INTERTIE PARTICIPANTS GROUP MEETING 1/2/03
SOUTHERN INTERTIE 
TESTIMONY OF PHIL KALUZA
Alaska Public Interest Research Group 

Hello, my name is Phil Kaluza and I am here representing AkPIRG and as a Chugach member. Thank-you for the opportunity to speak to you today.

My utility and public policy background consists of 6 years of elected service with the Nome Joint Utility, and six years as a Nome City Council member. I would like to note that in the 12 years of public service not once did we as elected officials withhold important decision making documents from the public as Chugach has done for four years with their secret 1998 internal Intertie study. Secrecy breeds suspicion.

I strongly encourage you to postpone setting of any decision date until your ratepayers and board members have had an opportunity to determine what cost/benefit numbers should be used and then determine the appropriate action. Given the financial crisis this state is facing, the merits of this backup southern intertie should also be compared to other more cost effective utility upgrades, such as power pooling, or other public needs like school and road repairs. What may have appeared to be a priority ten years ago, may well not be one today.

AkPIRG is currently investigating the appropriate use of the interest accrued on the intertie grant. The appropriation language specifically states the utilities shall agree to: pay the design and construction costs for the Anchorage-Kenai Peninsula power transmission intertie that exceed $46.8 M. There is no language authorizing the Dept. of Administration to use of any interest earned on those public funds for the intertie. Nor is there language suggesting AIDEA manage the grant funds. Any attempt to launder the interest earning thru AIDEA back into the intertie is clearly outside the intent of the appropriation. If it is not illegal, it is clearly unethical. Without appropriate legislative approval, AkPIRG intends to challenge the use of any interest earning from the Southern Intertie grant to be used for the design and construction of the Intertie.

To ignore the $70M of state grants in the cost/benefit analysis for the ratepayers is simply WRONG. This attempt to ignore the value of those public dollars to fund other more cost effective utility projects, again such as power pooling which would have enormous benefits to the ratepayers, you are in effect increasing your ratepayers' rates from what they could be if the funds were better spent. Even if the funds were returned to the State, the majority of that $70M would be spent within the railbelt area for other ratepayer services such as roads, schools, and public safety. Clearly, all public funds, including interest earned on public funds, must be part of any cost/benefit analysis to assure ratepayers are getting the most benefit.

There is significant short term and long term environmental costs in the construction of an intertie, no matter which route is used. The EIS approval was based upon the trumped up benefits included in the Updated 1998 Study, which made the economic benefits appear greater than the environmental cost. It is unlikely any Southern Intertie route would have been approved if the more reasonable cost/benefit numbers that were used in the recently released internal study were used. In light of the substantially lower ratepayer benefits acknowledged by the utilities, AkPIRG is investigating the legal ramifications of challenging the EIS approval for the Southern Intertie.

AkPIRG strongly recommends this Southern Intertie project be further evaluated before pressing ahead.

Thank-you for the opportunity to speak.