Legislature(2011 - 2012)BARNES 124
02/14/2012 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB264 | |
| HB312 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 264 | TELECONFERENCED | |
| *+ | HB 312 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 312-NATURAL GAS CONVERSION PROGRAM/FUND
8:57:12 AM
CHAIR MUNOZ announced that the final order of business would be
HOUSE BILL NO. 312, "An Act creating a low-interest loan program
for homeowners who convert their homes to natural gas-fired
heating; and creating the natural gas home heating conversion
loan fund."
8:57:18 AM
REPRESENTATIVE TAMMIE WILSON, speaking as the sponsor, explained
that HB 312 proposed to create a low-interest loan program for
Alaskans to convert their homes to natural gas-fired heating and
creates a natural gas home heating conversion loan fund. The
legislation would also allow the option for Alaskans to take out
a low interest loan to replace their oil, coal, or wood home
heating devices. Furthermore, the natural home heating
conversion loan program isn't subject to income limitations and
will be set at 1 percent interest for 10 years. She highlighted
that natural gas is a cleaner burning fuel than is currently
offered in many communities.
REPRESENTATIVE T. WILSON then informed the committee that per
the Environmental Protection Agency (EPA) the Fairbanks North
Star Borough is a nonattainment area for PM 2.5, which is a
particulate level. Thus far, models have shown that [the
designation] is due to Fairbanks' home heating, whether it's by
wood, coal, or heating oil. The aforementioned are the only
choices for residents of Fairbanks, save a small amount of gas
and some district heat within the City of Fairbanks. Therefore,
one would question why this proposed loan is necessary. She
explained that the EPA is going to require Fairbanks to prove
that it's taking steps to lower its particulate level, which is
called a state implementation plan. Fairbanks residents have
already been asked to upgrade their wood or coal burners, and
are also being asked to upgrade their oil furnaces when
affordable through the rebate program or other programs while
the area waits for natural gas to get to Fairbanks, which
hopefully will be less than 30 years because this proposal isn't
implemented until gas is available. She then related that
according to the EPA's emission factor data, switching from a
conventional wood stove to natural gas will reduce the PM
emissions in Fairbanks by 99.7 percent, which is very
substantial, and switching from oil to gas will reduce it by
38.6 percent.
REPRESENTATIVE T. WILSON then informed the committee that if
Fairbanks can't decrease its PM 2.5 to 35 parts per billion,
assuming the EPA doesn't change that, the EPA can eliminate that
Northern region's transportation funding. More locally, the
matter is about air quality and Fairbanks can't do much about
the inversion rate. Ultimately, Fairbanks can't reach [the
EPA's goal] without natural gas. Therefore, HB 312 provides
another tool that illustrates to the EPA a better way than
fining residents for heating their homes. She noted that the
Alaska Housing Finance Corporation (AHFC) would monitor this
loan program, for which there would only be funds once natural
gas is available to Fairbanks.
9:01:07 AM
REPRESENTATIVE T. WILSON, in response to Representative Gardner,
specified that this natural gas home heating conversion loan
program is modeled after the [energy] rebate program and stays
within its existing definitions and program.
REPRESENTATIVE GARDNER asked if the sponsor anticipates having
adequate funds to meet the needs of those homeowners who want to
participate or have income level guidelines been considered.
REPRESENTATIVE T. WILSON clarified that interior weatherization
is the program based on income and it's expected that many
Fairbanks residents will be able to use that program to upgrade
heating. This proposal targets the middle class which currently
can't afford to do the rebate program, but don't qualify for the
interior weatherization.
9:02:49 AM
REPRESENTATIVE CISSNA related her understanding that it's
possible for furnaces to be able to run on various sources of
energy such that a furnace could be converted to use natural gas
and then back to another source.
REPRESENTATIVE T. WILSON responded that at this point, she
hadn't considered that because in the Fairbanks area oil
furnaces or wood stoves couldn't be converted. She did
acknowledge that conversions to propane or natural gas might
allow converting [to another energy source] and she opined that
such conversions aren't quite as expensive as it would be to
convert an entire unit.
9:04:44 AM
REPRESENTATIVE FOSTER mentioned that propane cooking stoves come
with a part that can switch to natural gas, but he wasn't sure
how that would apply to heating equipment. He then inquired as
to the percentage of residents that use wood and oil.
REPRESENTATIVE T. WILSON specified that 60-65 percent of
Fairbanks residents use wood or coal burning devices, which has
been identified by the EPA as the main issue. Therefore,
Fairbanks has a program [to encourage] changing out wood
[furnaces]. Within the City of Fairbanks, it's about 55 percent
and growing as energy costs have increased.
9:06:11 AM
REPRESENTATIVE FOSTER then asked if HB 264 applies to just the
change out of appliance or does it also include the connections.
REPRESENTATIVE T. WILSON answered that it applies just to the
appliance. She expressed her belief that if the program covered
the cost of the appliance, then the homeowner could fund the
remainder of the process.
9:06:58 AM
REPRESENTATIVE AUSTERMAN related his assumption that in the
Railbelt there are many commercial buildings that currently burn
oil. If the goal is to reduce emissions, he questioned why the
legislation doesn't address commercial buildings as part of the
program.
REPRESENTATIVE T. WILSON explained that commercial buildings
weren't included because modeling has found that residential
buildings are causing the majority of the problem, mostly
because of the burning of wood and/or coal. She said she hadn't
wanted to broaden the legislation too much initially.
Furthermore, there are programs available for commercial
buildings. Representative T. Wilson offered to consider
broadening the legislation to include commercial buildings.
CHAIR MUNOZ opined that it would be more inclusive for the
program to include commercial buildings.
REPRESENTATIVE T. WILSON said she wasn't opposed to doing so.
9:08:20 AM
REPRESENTATIVE AUSTERMAN pointed out that HB 264 is basically
written for the Railbelt since it speaks to an issue specific to
Fairbanks and that is where the natural gas will be. Therefore,
he inquired as to what happens if Wantana is built or emissions
could be lowered by burning wood pellets rather than oil.
Representative Austerman also inquired as to whether the sponsor
had considered statewide issues.
REPRESENTATIVE T. WILSON stated that any community can use the
program if it had access to natural gas. The legislation does
focus on Fairbanks because of the need for Fairbanks to have its
state implementation plan submitted to the Alaska Department of
Environmental Conservation (DEC) by 2014 to ultimately be
submitted to the EPA. Representative T. Wilson reiterated that
HB 264 illustrates to the EPA that Fairbanks is serious about
wanting natural gas and what it would do for the area. She
reiterated that this proposed program would be available to
other areas currently burning oil that have access to natural
gas.
9:10:08 AM
REPRESENTATIVE AUSTERMAN informed the committee that by the end
of next year Kodiak will be using about 98 percent alternative
energy and will have electric rates of about $.14-$.15 per
kilowatt hour. Therefore, if there was a movement to convert
homes from diesel to electricity, perhaps the legislation should
include other energy sources beyond natural gas. Representative
Austerman said that he is considering a more holistic view of
the state.
REPRESENTATIVE T. WILSON related that with the Railbelt's high
cost of electricity, $.23-$.24 per kilowatt hour, she didn't
think of electricity as cheap enough to include in the program.
She said that she would be interested in an amendment to include
electricity because she wanted the program to apply statewide.
CHAIR MUNOZ related that much of the discussion of the Southeast
Alaska Integrated Resource Plan includes discussion of
conversion to wood pellets for home heating in some of the
smaller communities in Southeast Alaska.
9:12:30 AM
REPRESENTATIVE CISSNA recalled conversations that have led her
to believe that one can easily convert a gas-fired furnace to
propane. If that's the case, she indicated that it would be
[helpful for] HB 264 to include such options.
9:14:09 AM
REPRESENTATIVE GARDNER asked if the 1 percent interest on the
loan covers the overhead of establishing and administering such
a program or would the corpus of the fund be used for that.
REPRESENTATIVE T. WILSON deferred to AHFC, which will administer
the program.
9:15:30 AM
STACY SHUBERT, Director, Governmental Affairs & Public
Relations, Alaska Housing Finance Corporation, Department of
Revenue (DOR), highlighted that AHFC submitted an indeterminate
fiscal note. Although AHFC estimates that the cost to
administer the program would be 1 percent, it really depends
upon the demand of the overall program.
9:16:14 AM
CHAIR MUNOZ inquired of the committee the direction it wants to
provide to the sponsor.
9:16:42 AM
REPRESENTATIVE AUSTERMAN opined that the sponsor should add
sections addressing conversion to electricity and those areas
outside of the electrical grid or natural gas grid.
REPRESENTATIVE T. WILSON surmised then that instead of
specifying all types of energy, perhaps there could be a broader
reference to [alternative energy] to allow expansion as other
types of energy arise. She said she could do that.
9:18:10 AM
REPRESENTATIVE GARDNER recalled that Fairbanks faces the
possible loss of federal highway funds, and therefore she wanted
to evaluate the cost of the program versus the potential loss in
federal funds.
REPRESENTATIVE T. WILSON agreed to provide the committee with
the loss in transportation funds, but emphasized that this
legislation is addressing the restrictions that will be
implemented because Fairbanks is designated a nonattainment
area.
REPRESENTATIVE GARDNER said she is thinking of making a stronger
case for doing it now.
9:19:47 AM
CHAIR MUNOZ asked if the committee wants to expand the
legislation's 25 percent allowance for commercial structures.
REPRESENTATIVE GARDNER remarked that she is comfortable with it,
in the absence of any other testimony about it.
REPRESENTATIVE AUSTERMAN suggested that this issue may need to
be posed to AHFC.
9:20:28 AM
CHAIR MUNOZ asked if it would be overly burdensome or costly to
expand the program to include small businesses.
9:21:00 AM
PAUL KAPANSKY, Director, Mortgage Operations, Alaska Housing
Finance Corporation, Department of Revenue, specified that at
this point statute is severely limiting in terms of making loans
to commercial enterprises. Therefore, a change in statute would
be necessary to expand it to commercial enterprises. If there
was a change in statute and commercial enterprises were
included, he said the administrative cost and burden would
depend upon the need and demand. Currently, the residential
small loan program is administered via a contract through Alaska
USA. However, he wasn't sure how commercial loans would be
handled because AHFC doesn't do direct lending, per se.
CHAIR MUNOZ surmised then that perhaps that section should be
left as it is in the legislation.
REPRESENTATIVE T. WILSON noted that the 25 percent definition
was taken from the existing rebate program.
9:22:21 AM
REPRESENTATIVE FOSTER commented that the health impacts are
certainly immediate in terms of the particulates. However, he
asked if the fiscal impact in terms of the federal funds is
eminent or not.
REPRESENTATIVE T. WILSON said, "The EPA wants us to believe that
it's immediate." However, she related her understanding that
the odds are that in 2014 Fairbanks can't meet the deadline and
can ask for a five-year extension. She emphasized that it's not
just the highway funds that are at stake. For instance, if the
natural gas pipeline wanted to go through the Fairbanks North
Star Borough, because Fairbanks is a nonattainment area more
permitting would be required than would be necessary in other
communities. The economic impacts would be immediate, she
opined. She also noted that military bases and the movement of
troops would receive more scrutiny. Representative T. Wilson
related that she has been working directly with Region 10 EPA
through Seattle and has ascertained that as long as the area is
working toward the goal [of reducing emissions]5, the EPA is
usually "pretty good about it, but sometimes it depends on who
is the President of the United States at the time."
9:23:49 AM
CHAIR MUNOZ announced that HB 312 would be held over.