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Electric utility powers up for 21st century

Posted: Monday, August 06, 2001

The Homer Electric Association is branching out.

The cooperative providing electrical service to the western Kenai Peninsula since 1950 has set a new course going into the 21st century. The utility is about more than megawatts these days.

HEA's focus is on cutting costs, enhancing reliability, adding services and reaching out to the community, said HEA General Manager Norm Story, addressing the Soldotna Chamber of Commerce Tuesday at its weekly luncheon.

The possibility of deregulation sparked the change in direction over the past several years. Even though that is unlikely at present, the utility will continue to diversify and evolve, he said.

"There was a lot of discussion in the state of Alaska about deregulating our business. ... California has done a lot to demonstrate that deregulation is not so simple," he said.

In response to the challenge and to changing times on the peninsula, the board of directors decided to emphasize creative planning, partnerships and community projects, he said.

Story outlined the array of activities that are keeping HEA busy these days beyond the traditional power line maintenance and service extensions.

n Kenai Kachemak Pipeline Project

"This is a large project," Story said. "The conceptual engineering phase is in process now."

The proposed 75-mile pipeline would move natural gas from new wells to consumers along the western Kenai Peninsula and to sell surpluses to Anchorage markets.

The estimated cost is $45 million to $65 million. HEA plans to file for permits in October. It would build the pipeline in 2002 and begin operation in 2003.

"We are going to support providing gas to all consumers we can reach," he said.

HEA would own the pipeline; Enstar would operate and maintain it. Unocal and possibly Marathon would provide the natural gas.

Story explained that HEA decided to become involved with gas for two reasons. First, plans to bring natural gas to Homer-area homes is predicted to decrease electrical demand. Second, the company uses gas-fired generation under agreements with Chugach Electric that will eventually expire.

By becoming involved in gas transmission, HEA will safeguard both its supplies and its markets, he said.

n Nikiski cogeneration plant

"We hope to have that done in the near future," Story said.

HEA, in a partnership begun with Unocal and continuing with Agrium, moved a generator from Soldotna to the fertilizer plant in Nikiski.

The equipment will generate steam power from waste heat at the plant and add more than 5 megawatts of power to the peninsula's electric production.

The old system that Unocal used to generate its own power at the site will remain for the transition and as a backup.

n ACS partnership

The electric and phone companies are collaborating so HEA crews can install phone lines when they put in electric service. This is the third season of the partnership, which means residential customers only have to deal with one utility crew and one hole in the yard.

"It makes sense," Story said.

n Seward electrical utility merger

The city of Seward provides electricity to its residents and has expressed interest in letting HEA take over that function.

The proposal was put to Seward voters last October in the municipal election. A majority of them favored the change, but not the super majority required in the city statutes, Story said.

The cooperative is still discussing the matter with Seward, and the proposal may go back on the ballot, he said.

"If we join together, we could become more competitive," he said.

n The gas-to-liquids pilot plant

HEA has signed a five-year agreement with BP to service the experimental petrochemical facility under construction in Nikiski. Regulators have approved the agreement, which will provide a major new customer for HEA power, he said.

"We are looking forward to that project bringing benefits back to the area," he said.

n Fiber-optic lines

Story described the electric company's recent fiber-optic line between the central and south peninsula as a major success. It allows the company to maintain good communications between its Homer and Kenai offices and with its hydroelectric plant at Bradley Lake. In cooperative agreements, HEA allows ACS and the Kenai Peninsula Borough School District to use part of the cable capacity.

"When we talk about serving the community, that is the kind of service we are talking about," he said.

n Spruce bark beetle remediation

HEA has spent $1.67 million clearing dead trees from around transmission lines and has dealt with hundreds of dead spruce falling onto wires, which can cut off service and start fires. The problem of dead spruce throughout the service area is likely to continue and spread, Story said.

"We consider this a disaster," he said.

Because the utility right of way is only 20-feet wide, HEA has gotten permission to remove trees in a wider area to prevent blow-downs on the lines.

Story praised the Kenai Peninsula Borough and federal government for financial assistance in coping with the situation. Otherwise, the cooperative would have had to pass the extra expense of tree removal on to consumers.

n Marathon substation

The $4 million Kenai substation opened in January. It is designed to serve needs for the next 20 years, he said.

n Kachemak Bay submarine cable

The cable that conveys power from Homer across Kachemak Bay to the off-road villages of Seldovia, Port Graham and Nanwalek needs replacing. The existing cable dates from 1975 and has exceeded its expected lifespan. However, the cost of replacement is about $2 million.

Story said Sen. Ted Stevens is working on a federal appropriation to aid the project.

The cable replacement is due to take place later this year, using state-of-the-art technology for installing undersea lines.



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