Utilities request approval for transmission-only utility in Alaska’s Railbelt region

Four Railbelt utilities, Golden Valley Electric Association (GVEA), Anchorage Municipal Light and Power (ML&P), the City of Seward, and Homer Electric Association (HEA) have jointly submitted an application to the Regulatory Commission of Alaska (RCA) for a certificate of public convenience and necessity to form a transmission-only utility in Alaska’s Railbelt region, according to a Feb. 26 statement posted on American Transmission Company’s (ATC) website.

The filing is the culmination of more than four years of voluntary work by the parties working in coordination with Chugach Electric Association and Matanuska Electric Association (MEA), the statement noted. The work has included an evaluation of how the formation of an Alaska Railbelt Transmission company can provide overall benefits to consumers, the statement noted, adding that the Railbelt utilities have worked with ATC, which was formed through a similar effort in 2001 in the Midwest.

According to the application, today, each of the Alaska Railbelt electric utilities owns, operates, builds, and maintains transmission facilities within its certificated service area. Also, several of the electric utilities have contracts with the Alaska Energy Authority (AEA) to use, operate, and maintain the Alaska Intertie and certain of the Bradley Lake Hydroelectric Project’s transmission assets dedicated to transmitting Bradley Lake energy and capacity.

The application added that the Alaska Intertie includes a 170-mile, 345-kV transmission line between Willow and Healy that operates at 138 kV, transmission towers and conductors, transformers at the Healy and Teeland substations, as well as system stability devices at three locations that are necessary to allow the Railbelt Utilities to remain interconnected.

For several years now, Alaska Electric and Energy Cooperative, Inc. – which is the transmission-owning subsidiary of HEA – ML&P, Chugach, Seward, GVEA, and MEA – collectively referred to as the Railbelt Utilities – as well as ATC, have been working to restructure electric transmission in the Railbelt and establish an independent Railbelt electric transmission company.

The participating parties – that is, HEA, ML&P, Seward, GVEA, and ATC – have formed Alaska Railbelt Transmission, LLC (ART) to operate, maintain, plan, finance, and upgrade the Railbelt’s transmission network and to ensure the reliable delivery of electric power to all Railbelt customers, which constitute about 77% of the Alaska population, the application added.

Granting the application would allow ART to plan, execute, build, and operate transmission projects, as well as to operate and maintain the Railbelt transmission system on a regional basis, which would facilitate the development of a modern and robust network that would support Alaska’s future growth, and would benefit all Alaskans in the Railbelt, the application said.

The application also implement’s the commission’s June 2015 recommendation that an “independent transmission company should be created to operate the transmission system reliably and transparently and to plan and execute major maintenance, transmission system upgrades, and new transmission projects necessary for the reliable delivery of electric power to Railbelt customers.”

Discussing ART’s governance and structure, the application said that upon commission approval, any transmission assets held by the participating parties would be operated by ART under agreements entered into between those parties and ART, ensuring that ratepayers would not pay twice for existing infrastructure. Preferably, ART would acquire control – but not ownership – of the Alaska Intertie and Bradley Lake transmission assets through assignment of the relevant utilities’ contractual rights, the application said. Alternatively, subject to review of the amended and restated Alaska Intertie Agreement and Bradley Lake Agreements, those assets may be controlled and cost allocated under existing agreements, and those cost allocations subsequently passed on to ART through the relevant participating parties.

While each participating party’s ownership in ART varies, each company has one seat on the board of directors, which would determine the overall direction of ART and delegate responsibility for certain day-to-day matters to the executive team, the application added.

ART would operate all of its assets, whether those are existing transmission assets or future facilities it builds, as one grid. Any change in operations from the individual Railbelt Utilities to ART should be relatively seamless from the perspective of the Railbelt’s electric service users, the application added. Upon the formation of a Railbelt Reliability Council (RRC) or an Electric Reliability Organization (ERO), ART would operate in conformance with the standards and protocols developed and maintained by that organization.

The application also said that there would be some procedural differences in the unified operation of the transmission system compared to today. For instance, independent power producers or other generating entities would no longer deal with the different rules of the participating Railbelt Utilities, but would instead use a common generator interconnection agreement for standard network service; the integration agreement is part of ART’s tariff.

The application also said that while new construction of transmission projects historically has been done on a utility by utility basis, new construction would be planned and developed based on a Regional Integrated Resource Plan. Projects would need to meet the plan’s objectives and reliability standard planning protocols, and/or generate economic dispatch benefits that more than offset costs.

The application added that proposed projects would be evaluated by and require the RCA’s approval before being built. Having only one entity responsible for Railbelt electric transmission assets ensures the RCA and the Transco’s member utilities would be able to hold ART accountable for any issues arising during the planning, construction, and operation of the new facilities, according to the application.

Among other things, the application noted that ART would provide open access network integrated transmission service under its tariff, using a single network integrated transmission cost of service and non-discriminatory open access tariff, which allocates the costs and benefits of the network across all transmission users equitably. All of ART’s management, operations, and maintenance costs would be recovered through the transmission network cost of service, the application noted.

ART’s initial cost of service has been set using a capital structure of 60% debt and 40% equity, and using a return on equity of 10%.

The application added that ART’s members would pool transmission costs and allocate them through the tariff; initially, costs would be allocated based on percentages negotiated and agreed to by all participating parties. Over time, the participating parties have agreed that costs would transition so that they are allocated based on load ratio share, and costs for any transmission assets added after Jan. 1, 2019, would also be allocated on a load ratio shar basis, the application said.

According to the Feb. 26 statement, the next step in the application process is a determination by the RCA that the application is complete, following which there is a six-month review period prescribed for the commission’s decision.

About Corina Rivera-Linares 2807 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 13 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics and education for weekly newspapers and national magazines. She can be reached at corinar@pennwell.com.