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SEPA says third-turbine funding largely in place; June 21 outage under investigation
Summary
Southeast Alaska Power Agency (SEPA) reported that funding for a third turbine at the Tyee project is substantially secured though some amounts remain promised but not yet in hand; SEPA also described a June 21 outage triggered by an oil-level alarm that is under review.
SEPA (Southeast Alaska Power Agency) board chair and Assembly Member Lynn reported to the Petersburg Borough Assembly on July 7 that SEPA has advanced funding and procurement steps for a proposed third turbine at the Tyee project and is investigating a June 21 system outage triggered by an oil-level alarm in a generator bearing.
Lynn said the total estimated cost for the third turbine is $24,000,000. Secured funding includes a Department of Energy Section 247 grant of $5,000,000 and a Renewed Energy Fund Round 17 grant of $4,000,000 (total secured $9,000,000). Lynn said additional but not yet secured funding sources include $4,500,000 in congressionally directed spending being evaluated through Senator Murkowski’s office and an estimated $12,000,000 federal investment tax credit cash-equivalent; if those commitments materialize, the project would be fully funded without raising customer rates.
SEPA staff negotiated with Canyon Industries (Washington) on equipment procurement; an initial $12,900,000 bid was reduced in negotiation and the board approved a lump-sum contract for $11,900,000 for the turbine generator and transformer procurement.
On system reliability, Lynn reported that the June 21 outage was caused by an oil-level alarm in one generator bearing. The alarm is a protective measure; SEPA has confirmed no water intrusion into the bearing occurred. Lynn said the outage behavior was unexpected: because system loads among the three interconnected communities (Wrangell, Ketchikan and Petersburg) were low, only a single turbine was running and when that turbine tripped the whole system went down instead of another turbine picking up the load. SEPA is still investigating why the expected load pickup did not occur.
Why this matters: the third turbine project is a major capital investment for SEPA that affects generation capacity and long-term rates. The June 21 outage highlights operational risk and is prompting review of protective systems and dispatch strategy to avoid a single-point failure leading to multi-community outages.
What SEPA reported in detail
- Project cost and funding: Total estimated cost $24,000,000. Secured: DOE Section 247 grant $5,000,000; Renewed Energy Fund Round 17 grant $4,000,000. Unsecured/promised: $4,500,000 congressional directed spending under review; $12,000,000 federal investment tax credit cash-equivalent being anticipated.
- Procurement: Board approved negotiation and contract with Canyon Industries for a lump-sum of $11,900,000 for turbine generator and transformer procurement after staff negotiations that Lynn said saved about $1,000,000 from the initial bid.
- Outage: June 21 outage initiated by an oil-level alarm in a generator bearing; alarm functioned as intended to protect bearings. SEPA confirmed no water intrusion into bearings and said staff continue to investigate why automatic load pickup between turbines did not occur.
Assembly members asked questions about reservoir levels (reported as sufficient; one reservoir at a seasonal record and the other about 90% full) and whether the license amendment for a third turbine would be approved; Lynn said FERC review is progressing and she expected approval this year given the comment-response cycle was complete.
Ending: SEPA will continue negotiating equipment procurement and pursuing the remaining funding pieces; investigations into the June 21 outage are ongoing and SEPA staff will report updates as they become available to the board and member communities.
