Jul. 11--WASILLA -- An Anchorage-based energy company is seeking permission to build a power plant on the Alaska State Fair grounds in Palmer that it says would alleviate a local electric cooperative's need to build a controversial coal-fired plant.

Fair officials said they are considering the request from Tiqun Energy Inc. but don't expect to make any decisions soon. The proposal may be discussed at a state fair board meeting 7 p.m. Thursday at the fairgrounds. "Really this is at the beginning, beginning stages," said board chairman John Harkey. The company wants to lease or buy five acres of state fair land to build a 70-megawatt, natural gas-fired plant. Randy Hobbs, an energy consultant who lives in Mat-Su, is a partner in the company along with Anchorage developers Marc Marlow and Randy Kaer. He said the plant would be similar to one at the University of Alaska Fairbanks, which produces electricity but pumps waste heat through pipes to heat campus buildings.

The plant itself would cover about five acres and be enclosed in a barn-like building to blend in at the fair, Hobbs said. It would tie into an existing natural gas line that runs by the fairgrounds and its highest point would be a 50-foot emissions sta k, he said. The plant, which would cost about $80 to $90 million to build, would be combined with a 120-megawatt natural gas-fired plant in downtown Anchorage known as the Knik Arm Power Plant the company wants to restart, he said. The two plants together would provide enough power to keep the Valley and Anchorage humming until 2020 without the need for either utility to build their own power plants, and without the pollution concerns that come with burning coal, Hobbs said.

"We think we're a pretty good alternative to what they have, and it still leaves the door open for a coal plant down the road," he said. A HOT AND COLD RECEPTION The plants could be up and running by late 2009 or early 2010. Harkey said the plant has stirred interest among fair board members, particularly because of the company's proposal to supply low-cost waste heat to area agriculture producers, including greenhouses and even possibly a new Matanuska Maid dairy plant tha state officials have discussed building in Palmer. "It all sounds like a wonderful, potential proposal," Harkey said. But so far, the plants are getting a cool reception from the two electric utilities that would use the power -- Palmer-based Matanuska Electric Association and Anchorage-based Chugach Electric Association.

Both utilities have challenged Tiqun Energy's qualifications to sell them power. The company plants are listed as "qualifying facilities" with the Federal Energy Regulatory Commission, a designation that under federal law requires the utilities to negotiate with Tiqun to purchase power. The Regulatory Commission of Alaska recently ordered Chugach to negotiate with Tiqun by Aug. 1, but allowed the cooperative to not sign any binding agreements until the dispute over the qualifying status is resolved. QUESTIONS OF RELIABILITY Officials with both utilities said they have concerns about the viability of the project.

Chugach spokesman Phil Steyer said the company doesn't want to lose time working with Tiqun while it could be pursuing its own power projects. MEA attorney Jim Walker said MEA is reluctant to negotiate a deal that might fall through and leave the utility with no backup plan. He questioned whether Tiqun could get the financial backing it needs, and said the utility has been unable to get cost estimates from the company. "Our concern is if we were to act on the reliance that he is going to build that and then he doesn't, we're kind of stuck in a hole because we have to provide electric utility service," he said.

MEA is currently pushing its own plan to build a 100-megawatt, coal-fired plant and a 100-megawatt, natural-gas fired plant that it contends will provide cheaper, more reliable power for customers than it currently pays for power from Chugach. The utility board has backed the plan, but some residents have objected to the coal plant, citing environmental concerns and questions about the utility's cost estimates. UTILITIES EYE OWN NEW PLANTS Walker also questioned whether Tiqun could meet a federal requirement that at least 50 percent of the energy it produces must go to uses other than selling it to a utility, such as providing heat to area homes and businesses, for example.

Hobbs said the utilities are simply stalling because they want to build their own plants. "That's been the mentality, we don't want it because it's not us," he said. The company, he says, would finance the projects' estimated $240 million to $270 million cost by selling tax-exempt bonds, bonds he thinks would sell easily once the utilities commit to buying power. He also said any agreements would include performance milestones to make sure Tiqun Energy would not leave the utilities hanging. And, he said, the 50 percent requirement provides an exemption for companies that cannot sell power to area homes and busin sses, he said.

Although Marlow and Hobbs have floated several ideas for power plants over the years, Hobbs said he is more optimistic about this project because the utilities need to expand their power capacity. ------ Find S.J. Komarnitsky online at adn.com/contact/skomarnitsky or call 352-6714.