Legislature(2011 - 2012)BARNES 124


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Heard & Held
Heard & Held
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           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                                                               
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                                                               
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                                                               
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.                                                                           

Document Name Date/Time Subjects
HB_312_Fiscal_Note_SENATE VERSION.pdf HCRA 2/14/2012 8:00:00 AM
HB 312
HB_312_Sectional.pdf HCRA 2/14/2012 8:00:00 AM
HB 312
HB_312_Sponsor_Statement.pdf HCRA 2/14/2012 8:00:00 AM
HB 312
HB_312_Support_Fairbanks_Proposed_Gas_Distribution.pdf HCRA 2/14/2012 8:00:00 AM
HB 312
HB_312_Support_FNSB_Priority.pdf HCRA 2/14/2012 8:00:00 AM
HB 312
HB_312_Support_Fuel_Prices.pdf HCRA 2/14/2012 8:00:00 AM
HB 312
HB_312_Support_Sierra_Research_Memo.pdf HCRA 2/14/2012 8:00:00 AM
HB 312
HB_312_Support_Newsminer.pdf HCRA 2/14/2012 8:00:00 AM
HB 312
02 - HB 264 Sponsor Statement, Version B.pdf HCRA 2/14/2012 8:00:00 AM
HB 264
02 - HB 264 Sponsor Statement, Version B.pdf HCRA 2/14/2012 8:00:00 AM
HB 264
04 - HB 264 Fiscal Note HB264-DCCED-DCRA-02-10-12.pdf HCRA 2/14/2012 8:00:00 AM
HB 264
05 - HB 264 Supporting Documents - Juneau Empire Editorial - City's Top 10 Goals - Tricks or Treats, 13 November 2011.pdf HCRA 2/14/2012 8:00:00 AM
HB 264
06 - HB 264 Supporting Documents - Alaska State Home Building Association Resolution in Support of HB 264, 20 January 2012.pdf HCRA 2/14/2012 8:00:00 AM
HB 264
06 - HB 264 Supporting Documents - Alaska State Home Building Association Resolution in Support of HB 264, 20 January 2012.pdf HCRA 2/14/2012 8:00:00 AM
HB 264
07 - HB 264 Supporting Documents - Letter of Support from the Alaska Association of Realtors, 4 February 2012.pdf HCRA 2/14/2012 8:00:00 AM
HB 264
08 - HB 264 Supporting Documents - Letter of Support from the Juneau Affordable Housing Commission, 17 January 2012.pdf HCRA 2/14/2012 8:00:00 AM
HB 264
09 - HB 264 Supporting Documents - Letter of Support from DJG Development, 19 January 2012.pdf HCRA 2/14/2012 8:00:00 AM
HB 264
03 - HB 264 Sectional Analysis.pdf HCRA 2/14/2012 8:00:00 AM
HB 264