03/24/2009 03:00 PM House ENERGY

HB  31-NET ENERGY METERING                                                                                                    
                                                                                                                                
4:12:08 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT  announced that  the  final  order of  business                                                               
would  be HOUSE  BILL  NO. 31,  "An Act  relating  to net  energy                                                               
metering  for retail  electricity  suppliers  and customers;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
4:12:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KURT OLSON,  Alaska  State Legislature,  informed                                                               
the  committee that  HB 31  was  a rewrite  of a  bill that  died                                                               
during the 25th legislative session.                                                                                            
                                                                                                                                
4:13:07 PM                                                                                                                    
                                                                                                                                
JENNIFER  SENETTE, Staff  to  Representative  Kurt Olson,  Alaska                                                               
State  Legislature,  informed the  committee  net  metering is  a                                                               
method  of metering  energy consumed  and produced  at a  home or                                                               
business  that has  its own  source of  renewable energy.  In its                                                               
simplest form,  net metering employs a  standard electrical meter                                                               
that records power  going back from a household  or business onto                                                               
the electrical  grid, and going  from the electrical grid  to the                                                               
household  or  business.    Thus,  when  excess  power  is  being                                                               
generated by the household facility  the excess power goes to the                                                               
utility, the meter runs backward,  and credits are earned for the                                                               
consumer.   At other times, power  runs to the household  and the                                                               
meter runs  normally.  She continued  to explain that at  the end                                                               
of the billing period, the  customer pays for the net consumption                                                               
of power.   The  proposed legislation  is an  arrangement whereby                                                               
customers can  offset part  of the cost  of their  consumption of                                                               
power.  In  addition, excess energy is flowing to  the grid.  Ms.                                                               
Senette pointed  out that  the bill eliminates  the need  for the                                                               
consumer to purchase  a new meter, as the existing  meters can be                                                               
used, and also  eliminates the need for  storage batteries. These                                                               
two factors are important in order  to keep the installation of a                                                               
household  renewable  system  economic.   She  reviewed  the  key                                                               
points of  HB 31;  Part (b)  addresses the  rates of  the credits                                                               
generated when  a consumer puts  excess energy back out  onto the                                                               
grid, and Part (c) addresses the  rates at which the consumer can                                                               
sell  credits  back to  the  retailer.    In addition,  Part  (d)                                                               
specifies that  retailers organized as a  cooperative are exempt,                                                               
but can  "opt in."  She  explained that the fiscal  note reflects                                                               
the cost of  the addition of one more position  at the Regulatory                                                               
Commission of Alaska  (RCA).  Ms. Senette  further explained that                                                               
although  44  states  allow  net   metering,  each  state  has  a                                                               
different  policy; thus  the RCA  declined to  adopt federal  net                                                               
metering standards  because the  other systems  are inappropriate                                                               
for Alaska.  The biggest  difference between legislation in other                                                               
states is  how each state credits  the excess energy that  is put                                                               
back  onto  the  grid.    She concluded  that  HB  31  encourages                                                               
Alaskans to  invest in  small scale  renewable energy  systems by                                                               
allowing them to generate credits.                                                                                              
                                                                                                                                
4:20:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE OLSON  observed that this  bill is a  pre-file: in                                                               
fact, the  RCA has  opened two  dockets on  this subject  thus he                                                               
requested that the  committee hold the bill until  the RCA issues                                                               
its decisions.                                                                                                                  
                                                                                                                                
4:21:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  noted his conflict  of interest, as  he is                                                               
an alternate energy producer.                                                                                                   
                                                                                                                                
4:21:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN asked whether  a municipal utility enjoys                                                               
the opt-in provision available to cooperatives.                                                                                 
                                                                                                                                
4:22:30 PM                                                                                                                    
                                                                                                                                
MS. SENETTE was unsure.                                                                                                         
                                                                                                                                
4:22:39 PM                                                                                                                    
                                                                                                                                
ERIC MUEHLING  informed the committee he  produces solar electric                                                               
power by  a 10.5 kilowatt  solar array  that is connected  to the                                                               
local utility grid and that  prevents the release of 1,000 pounds                                                               
of CO2 gas into the atmosphere  each month.  Mr. Muehling pointed                                                               
out that  his local  utility, GVEA,  burns coal  for much  of the                                                               
electricity used in Fairbanks.   He said he strongly supports net                                                               
metering;  in fact,  the  legislation for  net  metering in  most                                                               
states allows the  utility to pay the retail price  for power and                                                               
this  is a  powerful  incentive for  renewable power  generation.                                                               
This incentive serves the public good  and is a public service as                                                               
it avoids putting  CO2 gas into the atmosphere.   He acknowledged                                                               
there will be  opposition to net metering  from public utilities,                                                               
who  now pay  only  one-half of  the  value of  the  power.   The                                                               
present system  is a  disincentive to  conservation, discouraging                                                               
to solar producers,  and "plain wrong."  Mr.  Muehling opined the                                                               
net effect of  net metering on an electric utility  is similar to                                                               
the  effect   of  electric  energy  conservation;   for  example,                                                               
utilities  encourage  the use  of  fluorescent  light bulbs,  but                                                               
reward customers  that use higher  levels of kilowatt hours.   He                                                               
stated  that  he strongly  supported  net  metering; however,  he                                                               
asked  whether HB  31 was  for residential  alternative producers                                                               
only and  how the  legislation will determine  intent.   Also, he                                                               
suggested  the  proposed  Sec.   42.45.047  (a)(5)  should  allow                                                               
cooperatives to "opt out" instead of "opt in."                                                                                  
                                                                                                                                
4:27:05 PM                                                                                                                    
                                                                                                                                
MARK MASTELLER  stated he  was a resident  of Mat-Su  where there                                                               
are abundant sources of renewable  energy.  He stated his support                                                               
for  net  metering legislation  because  it  will improve  energy                                                               
security and  stimulate economic development; in  fact, he opined                                                               
there will  be an  increase in  local economic  development after                                                               
stable net metering  is established.  Regarding HB  31, he stated                                                               
he was  glad there was  not an aggregate  limit on the  amount of                                                               
net  metering allowed,  and he  also supported  the aspect  of an                                                               
annual  accounting period.   He  suggested  the maximum  kilowatt                                                               
size should be  increased from 25 kilowatts to  100 kilowatts and                                                               
that electric  cooperatives and those that  already use renewable                                                               
sources should not be exempted.                                                                                                 
                                                                                                                                
4:29:53 PM                                                                                                                    
                                                                                                                                
JIM ADAMS  expressed his  belief that this  bill is  an incentive                                                               
for alternate  power sources  and he  supported any  incentive to                                                               
reduce the dependence on diesel powered fuel generation.                                                                        
                                                                                                                                
4:30:57 PM                                                                                                                    
                                                                                                                                
PETER MCKAY stated he is  an advocate for distributed generation,                                                               
homeowner-generated    energy,   and    the   homeowner's    easy                                                               
interconnection  with  their  retail electrical  supplier  via  a                                                               
single  bi-directional  meter.   Mr.  McKay  has been  an  active                                                               
participant in RCA docket R 06-005  since 2006, and he opined the                                                               
time for net metering in Alaska  is now: however, it will require                                                               
coordination between  the legislative and regulatory  branches of                                                               
the state government.   He stated that one of  his concerns about                                                               
HB 31 is  the treatment of surplus energy  by negotiated purchase                                                               
power  rates;  for  example,  a contract  with  an  utility  that                                                               
specifies both  a time and an  amount.  There is  also the option                                                               
of a nonfirm rate that is  a contract for an unspecified time and                                                               
amount, and an "avoided cost" rate  that is basically the cost of                                                               
fuel.    The  bill  proposes  a  firm  power  rate;  however,  he                                                               
expressed his preference for "a  retail credit that's rolled over                                                               
to a full  year, and then ... [the customer  will] pay that price                                                               
at the end  of the annual settling-up period."   The RCA proposed                                                               
to  essentially  give "avoided  cost"  for  a credit;  therefore,                                                               
there must  be reconciliation  between the  RCA and  the proposed                                                               
legislation.    Mr.  McKay  then pointed  out  the  exemption  of                                                               
electrical cooperatives  in HB  31 clearly  discriminates against                                                               
customers  who  buy power  from  the  Homer Electric  Association                                                               
(HEA).    He  suggested  that   everyone  should  have  the  same                                                               
opportunity  to  put  home-generated electricity  back  onto  the                                                               
grid.  In addition, the  25 kilowatt limit will discourage future                                                               
power  generation  by  larger   industrial  or  small  commercial                                                               
customers,  and   he  encouraged  expanding  the   limit  to  100                                                               
kilowatts.                                                                                                                      
                                                                                                                                
4:38:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  related GVEA is  a cooperative and  has an                                                               
obligation to  provide the  cheapest rates to  users; thus  it is                                                               
adamant that  it not  pass the  cost of  hooking up  net metering                                                               
onto its  rate payers.   Secondly, he suggested Mr.  McKay should                                                               
look at the Sustainable Natural  Alternative Power (SNAP) program                                                               
in effect at GVEA and in Chelan County, Washington.                                                                             
                                                                                                                                
4:39:41 PM                                                                                                                    
                                                                                                                                
MIKE   O'MEARA  stated   he   represented   the  Homer   Electric                                                               
Association Members  Forum (HEA Members  Forum), an ad  hoc group                                                               
of 350  HEA members who  support movement away from  fossil fuels                                                               
and toward renewable fuels.   The HEA Members Forum advocates for                                                               
net metering standards that can  provide savings on energy costs,                                                               
reduce the  demand for power  from the utility, create  jobs, and                                                               
supply clean  energy to the grid.   Regarding HB 31,  the Members                                                               
Forum  supports  an  annual  accounting  period  over  a  monthly                                                               
accounting  period due  to variances  in weather  patterns.   The                                                               
Members Forum  opposes the  exemption of  electrical cooperatives                                                               
and crediting based  on the negotiated firm power  rate; in fact,                                                               
it prefers  crediting in  kilowatt hours.   Further,  the Members                                                               
Forum  supports an  increase  in the  limit  on participation  by                                                               
kilowatt  hours from  25 to  100 kilowatt  hours, and  encourages                                                               
final  language that  will establish  true net  metering for  all                                                               
Railbelt utilities in a timely  manner.  Mr. O'Meara acknowledged                                                               
that HEA is attempting to  initiate a SNAP program; however, SNAP                                                               
programs over  time do  not provide  the dependable  payback that                                                               
net metering  will thus are  not an adequate replacement  for net                                                               
metering.                                                                                                                       
                                                                                                                                
4:44:35 PM                                                                                                                    
                                                                                                                                
MARGARET  ADSIT,  Energy  Coordinator,   Alaska  Center  for  the                                                               
Environment  (ACE),  informed the  committee  ACE  is a  not-for-                                                               
profit  environmental educational  advocacy organization  founded                                                               
in  1971.   Her organization  has  6,000 members  and its  energy                                                               
vision  is to  inspire  individuals,  businesses, and  government                                                               
entities to think about renewable  energy, energy efficiency, and                                                               
energy  conservation.   The ACE  supports establishing  statewide                                                               
net  energy  standards;  however, she  recommended  removing  the                                                               
provision in HB 31 that  exempts cooperatives from participation.                                                               
Ms. Adsit said  this provision will waste time  and undermine the                                                               
net metering  work underway at the  RCA.  She concluded  that ACE                                                               
supports the development  of net metering in  the state, provided                                                               
that  it occurs  in  a timely  fashion that  allows  for an  even                                                               
application of net metering across the Railbelt.                                                                                
                                                                                                                                
4:47:31 PM                                                                                                                    
                                                                                                                                
DAVE GARDNER, Vice President, Marketing  & Member Services, GVEA,                                                               
informed  the committee  GVEA has  successfully encouraged  power                                                               
producers' participation through the  SNAP program.  This program                                                               
meets the  needs of the  cooperative and its members  better than                                                               
net metering.   Because   SNAP is voluntary  and self-supporting,                                                               
it  does  not  "cross-subsidize"  costs for  producers  by  other                                                               
members.  In  addition, SNAP producers share  the funds collected                                                               
from  SNAP contributors,  thus  GVEA's  program compensates  SNAP                                                               
producers at  a higher rate  than they would receive  through net                                                               
metering   programs.     Mr.  Gardner   observed  that   GVEA  is                                                               
participating   in  RCA's   net   metering  and   interconnection                                                               
standards  workshops and   believes  that  if the  state were  to                                                               
adopt  net metering  and  interconnection standards  legislation,                                                               
the  RCA  should   be  the  agency  tasked   with  oversight  and                                                               
administration  of the  programs.   Moreover,  GVEA encourages  a                                                               
delay in  passage of HB 31  while the RCA is  investigating these                                                               
issues.                                                                                                                         
                                                                                                                                
4:49:15 PM                                                                                                                    
                                                                                                                                
ROBERT REAGAN,  Rates &  Tariffs Supervisor,  Anchorage Municipal                                                               
Light  & Power  (ML&P),  Municipality of  Anchorage, stated  that                                                               
ML&P  believes that  net  metering is  potentially  a very  large                                                               
subsidy paid by  rate payers to fellow customers.   Therefore, HB
 is  a violation of  the cost-causer/cost-payer principle.   He                                                               
urged the committee  to consider that the RCA  has more expertise                                                               
and information  on this subject  than the legislature,  thus the                                                               
legislature   should  not   preempt  a   decision  by   the  RCA.                                                               
Furthermore, any  exemptions in  legislation should apply  to all                                                               
utilities equally, unless there is a compelling reason.                                                                         
                                                                                                                                
4:51:28 PM                                                                                                                    
                                                                                                                                
DEAN THOMPSON, Attorney-at-Law, Kemppel,  Huffman & Ellis, stated                                                               
he was representing the Alaska  Power Association (APA) that is a                                                               
statewide   trade  group   representing   almost  40   municipal,                                                               
cooperative, and  other electric  utilities.  The  APA encourages                                                               
the committee to  wait on any relevant legislation  until the RCA                                                               
completes its work that was begun in  2006.  At that time the RCA                                                               
opened  a docket  to consider  federal  requirements regarding  a                                                               
federal net  metering standard, and  it now has two  dockets open                                                               
to  consider  a specific  Alaskan  net  metering standard  and  a                                                               
specific Alaskan  interconnection standard.  He  called attention                                                               
to a technical workshop attended  by industry representatives and                                                               
net metering proponents that began  to bridge the gap between the                                                               
two sides.  Mr. Thompson urged  the committee to allow the RCA to                                                               
make its  decision in the  best interest  of all of  the parties.                                                               
Finally, he  emphasized the APA  and its members are  not opposed                                                               
to renewable generation or to  customers who wish to offset their                                                               
energy load; in fact, federal and state law gives the consumer-                                                                 
generator the right to sell power to an electric utility.  Mr.                                                                  
Thompson opined the dispute is based on the price.                                                                              
                                                                                                                                
4:55:04 PM                                                                                                                    
                                                                                                                                
HB 31 was held over for further public testimony.