Alaska Energy Authority Railbelt Transmission Study March 2014

Available in draft form dated March 17, 2014, the Alaska Energy Authority has released the Pre/Post - Watana Transmission Study.   Whether or not Susitna gets funded, the pre- aspect of the report is helpful to understand the current status of the Railbelt utilities and what should be done to address the current status. It is quite detailed.   In some respects, this study is an update of the 2009-2010 study mentioned in my last blog.    It offers projects for $900 million with $2.7 billion in benefits.   This is of course much more debt than utilities can take on themselves, so substantive state funding would be requested, some of which included perhaps in the construction cost of Susitna-Watana if we get that far.

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. 

 

The benefit of the projects as a whole results in a net present value savings of over $2,678,425,000 over the 50-year life of the projects in power production simulations when compared to projected 2015 operating conditions.The economic benefit of improved reliability as measured by unserved energy, capacity deferral of individual utilities, reservoir optimization of the Bradley and Cooper Lake hydro plants, the use of excess energy during high water years,construction savings during the required rebuild of existing facilities and the amount of capacity deferral saving further increase the benefit of the projects by an estimated $30-40,000,000 per year although these additional savings were not evaluated in detail.

 

The benefit of the improvements with increased energy from Bradley’s Battle Creek project or the ability to contract for increased base load gas supplies are not considered in the analysis. With a total construction cost of $903,200,000, this results in a simplified benefit/cost ratio of 3.4 utilizing only the production cost savings, which is an extremely high ratio for electrical transmission projects. The inclusion of additional benefits would push this number even higher. There are few projects that can be evaluated individually, since the benefits to the Railbelt consumers are derived from a combination of individual projects; however the projects can be evaluated by how they improve reliability and economics for the Anchorage–Kenai area, Southcentral Alaska and the Anchorage to Fairbanks (Northern) connection. These system improvements must be constructed and operational prior to commercial operation of the Watana Hydro Project or any other large energy project in

the Railbelt. Although all of these projects are also required to support a large energy project, improvements that are specifically required to support a large hydro project or any other large energy project are addressed in a follow-up study to this report.