Golden Valley to complete purchase of Healy clean coal plant
Golden Valley Electric Association of Fairbanks has its financing in place to complete the purchase of the 50-Megawatt Healy Clean Coal Project from the State of Alaska, according to Cory Borgeson, president of the Interior electric co-op.
GVEA will rename the plant “Healy Unit 2” because it sits alongside Healy Unit 1, a long-operating 25-Megawatt coal plant owned and operated by GVEA, Borgeson said.
Final approvals on financing by the federal Rural Utilities Services, or RUS, a unit of the U.S. Department of Agriculture, have come through along with an agreement concluded with the Cooperative Finance Bank, a finance cooperative that specializes in loans to rural and small community utilities, Borgeson said.
The Cooperative Finance Bank will finance the purchase of the plant from the Alaska Industrial Development and Export Authority for $42 million, and certain additional costs will increase the amount financed to between $44 million and $45 million.
The RUS loan, meanwhile, will finance new emissions controls systems for the plant agreed to by GVEA as a part of a Consent Decree worked out with the U.S. Environmental Protection Agency last November. The cost of this is still uncertain, but it is expected to range between $50 million and $80 million.
EPA and Golden Valley agreed to the consent decree to forestall litigation from environment groups opposing coal-fired power plants.
New pollution-control systems will include Selective Catalytic Reduction systems to reduce nitrogen oxide and sulfur dioxide emissions.
In addition, GVEA will spend about $35 million to upgrade certain components of the plant, which was built in the late 1990s and began to test pollution-control systems that were new at the time.
Due to commercial disputes between AIDEA and Golden Valley, the plant was never operated commercially, and in 2009 AIDEA agreed to sell the facility to Golden Valley.
Although the entire financing package for Golden Valley could total $150 million to $180 million, those costs won’t substantially affect the expected cost of power because the costs will be spread out over many years of service by the plant, Borgenson said.
Coal is by far the cheapest fuel for power generation in Interior Alaska. Golden Valley now generates much of its power with naphtha, which is made from fuel oil, purchased from the Flint Hills Resources refinery near Fairbanks, has some wind power from its Eva Creek wind project also near Healy, receives a share of Bradley Lake hydro power and has also purchased gas-fired power from Chugach Electric Association.
The Chugach power purchases are expected to end in 2015, about the time the new Healy Unit 2 will come on line, Borgeson said.
Borgeson said he hopes to see the work on Healy Unit 2 plant completed in time for a start of operation in early 2015.
Tim Bradner can be reached at [email protected].