State may not fund
Connelly Lake

By Jessica Edwards

The Alaska Energy Authority has recommended the state legislature fund only half a $988,000 grant request for Alaska Power and Telephone’s Connelly Lake hydroelectric project, but unless additional money is appropriated, the project won’t get anything.

AEA also denied a $1.4 million grant request for a geothermal project at Haines Assisted Living facility.

State lawmakers are expected to make phase two grant awards to top-rated projects totaling $25 million by June 30.

AP&T president Bob Grimm said this week that less funding won’t derail the utility’s plans for a hydro plant above Chilkoot Lake. “It means the project will go forward, but a lot slower,” Grimm said.

The company will have to seek financing or commit its own funds to make up the difference, he said. AP&T will respond to community concerns about Connelly Lake in the coming months, he said.

“The community wants a lot of information on the project and we need to start developing it because of those concerns,” including misunderstandings about effects on fish and concerns about earthquakes, he said.

Grant awards in phase one totaled $100 million, and included $125,000 for a wood heat feasibility study in Haines and $288,000 to the Chilkoot Indian Association for construction of a central wood heat system for its new subdivision.

AP&T’s Connelly Lake hydro did not make the cut among the top thirty projects totaling $25 million, the amount designated for funding the second round of projects.

AEA officials this week said there’s a possibility more than $25 million would be appropriated for grants before next week’s end of the legislative session, and there also will also be more rounds of grants from the agency.

“AP&T can go ahead with the project with their own funds, they can apply for another grant in round three (in late summer), or they can do something else,” said AEA grant manager Butch White.

In its second round of renewable energy grants, AEA ranked 118 projects on qualities such as technical and economic feasibility, regional energy costs, project readiness, and economic benefits. It recommended 30 projects for full funding.

Connelly Lake was among 28 projects ranked in a second tier recommended for full or partial funding if the state should decide to dedicate additional funds over $25 million. HAL’s geothermal grant was among 58 projects denied.

AEA said projects recommended for partial funding were seen as viable, but might have project construction schedules later than 2010, or were expensive, high risk or had insufficient documentation to warrant full funding.

AP&T’s grant request would have funded initial design and permitting for the proposed hydroelectric storage project in the Chilkoot River valley north of the lake.

AP&T electric manager Danny Gonce said energy costs in Southeast Alaska likely played a role in Haines funding recommendations. “A lot of that is because a vast majority of Southeast gets cheap power.”

AEA funding recommendations by region show Southeast Alaska projects set to gain 3 percent of total funding in the second round of grants. In round one, Southeast was awarded 16 percent of the $100 million pot.

Gonce said if the legislature chose to grant half funding, $422,000 would allow preliminary inquiry into the Connelly Lake hydro’s feasibility.

“We can start certain parts of the research with the studies that are the biggest bang for the buck,” said Gonce. “I don’t know, but I imagine they’ll start on some habitat stuff.”

Haines Assisted Living board president Jim Studley said the organization hadn’t met to determine a “plan B,” but said he wasn’t ready to give up its plans to develop geothermal technology at the facility.

“We still think it’s a viable option. We’ll just need to look at different options for financing.” Studley said HAL’s goal is to develop heating systems at the facility that weren’t reliant on fossil fuels.

            In geothermal power systems, electric pumps circulate water down into the ground through a series of pipes, where it is heated by temperature differences between ambient air and under ground.