Anchorage will likely see higher bills with LNG imports, but some say renewables could delay that

Alaska utilities that use natural gas from Cook Inlet to heat homes and generate electricity will, in the not-too-distant future, need to look elsewhere.

That’s as gas producer Hilcorp says it won’t have enough easily accessible gas to fulfill future contracts. Utilities are considering importing more expensive liquefied natural gas, which the Northern Journal reports will cause price increases for consumers, for example, with electricity costing 10 to 15% more than it does now and gas to heat homes even higher.

How soon that’ll be necessary is up for debate, though.

The Northern Journal’s Nat Herz reported this week that renewable energy advocates say conservation, along with more power generated from solar and wind projects, could delay a shift to LNG by up to five years. But Herz says those advocates are worried the utilities are not moving quickly enough in that direction.

Listen:

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The following transcript has been lightly edited for clarity.

Nat Herz: So the utilities went to their consultants and they said, “OK, what are we going to do about this? Are we going to build a natural gas pipeline? Are we going to start cracking water into hydrogen and fueling with hydrogen? Are we going to build some wind turbines and some solar panels? How do we get out of this?” And they have these consultants go out and say, you know, “What are the costs of these different options? How much are all these things going to cost?” Fast forward to now, in the past several weeks, there have been a couple of in-depth reports issued by the region’s utilities that basically say, “OK, the best solution for us, and really the only thing we can depend on for the medium term, is importing liquefied natural gas, you know, starting in some number of years, a few to perhaps 10.

Casey Grove: So I just want to address something really quick. For somebody that’s worried that we’re just going to run out of natural gas, and all of a sudden, you’re not going to be able to heat your home, are we sure that that is not going to happen, that we’re not going to just run out of gas one day?

NH: That’s a really good question. And I think, you know, for the people who really know this industry and are following this issue, I don’t think anyone would tell you that there’s a real fear that the utilities are going to allow Alaskans to freeze during the winter. I think, you know, these reports that have been published, I think, make it really clear that the utilities are working really diligently to ensure that that doesn’t happen. And I think that’s a message that they really want to put out there that, “Look, we know that the single most important function that we provide is reliability. We have to keep the lights on. We have to keep the heat on.” That’s the utility’s, sort of, central message here, that, “We have a plan, we need to start working now, because it takes time to get the permits and build all the infrastructure that we need to import this natural gas.” What some of their critics, and what some advocates are saying is, “OK, we accept that we might need to have natural gas imports at some point in the medium-term future, but are the utilities really looking at all the variables here? And are they using all the tools in their toolbox to make sure that we don’t have to import LNG and pay these associated higher prices before we absolutely have to?” And that’s where you kind of get into these ongoing questions about, are the utilities moving as fast as they could be to bring renewable power sources online to reduce our dependence on natural gas? Are they incentivizing energy conservation, in a way that might help us reduce our dependence on natural gas and lengthen the supplies? And I think there are some interesting messages in this latest report, which was issued to an electric association that basically gave some suggestions about how to conserve our natural gas, I think, there’s some reasonable questions about whether the utilities and Chugach Electric Association, that’s the Anchorage utility, are really acting on.

CG: Yeah, and I mean, that’s not just rhetoric, right? I mean, it’s not just people suggesting, “Hey, maybe we can use more wind power or more solar, or whatever renewable stuff and conserve energy. There’s actually, you know, some basis for that opinion, right?

NH: Well, it’s really interesting. Basically, they sort of lay out several versions of the future. One version of the future is we do nothing to conserve gas, and we don’t manage to lock in any of these large-scale renewable electricity projects that are currently under development anytime soon. Another version of the future, Chugach Electric Association pulls off two of these really big renewable projects, wind and solar projects, in the next couple of years, they find a way to minimize increase in demand, we don’t have widespread adoption of things like electric vehicles and heat pumps that really would drive up our use of electricity, and that actually lengthens the amount of time before we have a gap and a need to bring in imported natural gas by five years. And I think, you know, to me, as a reader, I look at that report, and I’m like, “Wow, five years before I have to see a 10 to 15% increase in my utility bill, like that’s a pretty important takeaway. I think for for Chugach and for some folks in the utility industry, they are much more focused on, “Hey, we know that we’re going to have to do this at some point, and it’s going to take a long time, and we’re a little nervous about it. So we are focused on doing this now and communicating that we have to do it.

CG: So just getting back to like this debate about what Chugach and other other utilities that use natural gas should do. The advocates that are saying, “Hey, we should be thinking more about renewable energy here in the meantime,” why do they think that Chugach is maybe not moving quick enough in that direction?

NH: I think the whole debate here is really a question of emphasis. I think the executives and board members at Chugach know that members want them to move toward renewable energy. I think the culture of utilities is a very, sort of, conservative culture and a culture that really doesn’t necessarily find it easy to embrace a wholesale change in the way that you do business, which is, for decades, we have just pumped natural gas out of Cook Inlet, burned it in these plants and used it to fill our needs. And it’s been really good. Changing that to mixing in renewables and incentivizing energy conservation, where as most utilities, I think, have a culture of trying to build their customer base, like, that’s a really hard thing to embrace, I think, if you’ve been sort of in this model for decades. And I think the folks at the utilities want to do that, but they also are rightfully anxious about, “Are we going to have the infrastructure we need to keep the lights on?” And that’s their first priority. They say that they’re working on these things, like all of them, as fast as they can, but I think you can look at the situation and say that effort is just being put in other places right now.