Chugach is pursuing four hydroelectric projects to hedge against Cook Inlet gas decline

Alaska's largest electric utility is starting to put names on its long-term plan to move away from natural gas. Chugach Electric Association told members at its annual meeting Thursday that it has filed preliminary permit applications with the Federal Energy Regulatory Commission and water-right applications with the Alaska Department of Natural Resources for four hydroelectric projects on four Southcentral creeks — Boulder Creek, Caribou Creek, Canyon Creek, and Godwin Creek — that together would generate about 52 megawatts.

The driver is Cook Inlet. Southcentral Alaska's electric and heating supply runs largely on Cook Inlet natural gas, a regional resource that has supplied the area for more than 60 years and is now in long-term decline. About 40 percent of Chugach's gas comes from a Hilcorp Alaska contract that expires at the end of the first quarter of 2028. The rest comes largely from the Beluga River Unit, where Chugach owns a two-thirds working interest — the Beluga has been the top-producing field in the Cook Inlet Basin for 2024 and 2025.

CEO Arthur Miller said strong performance at Beluga has bought the utility some breathing room. The deadline for securing additional gas supply has moved from the first quarter of 2028 to the first quarter of 2029, helped by banking arrangements with Marathon Petroleum Company and Hilcorp. That's one extra year to figure out what comes next.

The 52 megawatts of proposed hydroelectric capacity is meaningful for the utility's diversification effort but smaller than Chugach's total system load by a wide margin — these projects, if they all proceed, would contribute to the long-term shift away from gas rather than replace it. The FERC preliminary permits authorize feasibility work only; no decision has been made on whether to actually build any of the four.

The Cook Inlet gas supply gap has been debated in the Alaska State Legislature for months, with utilities, producers, and policymakers weighing Cook Inlet investment, LNG imports, and new generation resources as supply contracts begin to expire.