Changes at Anchorage operation won’t hurt rural utilities, AEA says
Rural utility operators are worried changes to how the Alaska Energy Authority handles their powerhouse projects will hurt the reliability of electrical service in communities across the state, but AEA officials say the fears are the result of a simple misunderstanding.
The usually quiet public testimony portion of the authority’s March 30 board of directors meeting was dominated by utility managers and local government administrators from small bush communities pleading with AEA directors to not close the authority’s north Anchorage warehouse.
The 6,100 square-foot building just off of Commercial Drive is called a warehouse, but it has long served as a shop for AEA staff to assemble the tiny, modular diesel-fired power plants that are then shipped to many of the state’s smallest towns and villages.
A March 1 internal memo from new AEA Executive Director Michael Lamb directed closure of the warehouse within 30 days as a means to reduce the authority’s operating costs, maximize private sector contracting and consolidate it operations with the Alaska Industrial Development and Export Authority.
Those goals follow legislative intent language in the 2017 fiscal year budget directing AEA to wean itself off of unrestricted general funds by 2019.
AEA also administers federal grants and other state funds designated for specific programs.
Unrestricted general funds are the discretionary spending portion — and the majority — of the state budget.
The authority got about $870,000 of the roughly $4.3 billion unrestricted general fund budget for 2017, according to Lamb.
That money mostly goes to AEA’s general rural energy support work, which provides technical assistance to rural utilities and can be a parts or expertise backstop for small utility operators when the power goes out in their community.
About half of Alaska’s 200 rural communities have their electrical needs covered by larger cooperatives, such as the Alaska Village Electric Cooperative, or other groups.
Many of the remaining communities don’t have a customer base to stand up a self-sustaining electric utility and also lack the technical expertise to maintain electric infrastructure, which is a fundamental issue AEA has been working to improve over the years.
To that end, AEA has upgraded electric reliability and generation efficiency in 81 communities and is in the development phase on another nearly 20 projects through its Rural Power System Upgrade program, which has been funded through a variety of means depending on the project.
All of the testifiers at the AEA board meeting said the five authority staff that had worked at the warehouse were invaluable for the round-the-clock service they provided.
White Mountain Mayor Daniel Harrelson said simply, “Without your support and guidance we wouldn’t have electricity in White Mountain.”
An electrician by trade, Pelican power plant operator and Mayor Walt Weller said he has worked directly with AEA’s field and warehouse staff to upgrade the small Southeast town’s diesel and hydro plants.
“I can’t imagine any changes to their operations that could make it more efficient,” Weller said.
Other supporters of AEA’s rural utility work said the authority is driven not by profit but to do what’s best for communities and noted its mission is to lower energy costs in Alaska, not push money to private contractors.
AEA leaders said they were pleased to hear of the deep appreciation for their efforts, but the internal changes could actually improve the service many are afraid of losing.
“The core services discussed in testimony by the utilities that called in at the board meeting, those services will not change,” spokeswoman Katie Conway emphasized.
Chief Operating Officer Kirk Warren said in an interview that the warehouse staff has been moved into AEA’s main Midtown Anchorage office building, which it shares with the Alaska Industrial Development and Export Authority.
That will actually give them more time to respond to utilities’ needs as they won’t also be spending time assembling powerhouses, he said.
Warren stressed that the circuit rider, community assistance and emergency response programs among the “fundamental reasons that AEA exists” and all that is really changing is where the technical experts will spend their days and who how AEA contracts for work.
He added that the warehouse — which is state-owned and therefore has no monthly lease payment — will still keep emergency generators and other power plant parts.
“The savings will come, as de minimus as it is, in reduced utility costs and our ability to actually make (warehouse staff) feel like they’re a part of our organization,” he said.
The private firms that AEA will contract with to assemble the powerhouses will even be able to use the warehouse space if they choose, according to Warren, and an AEA employee will be on-site when that occurs.
The only things really changing are that AEA will not be acting as a parts expediter when it contracts for utility repair services and staff will not be turning the wrenches on the electrical generation units.
“We’re statutorily obligated to abide by what the Legislature has told us to do and there’s language — to the maximum extent possible we will contract with the contracting community,” Warren said.
He also said AEA hopes to have internal policy evaluations and changes finished by the end of the state fiscal year, which is June 30, to know how much unrestricted funding support it will need in the future.
Elwood Brehmer can be reached at email@example.com.