AIDEA turns down offer for coal plant

Posted: Thursday, June 24, 2004

FAIRBANKS (AP) The Alaska Industrial Development and Export Authority rejected an offer from Golden Valley Electric Association to purchase the Healy Clean Coal Plant.

GVEA offered to buy the plant for about $70 million. The money would have been paid out over the course of several decades. But AIDEA's board rejected the offer, instead preferring that all the railbelt utilities have a chance to be a part of operating the coal plant that has been idle since 1999, said Ron Miller, AIDEA's executive director.

''We didn't see any benefit to AIDEA,'' Miller said, of GVEA's proposal.

The $305 million Healy Clean Coal Project was to demonstrate new technology to burn coal in a way that reduced nitrogen oxides, sulfur oxides and particle emissions. It was built in part by a federal grant from the Department of Energy, the state Legislature, AIDEA, GVEA and Usibelli Coal Mine and completed in 1998. GVEA was to operate the plant and pay for the power. Usibelli was to provide the coal. But after a failed 90-day test, GVEA declined to operate the plant and it has been idle since 2001.

GVEA wants to retrofit the plant with traditional burners and made the offer to purchase the plant last March with hopes to do so with federal funds.

Currently there is $125 million listed for the retrofit in an energy bill still pending in Congress. About $60 million would be used for the retrofit and $20 million for cost overruns. The rest would go toward paying off AIDEA bonds that were sold to raise money for the plant's construction.

GVEA had hoped to retrofit the plant and have it operational between 2005 and 2007, providing 50 megawatts of power.

Steve Haagenson, GVEA's president, said GVEA is looking at another way to secure the Healy plant.

AIDEA's suggestion was outlined in a letter Miller wrote to six railbelt electrical utilities after they declined GVEA's offer. He suggested that all or some of the groups come together and look at obtaining all or some of the energy properties owned by AIDEA and Alaska Energy Authority.

Specifically, AIDEA and AEA are offering up Healy Clean Coal, the Bradley Lake hydroelectric project located on Kachemak Bay and the Alaska Intertie, a 170-mile power line from Healy to Willow.

One way to do that would be by having the Railbelt utilities join together to form a ''Unified Systems Operator'' but the utilities would have to decide what the organizational structure would look like, Miller said.

The Alaska Energy Policy Task Force suggested several organizational models of operations and ownership, he said.

One type of organizational structure has been discussed for the last year, said Carol Heyman, Chugach Electric Association's spokesperson.

Chugach Electric, GVEA and Municipal, Light & Power of Anchorage are working together on a forming a ''joint action agency'' in order to be in a position to develop power-generation projects, such as obtain ownership of HCCP, Bradley Lake and the intertie, she said.

The Healy plant was not a priority of the group.

''We're all very aware of the Healy Clean Coal Project,'' she said. ''We haven't addressed it.''

Other utilities in the state are likely not interested in the Healy plant right now, Heyman said.

''If AIDEA wants to hold out and expect someone else to buy it, it's probably going to be a little bit of a wait,'' Heyman said.

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