Independent Power Producers Seek Utility Regulations Change

 Some Alaska alternative energy producers may benefit from new rules the Regulatory Commission of Alaska is considering. But other independents say the state’s power statutes are so antiquated they should be completely revised.

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Alaska Environmental Power, which harnesses wind energy, filed a petition with the RCA in August of 2013, asking for changes in current regulations that would facilitate independent producers’ access to the electrical grid. Right now, the price of independent power is too high, and that is blocking the growth of independent power companies, according to Teresa Clemmer, an attorney representing AEP. Clemmer says Alaska ‘s current regulations are discouraging private investment in alternative energy.

“Independent power producers are looking for a fair opportunity to compete. That’s all they want is an ability to sell their power at a competitive price and to increase the development of renewable energy by tapping the market forces that are willing to invest lots of money in Alaska.”

Part of the problem is the costs utilities face in purchasing alternative energy and integrating it into the power grid.

Clemmer says state regulations need to harmonize with Federal Energy Regulatory Commission [FERC] rules when it comes to allowing emerging energy producers to use existing power infrastructure. A 1980s era federal law  encourages traditional electric companies to purchase power from non-traditional producers. Federal regulations require utilities to pay competitive prices for independently produced power under the Public Utilities Regulatory Policy Act. PURPA says utilities must purchase lower-priced althernative power whenever possible.

 Clemmer says, only 3 percent of Alaska’s energy comes from renewable sources, compared with almost 38 percent in the Lower 48, because state regulations have not kept up with the times.

“We just wanted to bring the state law in line with what the rest of the country is doing.”

In 1982, the then Alaska Public Utilities Commission adopted PURPA, which set guidelines for rates and conditions for purchase and interconnection of alternatively produced power by the established utilities. But those guidelines are not enforced, according to Duff Mitchell, executive director of Alaska Independent Power Producers. Mitchell says AEP’s petition to RCA doesn’t go far enough.

“It makes some progress, but it doesn’t remove the barriers to connecting to the grid. The RCA  docket is relatively narrow in scope, and it is asking our state to come away from the dark ages, or pre-PURPA era into a current period where we treat IPP’s and avoided costs and integration costs on the same parity which is already the rule of the land in the lower 48.”

Mitchell is working on a privately funded hydro power project intended to provide power for Juneau when it is complete. He says it’ll connect with the grid at the Snettisham power line eight miles away. Mitchell says Alaska’s system now forces independents to pay multiple fees before their power even reaches consumers, because of each of the six major electric utilities owns a portion of the transmission lines linking Homer and Fairbanks.

“And so it makes it very difficult for an independent power which has inexpensive power to offer, and wants to do a phase two project, and maybe the current utility right next door to them doesn’t need the power, but somebody else further away, let’s say in Fairbanks, does, and yet you have to wheel that power between three other utilities, and so they pancake it, or they extract fees and costs, so that that power is no longer economical.”

Mitchell says, in Alaska, utilities own both generation and transmission of power.. which is counter to FERC rules. He favors a legislative fix to the independent’s problems.  A bill now before the state legislature, HB 78, would seek to address some of Mitchell’s concerns.

Anchorage’s Chugach Electric has filed comments on the independent producers’  RCA docket, indicating that “individual utility boards… are in the best position to decide whether a particular project offers value to its customers.” Chugach spokesman Phil Steyer says that Chugach already buys power generated by Cook Inlet Regional’s Fire Island wind project. Steyer says his company is backing a different, but related, approach to the problem : unifying the six segments of the grid.

“A unified system operator for the railbelt could establish common rules of the road to include reliability standards and interconnection standards and it could collect through a universal tariff, the cost of operating, maintaining and expanding the existing regional grid.”

Steyer says, under the present system, it is difficult for the management of  electric cooperatives to see beyond their own service areas.  But Mitchell says the transmission lines are mostly state- funded, and should be open to all users. The RCA has accepted Alaska Environmental Power’s petition and Clemmer says at its most recent meeting, [Feb.11] RCA staffers presented language proposing the changes alternative energy producers want. She says the next step is an RCA draft rule and public comment. She says it is likely the RCA will make a decision on the issue by this summer.