Healy power plant sparks to life under new agreement
The state-owned Alaska Industrial Development and Export Authority’s board approved an agreement Jan. 14 to sell a mothballed 50-megawatt coal-fired power plant in Healy to Golden Valley Electric Association, the electric cooperative serving Interior Alaska.
The Healy Clean Coal Project is located near a coal mine in Healy owned by Usibelli Coal Mine Inc. and a smaller 25-megawatt coal-fired power plant now owned by GVEA.
In a Jan. 14 briefing, state Revenue Commissioner Pat Galvin, who is also chairman of AIDEA’s board, said he hopes the plant would be operating in six to 18 months. The plant was built in 1998 to test new clean coal technology.
The plant started and operated for a year to test new clean coal combustion systems but was idled in1999 when a commercial dispute developed between AIDEA, which owns the plant, and GVEA, which had contracted to buy power. Litigation stemming from the dispute has kept the plant closed since.
At the briefing, Galvin hailed the agreement.
"This is a win-win for all of us. Years of conflict have been set aside, and recent good-faith negotiations have produced a positive result for all concerned parties," he said.
The commissioner said GVEA will pay $50 million to AIDEA for the plant. The state authority will finance the purchase at a 5 percent interest and also extend a $45 million line of credit to the cooperative to pay costs for restarting the plant. AIDEA will charge a 6.5 percent interest rate on the line of credit, Galvin said.
Final details of the sale agreement will be worked out in the next 30 days and the sale is expected to close in six to eight months, Galvin said. Homer Electric Association will purchase 50 percent of the plant’s electric output. Coal for the facility is to be provided from the Usibelli mine.
There are some questions as to whether environmental permits issued in the 1990s for the plant are still valid, however. At the briefing, Galvin said there is uncertainty over the status of several permits, but Kate Lamal, GVEA’s vice president for power supply, said the permits are still in effect and will not have to be renewed.
An air quality permit issued for the plant is an area of special concern because the facility is within a few miles of the boundary of Denali National Park. Federal law puts special restrictions on industrial plant emissions near national parks.
A restart of the plant may provide an early test for how President Barack Obama’s new administration will treat new coal plants or, in this case, a restart of a plant. The Healy Clean Coal project has advanced systems for reducing sulfur dioxide and nitrogen oxide, and some other pollutants, but it has no systems to capture or store carbon dioxide or mercury. In the years since the plant was built, concerns over both carbon dioxide and mercury from coal plants have developed.
In the briefing, GVEA board chairman Bill Nordmark said the utility will operate the plant with its existing experimental technology, which was developed in the 1990s and installed in the Healy plant as a demonstration project.
This represents a shift in position for GVEA, which had earlier pushed a plan to remove the new technology because of the uncertainties over operational reliability and to replace it with modern, but conventional, coal combustion technology.
One of GVEA’s principal concerns is that the plant is the only one of its kind. This could mean higher maintenance and operating costs since replacement parts for equipment in the plant may not be available, and some may have to be custom-manufactured.
The U.S. Department of Energy contributed $117.3 million toward the plant’s $281 million cost. The experimental equipment performed well in meeting its goals in reducing pollution.
In 1998 AIDEA operated the plant for a year for the DOE to test the new equipment in burning different types of coal. During a 90-day commercial operating test in 1999 done with GVEA, operating problems arose that the utility said made the plant uneconomic to operate.
AIDEA and its engineering consultants disagreed, and a lawsuit ensued. The utility was eventually relieved of its obligations to purchase power, but for a decade no deal could be reached on terms for restarting the plant.