My Turn: LNG for Juneau: Coals to Newcastle?

  • Thursday, February 4, 2016 6:38pm
  • Opinion

Avista, the natural gas and electric utility that owns Alaska Electric Light & Power Co., approached our Assembly and our legislators last fall to seek support for bringing LNG/natural gas to Juneau as a new energy source for home and business heating (Juneau Empire, Nov. 1). At first, this sounds promising, as natural gas offers cost savings when compared to heating oil and has a somewhat smaller carbon footprint (about 27 percent less than oil). Yet, as several letters to the editor have pointed out, we have renewable energy sources (hydropower) and potentially cheaper heating methods (such as electric heat pumps) with virtually no carbon footprint. Leaving those issues aside for the moment, here’s some information on costs incurred in Homer for their recent buy-in to become a natural gas community.

Homer now gets natural gas from nearby Cook Inlet by way of the Homer-South Peninsula Gas Line completed in 2014. This gas line would not have been possible without $8,675,000 of state subsidies plus $2.5 million contributed by Enstar. Homer then borrowed $12 million from the Kenai Peninsula Borough to pay for the additional distribution lines to individual properties. To repay the loan, Homer assessed property owners $3,265.77 to hook up. The Alaska Dispatch News (Nov. 27) reported that Avista expected that hooking up to gas would be optional in Juneau, unlike Homer. Even so, how would those costs get covered here?

There is also a charge of $1,290 for the first 100 feet of service line to each Homer property, plus $2 for each additional foot. The total cost depends on how much it costs to convert a home’s heating system from oil, electric, or propane. For Juneau, conversion costs have been variously estimated by Avista as roughly $6,000 (Juneau Empire, Nov 1), and $2,000 to $15,000 (ADN, Nov 27). Adding all those costs together comes to a lot of moola on the back of any envelope. And for Juneau residents, total costs are largely unknown.

In Avista’s Nov. 4, 2015 earnings report, the CEO said in reference to the Juneau proposal, “…in order for the project to be economical for us and our customers we’ll need a combination of low-cost debt financing and potential state and local funds to support customer conversion costs.” While Avista has not made any public subsidy requests for the Juneau project, they were originally seeking a $58 million low-cost loan from the Alaska Industrial Development and Export Authority to combine with $78 million of their own funding to pay for the project. Apparently, their plans to seek an AIDEA loan have changed. In any case, ratepayers are needed to help pay those costs back and to provide earnings for the corporation and its shareholders.

Is it a good idea for Juneau to encourage a new carbon-based monopoly supported with as yet unknown costs to consumers? Consider this: the gas would come from Canadian sources, liquefied in Vancouver, trucked to Seattle, shipped to Juneau, converted back to gas in a plant to be constructed at Sheep Creek and then pumped through miles of pipes to homes and businesses. That’s a long supply chain roughly similar to how we get oil, but more complex and also subject to interruptions and variable commodity pricing. And it is far from local, unlike Homer’s gas. If we are looking for new cheaper energy sources, why not provide assistance to local renewable energy projects that will make Juneau a green community and meet our carbon free energy goals?

Juneau already has lower-cost alternatives to oil heat. These include air, tidal, ground and seawater heat pumps that can be retrofitted to existing homes, installed in new homes and installed as district heating to serve multiple buildings. Aside from district heating, these alternatives are successfully used today in Juneau where sales and maintenance are readily available. And they don’t require tearing up our streets to install gas lines.

• Doug Woodby is a retired fisheries scientist who lives in Juneau.

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