It would be a major energy project designed to supply low-cost electricity to Alaska's "railbelt," energy grid, a top company official said.

Managers of electric utilities greeted the proposal with some caution, however.

Steve Haagenson, President and CEO of Golden Valley Electric Association, in Fairbanks, said he met with Usibelli in April and reviewed the proposal. He said the plan has merits, but he has some reservations.

The project would use coal mined from leased state land, and the centerpiece will be a new 200-Megawatt power plant to feed the existing intertie power transmission system.

Denton said contracts with the main electric utilities serving the Railbelt will have be negotiated, but he said he has received a positive reception so far in meetings with utility managers.

"The message they gave me was that the timing for floating something like this is real good," Denton said. "They are all in the mode of thinking about the future, as to what they're going to do for the long haul. They seemed very pleased that we have taken the initiative to put something like this together," he said.

In a briefing paper distributed by Usibelli, the company said railbelt utilities in coming years are likely to experience decreasing reliability and escalating retail energy prices. The changes, it said, will be due to aging generation units and dependence on oil and gas as fuel. Natural gas is the primary fuel for power generation in Southcentral Alaska, and in Fairbanks Golden Valley Electric Association burns crude oil at its North Pole power station.

Denton told the RDC that it makes more sense to use abundant coal reserves to produce electricity for Alaskans, while saving oil and natural gas resources for export.

"Places like Texas and Alberta ... they understand that," he said. "They don't burn up their oil and gas in their state or province. They burn their coal and have low electricity rates, and have other resources to export. Alaska, I think, would do well to do the same thing."

Denton said 56 percent of the electricity generated in the United States comes from coal-fired generation, and over the past two decades new technology has resulted in a 31 percent decrease in atmospheric emissions from the plants.

As envisioned, the power plant would produce 1.6 million megawatt hours of energy annually, sending it down a three-mile, 230 kilovolt transmission line to connect with the nearby Northern Intertie system, operated by Golden Valley.

The UCM project is a long way from generating power, however. The concept summary, prepared by Harris Group Inc. and Steigers Corp., estimates it will take seven and a half years to get the project in operation.

Nearly half of that time, 38 months, will be consumed by permitting. Issues involved include air quality, wetlands use and compliance with the National Environmental Policy Act. Also needed are permits for state land use, fish habitat protection, a powerline construction permit, and a dam safety permit. The latter is required because the company plans to build a water reservoir encompassing 9,500 acre-feet of water contained behind a 120-foot dam. The water is needed for the power generation process.

Once permits are secured, the proposal calls for an additional 52 weeks of engineering, procurement and construction.

Eric Yould, Executive Director of the Alaska Rural Electric Cooperative Association, said the proposal is intriguing but it demands much more investigation.

"We would certainly encourage that sort of development," Yould said. "But the ultimate question is can it be permitted and, more importantly, is it economically feasible? In other words, is it less expensive than the other alternatives that we would have in the Railbelt?"

Yould said the current supply of natural gas available for Anchorage and the prospect of a natural gas pipeline from the North Slope bringing gas down the Railbelt need to be considered. "Those are questions that any prudent developer is going to look at," he said.

"They are not going to spend $421 million unless they have contracts to sell that power." He also said environmental concerns must be addressed.

Bob Randall is a spokesperson for Trustees for Alaska, an environmental oversight group.

"It's something we'll definitely keep an eye on," Randall said. "We've been interested in making sure that the class-one airshed in Denali National Park isn't compromised."

Haagenson, of Golden Valley, would be one of the customers for electricity from the plant.

"Two hundred megawatts is a big plant for Alaska. We have to look at the sizing for sending electricity north and south," he said. Haagenson said GVEA is working with other utilities in doing a Railbelt line IRP, or Individual Resource Plan.

The IRP will consider long-term power generation requirements for the region, and Haagenson said UCM's proposal will be part of the agenda. "We'll probably just put that in the mix and see what bubbles to the top," he said. He expects the plan to be complete in approximately six months.

Participants in the plan include Chugach Electric Association, GVEA, Homer Electric Association, Municipal Light and Power in Anchorage, Matanuska Electric Association and Seward Electric Association.

Denton is ready for a lot of discussions on the company's idea. "The Emma Creek Energy Project is not something we're going to start building tomorrow. It is a proposal to put before the utilities saying 'don't forget coal while you are doing your planning'," he said.

A prime factor driving the proposal by UCM is the acquisition in February 2001 of approximately 12,400 acres of new coal leases from the state. Portions of those leases near the mouth of Emma Creek contain shallow coal reserves that the company said are amenable to efficient, low cost surface mining.

Denton said the area, the Jumbo Dome leases, could produce an estimated 75 million tons of coal "at a very attractive price, we believe." The powerplant would burn about 1.6 million tons of coal per year.

The type of unit to be used is called a circulating fluid bed plant which is technology developed in part during design of the now-mothballed Healy Clean Coal Project, a 50-Megawatt new-technology coal power plant that has been shut down.

Denton said that while UCM is still working to find a way to make that facility commercially viable, the Emma Creek proposal has much greater potential. He did acknowledge, however, that it is not without challenges. Funding, for starters, is one.

"It's a big project, no question. Four hundred and twenty one million dollars is a large pill for anybody to swallow," he said. "Some sort of consortium, I believe, is probably what it's going to need to justify it," Denton said.

He said another significant issue is the size of the project and what it would mean to the overall power grid if it should shut down for any reason. Denton said the company is still doing research to determine the size of the power plant and transmission requirements.

"It may be that a 200-Megawatt plant is not really the right number. It may be 160 or 150. The 200-Megawatt plant is a ballpark number ... we think it's probably about on the upper end of what is technically achievable on the Railbelt."

Annual operating and maintenance costs for the facility are estimated to be $32.26 million. After construction, the facility would employ 53 full-time workers.

There are two existing coal power plants at Healy. One is an aging 25-Megawatt power plant operated by GVEA, and which is supplied by Usibelli. The other is the mothballed 50-Megawatt Healy Clean Coal Project.

That plant was built in 1996 by the Alaska Industrial Development and Export Authority under an agreement with the U.S. Department of Energy to test new pollution-control equipment developed for coal power plants. GVEA was to operate the plant under a contract with AIDEA.

The plant operated for two years and completed the tests of the new technology, which DOE said were successful. However, GVEA concluded the plant couldn't be operated commercially and ended its contract with AIDEA.

Journal reporter Tim Bradner contributed to this article.