Homer Electric has withdrawn its support for the Southern Intertie project.  The board of directors’ decision was based on an internal cost analysis that indicated the project is not economically viable under present conditions. 

Homer Electric plans to meet with the utilities in the Intertie Participants Group (Chugach Electric, Golden Valley Electric, Matanuska Electric, Anchorage Municipal Light and Power and the City of Seward)  in the near future to discuss its decision and work cooperatively towards a resolution that will be the best course of action for the group.   

The financial parameters of the project have changed significantly over the last year, making it less beneficial to Homer Electric Association. The most recent estimated cost of the project is $119 million, up from an earlier estimate of $100 million. The final design for the project hasn’t been completed and it’s possible the costs will continue to increase.

Homer Electric’s cost benefit analysis also determined that there have been changes in the generation capacity on the Kenai Peninsula that diminish the overall benefit of the Southern Intertie to Homer Electric members. The most significant change is the addition of the Cogeneration facility in Nikiski.  The plant, which produces 39 MW of electricity, provides Homer Electric with additional generating capacity and insures system reliability.

Homer Electric believes its decision to withdraw support for the Southern Intertie project is in the best interests of members of the cooperative. While the project initially had positive benefits, changes in project costs, financing options, generation capacity and the state’s economic climate have diminished the value of the project for Homer Electric Association.

Homer Electric looks forward to continue working with other Railbelt utilities and the state to insure reliable, competitive utility service to its members.