By Jenny Neyman
Redoubt Reporter
Forward motion has dried up on Homer Electric Association’s proposed project to install a hydroelectric dam on Grant Lake in the Kenai Mountains until an inflow of grant funds can be secured.
Brad Zubeck, project engineer with HEA, updated the Kenai-Soldotna Fish and Game Advisory Committee on the status of the project Jan. 11 at the Soldotna Sports Center, followed by a similar presentation in Moose Pass on Jan. 13. The presentations were conducted after a joint meeting with the public, involved agencies and Native tribe representatives in Seward on Nov. 12.
State grant funds have been the public money paying for project development to this point, but HEA doesn’t expect to have enough grant funds left to complete work on the next phase of development, which entails completing studies and gathering data on the area to gauge what impact the project might have on fish, water resources, wildlife, plants, historic and cultural sites, and recreational uses of the area.
“We’re bringing our activities to a suspension at this time,” Zubeck said. “We still have grant funds available to us but as we look ahead we don’t have enough to fully implement the studies that we anticipate.”
Cook Inlet Region Inc. and enXco, HEA’s initial partners in Kenai Hydro, the financial organization formed to pursue the hydro projects, announced in October their intention to back out of the venture.
“Our partners took a look at the economics and said, ‘There’s not enough room for us, we have other interests.’ And so they are withdrawing,” Zubeck said.
The project, as described in the Pre-Application Document submitted to the Federal Energy Regulation Committee in Aug. 6, calls for a 4.5-megawatt hydropower plant below Grant Lake with an influx of additional water taken from nearby Falls Creek in the mountains above the Seward Highway near Moose Pass. The area is part of the watershed that feeds the headwaters of the Kenai River.
An intake tower would be built on Falls Creek to draw water into a 2,800-foot-long, 10-foot diameter tunnel penstock emptying into Grant Lake. A dam would be built at the outlet of Grant Lake to increase water storage capacity in the lake. The water would be drawn out of the lake through a steel pipe penstock to a powerhouse with two turbines, then returned to Grant Creek above the section of creek used by anadromous fish, including spawning salmon. The lake lever would vary from 10 feet above the natural elevation to 25 feet below.
“That’s a range of values that we work within for licensing purposes, so if for some reason we change our minds and say, ‘Oh, we would like to take it 15 feet higher,’ we’d have to start back over again with studies and impacts and that sort of thing,” Zubeck said.
Almost 3 ½ miles of access of roads are expected to be built, which may or may not be open to public access, depending on U.S. Forest Service input, he said. Visual impacts from the highway are expected to be minimal.
Initially, Kenai Hydro applied for permits to investigate installing hydro dams on Crescent Lake and Ptarmigan Lake, as well, but surrendered those permits in September.
“Some folks talk about industrializing the whole watershed. That’s not the case. We have one project right now that does look semiviable,” Zubeck said.
The Grant project would have several benefits for HEA, all related to reducing the co-op’s dependence on energy produced from natural gas. It could offset 12,000 to 15,000 tons of C02 emissions a year, and replace about 1,000 cubic feet of natural gas used per year, Zubeck said.
Depending on natural gas prices, that could save HEA $760,000 to $1,860,000 per year, he said. When the debt on the project is retired, it could produce power for less than 5 cents per kilowatt hour for 100 years, he said.
“We could have very, very inexpensive power coming from hydro for a very long time,” Zubeck said. “Renewables stabilize our energy prices. They reduce the volatility that comes with gas generation. As you all know, gas prices dramatically fluctuate.”
The project is estimated to cost about $30 million for Grant Lake and $40 million with the addition of Falls Creek, depending on financing terms. With short-term financing that would work out to a little less than 20 cents per kilowatt hour for power, Zubeck said.
For $30 million or $40 million, a 4.5-megawatt project may not seem like much, but it would represent a large boost in the percentage of power HEA produces for itself. Currently, the Bradley Lake hydro plant south of Homer produces 7 percent of the power HEA uses — 10.8 megawatts, Zubeck said. HEA only gets 12 percent of the output of that plant.
“The projects that we’re proposing, Grant Lake and Falls Creek together could represent 50 percent more renewable energy generation. For HEA, that’s a significant project,” he said.
However, while HEA’s interest in diversifying its energy generation portfolio is in part driving interest in the Grant-Falls hydro project, it’s also contributing to the decision to shelve it for the time being.
“We’ve got a bigger problem ahead of us,” Zubeck said. “This 4.5-megawatt project doesn’t answer the bigger question for Homer Electric, which is, our board’s decided we’re going to be independent power producers at the end of our contract with Chugach Electric, which expires at the end of 2013. So January 1st, 2014, we’ve decided we will produce power for ourselves, and to do that we need to come up with about another 40 to 45 megawatts of generation. And we have plans to do that. That’s our top priority and that’s going to take a significant amount of capital to do that, so we don’t want to limit ourselves by going out and advancing this project right now when we’ve got a more important objective and priority for the co-op.”
The studies necessary for the licensing process to proceed for the Grant-Falls project are extensive, including studies on area fish and aquatic resources, aquatic habitat mapping, a critical factors analysis, in-stream flow study, invertebrate, zooplankton and phytoplankton studies, continued stream gauging and water-quality data gathering, expanding on existing vegetation mapping, wildlife studies, timber studies, a survey of invasive and sensitive plants, wetlands delineation, recreational uses of the area, and a survey of historic and cultural sites in the area, plus mitigation plans for any harms the project may pose.
The study list is still growing as the public currently has an opportunity to submit comments on questions it wants answered and studies it wants to see done.
At the Moose Pass meeting, residents requested at least 10 pages of additional studies they’d like to see done for the project, said Valerie Connor, conservation director of the Alaska Center for the Environment. The study list included a cost-benefit analysis and a socioeconomic study looking at the effect the project may have on the economy of the area, if it damages the recreational and tourism opportunities available.
“One point that folks keep making is that this project has a big footprint for such a small output of power. It is difficult to justify,” Connor said.
Zubeck said the licensing process is the same, whether it’s a big project or a little one.
“That’s a lot to do for a little project,” Zubeck said. “Right now we’re going to suspend activities. If we decide to advance the project we would then notify FERC, we would take our (Pre-Application Document) and open that up and say, ‘Here’s the list of issues (to be studied).’ They’ll issue their own scoping document, publish it to the public and they will then have a public meeting and take comments on the issues. And then FERC, once they establish the list of issues, that pretty much secures for us the issues that would need to be addressed.”
Several advisory committee members and people attending the meeting had questions about the project, many expressing concerns over what the hydro development might do to water levels and temperatures, and how that might affect fish habitat.
Jim Ferguson, with the Alaska Department of Fish and Game Sport Fish Division, also the statewide hydropower coordinator for Fish and Game, commented that it is possible to build hydropower projects without damaging fish runs.
“If you study the right issues, it’s possible to design these projects to have absolutely no impact whatsoever on fish,” he said.
Some can even be beneficial to fish, Ferguson said, since the project would be required to maintain whatever level of in-stream flow is determined to be necessary for fish, and that could prevent the stream from freezing in the winter and killing off eggs.
“That’s the best-case scenario, but it’s just making sure we ask the right questions, do the right studies and get the right data, and we can design these projects to have minimal to no impact. That’s the challenge,” he said. “If we make a recommendation, it’s theoretically possible that the amount of flow that would be released would make the project uneconomical. And that’s where we get into negotiations. Can you accept some risk and possible impacts to fish to get the power that people want?”
It’s the idea of negotiating risks that concerned some advisory committee members, who had questions about the project. Paul Shadura expressed concern that not enough data would be gathered or studies done to ensure fish habitat would be protected before the project gets a go-ahead, or that it may not be possible to foresee all the impacts that could be caused.
“How sure are we these things aren’t going to change?” he asked. “There are all kinds of complicated dynamics here. It’s just too simplistic to say that it’s not going to have downstream effects, not understanding what’s in the water or what’s out of the water and the plant life that surrounds it. How that changes it downstream, all the way to the Kenai River or the rearing areas and the slow areas of Trail Lakes, I don’t know. And I keep asking that question. The last thing this AC wants to do is come back in so many years and say, ‘Gee, there’s a reduction of fish up in those areas, and why is that?’ And then try to work from that situation.”
Zubeck reiterated that now is the time to make those concerns known and suggest studies, by visiting www.ferc.gov or www.kenaihydro.com.
“I hear you. I’m just telling you, when we hear things, they don’t fall on deaf ears,” he said.
Ferguson said the state takes these matters seriously.
“It is a long, complicated series of questions, studies and so on, which is one reason why I think HEA is retrenching at the moment, because they’re not cheap. And we do require these studies for a number of different federal laws and state laws. We have very strong laws in this state about protecting anadromous habitat and anadromous fish, so these are all important issues, and FERC will look at them very, very carefully when they make their licensing decision,” he said.
