Wednesday, December 10, 2014

Economic Report Questions Real Cost of Alaska’s Susitna Hydro Project

Cost of construction of a multi-billion dollar hydro project with potential for supplying more than half the current electric demand for Alaska’s Railbelt are questioned in a new report issued by Juneau economist Gregg Erickson.

The report says that the project does not survive any plausible market test, and that the Alaska Energy Authority substantially underestimated the cost of the Susitna-Watana Hydro Project.

The AEA estimate of a $5.2 billion price tag for the project excludes millions of dollars for new transmission facilities, as well as yet-to-be negotiated costs of leasing or buying Alaska Native lands needed for the project, Erickson said.

And the proposed in-state gas pipeline project and Susitna hydro project are competing for the same market, Erickson said.

Emily Ford, spokeswoman for AEA, said that AEA has been working on the necessary transmission upgrades and has identified improvements necessary to achieve reliability standards and to achieve economic dispatch, regardless of the project. AEA “has taken great strides to accurately reflect costs, including two independent cost estimates,” said Ford. “For more general presentations, we have focused on the most probable cost, but have publicly presented the full probabilistic range and sensitivity analysis.”

While the state sees the project as a means of helping to satisfy electricity needs of the growing Railbelt population, environmental groups are concerned that the project might devastate salmon runs.

The report was contracted by the Alaska chapter of Trout Unlimited and released by the Susitna River Coalition this week. The coalition supports alternatives to large hydropower projects, which the coalition contends would devastate wild runs of all five species of salmon in the Susitna River, damage wildlife habitat, and result in job loss in visitor, recreation and hunting economies.

“Our leaders have a clear choice to make,” said Mike Wood, coalition president.

“Do we invest in a natural gas pipeline or do we dam the fourth largest king salmon river in the state. With budgets in decline, it’s time for the state of Alaska to cut its losses and abandon the shortsighted Susitna Dam project.”

The coalition maintains that newly hatched Susitna River salmon would be harmed because the dam would create water flows as much as ten times higher than normal all winter long, causing young salmon to constantly struggle against greatly increased current in what are now slow steady water flows. This stress to their metabolism would weaken the salmon, stunt growth, and make them vulnerable to predators and disease, the coalition contends.

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