Calling the Anchor Point-Homer natural gas line the biggest economic development he's seen in his tenure, Homer City Manager Walt Wrede gave an update on the project Tuesday at the luncheon meeting of the Homer Chamber of Commerce. The city's sixth-highest ranked project on the 2011-2016 Capital Improvement Project list, Homer and the Kenai Peninsula Borough are seeking $10 million to extend an 8-inch natural gas distribution line from Chapman School in Anchor Point to Homer and on to Kachemak City. Enstar would build the line. If built, the gas line would:
Bring gas along the Old Sterling highway to the Sterling Highway, along Fairview Avenue and out East End Road to Waterman Road,
Save the Kenai Peninsula Borough School District $263,000 a year in heating costs for Homer schools,
Save South Peninsula Hospital $244,000 a year in heating costs,
Save the Alaska Islands and Ocean Visitor Center $42,000 a year in heating costs, and
Save the average homeowner $2,200 a year in heating costs.
All costs saved are based on a comparison to fuel oil. Savings are even higher compared to electricity and propane. The energy savings from those buildings alone would pay for the $10 million gas line in 18 years.
"We're doing want we can to get Homer hooked up and lower the cost of living, the cost of business," Wrede said.
In the 2011 fiscal year capital budget, the Alaska Legislature last session granted Homer $4.8 million for the project. Gov. Sean Parnell vetoed all but $525,000, citing questions about the project. The $525,000 is being used for a regulation station on the North Fork Road -- a plant to drop the gas pressure from a line coming from Anchor Point Energy's gas field -- and to extend a distribution line to Chapman School.
Parnell had been concerned about if the city had a plan in place, if the gas line wouldn't be paid for by other Enstar customers, if Homer wouldn't pay less than other customers and if the line could go beyond Homer. All those questions have been answered, Wrede said, most notably with the Homer City Council establishing a Natural Gas Line Task Force.
"We hear your veto message and are trying to get a plan in place," Wrede said.
The higher cost for the line is because it would go farther, he added.
The line has come under criticism. Sen. Tom Wagoner, R-Kenai, has criticized the idea of the state paying for a line operated by a private utility. Wagoner told KBBI radio that the state has never paid for gas lines.
"The state's funded all kinds of energy projects," Wrede said. "We're funding windmills and energy ties."
Alaska also has offered support for other gas line projects, most notably $500 million to TransCanada Alaska under the Alaska Gasline Incentive Act.
Wrede visited Juneau last week for the Alaska Municipal League legislative conference and to lobby for Homer projects. Parnell hasn't yet said if he supports the gas line, but Wrede said it's not uncommon for governors to be cagey about capital projects while they're under consideration by the Legislature.
"The governor hasn't come out and said he's flat opposed to it," Wrede said. "He hasn't said he's for it ... He does seem lukewarm at best."
Mayor James Hornaday urged citizens to write letters to Parnell supporting the gas line.
"It's really important for business people that the public facilities are going to benefit start contacting the governor's office," he said.
The state grant could go to Homer or the Kenai Peninsula Borough. Neighborhoods would pay for extension of the line, either through local improvement districts or the borough's utility service area district program. Kachemak City is considering a proposal to build an extension of the line and pay for it with a property tax increase. If big users like the high school and hospital extended lines, it would create a network of lines around town that would make neighborhood connections easier. Wrede estimated 110 miles of lines would need to be built out to connect all areas of Homer.
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