The Integrated Resource Plan For the Alaskan Railbelt A Rational Economic Plan for the future

1. The Integrated Resource Plan For the Alaskan Railbelt A Rational Economic Plan for the future December 9th, 2009 James S. Strandberg, P. E. Alaska Energy Authority RIRP Program Manager

2. A Rational Plan for the Railbelt • The looming future • Economic uncertainty • Aging generation • Traditional fuels more expensive and becoming scarce • A time for decisions – and actions • By Railbelt Utilities and the State of Alaska The Alaska Railbelt IRP

3. A Rational Plan for the Railbelt • Railbelt residents need • Plentiful, reliable, power supplies for consumers at stable, predictable prices • To provide this, Railbelt Utilities need • Access to reliable, long term, wholesale power supplies at stable prices The Alaska Railbelt IRP

4. A Rational Plan for the Railbelt • To achieve long run controlled economic development • Maintain our Alaskan quality of life The Alaska Railbelt IRP

5. A Rational Plan for the Alaska Railbelt • A few words on the national trend towards embracing renewable energy futures You may see some of these trends as you view the Alaska Railbelt Integrated Resource draft plan. The Alaska Railbelt IRP

6. A Rational Plan for the Alaska Railbelt • The performance of many technologies follows an S-curve, when years of slow gains precede rapid improvements that eventually flatten out at a physical limit. Wind and geothermal power appear to be entering their most fruitful phase, while fossil fuel power looks to be stagnating. Source: Mechanical Engineering Magazine, December 2009, Jeffry Winters, reporting on analysis by Melissa Schilling, Stern School of Business, New York University The Alaska Railbelt IRP

7. A Rational Plan for the Alaska Railbelt Energy cost versus cumulative R&D Spending – Wind Power Source: Mechanical Engineering Magazine, December 2009, Jeffry Winters, reporting on analysis by Melissa Schilling, Stern School of Business, New York University The Alaska Railbelt IRP

8. A Rational Plan for the Alaska Railbelt Energy cost versus cumulative R&D Spending – Geothermal Power Source: Mechanical Engineering Magazine, December 2009, Jeffry Winters, reporting on analysis by Melissa Schilling, Stern School of Business, New York University The Alaska Railbelt IRP

9. A Rational Plan for the Alaska Railbelt Energy cost versus cumulative R&D Spending – Fossil Fuel Power Source: Mechanical Engineering Magazine, December 2009, Jeffry Winters, reporting on analysis by Melissa Schilling, Stern School of Business, New York University Unit Costs of power increasing The Alaska Railbelt IRP

10. As the world turns, our energy future evolves before our eyes The Alaska Railbelt IRP

11. A Rational Plan for the Railbelt • Robust transmission • Diversified fuel supply • System wide power rates • Spread risk • State financial assistance • Regional planning • Wise resource use • Respond to large load growth • Technical resources • New technologies The Integrated Plan Embraces these concepts Our present Situation • Limited redundancy • Limited economies of scale • Dependence on fossil fuels • Limited Cook Inlet gas deliverability & storage • Aging G&T infrastructure • Inefficient fuel use • Difficult financing • Duplicate G&T expertise Transition Embrace our future together The Alaska Railbelt IRP

12. Some Definitions A Rational Plan for the Railbelt • REGA means “Railbelt Electrical Grid Authority” • GRETC means “Greater Railbelt Energy & Transmission Company” • RIRPmeans “Railbelt Integrated Resource Plan” Three Discrete Tasks • REGA study determined the business structure for future Railbelt G&T • GRETC initiative is the joint effort between Railbelt Utilities and AEA to unify Railbelt G&T • RIRPis the economic plan for future capital investment in G&T and in fuel portfolios that GRETC would build, own and operate The Alaska Railbelt IRP

13. A Rational Plan for the Alaska Railbelt • What is the Railbelt Integrated Resource Plan? Answer: • A plan for developing the Railbelt’s Electrical Grid to meet our energy future • Through phased construction of • New power generation • New transmission lines • New fuel portfolio projects The Alaska Railbelt IRP

14. A Rational Plan for the Alaska Railbelt • What kind of fuel and energy sources are considered? • Answer: • All viable energy sources • Natural Gas • Coal • Petroleum • Renewable Energy • Hydro energy • Wind energy • Geothermal energy The Alaska Railbelt IRP

15. A Rational Plan for the Alaska Railbelt • What kind of power plants are considered? • Answer: • Fossil fueled power plants • Coal • Natural gas • Petroleum • Hydro-electric power plants • Wind generators • Geothermal power plants The Alaska Railbelt IRP

16. A Rational Plan for the Alaska Railbelt How does the RIRP work with the proposed Railbelt Restructuring Initiative that is before the Legislature called GRETC? The Alaska Railbelt IRP

17. A Rational Plan for the Railbelt The Alaska Railbelt IRP

18. A Rational Plan for the Alaska Railbelt • The RIRP conforms with GRETC organizational Concepts • Transition the Railbelt to a fully functional G&T entity over a 10 year transition period • After year 10, provide all requirements power, to Railbelt distribution utilities • at a system wide rate • With equal reliability • From a diversified power portfolio The Alaska Railbelt IRP

19. A Rational Plan for the Alaska Railbelt • The RIRP is a tool for: • The G&T entity GRETC, as owner and operator of the network • The AEA, as a potential “banker”, or bonding entity • The Legislature, as a potential source of capital for GRETC. The Alaska Railbelt IRP

20. A Rational Plan for the Alaska Railbelt • The RIRP assumes • Formation of GRETC • Transition to unified operation within 10 years • Conclusions of B&V RIRP on GRETC: • While not impossible to pursue the RIRP without GRETC, it would be very difficult The Alaska Railbelt IRP

21. Evaluation Scenarios A Rational Plan for the Alaska Railbelt The Alaska Railbelt IRP

22. Potential Project Sites Devil Canyon Reservoir Watana Reservoir N High Devil Canyon Dam Watana Dam Devil Canyon Dam The Alaska Railbelt IRP 22

23. A Rational Plan for the Alaska Railbelt Susitna Hydroelectric Project The Alaska Railbelt IRP

24. A Rational Plan for the Alaska Railbelt • Results of the Railbelt IRP The Alaska Railbelt IRP

25. A Rational Plan for the Alaska Railbelt Scenario 1-B Source: B&V RIRP report – pg. 1-13 The Alaska Railbelt IRP

26. Conclusions – Preferred Resource Plan A Rational Plan for the Alaska Railbelt • DSM/EE Programs (2011) • Anchorage and GVEA MSW (2012) • Fire Island Wind (2012) • Southcentral Power Plant (2013) • Glacier Fork Hydro (2015) • Nikiski Wind (2017) • Anchorage Simple Cycle Turbine (2018) • GVEA Combined Cycle (2020) • Parallel pursuit of Chakachamna/Susitna/Glacier Fork • Multiple transmission projects The Alaska Railbelt IRP

27. Results – DSM/EE Resources A Rational Plan for the Alaska Railbelt Source: B&V RIRP report The Alaska Railbelt IRP

28. A Rational Plan for the Alaska Railbelt Conclusions – Financing the Future Source: B&V RIRP report, Seattle Northwest Securities The Alaska Railbelt IRP RIRP Plan 1A Capital Expenditures and Debt Capacity of the Railbelt Utilities

29. Conclusions – Regional or Individual Utility Future A Rational Plan for the Alaska Railbelt Source: B&V RIRP report The Alaska Railbelt IRP

30. A Rational Plan for the Alaska Railbelt Schedule for completing the Railbelt Integrated Resource Plan Technical Conference – December 10th, 2009, Captain Cook – Black and Veatch RIRP Project Manager Mr. Kevin Harper and members of consultant team will explain the results of Railbelt Integrated Planning to the public. • Public Comments accepted to January 6th, 2010. • Final Report to be issued on January 13th, 2010. The Alaska Railbelt IRP

31. A Rational Plan for the Alaska Railbelt Acknowledgements AEA Co-Project Manager Mr. Bryan Carey Prime Consultant: Black & Veatch Mr. Kevin Harper, P. E. Mr. Myron Rollins, P. E. Susitna Hydro Project Consultants HDR, R&M Consultants Mr. Robert Butera Railbelt Grid Stability/Wind Integration EPS Mr. Dave Burlingame, P. E. Financial Analysis Seattle Northwest Securities Mr. Jeb Spengler, Mr. Richard Schober Review and technical Support The six Railbelt Electric Utilities staffs Consultation and Advice The Railbelt Utility Board Task Force Governor’s Office Support Mr. Joseph Balash AEA Executive Director Mr. Steve Haagenson AEA technical support Ms. Sherrie Siverson Ms. Shauna Howell Mr. Chris Rutz The Alaska Railbelt IRP

32. A Rational Plan for the Alaska Railbelt On behalf of the Alaska Energy Authority, thank you for your time and attention. James S. Strandberg, P. E. RIRP project manager Questions??? The Alaska Railbelt IRP