Electricity Prices Rise in Alaska
The cost of a new power plant along with a shortfall of natural gas under contract in south-central Alaska is going to cause electricity price increases in the region by early next year, according to Alaska utility officials.
Phil Steyer, director of government relations and corporate communications for Chugach Electric Association, said the company, in partnership with Anchorage Municipal Light & Power, is bringing a new natural-gas-powered plant online in the first quarter of 2013 – South Central Power Project. The cost of the project is projected to cause a 5 to 10 percent increase in the price of electric service in 2013.
But a longer-term concern is the shortfall of natural gas under contract.
“We forsee a shortfall between supply and demand of natural gas that will show up in 2014,” said Steyer. While the lower-48 states enjoy record supplies of natural gas, Alaska’s south-central utilities rely on natural gas from aging wells within about 100 miles of Anchorage. For instance, Chugach Electric Association gets 88 percent of its power from natural gas. But the locally produced gas is not enough to meet demand, and Chugach and other local utilities anticipate having to tap their gas storage facilities this winter, according to The Anchorage Daily News. And the utilities have not been drilling enough new wells to keep up with demand.
In contrast, according to a report released in August by the US Energy Information Administration (EIA), “The use of horizontal drilling and hydraulic fracturing in shale and other tight rock formations played an important role in the increase of oil and natural gas reserves.” Proved reserves of US oil and natural gas in 2010 rose by the highest amounts ever recorded since the EIA began publishing proved reserves estimates in 1977.
“Right now we have gas under contract through 2014, but unmet needs begin to show up in 2015. That has led a group of utilities to look at importing natural gas to meet the projected gap,” said Steyer.
The good news: natural gas supplies are plentiful and relatively cheap right now.
- What You Need to Know About Demand Charges
- Choosing the Right LED Product for Industrial Lighting Applications
- Expert Q and A: Tips for Automating your Energy Data
- NAEM Trends Report: Planning for a Sustainable Future
- Alarms Management: The Future is Now
- Descriptive, Predictive, Prescriptive: Transforming Asset and Facilities Management with Analytics
- How "Fixed" is the Fixed Price Product?
- 24 Hour Fitness Trims Waste Costs Through an Effective Waste Recycling Program
- EHS Managers: The Evolution from Necessary Evil to Vital Leaders
- Support Lean Manufacturing Principles with IBM Maximo Asset Management
- BUYING STRATEGIES IN A VOLATILE MARKET: What Businesses Need to Know about Retail Electricity Procurement
- Smart Building Technology: The Key to Comprehensive Building Performance
- What Energy Managers Need to know about Procuring Natural Gas: Guidance for 2014 Natural Gas Contracts
- Energy Optimization from the Boiler Room to the Board Room
- Your Roadmap for Energy Management: First Stop – Myths & Realities of Energy Purchasing