Governor vetoes funding to develop 459-MW Susitna-Watana hydroelectric

Susitna-Watana financing

Alaska Governor Bill Walker announced June 29 that he had vetoed $1.29 billion from the budget bills passed by the 29th Alaska Legislature, and one casualty was financing to develop the 459-MW Susitna-Watana hydroelectric facility and dam.

According to the Governor’s office, “Since the legislature passed the budgets for fiscal year 2016 (July 1, 2015 to June 30, 2016) and fiscal year 2017 without any way to pay for them, Governor Walker used his veto authority to protect the state’s primary savings.”

Gov. Walker indicated the state has a $4 billion deficit and “drawing down from limited savings to fund the budget is not a viable plan.” He said he will “make sure Alaskans get a sustained permanent fund dividend.” The PFD, or Alaska Dividend, is a small, yearly dividend paid by the state government to every citizen who lives in Alaska. It is financed indirectly from oil revenues and is intended to ensure every Alaskan benefits from the state’s decision to exploit its oil resources.

In addition to the vetoes, Gov. Walker ordered a stop to $250 million of spending on transportation projects.

“Closing down” the Susitna-Watana Dam work was only one action included. Others included reducing the appropriate for oil tax credits by $400 million, reducing department spending by $38 million and reducing education funding by $58.3 million.

Alaska Energy Authority, which is in the midst of the Federal Energy Regulatory Commission permitting process for Susitna-Watana, is working to preserve the investment made in this project, according to Katie Conway. During FY 2017, AEA will finalize study reports, collect final data and remove equipment from the field.

Just under a year ago, we announced that a spending thaw allowed FERC pre-licensing studies for the project to resume.

Susitna-Watana is proposed for development on the Susitna River. It would include construction of a roller-compacted-concrete dam 705 feet high that impounds a reservoir 42 miles long and 1 mile wide. The powerhouse would contain three 153-MW turbine-generator units (exact size of these units may change as a result of further transmission system studies). The powerhouse will be constructed with an extra empty generating unit bay for the potential installation of a fourth unit in the future, per the project website. Electricity would be transmitted via the existing Railbelt transmission system, and the project would generate 50% of the current Railbelt electric demand, according to the project website.

Anticipated cost of the project is $5.19 billion, including licensing and construction.

The facility is anticipated to generate 2.8 million MWh of electricity annually. Economic benefits include estimated energy cost savings of $11.2 billion in 2014 dollars, average annual employment of 1,300 and direct spending of $3.4 billion in 2014 dollars.

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