03/31/2009 03:00 PM House ENERGY

HB 196-ALTERNATIVE ENERGY REVOLVING LOAN FUND                                                                                 
                                                                                                                                
CO-CHAIR EDGMON announced that the  first order of business would                                                               
be  HOUSE BILL  NO.  196,  "An Act  relating  to the  alternative                                                               
energy  revolving  loan  fund; and  providing  for  an  effective                                                               
date."                                                                                                                          
                                                                                                                                
3:04:10 PM                                                                                                                    
                                                                                                                                
ADAM  BERG, Staff  to Representative  Bryce Edgmon,  Alaska State                                                               
Legislature,  presented HB  196 on  behalf of  the House  Special                                                               
Committee  on  Energy.    Mr.   Berg  stated  HB  196  takes  the                                                               
Alternative Energy Revolving Loan  Fund, established in 1978, and                                                               
makes changes to the existing  statute by eliminating the "sweep"                                                               
provision; changing  the loan rates;  and repealing  the transfer                                                               
or sale of mortgages and notes.   Further, the bill adds language                                                               
to take  advantage of capitalization opportunities  and adds high                                                               
efficiency wood  pellet stoves to  the definition  of alternative                                                               
energy systems.   Mr. Berg noted that the fund  has been inactive                                                               
since the 1990s  when the balance of the fund  was transferred to                                                               
the general fund (GF).                                                                                                          
                                                                                                                                
3:05:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR EDGMON added  that HB 196 is House  Special Committee on                                                               
Energy  proposed  legislation.     The  bill  was  crafted  after                                                               
hearings in  rural communities where  the committee  discovered a                                                               
need for low interest rate  loans to individuals for improvements                                                               
to energy [efficiency] infrastructure.                                                                                          
                                                                                                                                
3:06:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETERSEN asked  for the  existing balance  in the                                                               
fund.                                                                                                                           
                                                                                                                                
MR.  BERG  said there  is  a  zero balance  in  the  fund as  any                                                               
payments due the  fund are swept into  the GF at the  end of each                                                               
fiscal year.                                                                                                                    
                                                                                                                                
REPRESENTATIVE PETERSEN surmised then that  the plan is to create                                                               
a revolving fund.                                                                                                               
                                                                                                                                
MR. BERG replied yes.                                                                                                           
                                                                                                                                
3:07:20 PM                                                                                                                    
                                                                                                                                
GREG WINEGAR,  Director, Division  of Investments,  Department of                                                               
Commerce,  Community, &  Economic  Development (DCCED),  informed                                                               
the committee his  agency administered the program  from the late                                                               
1970s until 1987.  During that  time, 2,900 loans were made until                                                               
the  changes by  the legislature  in 1990;  in fact,  there is  a                                                               
small balance  in the  account now,  but no  new loans  have been                                                               
made  since 1987.   Mr.  Winegar opined  HB 196  would allow  the                                                               
program to  operate again  with the  aforementioned changes.   In                                                               
response  to  Co-Chair  Edgmon, Mr.  Winegar  said  the  proposed                                                               
interest  rate would  be prime  plus 1  percent, with  a floor  5                                                               
percent and  a ceiling of 8  percent.  As the  prime rate changes                                                               
the fixed rate  would change between the cap and  the floor.  The                                                               
requirements  for collateral  are  a deed  of  trust against  the                                                               
residence receiving the  improvements.  He explained  that one of                                                               
the amendments  proposes the  deletion of  the requirement  for a                                                               
first deed  of trust;  he suggested  the program  should continue                                                               
with a  lien against  the property, but  not necessarily  a first                                                               
lien.                                                                                                                           
                                                                                                                                
3:10:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  EDGMON  identified  Mr. Winegar's  description  of  the                                                               
amendment as  conceptual Amendment  1, that deletes  "first" from                                                               
page 1, line 12, of the bill.   He then offered the amendment for                                                               
the purpose of discussion.                                                                                                      
                                                                                                                                
3:11:35 PM                                                                                                                    
                                                                                                                                
MR.  WINEGAR  stated  conceptual   Amendment  2  would  amend  AS                                                               
45.88.020(a) such that the energy  systems must be located in the                                                               
state.                                                                                                                          
                                                                                                                                
3:12:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN  called attention to  page 2, line  4, of                                                               
the  bill and  asked whether  it was  appropriate to  specify the                                                               
Wall Street Journal in the statute.                                                                                           
                                                                                                                                
MR.  WINEGAR  said  the  language  is  patterned  after  existing                                                               
statutory  language;  however,   he  agreed  with  Representative                                                               
Johansen's point.                                                                                                               
                                                                                                                                
3:13:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHANSEN then  asked about  the addition  of high                                                               
efficiency  wood   pellet  stoves  and  for   the  definition  of                                                               
"unprocessed wood."                                                                                                             
                                                                                                                                
MR.  BERG explained  that the  addition of  high efficiency  wood                                                               
pellet stoves denotes  that a normal wood stove  does not qualify                                                               
for the  program.   He was  unsure of the  reason for  the change                                                               
from "wood" to "unprocessed wood".                                                                                              
                                                                                                                                
REPRESENTATIVE  JOHANSEN  asked  Mr.  Berg  to  investigate  this                                                               
change  because  his  constituents are  providing  firewood  from                                                               
timber sales; in fact, he  will require more specific definitions                                                               
at later hearings.                                                                                                              
                                                                                                                                
CO-CHAIR EDGMON offered to have his staff investigate.                                                                          
                                                                                                                                
3:15:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK recalled demonstrations  of a soapstone stove                                                               
and a  wood-fired furnace  in Dillingham.   He asked  whether the                                                               
proposed provision would exclude these projects.                                                                                
                                                                                                                                
CO-CHAIR  EDGMON  opined the  Dillingham  projects  would not  be                                                               
excluded.                                                                                                                       
                                                                                                                                
MR. BERG said he was unsure.                                                                                                    
                                                                                                                                
CO-CHAIR EDGMON expressed  the intent of the sponsors  to use the                                                               
term wood; however, the drafter used the term unprocessed wood.                                                                 
                                                                                                                                
3:17:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN called attention  to page 2, lines 19-22,                                                               
of  the  bill  and  noted  the  reference  to  wood  stoves  with                                                               
catalytic converters,  and steam,  hot water,  or ducted  hot air                                                               
central  heating system  that uses  wood or  coal for  fuel.   He                                                               
opined these were the devices  viewed in Dillingham, and restated                                                               
his  interest in  the legal  definition of  the term  unprocessed                                                               
wood.                                                                                                                           
                                                                                                                                
3:17:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK  stressed  the inclusion  of  the  soapstone                                                               
stove.                                                                                                                          
                                                                                                                                
3:18:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT opined the soapstone  stove is covered under the                                                               
language referring to a ducted hot air central heating system.                                                                  
                                                                                                                                
REPRESENTATIVE  TUCK  confirmed  the intention  of  the  proposed                                                               
legislation   to  exclude   "just  any   old  wood   stove"  from                                                               
qualifying.                                                                                                                     
                                                                                                                                
MR. BERG agreed.                                                                                                                
                                                                                                                                
3:19:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT moved Amendment 1, labeled 26-LS0754\R.1, Kane,                                                                
3/31/09, which read:                                                                                                            
                                                                                                                                
     Page 1, line 12:                                                                                                           
          Delete "first"                                                                                                        
                                                                                                                                
REPRESENTATIVE PETERSEN objected for discussion purposes, and                                                                   
related his understanding of Amendment 1.                                                                                       
                                                                                                                                
MR. WINEGAR restated Amendment 1 allows for a second deed of                                                                    
trust.                                                                                                                          
                                                                                                                                
3:20:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PETERSEN withdrew his objection.  There being no                                                                 
further objection, Amendment 1 was adopted.                                                                                     
                                                                                                                                
3:20:40 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT moved Amendment 2, labeled 26-LS0754\R.2, Kane,                                                                
3/31/09, which read:                                                                                                            
                                                                                                                                
     Page 1, following line 9:                                                                                                  
          Insert a new bill section to read:                                                                                    
       "*Sec. 2. AS 45.88.020(a) is amended to read:                                                                          
                      (a) The department may                                                                                    
                                 (1)  make loans for the                                                                        
          purchase, construction, and installation of                                                                           
          alternative energy  systems that are located in                                                                   
          the state;                                                                                                        
                                 (2)  adopt regulations                                                                         
          necessary to carry out the provisions of AS                                                                           
          45.88.010 - 45.88.090, including regulations to                                                                       
          establish reasonable fees for services provided                                                                       
          and charges for collecting the fees;                                                                                  
                              (3)    collect  the  fees  and                                                                    
          collection   charges    established   under   this                                                                    
          subsection."                                                                                                          
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
CO-CHAIR EDGMON objected.                                                                                                       
                                                                                                                                
MR.  WINEGAR  restated  that  Amendment   2  clarifies  that  the                                                               
projects are located in Alaska.                                                                                                 
                                                                                                                                
CO-CHAIR EDGMON withdrew  his objection.  There  being no further                                                               
objection, Amendment 2 was adopted.                                                                                             
                                                                                                                                
3:21:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT  moved  to  report   HB  196,  26-LS0754\R,  as                                                               
amended,  out of  committee with  individual recommendations  and                                                               
the accompanying  zero fiscal notes.   There being  no objection,                                                               
CSHB 196(ENE)  was reported from  the House Special  Committee on                                                               
Energy.                                                                                                                         
                                                                                                                                
3:22:17 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:23 p.m. to 3:25 p.m.                                                                       
                                                                                                                                
3:25:38 PM