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Parnell offers budget amendments

Posted: February 20, 2014 - 9:37pm

JUNEAU — Gov. Sean Parnell has proposed an additional $32.7 million for the proposed Susitna-Watana hydro project, but that is contingent upon the Alaska Energy Authority securing land access permits required for field studies and other work.

AEA is the group pursuing the massive project between Anchorage and Fairbanks.

Parnell proposed the funding as part of his amended supplemental budget for the current fiscal year. The dam funding brings the total supplemental package — which typically includes unforeseen or unexpected costs — to about $86 million. This year’s package also includes funding for things like fire suppression and disaster relief associated with flooding last year.

AEA had wanted $110 million to complete its initial study report and prepare its license application for the Federal Energy Regulatory Commission during the upcoming fiscal year. Parnell included $10 million in next year’s budget, saying he wanted to see greater progress on the land access agreements.

Parnell’s budget director, Karen Rehfeld, presented the budget amendments for this year and next to lawmakers on Thursday.

In the House Finance Committee, Rep. Lindsey Holmes, R-Anchorage, asked if putting the $32.7 million in the supplemental, versus next year’s budget, was a bit of a “shell game,” because it wouldn’t count against any spending cap for next year. Rehfeld said if AEA gets the land access permits, it would have about $30 million left in existing appropriations. If Parnell’s budget requests are approved, AEA would have an additional $42.7 million, which Rehfeld said should allow AEA to get through the next fiscal year.

If the project remains on track, there would need to be another year of funding to get to the licensing application period, she said. If that’s successful, there would need to be money for pre-engineering or engineering.

Holmes said she wanted to dig into the details more to know how the money would be spent and if it should be in this year’s budget or next year’s.

Rep. Bryce Edgmon, D-Dillingham, said he wanted to know why so much money was going toward the project when it was still, in his view, sort of “still on the back of the napkin, in some respects.” In recent years, the state has provided more than $170 million toward the project.

Rehfeld said AEA has an approved study plan so it’s more advanced than that. Edgmon later revised his comment, to say Susitna was “still on the drawing board.”

Rehfeld said she appreciated the discussion, which begins to get at how much decision-makers are comfortable spending overall and how priorities are funded within that amount. She said the administration is trying to keep its amendments and budget proposals as low as possible. But she said Susitna is considered a priority project and the administration believes the project should continue.

Committee co-chair Alan Austerman tried to keep discussion on the amendments. He said he didn’t want to get into a debate on one project versus another, like Susitna and a gas pipeline project, at this point. He said debate on project merits can come later, such as when the budgets or gas line bill are in front of the committee.

According to the Susitna-Watana project website, the project would be capable of generating half the Railbelt’s electricity when it comes online. Critics worry about the impact the dam could have on things like salmon and river levels and flow. They also contend the major gas line project the state is pursuing would make the dam unnecessary.

AEA spokeswoman Emily Ford said by email that the $32.7 million would allow AEA to continue its environmental study efforts this year, including studies dealing with fisheries.

She said an additional $73 million will be needed to advance the project to FERC license application, reflected as a funding need for 2016, according to information provided the committee. The document also shows that, upon obtaining a FERC license, $245 million would be needed for engineering work.

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