Long-sought Alaska Railbelt utility integration finally becomes law

After more than five years of highly technical analysis, delicate negotiations and numerous fits and starts along the way, the path to restructuring Alaska’s once-disjointed Railbelt electric system is officially complete.

Gov. Mike Dunleavy signed legislation April 29 fortifying the authorities of the Regulatory Commission of Alaska and directing the six Railbelt electric utilities to establish a new organization to plan for and manage deeply integrated utility operations.

RCA Chair Bob Pickett thanked Dunleavy for signing Senate Bill 123 — spawned from recommendations the commission made in 2015 — and said it will eventually help provide Railbelt region residents with more reliable and effective power service in a formal statement.

“A cooperative effort of legislative leadership, the RCA, utilities, independent power producers and other public interest representatives contributed to this successful outcome, which started in 2014 at the direction of the Legislature,” Pickett said.

SB 123 passed the Senate unanimously and received broad support in the House.

It codifies the work that the Railbelt electric utilities have done at the behest of the Regulatory Commission of Alaska to better integrate the long-term planning of the six utilities and provide a consistent path for renewable power producers to access the regional transmission system.

“SB 123 will foster cooperation among the interconnected utilities and ensure consumer needs are efficiently and reliably met,” said Sen. John Coghill, R-North Pole, the chair of the Railbelt Electric System Committee that drafted the legislation.

Renewable Energy Alaska Project Executive Director Chris Rose called the signing of SB 123 “historic,” a term used by many individuals involved in the Railbelt electric work.

“Efforts to reform the Railbelt electric grid to improve coordination and efficiency among the six utilities something that people have been trying to do for decades. This is a major win for everyone,” Rose said. “It will create a better environment for renewable energy development, create efficiencies that will lower electric costs for consumers and allow Alaskans to have a say on what projects are built in the future.”

In 2014, lawmakers directed the RCA to conduct a detailed examination of the issues facing the Railbelt electric grid, which stretches across the service territory of six utilities from Fairbanks to Homer that collectively have a customer base typically served by a single utility in the Lower 48.

The RCA’s analysis resulted in a frank June 2015 letter to the Legislature that characterized the Railbelt electric system at the time as “fragmented” and “balkanized” and recommended the utilities be afforded time to voluntarily improve their coordination before the commission would seek to clarify its authority to direct coordinated utility operations.

At its core, SB 123 mandates the Railbelt electric utilities work with other stakeholder-driven organizations to form an electric reliability organization, or ERO, that would oversee implementation of system-wide reliability standards and coordinate long-term planning amongst the utilities. It also gives the RCA explicit authority to rule on the necessity of large infrastructure projects, such as generation plants, that utilities may pursue.

The primary end goal for many stakeholders is to achieve “economic dispatch” across the entire Railbelt — from Homer to Fairbanks — or consistently maximizing use of the most efficient power generation through near-constant power sales between the utilities.

Currently, the limited capacity of transmission lines in the region can inhibit economic dispatch of electricity, particularly from the state-owned Bradley Lake hydropower facility near Homer that provides some of the lowest-cost power in the region.

While the process of getting from the June 2015 letter to the passage of SB 123 was lengthy and included multiple setbacks, such as the scrapping of an application to jointly form a transmission company to support transmission infrastructure investments last year, utility leaders generally supported the concept.

Last December the general managers and CEOs of the regional utilities signed a memorandum of understanding outlining how they would form an ERO dubbed the Railbelt Reliability Council, governed by a board comprised of utility representatives and stakeholders championing independent power producers and others.

Utility leaders acknowledged the bipartisan support already behind SB 123 last fall was an impetus to developing the MOU, which calls for the reliability council’s implementation committee to have a business plan for the council ready by this December.

MEA spokeswoman Julie Estey wrote via email that the committee’s work has been slowed by a couple weeks while the utilities were immersed in responding to the COVID-19 emergency, but it has not stopped.

According to Estey, 11 applications for two unaffiliated implementation committee seats are currently being reviewed and the results are expected in the middle of this month ahead of a vote to finalize the committee roster.

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