Homer Alaska - Business

Story last updated at 9:54 PM on Wednesday, March 16, 2011

Lawmakers seem favorable toward dam project

By Tim Bradner
Morris News Service - Alaska

Plans for a large hydroelectric project on the upper Susitna River, potentially a $4 billion-plus project, are moving along, although things are at a very early stage.

The Alaska Energy Authority, a state agency, has selected a possible dam at the Watana site on the upper Susitna as a good option for a large hydro project and the Legislature is considering a $65 million capital appropriation requested by Gov. Sean Parnell to begin the required licensing with the Federal Energy Regulatory Commission.

Meanwhile, the AEA has signed a $5 million contract with MWH Americas, a consulting firm specializing in large power projects, to do preliminary design and engineering work related to the license application.

Under federal law FERC must authorize a hydroelectric project. There seems to be wide support in the Legislature for the $65 million appropriation, but the final decisions won't be made until the Legislature approves the state's fiscal year 2012 capital budget, which will come most likely as lawmakers adjourn.

However, what's needed along with approval of the initial funding is a revamping of the state energy authority to allow it to build and own projects. At this point, AEA essentially administers state energy programs but does not own or operate projects.

Legislation to allow AEA to undertake construction also is before the Legislature in Juneau. House Bill 103 is in the state House, while the Senate is considering Senate Bill 42, the version before that body. Both bills are sponsored by the governor.

Rep. Lance Pruitt, R-Anchorage, co-chair of the House Energy Committee, said there are some lawmakers questioning just how much new authority they should give the energy authority. However, most recognize that the agency must be given the tools to develop the project.

Other state agencies could do it too, but there's general agreement that projects as large and complex as hydro projects require the focus of a specialized agency.

HB 103, authorizing the AEA to take on new powers, is before Pruitt's committee.

AEA has developed hydro projects before. Until it was reorganized in the 1980s the energy authority was the Alaska Power Authority, which did build projects. The old APA group developed the 120-megawatt capacity Bradley Lake hydro project near Homer as well as hydro projects near Kodiak and Valdez, and in Southeast Alaska near Petersburg, Wrangell and Ketchikan.

All of these projects are operating today and produce some of the least costly power in the state.