Comment closes on giving the energy authority state land at Bradley Lake at no cost

Public comment closed Tuesday on the state's plan to give the Alaska Energy Authority about 5,805 acres at the Bradley Lake hydroelectric project at no cost, a transfer the authority's director told the governor's office would support financing for the plant's planned expansion.

The land, about nine square miles roughly 23 miles northeast of Homer, covers most of the dry land the authority already leases for the hydro plant, plus land for its Battle Creek diversion and the planned expansion. The Department of Natural Resources will now weigh the comments and issue a final decision, which it can do without further notice if no significant changes are needed.

Bradley Lake has run since 1991 and supplies about 10% of the Railbelt's power, from Homer to Fairbanks, according to the department's preliminary decision. The authority wants to make it bigger. Its Dixon Diversion would send glacier meltwater through a 4.6-mile tunnel into the lake and raise the lake about 16 feet, adding about 167,000 megawatt-hours a year, a 38% increase, the authority's board has been told. The authority told legislators in August that the expansion would add enough electricity for about 30,000 homes and offset about 1.5 billion cubic feet of natural gas a year.

The lake was about 1,486 acres before the dam. It's about 3,802 acres now and would grow to about 4,033, the decision says.

The authority's board materials put the total cost at about $435 million, including $401 million for construction. The price has been stated several ways since spring. Railbelt electric customers will repay up to $100 million in short-term borrowing that must be refinanced by mid-2028, and the authority is pursuing federal tax credits.

That's where the land comes in. "Following up on a conversation with the Governor," Curtis Thayer, the authority's executive director, sent the governor's office a letter in May requesting the transfer, which he wrote "will support our FERC amendment and the financing of the Dixon Diversion," according to an email posted among legislative documents.

The department's decision makes a similar case. Under the current lease, it said, the state earns no revenue and pays to manage the land, and without title the authority "would lack the financial flexibility to embrace funding opportunities." It considered keeping and expanding the lease instead and found that wasn't in the state's best interest.

The authority would pay administrative costs such as surveying, but nothing for the land. The state would also give up its usual right to take the land back if it stops serving a public purpose, saying federal license conditions already limit it to hydro use and that keeping that right could get in the way of the authority using the land "for investment purposes." The state would keep the mineral rights and proposes closing the land to new mining claims. There are none there now.

The department listed potential impacts: effects on surface water from new construction, effects on wildlife from lost habitat and "reduced DNR oversight" of the project. It said those can be minimized or mitigated, including through federal licensing rules. The authority has agreed not to further restrict public access, though it may close areas for safety during construction and operation.

The authority first asked in June for about 8,087 acres, including the land under the lake. In August it dropped tidelands, submerged lands and shorelands, along with parts of two critical habitat areas, Fox River Flats and Kachemak Bay. It would keep leasing those areas.

Only people who filed written comments by Tuesday can ask the department to reconsider its final decision. The transfer was also on the agenda for the authority's board meeting Thursday morning, under the director's comments on the expansion.