Utilities put off decision on Southern Intertie

Posted: Friday, July 18, 2003

ANCHORAGE (AP) Utilities were supposed to decide this week whether it makes sense to build a $119 million state-subsidized power line to link Anchorage and the Kenai Peninsula.

But now they say they need more time to decide on the long-planned southern intertie because of a loss of $28.5 million in state funds.

The utilities now say that they need until this fall to see if the project can be salvaged.

''Taking $28 million off the table just burns it really bad,'' said Jim Posey, director of Anchorage's city-owned Municipal Light and Power.

The Legislature this spring withdrew the money from the project.

ML&P, Chugach Electric Association and other Railbelt utilities this week opted to postpone until Nov. 21 their deadline to make a decision on the project. They plan to take another look at the costs and options in light of the loss of the $28.5 million.

''We have to have time to regroup and see what we can do,'' Posey said.

The southern intertie is the last of the big power projects that the state funded back when Alaska was flush with oil dollars. But now the state is facing a budget shortfall.

Gov. Frank Murkowski decided the state should take back the $28.5 million in interest built up from the 1993 legislative grant meant to fund the project.

Murkowski wanted to use the money to help fill the state budget hole, and the Legislature agreed.

If the project dies, the $46.8 million state grant from 1993 would be returned to the state's general fund, minus about $7 million that has been spent on engineering, route selection and environmental planning.

The utilities have spent about $500,000 on intertie planning, according to Chugach Electric.

An existing electric intertie runs up through the mountains from Kenai to Anchorage. But it's not large enough to carry all the power that is generated by the Bradley Lake hydro project near Homer and other sources on the Kenai Peninsula.

Posey said that without the new intertie ML&P would not get the benefits it planned on when it agreed to pay for Bradley Lake power.

But critics say the project is more of a state subsidy for the construction industry than for the public ratepayers.

Ray Kreig, a former president of the Chugach Electric board of directors, has spoken out against the line. He said he believes that the utilities themselves know that the project is not economical.

''They are trying to maintain a death grip on the (state) money,'' he said.

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