gathering information at several test sites, according to Eckert.

“It’s all necessary work to determine if those resources are practical or feasible,” he said.
Eckert said he thinks the Legislature’s plan was to help people through this winter, then dig into energy issues again next time around.

“I think they regard this as being a means of getting people through the winter and then the Legislature can work with a long-term plan in the next regular session,” he said.

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