First FERC hearings on Watana hydro project planned

JUNEAU — Federal regulatory proceedings for the planned $5 billion-plus Watana hydro project on the Susitna River north of Anchorage are getting under way.

The Federal Energy Regulatory Commission will conduct  “scoping meetings”  in March for the hydro project, which is being developed by the Alaska Energy Authority, a state agency.

The meetings, planned for March 27 through March 30 in Anchorage, Wasilla, Talkeetna, Fairbanks and Glennallen, are the first step in a required federal Environmental Impact Statement for the project, AEA officials told a state legislative committee in Juneau Jan. 26.

The Federal Energy Regulatory Commission is the lead federal agency on the EIS, and will be the agency conducting the hearings. Following the scoping meetings, the next step would be preparation of a draft EIS document followed by a final EIS and Record of Decision if the project is approved.

On a separate regulatory track, FERC must also issue a federal certificate, a form of permit, for the project. AEA filed a Preliminary Application Document with FERC on Dec. 29 and anticipates filing a full application by the end of 2012, Wayne Dyok, Watana project manager for the Alaska Energy Authority, told the Energy Committee of the state House in the briefing. 

An initial estimate of the project cost is $5 billon but Dyok said he expects to receive an updated cost estimate soon.

The project would involve a 700-foot-high concrete dam at a location about 185 miles up the Susitna River from its mouth at Cook Inlet. It would create a lake 39 miles long by two miles at its widest, Dyok said.

If it is built at the scale currently planned, it would have a capacity of 600 megawatts and generate 2.5 million megawatt hours of power annually, which would meet about half of the electricity requirement expected in the future for communities in Interior and Southcentral Alaska now connected to the regional power grid, Dyok said.

On the current schedule, construction would get under way in 2017, project spokeswoman Emily Ford said. At its peak about 1,000 would be employed in construction but the average would be about 800 according to current estimates, Ford said.

On its present schedule the Watana project would not be in operation until 2023.

“We are still assessing the optimal size of the project and would have this at the time we file our formal application with FERC at the end of the year,” Dyok told the legislative committee.

The project would be designed for expansion, most likely by raising the height of the concrete dam, he said.

The power house for the dam would be built from the start with sufficient capacity for expansion, he said.

The agency is also still considering different route options for a road and transmission line corridor that would be built to the site. One is a 44-mile route corridor from the Denali Highway south to where the project would be built. A second would be a 45-mile corridor east from the Alaska Railroad’s Chulitna station, on a route north of the Susitna River. A third, the Gold Creek corridor, would also extend from the railroad’s Gold Creek station east to the project, a distance of about 50 miles, with a route south of the Susitna River, Dyok said.

The Denali corridor option would be a road from the Denali Highway at Mile 113.7. If this route is chosen it would require about 20 miles of the Denali Highway from the Parks Highway to be upgraded to handle heavy loads, Ford said.

Watana is a scaled-down version of the much-larger Susitna River hydro project planned in the 1980s, which had involved two dams on the river.

If the project is built it would generate electricity at a constant price for decades. Interior and Southcentral Alaska now depend largely on fossil fuels, mainly natural gas, oil and coal, for power generation, and the prices for natural gas and oil are subject to sharp swings.

The state of Alaska conducted extensive studies in the 1980s for the large Susitna River project then planned, but dropped the project because of costs. It would have involved two dams, one at Watana and another upriver at Devil’s Canyon. The new version of the project involves just one dam at Watana and is smaller in scale.

However, the AEA is now benefitting from a substantial amount of geotechnical work done in the 1980s that is still valid, Dyok said.

That has reduced the amount of new geotechnical drilling needed, he said. Some new geotechnical drilling was done last summer, Dyok said.

There also were a large number of environmental studies done for the earlier project that are valuable, although much of that information must be updated for the new EIS, he said. For example, federal definitions of wetlands have changed so that new wetlands mapping must now be done, Dyok told the committee.

Last year the state Legislature appropriated $67 million, sufficient to fund planning and work on the FERC application through 2012, but more funding from the state would be needed to continue work after the application with FERC is filed late this year, Dyok said.

If the project proceeds, the state would have to decide at some point whether to make a large equity investment in the project, Dyok said. This could involve an appropriation of several billion dollars.

AEA’s current plan for financing is to pursue a model similar to that used for the Bradley Lake hydro project near Homer, where utilities in Southcentral and Interior signed long-term power purchase agreements. On the basis of those the Alaska Power Authority sold revenue bonds to pay for construction of Bradley Lake.

However, the state made a direct investment in the project, which lowered the amount of bonds that had to be sold, reducing payments and the price of power the utilities paid. Today Bradley Lake hydro power is among the least expensive power available to the regional utilities, although coal-fired power, using coal from the Usbelli Mine in Healy, is also very reasonably priced compared with oil and natural gas.

11/07/2016 - 1:56pm