CHUGACH ELECTRIC DIRECTOR PROTESTS EXCESS INTERTIE COSTS

Anchorage Daily News – 12/14/95
Letters
PROJECTS RAISE COST CONCERNS

The fuss over big-brother-government offering $35 million for a Copper Valley intertie is surprising. We've forgotten the fact that the Legislature also authorized $90 million for the north and south interties . . . but this has not created a ripple of public interest. What is it that separates the Copper Valley project from the other two? The truth is there is very little difference in the projects.

At this early design stage, environmental impacts are not identified. But all three projects should generate cost concerns. The state is funding only a portion of the $200 million needed for these projects. What the unfunded portion will do to everyone's monthly utility bill should raise questions about project economic viability.

One of the big expenses results from a little-known "1990 Memorandum of Understanding" signed by the IBEW and most of the electrical utilities. This MOU stipulates construction will be accomplished by IBEW contractors only, which is a fine deal for everyone except the utility ratepayers and other Alaskans who would like to bid on these interties.

The MOU will severely limit competition; thereby driving up project cost. Evaluation of similar projects indicates the cost increase will likely be more than 15 percent, which will add $30 million to the three projects.

Such an increase is more than enough to bring the viability of these projects into serious question. Yet, in the December 1995 "Economic Evaluation" completed by Commissioner Mike Irwin, Department of Community and Regional Affairs, this factor was totally ignored.

I guess a $30 million project cost increase does not mean much to Irwin's department. Perhaps that's why Alaska has budget problems.

- Ed Granger
[Director, Chugach Electric Association]