Fire Island Wind Power

For 15 years, Chugach pursued and assessed wind resource potential and development throughout its service territory, including Fire Island. Necessary studies were completed over the past several years to evaluate the impact of Fire Island Wind on Chugach's system and consumers. These efforts resulted in agreement with Fire Island Wind to purchase the output of its wind project located on Fire Island (Anchorage area map).

Fire Island Wind originally proposed a 52.8 MW wind farm to provide power to the entire Railbelt.  The project was ultimately sized to provide energy solely to the Chugach service area. Fire Island Wind expects the project will maintain a capacity factor of 31.5%, provide an average output of 5.5 MW, and produce 48,500 MWh per year.

Chugach requires approximately 9 billion cubic feet of natural gas per year to meet its retail requirements.  Purchase of wind energy is expected to reduce gas consumption up to 300 million cubic feet, or 3% of Chugach's long-term annual gas requirements.

Fire Island is connected to Anchorage via a double circuit 34.5 kV sub-transmission line. The sub-transmission line is comprised of submarine, overhead and underground segments. The bulk of the transmission line was paid for with a $25 million grant from the State Legislature in 2008. This grant was specifically for the purpose of building a transmission line to Fire Island.

Wind power is different from Chugach's other sources of power in that it varies depending on the wind.  The Fire Island Wind Project provides Chugach with the experience of integrating a variable energy resource into our power supply portfolio. The knowledge Chugach is gaining by dispatching this resource increases our opportunities to provide stable, responsible and diversified energy in the future.

For more information on the project, construction and wind generators visit, Fire Island Wind LLC's website:  www.fireislandwind.com

On October 10, 2011, the Regulatory Commission of Alaska approved a 25-year Power Purchase Agreement (PPA) between Fire Island Wind, LLC, a subsidiary of Cook Inlet Region Incorporated (CIRI), and Chugach Electric Association.  Over the term of the PPA Chugach pays a fixed price of $97 per megawatt hour ($0.097 per kilowatt hour) for power made available by Fire Island wind generators.

Wind power acts, along with other largely fixed-priced resources like Bradley Lake and Cooper Lake hydro-electric power, as a counterbalance against significant fluctuations in the price of natural gas needed to supply the bulk of Chugach's electric energy.  This pricing arrangement helps stabilize Chugach's cost of electric energy.

The cost of Fire Island wind power is recovered from Chugach retail members.  Currently the price is higher for wind power than it is for power provided by other sources, such as natural gas generation and hydroelectricity.  This is typical of new generation resources.  For example, power from the Bradley Lake hydroelectric facility initially cost more per kWh than Chugach's other sources but now is among the lowest cost resources on the Railbelt.

Fire Island wind is approximately 4% of Chugach's retail kWh sales. Its total annual cost is expected to be $4.7 million.  Unlike gas-fired resources, the cost is stable for 25 years, serving as a hedge on potential gas price increases.  Chugach pays $0.097 per kWh for power made available by Fire Island and, on average, slightly more if unable to take all the available power from the project (e.g. due to power dispatching needs).  This compares to the approximately $0.055 to $0.060 per kWh for power from other sources.

The table below illustrates the impact of Fire Island wind on an individual retail member's monthly bill for each customer class.  The line item below "FIW Renewable Energy Adj." identifies the additional cost of Fire Island wind on a per kWh basis.  It represents the difference between the average cost of electric energy from Chugach’s other resources and the cost of Fire Island wind energy.

For example, the total bill for a typical residential customer using 650 kWh is $91.50 (using rates effective Q4 2012) including the cost of Fire Island Wind.  Fire Island Wind adds $1.13 on the total bill, or approximately 1.2%.  This difference fluctuates over time based primarily on the cost of natural gas for Chugach’s other resources and Fire Island is expected to cost less than other gas-fired resources in the future.

Members may look to their monthly Chugach billing statement for the actual cost impact of Fire Island wind based on their actual monthly usage.

As a purchaser of Fire Island wind power, Chugach earns a Renewable Energy Credit (REC) for every Megawatt hour of wind energy produced.

RECs represent the environmental and other non-power attributes of renewable electricity generation and are a component of all renewable electricity products, according to the Environmental Protection Agency.

In cooperation with CIRI, the Fire Island wind generation units are registered with North American Renewables (NAR) Registry in order to track and manage the RECs generated by Fire Island Wind, which are then transferred to Chugach. These RECs may be sold on wholesale and/or retail markets and applied to help cover the costs of Fire Island Wind.

If you would like more information about Fire Island Wind RECs, or are interested in purchasing RECs, please e-mail: smartpower@chugachelectric.com.