Conversions:Rural Alaska Energy Supply

Chainspresented to

Rural Alaska Energy ConferenceSeptember 2002

Steve ColtInstitute of Social and Economic Research

University of Alaska Anchorageemail steve_colt@uaa.alaska.edu

Electricity in PCE Communities

• Serves about 78,000 people• with 5,400 kWh per person per year

Source: PCE FY00 statistics

Three Questions

•Where does rural Alaska electricity come from?

• Why does it cost so much?• What can we do about it?

• Urban Alaska electricity comes from– natural gas– hydro– (and coal)

• Rural Alaska electricity comes from– Diesel ! (and hydro)

Generation in PCE Communities by Source –

Hydro

12%

Diesel

88%

Total = 425 million kWh/yearor 48 MW average outputSource: PCE FY00 statistics

Three Questions• Where does rural Alaska electricity

come from?

•Why does it cost so much?

• What can we do about it?

Electricity in PCE Communities

• Serves 78,000 people• with 5,400 kWh per person per

year• using 360 gallons diesel per person

per yr• that costs about $390 per person

per year

Fuel Cost per kWh: Anchorage vs. Rural Alaska

2

9

0

2

4

6

8

10

cent

s pe

r kW

h

Anchorage high-wind communities

Rural diesel electricity comes from:

• Fossils• Crude Oil• Diesel at Refinery Gate (Anacortes

WA, Richmond WA, Nikiski AK)• Diesel at Barge Dock• Diesel in Tank Farm• Electricity at Powerhouse• Electricity in home

Components of Utility Diesel Cost

• Crude oil = $.35-.55 • Refining = $.25 • Bulk Barge = $.10-.30 • Inland Transport = $.00 - $1.00• Bulk Storage = $.10-.20

• Total = $.80 - $2.30

Actual Range of Fuel Costs

King Cove, City of Quinhagak Togiak Perryville, City of Chauthbaluk Noatak

0.5

1.0

1.5

2.0

2.5

3.0

$ p

er

Ga

llo

nPCE Recipient Communities

Box Plot - Median, Upper & Lower Quartiles, Outer Fences, Outliers

Source: FY96-FY00 PCE Annual Report 0ct 01 Oct. 22, 2001 11:47:46 AM

crude

29%

refiner

16%

inland

32%

storage

10%

barge

13%

NonFuel Cost per kWh

8

27.5

0

5

10

15

20

25

30

cent

s pe

r kW

h

Anchorage AVEC

Nonfuel cost includes

• Generators (machines)• Distribution lines and meters

(equipment)• Operations, Maintenance and

Management (people)

Total Non-Fuel Cost per kWh Sold vs. kWh SoldFirm Level Data - Unfilled Panel

$0.000

$0.200

$0.400

$0.600

$0.800

$1.000

$1.200

$1.400

$1.600

$1.800

$2.000

0 10000000 20000000 30000000 40000000 50000000 60000000 70000000

kWh Sold

$ p

er

kWh

APC

AVEC

BethelUnalaska & Nome

THREA

Naknek

Nonfuel cost per kWh for small rural utilities

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

$2.00

0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000

kWh Sold

$/k

Wh

Village Non-Profit

Village For Profit

Regional Non-Profit

Regional For-Profit

Kotlik-99

Kotlik-97

Kotlik-98

Tuntutuliak

AVEC

Arctic Village

Pedro Bay

Napaskiak

Venetie

True Cost of Electric Service to PCE Communities: $116

million/yr

Booked Fuel26%

Booked O&M33%

Booked Capital15%

Off Book Capital Grants9%

Off Book Subsidized Interest

16%

Off Book O&M1%

Three Questions

• Where does rural Alaska electricity come from?

• Why does it cost so much?

•What can we do about it?

What can we do?• Reduce fuel use?

– Yes! Save 9-18 cents per kWh

• Eliminate generators?– Maybe….Save 0-5 cents per kWh

• Reduce Distribution Equipment?– No. (at least not now…) 5-10 cents per

kWh

• Save OM&M Expense (people)?– Probably not…5-20 cents per kWh

Electricity Goes to:

• Light, sound, heat, appliances, TV, computer– Efficiency of conversion matters!

How do We Do It?

• Invest – • in 3 kinds of capital

Three Kinds of Capital

• Physical Capital – generators, wind turbines, distribution lines

• Human Capital – people with the right skills in the right place at the right time

• Social Capital – communities and utilities that work together to sustain the electric system

Rural Energy and Jobs

• The conventional energy system supports significant employment.

• Little of the total cost goes out-of-state

• About 75% of rural energy project dollars flow to urban areas. (weatherization)

We’re all in this together.

View this show after Thursday 9/19 at:

www.iser.uaa.alaska.edu

~The End