ACEP report details electricity costs in Fairbanks | Local news

Pride said County Hall commissioned the report in January 2023.

“We were interested in how much residents in the neighborhood spend on electricity and how that varies by neighborhood,” Pride said. “One of the main reasons the district was interested in doing this was to adjust the cost of living for our military families.”

She noted that military families stationed in Alaska’s interior spend a lot on energy costs, “and we want to make sure that’s factored into the COLA adjustment.”

The report, titled “Spatial Energy Load Analysis of the Fairbanks North Star Neighborhood,” was co-authored by Pride, Jesse Kaczmarski and Eric Trochim, with Kaczmarski as the lead author.

The analysis examines energy load, which is the percentage of annual income spent on residential energy services such as space heating and electricity.

“It’s a way of measuring how much households spend on energy consumption at home,” Pride said.

District residents spent 10.12% of their household income on energy and heating based on a weighted average. By comparison, the national average is about 3.1%, with households in the Pacific Northwest paying 2.3% due to abundant hydroelectricity.

“Burden is a good word regardless of income,” said FEDC Executive Director Jomo Stewart. “Even if it’s not as onerous because you have a higher income, those are still dollars that you might have spent on other things, savings, investments or starting a new business. Those dollars are no longer in your pocket.”

Pride said averages vary by census tract, from 6.65 percent at Eielson AFB to 16.33 percent in downtown Fairbanks.

She added that other factors determine individual cost burdens, such as household income and housing stock.

The data includes the cost of heating fuel, electricity provided by Golden Valley Electric Association, housing energy efficiency, household income and household behavior.

“As anyone in the area knows, we have really high energy prices and heating fuel — depending on the market — can be high,” Pride said.

Pride noted that much of the area’s housing stock was built during the construction of the Alaska pipeline with limited consideration for the climate of interior Alaska.

“We have an older housing stock that is not very energy efficient, and we have a very cool climate,” Pride said. One example is downtown Fairbanks, which has one of the oldest housing stocks and limited household incomes.

Pride said ACEP used data from the district’s GIS database to get the building’s size, age and location. It cross-references the Alaska Housing Corporation’s 2017 Energy Analysis and other sources to create a linear timeline.

The analysis states that energy costs have doubled since 2017.

“One of the biggest takeaways was that the initial estimate of energy load in 2018 was 6.5%, which I could see when analyzing the data, but now it’s 10-12%,” Kaczmarski, lead author, said in August.

Households in the area spent an average of $982 on heating and $3,284 on electricity. Pride warned that the percentages depend on the region.

“Downtown Fairbanks has the highest rate because we think a lot of the households are quite old and we’re not sure if they’ve had energy-efficient retrofits,” Pride said. The small population of the center also distorts the average household income.

Fort Wainwright also had a high energy cost burden, averaging 12.62% for households.

Mike Kraft, a wind farm developer, noted that the cost burden is associated with the 66-year-old combined cycle plant and the Army Post’s distribution system.

“The environmental study we did a few years ago was terrible for this underground system, as was the efficiency of this plant,” Kraft said. “It just increases their costs.”

Several factors guide the analysis

Rising space heating costs are a driving factor as heating fuel prices have soared over the past seven years.

According to Community Research Quarterly, natural gas heating costs alone have decreased by 10.3% since 2017. Heating fuel jumped by 2.94%, wood pellets by 14.2%, spruce firewood by 16.8% and birch firewood by 24.2%.

Pride said the study had its limitations, including the homes and buildings’ lack of improved energy sources or weather conditions, lack of rooftop solar panels, which homes have heated or unheated garages and average annual space heating prices.

She added that ACEP had to “de-identify” the information it collected from the district’s GIS database for privacy reasons. Information about rooftop solar could also clarify data on electricity prices.

“If you generate your own power, you’re going to buy less power from the utility,” Pride said.

Other factors include the lack of excess “cheap” power that GVEA can purchase from utilities in south central Alaska. GVEA has standard power purchase agreements with utilities for up to 70 megawatts of natural gas-fired electricity that it transmits up the Alaska Line; however, when excess capacity is available, GVEA may purchase it at a lower cost.

The combined natural gas crisis at the Cook Inlet and the severe cold snap in early February severely limited that option as Southcentral utilities were forced to prioritize their customers. Even then, GVEA had to supply some power needs for Southcentral utilities during a freezing February.

GVEA gets about 17% of its electricity from the Bradley Lake Hydroelectric Plant near Homer. Other sources include the Eva Creek Wind farm, a 563-kilowatt solar farm and 25 megawatts of purchased electricity from Aurora Energy’s coal-fired plant on Second Avenue.

However, its largest local sources are the Healy coal-fired power plants and local diesel plants in Fairbanks, North Pole and Delta Junction.

In 2022, GVEA generated 42% of electricity from coal and 33% from diesel and oil. The cooperative plans to diversify its energy balance in the future to obtain up to 47% of wind-generated electricity through power purchase agreements. GVEA originally planned to shut down the troubled Healy No. 2 power plant by the end of this year, but postponed that due to uncertainty over future natural gas supplies from the Cook Inlet.

Lisa Cassino, vice president of public affairs for Usibelli Coal, said area residents would pay an additional $245 million if coal-fired power plants did not power the region. She said that includes the combined heat and power plants at the University of Alaska Fairbanks, Eielson AFB and Fort Wainwright.

“Coal really plays a significant role in keeping electricity rates affordable and reliable,” Cassino said. She added that this should be considered “as the conversation continues to move away from solid base power.”

“Without coal in the mix, energy prices for businesses, clinics and households will increase significantly,” Cassino said.

While GVEA has outlined a plan to generate more electricity through renewable projects, its strategic generation plan recognizes the need for stable — or constant — baseload capacity. The utility’s initial goal was to purchase an additional 30 to 50 megawatts of natural gas from Southcentral utilities.

In February, GVEA postponed the closure of Healy Plant 2 indefinitely due to the natural gas crisis. In September, the company and Uzibelli signed a new coal supply contract with increased purchases. The updated terms include a provision that allows the utility to reduce purchases if any Healy power plant is out of service. The new agreement is valid until December 31, 2029.

The utility’s commitment to increasing renewables also relies on installing a state-of-the-art battery energy storage system (BESS) to help manage variability. GVEA’s current BESS system is 20 years old and takes up to 24 hours to restart after discharging stored energy to help during large-scale power outages.

Additionally, the US Army is exploring options to replace the 66-year-old Fort Wainwright Coal Station due to its age; it has broken down four times in the past few years.

Amry’s final environmental report initially supported installing natural gas boilers around the Army post and purchasing additional electricity from GVEA; the Army is also exploring potential geothermal resources. The final decision is expected in early 2025.

Uzibelli also questioned why the district funded the report but adopted a climate change adaptation plan “that will ultimately increase the cost of energy for our community.”

While the plan will guide the district’s policy decisions about the buildings it owns, taxpayers could shoulder the costs associated with the policy, she said.

Pride cautioned that ACEP’s analysis was not released until August, and the data was not available when the Assembly debated the climate plan.

The Climate Change Adaptation Action Plan is a guidance document with recommended actions for the district to implement or adapt to climate change plans. The Assembly initially voted against the 2023 version, but adopted an amended version in late June.

However, any of his policies require funding to implement, a decision that ultimately rests with the Assembly.

Pride said energy load analysis can help guide usage policies, such as eligibility criteria for assistance programs and recommendations for weather/energy efficiency programs. It can also drive equality and equity initiatives and inform policy goals.

Pride said improvements in energy efficiency and weather conditions are prime examples.

“The cheapest energy is the energy you never use,” Pride said.

Stewart, executive director of FEDC, agreed that the report is another tool for neighborhood organizations.

“At FEDC, we’ve been big supporters for a long time of things like the federal weatherization program, which helps low-income households and seniors,” Stewart said. “Energy efficiency always pays off, it’s just a matter of time.”