Strategic Generation

On June 27, 2022, Golden Valley Electric Association’s (GVEA) Board of Directors held a special meeting to take two actions. The first was a vote to adopt a plan surrounding GVEA’s future generation, the second was a decision on the retirement or extension of Healy Unit 1.

During the meeting, the board approved the installation of selective catalytic reduction (SCR) emission controls on Healy Unit 1. Under the terms of a 2012 Consent Decree with the Environmental Protection Agency, the board was faced with the decision to retire the plant, or to invest $26.1 million to add the emission controls by December 31, 2024. This decision ensures that Healy Unit 1, which is one of GVEA’s most reliable and low-cost electrical generation sources, can continue operating beyond 2024.

The board also adopted a strategic generation plan. The plan consists of the following components that were identified through extensive modeling as the best ways to maintain rates and reliability for all members:

  1. GVEA to install a selective catalytic reduction system on Healy Unit 1;
  2. GVEA’s management team to develop a comprehensive plan within 90 days for the systematic retirement of Healy Unit 2 by December 31, 2024;
  3. GVEA to develop and issue a Request for Proposal for a large-scale wind resource Power Purchase Agreement within 60 to 90 days;
  4. GVEA to expeditiously move forward within 90 days for the purchase and installation of a new Battery Energy Storage System of a minimum size of 46 megawatts /184 megawatt hours; and
  5. GVEA to secure a Purchase Power Agreement from southcentral Alaska utility/utilities or from southcentral gas producers/suppliers for the equivalent of 30 to 50 megawatts of energy to be transmitted up the Alaska Intertie.

This adopted strategic generation plan is the result of 18 months of extensive review of GVEA’s generation portfolio by the board, employees and supporting consultants. During this review, all viable options, the potential implications, and the associated risks were considered resulting in the analysis of over 120 different generation scenarios.

Members of GVEA’s board of directors are elected representatives of the membership, and are therefore responsible for making strategic, fiduciary decisions in the best interest of all members. During Monday night’s meeting, details of the analysis and modeling were explained. While the strategic generation review originated because of the Healy 1 decision, it became evident that the board needed to consider legacy decisions that encompassed the entire system. Because generation decisions are interconnected and impact rates, reliability and the environment, the analysis looked beyond GVEA’s immediate needs and the board focused on a future vision for the system as a whole.

The modeling results shared during the meeting gave an overview of the data considered in developing a strategic plan to ensure reliable electric service at fair and reasonable prices into the future, while also helping to reduce GVEA’s carbon output. The reduction of carbon makes progress toward the board’s 2019 Carbon Reduction goal and is essential for sustainable business development in interior communities.

With regard to Healy Unit 2, the board directed management, in collaboration with staff, to proceed with developing an implementation plan during the next 90 days which would address opportunities available for Healy employees – including jobs within GVEA, training, skill building and transitional services. The plan will also explore opportunities for collaboration with the Denali Borough. It is expected that the retirement of Healy Unit 2 will take at least 30 months. This comprehensive plan will be shared with both employees and members once finalized.

The decision to retire Healy Unit 2 comes after years of effort to improve reliability. The plant, which was built in the 90s as a demonstration plant, has never performed as anticipated despite the incredible efforts of employees and contractors. It is recognized that investments of time and money cannot continue when there are other technologies and opportunities available.