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special section ALTERNATIVE ENERGY

MAP: State of Alaska, AEA

Susitna Watana Dam By Tracy Kalytiak

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t’s possible that in just 11 years, a $4.3-billion hydroelectric plant will be operating in a steep-sided valley of the Susitna River below Watana Creek, according to the Alaska Energy Authority (AEA). The Susitna-Watana dam, when built, will rise 700 feet high, hold a reservoir 39 miles long and 2 miles wide, and is expected to generate an average of 2,600 gigawatt hours annually. The project—a revival of a project first studied in the 1980s—carries with it many questions that for now can’t be definitively answered: Will it provide enough affordable electricity to the Railbelt consumers who need it? Will it be possible for the dam to go online as quickly as AEA claims, in light of the thousands of studies that will need to be either performed or updated, and possible court challenges? Most importantly, how will the dam affect fish and water quality in the region? AEA’s Wayne Dyok, who began working as project manager in November, says the plant will meet about half of the Railbelt energy consumers’ electrical power needs. “This is a Level 4 engineering estimate that includes a margin of error of 30 percent below and 50 percent above—meaning a low estimate places the project at $3 billion and a high es-

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timate places the project at a little more than $6 billion,” Dyok says. Dyok says the number will continue to be refined as the project is further defined. “Factors like methods of construction, design and materials all drive project costs,” he says. “As more is understood about the project, the cost estimates become more refined. Previous estimates were based on modeling from the 1980s’ project information.” Dyok says the AEA is working with world-class experts on the design, engineering and construction of the SusitnaWatana hydroelectric project.

Project Analysis

MWH Global will conduct an analysis of the project and AEA will solicit an independent cost estimate and work with a board of consultants to ensure the project is designed and built responsibly and on budget. “The state will need to make an investment in the Susitna-Watana hydroelectric project and come to an agreement with Railbelt utilities for the project to be successful,” Dyok says. Future funding for the project is subject to legislative appropriation. Similar to the Bradley Lake project, AEA expects to issue debt payable by project service agreements with utilities or other power purchasers.

Dyok says when it’s built, the hydroelectric facility will provide long-term and stable rates to the Railbelt. “There are many variables and unknowns that need to be determined, making it difficult to define a rate structure at this time,” he said. “AEA is working on defining the final project size and design, state investment and financing, all factors to determining wholesale utility rates.” On Dec. 29, the AEA filed a 500page pre-application document with the Federal Energy Regulatory Commission. Now AEA is focusing on taking steps laid out in the FERC’s integrated licensing process.

Land Acquisitions

The first thing AEA did, in January and early February, was convene initial meetings with Alaska Native groups that either own or use land in the area near the proposed dam site. The estimated $4.3 billion project cost includes money for acquiring land. Ethan Schutt, Cook Inlet Region Inc.’s senior vice president for land and energy development, in a previous published account, said the road could bring potential trespass problems from recreational users crowding into land that is now remote and relatively inaccessible.

www.akbizmag.com • Alaska Business Monthly • April 2012

April - 2012 - Alaska Business Monthly  
April - 2012 - Alaska Business Monthly  

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