02/11/2013 07:00 PM House ENERGY

              HB  35-HOME HEATING CONVERSION LOANS                                                                          
7:01:42 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  ISAACSON  announced that  the  only  order of  business                                                               
would be HOUSE BILL NO. 35,  "An Act creating a low-interest loan                                                               
program for homeowners who improve  or replace their home heating                                                               
systems; and providing for an effective date."                                                                                  
                                                                                                                                
7:02:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TAMMIE WILSON,  Alaska State Legislature, informed                                                               
the committee  HB 35 authorizes  a loan  program for loans  up to                                                               
$15,000 through the Alaska Housing  Finance Corporation (AHFC) to                                                               
upgrade to a  more efficient "heating system."   A heating system                                                               
includes  the system,  labor,  and the  charge  for the  required                                                               
inspection of the  existing heating system by an  energy rater or                                                               
a mechanical  contractor.  The  inspector will write a  report to                                                               
the homeowner  stating what  savings may be  expected with  a new                                                               
heating system.   A  qualified home is  an owner-occupied  home -                                                               
single  family  dwelling  or  duplex.    If  qualified  for  this                                                               
program,  the  homeowner can  still  participate  in AHFC's  home                                                               
energy  rebate  or  weatherization program.    Representative  T.                                                               
Wilson  expressed  her  hope  that   natural  gas  will  soon  be                                                               
available in Fairbanks,  but other residents of the  state have a                                                               
variety of  heating systems  that can  be more  energy efficient.                                                               
There is a zero  fiscal note attached to the bill  as there is no                                                               
funding authorized at this time.                                                                                                
                                                                                                                                
7:04:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT  advised  that  Representative  T.  Wilson  has                                                               
letters of support from the  Fairbanks North Star Borough (FNSB),                                                               
Aurora Energy Services LLC, the  City of Fairbanks, and Southeast                                                               
Conference.     Furthermore,  AHFC  has  no   problem  with  this                                                               
legislation.                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON confirmed that  the sponsors of the bill                                                               
worked very  closely with AHFC  to put  "all the right  pieces in                                                               
all the right places."                                                                                                          
                                                                                                                                
7:05:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  expressed his concern that  a homeowner                                                               
may convert from  a fuel-oil system to a  more efficient fuel-oil                                                               
system and still  not be in a better position  to utilize natural                                                               
gas.                                                                                                                            
                                                                                                                                
REPRESENTATIVE  T. WILSON  agreed  that  a loan  can  be used  to                                                               
convert  to a  more efficient  oil furnace;  in fact,  converting                                                               
from a  furnace installed before 1990  may save 25 percent  to 50                                                               
percent of  oil consumption,  and this would  be helpful  in many                                                               
areas of  FNSB until  gas is  available.   The energy  rater will                                                               
advise the  homeowner about the  expected savings.   Furthermore,                                                               
she  has been  advised  that  newer oil  furnaces  can easily  be                                                               
converted to gas.                                                                                                               
                                                                                                                                
CO-CHAIR ISAACSON understood this loan is only available once.                                                                  
                                                                                                                                
REPRESENTATIVE  T.  WILSON agreed,  and  added  that through  the                                                               
rebate  program a  homeowner  can also  apply for  a  loan up  to                                                               
$30,000 at  3.5 percent  interest.  She  opined this  program was                                                               
not being  used to change  out furnaces  because "most of  it was                                                               
not paid back  and it ended up  being a pretty major  cost and we                                                               
saw a great need in this."                                                                                                      
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  about the  funding and  how many                                                               
loans are anticipated to be issued.                                                                                             
                                                                                                                                
REPRESENTATIVE  T.  WILSON explained  that  the  number of  loans                                                               
would depend  on the amount  of funding secured;  following that,                                                               
the funds  will revolve as  loans are repaid.    She  pointed out                                                               
that some  homeowners may  apply for loans  under the  maximum of                                                               
$15,000.                                                                                                                        
                                                                                                                                
REPRESENTATIVE JOSEPHSON  observed the bill repeals  AS 46.11.050                                                               
(b), which  applies to  the financing  of energy  efficient homes                                                               
and  buildings  and  the requirement  of  estimated  heating  and                                                               
lighting costs by an audit.                                                                                                     
                                                                                                                                
7:09:02 PM                                                                                                                    
                                                                                                                                
BRANDON BREFCZYNSKI, Staff,  Representative Tammie Wilson, Alaska                                                               
State Legislature,  explained that the repeal  of AS 46.11.050(b)                                                               
exempts  applicants  from  the requirement  of  an  energy  audit                                                               
because the loan program proposed by  HB 35 only requires a brief                                                               
inspection of the heating unit.                                                                                                 
                                                                                                                                
REPRESENTATIVE HUGHES referred to the  existing $30,000 loan at 3                                                               
percent available through the rebate  program.  She asked why the                                                               
proposed loan program is needed in addition to the existing one.                                                                
                                                                                                                                
REPRESENTATIVE  T.  WILSON  responded   that  the  existing  loan                                                               
program requires  a full [energy  audit] inspection.   The energy                                                               
audit  may  not  identify  a heating  system  improvement  -  for                                                               
example,  converting a  heating system  from oil  to gas  - as  a                                                               
qualified  cost, but  that improvement  would  qualify under  the                                                               
proposed loan program.   Also, the proposed  program is available                                                               
to those  who have already used  the rebate program, but  did not                                                               
improve  their heating  system because  the change  in efficiency                                                               
was not sufficient to qualify.                                                                                                  
                                                                                                                                
REPRESENTATIVE HUGHES  asked whether  an applicant  could qualify                                                               
for the $30,000 loan and  the proposed $15,000 loan concurrently.                                                               
In addition, she asked how an applicant qualifies for the loan.                                                                 
                                                                                                                                
REPRESENTATIVE T. WILSON deferred to AHFC.                                                                                      
                                                                                                                                
7:11:48 PM                                                                                                                    
                                                                                                                                
DAN FAUSKE,  CEO/Executive Director, AHFC, Department  of Revenue                                                               
(DOR),  advised that  an  applicant must  apply  through an  AHFC                                                               
approved  lender.   The  proposed  loan program  is  funded by  a                                                               
general  fund  (GF) contribution  and  is  a  1 percent  loan  to                                                               
qualified individuals.                                                                                                          
                                                                                                                                
CO-CHAIR MILLETT  clarified that  this is  a revolving  loan fund                                                               
that is replenished  by the repayment of loans once  it is funded                                                               
through the GF.                                                                                                                 
                                                                                                                                
REPRESENTATIVE T. WILSON said yes.                                                                                              
                                                                                                                                
CO-CHAIR ISAACSON asked  for the purpose of the  $15,000 limit as                                                               
some clean-burning coal systems cost up to $45,000.                                                                             
                                                                                                                                
REPRESENTATIVE  T.  WILSON stated  that  a  variety of  providers                                                               
estimated that $15,000 would take care of most needs.                                                                           
                                                                                                                                
REPRESENTATIVE HIGGINS  relayed that the price  of furnaces range                                                               
from about  $7,000 to $12,000.   He expressed his support  of the                                                               
program.                                                                                                                        
                                                                                                                                
7:15:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  ISAACSON opened  public testimony.   Seeing  or hearing                                                               
none, public testimony was closed.                                                                                              
                                                                                                                                
7:15:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON referred to  the statistics on [the cost                                                               
of] thermal  heating in  the Interior and  urged for  remedies to                                                               
the high rates.                                                                                                                 
                                                                                                                                
7:16:27 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT moved  to report  HB 35  out of  committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being  no objection, HB  35 was  reported out of  the House                                                               
Special Committee  on Energy with individual  recommendations and                                                               
the accompanying fiscal notes.