04/30/2001 05:35 PM Senate RES

                                                                                                                                
            HB 236-AIDEA BONDS FOR GAS PUBLIC UTILITIES                                                                     
                                                                                                                                
CHAIRMAN  JOHN  TORGERSON  called  the  Senate  Resources  Committee                                                          
meeting  to order at  5:35 p.m. and  announced HB  236 to be  up for                                                            
consideration.                                                                                                                  
                                                                                                                                
MR. RANDY RUARO,  staff to Representative  Williams, said  this bill                                                            
provides legislative  authority under  AS 44.88.100(g) for  AIDEA to                                                            
issue bonds  for a  specific natural  gas project.  The natural  gas                                                            
service  would  offer  a  fairly  cheap  and environmentally   clean                                                            
alternative source of fuel to communities.                                                                                      
                                                                                                                                
MR. PAUL  ROSENOWSKI,  Alaska Intrastate  Gas Co.  (AIGC), said  his                                                            
company  believes  introduction  of  gas utility  service  to  these                                                            
communities  will  provide  a  very  good,  clean,  environmentally                                                             
friendly  alternative  fuel source  that will  help  the economy  of                                                            
these  communities  as well  as significantly  reduce  their  energy                                                            
costs.                                                                                                                          
                                                                                                                                
He said the  cost of heating the Ketchikan  high school is  $400,000                                                            
per  year fuel  oil.  If the  school  was  heated with  natural  gas                                                            
instead,  that cost  would be reduced  by $60,000  to $80,000.  That                                                            
amount would  significantly boost  the school budget but  gas is not                                                            
available in  that community. The  same kind of savings could  occur                                                            
elsewhere.  He  said the  City  of  Cordova has  the  capability  of                                                            
supporting  a seafood processing plant,  but the costs of  operating                                                            
in the  community  are such  that there  are no  longer any  seafood                                                            
processors there. That  situation could change with the introduction                                                            
of natural gas.                                                                                                                 
                                                                                                                                
CHAIRMAN  TORGERSON asked  what percentage  of AIGC's portfolio  the                                                            
$76 million represents.                                                                                                         
                                                                                                                                
MR. ROSENOWSKI replied  that $76 million represents about 66 percent                                                            
of the  total project  costs. The  17 communities  are estimated  to                                                            
cost approximately $115  million.  AIGC and AIDEA have discussed the                                                            
possibility of bonding  approximately $50 million, which would leave                                                            
$26 million  of that bonding available  for subsequent communities.                                                             
They would  use $50  million in  Phase I for  three communities  and                                                            
then the  remainder would  be used for the  subsequent build-out  in                                                            
the smaller communities.  The total $76 million would  be sufficient                                                            
to cover the entire project.                                                                                                    
                                                                                                                                
CHAIRMAN TORGERSON  asked if the $50  million was front-end  loaded.                                                            
He said  that amount  would fix  three communities  and asked,  "How                                                            
much are you going  to have into it before you run  out of our AIDEA                                                            
money?"                                                                                                                         
                                                                                                                                
MR.   ROSENOWSKI   replied,   "The  financing   package   would   be                                                            
approximately  $70 million for Phase I, which is three  communities.                                                            
Eleven  million  dollars   of that   would  be  brought  in  through                                                            
ourselves.  Thirteen million  dollars  would be  brought in  through                                                            
internal  financing and the  remainder would  be the debt  financing                                                            
through  AIDEA, which  would bring  us up to  approximately the  $70                                                            
million."                                                                                                                       
                                                                                                                                
CHAIRMAN TORGERSON  said the committee would hold  the bill to await                                                            
further information.