Legislature(2009 - 2010)SENATE FINANCE 532
03/25/2010 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB220 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 220 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 220
"An Act declaring a state energy policy; relating to
energy efficiency and alternative energy; establishing
the energy efficiency grant fund, an emerging energy
technology fund, a renewable energy production tax
credit, and an energy use index; and relating to a
fuel purchasing cooperative, to energy codes and
efficiency standards, to energy conservation targets
in public buildings, to a state agency energy use
reduction plan, to the alternative energy revolving
loan fund, and to the renewable energy grant fund."
9:34:11 AM
SENATOR WEILOCHOWSKI stated that the fiscal note attached
to HB 220 was about $1.3 million, and he believed that
money could be recouped within a year.
SENATOR LESIL MCGUIRE remarked that the $1.3 million would
be for program execution, relating to energy efficiency and
bulk fuel loans. Currently the state spends approximately
$52 million on combined heat and utility costs. With energy
retrofitting provisions proposed in SB220, she believed
that long term savings would occur. She pointed out that
there would be revolving loan funds for the private sector
and municipalities.
9:38:25 AM
Senator McGuire believed the revolving loan fund would be a
way to help partner with schools to lower costs of energy.
The bill encouraged municipalities and private businesses
to reduce energy costs, but it is not a mandate. She
pointed out that the bill outlined a production tax credit
for renewable energy. She remarked that there were no
renewable energy projects that generate income for the
state. She explained the Emerging Energy Technology Fund:
seed money is used to attract high level companies who are
looking at cutting edge technologies. She pointed out the
United States Department of Energy has an Emerging Energy
Technology Fund, and it was accessed by companies to
develop technologies that have reshaped the natural gas
market. The Denali Commission utilized the Emerging Energy
Technology Fund idea, and put it into place with $4
million. Results were felt throughout the state, due to the
Denali Commission's program. She believed the program would
leverage federal funds and private trust funds.
9:44:09 AM
Senator Ellis queried the interplay between the existing
renewable energy fund, and the emerging technology fund.
Senator McGuire replied that the Renewable Energy Fund
related to projects that involve proven or demonstrated
technologies. The Emerging Energy Technology Fund deals
with cutting edge or developing technologies.
9:47:22 AM
MICHELLE SYDEMAN, STAFF, BILL WIELECHOWSKI, reviewed the
PowerPoint presentation: "Alaska Sustainable Energy Act: SB
220." The bill was a product of the Senate Resources
Committee and the Senate Special Committee on Energy.
Hearings in different communities were held during the
interim. Because the hearings were conducted in relation to
scheduled events, attendances at the hearings were high.
9:49:06 AM
Ms. Sydeman stated that research and outreach were
conducted with various energy-related organizations (Slide
4): Renewable Energy Alaska Program, Alaska Center for
Energy and Power, Alaska Federation of Natives, Cold
climate Housing Research Center, Commonwealth North, Alaska
Power Association, and the Southeast Conference. Products
were developed as a result of the various community
hearings (Slide 5): State Energy Policy and Program
Recommendations (50+ pages), Budgetary (Letter to Senate
Finance Committee) and Statutory (SB 220).
Ms Sydeman remarked that plans and policies in other states
were considered when drafted the bill; sub-committees were
convened, combining the House and Senate staff; and experts
were interviewed-all with the intent of drafting the bill
to meet expectations.
9:50:44 AM
MICHAEL PAWLOWSKI, STAFF TO MCGUIRE, stated that the goals
for SB220 were to provide affordable and reliable energy
for Alaska families and businesses; to stimulate private
sector investment; to produce long-term savings by
maximizing energy efficiency; to have the state government
lead by example; and to promote innovation. (Slide 7)
Mr. Pawlowski presented the major bill components (Slide
8): a state energy policy; the Energy Efficiency Revolving
Loan Fund; efficiency in government; a renewable energy tax
credit; the Emerging Energy Technology Fund; energy loans
for businesses; and the Alaska Affordable Heating Program.
Ms. Sydeman discussed the State Energy Policy (Slide 9).
The goals of the state energy policy included increasing
energy efficiency by 15 percent by 2020 and to generate 50
percent of electricity statewide using renewable energy by
2020.
Ms. Sydeman continued to discuss the goals of the state
energy policy (Slide 10): to promote the development of
nonrenewable energy resources, including natural gas, heavy
oil, nuclear energy, coal, and gas hydrates; to support
energy research, education, and workforce development; and
to maintain a fiscal regime that encourages private sector
development
Ms. Sydeman presented the portion of the bill regarding of
Nuclear Energy (Slide 11). There were some areas in current
statute that needed revision, to ensure nuclear energy is
on a level playing field with other types of energy
development. The bill would remove from statute a
requirement for governor's approval for projects, and leave
in place a requirement of for municipal and Department of
Environmental Conservation approval. The bill would enable
nuclear projects to apply for funding from the Power
Project Fund.
9:55:17 AM
Mr. Pawlowski stated that the administration brought
forward SB223, which created a revolving loan fund under
the Alaska Housing Finance Corporation (AHFC), for energy
efficiency, retrofits, and projects. That legislation was
integrated into SB220. The Energy Efficiency Revolving Loan
Fund (Slide 12) leverages $18 million in federal stimulus
funds. The AHFC would give loans to municipalities, school
districts, or state entities to perform energy efficiency
retrofits. The savings would come back to the state to
repay the loan. The savings could be leveraged and secured;
therefore a revolving loan fund would be created, allowing
retrofits to occur in perpetuity. Retrofitting would create
an estimated 2,500 jobs related to weatherization and home
energy upgrades.
9:57:19 AM
Co-Chair Hoffman wondered if the retrofitting would apply
to all Alaska schools, including Regional Educational
Attendance Areas (REAAs). Mr. Pawlowski replied that
extensive language in Section 4 of the bill, allowed for
retrofitting for REAAs.
Ms. Sydeman discussed Slide 13: "Leading by Examples." The
bill states that by 2020, the Department of Transportation
and Public Facilities (DOT/PF) shall work with other state
agencies to retrofit at least 25 percent of all state
buildings. The definition of state buildings refers to the
largest, and most energy consuming state facilities. The
retrofitting was shown to save about 20 percent a year. The
state currently spends roughly $55 million a year to heat
and light its buildings, the savings could translate into
$2.75 million a year.
Ms. Sydeman discussed more pay-offs from retrofitting. The
the state recently retrofitted eight state buildings, and
the contractor guaranteed savings of at least $278,000 a
year from that retrofit. In year one, savings equaled
$366,000; in year two, savings equaled $592,000; and the
year prior, savings equaled $571,000. She asserted that
savings alone from retrofitting 25 percent of state
buildings could cover the fiscal note for SB 220.
9:59:52 AM
Ms. Sydeman continued to maintain that the state should
lead by example (Slide 15). Section 23 of SB220 called on
DOT/PF to construct all new state buildings to high
efficiency standards; Section 11 required that the state
use alternative energy for new public works, if viable and
cost-effective; Sections 12 and 22 mandate that the state
purchase energy efficient appliances, equipment, and
vehicles.
Ms. Sydeman reviewed Section 24 of the bill, related to the
energy efficiency campaign (slide 16). Section 24 mandates
that the Alaska Energy Authority (AEA) and AHFC collaborate
to educate Alaskans through mass media about low-cost ways
to save energy. Money was currently in the budget, and
website development was already in place. Experts estimate
between eight percent and fifty percent could be saved
through efficiency measures alone. Energy efficiency is one
of the cheapest ways to meet energy needs.
10:02:17 AM
Mr. Pawlowski discussed emerging energy technologies
(Slides 17 and 18). With high energy costs, Alaska was
perfect place to test emerging technologies. The state can
demonstrate technologies and reduce costs for local
residents. Developing new technologies could potentially
allow Alaska to export new technologies. Twenty five
percent of world's population lives without access to
electricity, which is an incentive to look for new ways to
energize. The bill would establish a competitive grant
program at AEA to foster innovation. The fund would be
matched with federal funds from the Denali Commission, the
Department of Energy, and private research dollars. New
technologies would create high-tech jobs and would spur
investment in Alaska's economy. Alaska would have potential
to be a world leader in emerging technologies, given its
resources.
Mr. Pawlowski added that language in the bill would allow
repayment for project funding that goes into broader
application.
10:05:02 AM
Mr. Pawlowski pointed to different examples of emerging
technologies (Slides 20, 21, and 22).
Mr. Pawlowski addressed the renewable energy tax credit
(Slide 23). The renewable energy tax credit would encourage
investment by the private sector into renewable energy; it
would support the goal of generating 50 percent of
electricity using renewable energy by 2025; 25 states offer
renewable energy corporate tax incentives; five states and
the federal government offer production tax credits;
credits only accrue one a project in operation; the credits
are capped at 10 percent of capital investment; and the
credits sunsets January 1 2018.
Mr. Pawlowski continued to address how the credit is
calculated, referring to Sections 20 and 21 of SB220 (slide
24). When calculating the tax credit, the state must know:
the capital cost; the state/federal grants that the project
has received; the cost per kilowatt-hour on the project;
and the capacity factor. He noted that there are 8760 hours
in a year, one megawatt/hour equals 1000 kilowatt/hours,
and $.01 per kilowatt/hours equals $10 per megawatt/hour.
Mr. Pawlowski referred to Slides 25 and 26 for renewable
energy tax credit examples.
10:09:51 AM
Co-Chair Stedman asked if the concept of renewable tax
credits for wind turbines was used in Kodiak. Mr. Pawlowski
responded that the research does not include Kodiak. He
remarked that the effective date would be prospective, but
agreed to provide information regarding Kodiak wind
turbines. Co-Chair Stedman recognized that there would an
issue of post-dating the tax credits.
Mr. Pawlowski furthered that the difference between
transferable and refundable tax credits (slide 27).
Transferable credits must be approved by the department;
they must be marketed and purchased, which require broker
fees and demands of the purchaser, which mean less than
full credit going to the person receiving the incentive-
therefore a transferrable credit is an expensive program to
administer. Refundable credits do not require personnel to
administer, and 100 percent of the credit goes to the
recipient. In looking at streamlining the credit, the tax
credit was made refundable rather than transferrable.
Co-Chair Stedman asked what the tax credit would be
against. Mr. Pawlowski stated that the tax credit would be
against the corporate income tax.
10:12:28 AM
Ms. Sydeman stated that Sections 26 through 33 of the bill
would create a new program of loans to businesses (Slide
28). The loans could be up to $50,000 for either
alternative energy systems, or energy conservation
improvements. The loans would be for businesses that are
primarily owned by Alaskans. The money could be used for
insulation, thermal windows, furnace replacement or on
energy systems which are not dependent on oil or gas.
Mr. Pawlowski noted that Senator Egan's office had worked
to develop a commercial loan program.
Ms. Sydeman discussed the Affordable Heating Program (Slide
29). The objectives of the affordable heating program were
to make the program more responsive to a family's actual
heating costs; increase assistance as oil prices rise and
need increases; maintain statewide eligibility; use
existing administrative structures.
10:15:09 AM
Ms. Sydeman explained the Low Income Home Energy Assistance
Program (LIHEAP) (Slide 30). Families must apply for LIHEAP
annually, and their eligibility is based on their annual
income. The benefit levels were calculated by awarding
points based on household income; heating degree days in
the household location; the type and size of the house; and
the presence of children, elderly, or disabled in the home.
The points are then multiplied by the dollar amount related
to each point available.
Ms. Sydeman stated that SB220 proposed some changes from
current practice (Slides 31 and 32): it would link program
eligibility to the price of oil.
10:17:53 AM
Ms. Sydeman highlighted some program details (Slide 33). If
there was not sufficient money appropriated to provide
funding, the Department of Health and Social Services would
pro-rate payments. The payments would go to fuel vendors,
and not households. Individuals must apply and qualify for
the LIHEAP. The current federal appropriation is $28
million; the current state appropriation is $5 million; and
20,191 households currently benefit from LIHEAP.
Ms. Sydeman discussed additional provisions (Slide 34). The
state was required to provide technical assistance for
municipalities regarding energy codes and efficiency
standards. The state agencies would develop a standard
methodology for compiling and storing data regarding energy
consumption. The bill would expand the purposes of the
Southeast Energy Fund. The Alaska Energy Authority (AEA)
would organize and provide technical assistance for a
statewide fuel buying cooperative. The bill calls on the
governor to develop a plan to coordinate and consolidate
energy programs. The bill calls for DOT/PF to embark on a
feasibility study of compressed natural gas (CNG) state
vehicles.
Ms. Sydeman concluded that that SB220 would be a step
towards energy efficiency and sustainability.
10:24:00 AM
Senator Thomas wondered if the bill provided for leased
state buildings. Ms. Sydeman responded that the bill does
not include leased buildings.
Senator Huggins queried the payback of the Revolving Loan
Fund.
10:25:42 AM
Mr. Pawlowski responded that the key to the concept of the
Revolving Loan Fund was in performance contracting. He
noted that the ability to auto retrofit is the guarantee
for what is loaned against.
In a response to a question by Senator Egan, Ms. Sydeman
stated that oil was the trigger when determining
eligibility for the LIHEAP.
In response to a question by Senator Olson, Mr. Pawlowski
referred to Page 12, beginning Line 13 of SB 220. He
specifically pointed to line 16, which stated the program
eligibility would pertain to projects where the average
cost of energy exceeds the average cost of residence.
Primarily, AEA must look at the cost of energy in a region;
AEA must look at geographic balance; and AEA must look at
the financial benefit of the program. The cost of energy is
a priority, and the program helps to limit an individual's
burden of heating costs.
10:30:05 AM
Co-Chair Stedman mentioned the eight fiscal notes: six zero
fiscal notes from the Department of Environmental
Conservation (DEC), the Department of Revenue (DOR), the
Department of Administration (DOA), the Department of
Health and Social Services (DHSS); a fiscal note for
$788,700 in general funds for statewide project development
from Department of Commerce, Community and Economic
Development (DCCED) for; another fiscal note for $326,500
in interagency receipts for aide operations from DCCED; one
fiscal note from DOT/PF for $493,200 in general funds for
new staff.
10:31:17 AM
WALTER ROSE, KAWERAK, NOME (via teleconference), testified
in opposition to the proposed changes in the project
ranging method in the Renewable Energy Grant Fund. He
testified in opposition to the proposed amendment to Alaska
Statute 42.45.045D in section 15 of SB220. He felt the
statute would divert renewable energy grant funding away
from rural communities into regional hubs and urban
centers. He recommended the Renewable Energy Grant Fund
continue to give preference to projects that serve any area
in which the average cost of energy to each resident of the
area, exceeds the average costs of each resident of other
areas of the state.
CLAY KOPLIN, CORDOVA ELECTRIC COOP, CORDOVA (via
teleconference), testified in favor of the legislation. He
referred to section 23 AS44.42.067 item A, and recommended
moving the date up to 2015 and changing the reduction to 15
percent. He referred to section 29, and recommended a
change from 51 percent to 50 percent.
10:35:15 AM
LISA HUGHES, NORTHERN ALASKA ENVIRONMENTAL CENTER,
FAIRBANKS (via teleconference), testified in favor of the
legislation. She discussed the investment that is necessary
for the future economy for the alternative energy
requirement.
HOLLY NORWOOD, APEX WING ENERGY, NIKISKI (via
teleconference), testified in favor of the legislation.
MARK MASTELLER, CASCADIA GREEN BULDING COUNCIL, (via
teleconference), testified in favor of the legislation.
10:41:29 AM
JIM SYKES, COORDINATOR, MATSU ENERGY OF ALASKA (via
teleconference), testified in favor of the legislation. He
agreed with all aspects of the bill. He shared stories of
citizens who retrofit their homes and are happy with the
results.
RICH WILSON, ALASKA RATEPAYERS, ANCHORAGE (via
teleconference), spoke in opposition of the legislation. He
felt gas-fired industrial production was important in
economic development.
ROBERT VENABLES, SOUTHEAST CONFERENCE (via teleconference),
spoke in favor of the legislation.
CHRIS ROSE, RENEWABLE ENERGY ALASKA PROJECT (via
teleconference), testified in support of the legislation.
He noted that various consumer groups strongly support the
bill.
10:49:54 AM
ROSS COEN, TANANA CHIEFS CONFERENCE, FAIRBANKS (via
teleconference), testified in support of SB 220. He
supported the emerging energy fund. He shared a story about
boosting the fuel efficiency by four percent. He addressed
the subject of the amendment to Section 15 which will keep
the amount of grant funds. Shift from urban areas to rural
areas. He encouraged the reconsiderations of the committee.
10:51:58 AM
NICK HORRAS, YUUT ELITNAURVIAT (via teleconference),
testified in support of the legislation.
CAITLIN HIGGINS, EXECUTIVE DIRECTOR, ALASKA CONSERVATION
ALLIANCE (via teleconference), testified in favor of the
legislation.
10:56:41 AM RECESSED
1:34:17 PM
KIRK HARDCASTLE, OPERATIONS MANAGER, TAKU RENEWABLE
RESOURCES, testified in support of SB 220. He spoke in
support of the renewable energy section of the bill. He
noted that the finances allow for sustainable economic
strategies.
1:38:12 PM
THOMAS DEERFIELD, ALASKA POWER AND TELEPHONE, testified in
support of SB220. He mentioned the tax credit portion which
could have a significant effect on the funding necessary
for a Tok Alaska project.
1:42:39 PM
SB 220 was HEARD and HELD in Committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2 4 10 Sen McGuire FY10 FY09 Utility expenditure summary.pdf |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| Draft Energy Policy and Program Recommendations.pdf |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| DSIRE Incentive Summary Sheet.pdf |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| EETF Report.docx |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| EmergingTechFund4.pdf |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| Energy Conservation Pilot School Report.doc |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| Final Project Descriptions.docx |
SFIN 3/25/2010 9:00:00 AM |
SB 220 |
| Final Project Descriptions.docx |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| Renewable Energy Refundable Tax Credit Sheet.pub |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| SB 220 AAHP Document.PDF |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| SB 220 Resolutions of Support from APA.pdf |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| SB 220 Sectional Summary Version O.PDF |
SFIN 3/25/2010 9:00:00 AM |
SB 220 |
| SB 220 Sectional Summary Version O.PDF |
SFIN 3/25/2010 9:00:00 AM |
SB 220 |
| SB 253 DEC SFC Capital-Def. Maint. SFC 03.15.2010.pdf |
SFIN 3/25/2010 9:00:00 AM |
SB 253 |
| SB 253 FY11 UA Deferred Maintenance by MAU dist.pdf |
SFIN 3/25/2010 9:00:00 AM |
SB 253 |
| Sectional Summary Version D.PDF |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| Powerpoint - Alaska Sustainable Energy Act Presentation to Senate Finance 3-25-10.pptx |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| SB 220 Kewerak letter of support.pdf |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |
| SB220 Legislative_testimony March 2010.doc |
SFIN 3/25/2010 9:00:00 AM SFIN 3/25/2010 1:30:00 PM |
SB 220 |