Legislature(2011 - 2012)BARNES 124


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 312(CRA) Out of Committee
Moved CSHCR 10(ENE) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
           HB 312-NATURAL GAS CONVERSION PROGRAM/FUND                                                                       
8:04:53 AM                                                                                                                    
CHAIR MUNOZ announced  that the first 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."                                                                                                                     
8:05:28 AM                                                                                                                    
REPRESENTATIVE AUSTERMAN moved that the committee adopt                                                                         
Amendment 1, labeled 27-LS1301\A.5, Nauman, 2/20/12, which read:                                                                
     Page 1, line 2:                                                                                                            
          Following "gas-fired":                                                                                              
         Insert ", propane-fired, biomass, or electric"                                                                       
          Following "the":                                                                                                    
          Delete "natural gas"                                                                                                
     Page 1, line 6:                                                                                                            
          Delete "Natural Gas"                                                                                                
     Page 1, line 7:                                                                                                            
          Delete "Natural gas home"                                                                                           
          Insert "Home"                                                                                                       
     Page 1, line 10:                                                                                                           
         Delete "wood, or other non-natural gas-fired"                                                                          
          Insert "or wood"                                                                                                      
     Page 1, line 11:                                                                                                           
          Delete "heating device"                                                                                               
          Insert ", propane-fired, biomass, or electric                                                                         
     heating device or district heat"                                                                                           
     Page 2, line 4:                                                                                                            
          Delete "heating device"                                                                                               
          Insert ", propane-fired, biomass, or electric                                                                         
     heating device or district heat"                                                                                           
     Page 2, line 6:                                                                                                            
          Delete "heating device"                                                                                               
          Insert ", propane-fired, biomass, or electric                                                                         
     heating device or district heat"                                                                                           
     Page 2, line 16:                                                                                                           
          Delete "natural gas"                                                                                                  
          Insert "the energy source fueling or powering the                                                                     
     new heating device"                                                                                                        
     Page 2, line 18:                                                                                                           
          Delete "Natural gas home"                                                                                           
          Insert "Home"                                                                                                       
     Page 2, line 19:                                                                                                           
          Delete "natural gas"                                                                                                  
     Page 2, line 20:                                                                                                           
          Delete "natural gas"                                                                                                  
     Page 2, line 27:                                                                                                           
          Delete "a natural gas-fired heating device"                                                                           
          Insert "the new natural gas-fired, propane-fired,                                                                     
     biomass, or electric heating device or district heat"                                                                      
     Page 2, line 31:                                                                                                           
          Delete "natural gas"                                                                                                  
     Page 3, line 2:                                                                                                            
          Delete "heating device"                                                                                               
          Insert ", propane-fired, biomass, or electric                                                                         
     heating device or district heat"                                                                                           
8:05:57 AM                                                                                                                    
REPRESENTATIVE GARDNER objected for the purposes of discussion.                                                                 
8:06:04 AM                                                                                                                    
REPRESENTATIVE TAMMIE WILSON,  Alaska State Legislature, speaking                                                               
as the sponsor of HB 312,  explained that in discussions with the                                                               
Alaska Housing Finance Corporation  (AHFC) she understood that it                                                               
wanted  the legislation  to be  more  specific in  regard to  the                                                               
sources  of energy.   Being  more specific  should allow  for the                                                               
regulations to  be written in  an easier fashion and  the program                                                               
to  come online  in  a quicker  fashion.   In  response to  Chair                                                               
Munoz, Representative T. Wilson  confirmed that this loan program                                                               
would be  for homes that  convert from diesel generation  to gas-                                                               
fired,  propane-fired, biomass,  an electric  heating device,  or                                                               
district heat.   She clarified that Fairbanks  has district heat,                                                               
which is heat  [generated] by hot water.  If  a homeowner changes                                                               
from diesel to district heat, the  result is zero emissions.  She                                                               
stated that district  heat is the cleanest  energy available, but                                                               
it's only available to those  residents within the city limits of                                                               
8:07:37 AM                                                                                                                    
REPRESENTATIVE SADDLER requested  further explanation of district                                                               
heat,  particularly  in   terms  of  how  it   is  generated  and                                                               
REPRESENTATIVE GARDNER  surmised that  it's called  district heat                                                               
because a  massive boiler is  being used to  heat the water  in a                                                               
central location and piped to homes.                                                                                            
8:08:30 AM                                                                                                                    
BRANDON  BREFCZYNSKI,  Staff,  Representative T.  Wilson,  Alaska                                                               
State Legislature,  explained that  district heat is  a byproduct                                                               
of the coal power plant and  the hot water is piped to individual                                                               
residences.     The  individual  residences  must   have  a  heat                                                               
exchanger, which  converts the hot  water into heat and  pumps it                                                               
through  baseboard units  to  provide  heat in  the  home.     In                                                               
further  response  to  Representative  Saddler,  Mr.  Brefczynski                                                               
confirmed that it's centrally generated and distributed.                                                                        
8:09:21 AM                                                                                                                    
CHAIR MUNOZ inquired as to  the anticipated beginning fund amount                                                               
if HB 312 becomes law.                                                                                                          
8:09:40 AM                                                                                                                    
STACY   SCHUBERT,  Director,   Governmental   Affairs  &   Public                                                               
Relations, Alaska Housing  Finance Corporation (AHFC), Department                                                               
of Revenue, answered that at this  point AHFC doesn't have a good                                                               
feel for  the amount of participation  there will be in  the loan                                                               
program.   Therefore, AHFC isn't  comfortable making  an estimate                                                               
of the expenditure at this time.                                                                                                
8:10:17 AM                                                                                                                    
REPRESENTATIVE  AUSTERMAN inquired  as  to why  district heat  is                                                               
noted only once in the legislation.                                                                                             
REPRESENTATIVE T. WILSON pointed  out that the legislation refers                                                               
to  "district heat"  on  page 2,  lines  5 and  23.   In  further                                                               
response  to Representative  Austerman, Representative  T. Wilson                                                               
noted her agreement that the  reference to "district heat" should                                                               
be in the title as well.                                                                                                        
8:11:47 AM                                                                                                                    
REPRESENTATIVE  AUSTERMAN  moved  that  the  committee  adopt  an                                                               
amendment to  Amendment 1 such  that the language  being inserted                                                               
by  Amendment  1  on  page  1, line  2,  includes  the  following                                                               
language:  ",  district heat".  He noted that  the drafter should                                                             
work it  in correctly.   There being no objection,  the amendment                                                               
to Amendment 1 was adopted.                                                                                                     
8:12:23 AM                                                                                                                    
REPRESENTATIVE  DICK  questioned  whether  the use  of  the  term                                                               
"biomass" is creating confusion because wood is biomass.                                                                        
REPRESENTATIVE T. WILSON clarified  that biomass encompasses more                                                               
than just wood heat.                                                                                                            
REPRESENTATIVE  DICK  expressed  the   need  to  ensure  that  an                                                               
individual can't merely trade out one wood stove for another.                                                                   
REPRESENTATIVE T.  WILSON indicated that  can't occur as  it will                                                               
be  specified  in the  AHFC  regulations  that specify  that  the                                                               
conversion would  have to  be a unit  that's more  economical and                                                               
efficient.   In  fact, by  the way  the Environmental  Protection                                                               
Agency (EPA)  does its  certification one  is almost  required to                                                               
convert to something more economical.                                                                                           
8:14:03 AM                                                                                                                    
REPRESENTATIVE  SADDLER  asked  if  the   intent  of  HB  312  is                                                               
primarily cost  savings for consumers  or to address  air quality                                                               
REPRESENTATIVE  T.  WILSON  opined  that Amendment  1  makes  the                                                               
program  more  of  a  statewide  program,  although  the  program                                                               
originally targeted Fairbanks to address its air quality issues.                                                                
8:15:00 AM                                                                                                                    
REPRESENTATIVE  SADDLER  returned to  the  question  of how  wood                                                               
isn't biomass, and  asked whether a homeowner  could convert from                                                               
a wood stove to a wood pellet stove.                                                                                            
REPRESENTATIVE T.  WILSON emphasized  that the  main goal  of the                                                               
program  is to  convert from  oil.   She reiterated  that biomass                                                               
encompasses more  than just wood  as it now includes  wood chips,                                                               
wood  pellets,  and  compressed  logs.     She  opined  that  the                                                               
definition of biomass is continually changing.                                                                                  
8:16:42 AM                                                                                                                    
REPRESENTATIVE  SADDLER asked  if the  sponsor considered  having                                                               
the legislation target [conversions] from  wood and oil and leave                                                               
it to the  consumer to determine what kind  of alternative energy                                                               
is utilized.   He asked  why the sponsor  specified [conversions]                                                               
from oil to specific [alternative energies].                                                                                    
REPRESENTATIVE T. WILSON  mentioned that she had  an amendment to                                                               
open the program to everything,  but she was concerned that would                                                               
cause other  problems.  With regard  to the lack of  reference to                                                               
solar  energy,  she  pointed  out that  it  isn't  affordable  to                                                               
convert  to   for  residential  areas,  which   this  legislation                                                               
targets.    If other  alternative  energy  not specified  in  the                                                               
legislation becomes  affordable over  time, the statute  could be                                                               
amended to address it at that time.                                                                                             
REPRESENTATIVE  SADDLER  encouraged  the sponsor  to  place  some                                                               
sideboards on the definition of biomass.                                                                                        
8:18:45 AM                                                                                                                    
JOHN  ANDERSON, Weatherization  Officer,  Alaska Housing  Finance                                                               
Corporation,  Department of  Revenue, explained  that biomass  is                                                               
simply  a   larger  outdoor  unit  that   usually  serves  larger                                                               
buildings, such  as a school.   He clarified, "You wouldn't  do a                                                               
swap of a biomass for a residential unit."                                                                                      
8:19:12 AM                                                                                                                    
REPRESENTATIVE  SADDLER asked  if  the sponsor  has any  evidence                                                               
that there  would be any  net increase  in air quality  by moving                                                               
from oil or wood-fired to electric [heating].                                                                                   
REPRESENTATIVE T.  WILSON said that Fairbanks  residents wouldn't                                                               
change to  electric any  time soon  because of  the high  cost of                                                               
electricity  in   Fairbanks.    Electricity  was   added  to  the                                                               
legislation in order to encompass  those areas in the state where                                                               
electricity is more affordable.                                                                                                 
CHAIR  MUNOZ   acknowledged  that   biomass  technology   is  now                                                               
typically used  for larger commercial buildings,  but pointed out                                                               
that  the  Southeast  Integrated  Resource  Plan  energy  adviser                                                               
discussed  the opportunity  to  use biomass  in  home heating  in                                                               
Southeast Alaska.   Therefore, the sponsor was  asked to consider                                                               
incorporating that  into the legislation  as it was  broadened to                                                               
be applicable statewide.                                                                                                        
8:20:37 AM                                                                                                                    
REPRESENTATIVE  CISSNA, drawing  from  several conferences  she's                                                               
attended, related  that biomass  was discussed  in terms  of peat                                                               
and other products  that don't have to be from  a tree.  Although                                                               
she said she was  happy to see the amendments to  HB 312, she had                                                               
the  impression  the discussion  centers  on  switching from  one                                                               
[energy source]  to another.   She opined  that it would  be nice                                                               
for a homeowner  to have a burner that can  be converted from one                                                               
kind of fuel to another while still using the same equipment.                                                                   
REPRESENTATIVE T. WILSON said that  would be for the homeowner to                                                               
decide.  The intent  of HB 312 is to acknowledge  that oil is one                                                               
of the dirtiest ways to heat a  home and the cost of it continues                                                               
to increase.   The desire, she opined, is  to encourage residents                                                               
to consider  alternative energy sources  for air  quality reasons                                                               
as  well as  to achieve  affordability  for the  homeowner.   She                                                               
highlighted  that the  rater is  involved  in order  to help  the                                                               
homeowner make decisions  based on what would work  best in their                                                               
particular case.                                                                                                                
8:23:52 AM                                                                                                                    
REPRESENTATIVE  GARDNER asked  if the  proposed program  would be                                                               
able to use the existing home  energy raters, or would there have                                                               
to be a new training program for raters.                                                                                        
MR. ANDERSON  answered that  he would  anticipate using  the same                                                               
rater  pool  and AkWarm  energy  rater  software to  run  various                                                               
scenarios on  the energy  source in  the community  and recommend                                                               
the most efficient unit.   He characterized this proposed program                                                               
as a conversion program.                                                                                                        
8:24:45 AM                                                                                                                    
KATIE  KOESTER,  Community  & Economic  Development  Coordinator,                                                               
City of Homer, related support for HB  312.  The City of Homer is                                                               
expecting to bring  natural gas to Homer as it's  located only 14                                                               
miles  away.   While  conversion to  natural  gas would  generate                                                               
large  savings to  residents, businesses,  and public  buildings,                                                               
there will  be significant upfront  costs for those in  the Homer                                                               
area.   The upfront costs  would include  the tariff to  help pay                                                               
for  the  transmission  line,  distribution  system  within  city                                                               
limits that is  estimated to be over $20 million,  and the hookup                                                               
fee from  the main line  to the residence/business that  is about                                                               
$1,000, and  the cost of  converting home appliances  and heating                                                               
to natural gas.  She  opined that this proposed low-interest loan                                                               
program would help individuals to  be able to access the benefits                                                               
of natural gas, which could generate savings in the long term.                                                                  
8:26:27 AM                                                                                                                    
REPRESENTATIVE SADDLER asked whether having  this type of fund in                                                               
place is premature  since there is no secured  supply for natural                                                               
gas in Fairbanks.                                                                                                               
REPRESENTATIVE  T. WILSON  characterized the  program as  another                                                               
tool  that's available.   She  said she  couldn't imagine  anyone                                                               
putting out  the significant cost  for natural gas at  this point                                                               
when the  discussion has been that  it won't be available  for 30                                                               
years.   Therefore, the legislation  includes other  options that                                                               
are currently  available as well  as natural gas that  is already                                                               
available in  certain parts of the  state.  She noted  that there                                                               
are still discussions about trucking,  which would make it to the                                                               
consumer sooner.  In further  response to Representative Saddler,                                                               
she clarified that it's a one-time loan per customer.                                                                           
8:27:52 AM                                                                                                                    
REPRESENTATIVE GARDNER recalled that  the one-time loan amount is                                                               
$7,500,  and asked  if  that amount  would  cover the  conversion                                                               
REPRESENTATIVE T.  WILSON responded  that the $7,500  would cover                                                               
the actual  furnace/appliance, although  there may  be additional                                                               
costs to run the line to the residence.                                                                                         
8:28:30 AM                                                                                                                    
REPRESENTATIVE  FOSTER  posed a  scenario  in  which a  homeowner                                                               
utilizes the  loan program  for a conversion  and then  sells the                                                               
home one  year after the conversion.   He asked if  the homeowner                                                               
will have to  pay back the loan right away.   Taking the scenario                                                               
further, he  asked if  a homeowner who  does a  conversion, sells                                                               
the home with the conversion,  can then purchase another home and                                                               
perform another conversion  on a different house  if the original                                                               
loan was paid off.                                                                                                              
REPRESENTATIVE T. WILSON acknowledged  that would be addressed in                                                               
regulation.  However, she related her  desire for it to be a one-                                                               
time loan to  the individual, just as is the  case for other AHFC                                                               
loan   programs.      Representative  T.   Wilson   related   her                                                               
understanding  that a  homeowner  would have  to  specify in  the                                                               
contract to sell the house that he/she has paid off the loan.                                                                   
8:29:41 AM                                                                                                                    
REPRESENTATIVE GARDNER withdrew her objection to Amendment 1.                                                                   
8:29:55 AM                                                                                                                    
There being  no further objection,  Amendment 1, as  amended, was                                                               
8:30:10 AM                                                                                                                    
REPRESENTATIVE AUSTERMAN moved to report  HB 312, as amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying fiscal notes.                                                                                                      
REPRESENTATIVE GARDNER  objected for  discussion.   She explained                                                               
that although  she is  anxious about  moving legislation  such as                                                               
this with an indeterminate fiscal  note that could become a large                                                               
fiscal  note, she  understands the  urgency of  the situation  in                                                               
Fairbanks  because  of  the  air  quality  issues  and  in  other                                                               
communities  because  of the  price  of  energy.   Representative                                                               
Gardner then withdrew her objection.                                                                                            
8:31:42 AM                                                                                                                    
There  being no  further  objection, CSHB  312(CRA) was  reported                                                               
from   the  House   Community  and   Regional  Affairs   Standing                                                               
8:32:02 AM                                                                                                                    
The committee took an at-ease from 8:32 a.m. to 8:34 a.m.