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Scrutiny part of the process

Posted: Thursday, March 25, 2010

Homer Electric Association's interest in pursuing a plan to build and own power generation facilities is creating questions among some of our members. This is exactly what should be expected from a healthy and vibrant cooperative.

In matters of such importance, a comprehensive discussion needs to take place so an informed decision can be made in the best interest of all the members of HEA. I enjoyed speaking about our power supply plan during our regional meetings last fall around the Kenai Peninsula and again just last month to community organizations in Homer, Soldotna, and Kenai. The favorable response to the presentations was encouraging and I look forward to other opportunities to talk about this significant topic.

Independent Light is the name of the plan that would eventually put HEA in ownership of generation facilities here on the Kenai Peninsula. It calls for adding a steam turbine on to our existing Nikiski generation plant and with the addition of a small amount of gas, nearly doubling the power output of the plant to 77 megawatts. In addition, we would consider adding two gas turbines at the Soldotna substation where housing for the turbines already exists. While the discussion regarding the details of Independent Light is relatively new, the debate and studies regarding our power supply future go back several years.

Currently, HEA purchases 90 percent of its power from Chugach Electric. The contract will expire at the end of 2013. Knowing that deadline existed, the Cooperative engaged an independent consultant in 2004 to develop a power supply study. That study resulted in several options being laid out on the table for consideration. Over the past 5 years, as more information was gleaned and opportunities changed on the various options, the study has been continually updated. After a thorough review by the Board, the choices were narrowed down to basically two: Does HEA continue to purchase its power from Chugach or does HEA construct its own generation facilities?

According to the power supply study, the impact on retail electric rates is about the same because either option will require the construction of new generation assets. So with cost being relatively equal, other factors were evaluated and Independent Light eventually was deemed the best route for HEA to follow.

A key consideration is the fact that HEA will own the generation facilities. Decisions about how to dispatch power, integrate potential renewable energy sources, and negotiate contracts with natural gas producers will be made by HEA, with the best interests of our members being the driving force. That may not always be the case if we our buying power from another entity.

In addition, we are uniquely set up to take advantage of existing infrastructure. Our Nikiski generation plant already has a system in place to capture heat and produce steam that can be used for power production. And in Soldotna, we have a building in place that once housed a turbine generator and could easily do so again.

Will building the plants associated with Independent Light be expensive? Yes, but it is important to remember that generation facilities in the Railbelt area, from Fairbanks to Homer, are for the most part vintage 1960's and will have to be replaced. Homer Electric members will have to pay for the replacement costs one way or the other.

So the questions become:

* Do we as a cooperative want to own or rent our generation assets?

* Do we want the jobs associated with power production based on the Kenai Peninsula or Anchorage?

* Do we want our power costs determined by entities other than ourselves?

* Do we want other utilities telling us how and when we can use renewable energy resources?

The Board has looked at these questions and determined that Independent Light offers HEA members the most reliable, affordable option for our future power generation needs.

A decision of this magnitude is certain to have skeptics and even outright opponents who believe there may be a better path to follow. The Board and management respect those opinions and value the questions that are brought up. But at some point, and that point is arriving soon, a decision will need to be made by the Board, which is elected by the membership to represent their best interests.

In closing, I encourage all our members to review the Independent Light section of on our web site (www.homerelectric.com) and also look at the FAQ list where there is a more detailed explanation of some of the issues. In the end, I am confident we will work together to develop a power supply plan that ensures reliable, affordable and environmentally responsible power for HEA members.

Bradley P. Janorschke is HEA's general manager.



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