JUNEAU -- Lawmakers proposing to use $24 million to place windmills on Anchorage's Fire Island are facing opposition from at least one electric company that says such state money would be better spent for more pressing needs.

Companion bills introduced by Sen. Lesil McGuire, R-Anchorage, and Rep. Harry Crawford, D-Anchorage, would allocate money from the state's Railbelt Energy Fund to a consortium of public utility companies, which would build the transmission lines needed to move wind power generated on the island to mainland distribution centers.

The consortium, known as the Alaska Railbelt Energy Authority, includes two Anchorage power companies -- Municipal Light & Power and Chugach Electric Association, the state's largest public utility -- as well as Homer Electric Association and Golden Valley Electric Association in Fairbanks.

The group proposes using 4,000 acres on Fire Island for a 24-turbine wind farm that, if it is developed, could supply as much as 3.5 percent of the Railbelt's energy needs.

The Cook Inlet Region Inc., the Anchorage Native corporation that owns 3,000 acres proposed for the project, would build, operate and own the turbines, according to Phil Steyer, a Chugach manager familiar with the project. The corporation would sell the power to the electric companies.

The $24 million in state funding would let CIRI keep prices to customers down because it wouldn't have to include transportation line construction in the price, Steyer said

But the Palmer-based Matanuska Electric Association said it opposes using the Railbelt Energy Fund to bankroll a wind-farm project that could be fraught with problems.

The state created the Railbelt Energy Fund in 1985 to help electric companies between Homer and Fairbanks develop projects to address rising energy demand.

The Legislature does not have to spend the Railbelt Energy Fund money, which is estimated to be close to $80 million, according to Crawford. Last year, then-Gov. Frank Murkowski vetoed a bill that proposed splitting the fund among electric companies.

MEA said it isn't against wind power, but prefers the fund be divided as proposed last year.

"If the others want to use their portion toward the wind farm, we'll support them in that," said Tuckerman Babcock, a spokesman for MEA. Tuckerman said MEA needs to increase its base load power before it can consider other projects.

MEA's opposition and lawmakers sympathetic to its position could hold up the bill, Crawford said. Delaying the project puts it in jeopardy of losing matching federal funds that could help meet the cost of construction, he added.

So far, only one hearing has been held for either version of the bill. The Senate version has been assigned to be considered by an unusually high number of committees, McGuire said. Senate President Lyda Green, who assigns bills to committees, is from Mat-Su.

"I would hate to see a good idea like this one, which follows the ideals of the Railbelt Energy Fund, fall to the wayside because of politics," McGuire said.

Crawford said there is still hope the bill could get support from some key House budget writers, such as Rep. Kevin Meyer, R-Anchorage, who have shown support for the project and could help insert it into the state capital budget lawmakers are writing.

Daily News reporter Sabra Ayres can be reached at sayres@adn.com or 1-907-586-1531.