Legislature(2023 - 2024)BARNES 124
04/27/2023 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| HB121 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 121 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 121-UTILITIES: RENEWABLE PORTFOLIO STANDARD
10:17:24 AM
CHAIR RAUSCHER announced that the only order of business would
be HB 121, "An Act relating to a renewable portfolio standard;
relating to electrical energy transmission; relating to
distributed energy systems; relating to power cost equalization;
relating to the Alaska Energy Authority; and providing for an
effective date."
10:18:25 AM
REPRESENTATIVE JESSE SUMNER, Alaska State Legislature, as prime
sponsor, introduced HB 121. He explained that HB 121 would
require the Railbelt utilities to diversify their sources of
energy production and increase the percentage of energy
generated using renewable sources. He pointed out that
currently 15 percent of energy generated on the Railbelt comes
from renewable sources, and the proposed legislation would
require an increase of this to 80 percent by 2040. Because of
the increase in the price of Cook Inlet natural gas, he said,
the Railbelt energy costs have increased sharply; furthermore,
Cook Inlet natural gas is expected to fail to meet demand by
2027. He stated that HB 121 would help stabilize energy prices
by using available renewable sources of generation to offset the
declining supply of natural gas.
10:20:51 AM
JESSE LOGAN, Staff, Representative Jesse Sumner, Alaska State
Legislature, spoke to HB 121, on behalf of Representative
Sumner, prime sponsor. He stated that the governor has created
an energy task force which will create a list of energy related
recommendations by Fall 2023. He advised that these
recommendations may influence the proposed legislation going
forward.
10:21:34 AM
The committee took an at-ease from 10:20 a.m. to 10:21 a.m.
10:22:20 AM
CHRIS ROSE, Director, Renewable Energy Alaska Project, gave a
PowerPoint presentation, titled "Why the Railbelt Needs a
Renewable Portfolio Standard (RPS)" [hard copy included in the
committee packet.] Moving from slide 2 to slide 5, he gave a
brief overview, stating that the Renewable Energy Alaska Project
(REAP) was founded in 2004 as a statewide, nonprofit coalition
of over 60 energy stakeholders, which include developers,
consumer groups, electric utilities, and Alaska Native
corporations. He stated that REAP collaborates with state and
federal agencies, focusing on policy and financing in addition
to technology. He reiterated that energy prices on the Railbelt
are increasing because of the expected upcoming natural gas
shortage. He expressed the opinion that renewable energy
generation will be a cheaper and more stable way to make up for
the shortfall. He displayed two graphs showing the increase in
residential electric rates and the price of Cook Inlet natural
gas versus natural gas prices in other parts of the U.S.
10:25:05 AM
MR. ROSE, moving from slide 6 to slide 9, displayed graphs
showing the volatility of liquified natural gas (LNG) spot
prices, LNG spot prices in Japan versus average Cook Inlet
prices, and scenarios involving LNG imports up to 2028. He said
that 15 new natural gas wells are needed annually to keep up
with demand. He advised that imported LNG will be expensive, in
part, because of the natural gas market in Asia, while Cook
Inlet natural gas contracts will continue to become shorter and
more expensive. He expressed the opinion that even in the best-
case scenario for imported natural gas, it will be significantly
more expensive than current natural gas prices.
10:28:08 AM
MR. ROSE, displaying slide 10 and slide 11, gave a brief
overview of avoided cost. He explained that avoided cost is the
cost of generation which is avoided when a utility purchases
electricity from a third party. He showed a graph with
different avoided cost scenarios for Chugach Electric
Association, Matanuska Electric Association, and Homer Electric
Association. He added that these scenarios are based on the
potential prices of LNG. He said that even small-scale solar
projects are matching the avoided cost of natural gas and
creating a standard which has been addressed but never
materialized.
10:30:55 AM
REPRESENTATIVE CARRICK questioned the avoided cost in future
years.
MR. ROSE answered that the graph shows different scenarios of
LNG import prices. He said that $12 would be an optimistic
price, if a long-term deal were signed, and he explained that
the higher the cost of imported LNG, the higher the avoided cost
would be in regard to RPS. He added that bigger projects would
avoid even more cost.
10:33:35 AM
CHAIR RAUSCHER asked how the projections for future costs were
created.
MR. ROSE answered that numbers came from the current market,
from Chugach Electric Association possible projects, and the
Department of Natural Resources.
10:34:36 AM
MR. ROSE, on slide 12 through slide 14, stated that rising
energy costs on the Railbelt negatively affect rural
communities, as it decreases the amount rural costs can be
equalized by the power cost equalization program. He displayed
a graph showing the amount which would be lost annually per
rural households in different LNG price scenarios. He argued
that imported LNG should not be the answer and showed a map
displaying the different states with some type of renewable or
clean energy standard.
10:37:17 AM
REPRESENTATIVE CARRICK asked for an explanation of the
difference between a portfolio goal and a portfolio standard.
MR. ROSE explained that states with a portfolio standard can
issue fines for noncompliance. In response to a follow-up
question, he said that Alaska does not have codified renewable
energy goals.
10:39:12 AM
CHAIR RAUSCHER asked whether any state without codified goals or
standards is in a similar situation to Alaska.
MR. ROSE answered that Alaska is in a unique place, although
Hawai'i has the similar situation of being disconnected from the
rest of the U.S. He added that Texas is not connected to the
national grid.
10:40:17 AM
MR. ROSE showed slide 15 and slide 16, pointing out graphs
depicting the decreasing costs of renewable energy. He said
that the decrease in costs is directly related to states putting
renewable energy standards in place. He continued that the
manufacturing of solar panels is increasing, and this further
reduces the costs of generating energy using solar. He stated
that solar and wind energy generation are becoming more
competitive with natural gas in terms of price. He added that
natural gas is cheaper in the Lower 48, and renewable energy is
becoming less expensive to generate, even without subsidies.
10:43:04 AM
CHAIR RAUSCHER asked whether the reduced prices of renewable
energy accounts for the need for battery storage.
MR. ROSE answered that renewable energy prices would still be
competitive when accounting for the cost of battery storage. He
added that battery storage costs are decreasing.
10:45:22 AM
MR. ROSE, moving from slide 17 to slide 19, showed graphs
depicting the following: percentage by state of generation by
solar in 2022; states with RPS which include solar provisions;
and the net capacity added in gigawatts by energy source type.
He remarked that Massachusetts, a state which is not typically
sunny, generates 20 percent of its energy using solar. He
expressed the opinion that Alaska has a great opportunity to
capitalize on the amount of sun in the summer, and HB 121 would
allow homeowners to sell excess energy generated by solar panels
at the current market rate. He said that 83 percent of new
energy generation in the U.S. last year came from solar and wind
generation, and more fossil fuel power plants are being retired
than built.
10:48:35 AM
MR. ROSE, moving from slide 20 to slide 23, stated that in
Alaska a similar bill was proposed by the governor in 2022,
which passed two committees before the legislature ended. He
stated that a study has found RPS of 80 percent achievable and
would result in a significant reduction in energy and fuel
costs. The estimated cost to achieve 80 percent renewable
energy is approximately 3.2 billion, and there would be
approximately $6.7 billion savings before the 10-year extension
of federal tax credits for renewable energy.
10:51:45 AM
MR. ROSE, continuing to slide 24 through slide 26, stated that
the 2022 study did not include federal production tax credits or
any other type of federal support. The study also did not
account for higher LNG prices, the decrease in costs for wind
and solar, and the avoidance of carbon taxes. He displayed a
graph depicting planned capacity additions in the U.S. in 2023.
He said that wind and solar will make up approximately 35
gigawatts (GW), or 65 percent, of added generation capacity in
2023. An additional 9.4 megawatts (MWs), or 17 percent, is
expected to be added in the form of battery storage to save
excess power generated during peak times. He stated that the
Railbelt has an annual load of 535 MWs, and an additional 348
MWs in renewable generation would meet the goal of 80 percent
renewable energy generation. He added that there are companies
considering wind and solar projects of over 100 MWs, making the
goal achievable if Alaska incentivizes investment.
10:56:10 AM
CHAIR RAUSCHER asked whether 10 cents per kilowatt-hour would be
achieved by 2040.
MR. ROSE answered that achieving such prices would require a
significant reduction in overhead costs for the utilities. In
response to a follow-up question, he said that reaching the
milestones laid out in HB 121 would require an increase in the
amount of renewable energy generation. He advised that
renewable energy generation is expected to decrease in cost,
whereas fossil fuel generation is expected to increase in cost.
10:59:28 AM
MR. ROSE, displaying slide 27 and slide 28, stated that in 2020,
a bill was passed requiring the Railbelt utilities develop a
standards and regional planning council for cooperation on
energy generation and transmission, and this resulted in the
Railbelt Reliability Council (RRC), which is made up of 13
utilities and other stakeholders. He continued that the
proposed legislation would require RRC to implement and enforce
RPS. He said that the utilities are asking for an investment of
$2.5 billion to create and maintain transmission lines for
increased reliability. He stated that an expansion of
electricity transmission is necessary to support the investments
being made in renewable energy transmission.
11:02:55 AM
CHAIR RAUSCHER asked whether the Railbelt utilities would have
the ability to build the necessary renewable infrastructure on
their own.
MR. ROSE answered no, explaining that creating RPS would require
drawing from different sources, as this is the only possible way
to achieve the goal. In response to a follow-up question, he
said that RRC would need a standard to implement renewable
energy in Alaska.
11:05:09 AM
MR. ROSE, moving to slide 29 and then to slide 30, reiterated
that creating RPS would diversify energy generation, stabilize
and reduce energy costs, increase energy independence, and
create additional jobs. He emphasized that time is running out
to pass RPS before new contracts are signed, possibly resulting
in the import of natural gas; thus, higher energy prices.
11:07:37 AM
CHAIR RAUSCHER asked whether the utilities would be forced to
implement their own RPS if no legislation was passed.
MR. ROSE answered no, although he expressed the hope that they
would. He said that implementing RPS would not mean the
elimination of LNG contracts; however, it would reduce the
amount of LNG needed over time. He added that adding RPS would
attract more outside investment into renewable energy in Alaska.
11:11:04 AM
The committee took an at-ease from 11:11 a.m. to 11:16 a.m.
11:16:35 AM
MARK GLICK, Chief Energy Officer, Hawai'i State Energy Office,
State of Hawai'i, gave a PowerPoint presentation titled,
"Hawai'i State Energy Office" [hard copy included in the
committee packet. He began on slide 2 and slide 3 and stated
that the mission of the Hawai'i State Energy Office is to
"promote energy efficiency, renewable energy, and clean
transportation to help achieve a resilient, clean energy
economy." He gave a list of requirements from Hawai'i's RPS and
said each utility in the state will be required to achieve 100
percent renewable energy generation by the end of 2045.
11:20:22 AM
MR. GLICK, moving to slide 4 and slide 5, stated that Hawai'i
also has a decarbonization program. The state has established a
target to sequester more carbon and greenhouse gases than
emitted by the year 2045, and limit greenhouse gas emissions to
50 percent below the 2005 level by 2030. He said that the main
drivers of energy transition in Hawai'i is the increasing prices
of fossil fuels, a sense of urgency in regard to climate change,
and bipartisan collaboration.
11:24:06 AM
MR. GLICK, continuing to slide 6 and slide 7, stated that in
2021, 64 percent of Hawai'i's oil imports came from Libya, 28
percent from Russia, and 8 percent from Argentina. He stated
that, in response to the Russian invasion of Ukraine, Hawai'i's
only refinery shifted from Russian imports to imports from
Argentina and Libya. He displayed a graph comparing crude oil,
gasoline, and electricity prices in Hawai'i since 2006. He
added that while energy prices have been volatile everywhere,
they are more volatile and economically challenging in Hawai'i
because of its remote location.
11:27:24 AM
MR. GLICK, moving to slide 8 and slide 9, displayed graphics
depicting the effects of the 2008 through 2009 recession on
Hawai'i and the supply chain vulnerabilities faced by the state.
He said, during the recession, tax revenue in Hawai'i dropped
significantly when compared with the rest of the U.S. He stated
that Hawai'i is facing a sharp decline in tourism, posing
economic challenges for the state's biggest industry. He added
that Hawai'i's oil refinery closed, and the state is facing the
challenge of shipping in resources. He added that Hawai'i's
energy system is at much greater risk when faced with
circumstances such as bad weather.
11:32:01 AM
MR. GLICK moved to slide 12 through slide 15, stating that
Hawai'i is the first state to set RPS at 100 percent. He
displayed graphs showing future renewable energy projects and
progress towards meeting its RPS goals. He pointed out that the
result is a decrease in energy costs at a time when fossil fuel
costs are continuing to increase. He stated that Kaua'i Island
Electric Cooperative is currently at 70 percent renewable energy
generation and is expected to reach 90 percent by 2025.
11:35:32 AM
REPRESENTATIVE SCHRAGE asked how closing fossil fuel energy
generation assets before their expected lifespan was justified.
MR. GLICK answered that, in the early years of Hawai'i's energy
transition, there were some increases in costs because assets
were being closed before the expected life-expectancy. He added
that others had been paid off and were used beyond their
expected useful life, and the reduction in future energy costs
has been worth the investment.
11:38:01 AM
CHAIR RAUSCHER announced that HB 121 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 121 Letter of Support- Launch Alaska.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| HB 121 Letter of Support - Cold Climate Housing Research Center.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| CIRI Letter of Support HB 121.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| HB 121 DCCED RCA 4-23-23.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| HB 121 Sectional Analysis Version A.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| HB 121 Sponsor Statement.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| UCM Letter on HB121 RPS HENE.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| HB121-DCCED-RCA-04-25-23.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| HB121-DCCED-AIDEA-04-24-23.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| HB121-DCCED-AEA-04-25-23.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| HB 121 ROSE House Energy RPS 4-27-23.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |
| HB 121 HSEO_Alaska_StateLeg_04272023.pdf |
HENE 4/27/2023 10:15:00 AM |
HB 121 |