PUBLISHED: 7:04 PM on Wednesday, November 5, 2008
Haagenson to roll out new energy plan Dec. 1
State energy Czar Steve Haagenson says he'll roll out a long-anticipated statewide energy plan Dec. 1 and kick off a series of meetings to review the plan with municipalities, utilities and Alaska Native regional corporations during December and January.

"The goals of the plan are to reduce the cost of energy, which will help strengthen economic development," Haagenson told a state renewable energy task force Oct. 21.

High energy prices extracted a lot of disposable income in Alaska, threatening the viability of several communities, Haagenson said.

Although oil prices have dropped recently, he worries that the decline is likely to be temporary and the state shouldn't relax its efforts to promote energy efficiency and alternative energy.

High oil prices were a real economic hemorrhage, he said.

"We've found $2.4 million a year is being taken out of Selawik," a small village in Northwest Alaska.

"In Fairbanks $460 million a year was being extracted," a serious threat to the local economy, he said.

The energy plan will serve as a blueprint for state investments in renewable and alternative energy, and improvements in efficiency of existing diesel-fueled energy sources where there are no practical alternatives, he said.

Haagenson heads the Alaska Energy Authority, a state corporation that manages several major state-owned energy assets like the Bradley Lake hydroelectric dam. He was appointed to the post by Gov. Sarah Palin after retiring as general manager for Golden Valley Electric Association, an electric co-op serving Interior Alaska.

The energy plan is in its final stages of development, Haagenson told the task force. It is being done on a regional and community basis, and community plans that are to be part of it will list local energy options along with estimated costs.

Many of the local energy options, mostly small hydro, biomass and wind, came out of 28 community meetings Haagenson and AEA staff had last year. The options have been screened by an internal technology committee within the AEA, Haagenson told the task force.

The plan also includes a first-ever compilation of energy consumed in rural communities, which is being done by the University of Alaska's Institute of Social and Economic Research. Information on electricity use in rural communities has been available for some time but the data assembled by ISER will include estimates for home heating oil and transportation fuels.

"What we're finding so far is that people pay more for heating oil than any other form of energy, which means we have to figure out ways to encourage conservation in the home," Haagenson said.

Most of the AEA's energy initiatives so far have been aimed at displacing diesel used for power generation with wind or hydro energy, although several of AEA's smaller projects deal with space heating with new-technology wood stoves.

It's tough to find an economical replacement for diesel or gasoline used as transportation fuels, and even for home heating in most communities using fuel oil.

The AEA is using an assumed long-term oil price of $110 per barrel to evaluate alternative energy projects for state funding, although the projects are also screened at a lower price of $70 per barrel. Actual oil prices have dropped rapidly in recent months, although costs are high in rural communities because of transportation and other factors.

Although they are not AEA projects, Fairbanks leaders are looking at a multi-billion dollar project that would make diesel and other liquid fuels from coal and biomass. The city of Galena has studied a much smaller version of such a project for that community on the Yukon River.

Haagenson told the task force that the large Fairbanks alternative liquids plant could make as much as 40,000 barrels a day of liquid products, which would far exceed local fuel demands, which reach a peak of about 10,000 barrels per day in winter. The rest of the plant's output could be distributed around the state, he said.

The state energy authority is also taking a new look at a Susitna River hydroelectric project, which was investigated extensively in the 1980s but then shelved when oil prices skidded.

Haagenson said he hopes that won't happen again.

"If we go to sleep again because oil prices are low, this thing (the impacts of high oil prices) will come back with a vengeance," when prices climb again, he said.

Legislators on the task force were supportive but at the same time cautious. Sen. Charlie Huggins, R-Mat-Su, said he was worried that Haagenson will get his plan into high gear before the state lays the groundwork with policy decisions.

Haagenson said he is concerned that he public is demanding action on energy and will be impatient if there's too much talk without visible action.

"I think if we do a plan the policies will flow out of it. For example, an obvious policy is that we'll get off diesel," he said, an idea that underlies much of what AEA is doing.

Huggins replied that the policy and the plan should be done simultaneously. On a national level, the ethanol subsidies are an example of what happens when the consequences of an action aren't clearly thought out.

Rep. Bryce Edgmon, D-Dillingham, asked Haagenson if any items in the energy plan will be included in Gov. Sarah Palin's fiscal year 2009 budget, which is to be released Dec. 15.

Haagenson said that will be too soon for specifics of the plan to be included in the initial budget.

Several legislators, including Rep. Anna Fairclough, R-Eagle River, and Sen. Joe Thomas, D-Fairbanks, urged Haagenson to include significant measures promoting energy conservation in the plan.

Even with recent sky-high oil prices, people still aren't getting the message on conservation and energy efficiency, Fairclough said.

"I watched those big flat-screen TVs roll out of Costco after the $1,200 energy rebate checks landed. I guess that's an energy conservation action. At least those use less power than the old TVs," Fairclough said.