Performance Details

Department of Commerce, Community, & Economic Development - Alaska Energy Authority

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Mission

Reduce the cost of energy in Alaska.

Core Services

• Lead and coordinate state energy policy and planning.
• Assist communities and utilities in the development, financing, and ongoing technical support of cost-effective energy projects.
• Increase the safety, reliability, and efficiency of community energy systems through assistance and training.
• Reduce the cost of electricity for residential customers and community facilities in rural Alaska through management of the Power Cost Equalization program.
• Management and development of Alaska Energy Authority-owned infrastructure.

Mission Results

Core Services

A: The cost of energy in Alaska is reduced.  Details >

A1: Lead and coordinate state energy policy and planning.  Details > TARGET #1: By 2025, 50 percent of electricity generation is from renewable sources. TARGET #2: By 2020, a 15 percent improvement in per capita end-use energy efficiency (using a 2010 baseline). TARGET #3: 100 percent of Renewable Energy Fund projects are under way. TARGET #4: Facilitate technical, multi-stakeholder coordination for the following key program areas: efficiency, hydro, biomass, wind, heat recovery, diesel, and solar. A2: Assist communities and utilities in the development, financing, and ongoing technical support of cost-effective energy projects.  Details > TARGET #1: 100 percent of Bulk Fuel Upgrade (BFU) deficiency list projects completed. TARGET #2: 100 percent of communities needing rural power system upgrades (RPSU) receive them. TARGET #3: Power Project Fund outstanding balance increases annually. A3: Increase the safety, reliability, and efficiency of community energy systems through assistance and training.  Details > TARGET #1: Circuit Rider assistance is provided to communities in need. TARGET #2: Restore power to communities experiencing electrical emergencies within 48 hours. TARGET #3: All rural utilities (electric and bulk fuel) have appropriately trained operators and clerks. A4: Reduce the cost of electricity for residential customers and community facilities in rural Alaska through management of the Power Cost Equalization program.  Details > TARGET #1: 100 percent of eligible electric utilities receive Power Cost Equalization payments. TARGET #2: Maximize each utility's Power Cost Equalization benefits to 100 percent of eligibility. A5: Management and development of Alaska Energy Authority-owned infrastructure.  Details > TARGET #1: Manage Bradley Lake Hydroelectric Project for benefit to populations served. TARGET #2: Manage Alaska Intertie for benefit to populations served. TARGET #3: Zero outages occurred on the Alaska Intertie.

Performance Detail

Target #1: By 2025, 50 percent of electricity generation is from renewable sources. Methodology: U.S. Energy Information Administration “Net Generation by State by Type of Energy Source” (EIA-906, EIA-920 and EIA-923). CY2017 is estimated. Analysis of results and challenges: Alaska’s renewable energy portfolio continues to grow slowly and steadily due in part to the impacts of the Alaska Energy Authority (AEA)’s Renewable Energy Grant Fund (REF) program. The percentage of electrical need met by renewable generation has increased from 21.5% in 2010 to an estimated 29.42% in 2017 (final net generation figures for 2017 are not available from the Energy Information Administration until early 2019). 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 decrease in the estimated percentage of total renewable generation in 2017 because the absolute production from both oil and natural gas increased, while renewable generation stayed roughly the same between 2016 and 2017. 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. The only large renewable project currently slated for near term construction is expansion of the Bradley Lake hydro facility on the Railbelt. If the expansion had been operational in 2017 it would have added less than 1% to total statewide renewable generation. Assuming the current level of renewable energy projects being brought on line, it would take more than 100 years to reach the 50% goal. Increasing the percentage of electricity generated from renewable sources has been achieved by the following action items under way: 1) Local, regional and statewide energy planning efforts, including the Alaska Affordable Energy Strategy, that emphasize the need for data-driven decision making and use of most cost effective, locally available resources; 2) Renewable Energy Fund projects; 3) Additional state appropriations for renewable energy projects; 4) Power Project Loan Fund support of renewable energy projects; 5) Recapitalization of the Power Project Loan Fund to support additional projects; 6) Private capital in conjunction with Renewable Energy Fund grant money 7) Federal funding of renewable energy projects, including Denali Commission, Department of Energy and USDA; 8) 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 percent 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 over time but at a rate that is much slower than what would be needed to meet the 15 percent by 2020 goal. Based on current projections Alaska will achieve just under five percent improvement in efficiency per capita by 2020 for both heat and electricity. When we look at just electricity the efficiency gains are greater and are on track to reach just under 10 percent 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. Efficiency gains in heat energy often require a larger upfront investment and can be more complex to implement than electric efficiency measures (e.g. a lighting retrofit is cheaper and more straightforward than improving a building’s thermal envelope). The estimated per capita percentage improvement in efficiency is lower for 2018 than for 2017. This is due in part to population decrease and an overall modest increase in electric generation. A statewide building energy code has been proposed by efficiency advocates for a number of years to ensure that future building stock in the state is more efficient. However, given the slow pace at which building stock turns over, programs targeting existing stock are also needed significantly increase efficiency. One of the most salient takeaways of a recent report, “Energy Efficiency Program Evaluation and Financing Needs Assessment,” completed by the Vermont Energy Investment Corporation (VEIC) for the Alaska Affordable Energy Strategy, is that sweeping policy goals such as the 15 percent by 2020 energy efficiency improvement goal cannot be successfully reached without dedicated funding and supporting policy and/or regulatory change. This is the primary reason why Alaska’s energy efficiency opportunity remains largely unrealized. To capitalize on the efficiency opportunity, policy makers must shift the conversation from one focused merely on goals to one focused on realistic, actionable plans and a way to pay for them. AEA recommends consideration of implementation and funding concepts laid out in the 2016 VEIC report as a starting point for discussing an actionable, realistic energy efficiency plan that would lead to more robust savings. 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 one percent or two percent 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. All three of Alaska’s efficiency policy reports have also recommended establishing a statewide building energy code. Residential efficiency programs in the state have been primarily limited to the Weatherization at No-Cost Program, the Home Energy Rebate Program, the Energy Efficiency Interest Rate Reduction Program, and the Home Energy Loan Program – all grant or subsidy programs managed by Alaska Housing Finance Corporation. Through these efforts, nearly 40,000 existing or new residential buildings, out of a building stock of roughly 280,000, have received efficiency improvements; much of the money for those efforts was appropriated prior to 2010. Recent years have seen a steep decline in both federal and state funding; the Home Energy Rebate Program was essentially cancelled and the Weatherization at No-Cost Program has been scaled back significantly from peak activity around 2008/2009. Without a statewide building efficiency code there is no mechanism to ensure that new building stock is built in an efficient way. Commercial energy efficiency programs at AEA include the Village Energy Efficiency Program (VEEP) and Whole Village Retrofit pilot project, AEA’s Commercial Building Energy Audit (CBEA) program, and education and outreach. While the VEEP program, through its three distinct funding iterations (Denali Commission funded, American Recovery and Reinvestment Act funded, and State funded) has provided cost saving energy efficiency improvements to public/community buildings in nearly 200 communities around the state, that’s only a very small impact compared to the cost and greenhouse gas emissions savings potential of fully capitalizing on all the available opportunity. AEA has been funded by U.S. Department of Agriculture (USDA) to perform the commercial building energy audit program, offering audits to privately owned business outside the municipality of Anchorage. However, there has not been strong interest despite considerable outreach. Building owners are reluctant to invest the required 25 percent match without a clear way to pay for recommended improvements. Commercial Property Assessed Clean Energy (C-PACE), for which enabling legislation was adopted in 2017, creates another tool to improve energy efficiency in the non-residential 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 currently 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 percent of Renewable Energy Fund projects are under way. Analysis of results and challenges: The Renewable Energy Fund (REF) was established in 2008 and 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 did not receive funding from the legislature for FY2017 or FY2018. In summer 2016, AEA issued a notice that there would be no request for applications 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 Power Cost Equalization (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. AEA, working in consultation with the Renewable Energy Fund Advisory Committee (REFAC), the Alaska Department of Natural Resources, and third-party contractors, conducts rigorous evaluations of all applications received. Following AEA's recommendations, the legislature has approved $268 million for just under 300 renewable energy project grants. More than 73 projects are currently operational; in calendar year 2017 these projects displaced more than 30 million gallons of diesel equivalent gallons. As of September 2018, all REF projects which received appropriations are underway; project types range from feasibility through construction. Projects which were funded with FY2019 funds have all been scoped and negotiations are underway to finalize grants with the project developers. At an August 2018 meeting, the REFAC recommended that AEA solicit project applications through a Request for Applications (RFA) every other year starting March 1, 2019. Applications received will be evaluated per program guidelines and ensure that there is always a relatively current, well vetted, scored, and ranked list of renewable energy projects that can be recommended to the legislature for funding, either through general fund appropriations or excess earnings from the PCE endowment fund when available.

Target #4: Facilitate technical, multi-stakeholder coordination for the following key program areas: efficiency, hydro, biomass, wind, heat recovery, diesel, and solar. Analysis of results and challenges: For many years, AEA has provided leadership by facilitating technical, multi-stakeholder working groups across numerous technology areas. These working groups have been a key method for communities and the state to understand the potential and barriers for implementing energy technologies in communities. AEA has acted as a neutral arbiter to bring together a diverse group of stakeholders from state and federal agencies, communities, utilities, private companies, and non-government organizations to promote the responsible development of projects in communities. The working groups also provide a space for discussions on potential policy reform.

Target #1: 100 percent of Bulk Fuel Upgrade (BFU) deficiency list projects completed. Analysis of results and challenges: Upgrading bulk fuel facilities reduces the unit cost of energy by replacing leaking tanks and reducing the risk of future tank and equipment failure. Bringing these 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. By following the terms of the business plans, owner operators are better able to manage the storage facilities and the fuel inventories to the greatest economic advantage. The graphic 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 percent of communities needing rural power system upgrades (RPSU) receive them. Analysis of results and challenges: 75 projects are remaining. Of those, 30 are in communities served by independent utilities and 45 are in communities served by co-operatives, boroughs, and investor-owned utilities, including Alaska Village Electric Cooperative, the North Slope Borough and the Alaska Power Company. 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 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 outstanding balance increases annually. Methodology: Undistributed loan commitment values are only included after the sale of loans, but not for 2009-2010. $10 million fund capitalization for the Cordova Humpback Creek loan, appropriated in FY2015, is restricted and is not included in the committed balance. Analysis of results and challenges: The drop in the Outstanding Loan Balance total, which occurred between FY2010 and FY2011, resulted from 37 loans being sold in September 2010 to AIDEA that totaled $20,631,000. The sale capitalized the fund and allowed AEA to provide more loans. From 2011 to 2018, the Outstanding Loan Balance has continued to increase to a balance of more than $16 million at fiscal year-end 2018. The graph also shows the Undisbursed Loan Commitments since 2011, which at year-end 2018 were $9.8 million for a combined total Outstanding Loan Balance and Undisbursed Loan Commitments of $25.9 million, a five-fold increase since 2012. The available Uncommitted Loan Fund Balance available to loan as of June 30, 2018 is just under $10.5 million. The undisbursed commitments as of June 30, 2017 included $10 million, which was appropriated for Humpback Creek hydro project but then never used. The legislature re-appropriated these funds to the Department of Corrections and those funds, as of September 2017, have been transferred, lowering undisbursed commitments by $10 million (the transfer is reflected in FY2018). With decreased 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. AEA estimates a need of more than $20 million annually to maintain basic energy generation infrastructure in small rural communities. Some of these communities have difficulty accessing private commercial loans and will need to rely on a more flexible loan program like the Power Project Fund. AEA’s technical staff is well suited to evaluating and understanding the strengths, risks, and need for these energy projects.

Target #1: Circuit Rider assistance is provided to communities in need. Analysis of results and challenges: There are approximately 130 utilities eligible for Circuit Rider assistance. Of those, many are highly functional and do not request or demonstrate a need for assistance. Others may require and request assistance multiple times through the year. Circuit Rider provides both telephonic and local on-site assistance. It is a new program goal (2017) to make contact with every eligible utility and conduct an assessment of the utility’s infrastructure, noting any deferred maintenance for use in future planning and project development. 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 responds 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; by 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. Number of hours before power was restored in communities once notice was received: 07/2017 – Newtok 48 09/2017 – Akhiok 96 10/2017 – Kwethluk 7 10/2017 – Chefornak 12 12/2017 – Newtok 72 12/2017 – Kwethluk 24 02/2018 – Newtok 72 05/2018 – Hughes 32 06/2018 – Arctic Village 48

Target #3: All rural utilities (electric and bulk fuel) have appropriately trained operators and clerks. Analysis of results and challenges: 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 Power Cost Equalization (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.

Target #1: 100 percent of eligible electric utilities receive Power Cost Equalization payments. Analysis of results and challenges: Power Cost Equalization (PCE) payments reduce the unit cost of power to residential and community customers of eligible utilities. The Alaska Energy Authority 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 196 communities served by a PCE eligible utility did not participate in FY2018.

Target #2: Maximize each utility's Power Cost Equalization benefits to 100 percent of eligibility. Analysis of results and challenges: Power Cost Equalization (PCE) payments reduce the unit cost of power to residential and community customers of eligible utilities. Alaska Energy Authority 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. Community facilities are allotted 70 kilowatt-hours per month for each member of the population. The graph above shows the percentage of “community facility” kWhs a PCE utility is eligible for based on the population driven formula. The reasons that a PCE utility is not using all of the community facility kWhs vary from community to community. In some cases, it is because not all eligible facilities have been identified and in many cases, the allowable kilowatt-hours are more than all eligible facilities in the community consume each month.

Target #1: Manage Bradley Lake Hydroelectric Project for benefit to populations served. Methodology: Cost of energy adjusted to 2017 dollars. Analysis of results and challenges: The Bradley Lake Hydroelectric Project serves Alaska’s Railbelt from Homer to Fairbanks as well as the Delta Junction area. The project provides energy at an average cost of $0.04/kWh. Bradley Lake Hydroelectric Project annual energy can vary, depending on rain and snowmelt.

Target #2: Manage Alaska Intertie for benefit to populations served. Analysis of results and challenges: The 170-mile, 345kV transmission line runs between Willow and Healy. The 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 Fairbanks 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: Zero outages occurred on the Alaska Intertie. Analysis of results and challenges: Some outages are anticipated and the result of planned maintenance activities. Others are largely due to fault trips due to tree fallings.

Current as of November 13, 2019