Rural Alaska May Receive More Power Subsidies

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Today’s Key Takeaways:   Legislature votes to increase power subsidies to 194 rural Alaska towns and villages. Biden’s canceled lease sale brings criticism from Alaska. New FERC commissioner a consensus builder? Teck launches Zinc Satellite initiative. Judge says “no” to new Eagle River senate boundaries.


Alaska Legislature OKs increase to rural power subsidy (
James Brooks, Alaska Beacon, May 17, 2022

Residents of 194 rural Alaska towns and villages will get more of their monthly power bill subsidized by the state if Gov. Mike Dunleavy signs legislation approved Monday by the Alaska House of Representatives. 

On Monday, the state House voted 38-2 to increase the maximum subsidy allowed under the state’s Power Cost Equalization program. The bill passed the Senate on May 3. 

With the governor’s approval, the maximum amount of subsidized residential power will increase from 500 kilowatt-hours to 750 kilowatt-hours per month.

In 2020, the average American house consumed 893 kwh per month, according to the U.S. Energy Information Administration. 

In PCE-eligible communities, electric companies reduce the cost of power for homes, then apply to the Alaska Energy Authority for credits that bring the overall cost of power closer to the average of electricity in Juneau, Anchorage and Fairbanks.

The size of the subsidy has forced rural residents to drastically conserve power or risk a major hike in their electric bill if they go over the subsidized amount.

“You go to the communities at Christmas, and you wonder why there’s not that many lights on. It’s not because they don’t believe in Christmas or don’t have holiday spirit,” said Sen. Bert Stedman, R-Sitka.

Return to original compromise

When created in 1984, PCE was intended to serve as part of a grand compromise: Southeast Alaska would get state-funded dams, Southcentral Alaska would get subsidized natural gas, and rural Alaska would get PCE.

The program originally subsidized up to 750 kwh per month, but the Alaska Legislature reduced that figure in 2000 because of cost concerns. 

“We just want to get back to where we were on the program that was negotiated back in 1984,” said Sen. Lyman Hoffman, D-Bethel.

After the 2000 decrease, the legislature created an endowment to fund the program in perpetuity, and that endowment has grown to $1.1 billion. 

The PCE extension would increase spending from the endowment by as much as $15.6 million per year, but the endowment’s investment earnings are large enough to cover the cost, according to estimates provided by the Legislature.

Squeeze on community assistance

The drawback is that other programs could suffer. State law says that money not used for PCE — up to 5% of the endowment’s value annually — may be used on the state’s community assistance program, which provides general-purpose grants for local governments. 

Expanding PCE means less money available for that program and others, including a renewable energy grant program that also relies on extra PCE earnings.

“I feel a little bit like I’m between a rock and a hard place on this one,” Nils Andreassen, director of the Alaska Municipal League, told the House Finance Committee earlier this month.

Andreassen represents towns that rely on PCE, local governments that rely on community assistance and municipalities that need both.

Members of the Senate Finance Committee were told in April that an additional $320 million deposit into the PCE endowment would be needed to eliminate the risk to community assistance programs if PCE subsidies were raised.

“If we don’t make those endowments, then this would also take away the earnings for those additional programs,” said Sen. David Wilson, R-Wasilla.

Neither the House nor the Senate proposed an additional deposit into the PCE fund to address the problem.

More aggressive investing

The bill does contain a provision that allows PCE fund managers to invest the fund more aggressively, which could increase investment earnings and over time increase the amount of money available to spend. It would also increase the risk of losses in any given year. 

Previously, managers were told to target 4% returns; they will now be able to pursue all “prudent” investments, similar to the approach employed by the Alaska Permanent Fund.

Many legislators, including Sen. Donny Olson, D-Golovin, said the program’s expansion will help rural residents as they anticipate significantly higher home heating and fuel costs. 

“People can no longer live in rural Alaska where they were born and raised,” he said.

“Those people that can’t afford to live in rural Alaska … are going to be forced to move, and where are they going to move? They’re going to move to the cities. So, if you think the homeless population in the metropolitan areas is bad now, you ought to wait,” he said.


Biden’s canceled oil sale draws fire in Alaska
Heather Richards, Energy Wire, May 17, 2022

When the Biden administration canceled several planned offshore oil and gas lease sales last week, all eyes were on the heart of the offshore industry: the Gulf of Mexico.

But one of the three auctions struck would have offered waters in Alaska’s Cook Inlet, where the administration’s claim of “lack of industry interest” is being criticized by pro-oil politicians and industry groups.

Kara Moriarty, president of the Alaska Oil and Gas Association, said she wasn’t sure it was “fair” to assume industry was indifferent.

“The only way to gauge true industry interest is to hold the lease sale,” she said, noting that AOGA has filed public comments last year in support of the sale.

The decision sparked pushback from expected corners amid heightened partisan bickering over the Biden administration’s management of the federal oil and gas program during the current global oil upset. While the White House has accused the oil industry of not drilling more — keeping prices artificially high to boost profits — it’s also proved reluctant to expand access to federal oil and gas resources onshore and offshore, where it’s attempting to shift away from extraction in favor of conservation and recreation.

“Citing a ‘lack of industry interest’ is nothing more than fantasy from an administration that shuns U.S. energy production,” said Sen. Lisa Murkowski (R) in a statement with other Alaska leaders after the announcement.

The Cook Inlet basin is Alaska’s oldest producing oil and gas basin, first tapped in the 1950s and hitting a peak a few decades later as the state’s oil and gas industry shifted to the massive oil finds on the North Slope. But it’s not been a hot drilling location for some time.

The last sale in the inlet was during the Trump administration — that 2017 auction attracted one operator. The previous sale was two decades prior, with multiple cancellations in the intervening years due to low interest from oil and gas operators.

Asked whether Interior would respond to critics of the canceled Cook sale, Interior Department Communications Director Melissa Schwartz said, “We’ll let the long history of lack of interest in Cook Inlet speak for itself.”

Interior made the sale announcement last week in a surprise statement, after White House climate adviser Gina McCarthy noted it would not move forward in an email exchange with a CBS News reporter, the organization reported.

Larry Persily, a longtime oil and gas observer and former Alaska journalist, said a sale likely wouldn’t have mattered one way or the other.

“I don’t think the industry was drooling, clamoring, desperate for the leases,” he said.

But that’s not to diminish Cook Inlet as a niche producer for both natural gas and crude oil in Alaska, he said.

While it’s a declining resource, and a fraction of production compared to Alaska’s North Slope, Cook Inlet oil goes to a nearby refinery serving air travel and instate fuels. Perhaps more importantly, utilities in the region are “desperately dependent” on the inlet’s natural gas for heating and electricity, Persily said.

“It’s really important on the consumer side,” agreed Moriarty. “Almost all of the oil and gas produced in Cook Inlet — in fact, I think all of it — is utilized in state.”

To bid or not to bid

Most observers assumed that a lease sale could attract one bidder, Hilcorp Alaska LLC.

“Our guess is that only Hilcorp would have likely been interested,” said Liz Mering, advocacy director for Cook Inletkeeper, a local preservation group. “Hilcorp is the largest producer in Alaska at this point and the largest in Cook Inlet.”

The Texas firm was the sole bidder in the Trump-era sale in Cook Inlet, spending more than $3 million in bids for roughly 7 percent of the waters offered by the Bureau of Ocean Energy Management. The company has also been one of the sole bidders in recent sales in state waters in the Cook Inlet, which have also been modest.

Hilcorp did not respond to a request for comment by press time. The company is one of the largest privately held oil and gas companies in the country and recently acquired BP PLC’s onshore oil and gas assets in Alaska, making it a dominant force in Alaska’s oil industry.

Its interest in Cook Inlet, which started with a 2012 buyout of Chevron Corp.’s Cook Inlet assets, is credited with rejuvenating the otherwise declining resource play.

The proposed sale would have offered up to a fifth of the federal planning area in the Cook Inlet.

Mering, with Cook Inletkeeper, said in a statement last week that organizers were “thrilled” by the canceled sale, noting a grassroots effort to flood Interior with public comments asking for it to be canceled. Long a presence in the inlet, the oil and gas industry has been flagged as a potential threat to the endangered beluga whale population there. It’s also been responsible for several incidents, including substantial methane leaks from a Hilcorp pipe in 2017 and 2021.

Native Movement Climate Justice Director Ruth Łchav’aya K’isen Miller said the Biden administration should now expand its rejection of industry development in Alaska with more lasting protection on lands and waters.

“Tribes throughout [Tikahtnu], now called Cook Inlet, still honor and defend our thriving ecosystems and the strength of our interdependent place-based cultures,” she said. “It is clear to us that there will never be


FERC’s Phillips on gas, emissions and seeking consensus
Miranda Wilson, E & E News, May 16, 2022

In an interview, Commissioner Willie Phillips said he isn’t shying away from opportunities to work with the two Republicans on the Federal Energy Regulatory Commission.

When Willie Phillips joined the Federal Energy Regulatory Commission last December, some FERC watchers saw the appointment as an opportunity for Chair Richard Glick to advance his agenda.

But Phillips sees himself as playing a different role at the commission: a consensus-builder.

Phillips’ nomination by President Joe Biden — and confirmation by the Senate — gave the five-person, bipartisan commission a Democratic majority for the first time in over four years. His arrival at FERC also opened the door to reforming the process for permitting natural gas projects and addressing other high-profile issues.

Still, in a recent interview with E&E News, Phillips said he isn’t shying away from opportunities to work with the two Republicans on the commission.

For example, he issued a joint statement in March with Republican Commissioner Mark Christie concerning three natural gas projects’ greenhouse gas emissions, an issue that has otherwise often divided the commission along partisan lines.

“FERC works best when it works together. Consensus building is something I’ve done everywhere I’ve been in my career,” said Phillips, whose previous positions include utility regulator for the District of Columbia and assistant general counsel at the North American Electric Reliability Corp. (NERC). “I’m trying to do it here at FERC.”

In February, Phillips and two fellow Democrats, Glick and Commissioner Allison Clements, approved two policies changing the process for permitting new natural gas pipelines. Critics — including Sen. Joe Manchin (D-W.Va.) — lambasted the move as overly partisan and a threat to energy security.

The changes sought to compel natural gas project developers to account for the interests of landowners and environmental justice communities and reduce their emissions, establishing a first-ever threshold for measuring whether new facilities’ climate-warming emissions were significant (Energywire, Feb. 18).

The proposals were opposed by the two Republicans on the commission, on the grounds that they could raise energy prices and obstruct needed infrastructure. The following month, the commission unanimously voted to turn the proposed policies into drafts for further review (Energywire, March 25).

Although Phillips voted for the two gas policies in February, including the new greenhouse gas emissions threshold, he said he’s now interested in hearing from industry and other groups about “where or if” FERC should draw a significance line on gas projects’ climate-warming emissions.

“I’m looking forward to sitting down and seeing what stakeholders are saying,” he said.

In a wide-ranging discussion, the Alabama native and proud Eagle Scout also addressed another major rule recently issued by FERC, which would change how electric transmission lines are planned and paid for (Energywire, April 22). Seen by some experts and climate advocates as a key proposal for advancing clean energy, the rule could complement efforts in many states to switch to cleaner power sources, Phillips said.

In addition, he shared his support for having Congress act to set mandatory reliability and cybersecurity standards for the natural gas pipeline system. Similar standards are already in place for the electric power system.

Rep. Bobby Rush (D-Ill.) has introduced legislation to establish the first mandatory standards for gas pipelines, but the effort has gotten pushback from Republican lawmakers and some industry groups.

“It’s a no-brainer to have [the] same type of regime for natural gas pipelines,” Phillips said.

Phillips sat down with E&E News to discuss natural gas, electric transmission planning and FERC’s upgrade from “sleepy” to “little-known.”

What should people make of the commission’s decision in March to gather more comments on the two gas policy proposals that are now drafts?

FERC turning the policy statements into drafts is a very good thing. Where we can get more feedback from industry, that’s a good thing.

Moving forward, having stakeholder buy-in and being flexible to tweak where necessary these policy statements, so that they can be long-lasting and more durable, I think that’s a very good thing.

The greenhouse gas significance threshold seemed to get some of the strongest pushback. Did that threshold make sense? Is a climate change policy for gas projects still on the table for FERC? 

It’s important to note that the commission has and will continue to consider the effects of climate change in our pipeline project reviews. Also, the [emissions policy] was never presented as a final policy. I was interested in hearing feedback from people on exactly where or if we should draw a significance line. I’m still reviewing the comments on that, and I’m looking forward to sitting down and seeing what stakeholders are saying. I want feedback.

Can transmission planning reforms be finalized and implemented in time to meet states’ clean energy goals and get the U.S. close to Biden’s 2035 decarbonized electricity goal?

I call the transmission [notice of proposed rulemaking] a landmark NOPR. It’s a first big step for the commission. We haven’t addressed transmission policy in over a decade. So, I think the commission is moving deliberately and with a sense of urgency. The process will take the course it has to take.

This is a battleship, and it doesn’t turn on the dime. When you deal with something as important as transmission, it’s important we make sure we do it right. So, I believe we’re moving at the right pace. I absolutely take into consideration [states’ renewable energy] goals — I’m a former state regulator. There’s a lot of great activity happening in the states, and the NOPR we just put out complements those actions.

Do we need mandatory reliability standards for pipelines? What’s your message to Congress about that? 

Yes. The electric industry was the first of the critical infrastructure sectors to stand up reliability standards. This was after the 2003 Northeast blackout. I think we’ve seen a lot of progress, in large part because of those mandatory standards, especially when you think about critical infrastructure protection standards. Those are a great foundation for the requirements that are needed for utilities to identify, protect and respond to cyberthreats.

It’s a no-brainer to have that same type of regime for natural gas pipelines. Of course, the [Transportation Security Administration] has jurisdiction, especially over cybersecurity, on pipelines. I believe they have taken some great steps and instituted their first mandatory standard recently in the wake of cyber events here at home. I think we’re moving in the right direction, but it makes a lot of sense to me that we have mandatory standards for pipelines.

Glick’s current FERC term is ending at the end of next month. What’s it been like to work under his leadership, and do you hope he stays around? 

I like Chairman Glick a ton. He’s done a really effective job at the commission. As for his term and what will happen next, I defer to the White House on that. But I do believe the commission works best when it’s at a full complement. We’ve been able to do a lot just since I’ve come on board in the past six months. That’s a testament to having five commissioners.

Last year, FERC hired Montina Cole to serve as the agency’s first senior counsel for environmental justice and equity. How have you seen that affect decisions and processes? 

I’ve had several meetings with Ms. Cole. I’m very happy to see her come on board to the commission. I think it’s an important signal of the seriousness we take EJ issues and making sure we properly engage EJ communities. It’s a priority of mine.

I also applaud Chairman Glick for standing up the Office of Public Participation. I think the commission is still refining what that role will be and what exactly all the terms that are used in the industry will mean for us as we do our work. But the key takeaway is we’re addressing it head on, and I’m proud of that.

We’ve seen some significant power outages the last few years, including in Texas and California. Are grid operators, lawmakers and others responding adequately to prevent those kinds of events from happening again? 

Being a former NERC attorney, I see so many of the issues in my industry through the prism of reliability. Extreme weather events is one of the things I’m looking out for. I’m proud that the commission had a technical conference on Winter Storm Uri a few weeks ago. We heard from witnesses and operators who talked about the need for resource adequacy and diversification in our resources. The increasing amount of severe weather events we’ve seen is a constant reminder that climate change is ever-present.

What do you think of the political attention that FERC has been getting lately? 

When I started practicing in this space almost 20 years ago, that attention wasn’t there. I believe it’s a good thing. I think The Washington Post upgraded us from “sleepy” to “little-known” as an agency. It’s also a testament to the work we do that people are paying more attention to these issues. In the geopolitical space we’re in right now, the work FERC is doing is extremely important. So, I welcome the renewed attention.

What’s something most people don’t know about you? 

I’m an Eagle Scout. I was a scout leader even through my time in college and in law school as well. I believe a lot of what I learned then I still use today.


Teck launches Zinc Satellite initiative
Shane Lasley, North of 60 Mining News, May 17, 2022

With global zinc demand outpacing supply and the transition to renewable energy creating even more need for the galvanizing metal, Teck Resources Ltd. has launched an initiative to realize value from its portfolio of world-class zinc development assets – most of which are in Alaska and Northern British Columbia.

“The market outlook for zinc is strong, due to declining production from existing primary zinc mines, underinvestment in global exploration for zinc, and long-term demand driven by decarbonization, which is galvanized steel-intensive,” said Teck Resources CEO Don Lindsay.

The initiative, called Zinc Satellite, will build on the technical and commercial expertise of Teck’s Project Satellite team, which has successfully advanced and grown the value of the mining company’s copper growth projects over the past five years.

“Zinc Satellite will leverage our successful Project Satellite approach of making prudent investments to advance each asset by identifying pragmatic development options and paths to value. Value could ultimately be realized through a standalone investment, a partnership, or other transaction,” Lindsay continued.

This initiative will focus on leveraging the value of five world-class zinc development assets in Alaska, Northern BC, and Australia’s Northern Territory.

Red Dog satellites

Three of the five assets are satellite deposits near the company’s Red Dog Mine in Northwest Alaska.

During 2021, Red Dog produced 1.1 billion tons of zinc, which singlehandedly accounted for roughly 4% of the total zinc produced globally last year.

Going into 2021, Red Dog had roughly 46 million metric tons of proven and probable reserves averaging 12.9% (10.8 billion lb) zinc and 3.6% (1.8 billion lb) lead. This is enough ore to keep the world-class zinc mine in operation until 2031.

Aktigiruq and Anarraaq, deposits fully owned by Teck, could provide ore for the Red Dog mill deep into the 21st century.

“Looking to the future, Red Dog remains a premium zinc district with high-quality mine life extension potential at Aktigiruq and Anarraaq deposits,” Teck Resources Senior Vice President of Exploration Alex Christopher said in September.

Aktigiruq, which lies about nine miles north-northwest of the current Red Dog operation, is one of the largest undeveloped zinc deposits on Earth.

While an industry-compliant resource has yet to be published, Teck has previously reported that Aktigiruq hosts 80 to 150 metric tons of material averaging 16 to 18% combined zinc and lead.

This would be enough ore to feed the Red Dog mill for 25 to 50 years at current production rates.

Teck says a scoping study that is currently underway will provide a first look at the economic and engineering parameters of a mine at Aktigiruq.

Anarraaq, which lies about seven miles north-northwest of Red Dog and just south of Aktigiruq, hosts 19.4 million metric tons of inferred resource averaging 14.4% zinc and 4.2% lead, according to the most recent calculation published by Teck.

In addition to Anarraaq and Aktigiruq, Teck is exploring the Lik zinc project about 11 miles northwest of Red Dog under a 50-50 partnership with Solitario Zinc Corp.

Lik hosts 7.3 million metric tons of potentially open-pit mineable indicated resource averaging 8.1% zinc, 2.7% lead, and 51 grams per metric ton silver; plus 2.9 million metric tons of inferred resource at 8.6% zinc, 2.6% lead, and 37 g/t silver.

Potentially underground mineable mineralization also occurs on the Lik property.

Teck was the operator of a jointly funded 2021 program at Lik that included sampling, geophysics, and drilling to test new exploration concepts and expand resources along a 2.5-mile prospective trend northeast of the deposit.

Northern BC Cirque

Cirque, a Northern BC zinc project Teck is advancing under a 50-50 partnership with Korea Zinc, is another world-class asset being explored as part of the company’s Zinc Satellite initiative.

Cirque is found in the Kechika Trough, a region of northeastern BC rich in sediment-hosted zinc-lead-silver deposits and prospects. According to a calculation completed in the 1990s, the Cirque Main deposit hosted 24.7 million metric tons of historical reserves averaging 8.5% zinc, 2.3% lead, and 50.8 g/t silver.

These reserves were never mined, and Teck has carried out additional exploration in recent years. An updated resource calculation, however, has not been published.

Located close to existing infrastructure, Teck says concentrates from Cirque could easily be delivered to Trail, a Southern BC smelting, and refining facility owned by the company that processes concentrates from the Red Dog Mine.

The Teck-Korea Zinc JV also owns a 51% interest in three properties adjacent to Cirque – Pie, Cirque East, and Yuen.

ZincX Resources Corp., which holds the other 49% interest in these projects, has a total of 11 properties that cover a 140-kilometer- (87 miles) long stretch of the Kechika Trough.



Alaska judge rejects new map for Eagle River state Senate districts
Becky Bohrer, Associated Press, May 17, 2022

An Alaska judge has said a majority of members on the board tasked with redrawing the state’s political boundaries appeared to have adopted a map that splits the Eagle River area into two Senate districts for “political reasons,” and he ordered a new map be used this year.

Superior Court Judge Thomas Matthews in a decision released late Monday ordered the board to adopt on an interim basis a map that pairs the Eagle River area House districts into a Senate district. The decision comes in a second round of redistricting challenges. The candidate filing deadline for the August primary is June 1.

Matthews said he expected a quick review of his decision by the Alaska Supreme Court.

The Supreme Court in March found constitutional issues with elements of a map drawn by the Alaska Redistricting Board last fall. In one of the instances, the court ruled a state Senate district pairing part of east Anchorage and the Eagle River area constituted an “unconstitutional political gerrymander.”

The plan adopted by the board 3-2 in response to the court spurred the latest challenges, which focus on the board’s decision to link part of the Eagle River area with south Anchorage and Girdwood for a Senate district and another part of the Eagle River area to an area that includes a military base for another Senate district.