Economic Report Questions Real Cost of Alaska’s Susitna Hydro Project

Cost of construction of a multi-billion dollar hydro project
with potential for supplying more than half the current electric demand for
Alaska’s Railbelt are questioned in a new report issued by Juneau economist
Gregg Erickson.
The report says that the project does not survive any
plausible market test, and that the Alaska Energy Authority substantially
underestimated the cost of the Susitna-Watana Hydro Project.
The AEA estimate of a $5.2 billion price tag for the project
excludes millions of dollars for new transmission facilities, as well as
yet-to-be negotiated costs of leasing or buying Alaska Native lands needed for
the project, Erickson said.
And the proposed in-state gas pipeline project and Susitna
hydro project are competing for the same market, Erickson said.

Emily Ford, spokeswoman for AEA, said that AEA has been
working on the necessary transmission upgrades and has identified improvements
necessary to achieve reliability standards and to achieve economic dispatch,
regardless of the project. AEA “has taken great strides to accurately reflect
costs, including two independent cost estimates,” said Ford. “For more general
presentations, we have focused on the most probable cost, but have publicly
presented the full probabilistic range and sensitivity analysis.”
While the state sees the project as a means of helping to
satisfy electricity needs of the growing Railbelt population, environmental
groups are concerned that the project might devastate salmon runs.
The report was contracted by the Alaska chapter of Trout
Unlimited and released by the Susitna River Coalition this week. The coalition
supports alternatives to large hydropower projects, which the coalition
contends would devastate wild runs of all five species of salmon in the Susitna
River, damage wildlife habitat, and result in job loss in visitor, recreation
and hunting economies.
“Our leaders have a clear choice to make,” said Mike Wood, coalition
“Do we invest in a natural gas pipeline or do we dam the
fourth largest king salmon river in the state. With budgets in decline, it’s
time for the state of Alaska to cut its losses and abandon the shortsighted
Susitna Dam project.”

The coalition maintains that newly hatched Susitna River
salmon would be harmed because the dam would create water flows as much as ten
times higher than normal all winter long, causing young salmon to constantly
struggle against greatly increased current in what are now slow steady water
flows. This stress to their metabolism would weaken the salmon, stunt growth,
and make them vulnerable to predators and disease, the coalition contends.