April 24, 2013 | Vol. 25 Edition 17

Power rates to rise after cogen "explosive event"

Hydro power down due to low water levels at Solomon Gulch CVEA says

Copper Valley Electric Association CEO Robert Wilkinson was not kidding when he announced he had bad news for cooperative members during the annual membership meeting in Valdez last Thursday.

Valdez Star file photo
A 2011 photo shows the inside of CVEAs cogeneration plant that generates electricity inside the Petro Star refinery. The plant is offline and will cause electric power costs to rise dramatically this month.

“I’ve got some bad news to tell about,” he told the packed house at the Civic Center.

Wilkinson said electricity bills would rise about six cents a kilowatt hour after an “explosive event” at the co-op’s cogeneration plant occurred at the Petro Star refinery in early April.

The co-op sells the refinery heat from the co-generator which is then passed on as a heat credit to members to help offset high diesel prices charges to create electricity during winter months.

“We can’t produce heat to return back to you” in the form of fuel credits, he told the audience.

To add to the woes of rate payers, Wilkinson also announced that the Solomon Gulch Hydro plant will not be producing cheaper electricity anytime soon due to 6.6 foot water levels – well below that needed to power the plant into full swing.

“You’re so low, your sucking rocks down the penstock,” Wilkinson said is the way CVEA officials describe the dam levels. “We’re going to have to do it with diesel.”

This despite flooding in the area last fall and above average snows this winter season.

April bills hitting residential post office boxes this week show a fuel charge of 21.04 cents a kilowatt hour with a 3.7 cent fuel credit. When combined with generation and transmission costs, CVEA residential customers are paying 27.84 cents a kilowatt hour for electricity.

While the news is grim for summer rate relief, Wilkinson painted a rosy picture for the summer of 2015.

He said if the momentum currently underway keeps up, the co-op’s long awaited Allison Creek hydro project will come online, and will eliminate a million gallons of diesel costs from CVEAs current yearly buy.

“That project is just about to get underway,” he said.

He said that will average out to about 2 cents less per kilowatt hour compared to current rates.

The $39 million project has been funded with $14 million in grants and an addition $4 million from the last Alaska legislature session.

He said the project is at 90 percent design completion and heading quickly towards 100 percent.

The Valdez City Council declined to help fund the project during a meeting between the board and council earlier this year; city officials cited past projects funded by CVEA that failed to bring promised savings for co-op members.

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