Southcentral Power Project under utility control
After 22 months of construction, the new Southcentral Power Project is now under utility control. As of 11:59 p.m. on Jan. 31, Chugach Electric Association accepted “care, custody and control” from SNC-Lavalin Constructors, the contractor hired to build the new power plant for two Anchorage-area utilities. "I'm very proud of the work by Chugach staff and managers to bring this project to fruition on behalf of the two utilities and the thousands of consumers they serve," said Janet Reiser, chair of the Chugach Board of Directors.
The $369 million project became operational well ahead of its scheduled June transfer date. Groundbreaking occurred in March 2011. At the height of construction more than 400 workers were on-site.
SPP is a joint project of Chugach and Municipal Light & Power. Chugach owns 70 percent of the plant and ML&P 30 percent. Those percentages set each utility’s proportionate share for the fuel, expenses and output of the plant.
Under the terms of an agreement between the two utilities, Chugach will operate and dispatch the power from SPP on behalf of the joint owners. Although the utilities have been taking power from the project over the past few months during its testing and commissioning, they have now gained the ability to schedule when and how the plant will be used to ensure maximum economy, efficiency and benefit to customers.
SPP is a very efficient, 183-megawatt, gas-fired power plant. It contains three natural gas-fired turbines and one steam turbine, each coupled with a generator. While the 48-Mw gas turbine-generators are capable of running independently, the plant will operate in “combined-cycle” mode most of the time.
In combined-cycle, the 800-degree hot exhaust of the gas turbines is used to make steam which powers the 39-Mw steam turbine-generator, thereby producing extra electricity with no additional fuel cost. Both Chugach and ML&P have operated combined-cycle units at their power plants for decades. While the technology is not new, the new machines are more efficient than those currently in use. SPP will use only about three-fourths of the natural gas to make a kilowatt-hour of electricity compared to the system average today. That efficiency will translate to significant savings in fuel for the customers of both utilities. Chugach alone estimates the new plant will cut its annual natural gas consumption by 3 billion cubic feet a year. At current prices, that amounts to an annual savings of more than $15 million for Chugach customers.
The plant’s efficiency will be very helpful as the region grapples with the challenges of diminished production from existing Cook Inlet gas fields and concerns about the ability of the gas transmission system to deliver all the gas customers need at any given point in time. "This project came in under budget, ahead of schedule and just in time to help relieve some of the pressure on the Cook Inlet natural gas delivery system," said Chugach CEO Brad Evans.
Customers do need to pay for the cost of the new plant, however. With today’s relatively low gas prices, interest and depreciation on Chugach’s $256 million share of the Southcentral Power Project, plus annual operating expenses, are expected to result in an estimated 4-6 percent rise in monthly bills in 2013. Chugach recently filed a request to recover its costs associated with SPP with the Regulatory Commission of Alaska.
New investment was inevitable. The only question was what millions of dollars was going to be spent on. Existing generation was decades old. Prior to building SPP, the last unit on the Chugach system was added in 1981. Chugach made the decision to invest in efficient new generation rather than pour tens of millions of dollars into equipment more than 30 years old.
SPP was built on available land at Chugach’s headquarters complex near Minnesota Drive and International Airport Road. Chugach has operated a smaller natural gas-fired power plant there for nearly 50 years. The site was selected after considering several alternatives, in part because key infrastructure like roads, gas and electric transmission lines were already nearby. In conjunction with the project, a new transmission substation was constructed adjacent to the plant, and only short stretches of new transmission lines were necessary to tie the project into the grid.
Chugach is the largest electric utility in Alaska, providing power for Alaskans throughout the Railbelt through retail, wholesale and economy energy sales.