JON KUMIN: Thank you, Chris. Now Joe Griffith is going to give us a little detail on a project that expands further on what Chris mentioned on wind power that's close to home.

JOE GRIFFITH: Thank you, Jon, and Chris, for giving us the outline there of what this really is from an energy standpoint.

A real quick overview on the work we've been doing on the Fire Island project. Maybe we could pull up the slide there. We've been looking at wind resources at Chugach now for five or six years or thereabouts. The current project that we're looking at is a consortium of four utilities that have signed a memo of understanding to work and perhaps take power from the project if it comes to fruition. That's Chugach, Golden Valley in Fairbanks, Homer Electric on the Kenai, and ML&P here in town.

The island we're talking about looks like this. And I'll talk more about that in a moment. It's off of International Airport east/west runway out there. Most of you fly over it every time you fly.

We've done extensive wind studies around the -- next slide, around the local area down to along Kenai, along the Turnagain Arm, over on the west side of the Inlet. Two or three areas came out being among the best in this area, one of them being Fire Island. It's an obvious because of its rather remote location.

Next slide, please. These are not small units. An example, the one on the left there is one that's used in Kotzebue that you heard spoken of by Chris. And on the right side is an example of one like we would put up out on the island there. Large pieces of equipment, upwards of 400 feet to the top of the blade. These are 1.5 to 3 megawatt units. And the whole Railbelt uses about 1,000 megawatts at any given peak, so you can see how these could fit into our power supply.

Here's a picture of a 3 megawatt Vestus unit in the Texas Panhandle. You can see the small truck down here, very small. They're huge units to say the least. And they do turn rather slowly and they're almost eerie if you've ever watched them. Something like 25 rpms, so they're not fast turning.

We now have an example coming up here of what Fire Island might look like with towers on it. Is this the one that turns? And they just sit there hour after hour and turn when the wind blows. Now the one disadvantage of them is that you can't schedule the wind, so you have to have backup turbines in an area like we are to be sure that the power's available when you need it if the wind were to die down.

One of the limiting factors for Fire Island is transmission. How do we get the power off the island? Transmission today can cost upwards of a million dollars a mile. It's three miles out there, so it doesn't look like too much of a challenge till you add in all of the supporting infrastructure, the roads, the docks, the substations, the linkages that must go to tie them together. So it is a substantial undertaking.

And if there's a limiting factor in the Fire Island project today it's the transmission of the energy that would be produced. We're working on that. We've asked for both federal and state help on it. And perhaps we will be successful in that. We'll see.

We also put together a visual impact study. As you can see from Kincaid Park here pretty hard to see them. You hardly notice them.

Next one. There's what they look like if you're a little closer out there walking across the mud flats or flying too low inside the sea area out there.

You paint them grey they pretty much go away and you hardly notice them at the distances we're talking about.

The project is being analyzed as we speak by our folks, the financial people. At the moment it is not competitive with our cheapest generation at Beluga, but as the cost of fuel rises and the cost of these items come down and if we can get some federal grant money to get to the island with transmission, then I think we're looking at a viable project.

You heard -- I'll quit on Fire Island for a minute and hit some other points here really quickly, Jon, so we've got some time for questions.

Chris mentioned the various forms of renewable energy. He listed six. There are actually two others that some quarters would say are renewable. One of them is nuclear. And believe it or not we have a nuclear project in this state. The City of Galena is talking about installing one of these new little nuclear reactors to provide their power. They're really a novel unit. They're small. They dig a hole in the ground, they set the unit in there, and 30 years later you haul it out. They're just a completely self-contained unit far different than what the conventional nuclear plants that we have around the country today.

Nuclear is a big source of power in the world. France generates upwards of 80 percent of their power with nuclear. So you can't hardly leave it out of any long-term discussion about energy.

The other one is hydro. Hydro is very, very expensive on the front end. We have three hydro facilities in the near vicinity. Bradley Lake on the Kenai Peninsula. Eklutna up to the northwest of here -- or northeast. And Cooper Lake that's in the relicensing phase. And that's an experience in itself, that I recommend everybody who would like to deal with the bureaucracy.

The beauty of some of these projects is as Chris indicated you could use them to generate hydrogen or as a source of energy. And it perhaps could be the greatest economic development advantage that Alaska has to use our renewable resources to generate a marketable product as the Lower 48 continues to move toward a hydrogen economy. And I don't think that's going to be soon, but perhaps we could get in on the front end of it if we use our assets correctly.

We're using natural gas for about 80 percent of our generation today. By 2010 or 11 we will not be able to meet peak with the natural gas side of it. That includes heating your home as well as electric generation, so that's a true challenge that we must address this year in fact.

What is the potential for villages? Chris mentioned that there are some who can use them. Kotzebue has done well with them. And, of course, any place that you can interconnect can use the power from the renewable resources.

In any economic development activity one of the first questions you're asked when these people come up to talk to you is what's the cost your energy and what's the supply. And we must be able in the future to ensure that we have a strong economy, be sure that we've got energy supplies that are relatively cheap. Renewable energy is a piece of that and I'll be happy to answer questions later on. Thank you.

MR. KUMIN: Thank you, Joe. Our third panelist is Nick Goodman who's with TDX Power and who's going to talk about, among other things I believe, geothermal. I know I've been hearing about the one in Dutch Harbor for at least 10 years, maybe 15. And perhaps you could fill us in on the potential for that. Thank you.

NICK GOODMAN: Thank you, Jon, and thank everyone for the invitation this morning. I'm thrilled to be here to talk about a topic that's very near and dear to me which is renewable energy and what brought me here to this state seven or eight years ago.

My topic today is to talk very briefly about geothermal power which is something that my company TDX Power has become involved in over the last two years. And I'm going to break all protocols this morning. We have 10 minutes and I'm going to ask Jon to hold me to that, so I'm actually going to race through slides, throw a lot of pictures and information at you and encourage questions on the tail end because I think the questions are the valuable part.

So next slide, please. Just very briefly I'd like to talk about Iceland American Energy which is a partnership that TDX Power is in. A little bit about geothermal and a little bit about Iceland because that's really what we're proposing to bring to Alaska here is the Icelandic way.

Iceland American Energy is a joint venture between TDX Power, ENEX which I'll talk a little bit more about in a minute, which is our partner from Iceland, and three partner firms from California. And our interest is developing geothermal projects here in Alaska and also in the Lower 48. And as Chris lost the picture I did, too, wouldn't you know the picture we lost is our logo, but there is the three entities. ENEX, again, is based in Reykjavik. Geoelectric Fenoil (ph) and GLF (ph) are development companies based on California that have a long track record of the geothermal power industry.

Next slide. A little plug on my company, TDX Power. We're a specialist power generation firm. We are very interested in renewables, but we actually own utilities statewide, in Deadhorse -- move to the next slide. In Deadhorse we generate with natural gas. In Sand Point we're a liquid fuel utility out there. And in St. Paul we have the state's largest wind turbine actually right now until Chugach proceeds with their project, but that's a 250 kilowatt wind turbine, about half the size of what Joe showed you in his slide between Kotzebue and what's being proposed here.

So our partner ENEX, I'll try to relay our Icelanders' thoughts and views on the projects here in Alaska. ENEX is a conglomerate of all the major geothermal and energy producers in Iceland. The two major utilities, a drilling company, a venture capital firm, and bank, they've come together to export their knowledge and their history in geothermal power to other countries. And they have quite a bit of experience around the world. They have partnered with us here in North America and Alaska.

Next slide, please. There's just a little bit more background. It's a very large company, combined assets of over 2 billion. They've got 1,200 staff. And they've been doing geothermal for over 70 years in Iceland. And I'll talk a little bit more about that.

So geothermal 101, and I'm really the person to give you only geothermal 101. For those engineers in the crowd that have more technical questions I'm going to defer those to Joe.

Quite simply what they do in Iceland based in a volcanic area is they're accessing hot water that exists below the surface of the earth. And they're using that either in a liquid form or a steam form to drive turbines and create power.

Typically geothermal is broken down into two categories. There are low temperature fields which we have documented resources here in the state of Alaska of low temperature fields. And high temperature fields and usually it's 150 degrees C is the break point between those two. This is Krafla one of the power plants in Iceland. And just to give you a little background or flavor for how geothermal works. It's not really for the faint of heart. We are accessing hot water and steam near and sometimes on top of active volcanos. This is a picture of Krafla during the day. Next slide. This is a picture of Krafla with a active volcano erupting in the background and when I say geothermal is not for the faint of heart I mean it.

The Icelanders did not run from this situation. Barriers were built. Trenches were created. We lost three wells, I believe, but the power plant was saved. That power plant is on line and running today. And to the extent that volcanos can be controlled we're quite comfortable with our partners from Iceland and their capability of doing that.

Next slide. So this is the largest tourist attraction in Iceland. It is -- and there are a couple of more pictures there. It's called the Blue Lagoon. Back in the 1980s when the power plant in the background was built re-injecting the waste fluid was sort of a new concept. And our partners decided that they would dump the waste fluid into the lava fields next to the power plant and it would surely soak in. Well, it didn't. It created a pool and the water just sat there and teens being teens they decided that it would be a great place to go at night and go swimming and so on and so forth. It turns out that that water actually has a lot of medicinal characteristics to it. It clears up eczema and has been turned into the largest tourist destination in Iceland. It says on there, I think, they get about 400,000 visitors a year. There's a four star resort there, a spa, a number of restaurants, and people come to bathe in the waste water from the power plant.

A little more information on geography just to show you that Iceland actually does sit on a plate boundary the same way we do. You will see the red there in the Aleutians which is our back yard. I should have mentioned before. TDX Power is actually a village corporation from the island of St. Paul, so our backyard is the Aleutians. That's where our shareholders are. And in addition to a tremendous wind resource it's also a tremendous geothermal resource. The main barrier being, of course, there's not much of a market out there, so I would agree with Joe and Chris discussions about hydrogen or other ways to use energy in remote places is very key and very much of interest to us in the Aleutians.

Next slide. A little background information on Iceland. Very little in the way of local resources. It's one of the few areas that they differ from Alaska. And they've pretty much used up their local fossil fuel resources in the early years of that country.

Next slide. They like to say 80 years ago Iceland was a third world country. This is described as premier housing in Iceland with thatched roofs. This is actually the housing where the Bishop lives for the church outside of Reykjavik.

Next slide. And today Iceland is the most advanced geothermal country in the world.

Next slide, please. This is a picture of downtown Reykjavik.

Uses in Iceland. Iceland is rich with hydro as well as geothermal. And hydro has been developed first. So hydro actually meets the majority of their electric needs right now and geothermal meets the majority of their heating needs, but the Icelanders use every little bit of energy that comes out of the geothermal wells and there are a number of other smaller components that are used there.

Next slide, please. This is a hot water pipeline that comes from a power plant outside of Reykjavik. This pipeline is full of hot water. It goes 60 kilometers and loses two degrees C. This hot water is used to provide heating in downtown Reykjavik. And that's part of their total well concept.

Next slide, please. So just running through some of the other uses of the geothermal in Iceland. Snow melting on some of the streets and driveways.

Next slide. Next slide. Swimming pools There are 160 swimming pools in Iceland with a population of 270,000. You do the math. Horticulture is very popular in Iceland. Lots of homes have their own greenhouses.

Next slide. Fish farming, not a topic that we like to talk about here in the state, but it is something that benefits from geothermal power in Iceland.

Next slide. Diatomaceous earth drawing. Basically just an industrial process that takes advantage of the heat.

Seaweed drawing. Sea chemical plants, primarily salt.

And just run you through some of the plants in Iceland so you get a feel for the size and what these plants look like, and then I'm happy to answer questions.

This is Krafla. It's a 30 megawatt project in 1977, was increased another 30 megawatts in 1997 and another 40 megawatts on the books now.

Next slide. This is Svartsengi which is where the Blue Lagoon is and there you see it, folks. A power plant with a tourist destination in the background.

This is one of the newer plants and in Nesjavellir. This is a co-generation started in 1990. Began at 60 megawatts. It's now at 90 megawatts. It will be expanded to 120 megawatts. And this is an important scene you see here, the ability to add incremental power to these plants once they're established and more wells can be dug.

This is the Husavik plant. It's a very small plant and one that we like because it shows the potential for small remote power generation plants at the two megawatt size which would be a potential model for some of the communities here in Alaska.

New industry in Iceland, crocodile farming. Okay. So to sum it up, economic reasons, I think the reasons for geothermal are just that. We have a tremendous resource if we can figure out how to pair it up with a market. There are a number of benefits to geothermal power. It's clean. There are no emissions. And it -- obviously it doesn't require fossil fuel.

Like hydro the up front capital costs with geothermal are very expensive on the front end. The operating costs are very low. And so what they've done is Iceland is they've made a conversation from fossil fuel to renewables. Average electricity price in Iceland today now that they have all this installed capacity in the ground is about 6 cents a kilowatt hour. All their heating is charged on a per kilowatt hour basis as well. And it's about a penny and a half a kilowatt hour, so the cost of living in Iceland is actually a fraction of what it is on the utility side here in Alaska. And it's environmentally friendly.

Next slide, please. A little bit of contact information. And then I'm happy to answer questions as well. Thank you.