Want to Help Reform HEA and Get Paid for It?

HEA Board Candidate Jim Levine Needs a Campaign Manager.

This will be a paid, temporary, part-time position with fluctuating hours.

Good writing, speaking, and computer skills are required. Community organizing experience would be an asset.

Jim is running for the HEA Board District 3 seat -- everything south of Kasilof

Jim advocates finding new and better ways to provide electricity to HEA members as part of a coordinated strategy to bring rates under control. He supports greater openness and transparency in the governance of our coop.

Contact Jim Levine for more information: 299-0323, jlevine(emailAT)jaybrant.com

If you're not interested, please pass this information on to people you know.

KBBI Coffee Table February 25th

Tomorrow's KBBI Coffee Table Program Will Feature HEA Management's Perspective

9:00 AM - 10:00 AM
Wednesday, February 25, 2009

KBBI-AM 890, Homer
KDLL-FM 91.9, Kenai

HEA General Manager Brad Janorschke and Public Relations Coordinator Joe Gallagher will be the only guests.

KBBI News Director Casey Kelly chose not to invite any guests with differing perspectives:

I made that decision because there are so many issues surrounding HEA right now. I felt like the best thing to do was to have Brad come on and answer questions about everything from the rate increase to Healy to the power supply study to board elections and member relations.

But the fact is, no one is being given a soapbox. It's my position that a talk show is a dialogue between host, guests, callers, and listeners. No one element is given greater weight than another.


Nobody will be there to represent your concerns -- it's up to you to call in and express yourself.

Some basic talking points follow.

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Talking Points:

Independent Power Source Study:
HEA should stop negotiations with GVEA for a Healy 2 Power Sales Agreement pending the outcome of the recently announced power source study.

Right-to-Know:
HEA is a member-owned cooperative. Members have a right to know about HEA actions that will affect our utility rates. HEA must improve the ways members are informed. Why weren’t recent huge, mid-winter, rate hikes announced farther in advance? How come rate increases weren’t made in small increments over several months? Is HEA considering salary and benefits adjustments for its top management? Why do closed-door power sales agreement negotiations between HEA and GVEA continue? How will we be kept informed of progress and findings of the power source study and other projects?

High Risk:
The Healy Coal Plant faces significant and unknown costs from anticipated greenhouse gas and mercury rules. The Obama Administration is committed to enacting new rules that will limit emissions of greenhouse gasses, and the EPA is re-writing new, tougher rules on mercury emissions. These new rules will add significant Healy 2 startup and operating costs while increasing liabilities from litigation. AIDEA and HEA refuse to consider any of this in estimating costs. Such factors must be quantified before HEA commits us to any contract with GVEA.

Mounting Cost:
The Healy Coal Plant is a black hole for public money. Test runs in 1999 proved the facility could not provide reliable, “clean” power at a competitive cost. Despite this fact, the recent agreement on Healy 2 will retain its faulty technology. After pouring $300 million into this coal experiment how much more state money will a restart really take? The legislature will soon consider a bill to consolidate all railbelt utilities. Does HEA support this approach? What would consolidation mean for the Healy 2 agreement?

Higher Rates:
The Healy Coal Plant is likely to increase your electricity costs. HEA has lamented the 30 year contract with Chugach for natural gas since long before the gas cost spike. We got stuck with that contract because HEA thought gas would always be plentiful and cheap. Why does HEA think that, in the face of rising international demand, coal prices won't increase? Alaskan coal deposits may be vast but coal prices have never been stable. That’s because international markets dictate Alaska coal prices. International coal traders predict a 20% to 30% increase in just the coming six months. Under the current terms, HEA ratepayers will be forced to buy 1⁄2 the power from Healy, regardless of the cost.

Stable Rates:
HEA must look forward to renewable power, not backwards to coal. Alaska boasts enormous renewable energy resources that promise clean, fixed-cost power and sustainable jobs. After construction costs, renewable energy systems produce power on a fixed-cost basis, avoiding the market swings and pricet increases of fossil fuel. The Bradley Lake hydropower facility in Kachemak Bay is an excellent example, producing power at less than half the rate GVEA predicts for Healy 2. And it’s clean, reliable, fixed-cost power indefinitely. What ever happened to the idea of a gas-fired turbine on the Kenai Peninsula to bridge the gap until we can develop our renewable energy sources?

Feb 11 HEA Press Release - Homer Electric to Study Power Supply Options

HEA
3977 Lake Street, Homer, AK 99603 (907) 235-8167
280 Airport Way, Kenai, AK 99611 (907) 283-5831

PRESS RELEASE - February 11, 2009

Homer Electric to Study Power Supply Options

The Homer Electric Board of Directors will be seeking proposals from power supply consultants to evaluate all possible power generation sources that may be available to the cooperative. The decision was made at the February 10th board meeting, following nearly two hours of comments from Homer Electric members.

The goal of the independent, third-party study will be to provide the HEA board with a complete cost-benefit analysis of different generation sources including natural gas, coal, and various types of renewable energy.

The study will be coordinated by the Homer Electric Board of Directors, with input from three members of the cooperative. The board will select a member from each of the three districts in the cooperative to participate in the design and implementation of the power supply study.

Board President Debbie Debnam said the results of the power supply study will be critical to determining HEA’s future power generation decisions.

"The Homer Electric board is committed to finding a mix of generation sources that will provide our members with reliable, affordable energy. We need to know, as best as possible, what the choices are and what each of them will mean to our rates. This study will give us direction on how to proceed with some very important decisions," said Debnam.

The timeline for completion of the power supply study is approximately six months, although it is possible it could be completed earlier.

There were several comments at Tuesday night’s board meeting regarding the possibility of Homer Electric purchasing power from the Healy Clean Coal Project (HCCP).

Homer Electric recently approved a Term Sheet with the state’s Alaska Industrial Development and Export Authority and Golden Valley Electric Association to purchase half of the power from HCCP, but a binding Power Sales Agreement has not been negotiated.

"The goal of the power supply study is to find out what our best options are. The study will consider all factors involved in power production, including possible future fuel costs, regulatory issues, reliability, and most importantly, the impact it will have on the rates paid by our members," said Debnam.

Debnam said the board hopes to be able to send out a request of proposals for a power supply study by the end of February.

For additional information regarding this press release, please contact Joe Gallagher, HEA public relations coordinator, at 907-283-2324

Your Help Is Needed

HEA Members in Kenai, Soldotna, Nikiski, Sterling and other parts of Board Districts 1 and 2 only:

Good candidates are needed to run against Bruce Passe (HEA District 1) and William Tappan (HEA District 2) in the HEA Board election.

Both these incumbent Board members support the Healy 2 deal.

If you are willing to be a candidate or help to find and support someone else who will, please contact fellow Kenai HEA member Jerry Brookman.

Gerald Brookman brookman (emailAT) alaska.net

Time is short -- candidate applications with at least 15 HEA member signatures (one per household) are due by February 27.

Love or Hate Coal, Healy 2 is a bad deal for HEA members.

AIDEA gets rid of a costly white elephant.
GVEA gets another coal plant.
HEA members get to pay the bills.

Take 3 steps to avoid unnecessary rate hikes:

1. Contact HEA Board members.
Tell them you don't want them to sign a contract with AIDEA and GVEA under terms they approved last month.

Debbie Debnam President (Sterling): 262-9277
Donald Seelinger, Secretary/Treasurer (Seldovia): 399-7573
Bruce Passe, Deputy Secretary (Kenai): 283-4617
William "Bill" Tappan (Kenai): tappassoc (EMAIL@)acsalaska.net; 260-6961
Tim Evans (Kenai): heatde (EMAIL@) gmail.com; 262-3734
Jose (Tony) Garcia (Nikiski): 394-2489
Brad Janorschke, General Manager: bjanorschke (EMAIL@) homerelectric.com; 235-8551


2. Write a letter to the editors.
Tell Peninsula newspapers why you oppose the proposed Healy 2 deal.

Peninsula Clarion, Anderson, Dori Lynn (Editor), dorilynn.anderson(EMAIL@)peninsulaclarion.com
Homer News, Letters to the Editor, letters(EMAIL@)homernews.com
Homer Tribune, Letters to the Editor, letters(EMAIL@)homertribune.com
Seward Phoenix Log, Cinthia Ritchie, critchie(EMAIL@)alaskanewspapers.com
Redoubt Reporter, Jenny Neyman, redoubtreporter(EMAIL@)alaska.net

3. Plan to attend the February 10 HEA Board meeting.
Bring your friends and neighbors. The meeting will be at 280 Airport Way in Kenai (5:30 PM). It will be video conferenced to the Homer office.

HEA General Manager Brad Janorschke claims the plant will produce power at a competitive price but there has been no third party assessment of:

Technical feasibility
Healy 2 relative to other power source options available to HEA
Potential costs and benefits of the proposed agreement

There is nothing to support Janorschke’s assertion.

HEA Healy Editorial

AN OPEN LETTER TO HEA MEMBERS REGARDING THE HEALY CLEAN COAL PROJECT (A similar letter was delivered earlier to representatives of Homer Electric Members Forum in response to questions about the Healy Clean Coal Project.)

To Homer Electric Members:

One of the principles of a cooperative is member participation and there is no doubt that Homer Electric is committed to that ideal. Recently, there has been much discussion, sometimes heated, about a decision to restart the Healy Clean Coal Project (HCCP). This discussion comes at the same time that Homer Electric members are feeling the effects of significant rate increases. While we may not have consensus on how to move forward with the Healy Clean Coal Project, there is no doubt in my mind that all involved have the same goal: reliable energy at an affordable price. The following is a synopsis of Homer Electric’s involvement with the Healy Clean Coal Project. As with any large project, there are some unanswered questions, but the following is what we know at this time.

BACKGROUND
Let me begin by telling you that it is HEA’s mission to provide its own independent generation starting in January, 2014. This means that in less than five years, HEA will have to obtain or construct approximately 70-80 MWs of new generation. In achieving this goal, HEA is seeking to diversify its generation portfolio to reduce our dependence on natural gas and the volatility associated with the pricing of this fuel source. To this end, HEA is pursuing renewable energy generation alongside more traditional generation technology, such as coal-fired power production.

Given HEA’s relatively short time to acquire new generation, HCCP has the advantage of being an existing facility. Upon acquiring HCCP from the Alaska Industrial Development and Export Authority (AIDEA), Golden Valley Electric Association (GVEA) expects to bring the facility online in approximately eighteen months to two years. GVEA has given HEA the opportunity to purchase, at cost, up to 50% of the power it generates from the plant. The contract to purchase power from GVEA will satisfy a portion of HEA’s need for new generation and will fulfill the goal of diversifying our generation portfolio. In the larger view, the GVEA transaction would provide approximately 22.5% of the 120-130 MWs of capacity that HEA will require in 2014.

A significant advantage to the GVEA transaction is that it provides HEA with needed capacity but requires no new capital (debt or equity) from HEA. According to HEA’s current power supply study, without the capacity provided by GVEA, HEA would strain its borrowing ability in order to acquire sufficient additional resources. As a result, HEA would not have the capital to use on other energy sources; including developing its own renewable opportunities.

TECHNOLOGY
HCCP was originally designed to burn “waste” coal, essentially a very low BTU content coal that contained a significant amount of impurities that caused undue wear and tear on the system. Complications associated with burning “waste” coal were at the heart of the dispute between GVEA and AIDEA. In spite of burning “waste” coal, the original HCCP did operate successfully for almost two years at full generation capacity. By contrast, when HCCP is restarted it will burn higher quality coal and will no longer try to burn “waste” coal.

As originally designed, HCCP employs an advanced slagging combustor technology that enables burning of the coal in stages to minimize the formation of nitrogen and sulfur oxides. Emissions are further reduced by injection of limestone downstream of the combustion process in conjunction with a Spray Dryer Absorber (SDA). At the time of its conception, it was on the leading edge of technology.

In preparation for restarting HCCP, HEA and AIDEA selected a nationally known engineering firm (Shaw) specializing in coal-fired power plants to perform a comprehensive assessment detailing all work necessary to restart HCCP. Shaw identified systems and tasks that needed modifications and updates prior to restart, but was confident that the plant could be successfully restarted and operated safely and reliably. Through Shaw’s comprehensive assessment of the present status of the plant, we are confident that the plant can be operated successfully.

REGULATIONS
HEA is aware that future regulations will likely affect HCCP; however, these regulations will take several years to develop and implement. In addition, future regulations can and will affect other forms of generation. The Environmental Protection Agency’s (EPA’s) latest attempt at regulating mercury emissions failed in the courts and the EPA is working on a redraft of these regulations. Under the failed regulations, HCCP would likely have qualified as a “low mass emitter” and would not have been required to implement any mercury removal technology. We are fortunate that Usibelli coal is relatively low in mercury content compared with Lower 48 sources of coal. Future regulations would have some impact on coal-fired generation, and perhaps other fossil fuel generation as well, but that impact is a matter of speculation at this time. What is likely to happen is that HCCP will operate, with or without HEA participation, under its existing permits.

Technology and equipment does exist for removing mercury from stack emissions. These technologies are effective and efficient and, if necessary, HEA is confident that mercury removal would not cause an unacceptable increase in the price of power out of HCCP.

On the subject of greenhouse gas emissions, HEA is aware that there may be future regulations. The technology to capture and sequester greenhouse gases is in its early developmental stage and a proven technology has not emerged. How any regulations, if implemented, might affect HCCP in the future is not known and HEA cannot quantify the cost of these regulations at this time. One must also recognize that if HCCP is not used to generate the required energy, that energy would be replaced with the use of gas fired generation. Gas fired generation, although it does not have as large a carbon footprint as coal, still has a significant impact on the total amount of emissions. Diversity of location and diversity of sources can only assist in making the emissions impact as small as possible. In a perfect world there would be a source that we could depend on for the base load energy requirements of our members that would have little or no carbon footprint. Unfortunately, that technology is not available at this time.

COAL PRICES
While coal is a non-renewable resource, Alaska is blessed with an abundance of coal resources. In fact, the source for HCCP’s coal (Usibelli Mine) is located in Healy and is expected to last at least 150 years, which is well beyond the expected life of HCCP. HEA, and our experts, expect less volatility in the price of coal than from other fuels such as gas or oil. While the price of coal will reflect the current economic conditions and trends, coal is insulated from radical price fluctuations because of the terms and long duration of typical coal purchase contracts. While coal may never be as cheap as state or federally subsidized hydroelectric power, it is not likely to exceed the price of natural gas or oil fired generation. Hence, HEA expects that HCCP will, over the long term, provide a stabilizing influence on our price of power. Again, this perfectly matches HEA’s strategy of balancing its generation portfolio to achieve stable long term rates for our members.

Your HEA Board and management are doing their best to bring HEA ratepayers the most cost effective and stable power possible. This challenge involves balancing a complex blend of interests, relationships and technologies. By agreeing to equally share both the cost and power output from HCCP with GVEA, HEA is effectively splitting any future risk for its members.

I appreciate the interest and concerns of all HEA members and hope this information will give you confidence that the HEA Board is making the best possible decision based upon solid engineering recommendations with due consideration given to future risks. While you may not be completely in support of the HCCP project, I hope you will find reason to support the Board’s action in delivering a project that provides diversity and long term stability to our average price for power.

Sincerely,
Brad Janorschke
General Manager
Homer Electric Association, Inc.