Chugach files plan with regulators to create community solar farm that members can buy power from

Alaska’s largest electric utility has once again filed a plan with regulators to create a small community solar farm in Anchorage, after an earlier attempt was rejected in 2019.

The Chugach Electric Association program would allow the utility’s members without their own rooftop solar array, such as renters, to benefit from renewable energy by subscribing to buy power from the solar farm, according to the utility’s Dec. 28 filing with the Regulatory Commission of Alaska.

The utility has proposed the program in response to member interest for more clean energy sources to reduce the dependence on natural gas that produces most of the utility’s power, the filing said.

The proposal comes amid concerns that natural gas for Chugach Electric and other utilities along Alaska’s Railbelt will need to be imported in the future, as projected supplies in Cook Inlet wane.

A renewable energy group criticized the community solar farm plan in interviews this week, saying its estimated cost of power will be so expensive it will dissuade members from joining the program. A consumer advocacy group also raised concerns about the project’s high cost of power.

But officials with Chugach Electric said many members have shown strong interest in the voluntary program for its climate benefits, and have indicated that they would pay more for the solar electricity to support it.

They also said the utility will pursue federal tax credits that will greatly reduce the cost of the program to members once those credits are received.

“We have a board goal of carbon reduction,” said Al Rudeck, chief strategic officer for Chugach Electric. “And we want to respond to member requests.”

The 500-kilowatt farm, with 1,280 panels, would be built at the utility’s substation at 800 E. 94th Ave., near the Dimond Center mall, according to its filing.

It would start as a three-year pilot program in March 2025, the filing said.

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

“The project is small in relative terms, generating electricity equivalent to an average of .02 percent of Chugach’s retail energy sales annually,” the filing says. Its annual revenue and expense would represent about .08% of the utility’s projected 2023 revenue of $356.1 million, it says.

Chugach Electric would own the project, said Julie Hasquet, the utility’s spokeswoman. Participating members would pay a portion of the cost to build and maintain it, and receive the same proportion of its energy output credited to their monthly bill, the utility said in its January newsletter.

The project would cost $2.8 million.

But the utility expects to receive a direct federal tax credit payment of 30% to 40% of the project’s eligible construction costs, according to the filing.

Chugach Electric has not calculated the impact of the tax credit to rates out of an “abundance of caution,” the filing says. Once the credit is received, Chugach will file an update with the commission to adjust the subscription price.

The utility can only apply for the credit after the project enters operation, the filing says.

A 30% tax-credit payment would reduce the project cost to $1.9 million. That would reduce the subscription price about 27%, the filing says.

Under the plan, a member could subscribe to receive power from a panel, or up to 20 panels, paying a monthly fee.

Antony Scott, a former commissioner with the Regulatory Commission of Alaska, said the plan doesn’t provide incentives for people to sign up.

Citing figures based on the current filings, the costs for electricity would be about three times higher than the utility’s current residential rates, said Scott, director of economic and regulatory affairs for the Renewable Energy Alaska Project. A member would pay $22.27 monthly for a panel, or $267 in the first year, and similar amounts in many following years, according to the filing. A panel would produce 400 kilowatt-hours of energy annually, according to the filing.

Scott said that Chugach Electric has proposed building the facility no matter how many people sign up, so the marginal reduction in pollution will happen with or without someone’s investment, reducing the incentive for someone to subscribe.

There are better ways for members to spend $267 a year if they want to reduce pollution, he said. They can spend it on energy-efficient light fixtures, better insulation or sealing on a house, or they can begin saving for their own rooftop solar project.

“You’re not reducing carbon, you’re just agreeing to pay more for your power than your neighbors,” Scott said.

Renewable Energy Alaska Project will provide detailed comments on the plan as part of a public comment period running through Jan. 29, said Chris Rose, head of the group.

The group wants to see the commission suspend the proposal into a docket, so it can be fully examined before the commission, he said.

“There are a lot of issues we’d like to have addressed with the commission, and not have it just waved through,” he said.

Phil Wight, policy analyst with Alaska Public Interest Research Group, said the group supports more solar power, but it does not support higher costs for consumers that are unnecessary.

“Chugach’s proposed pilot project does not offer savings, but rather increases energy costs for subscribers,” Wight said in an email.

“Now is not the time to charge Alaskans more for the renewable energy we need to diversify our power supply and lower monthly energy bills,” he said.

“We urge Chugach to rethink charging its customers more for solar photovoltaic power — the least expensive technology humans have ever discovered for producing electricity,” he said.

The Regulatory Commission in 2019 rejected Chugach Electric’s earlier proposal for a community solar farm, calling it “confusing and undefined.” The agency raised concerns that all ratepayers would bear financial responsibility, not just the participants. But the regulators emphasized the state’s strong interest in renewable energy and said it did not want to discourage innovative programs.

Hasquet said a utility survey of 1,200 members in December showed that 81% were interested in Chugach creating a community solar program. She said that 25% of the respondents said they were willing to pay an average $24 extra per month for it. Five percent of respondents said they’d pay more than $50.

If the project is approved by the commission, the utility would accept applications from potential subscribers from Oct. 1 to Feb. 14, 2025, the filing says. The service would start in March next year.

“We believe that there’s a big appetite from our members for an opportunity to participate in community solar, and this is a voluntary project, a pilot program,” Hasquet said. “We’d hope to be given the opportunity to be successful before people decide it’s a bad idea.”