What others say: Naphtha doesn’t help Interior Energy Project, but should lower costs

  • Monday, January 11, 2016 5:58pm
  • Opinion

Interior electric utility Golden Valley Electric Association’s decision to assume a more minor role in the Interior Energy Project than some hoped was perhaps the worst news for the project’s prospects in 2015. The Alaska Industrial Development and Export Authority had hoped the cooperative would line up for two billion cubic feet of natural gas per year, a substantial base demand that would help reduce costs to residential customers. Instead, GVEA settled on a 12-year deal with local refiner Petro Star to fuel its North Pole generation plant mostly with naphtha, committing to 600 million cubic feet of natural gas as a compromise measure. While this was hard news for the natural gas project, GVEA’s reasoning for making the decision is sound and in the best interest of its members.

In order to make achieving the energy project’s $15 price point easier, backers at AIDEA and in the Interior community were hoping Golden Valley would sign on for 2 billion cubic feet of natural gas, a major base from which to build residential demand in the project’s early phases. More gas demand would spread costs out further, reducing the burden on residential customers to repay the bonds upon which the bulk of the energy project is being financed. The net difference in gas costs to residential customers with GVEA’s lessened 0.6 billion cubic foot commitment has been estimated at between $0.60 and $1.50 per thousand cubic feet for residential customers. In a project that has already struggled to achieve its $15.00 per thousand cubic foot price target, an additional $1.00 per mcf in cost to customers makes matters even more difficult.

But though GVEA has been — and still is — a major part of the IEP, as an area-wide utility, it has more to consider than the target price for natural gas in Fairbanks and North Pole. Its overarching goal is cheaper energy for all of its members, many of whom won’t directly benefit from the natural gas project. And the persistent delays that have pushed back the delivery date for gas aren’t easy for residents to abide, much less a utility presented with a long-term, relatively low-cost fuel source. GVEA’s deal with Petro Star for naphtha locks in 12 years of supply at rates comparable to those available now.

If residents could secure a deal like that for their own homes for heating oil, it’s a safe bet the natural gas project would be abandoned altogether. They don’t have that flexibility; GVEA did. It’s difficult to blame the co-op for pulling the trigger on a fuel source that should lower electricity costs for all of its members for years to come.

Nonetheless, the natural gas project remains vital to Fairbanks and North Pole residents. Even in the absence of a trucking or rail delivery system, local gas storage and distribution would be essential for the community to take advantage of gas from the large-scale Alaska LNG plan when it comes online. And natural gas appears the best — and possibly only — solution to get North Pole’s air pollution problem under control. GVEA has been good enough to maintain a sizeable chunk of commitment to the project — while 600 million cubic feet isn’t two billion, it’s still a big anchor the project needs, especially since the co-op has pledged to take that gas in the summer, when residential demand will be close to nil.

The Interior Energy Project is still a top priority for the community, and GVEA shouldn’t be thrown under the bus for their decision to seek surety in their fuel rates when the opportunity presented itself. That is, after all, what the IEP itself is all about. Golden Valley just took advantage of the opportunity to bring costs down earlier — and possibly more — than would have been possible with natural gas.

— Fairbanks Daily News-Miner,

Jan. 3

More in Opinion

File
Opinion: Here’s what I expect of lawmakers in a post-Roe America

I urge lawmakers to codify abortion rights at the state and federal levels.

File
Opinion: Confusion over ranked choice voting persists

Voter confusion over ballot procedures will continue

Former Gov. Bill Walker, right, and his running mate former commissioner of the Department of Labor and Workforce Development Heidi Drygas, speak to Juneauites gathered for a fundraiser at a private home in Juneau on Tuesday, June 7, 2022. (Peter Segall / Juneau Empire)
Voices of the Peninsula: A vote for Walker/Drygas is a vote for Alaskans

It’s easy to forget some of the many lost lawsuits, devastating budget cuts and general incompetence that defines Mike Dunleavy’s term as governor

This photo shows a return envelop for 2022 special primary. (Ben Hohenstatt / Juneau Empire File)
Voices of the Peninsula: Learn how to access your ballot

The recent special primary election was the first time the state conducted an all mail-in ballot election

The Storyknife Writers Retreat in the summer of 2021 in Homer, Alaska. (Photo provided)
Point of View: Storyknife: Invest in women writers, read the rewards

Storyknife is committed to providing opportunities to a diversity of writers

Residents line the Sterling Highway in front of Sen. Lisa Murkowski’s office to oppose Pebble Mine on Wednesday, June 26, 2019, in Soldotna, Alaska. (Photo by Victoria Petersen/Peninsula Clarion)
Voices of the Peninsula: No more delays — finalize protections for Bristol Bay

How many times do we have to say NO to a bad project that would harm Alaskans?

Peter Asmus (Photo provided)
Why Alaska is leading the nation on energy innovation

Alaska is a unique vantage point upon which to review the world’s current energy conundrum

Gubernatorial candidate Bill Walker stands in the Peninsula Clarion office on Friday, May 6, 2022, in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Opinion: On Alaska’s gasline, you can’t schedule opportunity

Alaska has the largest source of stranded conventional gas (no drilling required) in North America

Charlie Pierce stands in his home on Thursday, March 11, 2022, in Sterling, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Voices of the Peninsula: When politics get dirty

So, let me step out front and dispel the already debunked false narratives …

Most Read