Legislature(2011 - 2012)BARNES 124
02/21/2012 08:00 AM COMMUNITY & REGIONAL AFFAIRS
Download Mp3. <- Right click and save file as
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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 Fairbanks. 8:07:37 AM REPRESENTATIVE SADDLER requested further explanation of district heat, particularly in terms of how it is generated and distributed. 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 issues. 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 cost. 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 adopted. 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 Committee. 8:32:02 AM The committee took an at-ease from 8:32 a.m. to 8:34 a.m.