02/23/2010 03:00 PM House ENERGY

                   HB  31-NET ENERGY METERING                                                                               
                                                                                                                                
4:30:29 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT announced that the  next order of business would                                                               
be HOUSE  BILL NO. 31,  "An Act  relating to net  energy metering                                                               
for  retail electricity  suppliers and  customers; and  providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
                                                                                                                                
4:30:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KURT OLSON,  Alaska  State Legislature,  informed                                                               
the  committee that  the proposed  amendment  to HB  31 would  be                                                               
presented by his aide, Jennifer Senette.                                                                                        
                                                                                                                                
4:31:11 PM                                                                                                                    
                                                                                                                                
JENNIFER SENETTE, Staff, Representative  Kurt Olson, Alaska State                                                               
Legislature, began  by reviewing  HB 31 for  the committee.   She                                                               
noted that  the Regulatory  Commission of  Alaska (RCA)  has been                                                               
working on  a net metering  docket for  over one year  and closed                                                               
the docket in  October.  Representative Olson, sponsor  of HB 31,                                                               
has  incorporated the  regulations  adopted by  the  RCA into  an                                                               
amendment  to  the  bill  because  the  regulations  are  a  good                                                               
compromise for all  of the interests involved:  customers who net                                                               
meter, customers  who do  not net meter,  and the  utilities that                                                               
serve them.                                                                                                                     
                                                                                                                                
4:33:09 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:33 p.m. to 4:34 p.m.                                                                       
                                                                                                                                
4:34:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS moved  to  adopt Amendment  1, A.1,  Kane,                                                               
1/27/10.                                                                                                                        
                                                                                                                                
CO-CHAIR MILLETT objected for purposes of discussion.                                                                           
                                                                                                                                
4:34:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS advised  that the  regulations recommended                                                               
by  the  RCA were  put  in  amendment form.    He  referred to  a                                                               
document  that embeds  the recommendations  made by  Mr. Pickett,                                                               
RCA chairman.                                                                                                                   
                                                                                                                                
4:35:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  MILLET  requested  copies   of  the  document  for  the                                                               
committee.   She then asked  Ms. Senette to review  the sectional                                                               
analysis on Amendment 1.                                                                                                        
                                                                                                                                
4:35:46 PM                                                                                                                    
                                                                                                                                
MS.  SENETTE  emphasized  that   Amendment  1  codifies  Chairman                                                               
Pickett's  testimony word-for-word.   Subsections  (a), (b),  and                                                               
(d) address the  applicability and the waiver  opportunity of the                                                               
net metering  requirement.  Generally speaking,  the net metering                                                               
requirement  applies   to  all  utilities  subject   to  economic                                                               
regulation by the RCA with the  two exceptions set out on page 2,                                                               
lines  8-13:   (1) utilities  that  are 100  percent supplied  by                                                               
renewable sources;  (2) independent systems with  retail sales of                                                               
less than five million kilowatt  hours during the previous fiscal                                                               
year.  For  example, the Alaska Power &  Telephone Company (AP&T)                                                               
serves  twenty-one  communities, five  of  which  sold over  five                                                               
million kilowatt  hours during FY  2007.  Thus, the  only portion                                                               
of AP&T that  would be required to provide net  metering would be                                                               
in  those  five communities  that  have  sold over  five  million                                                               
kilowatt hours.   Ms.  Senette called attention  to page  2, line                                                               
13, and pointed out that  if a utility demonstrates that limiting                                                               
net  metering  installations  is  necessary  due  to  operational                                                               
constraints  or  liability  issues,  the  utility  would  not  be                                                               
required to provide net metering.                                                                                               
                                                                                                                                
4:37:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  recognized the  value of  renewable energy                                                               
sources,  but because  they are  intermittent  sources, they  can                                                               
only be  a portion of  the utility's  portfolio.  He  opined that                                                               
this provision  of the amendment  must be perceived  as something                                                               
that protects  the ratepayer base  of a small utility,  because a                                                               
smaller utility cannot  absorb the net metering  kilowatts in the                                                               
way large producers can.                                                                                                        
                                                                                                                                
MS. SENETTE  agreed.  She  continued with her  sectional analysis                                                               
and said  subsections (e)-(i)  set an  overall capacity  limit on                                                               
net metering.  Subsection (f) allows  a utility to opt out if its                                                               
overall   nameplate  capacity   of  all   net  metering   systems                                                               
interconnected  with  the  utility  exceeds 1.5  percent  of  the                                                               
utility's average annual  retail demand.  Furthermore  on page 3,                                                               
line 9, subsection (i), she  noted a utility can actually request                                                               
an  increase  to  that  1.5  percent  capacity.    Continuing  to                                                               
subsection  (g),  Ms.  Senette  explained  that  this  subsection                                                               
precludes  a utility  from  disconnecting  existing net  metering                                                               
customers  should the  cumulative nameplate  capacity of  the net                                                               
metering systems  interconnected with the utility  exceed the cap                                                               
as a result of average demand going down.                                                                                       
                                                                                                                                
4:40:44 PM                                                                                                                    
                                                                                                                                
MS. SENETTE continued to page  3, subsection (h), that requires a                                                               
utility to annually publish in  its tariff the number of kilowatt                                                               
hours that are  equivalent to that 1.5 percent  of average retail                                                               
demand.   Subsection (l) specifies  the eligibility  criteria for                                                               
the  consumer  generation   facilities,  including  a  generation                                                               
capacity limit  of 25  kilowatts.   Subsection (m)  describes net                                                               
metering   and  that   the  utility   must  measure   the  energy                                                               
consumption  and  generation  of   a  net  metering  consumer  to                                                               
determine net consumption,  and to determine bill  credits.  Page                                                               
5, [paragraph] (2),  indicates that compensation is  based on the                                                               
utility's non-firm  purchase power  rate-typically on  an avoided                                                               
cost basis-and  that credits  can be carried  forward and  do not                                                               
expire.   She emphasized  that if  a renewable  energy generation                                                               
facility  is  built  and  it   contributes  more  power  than  it                                                               
consumes,  credits  are issued  instead  of  a payment,  but  the                                                               
credits never  expire.   Subsection (n)  allows the  utilities to                                                               
charge  a  net  metering   consumer  for  non-generation  related                                                               
consumer  charges   if  those  charges  are   authorized  in  the                                                               
utility's tariff.   Subsection (p) allows the  utility to request                                                               
a  change  to its  rate  design  to  incorporate a  net  metering                                                               
customer class; however, the utility  must demonstrate an adverse                                                               
material rate impact on those who do not net meter.                                                                             
                                                                                                                                
4:43:16 PM                                                                                                                    
                                                                                                                                
MS. SENETTE  then advised  that the remainder  of Amendment  1 is                                                               
definitions.  She introduced expert witnesses.                                                                                  
                                                                                                                                
4:44:01 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT asked  whether the  RCA supports  codifying its                                                               
recommendations  in  statute,  or  if   it  wishes  to  keep  the                                                               
recommendations under regulations.                                                                                              
                                                                                                                                
MS.  SENETTE  said  she  did   not  know.    However,  there  are                                                               
advantages  to moving  the recommendations  into statute  because                                                               
statute  trumps regulations  and is  not subject  to a  change in                                                               
leadership.                                                                                                                     
                                                                                                                                
4:45:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR EDGMON  understood that  the RCA chairman  preferred the                                                               
recommendations not  be put  into statute,  and he  expressed his                                                               
interest in hearing whether the RCA supports the [amendment].                                                                   
                                                                                                                                
REPRESENTATIVE TUCK  agreed.  He  pointed out that  the amendment                                                               
codifies language, but questioned the  purpose of also giving the                                                               
commission allowances to make changes.                                                                                          
                                                                                                                                
4:46:45 PM                                                                                                                    
                                                                                                                                
RICH  GAZAWAY,   Advisory  Section  Manager,   Alaska  Regulatory                                                               
Commission (RCA),  Department of Commerce, Community,  & Economic                                                               
Development  (DCCED),  advised  the  committee that  he  was  the                                                               
administrative law  judge who conducted the  hearings and process                                                               
for net metering regulations.                                                                                                   
                                                                                                                                
CO-CHAIR MILLETT asked  whether there is a benefit to  the RCA to                                                               
not have these regulations in statute.                                                                                          
                                                                                                                                
4:47:39 PM                                                                                                                    
                                                                                                                                
MR.  GAZAWAY   confirmed  that  having  the   recommendations  in                                                               
regulations provides the RCA with  a greater level of flexibility                                                               
to amend  standards.  However,  as a  staff member, he  could not                                                               
speak to what position the five commissioners would take.                                                                       
                                                                                                                                
4:48:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK  observed that  the amendment allows  the RCA                                                               
to make changes in Section 1.   Therefore, he asked whether there                                                               
are limitations to the RCA's flexibility to make changes.                                                                       
                                                                                                                                
4:49:01 PM                                                                                                                    
                                                                                                                                
MR.  GAZAWAY  explained  that the  waiver  provision  allows  the                                                               
commission to  exercise its  discretion.   He concluded  that the                                                               
language would  provide some flexibility,  and is modeled  on RCA                                                               
regulatory language.                                                                                                            
                                                                                                                                
4:49:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS  defended  the language  in  Amendment  1,                                                               
saying  it codifies  the legislature's  intent for  net metering.                                                               
Because  net  metering  in  Alaska is  brand  new,  he  cautioned                                                               
against the use of rigid language.   In fact, the use of the word                                                               
"may"  provides   sufficient  direction  to  the   RCA  from  the                                                               
legislature,  and sufficient  latitude for  the RCA  to interpret                                                               
what works for the utilities across the state.                                                                                  
                                                                                                                                
4:51:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK clarified that he  was not suggesting the use                                                               
of the word  "shall."  He re-stated his inquiry  as to the effect                                                               
of the  amendment and  why it was  necessary to  codify decisions                                                               
that the RCA is authorized to make.                                                                                             
                                                                                                                                
4:52:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT  withdrew her objection  to Amendment 1.   There                                                               
being no further  objection, Amendment 1 was adopted,  and HB 31,                                                               
as  amended,  was  before  the  committee.    She  opened  public                                                               
testimony.                                                                                                                      
                                                                                                                                
4:52:58 PM                                                                                                                    
                                                                                                                                
JIM  STIMPFLE  said he  could  not  tell  from  the bill  or  the                                                               
amendment whether this is a two meter  or a one meter system.  In                                                               
a one  meter system, one  meter reads the  power going in  and if                                                               
consumers  are  using  their  own   renewables,  the  meter  runs                                                               
backwards.                                                                                                                      
                                                                                                                                
CO-CHAIR MILLETT opined the legislation  does not address how net                                                               
metering  takes place  because that  is a  "utility to  consumer"                                                               
issue.                                                                                                                          
                                                                                                                                
4:54:02 PM                                                                                                                    
                                                                                                                                
MR.  STIMPFLE referred  to  Amendment  1, page  4,  line 15,  and                                                               
recommended  the  addition  of  a  provision  to  allow  a  small                                                               
business owner, in a rural area,  an offsite grid connection as a                                                               
way to  "credit back" the power  usage at another site.   He then                                                               
asked whether  the Alaska  Village Electrical  Cooperative (AVEC)                                                               
produces  less  than five  million  kilowatts  and has  a  waiver                                                               
against compliance with net metering.                                                                                           
                                                                                                                                
4:54:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT said she believed that to be the case.                                                                         
                                                                                                                                
4:55:08 PM                                                                                                                    
                                                                                                                                
MIKE  O'MEARA,   Homer  Spokesman,  Homer   Electric  Association                                                               
Member's  Forum,  informed  the   committee  the  Homer  Electric                                                               
Association Member's Forum  is a ratepayers' group.   He said his                                                               
organization questions  the need to  codify the RCA  net metering                                                               
regulations into  law; however,  HEA Member's  Forum participants                                                               
would be supportive of the bill,  as amended, if it goes forward.                                                               
Consensus among  the participants  is that the  RCA did  a pretty                                                               
good job  of balancing the  demands from various interests.   The                                                               
organization remains  interested in  seeing that nothing  is done                                                               
to diminish  the regulations,  and he urged  that changes  not be                                                               
made  to  affect   what  the  RCA  has  regulated.     Also,  his                                                               
organization  discourages  any  language  that  would  limit  the                                                               
ability  of   ratepayer  groups'  participation  in   future  RCA                                                               
deliberations on this issue.                                                                                                    
                                                                                                                                
4:58:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT clarified that the  amendment was adopted and is                                                               
now part of the bill.                                                                                                           
                                                                                                                                
4:58:21 PM                                                                                                                    
                                                                                                                                
PETER McKAY informed  the committee he has  participated with the                                                               
RCA proceedings  on net metering since  10/06.  He stated  he was                                                               
comfortable with  Appendix A to  RCA Order 09-1, Order  Number 3;                                                               
however, there are differences between  the order and Amendment 1                                                               
offered  by Representative  Ramras  in the  language  and in  the                                                               
structure.  Mr.  McKay said he could not be  comfortable that the                                                               
issues worked out by the  regulatory commission are intact in the                                                               
amendment,  and   he  stated  his   desire  for   a  line-by-line                                                               
comparison,  or  a  cross  reference  that  identifies  identical                                                               
language,   different  language   with  the   same  intent,   and                                                               
differences  and  omissions  when  compared to  RCA  Appendix  A,                                                               
Article 3,  Section 900, of  the Alaska Administrative Code.   He                                                               
urged that the  committee make this comparison prior  to the bill                                                               
moving forward.                                                                                                                 
                                                                                                                                
5:00:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT  asked  Mr.  McKay  to  send  his  concerns  in                                                               
writing.                                                                                                                        
                                                                                                                                
5:01:13 PM                                                                                                                    
                                                                                                                                
MARILYN  LELAND,  Executive  Director, Alaska  Power  Association                                                               
(APA), informed  the committee her organization  is the statewide                                                               
trade  association representing  electric  utilities that  supply                                                               
power to 500,000 Alaskans.  Ms.  Leland provided a history of net                                                               
metering regulation  in Alaska  from 2006.   She stated  that her                                                               
organization believes that the RCA  process that is now completed                                                               
was  a  success.    Public participation  in  the  workshops  and                                                               
opportunities for  public testimony were well  attended; in fact,                                                               
during  the workshops  RCA  staff,  utility representatives,  and                                                               
members  of  the   public  came  to  agreements   that  "all  who                                                               
participated could live with."                                                                                                  
                                                                                                                                
5:03:40 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT asked whether APA supports this legislation.                                                                   
                                                                                                                                
MS. LELAND  responded that the  bill and amendment have  not gone                                                               
to  the  membership;  however,   APA  issued  a  resolution  that                                                               
supported leaving net metering to the RCA regulatory process.                                                                   
                                                                                                                                
5:04:37 PM                                                                                                                    
                                                                                                                                
DEAN THOMPSON,  Attorney, Alaska  Power Association  (APA), began                                                               
his testimony  by saying  that APA  actively participated  in the                                                               
RCA  process   and  does   not  oppose   the  substance   of  the                                                               
regulations;  however,  APA  has  administrative  concerns  about                                                               
codifying RCA regulations  in statute.  The main  concern is that                                                               
it  may create  inconsistencies between  statute and  regulation.                                                               
The regulations adopted  by the RCA are not  legally effective or                                                               
final, and  will not be until  reviewed by the Department  of Law                                                               
(DOL)  and certified  by the  lieutenant governor.   Furthermore,                                                               
the review could  result in substantive changes  that require the                                                               
RCA to re-notice the regulations.   In either case, codifying the                                                               
most   recent    RCA   regulations   in   statute    may   create                                                               
inconsistencies.    Secondly,  the  risk  increases  if  the  DOL                                                               
suggests changes  to the regulations.   Mr. Thompson  warned that                                                               
those   are  the   problems  that   could  result   in  codifying                                                               
regulations  that  are  not  yet final.    Regarding  the  waiver                                                               
language in Section 1, subsection  (b) of Amendment 1, he pointed                                                               
out  that the  standard for  the  waiver is  that "no  legitimate                                                               
public interest  would be served  by enforcing  the requirement."                                                               
He  opined the  commission  is given  some  flexibility, but  not                                                               
complete flexibility or discretion.                                                                                             
                                                                                                                                
5:09:26 PM                                                                                                                    
                                                                                                                                
MR. THOMPSON assured the committee  that APA worked hard with the                                                               
RCA  and  other  stakeholders  on  the  regulatory  process  and,                                                               
although   members   are   not  completely   pleased   with   the                                                               
regulations,  they determined  the regulations  were good  enough                                                               
and worked well enough for everyone  to move ahead.  He commended                                                               
the parties in this regard.                                                                                                     
                                                                                                                                
5:10:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT ascertained that no one else wished to testify,                                                                
but left public testimony open for further comments.  HB 31 was                                                                 
held in committee.