by Phillip Manning ~ December 8th, 2014
A new analysis claims that the economics of the Susitna-Watana Hydroelectic Project are unfeasible. The report was commissioned by Trout Unlimited, a group opposing the project, and it was carried out by economist Gregg Erickson. In it, Erickson says that the Alaska Energy Authority’s cost projections for the 735-foot tall dam leave out major factors, such as leasing and purchasing Alaska Native-owned land and building nearly $900 million in new electrical transmission lines. Gregg Erickson also says that large projects built by AEA have a history of coming in over budget.
AEA’s estimate of the cost of Susitna-Watana is around $5.2 billion. Erickson says that the plan to pay for the megaproject would end up being much higher than AEA estimates. He says the five percent interest rate being used in official projections is “unrealistically low.” Erickson claims that the hydro project only pays for itself under a narrow set of assumptions.
Susitna-Watana Project Manager Wayne Dyok disputes many of Erickson’s findings. Dyok says that other large hydro projects have come in at budget and many received financing at less than five percent interest. AEA plans to release additional feasibility information in January, including a third-party financial analysis that Dyok says falls within ten percent of AEA’s estimates. Dyok maintains that the economics of the megaproject are viable.