Alaska Energy Policy: An Exchange (RPS in the balance)

By Kassie Andrews -- September 26, 2024

“There is no management-of-change transition plan that shows how we can effectively move from one energy source to another responsibly. Is it green? Is it ethical? What is the risk? What is the benefit?  What is the cost? What are the metrics of success? Is it even achievable? Will forcing Alaskans to pay the price for all of this have any [climate] effect whatsoever?”

Ky Holland is running for Alaska State House in District 9, Anchorage (South Anchorage), Girdwood, Whittier.  Running as an Independent, he supports a Renewable Portfolio Standard (RPS). With RPS legislation imminent in the upcoming session, I wanted to know where Holland stood on this bill of goods specifically.

Be warned: the green lobby is working overtime to mandate unreliable and expensive sources of energy on Alaskans. While Ky’s opponent, Republican Lucy Bauer, has stated she will oppose an RPS “as it is currently being proposed,” my exchange with Holland unmasks why he believes mandates are needed. It is certainly not economics or the self-interest of the state. It is Green Ideology, the climate agenda above all.

Here is the exchange to follow the lines of reasoning.

Andrews to Holland (Sept. 13, 2024)

I’m curious about your stance on energy, specifically on whether or not you would support a bill for Renewable Portfolio Standards. 

Holland to Andrews (Sept. 15, 2024)
Re: Energy – yes I support the RPS. I understand some are concerned about the mandates and costly penalties and whether we will fund the investments needed to get to the standards avoid paying the penalties. Those concerns are reasonable, but my understanding is that there are plenty, perhaps too many, ways to get around the standards and avoid ever paying any penalties. 

Personally, I support the conclusions from the NREL studies and recommendations for achieving the lowest cost and highest reliability for our energy needs based on a significant shift to renewable energy with a gas-powered base load capability. I’ve attached one of the reports. Perhaps one day not needing gas will be achievable, but the NREL path seems like a solid next step in avoiding other decisions that commit us to higher energy costs, and delay reducing greenhouse gas emissions. 

Andrews to Holland (Sept. 17, 2024)
I have major concerns with a Renewable Portfolio Standard (RPS).  It is my understanding that the primary reason for the “energy transition” is to reduce carbon dioxide (CO2) emissions.  This is the first assumption that needs to be questioned.  If the overall goal is to abate CO2, RPS policies have proven to be ineffective. There seems to be no known budget tied to any metric for the ever-changing social cost of carbon, which is another topic in itself.

One estimate I have read is on the order of $128B to transition Alaska to a renewable energy future by 2050. [Link]  This transition can only be accomplished through government subsidies and a mandate to do so.  Mandates exist for one reason only and that is to “fix” the market by allowing the government to step in and override economics decision-making.

The needs of the co-op members are represented by elected boards. We are seeing a shift in the priority of these boards with reliable and affordable energy taking a back seat to the priorities of “decarbonization”.  I am looking for a representative to ask why boards are negating their fiduciary duty by relying on the state to create a demand for something via heavy-handed regulation, but I cannot seem to find anyone who cares.  Overall, is this about “saving the planet” or something else? 

The forecasted increase in the cost of natural gas as shown in the NREL report you provided are self-inflicted wounds due to the lack of sound energy policy.  Our co-ops and the NGOs have colluded over the past 15 years or longer by prioritizing “decarbonization” above all. How does a co-op justify extensions or new gas contracts when they’ve committed to aggressive decarbonization targets?  They can’t. 

The report claims “growing challenges due to the declining supply of natural gas.”  The decline is manufactured by errant public policy and not the result of geology or economics.  We do not have a gas shortage, we have a surplus of gas regulation and thus a contract shortage.

The study does not include experts in the field(s), the producers that currently provide two thirds of the Railbelt electricity demand.  This report and plan for a mandate in our electricity is one side of the story as it relates to something so important for Alaskans: firm, reliable, best-cost energy. Government intervention in this case is the complete opposite of this. 

Where is the cost analysis between energy transition to 100% renewables as stated and dropping royalties to allow Cook Inlet development? Nowhere does this study assess natural gas availability. It just assumes a cost savings from not buying fuel and buying renewable energy power at a rate better than the utilities can get because the power purchase agreement is an outcome given to the RCA vs. a rate case settled by the RCA. 

This happens when you allow independent power producers to be wholesalers direct to the new state entity (legislation enabling this passed last session).  This puts the utility on the hook for the reliability of the IPP, which means you will have to buy more contingency to avoid paying for unmet generation, this is just one way members will see increased costs which our co-op boards will then be able to point to the new laws as justification rather than incompetence or negligence.  

The NREL study appears to favor wind and solar as the preferred option, stating as much in the executive summary.  Wind and solar are completely dependent on the weather, meaning they are 100% unreliable.  To your point, the gas-powered base load would be the backup for this.  The IPPs should pay for this backup, not the members.  This mandate will prematurely displace base load generation, which is another example of how members will see increased costs.  Eventually, our co-ops will be nothing more than a beat down billing function unable to meet operation and maintenance budgets due to loss of revenues from the IPPs.

An assumption in the report is estimated population growth of 4.5% from 2021-2040.  This is counter to current trends.  What happens if the population shrinks by this amount?  How much population shrinkage can exist before it is decided traditional generation is the most effective?

I would like to get your thoughts on energy sprawl, the environmental impacts of wind and solar, and what happens when this stuff wears out at the same time.  Absent in the NREL report are estimates of material to achieve this goal, x amount of steel, concrete etc. Where is all of this material going to come from, and how much will it cost if these industries also require “decarbonization”?  Will we soon hear the terms Peak Minerals, Peak Metals and Peak Money?  Can this be replicated again given current known reserves of required materials?

I’d also like to know your thoughts about the reality that Alaska is and can continue to be self-sufficient for decades, if not centuries with our own coal, natural gas and oil resources based on proven reserves.  We do not have to be beholden to anyone for our energy security; however, nearly all of the materials required for the transition will be imported from countries like China, who are completely exempt from committing industrial and economic sabotage on themselves. 

I say this because I do not see energy transition enthusiasts clamoring for the production of these resources in our own country and state.  The insult-to-injury here is how these materials are sold to us – China exploits other countries, the environment and commits human rights abuses in horrific fashion to make this happen, negating any and all perceived benefits of the transition.

On your focus, under the RPS conditions to achieve the transition, the only end result is spending too much public money and endless increases in rates for members.  Is reliability at reasonable cost not primary?  Logically and responsibly, the preferred model to be adopted here in Alaska would be a Reliable, Affordable Portfolio Standard.

Let us not adopt the failing model of the Renewable Portfolio Standard.  We should immediately transition to a Reliable Portfolio Standard.  Alaska’s residents and businesses absolutely expect and depend on the latter.  A Reliable Portfolio Standard is the lifeblood of our state; a Renewable Portfolio Standard is the lifeblood of the special interest rent-seeking profiteers (aka crony capitalists).  

The only stakeholder to a representative is their constituents.  In the run-up to all of this, I’ve witnessed NGOs included as stakeholders, but they are not.  As your prospective constituent, I would greatly appreciate equal consideration as the activist NGOs that are not your constituents such as NREL, REAP, Pacific Environment, Earthjustice etc.  It has been my experience that these have been the only voices in consideration as they’ve been invited to write legislation and support damaging legislation against Alaskan’s wishes.

This is not time for partisan politics as usual; this is a turning point where I and many others I know can support you.  We need you to protect all Alaskan’s energy infrastructure.  This gravely concerns me.  I am asking you to include me in the conversation.  How can I help?

Holland to Andrews (Sept. 17, 2024)

You’ve given me a lot to think about. I’m preparing this morning for a candidates’ forum at the Chugach electric Association with their employees. Your thoughts are very helpful as I consider the different sides of this issue, but I don’t pretend to be an expert on all of the many different facets of this problem, though I’m interested in learning more, and one of the benefits of being a legislator is the access to information and feedback like what you’ve provided, debates and discussion, and additional information and resources that I look forward to if I win the election. But even if I don’t win, I look forward to being a more informed citizen and continue the community development and economic development work I’ve been doing.

I won’t be able to do justice to all of your thoughts this morning however I want to acknowledge three key assumptions that I currently hold approaching these issues. 

1. The cost impacts of climate and weather related damage to people and our infrastructure in Alaska and across the country is the more important and significant cost compared to the development of renewable power. Saying that I acknowledge that that’s an assumption that I perhaps need to explore in more detail to back that up, but it is based on my assumption that the climate is changing, creating more frequent and more severe weather events, and threatens the lives and the economy of future generations and we have an obligation to do what we can now to reduce the cost on the future generations. https://www.imf.org/en/Blogs/Articles/2023/12/05/benefits-of-accelerating-the-climate-transition-outweigh-the-costs
2. The cost of energy to consumers and to business owners is an equal factor to reliability, and of course unreliable energy is going to be more expensive. (That’s why I think the NREL recommendation of about 80% transition to renewables is more realistic than other states that have had an RPS goal of 100%.) Particularly in Alaska, the cost of energy is an essential aspect to the affordability and success of our economy. I do acknowledge that the contribution of subsidies to the infrastructure cost make the true cost of the power less clear, but at this point, it’s clear that any of the future fossil fuel solutions have the same set of assumptions of buying down the infrastructure cost, such as the possible gas pipeline that is only economical with significant subsidies, or the drilling additional of wells in Cook inlet that are also only going to happen with additional subsidies and tax credits. Personally, if I have to subsidize projects, I’d rather subsidize projects that have a lower and more stable operating cost long-term and have a benefit to reducing greenhouse gas admissions, with the result of making some contribution to offsetting future cost paid by Alaskans in the future.
3. The population of Alaska and even the Anchorage metropolitan area has been going down in a trend that is opposite from forecast made only eight years ago. It’s my goal and the purpose of my running as a legislator is to develop the economic opportunities for the next generational Alaskans, that result in our population returning to a growth trajectory, and to consider the possibility that climate changes in the rest of the country will put significant pressure on northern regions, including Alaska to accommodate greater growth as people are driven north to areas that are more hospitable, have access to supplies of clean water, and are not at risk of more frequent severe weather events, and their costs. 

I’m will have to get back to the prep work for the events today, but I’ll continue reflecting on your thoughts and come back and reread it later after the candidate forum when I may have some new perspectives and insights from the questions that I get there. It’s been very helpful to get the information you’ve sent. You’ve given me some good issues to consider for the meeting today with your pushback on the RPS and focus on the importance of reliability.

I think it’s also important for me to note that I do support oil and gas and have no plans to take action that hurts those industries. I see them as essential to our state and I also believe that there are many business development and economic opportunities that can be created from these industries. 

Andrews to Holland (Sept. 22, 2024)

On your first bullet point on the cost impacts of climate and weather-related damage being more important and significant cost compared to the development of renewable power:  I think we most certainly agree on this.  We were much too close to catastrophe than I think most people realize this last January during the cold snap.  It is hard to imagine the destruction of a blackout of length during subzero temperatures.  If not for the firm, clean and reliable power of Eklutna Hydro, it is possible we would have had a much different outcome.  The importance of reliability in cases like this past winter cannot be understated.

Looking back on the historic cold snap (coldest prolonged weather in over a decade) vs. the performance of Fire Island Wind at that time gives us a glimpse into the very risk to be avoided.

During the 7-day coldest duration period from January 28th to February 3 (Anchorage Airport), the average capacity factor of Fire Island Wind was 20.3%.  100% unreliable, when we needed it most.

	Fire Island Wind (17.6 MW)
Date	MWh	Daily Capacity Factor
28-Jan	72	17.0%
29-Jan	41	9.6%
30-Jan	27	6.5%
31-Jan	68	16.0%
1-Feb	–	0.0%
2-Feb	129	30.4%
3-Feb	264	62.5%

On emissions concerns, Alaska’s total of 41 million metric tons of CO2 released in 2022 compared to the US total of 6,343 mm tons, or less than one tenth of one percent (0.00650.  Globally, Alaska represents about one hundred of one percent of the total (36,100 mm tons).  This is equivalent to a mosquito’s fart in a hurricane.  Reduction in Alaska’s emissions is not going to change the climate.  Under plans to reduce emissions, it is a double whammy for Alaskans where we will pay a particularly high price because of transport, industry and energy use requirements.

I would like to see protective legislation put forward for Alaskans from what I view as a threat to our way of life.  The reality is that for the foreseeable future, a high carbon future is a way of life for Alaskans.  I do not think that we should be apologizing for it or sacrificing our industry, our economy, liberty, prosperity, or freedom to achieve it either. 

As I touched on in my first email, given known reserves, the transition from fossil fuels is impossible.  This is an effort in futility, to no known effect to the climate but what we do know is that it will come at great cost and risk.  My concern is not about propping up or the protecting of particular industries, however I must say that the petrochemical industry is critical to all sectors.  We can point to countries like Germany as an example of what happens when gas supplies are compromised.  Exporting our energy to the primary emitters is celebrated meanwhile we are expected to absorb the cost to offset their emissions?

Energy is not all that is at stake here.  Economy of scale and security of supply chain of the petrochemical industry and defense is essential and non-negotiable.  We must look at the totality of all of this.  There is no management-of-change transition plan that shows how we can effectively move from one energy source to another responsibly.  Is it green?  Is it ethical?  What is the risk?  What is the benefit?  What is the cost?  What are the metrics of success?  Is it even achievable?  Will forcing Alaskans to pay the price for all of this have any effect whatsoever?

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Kassie Andrews is a Principal at MasterResource who regularly comments on Alaska energy policy.