In the interest of providing "reliable electric service at the lowest cost possible," Homer Electric announced Wednesday it is joining with other Railbelt utilities to look into forming a unified power system.
Homer, Chugach and Golden Valley electric associations signed a memorandum of understanding to explore the costs and benefits of creating what is known as a Unified Power Provider, according to a statement issued by HEA spokesman Joe Gallagher.
The utility groups would be sharing responsibilities of providing transmission and power generation services, Gallagher said.
"It's important to note, at this point, they're investigating the potential to do this," he said. "The memorandum sets things in motion to reach that goal."
HEA Board President Dave Carey also mayor of Soldotna announced the pact during the weekly Kenai Chamber of Commerce luncheon meeting.
"We envision that all future generation will be part of this system, as well as current state resources," Carey said.
"This should provide more reliability for our members and reduce rate increases because of the potential for all UPP members to receive the least expensive power being produced," he said.
HEA and Chugach Electric also signed a memorandum of understanding to work together to develop a gas-fired electricity generation source in South Anchorage.
Carey said the plant would probably produce 260 megawatts a day, "which will provide economies of scale while also considering future alternative energy sources."
HEA currently purchases power requirements from Chugach under a wholesale power agreement that expires Dec. 31, 2013.
"While there are still many details to be worked out, the plant could be on-line by 2012, which could allow us to reopen our current 30-year contract with Chugach Electric before it ends," Carey said.
According to Gallagher, Chugach has offered HEA the opportunity to be a participant in the South Anchorage project in order to partially satisfy HEA's power needs after 2013.
Gallagher said HEA's current total daily base load is about 70 megawatts.
"The fact that two prominent Alaska electric cooperatives are going to work together on a potential major generation project is right in line with recommendations from the 2004 Alaska Energy Policy Task Force," said Carey and Chugach Board President Elizabeth Vazquez in a prepared statement.
"This effort will benefit the members of both cooperatives and could result in a stable, economic source of power for many years to come," said Vazquez and Carey.
"We are all most hopeful and believe it is time to get this state moving again by providing competitive energy for industry, businesses and our residential customers," Carey said.
HEA and Chugach hope to have a project agreement completed and ready for presentation to their respective boards of directors later this year.
Phil Hermanek can be reached at email@example.com.
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