Alaska regulators want utilities to address emergency plans as they face gas shortage

Alaska utility regulators said this week they will soon begin pressing utilities for their emergency plans as concerns about unexpected power interruptions grow amid an expected shortage of Cook Inlet gas.

The five-member Regulatory Commission of Alaska will likely start the discussion with the Homer Electric Association early next year, since the utility will be the first to have its supply contract for gas end, said Commissioner Robert Pickett in an RCA meeting on Wednesday.

“We will be looking at each of the utilities that have gas supply agreements, starting with the ones where the wall is the closest,” Pickett said, referring to the end date for utilities’ gas supply contracts.

Homer Electric’s contract with Hilcorp is set to end before April. A Homer Electric official said on Thursday the utility has an agreement to purchase natural gas from gas company Enstar once the Hilcorp contract ends.

Hilcorp, the dominant Cook Inlet gas producer, warned Railbelt utilities from Homer to Fairbanks last year that it may not be able to renew gas supply contracts as gas production wanes in the aging basin.

For the state’s biggest electric utilities, Chugach and Matanuska electric associations, those gas supply contracts aren’t set to end until 2028. Enstar’s contract with Hilcorp is set to end in 2033.

Natural gas is the primary fuel source for electricity and heat in Southcentral Alaska.

Commissioners on Wednesday questioned how the utilities would deliver electricity in the event of reduced power supply, if enough natural gas can’t be delivered to turbines.

The commissioners said it’s time to start thinking about worst-case scenarios, such as making sure some customers are protected during power interruptions.

[Alaska’s looming natural gas crisis draws growing attention from mayors, state regulators]

“Because obviously there are different types of customers,” Pickett said. “You don’t want to shut off the hospital. You don’t want to shut off critical communication assets.”

“And I don’t think that has sufficiently been thought through,” he said of the utilities’ plans.

RCA chair Robert Doyle said people don’t like to talk about worst-case scenarios. But he said it’s time to start planning.

He referenced the Texas power grid failures in early 2021 when extreme winter cold led to long power outages for millions of homes in that state, and almost catastrophic failure of the grid.

“We’re talking about very serious things,” Doyle said.

Officials with Chugach and Matanuska electric associations said earlier this week that they are pursuing options to secure additional gas supply and are not discussing brownouts or blackouts tied to reduced supply. A blackout is a full interruption of power in a given area. A brownout is a partial, temporary reduction in power.

Jenniffer Rosin, a spokeswoman with Homer Electric, said the Railbelt utilities are working together to identify future sources of fuel, including renewable energy and importing liquefied natural gas.

“We’re working with the Railbelt utility working group to avoid any power issues,” Rosin said. “We take this very seriously. Everyone affected by this gas crisis is taking this very seriously.”

“We’ll do what we need to keep the lights on,” she said of Homer Electric. “There won’t be blackouts. We won’t let that happen.”

Based in Homer, the electric utility provides power to several Kenai Peninsula communities, including Soldotna and Kenai. It has about 25,000 members.

Rosin said Homer Electric has entered into a procurement agreement with Enstar to acquire gas after the electric company’s gas supply contract with Hilcorp ends early next year. The agreement is awaiting signatures and has not yet been filed with the regulatory commission, she said.

“For the time being there won’t be a gas shortage, but everyone will still be in this gas shortage crisis,” she said of Homer’s agreement with Enstar.

Overall demand for Cook Inlet natural gas is expected to begin exceeding supply by small amounts in 2027, with the gap growing from there, experts have said.

Rosin said the Homer utility is preparing to respond to the commission’s request.

“We’re getting ready for what we need to do if that’s the way they want us to go,” she said. “We will be there.”

Pickett at the meeting expressed concern about the difficulty the utilities might face in securing a good future contract for liquefied natural gas in a market where prices are extremely volatile. He also indicated that renewable energy projects may not be built quickly enough to address the gas shortage.

Commissioner Jan Wilson said she agrees with Pickett’s plans to understand how utilities will deal with any potential emergency scenarios.

“It’s an unpleasant issue to contemplate, but I agree with you that it’s necessary and it’s within the commission’s area to be holding the utilities to some kind of standard,” Wilson said.