MEA's integrated resources plan, prepared under contract by CH2M Hill, indicates the cost of operating the 100-megawatt circulating fluidized bed power plant at roughly $60 per megawatt. The plan is available on MEA's Web site, www.mea.coop. Previously, MEA released only the report's executive summary.

Utility consultant Mark Foster puts the cost, in 2015 dollars, at a much higher figure.

“A reasonable estimate of the long-run levelized cost of electricity that incorporates more detailed and current costs information, including estimates of future carbon dioxide emissions costs, is more likely to be in the $130 to $175 per megawatt range (in 2015 dollars),” Foster said in a report commissioned by Pete Houston, president of the MEA Ratepayers Alliance, a grassroots group opposed to the coal plant.

“If the current coal-fired power plant project is pursued, it could cost the MEA member owners hundreds of millions of dollars more than resource options (natural gas, biomass, wind and end-use energy efficiency) that are available in the Alaska Railbelt over the planning horizon for a major new power plant,” Foster said in a cover letter to Houston that accompanied his report.

“In addition, given low customer density and a high proportion of outages due to distribution system failures, MEA's concerns about reliability may be better addressed by tree trimming, distributed generation, and improved coordination with other utilities rather than a 100-MW coal-fired power plant,” Foster said.

MEA spokesman Tuckerman Babcock said he had read Foster's report. “Some parts of the analysis are based on real factors and others are way out there,” he said. “I was very disappointed by the lack of sophistication in his report.”

“The idea that there should be a range of potential costs for the coal plant is a sensible suggestion, but most of it is far out there,” he said.

Babcock also said that staff was recommending to the MEA board of directors that the entire integrated resources plan be released immediately. MEA had refused through June 11 to release to the public anything but the executive summary, on grounds that the utility was waiting for Chugach Electric Association to release its own new integrated resource plan. At this point, Babcock said, “we have despaired of getting Chugach Electric to come out with a new IRP.”

Foster, a utility and pipeline consultant, has had a long-term interest in the Alaska utility business, beginning with his senior report as a civil engineering student at Stanford University: an economic analysis of the Susitna hydroelectric project.

His credentials include serving as an engineer at the Chena Power Plant for the Fairbanks Municipal Utilities System, president and chief operating officer of the Anchorage Telephone Utility Long Distance, vice president of product development for Anchorage Communication Systems, and as a commissioner on the Alaska Public Utilities Commission. As an APUC commissioner, Foster participated in reviewing the Railbelt utility wholesale power contracts and rates. He also served as president of the Western Conference of Public Service Commissioners and was a member of the National Association of Regulatory Utility Commissioners, Finance and Technology Committee.

Foster said that if other individual electric utilities on the Railbelt were to act in the same manner as suggested by the MEA plan, “MEA member owners could find themselves with significant excess capacity coupled with take-or-pay coal contracts — all of which could lead to MEA member owners paying excessive electric rates for under-utilized generation assets that carry long-term debt and coal contract obligations.”

Foster's report also said that the MEA integrated resources plan appears to unduly discount the strategic value of buying electricity from a regulated utility, in this case Chugach Electric Association, acting as a consolidator of demand compared to MEA building, owning and operating its own power plant. In fact, MEA has enjoyed low rates associated with regional grant-supported capital projects, including intertie transmission facilities, the Bradley Lake and Eklutna hydroelectric projects, he said. MEA has also benefited from Chugach Electric's extended debt refinancing, without direct exposure to the attendant risks of carrying the debt on its own balance sheet, the report said.

“In exchange for giving up the benefits of buying wholesale from a regulated utility, MEA appears to be planning on negotiating directly with unregulated fuel suppliers,” he said. “It is difficult to imagine a scenario more favorable to coal and gas suppliers than each utility splitting itself away from a larger purchasing group (whether under Chugach Electric, Golden Valley Electric Association, a joint action agency or a unified system operator) to enter directly into individual negotiations with fuel suppliers, which appears to be MEA's strategic direction outlined under its plan,” the report said.

Foster also questioned whether local generating capacity would significantly improve system reliability.

“At the public presentation in Palmer, MEA representatives suggested that a recent outage associated with the transmission system could have been avoided if they had a local power plant,” he said. “It appears that the outage referenced at the public meeting was due to inadequate coordination of maintenance activities with other utilities and could easily have been avoided.”

Rather than assuming that the reliability benefits associated with locating a power plant are sufficient to justify ignoring other opportunities, a more prudent approach would be to quantify the value of those reliability benefits and compare the total cost of service associated with a local power plant to the total cost of reliable service for power resources adjacent to or along the Railbelt transmission system, Foster said in his report.

MEA's Babcock there isn't a coal plant in the United States that costs as much the estimates in 2015 dollars given in Foster's report. “He's picking out of thin air what the CO2 costs will be,” Babcock said.