Alaska’s capital city has a second electric utility after a decision by state officials this month, although the new concern faces some initial hurdles in getting online.
The Regulatory Commission of Alaska approved an application from Juneau Hydropower Inc., or JHI, to become an electric utility on June 11. The decision requires Alaska Electric Light and Power, previously Juneau’s sole electricity provider, to help connect the new utility to the grid. But Juneau Hydropower must finance and build its proposed hydroelectric project before its federal license expires, or the commission will revoke its approval.
The decision comes after more than a decade of equipment and ownership disputes between the new utility and AEL&P over what’s called interconnection — the point where electricity from separately owned facilities joins to supply power through the same transmission line. The two companies will now have to work together to bring a new hydroelectric project online. The proposed project at Sweetheart Lake would grow Juneau’s renewable energy capacity by 19.8 megawatts. That’s enough to increase the borough’s hydroelectric capacity by nearly 20%.
AEL&P’s total hydroelectric capacity is 102 megawatts. The Snettisham Hydroelectric Plant operated by AEL&P currently supplies two-thirds of Juneau’s electricity and has a capacity of 78.2 megawatts.
Duff Mitchell, the managing director at Juneau Hydropower, says his project will increase energy security in Juneau in the event of a natural disaster. There was a two-month outage in 2008 when an avalanche hit multiple electric towers and took out about a mile of the Snettisham transmission line. Mitchell says the project will also help the city flourish.
“There’s going to be energy security for the future needs of Juneau, whether it be air-source heat pumps, electric cars, dock electrification or just growth and prosperity for Juneau,” Mitchell said.
The commission approved a service territory where Juneau Hydropower can deliver electricity that includes the stretch from Lena Point through Berners Bay.
To shuttle power there, the company must build several pieces of infrastructure including a hydroelectric plant at Sweetheart Lake, a switchyard near Mist Island to connect Sweetheart with Juneau’s existing transmission line, and an additional transmission line from AEL&P’s Lena substation to the Kensington Mine more than 30 miles away. The company also plans to build a substation at Echo Ranch Bible Camp near Berners Bay to serve potential future customers and a battery energy storage system.
But to complete the work, Juneau Hydropower needs money and has limited time. The commission made its approval conditional on both.
Juneau Hydropower has to file proof that it has secured enough funding for the project, which is estimated at about $265 million dollars, before it builds. Construction must begin by Sept. 8, 2026, and finish three years later — deadlines that match the new utility’s Federal Energy Regulatory Commission license restrictions.
Mitchell says he’s moving as quickly as possible to make this happen.
Financing Energy
The commission exempted the company from a requirement that a utility must serve 10 or more customers. So far, Juneau Hydropower’s only contracted customer is the Kensington Mine, which is projected to use 8.5 megawatts of electricity. The gold mine currently powers its operations with diesel.
Mitchell says that other potential customers have indicated a desire to receive electricity from Juneau Hydropower, including the Alaska Department of Transportation and Public Facilities, Goldbelt Corp., Grande Portage Resources, GreenSparc, Alaska Energy Metals Development Corp., Alaska Communications and Rainforest Telecom.
But Mayor Beth Weldon says she is skeptical that Juneau Hydropower can build a reliable customer base.
“I’ve said all along that they have to come up with year-round customers, and right now, we don’t have, other than Kensington, there’s no year-round customers,” Weldon said.
Alec Mesdag is the CEO at AEL&P. He says that he doesn’t think Juneau Hydropower’s proposed project is financially viable.
“They have one customer versus our 18,000 customers,” he said. “So it’s an incredible burden to try to recover all of the revenue you need from one customer.”
Juneau Hydropower proposes to pay for most of the hydropower project through federal and state loans from the U.S. Department of Agriculture Rural Utilities Service and the Alaska Industrial Development and Export Authority (AIDEA), the public agency that owns Snettisham. The loans have not yet been approved. Mitchell says he will also rely on federal investment tax credits, which the company hasn’t earned yet.
Those uncertainties prompted a comment from the commission. “We are concerned about JHI’s lack of loan approval,” the commission wrote in the decision. “However, it would not be just or reasonable for us to require JHI to have approved Sweetheart financing in order to be granted a certificate when JHI has been told it must have a certificate in order to get financing approval.”
Mitchell says he is confident that he will be able to secure funding by the September deadline.
The Interconnection Point
The point where new development at Sweetheart Lake will connect to the Snettisham transmission line, called the Mist Island switchyard, is where the largest disputes have erupted between AEL&P and Juneau Hydropower.
Last month, Mayor Weldon brought a resolution to the Juneau Assembly supporting AIDEA’s ownership of the switchyard. But the commission decided Juneau Hydropower is to own it, writing that AIDEA will instead own a motor-operated bypass switch so that power would still flow from Snettisham to AEL&P’s customers in the event of a catastrophic failure at the Mist Island switchyard.
Still, Mesdag insists that the switchyard would be capable of interrupting power from Snettisham to Juneau in the event of a failure.
Mesdag wrote in an email to KTOO that AEL&P is “deeply disappointed in the commission’s decision regarding interconnection, which sacrifices the security of Juneau’s most important generation resource to instead accommodate a small group of private investors that has never built, owned, operated or maintained electric generation or transmission infrastructure.”
Juneau Hydropower is contracting with Ameresco, a company that builds energy infrastructure, and David Burlingame, an electrical engineer with companies based in Anchorage, to design, build and maintain the project. The commission wrote that relying on contractors doesn’t indicate a lack of technical expertise on Juneau Hydropower’s part.
Juneau Hydropower must file interconnection and joint-use use agreements with the commission by June 25. AEL&P has until July 11 to appeal the decision.
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