Fairbanks utility plans system upgrade as its capacity limits are tested

FAIRBANKS, Alaska (KTUU/KTVF) - Interior Alaska utility Golden Valley Electric Association (GVEA) is planning to make upgrades to its infrastructure as an evaluation revealed that it is currently operating around its capacity level and likely will not be able to meet the demand expected in the next five to ten years without making changes.

A system in need of upgrades

According to GVEA’s CEO Travis Million, a “resource adequacy” test undertaken by the National Laboratory of the Rockies found that the utility’s existing plans to grow its infrastructure were not adequate to meet the coming need.

The current situation came about, according to Million, because GVEA saw recent stressors on its system, including the unusually cold winter over the last few months and the loss of reliable natural gas that could be imported from the Anchorage area starting in 2024.

“With the load growth we’re seeing, we’re just seeing that there, there are weaknesses within our system that need to be addressed in order to maintain reliability for today and into the future,” the CEO said.

Million stressed that the system is able to continue operating at current demand, but without much room for equipment to malfunction.

“If you have a generation unit or multiple generation units, go down or a transmission line goes down, it then becomes very tight in order to meet those demands and those needs,” he explained.

Meanwhile, GVEA projects a growth in demand in the coming years, attributed mostly to military and mining needs.

Should the utility ever find itself unable to meet the community’s needs, Million described the process by which first the mining companies, military bases and other industries would be asked to temporarily generate their own power, then if needed, extra energy could potentially be pulled from Anchorage.

“Then if it absolutely kept getting worse, then it would get into a point where we call it a controlled load shed program to where if we had to, we would take sections of our system, bring it offline for 30 to 60 minutes, bring it to the next section, turn that one off, turn the previous one back on, and roll that around throughout the system until such time we had generation back online,” he said, adding that certain services, like the hospital and emergency management systems, would never be turned off.

Short and Long-Term Plans

To combat the current situation and prepare the utility for future growth, GVEA is preparing to invest in deferred maintenance on its existing power plants, including a $20 million overhaul of a piece of equipment at one of its North Pole generation units.

Looking further ahead, Million described a new gas turbine unit in the Interior, currently quoted at $100 million and with a four- or five-year wait time to secure, as well as new batteries to be installed using the Powering Affordable Clean Energy Program.

These combined efforts, he said, were determined to meet GVEA’s anticipated need.

Increased Costs for GVEA Members

All of these investments will take a toll on Interior residents’ utility charge on their monthly bills, Million acknowledged.

“We can borrow and spread those costs over a longer period of time. It could be 30 or 40 years, whatever the life of that asset is, so the impact is gonna be lessened than if we just went out and had to pay the cash out of pocket,” the CEO said.

Million was unable to provide an estimate of the cost increase that members would see and specified that the costs related to these investments would not come due until the improvements were made and functioning, expected in four or five years at the earliest.

“Not to say that we would still not have costs that we’re incurring during the construction phase and whatnot that way, but we wouldn’t be able to collect those in rates until such time it’s fully up and operational,” the CEO added.

He claimed that the new infrastructure, running more efficiently than the current system, could alleviate some of these increases.

Addressing the near future, the CEO also warned GVEA members that recent increases to gas prices could lead to an increase in the Fuel and Purchased Power Rate charged by the utility as early as June.

“We don’t we don’t normally roll those numbers out until right at the end of the quarter when we have them finalized, but I’m just wanting to project that we foresee that they are going to be going up because of what we’re seeing globally right now on the fuel market,” he said.

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