Anchorage's water utility would cut its Eklutna hydro payments roughly in half

Anchorage's water utility would pay about half what it does now for water from Eklutna Lake under new agreements with the lake's hydroelectric owners, its general manager told an Assembly committee Thursday.

About 90% of Anchorage's public water comes from the lake, but the hydro project's owners hold the water rights. When lake water goes to city taps instead of through the power plant, the utility pays the owners for the electricity they lose, now about $1 million to $1.2 million a year.

"We were able to cap our compensation at $600,000 a year with an adjustment for inflation, and that's going to save us about $600,000 a year," said David Persinger, general manager of Anchorage Water and Wastewater Utility. Chugach Electric Association would receive those payments, and the city, which owns a majority of the hydro project, would make up any shortfall, according to the water supply agreement.

The bigger change comes later. In 2055, the utility could take ownership of water rights at the lake and stop paying. Persinger put that at 37 million gallons a day, the most the Eklutna treatment plant can handle. Anchorage uses about 23 million gallons a day on average, he said.

In exchange, the hydro owners could use the utility's tunnel to send water back into the Eklutna River, under a fish and wildlife program Gov. Mike Dunleavy set in 2024. Water would be released at the utility's portal facility, about a mile below the dam. That carries some risk for the utility's buried pipeline in the canyon, which was laid in the 1980s when the river was nearly dry. "There's some risk, you know, anytime you rewater a river that's not been watered for a long time and you have critical infrastructure in there," Persinger said. He said the savings would help pay for backup water sources, such as deep wells.

The portal plan may not be the final one. The governor also ordered a study of pumped storage hydropower, which would extend the river work past the dam into the lake and its tributaries. The Native Village of Eklutna wants fish passage into and out of the lake. Anchorage Hydropower Utility's engineering director told the committee pumped storage would cost $1.5 billion to $1.7 billion and could qualify for large federal tax credits, and the choice could go before the governor in the second quarter of next year. If pumped storage is picked, the water agreements wouldn't take effect, according to the mayor's memo.

The Assembly approved the agreements 12-0 last month, dropping a condition tied to the city's bid to regain a vote in running the hydro project. They haven't been signed. A Department of Law attorney said the major terms are set and technical diagrams are being finished.