Southern Intertie Benefit/Cost Studies
prepared January 19, 2003 by Alan Mitchell - Former State Utility Consumer Advocate (1990), now Senior Manager of Economic Analysis at GCI. PDF version
1 - Railbelt Intertie Reconnaissance Study, funded by Alaska Power Authority, June 1989
Railbelt Energy Projects were analyzed, including interties, energy
efficiency programs, and a natural gas pipeline from Anchorage to
Fairbanks. The Southern
Intertie was shown to be uneconomic and had the worst benefit to cost
ratio of all eight projects analyzed.
2 - Economic Feasibility of the proposed 138 kV Transmission Lines in the Railbelt, funded by Railbelt Utilities, Dec 1989
with the results of the APA Reconnaissance Study, the Railbelt Utilities
hired the same consulting firm, Decision Focus Inc. (DFI), to reanalyze
the intertie projects. Astonishingly,
the benefit estimate of the Southern Intertie increases by a factor of 2.6
relative to the study six months prior.
3 - A Review of "Economic Feasibility of the ...", funded through Utility Consumer Advocacy contract, Feb 1990
North, who held the Utility Consumer Advocacy contract at that time,
reviewed the Utility-funded study (2).
4 major method errors (including a $25 million arithmetic error)
plus additional questionable assumptions were identified.
The review concluded that the Utility-funded study grossly
overstated the benefits of the Southern Intertie project and that the
Southern Intertie does not justify its cost.
4 - Ratepayer Impacts of Proposed Transmission Projects, Feb 16, 1998, funded by Chugach Electric, held Confidential until Dec 2002
having received poor quality information on the impacts of the Northern
Intertie on Chugach from Chugach management, the Chugach board wanted to
make sure they had accurate benefit/cost information about the Southern
Intertie before spending ratepayer dollars.
Once again DFI was hired (at the suggestion of Chugach management)
to perform the study. Contrary
to recent statements by Chugach management, the study analyzed benefits
for all Railbelt utilities. DFI
claimed then and still claims now that this study is more accurate than
prior studies. The
study showed that the benefits of the Southern Intertie are substantially
short of its costs, when all costs are considered (including state-funded
costs). Chugach kept this
study confidential, for obvious reasons, until a former Chugach board
member resisted legal intimidation by management and demanded its release
in November 2002.
study was used in the EIS process for the Southern Intertie. The study was
not a new study; it was an update of the '89 Utility study, accounting for
changes in fuel prices and changes in the need and cost of new generating
capacity. Although this study
was published after (4), the Secret Study, the consultant states that the
work was actually performed prior to the Secret Study.
The benefits shown in this study are 2.5 times as high as those in
the Secret Study (4). Again,
DFI states that the Secret Study is the more accurate study.
Study history table (Chugach Consumers) Detailed Southern Intertie event chronology