It's the latest addition to the Delta Creek hydroelectric facility, a $5.7 million utility that came online in August 2008 as an alternative to diesel as the sole energy source.

The significance of the new boiler is that the city will be able to take what is still a fair amount of surplus hydroelectric power, run it through the electric boiler and produce waste heat for the local school, in addition to waste heat already generated from diesel fuel used when hydropower runs lower in winter months.

"It's waste heat, but it's not diesel driven," said Gary Hennigh, the administrator of this predominantly Alaska Native community of 750 people.

Because the electric boiler was installed only weeks ago, the city isn't predicting yet what the magnitude of energy savings will be, but the waste heat component has saved the borough 19,439 gallons of diesel fuel in one year, a cost savings of $63,452 in operation of the school, he said.

To date, the savings King Cove has experienced from using hydroelectric power in place of diesel fuel have already been significant, Hennigh said. The yearly fuel savings, in fact, more than pays the annual debt service on the remaining $1.4 million the city borrowed to construct the Delta Creek hydroelectric facility.

King Cove's current 24 cents per kilowatt-hour of power cost makes that city the cheapest single-site utility, per kilowatt hour cost, of the more than 160 communities receiving power cost equalization subsidies, Hennigh said. King Cove is able to hold the cost per kilowatt-hour at 24 cents because hydroelectricity provides more than 50 percent of the community's annual power, he said.

"Without the Delta Creek hydro facility, the cost per kilowatt hour today would be closer to 35 cents or 40 cents," he said. "Even with debt service on the hydro, the savings are several hundred thousand dollars annually because far less diesel fuel is used. We just don't need to keep the diesel plant operating for as many hours."

Also in the works are a companion hydro facility, to be completed by 2011, and the sale of energy to Peter Pan Seafoods, which operates a processing plant critical to community employment.

The cost of the electric boiler and a switchgear to be installed in the power plant by the end of October - approximately $250,000 - are being paid for by the Alaska Energy Authority.

The switchgear helps integrate hydropower with diesel power, so in winter months, when hydropower is at a low flow, the switchgear automatically turns on the diesel generators, Hennigh said.

Meanwhile, while hydropower is running strong, the electricity coming through the hydro facility is used in the electric boiler, and the energy for subsequent waste heat is being used in the local school, so that diesel fuel does not have to be used for heat.

"It is an additional form of energy getting into waste heat coming from the hydro facility, rather than the traditional way, from diesel fuel burned in a diesel generator," Hennigh said.

The powerhouse project upgrades are all part of an ongoing energy project that began with construction of a new bulk fuel tank farm in the summer of 2007, funded primarily by the Denali Commission, but also by the Alaska Energy Authority. Once the tank farm went into operation in fall 2007, construction began on the new power plant, which itself came online in August 2008.

"Because they were done on time and within budget, there were extra funds to do other things for us, including the electric boiler. The new switchgear is another."

The latter will give the city a higher level of efficiency and better management control of its hydro and diesel power facility, he said.

Former King Cove Mayor Ernest Weiss noted in a recent city publication that the city is immensely proud of its Delta Creek Hydroelectric Project, initiated in 1994.

These days, with diesel prices topping $3 per gallon, King Cove is reaping the benefits of this project's success, Weiss said.

Hennigh agreed.

Along with the savings in fuel costs to Aleutians East Borough's school district, the waste heat energy is reducing the community's carbon footprint, Hennigh said.

Now the city is gearing up for phase two of hydropower, which Hennigh estimates will cost some $4 million.

Recent feasibility studies indicate Waterfall Creek hydro project has the potential to contribute another 1.4 million kilowatt hours annually to King Cove's electrical grid.

That means up to 80 percent of King Cove's electrical generation would come from renewable energy, city officials said.

If necessary, the city could come up with one-third of that money, with the rest coming from grants from the state's renewable energy fund, the Denali Commission and the rural development division of the U.S. Department of Agriculture, he said.

Applications for the state funds, which still need legislative approval, are due by Nov. 10 and, if the Legislature recommends approving, those construction dollars will be handed out next June or July, Hennigh said.

"If we can show them that most of the power from the second hydro facility will be sold to Peter Pan Seafoods, they will likely approve our application," he said.

Margaret Bauman can be reached at margie.bauman.@alaskajournal.com.