MEA Extends Natural Gas Contract and Storage

Matanuska Electric Association, or MEA, along with other railbelt utilities has been working toward longer term solutions to supply the region with electricity. According to MEA Chief Strategy Officer Julie Estey, the company still has an agreement with Hilcorp to supply MEA and other railbelt utilities with natural gas from Cook Inlet. That contract is set to expire in 2028. Hilcorp has previously said the gas resource has been declining and wasn’t sure it could provide enough past that date.

But MEA has now signed a contract extension with Hilcorp through March 2029, allowing one more year to find solutions to the energy issues. 

Natural gas remains the main source of energy for MEA, making up about 85 percent of the total.

“Gas will continue to be a cornerstone because it’s firm power. Our members have already made an investment in that infrastructure.” 

The contract extension allows MEA more time to find alternatives to help bridge the gap as natural gas resources from Cook Inlet decrease. Estey says MEA is exploring alternative options, including coal, biomass, renewables, and other sources of natural gas.

“We’ve been down the path investigating all of those different options. You know with all of this uncertainty, the timeline, it was clear that none of those options would be available for us when our contract expired March 31, 2028.”

Estey says MEA continues to look at all options, but there have been policy shifts around wind and solar. However, the company is continuing to explore wind with railbelt utility partners. She says MEA has done a desktop analysis of where wind resources may be, but they now have the equipment to take the next step.

“We’ll be deploying LiDAR equipment throughout the interconnected grid to try to look at where the wind resource possibilities are.”

Though Estey stresses that MEA is working to diversify its portfolio, it will take time. And for now, natural gas is the best and least expensive option for supplying power to the MEA customers.

Estey says residents can expect a gradual increase in rates of about five percent each year. She says the prices are still below other recently approved contracts.

In addition to the natural gas contract extension, MEA also will be able to store gas during periods of lower demand, which will help with system reliability. That, in turn, could help keep costs lower.

The contract extension still needs to be reviewed by the Regulatory Commission of Alaska for approval. Should the contract be approved, the average customer could see increases of about 7 to 8 dollars per month beginning April 1.