From the Experts

As Alaska Runs Out of Gas, It’s Time to Conserve Energy and Invest in Renewables

May 20, 2024

By

Hannah Payne Foster

Senior Associate Attorney

Office

Earthjustice’s client seeks to hasten the transition to clean energy amid a high-stakes gas shortage in Cook Inlet.

Even if you’ve never been to Alaska, you’ve probably heard about our state’s natural beauty and abundant natural resources, which include some of the largest reserves of oil and gas in the nation. What you may not have heard is that in Alaska’s Railbelt communities where 70% of Alaskans live (from Fairbanks in the Interior to Homer at the tip of the Kenai Peninsula), the gas that residents depend on for heating and electricity will soon run short.

Gas can still be found in Southcentral Alaska’s Cook Inlet near Anchorage, but the price of extracting that gas has become so high that no company is willing to pursue it without significant subsidies. And while other parts of the state like the North Slope still have gas reserves, that gas can’t reach most Railbelt communities without first building a pipeline that would cost billions.

Because of Alaska’s small population and its vast geography, these pricey fossil fuel solutions simply don’t pencil out, as much as Alaska’s gas boosters would like them to. Transitioning to renewables, however, does make good economic sense – a fact confirmed by a recent National Renewable Energy Laboratory report which shows that an energy portfolio consisting of 76% renewables by 2040 is the most viable economic path forward for Alaska.

Despite that economic good news, Alaska’s utilities have been slow to adopt clean energy alternatives even as dwindling gas supplies are forcing change.

Very soon – by 2027 – Alaska’s Railbelt utilities are planning to make up for the gas shortage by importing liquefied natural gas (LNG) from another state or country. This will mean even higher gas prices and utility bills for Alaska’s already cost-burdened residents.

An offshore platform in the ocean with snowy mountains in the distance. Natural gas is flaring on the rig.

Offshore drilling rig in Cook Inlet with Alaska Range peaks in the distance. (Paul Souders / Getty Images)

Amidst this gas crisis, Earthjustice is intervening for the first time in a public utility rate case in Alaska before the Regulatory Commission of Alaska (RCA). Our client is Renewable Energy Alaska Project (REAP), a nonprofit that for 20 years has advocated for common-sense, economical clean energy through education, training, policy, and advocacy.

Rate cases before public utilities commissions like the RCA determine how much a utility can charge for services and how fees are structured and can often provide a productive avenue for groups like REAP to exert meaningful influence over how utilities operate, including by trying to hasten the transition to clean energy or imposing energy efficiency measures. Earthjustice represents clients in rate cases in more than 20 states and territories across the nation – and now Alaska is included on that map.

Like Earthjustice, this is REAP’s first rate case in Alaska.

Map of states where Earthjustice works in PUCs.

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  • Map outline of Alaska.

    Alaska’s potential for clean energy is vast, yet utilities are planning to import liquified natural gas, which would significantly raise rates for customers. Earthjustice is intervening before the Regulatory Commission of Alaska.

    With abundant wind, geothermal, tidal, solar, and fish-friendly hydropower options, the potential to develop clean energy in Alaska is vast. And yet the state is planning to soon import liquified natural gas (LNG) to address its looming energy crisis. In 2023, Earthjustice intervened for the first time in a case before the Regulatory Commission of Alaska to advocate for energy conservation and help facilitate the buildout of clean energy in Alaska.

    More than 80% of Chugach Electric Association's electricity comes from gas extracted locally from Cook Inlet, but that gas is now scarcer and more expensive to produce. To fill the gap, utilities are planning to import LNG as soon as 2027, which would significantly raise rates for customers who already pay some of the highest energy prices in the country.

    Alaskans should not be locked into burning expensive imported gas to power their homes and businesses when there are ample clean energy resources to develop in the state. The federal Inflation Reduction Act can help fund the buildout of renewable energy and transmission in Alaska. But utilities and lawmakers are standing in the way of Alaska’s clean energy boom.

    On behalf of our client Renewable Energy Alaska Project (REAP), Earthjustice submitted plans that would conserve limited remaining local gas and encourage adoption of rooftop solar on local homes and businesses. REAP believes that by using available federal and state funds to develop Alaska’s vast potential for clean energy, Alaska can move away from its dependency on fossil fuels and create a better future.

    Want to get involved in Alaska? Reach out to Renewable Energy Alaska Project (REAP)

    Utilities involved: Chugach Electric Association

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Chugach Electric Association, Inc. (Chugach) serves Anchorage and the surrounding area, making it the largest electric utility on the Railbelt. Though many of Alaska’s utilities are member-owned cooperatives, several of the larger ones like Chugach are regulated by the RCA and must seek permission to change their rates.

By intervening in the Chugach rate case, REAP, represented by Earthjustice, aims to encourage energy conservation, which will reduce the amount of gas that will need to be imported to make up the shortfall. Chugach’s electricity is generated primarily from Cook Inlet gas-fueled power plants. Conserving Cook Inlet gas will help keep energy rates as low as possible for Chugach’s ratepayers, as well as for Anchorage heating consumers, while REAP and other clean energy advocates continue to press for a swift buildout of renewable energy options that will in the long-term lessen the electric utility’s dependence on fossil fuels.

In the rate case, REAP identified a fundamental flaw in Chugach’s rate proposal. Despite a requirement in Alaska law that rates be designed to “promote the conservation of resources used in the generation of electric energy,” Chugach’s proposed rates don’t take any specific measures to conserve gas. This is especially egregious considering the looming gas crisis. In the rate case, REAP has proposed a different rate structure that would encourage gas conservation and the adoption of rooftop solar.

Solar panels in the foreground on the rood of a home in a subdivision.

Residential solar panels in Anchorage, Alaska. (Dennis Schroeder / NREL)

REAP’s rate proposal is known as an inclining block rate (IBR) structure. Under an IBR structure, rates increase as a customer uses more electricity. So those who use the most electricity pay a higher rate for the extra electricity they use. This type of structure insulates the most vulnerable, lowest electricity consumers from rate hikes, while also encouraging large consumers to adopt conservation methods (including rooftop solar).

This summer, REAP will argue for its rate design in a month-long hearing at the RCA. REAP hopes to help conserve the limited remaining Cook Inlet gas resource, which could help avoid the need for long-term LNG contracts. Such contracts would further lock Alaska residents into dependence on fossil fuels.

By pursuing this rate case alongside a myriad of other projects including pro-renewable state legislation, REAP will continue to collaborate with partners to hasten the clean energy transition in Alaska, resulting in lower energy costs and a better future for Alaskans.

Hannah Payne Foster

Hannah Payne Foster is a senior associate attorney based in Anchorage.

Alaska Office

Opened in 1978, our Alaska regional office works to safeguard public lands, waters, and wildlife from destructive oil and gas drilling, mining, and logging, and to protect the region's marine and coastal ecosystems.

An areal photo of Anchorage, a medium sized city, in the foreground, with snowy mountains in the distance.
Downtown Anchorage, Alaska. (Jacob Boomsma / Getty Images)