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

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

A1: Management and development of Alaska Energy Authority-owned infrastructure.  Details > TARGET #1: Manage the Bradley Lake Hydroelectric Project for the benefit of Railbelt Consumers. TARGET #2: Manage the Alaska Intertie for the benefit of Railbelt Consumers. TARGET #3: No unplanned outages occurred on the Alaska Intertie. A2: Assist communities and utilities in the development, financing, construction, and ongoing technical support of cost-effective energy projects.  Details > TARGET #1: 100 percent of Bulk Fuel Upgrade (BFU) projects completed. TARGET #2: 100 percent of communities needing rural power system upgrades (RPSU) receive them. TARGET #3: Power Project Fund (PPF) outstanding balance increases annually. A3: Reduce the cost of electricity for residential customers and community facilities in rural Alaska through the management of the Power Cost Equalization program.  Details > TARGET #1: 100 percent of eligible electric utilities receive Power Cost Equalization (PCE) payments. TARGET #2: Maximize each utility's Power Cost Equalization (PCE) benefits to 100 percent of eligibility. A4: Increase the safety, reliability, and efficiency of community energy systems through assistance and training.  Details > TARGET #1: Circuit Rider assistance is provided to eligible communities. 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. A5: 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 (REF) projects are underway.

Performance Detail

Target #1: Manage the Bradley Lake Hydroelectric Project for the benefit of Railbelt Consumers. Analysis of results and challenges: Located at the southern end of southcentral Alaska, the 120-megawatt Bradley Lake Hydroelectric Project generates an average of 392,000 megawatt-hours (MWh) of energy per year and serves Alaska's Railbelt consumers from Homer to Fairbanks, as well as the Delta Junction area. The project provides energy at a long-term average cost of $0.04 per kilovolt-hour (kWh). The Bradley Lake Hydroelectric Project annual energy can vary, depending on rain and snowmelt. Annual project energy increased by approximately 10 percent in FY2021 with the completion of the West Fork Upper Battle Creek Diversion Project by AEA. In the summer of 2019, the Soldotna to Quartz Creek (SSQ) Line, a critical component of the Railbelt transmission system that delivers the lowest-cost power from Bradley Lake near Homer north to Fairbanks, was out-of-service for an extended time after receiving damage during the Swan Lake Fire. It took four months to bring the line back into service costing an estimated $12 million to Railbelt utility ratepayers. To improve the reliability of the Railbelt bulk power system and decrease costs for Alaska’s Railbelt ratepayers, in December 2020, AEA acquired the asset. The transaction brings significant benefits to customers — including better cost alignment, increased reliability, and prospects for upgrades to the line, which would decrease line losses and allow for increased power transmission north, and unconstraining Bradley power. Since AEA purchased the line, it has operated without any outages.

Target #2: Manage the 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, 345 kilovolt (kV) transmission line that runs between Willow and Healy. It is operated at 138 kV. 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 the Kenai Peninsula utilities. This results in savings for GVEA consumers. GVEA’s avoided costs have decreased in recent years due to a lack of economy energy from Southcentral. They expect those avoided costs to increase in the future as GVEA concludes longer-term gas contracts to be supplied to Southcentral power plants for GVEA benefit, and renewable energy resources are developed on the Railbelt.

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 trees falling on the line.

Target #1: 100 percent of Bulk Fuel Upgrade (BFU) projects completed. Analysis of results and challenges: Through the AEA’s Bulk Fuel Upgrade program, eligible recipients are provided financial and technical assistance to upgrade bulk fuel facilities, which reduces the unit cost of energy by replacing leaking tanks and decreases 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 can 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 chart above indicates the continuous progress toward the goal. Projects flow from the 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: AEA’s Rural Power System Upgrades (RPSU) program upgrades rural power infrastructure. 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. AEA has 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 the 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 Power Project Fund (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. From FY2014 to FY2020, the outstanding loan balance has continued to increase to a balance of $26.5 million at Fiscal Year-end 2021. The graph also shows the loan receivable since 2014, which at fiscal year-end 2014 were $5.9 million. At a recorded $26.5 million for loan receivables for FY2021, this calculates as a four-fold increase over the seven years from FY2014 to FY2021. For FY2021, there was a combined total outstanding loan balance and undisbursed loan commitments of $38.9 million. As a robust, low-interest loan program, the PPF provides an advantageous financing tool for eligible borrowers to finance projects including but not limited to the repair and replacement of existing infrastructure for the development of new generation resources. An added benefit of the PPF loan program is its unique ability to offer such low-interest financing for both preliminary and later-stage projects, which generally proves difficult when pursuing traditional lending options. 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 the project "funding stacks."

Target #1: 100 percent of eligible electric utilities receive Power Cost Equalization (PCE) payments. Analysis of results and challenges: AEA’s Power Cost Equalization (PCE) program provides economic benefits to communities and residents of rural villages where the cost of electricity is often much higher than for customers in 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 payments, and provides technical assistance to utility clerks who need help preparing PCE reports. Utilities not participating in the PCE program do not receive payments.

Target #2: Maximize each utility's Power Cost Equalization (PCE) benefits to 100 percent of eligibility. Analysis of results and challenges: AEA calculates and issues Power Cost Equalization (PCE) payments, and provides technical assistance to utility clerks who need help preparing PCE reports. The PCE base rate is calculated each year as the weighted average price of electricity in Anchorage, Juneau, and Fairbanks. The graph above shows the number of PCE "eligible" residential kilowatt-hours (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 more than those eligible for PCE. The average monthly residential kWhs consumed in FY2019 was 281 kWh per household. Data for FY2021 is not currently available but will be included in the annual PCE statistical report, which will be finalized by March 1, 2022. Consumption of electricity by eligible residential customers has seen a steady decrease over time, as residential customers continue to conserve and as certain communities avail themselves of the benefits of renewable energy power generation.

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 FY2021, the Circuit Rider program assisted 111 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 onsite support. AEA also uses the opportunity provided by onsite Circuit Rider assistance to conduct itinerant training relevant to the utility's specific infrastructure.

Target #2: Restore power to communities experiencing electrical emergencies within 48 hours. Community Power Outages Restored in < 48 Hrs Fiscal Year Outages < 48 Hrs Outages > 48 Hrs FY 2021 1 0 FY 2020 1 0 FY 2019 5 0 FY 2018 2 1 FY 2017 4 2 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 FY2021. In responding quickly, the potential damage is significantly reduced. The logistics and weather of rural Alaska are significant factors that can delay a 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 residents for their energy projects and infrastructure. Training residents to manage their rural energy infrastructure reduces the unit cost of energy and provides village residents with marketable skills, which add incentive and value to the PCE program. COVID-19 had a substantial impact on the number of rural residents able to attend training. Proper maintenance and operation of energy infrastructure help ensure that the infrastructure continues to operate most efficiently. Properly maintaining a facility extends the operational life of the facility. Training in FY2021 included bulk fuel operator training, power plant operator training, advanced power plant operator training, utility manager training, and PCE clerk training.

Target #1: By 2025, 50 percent of electricity generation is from renewable sources. Methodology: U.S. Energy Information Administration "EIA Data Browser: Net generation for all sectors." Analysis of results and challenges: Alaska's renewable energy portfolio continues to grow steadily due in part to the impacts of the Renewable Energy Fund (REF), a grant fund administered by AEA. The percentage of electrical needs met by renewable generation has increased from 21 percent in 2010 to an estimated 31.0 percent in 2020. Of the renewable generation, about 90 percent is produced by hydropower, seven percent by wind power, and three percent by other renewable sources (e.g. biomass and solar). 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. The estimated percentage of total renewable generation in 2019 was essentially flat from 2018. Total generation dropped by over one percent. 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 relative 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. For Round 13 of the REF, 11 applications further expanding the integration of renewable generation within Alaska’s statewide energy portfolio were recommended to the Legislature. All 11 applications were approved and authorized by the Legislature in September 2021. AEA is currently undergoing preparations for Round 14, to begin solicitation for applications in mid-November 2021. Increasing the percentage of electricity generated from renewable sources has been achieved by the following action items underway: • 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 PPF loan program to support additional projects; • Federal funding of renewable energy projects, including the Denali Commission, the Department of Energy, and the United States Department of Agriculture; • Energy efficiency and conservation programs such as AEA's Village Energy Efficiency Program, the Commercial Building Energy Audit Program, and public education and outreach activities that lower overall energy consumption, thereby increasing the percentage of power generated by renewables. • The addition of the West Fork Upper Battle Creek Diversion to Bradley Lake has increased renewables on the Railbelt by 37,000 megawatt-hours, which is equivalent to the annual electrical usage of approximately 5,000 homes.

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. Projections suggest that Alaska will achieve just under five percent improvement in efficiency per capita by 2020 for electricity and heat. When we look at electricity alone, the efficiency gains are greater and are estimated to have reached over 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 are driven by market forces and regulations at the federal level. These improvements are likely the primary drivers of the efficiency gains in electric energy consumption. Commercial energy efficiency programs at AEA include the Village Energy Efficiency Program (VEEP) and Whole Village Retrofit pilot project, the Commercial Building Energy Audit program, as well as education and outreach. The VEEP program, through its four distinct funding iterations (Denali Commission, American Recovery and Reinvestment Act, State, and Wells Fargo) has provided cost-saving energy efficiency improvements to public/community buildings and facilities in nearly 200 communities around the state. Currently, the only active program is VEEP with a new solicitation for projects going out in FY2022. 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. Since being awarded, a C-PACE Stakeholder Advisory Group was formed, and the Municipality of Anchorage has adopted the program. The Matanuska-Susitna Borough and the City and Borough of Juneau are showing heavy interest in adopting the program. AEA is actively working on supporting interested jurisdictions.

Target #3: 100 percent of Renewable Energy Fund (REF) projects are underway. Analysis of results and challenges: AEA's Renewable Energy Fund (REF) grants assist qualified Alaskans to reduce the cost of energy through the development of validated renewable energy projects. Established in 2008, AEA began soliciting applications for REF grants in the fall of that year. Thirteen 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 the summer of 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. 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 evaluates funding applications. Following AEA's recommendations, the legislature has over time approved $275 million for 244 renewable energy project grants. Nearly 100 projects were operational in November 2021. In September 2020, AEA received 21 applications for Round 13. Of those applications, AEA recommended 11 for funding to the Legislature, in consultation with the REFAC for a total funding request of $4.75 million. In September 2021, all 11 projects were approved and the $4.75 million appropriation, authorized by the Legislature. AEA is currently preparing to solicit the next group of applications REF Round 14.

Current as of November 22, 2021