A recent Newsminer story detailing the impact of Flint Hills Refinery shutting down to GVEA, I've got a few mitigating solutions and some information to bring to light to our member-owners of GVEA.
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?
