Pebble tries to dig up power

According to a Homer Electric Association official, any future contract to supply electrical power to Northern Dynasty Mines' Pebble project would not affect the power bills paid by the utility's other consumers.

"You can't go get a new customer that costs you money," Rick Eckert, HEA's manager of finance and business development, said in an interview last week. "That makes no sense."

The public utility is engaged in a joint feasibility study with the mining company to determine the best way to deliver energy to the mine site northwest of Iliamna. Eckert said HEA is only interested in participating in the study if it helps improve the cooperative as a whole.

"Our approach is that HEA's participation (in the study) is appropriate only to the extent that the electric service to our members is enhanced,"

NDM's mine could demand peak loads as high as 250 megawatts, which might be supplied by running cable under Cook Inlet and across land to the mine site, and connecting that transmission line to the Railbelt electrical grid.

The cost of any new infrastructure would be raised and paid for by the mine, Eckert added. If the miners and the utility were to agree to commercial terms, HEA would make money, not lose it, he said.

Critics of the mine project have expressed concerns that the cost of building the transmission lines and generators needed to supply the necessary power to the mine might be blended into the power bills of HEA's residential and small business customers by way of surcharges.

Pat Flatley, outreach coordinator of the Bristol Bay Alliance, said a review of the energy supply and transmission capabilities of the Railbelt grid linking the Kenai Peninsula to Anchorage, the Matanuska-Susitna area and Fairbanks shows there is excess power available but transmission capability is restricted.

Citing a 2003 study by the Alaska Energy Policy Task Force, Flatley said the total available capacity of all Railbelt generators in 2002 was 1,358.3 megawatts, while the total peak demand was about 770 megawatts. But only one transmission line links Anchorage and the peninsula, while another connects Anchorage to Fairbanks. Unlike in the Lower 48, where power grids are often interconnected and looped, the Alaska system is isolated and linear and cannot draw from other parts of the country. In addition, the two main transmission lines have limited carrying capacities of 75 MW and 70 MW, respectively.

Boosting that capability will cost a great deal of money, a cost someone will have to bear, Flatley said. Eckert confirmed the limitations of the existing system, but said HEA's other consumers won't be tapped for construction and operating costs of any transmission service to the future mine. Eckert went on to explain the limits of the current system.

Because it is isolated, ensuring that even current demand can be met requires the Railbelt system to have access to far more power generating capability than peak demand actually calls for. That way if a generator fails, another can pick up the slack, Eckert said.

HEA owns the Nikiski Cogeneration Project and two small generators at Seldovia. It also has rights to 14 MW from the Bradley Lake Hydroelectric Dam. The rest of the energy it supplies its customers is purchased from Chugach Electric Association. Chugach also pays HEA to run its Nikiski generator under an agreement that terminates in 2015, Eckert said.

Northern Dynasty has previously said it would need up to 200 MW of peak-demand power. Eckert said estimates had recently been pushed up to around 250 MW. How the mine's estimated peak demand could be guaranteed and delivered given the constraints on the existing system is a question at the heart of the power feasibility study, but clearly, additional generating ability is going to be needed, Eckert noted.

The first phase of the supply study, completed in April, determined whether delivering energy was technically feasible. Phase 2 will determine what generating capacity may be needed and where such plants would be located. A confidentiality clause in its study contract with Northern Dynasty Mines prevented Eckert from discussing specific details of the Phase 1 results until given clearance by NDM officials, he said. However, he did say that work had provided "a conceptual system" designed to connect to the Railbelt.

It would involve running an underwater cable from somewhere between the western Kenai Peninsula near Anchor Point or Happy Valley across Cook Inlet to Seal Spit on the north coast of the Iniskin Peninsula northeast of Williamsport. From there, a line would be run overland to Iniskin Bay and then underwater again to somewhere near the mouth of Iliamna Bay, where NDM is considering building port facilities that might include a generating plant. That plant could add to the power being brought west from the Kenai Peninsula and supply energy to the Railbelt when not needed by the mine, Eckert said. A landline would connect NDM's port facilities to the mine.

"The cost is significant but not prohibitive as far as we are aware," Eckert said. "We have a number, but NDM has not completed its feasibility analysis for the project yet."

NDM is not expected to complete that analysis, of which the power feasibility study is a part, until the end of the year. Eckert said, however, that he anticipated NDM making the power study cost figures public before then.

The power study investigated generating electrical energy at the mine site, but that approach proved much more expensive than building a transmission line and connecting to the Railbelt system, Eckert said.

Ratcheting up the generating capability of the Railbelt system could include tapping the Beluga coal fields, Eckert said. Though a long way from the mine site, that coal would add energy to the overall system.

Discovery of natural gas in Bristol Bay, now a focus of oil and gas exploration, might also add to the energy equation, he said.

"If I had my dream, there would be a marketable supply of natural gas that could be used right there at the mine site," Eckert said.

Bruce Jenkins, of Northern Dynasty, said Wednesday that it was legitimate for people to raise concerns such as whether energy delivery to the mine would affect other consumers' bills.

"As long as those questions are not blown out of proportion and reported as fact," he said.

Northern Dynasty's project, he said, would pay its own way. Any commercial agreement short of that would be a bad move for HEA, he said.

Jenkins said he was just about to leave for a two-day meeting in Seattle to hear technical updates on the status of the overall project to date. At that meeting, HEA officials were expected to brief Northern Dynasty on aspects of the power study, he said.