Reduce the cost of energy in Alaska.
- Management and development of Alaska Energy Authority-owned infrastructure.
- Assist communities and utilities in the development, financing, construction, and ongoing technical support of cost-effective energy projects.
- Reduce the cost of electricity for residential customers and community facilities in rural Alaska through management of the Power Cost Equalization program.
- Increase the safety, reliability, and efficiency of community energy systems through assistance and training.
- Lead and coordinate state energy policy and planning.
|Mission Results||Core Services|
|A: Result - The cost of energy in Alaska is reduced.|
|A1: Core Service - Management and development of Alaska Energy Authority-owned infrastructure.|
Target #2: Manage Alaska Intertie for the benefit of Railbelt Consumers.
Analysis of results and challenges: Owned by AEA, the Alaska Intertie transmission line is a 170-mile long, 345kV transmission line that runs between Willow and Healy. It is operated at 138kV.
The Alaska Intertie allows Golden Valley Electric Association (GVEA) in Fairbanks to purchase electricity produced less expensively with lower cost energy such as natural gas and hydroelectric from the Anchorage and Kenai Peninsula utilities. This results in savings for GVEA consumers.
Reductions in avoided costs in 2015 and 2016 are largely due to higher costs of sales from Anchorage utilities and the lower cost of fuel in the Fairbanks region.
Target #3: No unplanned outages occurred on the Alaska Intertie.
Analysis of results and challenges: Planned outages are anticipated and are the result of scheduled maintenance activities. Others are largely due to fault trips due to tree fallings.
|A2: Core Service - Assist communities and utilities in the development, financing, construction, and ongoing technical support of cost-effective energy projects.|
Target #1: 100% of Bulk Fuel Upgrade (BFU) projects completed.
Analysis of results and challenges: Through AEA’s BFU program, eligible recipients are provided financial and technical assistance to upgrade bulk fuel facilities, which reduce the unit cost of energy by replacing leaking tanks and decrease the risk of future tank and/or equipment failure.
Bringing facilities into compliance with federal and state codes and regulations also makes them safer and more reliable. By eliminating fuel spills from leaking tanks, a community is able to use all fuel purchased and avoid environmental cleanup costs. In following business plan terms, owner operators are better able to manage the storage facilities and the fuel inventories to the greatest economic advantage.
The graphic above indicates the continuous progress toward the goal. Projects flow from left side of the graph to the right as they are identified as a project in need, then progress from conceptual design through construction and are ultimately completed.
Target #2: 100% of communities needing rural power system upgrades (RPSU) receive them.
Analysis of results and challenges: AEA’s RPSU program upgrades rural power infrastructure.
There are approximately 72 projects remaining on AEA’s RPSU priority list. Since 2000, 98 projects have been completed. In Fiscal Year 2019, two RPSU projects in construction: Port Heiden and Clark’s Point.
Powerhouse upgrade projects replace outdated, inefficient systems with new electronically controlled generator sets. New powerhouses contain generators of several different sizes. This allows the operator to employ the most efficient generator at various power demand levels throughout the day.
At peak demand times the largest generator provides the power, while at low-demand times or times renewable sources are generating a smaller generator may provide the power. We have also increased fuel efficiency by adding electronic fuel injectors and we have strengthened many other components to ensure reliability and long life. AEA has installed remote monitoring systems to improve the capacity to provide remote technical assistance.
The graphic above indicates the continuous progress toward the goal. Projects flow from left side of the graph to the right as they are identified as a project in need, then progress from conceptual design through construction and are ultimately completed. The total number of projects varies due to many factors, such as changing community populations affecting eligibility for the RPSU program, and new needs arising.
Target #3: Power Project Fund (PPF) outstanding balance increases annually.
Analysis of results and challenges: AEA’s PPF loan program provides funds to local utilities, local governments or independent power producers for the development, expansion or upgrade of electric power facilities, including distribution, transmission, efficiency and conservation, bulk fuel storage, and waste energy.
The increase in the outstanding loan balance total, resulted from a substantial draw down of the $20 million open line of credit for the Hiilingaay Hydro-Electric project construction that was made available from the Legislature. From 2014 to 2019, the outstanding loan balance has continued to increase to a balance of more than $25 million at Fiscal Year-end 2019. The graph also shows the loan commitments since 2014, which at year-end 2019 were $3.1 million for a combined total outstanding loan balance, loan commitments of $28.3 million, a two-fold increase since 2014.
With reduced state grant funds, communities are beginning to transition from grant-funded energy projects for everything from repair and replacement of existing infrastructure to development of new generation resources. There is a notable increase in loan application activity in the first few months in the beginning of Fiscal Year 2020. In an increasingly constrained funding environment, AEA is actively reaching out to Alaskan stakeholders to promote awareness that the PPF loan fund is available to finance a wide range of energy projects and can be used in combination with other sources to complete project “funding stacks.”
|A3: Core Service - Reduce the cost of electricity for residential customers and community facilities in rural Alaska through management of the Power Cost Equalization program.|
Target #1: 100% of eligible electric utilities receive Power Cost Equalization (PCE) payments.
Analysis of results and challenges: AEA’s PCE program provides economic assistance to communities and residents of rural electric utilities where the cost of electricity can be three to five times higher than for customers in more urban areas of the state.
PCE payments reduce the unit cost of power to residential and community facility customers of eligible utilities. AEA calculates and issues the annual payments, and provides technical assistance to utility clerks who need help preparing PCE reports. Utilities that are not participating pursuant to the statutes and regulations do not receive some or all payments. One of the 195 communities served by a PCE eligible utility did not participate in FY2018.
Target #2: Maximize each utility's Power Cost Equalization (PCE) benefits to 100% of eligibility.
Analysis of results and challenges: AEA calculates and issues the annual payments, and provides technical assistance to utility clerks who need help preparing PCE reports. The PCE floor is calculated each year as the weighted average price of electricity in Anchorage, Juneau, and Fairbanks. If PCE utilities are properly operating and reporting their costs, their post-PCE effective rates should be near the floor.
The graph above shows the number of PCE “eligible” residential kWhs sold as a percentage of the total residential kWhs sold. Residential customers are eligible for PCE credit up to 500 kWhs per month per customer. Customers must pay the utility the full rate for all kWhs used in excess of those eligible for PCE. The average monthly residential kWhs consumed in FY2018 was 292 kWh per household.
Consumption of electricity by eligible residential customers has seen a steady decrease over time. As residential customers continue to conserve and use fewer kWhs, the percentages will continue to increase.
|A4: Core Service - Increase the safety, reliability, and efficiency of community energy systems through assistance and training.|
Target #1: Circuit Rider assistance is provided to eligible communities.
Analysis of results and challenges: AEA’s Circuit Rider program provides eligible communities with technical assistance to improve the efficiency, safety, and reliability of their energy infrastructure and helps reduce the risk and severity of emergency conditions. In FY2019, Circuit Rider provided assistance to 69 communities.
Many utilities are highly functional and do not request or demonstrate a need for assistance. Others may require and request assistance multiple times throughout the year. Circuit Rider assistance is provided in telephonic and local on-site support.
AEA also uses the opportunity provided by on-site Circuit Rider assistance to conduct itinerant training relevant to the utility’s own specific infrastructure.
Target #2: Restore power to communities experiencing electrical emergencies within 48 hours.
Analysis of results and challenges: AEA’s Electrical Emergency Assistance service delivers on-call emergency response to electrical emergencies in eligible rural utilities that present an imminent danger to life or a likelihood of significant disruption of electrical service.
AEA's goal is to reach each community in need within 48 hours and was met in FY2019. In responding quickly, potential damage is significantly reduced. The logistics and weather of rural Alaska is a significant factor that can delay the response.
Establishing good communication pathways with the utilities and Alaska Emergency Management is key to reducing the time needed to respond and restore power.
Target #3: All rural utilities (electric and bulk fuel) have appropriately trained operators and clerks.
Analysis of results and challenges: AEA provides training opportunities to local residents for their energy projects and infrastructure. Training local residents to manage and operate rural energy infrastructure reduces the unit cost of energy by providing rural residents the skills to produce and submit PCE reports as well as better operate and maintain energy infrastructure.
PCE clerk training helps ensure communities members are properly trained to complete the PCE reports and therefore receive maximum benefit from the PCE program. PCE reports must be submitted properly and on time to receive PCE payments.
Proper maintenance and operation of energy infrastructure helps ensure that the infrastructure continue to operate in the most efficient manner. Properly maintaining a facility extends the operational life of the facility. Trainings in 2018 included bulk fuel operator training, power plant operator training, advanced power plant operator training, utility manager training, and PCE clerk training.
|A5: Core Service - Lead and coordinate state energy policy and planning.|
Target #1: By 2025, 50% of electricity generation is from renewable sources.
Analysis of results and challenges: Alaska’s renewable energy portfolio continues to grow steadily due in part to the impacts of the REF, a grant fund administered by AEA.
The percentage of electrical need met by renewable generation has increased from 21.5% in 2010 to an estimated 31.17% in 2018 (final net generation figures for 2018 are not available from the Energy Information Administration until early 2020). Of the renewable generation, about 90% is produced by hydropower and 10% by wind power. Because so much renewable generation comes from hydropower, there are year-to-year fluctuations in overall renewable contribution based on weather. In years with little snow and low precipitation, there will be a decrease in total renewable generation with no change in installed capacity. There was a increase in the estimated percentage of total renewable generation in 2018 because of modest increases in wind and hydro production, 1% and 9% respectively, and an approximately 9% decrease in the absolute production from both oil and natural gas. Total generation dropped by almost 4%.
In addition to the gains in electricity generation from renewable energy depicted in the graph above, the REF grant program has also funded renewable energy systems in rural locations whose utilities are not required to report to the Energy Information Administration. REF projects also provided gains in renewable heat energy, such as biomass and heat recovery. Heat recovery projects typically displace costly heating fuel in schools, water systems and other community facilities located in relatively close proximity to the powerhouse. Biomass projects displace heating fuel in non-residential buildings and bring energy security through local sourcing as well as job creation at the local level.
Several renewable projects have been completed recently or are slated for near term construction including 900-kW wind turbines in Bethel and St. Mary’s (funded through the REF), a 563-kW solar farm in Fairbanks, a 1-MW solar farm in Willow (funded through a PPF loan), and AEA’s expansion of the Bradley Lake hydroelectric facility on the Railbelt.
Increasing the percentage of electricity generated from renewable sources has been achieved by the following action items under way:
• Local, regional and statewide energy planning efforts that emphasize the need for data-driven decision making and use of most cost effective, locally available resources;
• REF projects;
• Private capital in conjunction with REF grant money;
• Additional state appropriations for renewable energy projects;
• PPF loan program support of renewable energy projects;
• Recapitalization of the PPF loan program to support additional projects;
• Federal funding of renewable energy projects, including Denali Commission, Department of Energy, and by the United States Department of Agriculture (USDA);
• Energy efficiency and conservation programs such as AEA’s Village Energy Efficiency Program (VEEP), Alaska Commercial Building Energy Audit Program, and public education and outreach activities that lower overall energy consumption, thereby increasing the percentage of power that is generated by renewables.
Target #2: By 2020, a 15% improvement in per capita end-use energy efficiency (using a 2010 baseline).
Analysis of results and challenges: Energy efficiency per capita in Alaska continues to improve. Based on current projections, Alaska will achieve just under 5% improvement in efficiency per capita by 2020 for electricity and heat.
When we look at just electricity, the efficiency gains are greater and are on track to reach over 10% improvement by 2020. Efficiency gains result from a combination of State of Alaska programs investing primarily in residential efficiency coupled with improvements in the efficiency of consumer electronics. Efficiency improvements in consumer electronics/lighting is driven by market forces and regulations at the federal level. These improvements are likely the primary drivers in the efficiency gains in electric energy consumption.
Alaska’s three energy efficiency policy reports all recommend an Energy Efficiency Resource Standard (EERS). An EERS could be a means of achieving a savings target like 1% or 2% per year, but would require a funding mechanism like a statewide system benefits charge on all kWhs sold. System benefit charges are often used as a way of generating revenue to pay for utility or State-run energy efficiency programs. An EERS would create a mandate that could drive market transformation in energy efficiency.
Commercial energy efficiency programs at AEA include the VEEP and Whole Village Retrofit pilot project, AEA’s Commercial Building Energy Audit (CBEA) program, and education and outreach. The VEEP program, through its four distinct funding iterations (Denali Commission funded, American Recovery and Reinvestment Act funded, State, and Wells Fargo funded) has provided cost saving energy efficiency improvements to public/community buildings and facilities in nearly 200 communities around the state. AEA was funded by USDA to perform the CBEA program, offering audits to privately owned business outside the municipality of Anchorage.
Commercial Property Assessed Clean Energy (C-PACE), for which enabling legislation was adopted in 2017, creates another tool to improve energy efficiency in the commercial building sector. C-PACE is a financing tool that allows local taxing authorities to place a voluntary tax assessment on commercial properties to finance efficiency and building level renewable energy improvements. AEA is working with the Fairbanks North Star Borough, the Municipality of Anchorage, the Kenai Peninsula Borough, Mat-Su Borough and the City and Borough of Juneau in an effort to develop C-PACE.
Target #3: 100% of Renewable Energy Fund (REF) projects are under way.
Analysis of results and challenges: AEA’s REF grants benefit Alaskans by reducing and stabilizing the cost of energy through development of renewable energy projects.
Established in 2008, AEA began soliciting applications for REF grants in the fall of that year. Nine application periods have been completed. The projects recommended for funding from the Round 9 Request for Applications (RFA) did not receive funding from the legislature for FY2017 or FY2018. In summer 2016, AEA issued a notice that there would be no RFAs for REF Round 10. Instead, AEA would resubmit the Round 9 projects that were recommended but not funded in the previous legislative session. As per AS 42.45.085, excess PCE earnings in FY2018 resulted in a capital appropriation of $11 million to the REF for six new projects to commence in FY2019. The funded projects came from the Round 9 recommended list.
Working in consultation with the Renewable Energy Fund Advisory Committee (REFAC), the Alaska Department of Natural Resources, and third-party contractors, AEA conducts thorough evaluations of applications received. Following AEA's recommendations, the legislature approved $268 million for just under 300 renewable energy project grants. Nearly 100 projects were operational in October 2019. In calendar year 2017, these projects contributed to displacing more than 30 million gallons of diesel equivalent gallons. As of October 2019, only one REF project which received appropriations in FY2019 remains to be started. Project types range from feasibility through construction.
REFAC recommended that AEA solicit project applications through RFAs every other year. Applications received will be evaluated per program guidelines and ensure there is a current, vetted, scored, and ranked list of renewable energy projects that can be recommended to the legislature for funding. AEA expects to solicit project applications in March 2020.
Current as of December 9, 2019