Alaska State Senate approves millions to restart Healy coal plant

The state Senate approved spending $12.5 million to help restart the Healy Clean Coal plant in hopes of salvaging the $300 million project.

The money would go the Alaska Industrial Development and Export Authority, a state agency that took control of the Healy plant after an unsuccessful test run in 1998 and 1999. AIDEA is negotiating with Homer Electric Association to run the plant and provide a new power source for the Kenai Peninsula, which now depends largely on natural gas-fired electricity.

HEA said it has been studying the plant for six months and is convinced the original equipment can do the job economically, especially given the higher prices for natural gas.

"It just made a plant like Healy Clean Coal more competitive," said Rick Eckert, HEA manager of business development and regulatory affairs.

Homer Electric says the plant, which can generate just over 50 megawatts of power, would diversify its power sources. HEA now uses 65 to 80 megawatts, mostly gas-fired power purchased from Anchorage's Chugach Electric Association. Those contracts are due to expire in seven years.

But Golden Valley Electric Association of Fairbanks, which was involved in building the Healy plant, continues to want the plant for its own use. GVEA wants to tear out much of the plant's experimental technology and put in more conventional generators.

AIDEA sued Golden Valley last year over plans for the plant's future.

The new state money for Healy would come out of $73.5 million left over in the state's Railbelt Energy Fund, which has been sitting around since the 1986 demise of a mega-hydro project proposed for the Susitna River. Much of the fund has been spent on Railbelt energy projects. The current plan in Juneau would parcel out the remainder of the fund to AIDEA and South-central Alaska utilities.

AIDEA will need more than the $12.5 million to restart the Healy plant, Eckert said. He wouldn't disclose how much extra.

The Healy plant was first picked in 1989 as a federal demonstration project of new cleaner-burning power generation technology. It was built with $120 million in federal funds and $175 million in state and AIDEA funds. The project, linked to the nearby Usibelli coal mine, was controversial because it was to be built so close to Denali National Park.

After its trial period, the plant was shuttered by Golden Valley, which said the new technology was not economical.

Golden Valley wants to retrofit with more proven technology, said Kate Lamal, the utility's vice president of power supply. Given technological advances since the Healy demonstration was built, the proven technology would not pollute any more than the experimental technology already on hand, she said. AIDEA disagrees.

Cost of retrofitting the plant for GVEA's use has been estimated at $80 million, she said.

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Information from: Anchorage Daily News, http://www.adn.com