Utilities along Alaska’s Railbelt could soon be united under one umbrella organization.
Representatives from all five Railbelt utilities and other stakeholders submitted an application Friday to the state’s regulatory agency to be that group — or electric reliability organization — which would oversee a joint set of standards and coordinate project planning between co-ops from Homer to Fairbanks. The applicationwas submitted seven years after the agency highlighted the need for more coordination between utilities.
David Thomas said it’s kind of like putting together a book of rules for the road. Thomas is the director of strategic services for Homer Electric Association and is the cooperative’s representative to the group that applied, called the Railbelt Reliability Council.
“So these new rules are more comprehensive, now mandatory and with penalties, and cover a wider range of participants in the future," Thomas said.
Formal coordination among utilities is a new concept in Alaska.
The Regulatory Commission of Alaska oversees public utilities’ rates and approves contracts. But it doesn’t oversee some of the more technical rules of the road. And right now, a lot of those rules are just informal agreements between utilities. Furthermore, there are no enforcement mechanisms to hold utilities to those standards.
The RCA took issue with that decentralization. In 2015, it sent a letter to lawmakers outlining the need for Railbelt reform, pointing to inefficiencies in projects that spanned service areas and disjointed reliability standards.
At the same time, the energy landscape in Alaska has become more complicated. There are more players today than there were before, like independent power producers — private companies that sell electricity to cooperatives. One independent power producer is considering building a large solar farm on the Kenai Peninsula and selling the power it generates to HEA.
And Thomas said there are more complicated factors at play, too, like threats to utilities’ cybersecurity.
“We are perhaps only as secure as our weakest link," Thomas said. "There are physical and cybersecurity standards that we currently follow on a voluntary basis, which will become more detailed and will become more mandatory in the future.”
In 2020, the Alaska Legislature passed a bill to pave the way for the existence of a Railbelt-wide organization.
That’s when the Railbelt Reliability Council started meeting. The group is made up of representatives from utilities, like HEA, as well as representatives from private companies and the state.
Julie Estey, with Matanuska Electric Association, chairs the group. She said it had its first meeting in July 2020.
"And since then we’ve been working to put together things like bylaws, processes and governance structures," she said.
That’s not to say all members of the council agreed every step of the way.
Some members of the group came to the table with fundamentally different interests, which Thomas said is why the application sometimes goes into excruciating detail about the intricacies of the cooperative efforts. No group wanted to be left out.
“There was heartfelt discussion, frequent arm-wrestling and occasional mediation to get to the endpoint of having unanimous agreement to submit the application," Thomas said.
Twenty months after the group started meeting and 300 pages of application materials later, the group submitted its roadmap for Railbelt-wide cooperation to the RCA.
The RCA now has six months to review the group’s application to be the coordinating force. Estey said she’s not aware of any other applications that will be submitted.
Estey said rules are one part of the equation. The organization will also work on coming up with a plan for how the utilities can meet their loads' needs.
“So all of these things are common in the Lower 48," Estey said. "Because our system didn’t require it until now, it’s been more informal. But all these processes will be formalized so we can really be a cohesive group in not necessarily how we manage, but how we grow and what it looks like.’
Thomas said the co-ops are footing the bill to pay for research and hire staff. He estimates a $500,000 price tag for HEA in 2023 and roughly $1 million each year after that.
He said one way to pay for that would be a line item on ratepayers’ bills, estimating an extra $1 a month for the average household.
“To draw an analogy — hiring a police force and having a court system to enforce the rules of the road is not free," Thomas said. "But hopefully it oversees a uniform playing field, fairness and encourages more people to play by the rules than if those systems weren’t in place.”
He said the direct financial benefit to ratepayers is hard to quantify. But the hope is that developing a roadmap for the utilities could help with economies of scale. And if the utilities are all putting their heads together, they could work on larger, more ambitious projects down the road.
