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Peninsula projects in budget: Senate's energy package includes funds for infrastructure

Posted: Thursday, May 12, 2011

While Alaska's lawmakers wrestle through a contentious budget process, energy projects on the Kenai Peninsula are on the table.

The Senate's pot of energy funds included $77.6 million for projects in House Districts 33, 34 and 35. Those districts encompass much of the Kenai Peninsula Borough.

The state House Finance Committee took up the senate's capital budget yesterday morning, marking the end of an almost month-long stalemate special session that was preventing the Legislature from getting a capital budget passed.

Language in the state Senate's version of the capital budget would prevent the governor from cutting one energy project -- or if he did, it would mean that they all got slashed. That would mean that if the governor wanted funding for the large hydro project he has championed, he also must fund all of the smaller energy projects lawmakers wanted.

But House Speaker Mike Chenault, R-Nikiski, said the House will unbundle the projects before the governor gets the budget.

"We're going to take the language out," he said.

Among those smaller projects are more than a dozen on the Peninsula, including work on transmission lines, hydro expansions and development of alternative energy sources.

Homer would also get a significant boost in the form of $10 million for a natural gas pipeline.

Homer Electric Association is among the utilities with projects on the line. The energy section of the budget includes $25 million for an upgrade to the Nikiski to Soldotna transmission line.

HEA's Joe Gallagher said that project would add a second 115-kilovolt line between Nikiski and Soldotna. That upgrade is needed to provide reliable service in the area, Gallagher said. Without the addition, Railbelt utilities would not be able to move as much Bradley Lake power to Anchorage.

Chenault said the Senate had the first crack at the budget when the Peninsula projects were added. The Senate opted to include all of the Alaska Energy Authority's recommendations, he said.

"I certainly have talked to Homer Electric about the projects in our area," he said.

Gallagher said the transmission project received letters of support from the cities of Kenai and Soldotna, as well as Tesoro and Chevron.

The utility hasn't decided what will happen if the Nikiski to Soldotna transmission upgrade doesn't go through, Gallagher said.

"We will have to see how the legislative session plays out and then review the project," he said in an email.

Bradley Lake is another potential site of energy spending. The budget calls for $15 million to divert Battle Creek into the lake, increasing the energy output from that hydropower project.

HEA and the other five utilities that receive power from that project will benefit, Gallagher said.

The other utilities are Chugach Electric Association, Matanuska Electric Association, Municipal Light and Power, Golden Valley Electric Association and the City of Seward.

The Railbelt utilities have a stake in another transmission line project that's included in the budget.

Maintenance and repair on the transmission line from Quartz Creek to Soldotna is set to get $10 million.

"The transmission line segment between Soldotna and Quartz Creek substations is a crucial link between Bradley Lake and the five utilities to the north of Soldotna," Gallagher said via email.

The maintenance and repair will facilitate delivery of Bradley Lake power, he wrote.

Another $5 million in the budget would go to study, design and permitting of an upgrade to the line from Soldotna to Quartz Creek.

"These funds will start the permitting process to preserve the right of way for upgrade to 115kv and accomplish route studies and project scoping," Gallagher wrote.

Many of the Bradley Lake purchasers also have their own projects in the budget, including about $1.6 million for Chugach projects on the Peninsula.

Seward's power plant could receive $4 million, with other projects nearby receiving another $2.8 million. That money would go toward finishing a transmission line, a hydroelectric training facility at Alaska Vocational Technical Center and a hydroelectric project on Fourth of July Creek. According to the funding recommendation, money for the creek project -- just over $1 million -- would go to preliminary work to determine the feasibility of the project. Independence Power, an Anchorage-based entity, proposed that project.

That's not the only new renewable project in the budget.

Another hydro project, the Grant Lake facility near Moose Lake, is on the funding list. According to the Alaska Energy Authority's funding recommendation, about $1 million from the state would go to field studies, environmental assessments, and other preliminary work to see how feasible the project is. That was proposed by Kenai Hydro, a subsidiary of HEA.

Ocean Renewable Power Company, and Ormat Nevada also each have a renewable energy project on the table.

ORPC, a Maine-based entity with Alaska offices, applied for funding for environmental work in the Cook Inlet. The proposed work is a necessary step for the company to adapt their turbine generator units for eventual deployment in Alaska. The state's proposed contribution would be $2 million.

Almost $2 million is also on the line for Ormat, which is trying to develop geothermal power at Mount Spurr. According to the AEA's funding recommendation, the money would go to construction of a geothermal well, assuming the company's work scheduled for this summer affirms the project's feasibility.

But before any of those projects can move forward, utilities and businesses are waiting for the House to pass their final budget.

Chenault said it wouldn't take the House very long to add their projects, take public testimony and get a budget passed.

"I would suspect that we'll have a budget on the floor Friday, possibly Saturday," Chenault said.

Then it will all be in the governor's hands.

"The governor will look at the overall size of the budget and do any paring," Chenault said.

Molly Dischner can be reached at molly.dischner@peninsulaclarion.com.



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