Legislature(2021 - 2022)GRUENBERG 120
04/30/2021 08:00 AM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Workers' Compensation Board | |
| HB170 | |
| HB75 | |
| SB21 | |
| SB69 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 170 | TELECONFERENCED | |
| += | SB 69 | TELECONFERENCED | |
| + | SB 21 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 75 | TELECONFERENCED | |
HB 170-ENERGY INDEPENDENCE PROGRAM & FUND: AIDEA
8:11:34 AM
CO-CHAIR FIELDS announced that the next order of business would
be HOUSE BILL NO. 170, "An Act establishing the Alaska energy
independence program and the Alaska energy independence fund in
the Alaska Industrial Development and Export Authority; and
providing for an effective date."
[Before the committee was CSHB 170(ENE).]
8:12:14 AM
REPRESENTATIVE SCHRAGE moved to adopt Amendment 1 to CSHB
170(ENE), labeled 32-GH1074\B.6, Fisher, 4/28/21, which read as
follows:
Page 9, lines 19 - 22:
Delete all material and insert:
"(e) At least 35 percent of the funds used for loans
and other forms of financing for sustainable energy
development made over a three-year period under
AS 44.88.450 - 44.88.456 must be made in communities
that receive, or that have residents who receive,
power cost equalization under AS 42.45.100 -
42.45.150."
8:12:17 AM
CO-CHAIR FIELDS objected for the purpose of discussion.
8:12:20 AM
REPRESENTATIVE SCHRAGE said that the purpose of Amendment 1 is
to ensure that underserved communities receive funding while
considering the concerns about flexibility that were expressed
by Alan Weitzner, Executive Director of the Alaska Industrial
Development and Export Authority (AIDEA), during the April 28,
2021, meeting of the House Labor and Commerce Standing
Committee. He said that by averaging the funding requirement
over three years, there would be flexibility while ensuring that
the program is equitable in its reach.
8:13:32 AM
REPRESENTATIVE MCCARTY asked whether small communities would be
considered for the funding mandate.
REPRESENTATIVE SCHRAGE responded that a number of communities
receive power cost equalization (PCE), including some near the
railbelt.
CO-CHAIR FIELDS added that the pending federal legislation
requires 40 percent allocation of funds to underserved
communities, so a 35 percent requirement in statute in Alaska
would be less restrictive while leaving room for funding
directed to underserved communities that are not necessarily
receiving PCE.
REPRESENTATIVE MCCARTY asked, "What is the denominator - the
federal, or the state?"
CO-CHAIR FIELDS responded that the federal law has not yet
passed.
8:15:51 AM
REPRESENTATIVE NELSON said he would like to hear an opinion on
Amendment 1 from AIDEA.
8:16:29 AM
ALAN WEITZNER, Executive Director, Alaska Industrial Development
and Export Authority, stated that AIDEA has the same concerns,
and for the same reasons, as previously expressed during the
House Labor and Commerce Standing Committee meeting on April 28,
2021. He read from the text of the Clean Air and Energy
Sustainability Accelerator Act, H.R. 806, Section 1627,
subsection (b), paragraph (2), which read as follows:
MINIMUM PERCENTAGE.The Accelerator shall ensure that
over the 30-year period of its charter 40 percent of
its investment activity is directed to serve climate-
impacted communities.
MR. WEITZNER stressed that the federal legislation specifies
"climate-impacted communities" to identify underserved
communities. He pointed out that the allocation of 40 percent
of investment activity is to occur over the 30-year charter,
which is not in line with the three years as suggested by
Representative Schrage. He said that there is ongoing debate
regarding how funding is applied and stated his belief that a
front-loaded funding requirement would inhibit the ability to
implement programs. He stressed that AIDEA supports the intent
of Amendment 1, which is to focus support on underserved
communities in urban, rural, and remote areas, and asked for the
flexibility necessary to help ensure a successful fund.
8:19:27 AM
REPRESENTATIVE SCHRAGE opined that Mr. Weitzner's testimony
further reinforces the need to define what an underserved
community in Alaska would be, especially considering the factor
of climate impact. In previous testimony, he said, it was
expressed that some of the best investments are in
weatherization and energy efficiency, both of which reduce the
cost of diesel heating and the savings of which allow
communities to pay back the loans received for energy upgrades.
He then suggested that, if Amendment 1 is so restrictive, the
capitalization could be increased so that approximately the same
amount of funding is available for other investments.
8:20:59 AM
CO-CHAIR FIELDS opined that Amendment 1 would make CSHB 170(ENE)
more flexible than originally written and amended.
8:21:10 AM
CO-CHAIR SPOHNHOLZ referred to the Renewable Energy Fund and
asked how many applications in the past five years haven't been
funded.
MR. WEITZNER replied that there has been no legislative funding
for the Renewable Energy Fund since approximately 2015; however,
the power cost equalization (PCE) endowment mandates that the
first tranche of earnings funds PCE; the second tranche,
totaling approximately $30 million, funds community assistance;
and any leftover earnings go to either power houses, the
Renewable Energy Fund, or into a loan fund administered by the
Division of Community and Regional Affairs at the Department of
Commerce, Community, and Economic Development. He said that 11
projects are pending before the legislature.
CO-CHAIR SPOHNHOLZ asked about the total value of the pending
projects.
MR. WEITZNER replied that the value is approximately $4.75
million.
CO-CHAIR SPOHNHOLZ commented that $4.75 million out of $10
million is more than the 35 percent currently proposed under
Amendment 1. She noted that energy in rural Alaska is
expensive, and that if spending by residents can be reduced, the
funds can be used to invest in more renewable energy, creating a
"virtuous cycle" of sustainability for those in PCE communities.
8:24:33 AM
CURTIS THAYER, Executive Director, Alaska Energy Authority,
pointed out that the Renewable Energy Fund is a grant program.
8:24:46 AM
MR. WEITZNER added that the Alaska Energy Independence Fund is
intended to be a loan program, and that green banks operate as a
financial conduit for private-sector investment.
CO-CHAIR FIELDS commented that the House Special Committee on
Energy heard testimony regarding the return on investment of
weatherizing homes in rural areas, many of which are extremely
inefficient.
8:25:27 AM
REPRESENTATIVE KAUFMAN expressed the viewpoint that the adoption
of Amendment 1 would be like telling a business that it would be
required to sell a certain percentage of its product to a
certain group.
REPRESENTATIVE SCHRAGE explained that the Connecticut Green Bank
was so successful that it studied the financial vehicles being
utilized and realized that underserved communities weren't being
invested in. A requirement for investment in underserved
communities was subsequently enacted, after which the green bank
found that investing in such communities is profitable. Such
projects are financially viable, he said, and Amendment 1 would
ensure the prioritization of underserved communities in response
to their need. He reminded committee members that the 35
percent funding requirement is already in CSHB 170(ENE);
Amendment 1 would average that amount over three years.
8:27:20 AM
REPRESENTATIVE NELSON asked Representative Schrage whether he
would consider a conceptual amendment to give Alaska's green
bank some "breathing room" before enacting the requirement.
REPRESENTATIVE SCHRAGE responded that promises to invest in
underserved communities often go unfulfilled, which is why he
wants the requirement. He said, "If we're going to create a new
program that invests in Alaska, let's make sure it's equitable
right up front."
8:28:09 AM
REPRESENTATIVE SNYDER suggested referring to the state energy
policy under AS 44.99.115 which, she said, "directs Alaska to
identify and assist with development [of] the most cost-
effective and long term sources of energy for each community
statewide." She said that the current policies have not
achieved the directive; therefore, she supports Amendment 1.
8:28:49 AM
REPRESENTATIVE MCCARTY discussed an allocation of $280 million
over 12 years for energy programs and mentioned insulation and
window installation in Kodiak. He asked what percentage of
homes the program impacted.
CO-CHAIR FIELDS asked Mr. Thayer to summarize the aggregate
investment and the renewable energy fund going back to 2008 and
the weatherization assistance program, as well as information on
the railbelt and the PCE program.
8:30:08 AM
MR. THAYER replied that the weatherization programs for housing
would have been through the Alaska Housing Finance Corporation
and that he would find information on the other programs.
8:30:38 AM
CO-CHAIR FIELDS told Mr. McCarty that state investment in
renewable energy infrastructure has been greater than the
aggregate investment in rural Alaska through the renewable
energy fund. The weatherization assistance program, he said,
was in urban and rural Alaska.
8:31:02 AM
CO-CHAIR FIELDS removed his objection to Amendment 1.
8:31:11 AM
REPRESENTATIVE NELSON objected to Amendment 1.
8:31:16 AM
A roll call vote was taken. Representatives Spohnholz, Fields,
Snyder, and Schrage voted in favor of Amendment 1 to CSHB
170(ENE). Representatives McCarty, Nelson, and Kaufman voted
against it. Therefore, Amendment 1 was adopted by the House
Labor and Commerce Standing Committee by a vote of 4-3.
8:32:02 AM
REPRESENTATIVE SCHRAGE moved to adopt Amendment 2 to CSHB
170(ENE), labeled 32-GH1074\B.1, Fisher, 4/28/21, which read as
follows:
Page 7, line 20, following "shall":
Insert "(1)"
Page 7, line 22, following "AS 44.88.450 - 44.88.456":
Insert ";
(2) annually prepare a report containing
information regarding the implementation and operation
of the Alaska energy independence program and fund
under AS 44.88.450 - 44.88.456, including the amount
of loans made, the amount available to be loaned, the
scope of projects financed, and actions taken by the
authority in response to recommendations from the
advisory board established under AS 44.88.450(b), and
deliver the report to the senate secretary and the
chief clerk of the house of representatives and notify
the legislature that the report is available"
8:32:06 AM
CO-CHAIR FIELDS objected for the purpose of discussion.
8:32:09 AM
REPRESENTATIVE SCHRAGE explained that Amendment 2 would require
annual reports detailing the activities of the fund to include
what investments have been made, how much has been invested, and
how much money remains in the fund.
8:33:34 AM
CO-CHAIR FIELDS removed his objection. There being no further
objection, Amendment 2 to CSHB 170(ENE) was adopted.
8:33:42 AM
REPRESENTATIVE SCHRAGE moved to adopt Amendment 3 to CSHB
170(ENE), labeled 32-GH1074\B.8, Fisher, 4/28/21, which read as
follows:
Page 2, lines 7 - 13:
Delete all material and insert:
"(2) five public members [APPOINTED BY THE
GOVERNOR], each of whom has expertise in private
sector business or industry, or both, and possesses
demonstrated leadership skills, appointed by the
governor, subject to confirmation by a majority of the
members of the legislature in joint session."
Page 2, lines 15 - 16:
Delete "Public members of the authority described
in (a)(2) of this section serve [AT THE PLEASURE OF
THE GOVERNOR] for four-year [TWO-YEAR] terms."
Insert "Public members of the authority described
in (a)(2) of this section serve staggered five-year
[AT THE PLEASURE OF THE GOVERNOR FOR TWO-YEAR] terms."
Page 2, lines 18 - 21:
Delete all material.
Renumber the following bill sections accordingly.
Page 10, line 31, through page 11, line 7:
Delete all material and insert
"(1) one member shall serve a one-year
term;
(2) one member shall serve a two-year term;
(3) one member shall serve a three-year
term;
(4) one member shall serve a four-year
term;
(5) one member shall serve a five-year
term."
8:33:45 AM
CO-CHAIR FIELDS objected for the purpose of discussion.
8:33:46 AM
REPRESENTATIVE SCHRAGE explained that an amendment adopted to HB
170 by the House Special Committee on Energy expanded the board
of AIDEA, which is the same as the board of AEA, from five
members to seven; it also mandated that four of the members be
appointed by the legislature. He expressed the belief that the
amendment would have been unconstitutional and would have
overextended the reach of the legislature; Amendment 3, he said,
is an attempt to broker proper legislative involvement in the
board. The board would consist of five members and the governor
would retain appointing power, he said, and appointees would be
confirmed by the legislature. He said that Amendment 3 would
also expand the board members' terms from four years to five,
staggered to allow one new appointee each year.
8:35:41 AM
REPRESENTATIVE NELSON asked for the vote on the amendment passed
in the House Special Committee on Energy.
REPRESENTATIVE SCHRAGE replied that he believes it passed by a
vote of 5-2.
CO-CHAIR FIELDS expressed his agreement.
REPRESENTATIVE NELSON asked whether Representative Schrage voted
for an amendment he believed to be unconstitutional.
CO-CHAIR FIELDS explained that there was no consensus on the
constitutionality of the amendment. He said that, given the
varying opinions, it seems as if Amendment 3 is an attempt to
compromise. He stressed that it was not clear whether the
amendment was unconstitutional.
8:37:05 AM
REPRESENTATIVE SCHRAGE said that it was his opinion that the
previous amendment was unconstitutional, and he agreed with Co-
Chair Fields' assertion that there was no clear consensus. He
said that he doesn't want to see the proposed legislation caught
up in legal issues.
8:38:09 AM
REPRESENTATIVE NELSON expressed his understanding that the
proposed legislation is about establishing a green bank and said
that he doesn't understand how board requirements are involved.
CO-CHAIR FIELDS explained that the proposed legislation would
empower AIDEA with respect to the planned green bank, so it's
logical to look at AIDEA's board structure and requirements.
8:38:39 AM
MR WEITZNER shared that AIDEA's position is that the issue is
much broader than just what's described in the proposed
legislation, including sustainable energy development and
economic development in the sector.
8:39:29 AM
REPRESENTATIVE SCHRAGE commented that AIDEA already manages over
$1 billion and, with the federal funds expected to be added, he
could see AIDEA reaching $2 billion in managed assets. To put
it in perspective, he noted that $2 billion equals half of
Alaska's current state budget. He opined that proper oversight
is needed if the intention is to continue to empower AIDEA and
to grow the scope of development it manages.
CO-CHAIR FIELDS commented that AIDEA board members undertake
complicated, technical work, so a longer tenure makes sense;
staggered terms would provide greater stability and
predictability across administrations.
8:40:48 AM
CO-CHAIR FIELDS removed his objection to Amendment 3.
8:41:00 AM
REPRESENTATIVE KAUFMAN objected for the purpose of discussion.
8:41:03 AM
REPRESENTATIVE NELSON suggested proposing different legislation
regarding AIDEA oversight. He commented that he doesn't want to
vote on Amendment 3 only to learn later that the amendment may
be unconstitutional.
8:41:41 AM
REPRESENTATIVE KAUFMAN expressed that, while Amendment 3 is an
improvement over the prior amendment adopted within CSBH
170(ENE), the issue of AIDEA oversight is worthy of a separate
piece of legislation. He asked Representative Schrage to
discuss how the performance of board members would be managed
should Amendment 3 be adopted.
8:43:08 AM
REPRESENTATIVE SCHRAGE responded that there are currently no
performance measures for AIDEA board members; all five
appointees serve at the pleasure of the governor, who may hire
and fire members with no legislative process. He expressed that
Amendment 3 would mandate thoughtful decisions regarding board
appointments. He then listed several different state boards
with appointees who serve at the pleasure of the governor, are
confirmed by the legislature, and who may or may not be removed
only for cause; he concluded that there is plenty of precedent
for legislative confirmation and removal for cause for
appointees serving on public-private boards.
8:44:58 AM
REPRESENTATIVE MCCARTY said that he is confused about a number
of issues, and he asked whether the governor is unilaterally
appointing board members.
REPRESENTATIVE SCHRAGE replied, "Yes, there are numerous boards
that either have appointment at the pleasure of the governor or
with confirmation, and removal at the pleasure of the governor
or with cause. We have numerous boards, all with different
structures, but the changes made in this amendment, there's
precedence for."
REPRESENTATIVE MCCARTY commented that, as a former trustee of
the Alaska Mental Health Trust Authority, he was appointed by
the governor and confirmed by the legislature. He expressed the
belief that Representative Schrage "gave an example of something
that doesn't exist," and he asked for an at-ease to investigate
Representative Schrage's claims.
8:46:00 AM
CO-CHAIR FIELDS pointed out that there may be a
misunderstanding, and he invited Representative Schrage to
clarify his statements.
8:46:04 AM
REPRESENTATIVE SCHRAGE said, "I believe I said, '... Mental
Health Trust, appointed by the governor, confirmation by the
legislature...'. I believe you went through the confirmation
process, and removal is for cause only. So, in fact, the Mental
Health Trust would be very similar [in] structure to what this
amendment would create."
REPRESENTATIVE MCCARTY expressed understanding that AIDEA board
members are appointed by the governor with no legislative
involvement.
REPRESENTATIVE SCHRAGE responded that is correct.
CO-CHAIR FIELDS interjected that Representative McCarty's
description is of the current process, which would be changed by
the adoption of Amendment 3 to be more in line with other state
boards.
8:46:50 AM
CO-CHAIR FIELDS asked Representatives Kaufman and Nelson whether
they maintained their objections.
[Representative Nelson nodded, indicating that he maintained his
objection.]
8:46:52 AM
A roll call vote was taken. Representatives Nelson, Snyder,
Spohnholz, Fields, and Schrage voted in favor of Amendment 3 to
CSHB 170(ENE). Representatives Kaufman and McCarty voted
against it. Therefore, Amendment 3 was adopted by the House
Labor and Commerce Standing Committee by a vote of 5-2.
8:47:49 AM
CO-CHAIR SPOHNHOLZ moved to adopt Conceptual Amendment [4] to
CSHB 170(ENE), to rename the green bank from the Alaska Energy
Fund to the Alaska Clean Energy Fund.
8:47:52 AM
CO-CHAIR FIELDS objected for the purpose of discussion.
8:47:53 AM
CO-CHAIR SPOHNHOLZ expressed that Alaska needs to show that it's
serious about engaging in the transformative powers of the green
bank, and amending the name would help accelerate the move
toward energy sustainability and independence. She pointed out
the need for private investment, and stressed that development
of clean energy would attract investors.
8:49:06 AM
REPRESENTATIVE NELSON expressed that the $10 million already
committed to the green bank should demonstrate Alaska's
commitment.
CO-CHAIR FIELDS interjected that the updated fiscal note for
capitalization of the green bank is $30 million.
8:49:54 AM
MR. WEITZNER listed several names of similar programs in other
areas and said that the current name evokes the mission of the
fund and Alaska's sense of independence. He said that this
initiative is a novel approach to energy independence and that
the name of the fund is derived from its mission.
8:51:49 AM
REPRESENTATIVE MCCARTY asked Mr. Weitzner whether he agrees with
changing the name to the Alaska Clean Energy Fund.
MR. WEITZNER said that AIDEA's preference is to leave the name
as originally proposed and that he was only trying to inform the
committee on the derivation of the name.
REPRESENTATIVE MCCARTY said, "I'm also concerned about what
happened in Texas ... Green energy was destroyed in areas where
they had to go to other sources to keep energy going, and if we
isolate it in words that it goes to 'this,' and something
happens ... some of that green energy could be destroyed for a
time." He asked whether the name would inhibit fund mobility.
MR. WEITZNER explained that the name itself would not prohibit
using funds for things not specifically "clean," nor would it
inhibit the state from being able to obtain federal or private
sector funding.
8:54:48 AM
REPRESENTATIVE SCHRAGE pointed out that the proposed legislation
includes definitions for acceptable investment and that the name
has no impact on fund uses.
8:55:36 AM
CO-CHAIR SPOHNHOLZ commented about the need to brand the program
in a way that publicly illustrates the purpose of the fund;
energy independence could imply an investment in diesel, she
said, which isn't helping solve the energy problem. Green
energy works in Alaska, she said, and Texas wasn't prepared with
the infrastructure for freezing weather just like Alaska isn't
prepared for excessive heat. She said that she isn't concerned
that changing the name to the Alaska Clean Energy Fund would
prohibit energy efficiency, but that it would signal that
Alaska's green bank is a worthwhile investment.
8:57:36 AM
CO-CHAIR FIELDS removed his objection. He stated that
Representative Nelson "maintains his objection."
8:57:42 AM
A roll call vote was taken. Representatives Spohnholz, Fields,
Schrage, and Snyder voted in favor of Conceptual Amendment [4]
to CSHB 170(ENE). Representatives Nelson, Kaufman, and McCarty
voted against it. Therefore, Conceptual Amendment 1 was adopted
by a vote of 4-3.
8:58:37 AM
CO-CHAIR FIELDS opened public testimony on CSHB 170(ENE), as
amended.
8:58:56 AM
LIZZIE NEWELL testified in support of HB 170. She said that the
average annual cost of energy is over $8,000 per resident and
that up-front costs for home efficiency upgrades are burdensome;
however, previous programs to offset the costs have been
restricted. She said that her community council recently
arranged for discounted solar panel installation but that she
wasn't able to get a loan to cover the cost; had loans been
available, more people would have been able to participate. She
said home weatherization frees up income and employs individuals
to complete upgrades at a time when employment is needed. She
said that the proposed legislation would combat the state's high
utility costs along with the large carbon footprint, and that it
would have a lasting impact on neighborhoods.
9:01:47 AM
REPRESENTATIVE SCHRAGE commented that Ms. Newell's testimony
demonstrates the importance of the bill.
9:02:09 AM
TIM DILLON, Executive Director, Kenai Peninsula Economic
Development District, testified in support of HB 170, commenting
that Alaskans pay nearly twice the national average for energy.
He said that cost-effective loan programs for individuals and
communities for sustainable development would assist in creating
new jobs and businesses and would improve Alaska's energy
independence.
9:03:21 AM
HEZEKIAH HOLLAND III testified in support of HB 170, sharing
that he is a private investor and is very involved in
entrepreneurship and innovation startups. He stated that, while
he supports the proposed legislation, he is concerned that there
are questions of "will" and of the ability to invest in new
projects. He expressed concern with the overlap of the boards
of AIDEA and the Alaska Energy Authority (AEA) and of the
boards' power to create new subsidiary organizations with no
advisory reporting, and he recommended reconsideration of the
powers under AS 44.88.178. He said that Alaska must move to a
more independent and "investable" structure that would attract
private capital, and he mentioned observing similar public-
private initiatives that had risk tolerance levels that made
investment unattractive. Regarding the board members, he
recommended reserving a seat for an appointee specifically
identified as having a background in innovation and new
technology and who could be a voice for transformation instead
of continuation of past projects. He suggested using the Alaska
Center for Energy and Power or Launch Alaska as resources.
9:06:15 AM
CO-CHAIR FIELDS commented that subsidiaries would be limited to
the functions of the green bank.
9:06:44 AM
ROBERT VENABLES, Executive Director, Southeast Conference,
testified in support of HB 170, expressing that it's consistent
with the state's energy policy. He said that the legislature
has been very "strategic" in ensuring that every opportunity to
leverage federal funds is met to the fullest possible extent.
He said that the proposed legislation addresses a significant
need for loans and other forms of development in sustainable
energy in residential, commercial, and industrial market
sectors.
9:08:27 AM
NAURI TOLER testified in support of HB 170. She expressed
concern with establishing the green bank within AIDEA due to
issues she characterized as bad investments and employee
complaints that AIDEA creates a hostile work environment. She
supported at least one-third of funds earmarked for rural areas
and said that she would like to see a specific program for
greenhouse gas emissions.
9:11:09 AM
LOIS EPSTEIN testified in support of HB 170. She said she is an
engineer and has been a longtime critic of AIDEA's decisions,
commenting that the AIDEA board doesn't have the time or staff
to act as an independent check on AIDEA's decisions due to its
members being selected by the governor. She said that AIDEA
makes costly investments that promote the current governor's
interests, regardless of whether the investments make sense for
the state. The proposed legislation would be an opportunity to
establish statutes regarding AIDEA's decisions, she said, and
she recommended amending the proposed legislation to provide 30
days' public notice on resolutions and regulations, as well as
require AIDEA to develop a publicly-available document showing
the acceptance or rejection of factual or other relevant public
comment. She said that Representative Claman's amendment
regarding the makeup of the board should be retained in its
current form, and she pointed out that AIDEA has operated for
years without subsidiaries.
9:13:25 AM
CO-CHAIR FIELDS commented that his understanding of AS 44.88.178
is that the creation of limited liability companies (LLCs) is
limited to the functions of the green bank. He asked Mr.
Weitzner for his interpretation.
9:13:41 AM
MR. WEITZNER responded that AIDEA currently has statutory
authority under AS 44.88.172 to establish LLCs. The language of
the proposed legislation, he said, identifies the ability of
AIDEA to structure subsidiaries under the Alaska Energy
Independence Fund, and that those specific subsidiaries would be
used only for the program's powers and authorities.
9:14:45 AM
REPRESENTATIVE SCHRAGE stated his disagreement that AIDEA
currently has the ability to create LLCs. The original text of
HB 170, he said, would have given AIDEA explicit authority to
create LLCs under all of AIDEA's investments; Amendment 6,
adopted during the April 21, 2021, meeting of the House Special
Committee on Energy, ensured that the authorization for LLCs was
limited to the energy independence program.
9:15:23 AM
CO-CHAIR FIELDS stated his agreement that the amendment
appropriately constrains the LLCs to functions of the green
bank.
9:15:43 AM
JACK HEBERT testified in support of HB 170. He shared that he
is the founder of the Cold Climate Housing Research Center and
said he has been building homes in Alaska for 48 years. He said
that this proposed legislation is a positive step for rural
Alaska.
9:16:56 AM
JOHN GAEDEKE shared his concern regarding AIDEA oversight. He
said that more money allocated to the fund, and arguments by
AIDEA for more flexibility, seem to translate into less
oversight. He compared passing the proposed legislation with
AIDEA oversight to acknowledging that someone is a drunk driver
but still giving them a car. He said that he supports green
energy but is concerned about the AIDEA oversight aspect.
9:18:58 AM
CLARE KREILLKAMP, Associated General Contractors of Alaska
(AGC), testified in support of HB 170. She said that AGC does
not represent any particular resource industry, instead
advocating for a healthy economy, responsible environmental and
developmental partnerships, and opportunities for infrastructure
investment and construction activities. The Alaska Energy
Independence Fund would create new opportunities statewide, she
said, and the construction industry would play a critical role
in providing the new services, which translate to meaningful
wages for working Alaskans.
9:21:20 AM
JOMO STEWART, Energy Project Manager, Fairbanks Economic
Development Corporation (FED), testified in support of HB 170.
He said that Alaska needs an energy solution to address cost,
availability, and flexibility. He expressed that the impact of
power cost equalization (PCE) is limited to residents,
eliminating many economic actors in the state and that the cost
of "classically defined" market capital can inhibit project
development and enhancement. He expressed that the proposed
legislation would fill a gap between grants and traditional
market financing. He said that the ability to deviate from
traditional investor rules and financing criteria is crucial
because flexible capital can move projects forward.
9:23:47 AM
MARGI DASHEVSKY, Regenerative Economics Coordinator, Fairbanks
Climate Action Coalition, testified in support of HB 170. She
shared that she testified against the allocation of Coronavirus
Aid, Relief, and Economic Security (CARES) Act funding to AIDEA
for the Ambler Mining District Industrial Access Road project
and has had difficulty participating in AIDEA's processes. She
discussed the risk mitigation provided by green banks and said
that banks and credit unions can use their liquidity in
efficient manners. She said that this program provides an
opportunity to hire specialized loan officers to assist
homeowners and business owners in accessing funds and navigating
the system.
9:26:48 AM
CO-CHAIR FIELDS, after ascertaining that no one else wished to
testify, closed public testimony on CSHB 170(ENE), as amended.
9:26:57 AM
The committee took an at-ease from 9:26 a.m. to 9:27 a.m.
[CSHB 170(ENE), as amended, was set aside.]
9:28:07 AM
ADJOURNMENT
The House Labor and Commerce Standing Committee meeting was
recessed at 9:28 a.m. to a call of the chair.
3:03:07 PM
CO-CHAIR FIELDS called the House Labor and Commerce Standing
Committee back to order at 3:03 p.m. Present at the call back
to order were Representatives Fields, Snyder, Schrage,
Spohnholz. Representative Nelson arrived as the meeting was in
progress.
HB 170-ENERGY INDEPENDENCE PROGRAM & FUND: AIDEA
3:03:17 PM
CO-CHAIR FIELDS announced that the next order of business would
be a return to HOUSE BILL NO. 170, "An Act establishing the
Alaska energy independence program and the Alaska energy
independence fund in the Alaska Industrial Development and
Export Authority; and providing for an effective date." [Before
the committee was CSHB 170(ENE), as amended.]
CO-CHAIR FIELDS read from the text of CSHB 170(ENE), as amended,
page 5, beginning on line 9 and ending on line 11, which read as
follows:
Subject to limitations for the use of the economic
development account under AS 44.88.172 and the Alaska
energy independence fund under AS 44.88.450 -
44.88.456, the
CO-CHAIR FIELDS asked, "Does inclusion of the clause 'economic
development account under AS 44.88.172' open up AIDEA authority
to create LLCs beyond the scope of the green bank?"
3:04:01 PM
SANDON FISHER, Attorney, Legislative Legal Services, Legislative
Affairs Agency, responded that, with respect to the economic
development account, AIDEA's authority to create LLCs would
derive from AS 44.88.172(a)(2), which gives AIDEA the power to
own limited liability companies. He discussed the existence of
a possible conflicts between AS 44.88.172(a)(2) and AS 44.88.178
and he commented that, while the issue is worth clarifying, he
doesn't believe that this language would give AIDEA the power to
create LLCs. He said that the clause referenced by Co-Chair
Fields specifically refers to transferring assets into a
subsidiary, but requires that those assets be used for the
purpose of their respective funds.
CO-CHAIR FIELDS asked whether CSHB 170(ENE) limits the creation
of LLCs to the functions of a green bank.
MR. FISHER replied that it's unclear. He said that
corporations, LLCs, and limited partnerships are identified
specifically with respect to the green bank but not the economic
development account, and that the language in AS 44.88.172
specifically references LLCs, which, he expressed, may be the
source of the ambiguity. He pointed out that the committee has
the opportunity to clarify the issue.
CO-CHAIR FIELDS said that he wanted to clarify that the proposed
legislation would authorize the creation of LLCs, limited
partnerships, and subsidiary partnerships solely for the
functions of the green bank. He asked Mr. Fisher how that could
be accomplished.
MR. FISHER replied that it would be a policy call. He said that
the committee would need to determine whether AIDEA should be
limited to owning, but not forming, LLCs, or whether AIDEA
should be completely prohibited from owning or forming
subsidiary LLCs.
CO-CHAIR FIELDS stated that his goal would be to give AIDEA
clear authority to create and own subsidiaries, LLCs, or limited
partnerships for purposes of doing only green bank functions.
He said, "This is a bill about the green bank; I think it's
entirely reasonable that we give them the authority to use these
multiple corporate types to pursue green bank functions, but I
don't want it to be used beyond that ... whether the underlying
statutes authorize that, in my view, is a question for another
day." He asked Mr. Fisher whether he would have language on how
to accomplish that.
MR. FISHER suggested adding "but not including limited liability
companies" after the word "corporations" on page 5, line 4. He
suggested that such a change would accomplish Co-Chair Fields'
goal; however, it could potentially change the current authority
in statute.
3:10:06 PM
The committee took an at-ease from 3:10 p.m. to 3:11 p.m.
3:11:45 PM
CO-CHAIR SPOHNHOLZ opined that it would be wise to allow AIDEA
some flexibility with regard to its methods of conducting
business while creating more stability in its board membership.
She discussed the complex legal and regulatory environment
around energy and economic development, and she expressed that
having a longer tenure for board members is wise, as well as
ensuring that board members are removed for cause.
3:12:43 PM
CO-CHAIR SPOHNHOLZ moved to report CSHB 170(ENE), as amended,
from committee with individual recommendations and the
accompanying fiscal notes.
3:12:54 PM
CO-CHAIR FIELDS objected for the purpose of discussion. He
thanked all of the invited testifiers for their participation
and advice, and he noted the tension between public requests for
transparency and accountability regarding AIDEA, and AIDEA's
ability to carry out the functions of the green bank. He then
removed his objection.
3:13:49 PM
REPRESENTATIVE NELSON objected.
3:13:58 PM
REPRESENTATIVE SCHRAGE expressed excitement at the prospect of
passage of the proposed legislation.
3:14:44 PM
REPRESENTATIVE NELSON expressed the opinion that the proposed
legislation has moved away from its original intention and that
the amendments have changed it to a comprehensive "fix" for
AIDEA.
3:15:14 PM
A roll call vote was taken. Representatives Spohnholz, Snyder,
Fields, and Schrage voted in favor of the motion to report CSHB
170(ENE), as amended, from committee with individual
recommendations and the accompanying fiscal notes.
Representative Nelson voted against it. Therefore, CSHB
170(L&C) was reported out of the House Labor and Commerce
Standing Committee by a vote of 4-1.