Veto shorts HEA upgrade money

Homer Electric Association has needs. Until May, the cooperative had the money. As of today, however, the cooperative is resigned to simply studying those needs.

Upgrades to HEA’s transmission and distribution facilities on the Kenai Peninsula will likely be delayed until after the next official session of the Alaska Legislature after Gov. Frank Murkowki’s veto of a $73.5 million appropriation from May’s $2.25 billion spending plan.

The money, which passed in the Legislature’s version of the bill, was meant to be taken from the Railbelt Energy Fund for several state projects. The fund was set up in the mid-1980s for Railbelt energy projects. HEA’s share of the $73.5 million was $12.5 million.

An attempt to override the veto Thursday during the Legislature’s second special session failed on a 27-24 vote. Forty-five votes were needed to override the veto.

According to HEA spokes-person Joe Gallagher, the cooperative began a transmission study about a month ago to determine the upgrade needs on the Kenai Peninsula. Gallagher said upgrades would most likely be needed to the transmission system serving Agrium USA’s fertilizer plants, the BP and ConocoPhillips gas-to-liquids facilities and Tesoro’s refinery in North Kenai.

“We’ve got some pretty heavy industrial needs out there,” Gallagher said.

The system has yet to fail, nor does HEA anticipate problems in the immediate future, Gallagher said. He pointed out, however, that the Railbelt Energy Fund’s purpose is to provide for energy upgrades in anticipation of future needs.

“We’re trying to stay ahead of the curve,” he said.

Other utilities and utility projects were affected, too. The nixed $73.5 million also had $12.5 million earmarked for the Alaska Industrial Development and Export Authority’s project to reopen the Healy Clean Coal Plant. HEA is in talks with the state to operate the facility when and if it opens, which could mean a new source of power for HEA — and possibly lower rates to customers.

“Indirectly, we would benefit (from the Healy Coal Project) if we reached an agreement to operate the facility for the state,” Gallagher said.

According to a press release issued by the cooperative last week, HEA General Manager Brad Janorschke said the governor had reversed an earlier position on the funds.

“Throughout the legislative session, the governor and his staff supported the Railbelt Energy Fund plan agreed to by the utilities,” Janorschke said. “In fact, the governor invited several utility managers to his home to discuss the plan and give it his approval. To wait until the final minute and then use his veto power to cut the funding is a disservice to the tens of thousands of electric utility rate payers in the Railbelt area.”

Janorschke also pointed out that projects in the Fairbanks area have received more than $85 million from the Railbelt Energy Fund.

According to Gallagher, the veto means the cooperative will go back to the drawing board. Meetings between the utilities and officials are likely to get a replay before and during the Legislature’s next official session in an attempt to secure money for peninsula upgrades, he said.

“That fund still exists, the money just hasn’t been allocated yet,” Gallagher said. “We will just have to go back and try to convince the governor and others that this is a well-thought out plan.”