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State issues permit for power plant in Interior

Posted: February 8, 2012 - 10:40am

The state of Alaska has issued a key permit to allow a mothballed 50-megawatt coal power plant in Interior Alaska to restart, officials with Golden Valley Electric Association, the Interior Alaska electric cooperative, said Feb. 6.

Alaska’s Department of Environmental Conservation issued what is essentially a renewal of an air quality permit issued earlier for the Healy Clean Coal Project, which was built in the late 1990s to test experimental new air emissions technology, according to Brian Newton, Golden Valley’s president.

Appeals of the permit are expected to be filed, however, by environmental groups who oppose the restart of the Healy coal plant, which is about 90 miles south of Fairbanks, Newton said.

“This is a good first step, but we have a long way to go to get the permit finalized,” Newton said. The utility is negotiating with a coalition of environmental groups led by the Sierra Club in hopes to avoiding protracted appeals and lawsuits.

The negotiations center on additional modifications Golden Valley could make in the plant to further reduce air emissions. Estimated costs to restart the plant are “something north of $20 million,” Newton said, but if additional modifications requested by the Sierra Club are made the costs will be much higher.

National environmental groups have engaged the issue because it is a test of policy in the Obama administration for coal-fired power plants. There are some new U.S. Environmental Protection Agency rules incorporated in the permit but the main issue is whether the plant will need a completely new air quality permit or whether the existing permit can be renewed, state officials said on background.

The plant has not operated since 1999 but its utilities and other systems have been kept active by Golden Valley and AIDEA, which is still the plant owner. Environmental groups argue that the plant has been shut down so long that a completely new air permit is needed. The state, and Golden Valley, disagree with that.

The state has issued the air permit as a renewal but EPA can still overturn that decision. A new permit will require extensive new analysis and evaluation of the plant systems to see if they are the best available technology. That will all take longer, adding to the delay in getting the plant restarted.

There is also sensitivity over the plant because it is at Healy, near Denali National Park and its pristine air shed.

State commissioner of Environmental Conservation Larry Hartig said the new rules are incorporated in the renewed air quality permit and the state has the support of the U.S. Environmental Protection Agency’s Region 10 office in Seattle in its interpretation of the rules. However, there may still be some disagreement from EPA headquarters in Washington, D.C. where the Sierra Club has been focusing its efforts, Hartig said in an interview.

The plant operated for a year to test the emissions systems under an agreement with the U.S. Department of Energy but then closed in 1999 because of a commercial dispute between Golden Valley, which had contracted to purchase the power, and the plant owners, the state-owned Alaska Industrial Development and Export Authority.

The U.S. DOE paid for about half the cost of the $300 million plant under a program to test new air emissions control systems.

The emissions technology systems, developed by TRW, performed well, DOE said in an evaluation. However, Golden Valley claimed operating costs were too high.

A decade of lawsuits and negotiations followed until Golden Valley agreed to purchase the plant from the state authority. The utility and the state have since been working on a plan to restart the facility and renew its permits including the air quality permit.

The state Department of Environmental Conservation issues the air permit under authority delegated by the U.S. Environmental Protection Act under the federal Clean Air Act.

Coal-fired power from the plant will be less expensive than power Golden Valley now generates with oil-fired turbines. If the Healy Clean Coal Project comes back on line the utility expects to be able to reduce rates to its Interior Alaska customers by 20 percent, Fairbanks North Star Borough Mayor Luke Hopkins said in an interview.

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