EDITORIAL: Alarm bells sounding for Southcentral Alaska’s energy future

When it comes to crises in Alaska, residents have an unsettling tendency to tune out until the only options left are bad. In part, this is learned behavior: Sometimes the state is bailed out by its resource wealth (as has happened with budget snafus and rollercoaster oil prices) or world events (such as the advent of World War II bringing a tremendous infrastructure boom). When this happens, Alaskans take away the lesson that they may as well not bother acting to forestall a catastrophe, placing their trust in outside forces to swoop in and save us from disaster. But this is dangerous, shortsighted thinking, and there’s no guarantee we’ll escape the worst-case scenario. The most recent example came late last month, when natural gas utility Enstar asked the state to approve a minor territorial expansion that would allow for the construction of a short pipeline — one that would allow Enstar to transport imported natural gas.

The notion of importing gas to a state with tremendous proven reserves of the resource is anathema to many Alaskans, who can’t fathom why it doesn’t make more sense to develop the gas within the state’s borders. But the appetite of producers to explore for more gas in Cook Inlet — and take on the associated financial risk — is meager. And the massive natural gas deposits on the North Slope are mostly stranded, with transportation costs (or construction costs for Alaska’s great white whale, a trans-Alaska natural gas pipeline) rendering their delivery uneconomic. As a result, the most cost-effective supply option for Enstar’s gas supply after its contract with Hilcorp expires in 2033 threatens to be imported gas.

That should be a scary prospect for Alaskans, as imported gas will by no means be cheap. In addition to the cost of purchasing and transporting the gas, Alaska customers would be on the hook for the cost of constructing or purchasing a mess of infrastructure — a gas terminal at Port MacKenzie or elsewhere, the pipeline between that terminal and existing infrastructure, as well as a host of other potentially necessary changes to accommodate the new supply method. And the shortfall between the gas Southcentral needs and the gas it has is much closer than 2033 — Enstar foresees demand exceeding guaranteed supply as early as this coming winter, and other utilities’ contracts with Hilcorp are up far sooner, raising the specter of increased utility bills as electric cooperatives turn to higher-cost energy sources to provide power. Whether it’s with state subsidies or higher bills, Alaskans need to understand that on our current trajectory, we will be paying up to twice as much to heat and power our homes and businesses in the next five years.

Energy cost increases, in the event gas has to be imported, will reverberate through every corner of Alaska’s economy. The costs of heat and power are priced into every commodity we purchase. So an increase in energy costs will result in retailers raising prices to cover their own costs. It will result in landlords raising rent prices to cover increased utility bills. It will result in small and large businesses raising prices and/or shrinking their operations to reflect the increased costs of getting by. There is nothing that can throw the brakes on an economy as quickly or completely as increasing energy costs — and Alaska’s economy is already in precarious shape.

One might ask what the electrical utilities have done to find a long-term stable fuel source on behalf of their customers. The answer, unfortunately, is not enough. They’ve been aware of the gas shortfall for years and, rather than focusing on finding alternative sources of gas or alternative fuels like coal, they have largely stuck their heads in the sand, preferring to focus on wind and solar projects that can’t provide nearly enough stable power generation to replace gas before imports are needed. Renewables should be part of the power mix in Alaska, but it’s a fantasy to expect them to come online in time to matter for the coming natural gas shortfall. It’s past time Chugach Electric and the other utilities make a concerted effort to find a long-term fuel supply other than importing natural gas. Alaskans can’t afford any more time wasted.

Unfortunately, Alaskans’ elected representatives also didn’t make securing lower-cost gas supply nearly as great of a priority as they should have during the past legislative session. Despite dire warnings from Enstar and gas producers, legislators gaveled out in mid-May without approving incentives for Cook Inlet exploration and production, or for that matter any meaningful legislation to chart a course that could help Alaska avoid importing gas. This should be a central issue of this year’s election, and we urge residents to vote only for candidates who pledge to take immediate action that would secure gas supply at a lower cost than importing it — and are willing to work with others to get that done, regardless of their party or ideological bent. If current legislators want to show their constituents they’re serious about governing, they still have time for a special session to address the issue before fall campaigning begins in earnest. What better way is there for lawmakers to convince voters they’re doing the job they were elected to than helping them avoid a massive financial hit on their utility bills?