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The Alaska Industrial Development and Export Authority and Golden Valley Electric Association in Fairbanks are in the final stages of negotiating details of their agreement for Golden Valley to purchase the Healy Clean Coal Project from the state development authority.

The deal could be concluded as early as the week of Nov. 15, according to Ted Leonard, AIDEA's executive director.

AIDEA's board held an executive session during a regular board meeting Nov. 9. Leonard's comments came after the executive session ended.

Brian Newton, Golden Valley's general manager, said the co-op board met Nov. 11 and authorized him to sign the final documents on the purchase agreement.

It can't happen soon enough for Newton.

"Not having access to that coal-fired plant is costing our ratepayers $2 million a month because we have to generate more of our power with oil," Newton said.

The Healy Clean Coal Project is a 50-megawatt coal-fired power plant in Healy that has been mothballed in a commercial dispute since 1999, just after the plant was completed. New technology coal-burning and emissions controls have been built into the plant and tested during the one year the plant operated.

"There are no changes in the basic terms and conditions to the sale that were agreed on earlier this year," Leonard said. "We're just talking details now."

Golden Valley has agreed to pay AIDEA $50 million for the plant and buy the power that would be generated. The state authority would finance the purchase with a $45 million extension of credit to the co-op. Golden Valley would also operate the plant. It now operates a 25-megawatt coal plant that is adjacent to the clean coal plant.

Leonard said the pending agreement will be a "soft closing" of the deal because it will still be contingent on approval by the Regulatory Commission of Alaska of a power sales agreement from Tri-Valley Electric Cooperative, the entity Golden Valley would form to own the plant, to Golden Valley itself.

Newton said the RCA must also issue a certificate of public need and necessity to Tri-Valley, essentially a license allowing the new entity to operate as a power generator.

The Alaska Department of Environmental Conservation must also complete the renewal of an air quality permit for both plants, Newton said. ADEC is taking public comments on the renewed permits until Dec. 5, after which the agency would summarize any comments made and recommend to the U.S. Environmental Protection Agency that the permit be reissued.

This should be a formality because the permit for the two plants has been renewed once already since it was first issued, Newton said.

When the agreement is concluded, it will bring to an end a decade-old dispute between Golden Valley and AIDEA over the plant. AIDEA built the plant in 1996 and 1997 to test new clean coal technologies on behalf of the U.S. Department of Energy and then to operate the plant commercially to produce electricity.

Golden Valley had agreed in the early 1990s to buy the electricity and to be the plant operator.

The U.S. DOE funded about half of the plant's $300 million-plus construction cost to demonstrate the ability of the new technologies developed to burn coal more efficiently, including waste coal not used now, and to reduce air pollution.

When the plant was finished, AIDEA operated the plant for DOE during a one-year testing program, during which the new technologies were shown to achieve their goals. In a subsequent operating test, conducted in 1999, Golden Valley cited deficiencies.

The result was a dispute in which Golden Valley sought, and won, the right to terminate its power purchase and operating agreement. Since 1999 the two entities have discussed, and at times, litigated, over various solutions to the dispute.

Homer Electric Association was part of the preliminary deal reached earlier this year, but backed out of the agreement this summer after the Kenai Peninsula co-ops's members and board questioned buying power generated from coal.

Newton said that getting access to more power generation in Interior Alaska is important to Golden Valley because of the increasing shortages of natural gas in Southcentral Alaska, which has caused Chugach Electric to reduce much of the surplus gas-fired power that it previously sold to Golden Valley at attractive rates.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.