Thursday, June 12, 2014
Friday, June 06, 2014
Saturday, May 10, 2014
People around town have commented on the lack of quorum for the recent annual meeting. I don't see this on the agenda, but perhaps it will be discussed under board member comments.
Thursday, May 01, 2014
It seems to many that the elimination of the registration bonus $15 in 2013 was the most likely culprit. It was also an attempt to save money on the production of the meeting, costing about $18,000 last year. GVEA wisely announced this in advance to avoid unhappy people in the line and it would appear that their marketing effort was successful in a perverse way. Even with reduced number of cookies and no fruit-vegetable platters, there were trays full of cookies left over. Here's board Chairman Bill Nordmark at the leftover table following the meeting.
If reduced attendance is expected to continue, it might be considered to have it in a smaller and more affordable venue next year. The meeting used to be held at Hering Auditorium.
In a positive vein, the reduced attendance meant that the odds of winning the 9 drawings for $250, $500, and $1,000 were up. Two next-door-neighbors on Chena Hot Springs Road each won one.
The meeting was not video'd this year as in the past few years, but meeting audio and the Powerpoint presentation was promised to be on line soon.
A final thought is that it is important for members to be involved in their co-op, thus show up. Member feedback in the past couple years was to do away with the frills of the annual meeting production and concentrate on business. I think this goal was accomplished. That being said, it appears that carrots are still needed to garner a quorum.
Monday, April 28, 2014
With investments of over $320 million prior to this, I believe this might be the most expensive coal fired power plant for the 50 mw it is intended to produce. Here is No comments:
Sunday, April 27, 2014
The summary of the report says:
The recommended transmission system improves reliability, mitigates future cost increases to Railbelt rate payers, allows unconstrained energy transfers and the use of peaking capacity from the Bradley Lake hydroelectric project, provides improved and increased energy transfers between all areas of the Railbelt, and facilitates the addition of the Watana large hydro project.
It was originally scheduled as an executive session except for member comments at the beginning. However, when I showed up as a member to make a comment at the beginning, the board chair kindly opened the meeting for the educational session, closing it a few hours later when it came time for the board to discuss what to do moving into the future with a new Integrated Resource Plan for GVEA, proposed to be contracted to Black and Veatch. The latter is scheduled to come up at the executive session for the regular board meeting on April 28, 2014. The Integrated Resource Study typically precedes a Rate Study that will be required once Healy 2 in on line for a year or so. That will be a subject of other blogs in the future.
High points were:
- Anticipated growth (flat*).
- Age and condition of current generation facilities.
- Age and condition of current transmission facilities, including substations
- Challenges in dispatch and balancing generation with demand, optimizing efficiencies with cost of various sources of power (I have great respect for dispatchers).
- Some discussion about what Ft. Knox and Pogo's commitments were and likely future. In the mix: Flint Hills substantially reduced, Ft. Knox reduced, Pogo expanded, Clear AFB added.
- Other large customers and generation folks in the Fairbanks area: Pump 9 in Delta, Ft. Wainwright, Eielson.
- Other generation and transmission in the Railbelt
- Homer Electric (HEA) now on its own generation instead of buying from Chugach.
- Matanuska Electric (MEA) now on its own generation instead of buying from Chugach, and with surplus power available for sale to other utilities.
- Anchorage Munipal Light and Power new generation.
- Opportunities and limitations for GVEA buying natural gas generated electricity from Chugach and in the future from MEA across the intertie.
- Challenges in the Kenai with transmission costs for getting electricity from Bradley Lake.
Some of my observations:
- GVEA has the most diverse fuel-mix generation facilities of any utility in the Railbelt - coal, oil, natural gas from Southcentral, wind, and future trucked natural gas by 2015-16.
- We will have way more generation available to us than needed - out peak load in 2013 was 211 mw with about double that inf capacity.
- We are still paying on quite a bit of this generation facilities - principal, interest and depreciation.
- GVEA still has more debt to be taken on with the restart of Healy 2 - over $190 million that has not impacted our utility charges yet.
- * growth is expected to be flat (except if large projects come on line, such as Tower Hill Gold Mine in Livengood for to 100 mw). GVEA expanded their territory to include up to Livengood in 2013, but I hope that any generation needed is built on-site as, for this large load, it doesn't make sense to incur line loss. Actually, I hope that Tower Hill builds their own generation. Tom Irwin, former GVEA VP, is the local guy in charge of Tower Hill development so he should be aware of the impacts.
- There is a long term objective to see if utilities can pool their interconnecting transmission facilities to provide for a more efficient system for all. A couple of attempts have already been made without bearing fruit. See the Regional Integrated Resource Plan mentioned above. Also, reference the tariff arguments
now in progress before the RCA between HEA and other utilities with HEA now generating their own.
Sunday, April 06, 2014
GVEA wisely seeks to dispatch the cheapest energy first to meet demand. Conservation is the cheapest source, electricity not used. Natural gas from southcentral is the next cheapest, but is limited to about 80mw across the tieline. GVEA's Healy 1 is the next cheapest, followed by the Co-gen plant at North Pole, then the two older oil fired generation then a few smaller units, including one in Delta. They also have the Eva Creek Wind Farm and a smaller Delta privately owned wind farm from which they buy discount power. Eva Creek, being free power, should be cheaper than coal, but harder to dispatch due to the variability.
I have been advocating a voluntary notification system to the board for over 2 years whereby, when they are about to need the costlier generation of oil, let folks know and see if short term reductions can be accomplished. The CEO says the ball is in his court. Lots of models out there, such as Nixle, the FNSB school notification, air quality alert system in progress, and a handful of utilities around the country. No re-inventing needed for the wheel. See my blog from last month.
We aren't in control of the Koch Brothers refinery decision. They had a chance to participate in the trucked natural gas project, but backed out of it because they didn't want to work with anyone.
Related, GVEA's rate structure is such that, when the cost causer-cost payer principle that guides rate design is used, it has typically penalized those with the variable use (residential, small commercial) vs. the steady and interruptible rates paid by large industrial consumers. When Healy 2 comes on, there will be another rate case and this should be part of the discussion.
Finally, while Healy 2 will be cheaper generation than North Pole on oil, we'll still have an increase in our utility charge to pay the loans and depreciation. We are now beginning to see a bit of an increase from the $71 million invested in Eva Creek. GVEA utility charge goes up 3.4% July 1. Add to that almost $200 million from Healy 2 over the next few years. That's a lot of debt, all told, almost double of what was allowable until we members allowed the board, in a bylaws vote, to exceed the $450 million book value of loans a few years ago.
So, will the Flint Hills Closure cost GVEA? Yes. Are there other ways of addressing the impacts? Yes, again. Is the there a larger picture to consider? Most certainly yes?
We know a little more about the Flint Hills impact, as the Fairbanks Daily News Miner had an article last week about how and why energy costs were expected to increase.
My understanding is that the trucked natural gas project is likely to result in more expensive gas than hoped, around$17/mcf instead of the $10-$12/mcf previously bandied about. If $12 is equivalent to $2/gal for fuel oil, then you can do the math.
As an aside, there will be an Interior Energy Open House Wedgewood hosted by state agencies AIDEA and AEA. Also, the FNSB granted a $7.5 million revolving loan to the Interior Gas Utility Board (IGU) with lots of fiscal controls on expediture. This $7.5 million was part of the settlement over valuation and back taxes that Alyeska Pipeline owed the FNSB, pending appeals. And the governor is trying to stack the deck against the next assessment, but that's another story.
Other issues included:
Approval of a 3.4% increase in the utility rate, effective I believe June 1. This was attributed to the debt interest on Eva Creek. While this expected increase, it is also hoped that the energy charge would go down at least equal based upon the free wind energy.
Ft. Knox, asking what GVEA would charge to transmit Matanuska Electric power across GVEA's lines. Apparently, Ft. Knox thinks they might get cheaper power than from GVEA directly.
The board did approve the Early Capital credit Retirement proposal you can see on the agenda. First come, first serve is the policy, but the board (and myself, here) would like to see some outreach so it isn't just those in the know that take advantage of it.
GVEA is also getting prepped for the annual meeting April 30. This year, there will be no freebies for registration to save $. In many respects, the CEO is heading an effort to cut the fluff within the company. There will probably be fewer cookies at the meeting too. OK with me. There will still be must-be-present-to-win raffles.
This was the first meeting where a board member was actually 2 way audio and video from a remote location. While not ideal, it makes it possible to attend meetings that have either been unsatisfyingly audio only or have a board member be a no-show. Most board members don't miss meetings, a good thing of course. Eventually, we might be able to get them live-streamed, but some on the board are currently not at all receptive.
The GVEA board changed their May meeting as the one calendared fell on Memorial Day that comes early this year. So the May meeting will be May 19 instead.
Friday, March 07, 2014
I thought I would share this 1979 North Pole Refinery Energy study that the FNSB produced. It doesn't have any mention of environmental cost of pollution from spills, but had some other interesting numbers. A chance to look at a bit of history.
Thursday, February 20, 2014
Much of GVEA meetings are in executive session to which we member-owners are not privy. This being said, the board meeting books on line are becoming more complete for members. Anyone interested should browse the minutes and agendas. It is rare when more than a member or two comes to the board meetings. Slowly, GVEA high level activities are becoming more transparent to members, a good thing in my book.
GVEA purchased the Healy 2 (experimental) coal fired power plant from AIDEA and has committed gobs more money to restarting it. GVEA Healy 2 webpage This was approved at the Aug. 26, 2013 board meeting and glad to report the minutes are on line.
The board approved a $45 million loan and purchase of the plant from AIDEA and another loan for $87,800: $35 million for improvements, $50 million for emissions controls, and $2.8 million for an on-site warehouse. The April 17, 2013 minutes actually reflect a diffent amount than on the GVEA page referenced above. With about $380 million having been spent on the plant prior to this, the total cost of this relatively small 50 mw plant is over $500 million. The purchase and work to restart increases GVEA's debt substantially. As of the end of 2012, GVEA debt was in excess of $380 mm. This translates into an increase in our utility rate. GVEA hopes that the eventual operation of this will reduce the energy charge, as coal is cheaper than oil.
Energy Sense Program
This program lost the long term employee in Feb. 2014 and GVEA wasn't very proactive in replacing him, having only one energy auditor who only worked one-two audits each evening. GVEA contracted with the Cold Climate Housing Research Center (CCHRC) $30,000 to review and make recommendations. The recommendations saw the light of day at the Jan. 27, 2014 board meeting.
Interior residents experienced long electrical outages with icing of lines due to rain then freezing in Nov. 2013 and Jan. 2014. Trees fell over on the lines with high winds as well. I hope GVEA will consider burying high risk distribution lines where the ground is stable (i.e. not on permafrost or high water table areas). While it may cost more initially, the cost of the Nov. 2013 was perhaps $2 million.
Good Cents Program
By rounding up your electric bill (unless you have oped out), GVEA collects about $30,000 per month to give away to non-profits and charitable organizations and occasionally needy individuals. While their requirements for grants aren't conducive to other than professional organization (tax status, audits, etc.), this is quite a bit of money. If the word really gets out, there could be lots of competition for funds. At the moment, this is pretty much a voluntary effort to administer.
GVEA now has a year of data from the Eva Creek Wind Farm down by Healy. It's performed just about as well as expected, providing the equivalent of 6,800 homes' worth of electricity for a year. GVEA refused to buy additional wind from Mike Craft's Delta Wind farm because they indicated they couldn't figure out how to dispatch the additional electricity. It's complex to dispatch the cheapest electricity and wind being variable, makes it more difficult. Still, I hope this will become better understood and perhaps with addition of storage, we can use more wind.
Natural Gas Trucking
GVEA tried to work with Flint Hills on a joint project to truck liquified natural gas (LNG) from Prudhoe Bay. The legislature provided some grant and low interest loan money for this project. They met with the governor and Flint Hills, which stood to substantially reduce its energy operation cost, backed out of the project, unwilling to share any of its economics. With the Koch Brothers since deciding to shut down the refinery, it kind of mocks their excuse that the reason was the sulfolene contamination (even though they committed to continuing the mitigation), but that's a subject for a separate blog.
The shutdown of the Flint Hills refinery also affects GVEA in no longer being able to get naptha from the refinery and also a loss of income from the pipeline subsidiary that GVEA owns to distribute oil from the Trans Alaska Pipeline to the refinery. You'll no doubt be reading more about this.
As well, the Fairbanks Natural Gas (FNG) company and the Interior Alaska Natural Gas Utility (AGU) fought out service areas in greater Fairbanks and North Pole with the Regulatory Commision of Alaska, resulting in a split of territories. The trucked natural gas and legislative help in providing loans for storage puts the onus on both companies to start building out distribution lines to residents and companies. Thus far, FNG hadn't been building out to other than large consumers. AGU is contracting with the same company that is hired to build the liquificaiton plant in Prudhoe Bay to start distribution network in the concentrated North Pole area. GVEA will also be getting natural gas, converting North Pole oil fired plant(s) to use natural gas.
Energy rates have bounced up then down, helped by natural gas fired electricity across the Intertie from South Central Alaska (Chugach and for a short time, really cheap electricity from Homer Electric Association). Utility rate will continue to go up as depreciation, loan payments of principal and interest increase from Eva Creek ($70+ million) and soon Healy 2. Healy 2 is supposed to be operational within 2-3 years and reduce our need for high cost oil fired electricity about the same time as trucked natural gas will become available. I do expect our rates to not decline much if any In the medium term, they could actually increase. Cost of power rates adjust quarterly. Utility rates can be adjusted every 6 months up to 4%. When Healy 2 comes on line, there will be a need for a formal cost of power study (likely costing more than a million dollars).
Peak Notification Methods
As part of my 12 point transparency plan of several years ago presented to the Member Advisory Board (MAC) and the GVEA Board, I suggested that GVEA find simple way to notify consumers when demand was about to require high cost power be started. Ideas such as texting, email, phone, all automated at low cost. The board took the issue up and assigned it to the MAC. They in turn had an ad-hoc MAC task force look at it whereby the VP who ran the meetings wrote up that it made no sense and gave it back to the CEO. This of course made no sense and some members of the board weren't very happy. I heard rumors of another report being generated and will be chasing that down. The idea is very simple - if people would curtail incidental electric uses on occasion, we all could save. This particular VP has since retired and the board may be looking at the MAC functions, which are supposed to be an asset of the board and not a tool of GVEA executives. Making that clear to MAC members and getting them involved in a different manner may help. It has to be a two way street. I will report separately on progress on the 12 point plan hopefully soon.
This was a subsidiary of GVEA and mixed employees. At the end of 2012, it was separated out, though GVEA contracts with them for computer services. It remains an asset of GVEA somehow, so it would be in the members' interest if it were anything other than nearly totally transparent to members. I've been working on this for about a decade. One improvement here is that the VP for computer-networking for GVEA and the president of Alasconnect, the same person, won't be getting a double salary. You can see how that worked out for him at on page 10, line (15) of GVEA IRS Form 990 for 2012 (and previous years 2010 and 2011, available on line).
Tri-Valley Electric Association
Members may recall the 2006 effort of GVEA to transfer all its generation and transmission assets to Tri-Valley Electric Association, something that came out of a national electric coop association discussion. GVEA members wisely turned it down. It turns out that GVEA realized it wasn't needed after all as in July, 2013, the board voted to dissolve the corporation.
There were of course other issues that came up. Again, do avail yourself of the minutes and agendas. Become an active member of our co-op!