With an eye toward having its own independent power supply, Homer Electric wants to build one or more gas-fired power plants on the Kenai Peninsula.
Currently the Homer Electric Association buys its power from Chugach Electric under terms of a power sales agreement that ends Dec. 31, 2013. HEA has told Chugach it will not renew the agreement.
Earlier this year, HEA signed a memorandum of understanding with Chugach Electric to work together to develop a gas-fired electricity generation source in South Anchorage.
HEA Board President Dave Carey said in February, the plant would probably produce 260 megawatts a day, "which will provide economies of scale while also considering future alternative energy sources."
The new proposal pulls HEA out of the South Anchorage generation project.
HEA spokesman Joe Gallagher said right now, HEA purchases approximately 90 percent of its power from Chugach. The remaining 10 percent is the utility's share of power generated by the state's Bradley Lake hydroelectric project.
The current load of HEA customers is about 85 megawatts and the projected load in 2014 will be about 120 megawatts, including reserves.
"We see a 2 1/2 percent increase per year," Gallagher said.
A resolution passed by the HEA Board of Directors calls for construction of a natural gas-fired project that would generate 60 megawatts of power.
HEA currently operates the Nikiski Co-Gen plant that generates 40 megawatts of power, which is sold to Chugach. Gallagher said that power would become HEA's once the Chugach contract expires.
Additional generation would come from the Healy Clean Coal Project. Gallagher said Healy has "a potential to produce 50 megawatts."
"We would get that electricity and have the ability to market it to others," he said. "It's all part of (Homer Electric) becoming independent."
HEA also continues to pursue hydroelectric power and is in the data-collection phase of harnessing wind power.
"We have three (meteorological) towers up on the Kenai Peninsula now," Gallagher said, adding that the feasibility of erecting wind turbines could be assessed after one to two years of data collection.
With the recent closure of the North Kenai Agrium fertilizer plant due to a scarcity of natural gas needed as a feedstock, Gallagher was asked how HEA expects to fuel its power plants.
"We will negotiate with the gas producers," he said. "We anticipate those negotiations will be successful."
He said the next step in the project will be to determine how many plants will be built and where they will be on the Kenai Peninsula.
"It would be about one or two years to figure all that out and about two years to build the plants," Gallagher said.
In a printed statement, Carey said, "The construction of a power project on the peninsula would also be a boost for the local economy, providing jobs for the construction and operation of generation facilities."
HEA anticipates having the new generation project on-line within the next five years.
Phil Hermanek can be reached at email@example.com.
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