News Miner, 1/27/91
By Fred Pratt
The crowd at the
Northern Alaska Environmental Center is always telling us that it's
better to conserve energy than build new power plants (or anything else
for that matter).
Now that a state
study says a three-part conservation program is not only feasible on
a cost-benefit basis, but just as feasible as the proposed gas pipeline
from Cook Inlet to Fairbanks.
The study was part
of the effort being made by the Alaska Energy Authority for its proposed
Healy "Clean Coal" power project, which flunked all the cost-benefit
While the studies
already cover a good-sized shelf, they are reviewed succinctly in a
new legislative research report released this week.
There's a lot of
good stuff in this report, but today I'll cover just the conservation
In the "Railbelt
Intertie Reconnaissance Study" written in 1989 by Decision Focus
Inc., all the various suggested AEA projects are subjected to a cost-benefit
analysis. The study was the first in a series required by the legislature
to justify the Healy project.
First the consultants
broke down oil price projections for the next 20 years into low, middle
and high scenarios. The low forecast assumed oil prices of $13 a barrel
this year rising slowly to only $19 a barrel by 2010. The high forecast
saw $19 a barrel by 2000 and $30 a barrel in 2010.
Then the consultant
made low, middle and high forecasts for electric power demand growth
in the Railbelt. The low and middle forecasts expect declining or relatively
flat demand through 2000, while the high forecast saw steady growth
two sets of assumptions gave nine different scenarios for the next 20
forecast was judged the most probable, with a 30 percent chance of coming
true. The low oil price and medium power demand growth was considered
next most probable, with a 23 percent chance.
The consultant then
analyzed the costs and benefits from the Healy project, as well as other
proposals, including upgrading transmission lines, the Railbelt gas
pipeline, and other coal-fired plants.
The result was that
the most cost-effective program would be a $10 million upgrade of the
Anchorage-Fairbanks power intertie, which would bring savings of four
times its cost.
Next best is the
Railbelt gas pipeline, which would cost $284 million in a version slightly
smaller than the one proposed by Enstar several years ago. It would
have a cost-benefit ration of 1.86, slightly less than half as good
as the power line upgrade's 4.0.
Third came the three
best of the eight proposed conservation programs. They would cost $16
million and yield savings of $28 million, the consultants figured, for
a cost-benefit ration of 1.75.
Last came a package
of all eight conservation programs. They would cost $44 million and
yield $61 million in savings.
What are these conservation
programs? Most are rebates the state would pay to businesses that sell
or install eligible equipment, rebates supposedly passed on to consumers.
The programs were
dreamed up and evaluated by the University of Alaska's Institute of
Social and Economic Research. They are:
1. $500 for converting
residential hot water heaters from electric power to natural gas;
2. $40 for buying
an electric hot water heater with an efficiency of more than 95%;
3. $170 for installing
gas piping to a residential clothes dryer and $50 for buying a gas clothes
4. $50 for buying
a refrigerator that's at least 28 percent more efficient than required
by new federal appliance efficiency standards;
5. $50 for buying
a freezer that's at least 35 percent more efficient than new federal
6. 30 cents to $1.80
for buying energy efficient fluorescent lamps;
7. $13 for each
electronic fluorescent ballast, the "starter" for fluorescent
8. $7 to $12 for
compact fluorescent lamps; and
9. A rebate for
exceeding conservation standards in new commercial construction.
figured that 6, 7, and 8, the lighting group, would generate nearly
60 percent of the expected savings. They threw out No. 5, the freezer
rebate, in later analysis.
However, ISER figured
the program would have to be maintained for 20 years to yield the full
seven percent savings it projected in electric power demand, and the
savings would disappear over the next 20 years as the incentives end
and we go back to "normal" buying patterns. A 10 year period,
considered more politically realistic, was used in the later cost-benefit
That's the problem,
of course. Sooner or later we'll still need new generating capacity.
Research Report 91.025 is available at the local Legislative Information