MEA says rolling blackouts possible under worst-case winter gas shortage

What you need to know:

• Matanuska Electric Association warned it could institute rolling 30-minute power outages this winter as part of a worst-case scenario response to a regional natural gas shortage.
• Enstar says aging Cook Inlet gas fields, lower-than-expected production and limited gas storage could leave the utility short of fuel if Southcentral Alaska experiences another cold winter. Other electric utilities with dual-fuel generators could take similar steps.
• Utility officials say importing liquefied natural gas could help bridge future supply gaps but would increase costs for consumers. They continue to support the proposed Alaska LNG Project, though it still faces significant legislative and financing hurdles.
• Short on time but need the local news scoop? Get free weekly news in your inbox for Mat-Su, from Mat-Su.

ANCHORAGE — Matanuska Electric Association could institute rolling half-hour power blackouts this winter as a worst-case scenario response if extremely cold weather leaves natural gas utility Enstar unable to meet demand, Tony Izzo, the electric cooperative's CEO, said Tuesday at a briefing in Anchorage.

If the plan is implemented, MEA would increase power generation with diesel fuel at its Eklutna Generation Station, which is equipped to use both natural gas and fuel oil.

That step would divert gas it otherwise would have burned into storage for Enstar and may require reducing electricity to residences and businesses.

Rolling blackouts would not affect public safety and essential service buildings, energy officials said. They would come as a last step if MEA could not reduce load by other means, including asking users to turn down their thermostats a few degrees, MEA officials said.

"This is an urgent problem," Mat-Su Mayor Edna DeVries said at the briefing. "Our borough is still growing in population, and we cannot have power blackouts. We're turning away people who want to invest in our communities and our port" because of uncertainties over energy, she said.

Although the Eklutna plant is equipped to quickly start its diesel engines in an emergency, there are limits to how long the engines can run on that fuel. Operating for extended periods may require additional fuel storage, which would require expanded storage capacity and changes to operating permits, MEA officials told legislative committees earlier this year.

Izzo said curtailment periods would be limited to 30 minutes so buildings would not cool to levels that could pose hazards or risk damage to pipes.

Other electric utilities with dual-fuel generators, such as Chugach Electric Association, would likely adopt similar measures to help Enstar.

"Our priority will be to help Enstar keep homes heated," Izzo said.

Unlike electric utilities, which have access to alternative energy sources such as hydropower, Enstar has no alternative to natural gas to supply heat to homes and large buildings.

The Regulatory Commission of Alaska requested the utilities' contingency plans for service reductions, Izzo said. Public safety and essential service buildings would not be subject to the rolling outages.

The outages would affect industrial facilities first, followed by businesses, schools, churches and homes, according to the filing.

If the coming winter is warm, Enstar's gas supply problem may not be serious or may not appear at all. But if the region experiences another cold winter like last year's, there will be problems, Enstar CEO John Sims said.

Using diesel generators also would raise consumers' costs.

"Fairbanks saw a 60% increase in the cost of fuel last winter when Golden Valley Electric Association had to switch to diesel to replace less-expensive gas-fired power moved north to Interior Alaska," Sims said.

The threat of a fuel shortage has developed because Enstar may not be able to get enough gas into storage before the start of cold weather. Gas was drawn from storage at high rates during cold weather last winter and may not be fully replaced this summer by Cook Inlet gas producers.

Cook Inlet's major gas fields are no longer producing as much gas, Sims said. The fields are aging after operating for more than 50 years and are being depleted. Hilcorp Energy, the major producer, is drilling 27 new gas wells this year just to maintain its current supply contracts. In addition, gas expected from Cook Inlet producer BlueCrest Energy did not materialize, underscoring the uncertainty of future supply from the inlet.

"We're looking for 3 billion cubic feet of gas," Enstar spokesperson Lindsay Hobson said in an interview. The utility normally likes to have 7 billion cubic feet in storage at the start of cold weather. It now has about 4 billion cubic feet stored at Cook Inlet Natural Gas Storage Alaska, a gas storage facility near Kenai.

A longer-term proposal to bring North Slope gas to Southcentral Alaska through a new pipeline as part of the Alaska LNG Project remains uncertain because the state Legislature, now in a special session, has failed to agree on a separate issue involving a new tax on corporations such as Hilcorp Energy, the region's largest Cook Inlet gas producer.

However, even if that issue were resolved and the Legislature passed a proposed bill to aid the Alaska LNG Project, there is no guarantee the pipeline will be built because financing still must be arranged, and the project is widely acknowledged to be economically marginal.

Sims acknowledged the project cannot be built in time to address this winter's supply concerns but said it remains the best long-term solution. Enstar and other utilities may have to import liquefied natural gas, or LNG, to augment supplies until a North Slope gas pipeline is available, if it can be built, Sims said.

Importing LNG will not be cheap. It will increase consumers' natural gas rates.

"The Alaska LNG Project is the only project that can not only meet the gas supply need but also reduce costs to ratepayers," he said.

Mayor DeVries gave a full-throated endorsement of the North Slope pipeline Tuesday.

Just under one-third of the 800-mile pipeline would pass through the Mat-Su Borough, "but only half of our citizens even have access to gas now," she said.

"The Legislature can't step back and wait another year" to help the North Slope gas project. "We need this now," she said.

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