Alaska Electric Light and Power Company’s new diesel generation plant will offer more reliable backup power for Mendenhall Valley residents, but that security comes at a cost.
During the Juneau Chamber of Commerce’s weekly luncheon Thursday, AEL&P President Tim McLeod said that the company will seek a rate increase to cover the cost of the $22 million plant.
“All of our infrastructure investments impact our rates down the road,” McLeod said. “There will be some inflation.”
After the luncheon, McLeod told the Empire that AEL&P will file for a rate increase with Regulatory Commission of Alaska at some point in the next few months. McLeod said he doesn’t yet know how much rates will increase in response to the sizeable infrastructure investment — roughly double what the company typically spends on infrastructure most years.
But he does know that the company won’t seek as steep an increase as it did in 2010 when rates went up by about 20 percent.
“It won’t be anywhere near the level that it was last time,” McLeod said.
Rate increase aside, McLeod and AEL&P project manager Bryan Farrell said that the new plant, which is located off of Industrial Boulevard, is good news for Juneau residents, particularly those who live in the valley.
Even after the new 25 megawatt diesel plant is completed this fall, the company still plans to hold true to its slogan: “100 percent hydro 99 percent of the time.” The diesel plant will function strictly as a backup power source in the event that something, such as an avalanche, causes the valley to be cut off from the hydropower lines, which for the most part run into town from south of Thane.
“In winter, when our loads are at their peak, if we had any sort of long-term outage we could not pick up all of the valley,” Farrell told the luncheon crowd, which filled the Moose Lodge dining area Thursday. This plant will fix that.
Though it has the ability to power the entirety of the valley, which is where more than half of Juneau’s residents live, the plant will only run between 100 and 200 hours per year, according to Farrell who is also a generation engineer for the company.
“We have to maintain backup resources, and those resources have to be in town,” McLeod said during the luncheon. “Every part of our electric system has the potential to — and probably will — fail at some point, so we have to plan for that.”
AEL&P began air-quality monitoring, an important regulatory step, for the new plant five years ago. It purchased the land the plant sits on three years ago, and it began construction in January. The plant should be operational by the end of October, Farrell said.
• Contact reporter Sam DeGrave at 523-2279 or sam.degrave@juneauempire.com.
