Hydro power development has, to date, saved Cordova millions of dollars in diesel fuel alone and kept utility costs affordable, Cordova Electric Cooperative (CEC) officials say. And now the cooperative is looking to expand this effort.
CEC is currently producing hydro power through two innovative projects – the Humpback Creek Dam and Crater Lake Dam – which the cooperative will describe in a town hall at the Cordova Center at 6 p.m. on April 9. CEC will also solicit community feedback at the town hall.
The two projects are funded in part by federal tax credits, low interest loans, and grants.
“Federal support is critical to assist with the initial high capital costs of developing hydropower, which becomes our most secure and affordable energy option for future generations,” said Clay Koplin, CEO of CEC.
He said federal funding hasn’t always been easy to get for this kind of power.
“In the past, hydro has not had very much access to federal funding,” Koplin said. “However, the past two administrations have increasingly funded hydropower through tax credits, low interest loans, and grants.”
He noted that Sen. Lisa Murkowski, R-Alaska, has been “instrumental in these opportunities.” On March 27 Murkowski, along with Sen. Maria Cantwell, D-WA, announced they have reintroduced their Maintaining and Enhancing Hydroelectricity and River Restoration Act, which supports hydroelectricity infrastructure development via a federal tax incentive to increase security and capacity of existing dams.
“For Cordova, we were able to get $12 million of Indian Energy Act funding through The Eyak Corporation to pay for half of the Power Creek project, and another $12 million in state of Alaska grants through House/Senate Bill 528 for debt forgiveness to fully fund the $24 million project,” Koplin said.
He also said the Power Creek project “eliminated most summer fuel use, and CEC dropped rates nearly 20% as well.”
“So far, the 22-year-old project has saved the community over $50 million in diesel fuel costs – more than twice what it cost to build the project,” Koplin said.
The Humpback Creek project, a smaller endeavor, was destroyed by excessive flooding in 2006. About two-thirds of the rebuild cost was shared between the state of Alaska and FEMA, and CEC borrowed for the remainder – approximately $22 million total. The project nearly doubled the output of energy in the process, offsetting additional diesel without any rate increases, Koplin said.
Murkowski has been trying in one form or another to do this for 10 years, Koplin said, noting that this power has fueled fishing in the state.
“Cordova wouldn’t have the seafood industry it has today without hydropower,” he said. Rich Wheeler, owner/operator with his wife Sena of 60° North Seafoods in Cordova, said he is quite amazed at what Cordova is able to offer in hydropower.
“If we didn’t have hydropower the cost of diesel power generators would go through the roof,” Wheeler said. “If it wasn’t for the inexpensive hydropower the cost of diesel power would put us all out of business.”
The environmental impact of hydropower is also important for Cordova, noted Mayor Kristen Smith, who is also the executive director of the Prince William Sound Economic Development District.
“Any reduction in burning diesel fuel is an improvement in air quality, for our residents and in reduced greenhouse gas emissions,” she said.
Koplin said external funding covers the high up-front cost of building hydroelectric plants, which the community benefits from “for the next 100 years.”
“This is why many of the Southeast Alaska utilities have some of the lowest rates in the state – they are mostly hydropower by projects that have the debt paid off,” he said.
Murkowski’s Maintaining and Enhancing Hydroelectricity and River Restoration Act would establish a 30% federal tax incentive to encourage upgrades to the safety and security of existing dams, investments that expand fish passage infrastructure, and improvements to water quality and recreational use opportunities at the hydropower project sites. It would also establish a first-ever federal cost-share to encourage removal of obsolete obstructions that harm river ecosystems and outdoor recreation opportunities. Both incentives would be available to nonprofit entities.
Murkowski said that hydropower provides clean, reliable and affordable baseload energy in many areas of Alaska and has just begun to tap into its potential use of this renewable resource.
“Our commonsense legislation incentivizes hydropower along with innovation that will enhance grid resiliency, make our dams safer, and allow our fish habitats to thrive,” she said.
Crystal Enkvist, executive director of the Alaska Power Association, supports the legislation.
“Thirty percent of Alaska’s electric energy comes from hydro and recent studies indicate significant opportunities for additional hydropower development,” she said. “It is critically important to the continued development and enhancement of hydropower in Alaska and throughout the nation.”
Enkvist noted two stipulations in particular.
“Specifically, the ‘approved remote dam’ and the ‘interconnection property’ provisions are especially beneficial for Alaska because they allow for the construction of certain dams and the transmission necessary for those dams to be covered under a 30% investment tax credit (ITC),” Enkvist said.
She echoed other officials’ sentiments about the importance of hydro funding.
“Funding support for the construction of new hydro is absolutely what we need in Alaska,” Enkvist said. “In addition to funding for new hydroelectric facilities, the 30% ITC incentivizes environmental improvements and dam safety upgrades at existing hydropower facilities.”
Joel Groves, president of the Alaska Independent Power Producers Association, also supports the legislation, which he said would move Alaska and the rest of the nation toward enhanced energy security.
“This legislation wisely positions America toward a brighter and more robust energy future and resultant economic prosperity,” he said.
Co-sponsors of the bill include Alaska’s other senator, Dan Sullivan, R-AK, as well as Sens. Susan Collins, R-ME, Kristen Gillibrand, D-NY, Angus King, I-ME, Patty Murray, D-WA, Gary Peters, D-MI, and Jeanne Shaheen, D-NH.
While elected officials are trying to get the legislation passed, CEC is working on the two storage projects.
“Humpback Creek Dam and Crater Lake Dam are both run-of-river; there is no dam storage, so we must use the water for electricity or lose it,” Koplin said. (In the summer CEC spills a lot of excess water, and in the winter, CEC must run diesels.)
Both projects could benefit from this legislation reintroduced by Murkowski and Cantwell, particularly with investment and production tax credits that Murkowski has worked to make available to tax exempt public power utilities like most of those in Alaska – electric cooperatives and municipal utilities.
“We have received significant federal funding for both projects, mostly low-interest loans, and have applied for more from the state and federal government,” Koplin said. “Both projects can also be community water supplies to support our seafood industries, especially winter seafood production.”
Koplin said that to date CEC has received funds through an application by the Native Village of Eyak, The Eyak Corporation, and Chugach Alaska Corporation, and by direct application of CEC. CEC has applied for additional funding through Chugach Tribal Services of Chugach Alaska Corporation, to the federal Department of Energy, and to the state. The city of Cordova has also supported developing Crater Lake as both a community energy and a water supply to offset nearly $20 million of investments over the next few years for maintenance upgrades to the Humpback Creek hydro project and the city’s water infrastructure.
“These are community scale projects and CEC has already started community outreach to explain the current design of the projects and solicit community feedback on how to make the projects of highest benefit to the community, and mitigating any concerns over the safety, aesthetics, or impacts of the projects,” Koplin said.
