"With the new missile defense facilities near Delta, a good possibility that the large Pogo gold mine will be built and that oil-fueled pump stations on the trans-Alaska Pipeline System will convert to electricity, we have to plan for expansion," said Steve Haagenson, president of GVEA, the electric utility for the Interior.

GVEA awarded a contract to NANA/Colt Engineering LLC to do preliminary engineering for two turbines and a steam generating unit to be built at the utility's North Pole generating station, which now has two oil-fired turbine generators with 120 Megawatts of capacity.

The preliminary engineering will allow GVEA to develop a cost estimate with 95 percent certainty, Haagenson said. That will allow GVEA's board to give final approval for the project, which could be under construction by summer. GVEA needs new generating capacity online by 2005, Haagenson said.

While there are no cost estimates for the project, an industry rule-of-thumb is that turbine generation equipment costs about $1,000 per installed 1,000 Kilowatts, according to Kate Lamal, GVEA vice president for power supply. That could put the total cost for the new plant at $50 million to $60 million, she said.

Haagenson said the new unit will use clean-burning naphtha as fuel instead of the crude oil burned in the two existing GVEA turbines. Naphtha produces 90 percent less sulfur dioxide when used as fuel than does oil, he said.

Lamal said naphtha is likely to be priced more competitively than fuel oil, too. The naphtha would be purchased from the Williams Alaska Petroleum Co. refinery, which is also at North Pole. The refinery is adjacent to GVEA's power plant.

Williams gets naphtha as a byproduct of refining jet fuel, diesel and gasoline from crude oil taken from the trans-Alaska oil pipeline, which runs through North Pole. Much of the naphtha made by Williams is now shipped to Anchorage via the Alaska Railroad and sold to export markets.

Lamal said the new plant addition will also produce less nitrogen oxide and carbon monoxide in its emissions. The utility will also reduce use of one of the two oil-fired turbines, toward a goal of keeping total air pollution from the plant within the range now allowed by air quality permits.

All the generation capacity can still be called on when it is needed, Lamal said. This is usually during cold weather.

Another reason GVEA is building new generation capacity is that its existing power plants are more than 25 years old, Lamal said. The two oil-fired turbines at North Pole are the utility's most recent plant additions, and they were built in 1976. A 25-megawatt coal-fired power plant at Healy, south of Fairbanks, was built in the 1960s.

"All of the major Alaska utilities face this problem, including Chugach Electric (Association) and Municipal Light and Power in Anchorage," Lamal said. "The equipment is aging. We have to plan for replacement."

One difference for GVEA is that, in addition to normal population growth in Interior communities, there are possible large increments of new demand.

GVEA supplies 180 Megawatts of power during peak times in the Interior, Haagenson said. Projects now under construction or in advanced stages could add another 30 Megawatts of demand.

The missile defense facility now under construction at Fort Greely, near Delta, could require 10 Megawatts of power from GVEA, Haagenson said.

Final permits for the Pogo gold mine, also near Delta, are nearing approval, and Teck Cominco Inc., the developer, may begin construction in 2003. A large underground mine at Pogo could add another 10 Megawatts to GVEA's load.

Alyeska Pipeline Service Co. is studying possible cost-savings of powering some of the pump stations on the trans-Alaska Pipeline System with electricity. The demand on GVEA depends on how many pump stations are converted, but it is estimated that one station near Delta could require 10 Megawatts of power.

Haagenson said new turbines at North Pole won't replace GVEA's ability to buy power from the Healy Clean Coal Project, a 50 Megawatt new-technology coal plant at Healy that is now shut down. "We'd still need this even if we got Healy," he said.

The new Healy plant, completed in 1997, closed after a dispute over operating problems developed between GVEA, its operator, and a state corporation which owns the plant, the Alaska Industrial Development and Export Authority, or AIDEA.

GVEA wants to retrofit new-technology equipment with conventional coal-burning systems which are more reliable, Haagenson said. AIDEA argues the existing equipment in the plant can be modified at less cost to eliminate any problems.

The dispute is unresolved. The project suffered another setback Jan. 17 when the U.S. Department of Energy turned down a $30 million grant proposal from AIDEA that would have paid for modifications to the plant equipment and a three-year operating test to demonstrate the plant's ability to deliver power reliably and economically.

Lamal said the new naphtha-fueled and steam turbines planned at North Pole are well-established technologies. GVEA teams visited several similar plants in the Lower 48 and Canada, where cold winter weather is similar to Interior Alaska.

What's planned at North Pole, she said, is a 43 Megawatt gas turbine that would be fueled with naphtha, with a waste-heat boiler on its exhaust stack that will produce steam to drive a second 14 Megawatt steam turbine.

The plant is being designed so that additional turbines can be added, bringing the new plant capacity to 120 Megawatts. With the two older turbines capable of also producing 120 Megawatts, GVEA will have a combined capability to generate 240 Megawatts at its North Pole plant.

Lamal said, if a natural gas pipeline is built through Interior Alaska, the new plant can be converted to use gas instead of naphtha.