North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Efforts to restart the $300 million state-owned Healy Clean Coal Plant Project got a major boost recently when the Alaska Legislature earmarked $12.5 million for the project in this year's capital budget.

Senate Bill 231, which is currently awaiting Gov. Frank H. Murkowski's signature, authorizes the Alaska Industrial Development and Export Authority to spend the funds on startup of operations at the 50 megawatt Healy project. The money is part of $74 million-plus in the Railbelt Utility Fund that lawmakers divvied up for capital projects among electric utilities in Alaska's Railbelt communities. The Healy plant, built with federal and state funds, is 78 miles southwest of Fairbanks.

AIDEA hired Homer Electric Association last year to study restarting the 50 megawatt power plant and to manage the operation once it is up and running.

Homer Electric is currently negotiating a power sales agreement with AIDEA after completing a favorable review of the project over six months beginning in October 2005.

"We are actively working with AIDEA to reach an agreement, and we fully support the Legislature's appropriation and hope the governor will sign it," Homer Electric spokesman Joe Gallagher said May 22.

Plant has troubled history

The Healy plant, completed in 1997 after two years of construction, has struggled to come to life. Hampered by environmental permitting delays, extended tests, design changes and litigation by its original power purchaser, the project experienced a 50 percent cost overrun that brought total spending to $297 million.

Fairbanks-based Golden Valley Electric Association, the original power purchaser and operator of the plant, opted out of the project a few years ago and is currently embroiled in litigation with AIDEA. Golden Valley said the plant is "fatally flawed," describing it as too costly to operate and not able to meet reliability and safety standards.

AIDEA, which is responsible for $85 million of the plant's costs, is eager to restart the facility. AIDEA officials told Congress last year that the Healy plant can be restarted for about $20 million. The authority has not revised its estimate since, though "we know more now than we knew then," AIDEA spokeswoman Becky Gay said May 22.