Legislature(2009 - 2010)Bethel

05/29/2009 01:00 PM ENERGY


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01:11:56 PM Start
01:12:59 PM HB218|| HB219
05:37:59 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Location: Bethel City Council Chambers
+ Statewide Energy Policy Discussion TELECONFERENCED
= HB 218 CREATING DEPT OF ENERGY/AEA BD
Heard & Held
*+ HB 219 RENEWABLE ENERGY GRANT REQUIREMENTS TELECONFERENCED
Heard & Held
HB 218-CREATING DEPT OF ENERGY/AEA BD                                                                                         
HB 219-RENEWABLE ENERGY GRANT REQUIREMENTS                                                                                    
                                                                                                                                
1:29:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT announced that the  only order of business would                                                               
be HOUSE BILL  NO. 218, "An Act establishing and  relating to the                                                               
Department of Energy and to the  board of directors of the Alaska                                                               
Energy Authority;  transferring the  Alaska Energy  Authority and                                                               
the Alaska  Natural Gas  Authority to  the Department  of Energy;                                                               
and transferring  the home energy  and weatherization  program to                                                               
the  Department of  Energy."  and  HOUSE BILL  NO.  219, "An  Act                                                               
relating to the renewable energy grant fund."                                                                                   
                                                                                                                                
CO-CHAIR MILLETT  invited comments  on the legislation  before it                                                               
as well  as the stimulus  funds.  She related  her understanding,                                                               
from comments  she has heard,  that energy  has risen to  a level                                                               
that it  should be a cabinet  level position.  Therefore,  HB 218                                                               
was introduced  to form a  Department of  Energy to house  a one-                                                               
stop  shop  for  energy.     The  other  legislation  before  the                                                               
committee,  HB 219,  is cleanup  legislation  that proposes  some                                                               
parameters to make projects more  successful, including hiring an                                                               
economist with experience in renewable energy projects.  Co-                                                                    
Chair Millett  characterized both pieces of  legislation as works                                                               
in progress.                                                                                                                    
                                                                                                                                
CO-CHAIR EDGMON invited written comments and testimony.                                                                         
                                                                                                                                
1:33:37 PM                                                                                                                    
                                                                                                                                
BOB  CHARLES, Community  Development Coordinator,  Association of                                                               
Village Council  Presidents (ACVP); President, Nuvista  Light and                                                               
Electric Cooperative, Inc., informed  the committee that the ACVP                                                               
regional  energy plan  was  charged by  leadership  to develop  a                                                               
sustainable  energy   plan  by  combining  resources   to  review                                                               
conventional  and  nonconventional renewable  energy  development                                                               
and identify planning  and deployment strategies.   He noted that                                                               
during the  process, a fuel tank  task force was developed.   Mr.                                                               
Charles  related  the  three   goals  and  deployment  objectives                                                               
specific  to energy.    The  first goal  is  to execute  economic                                                               
stability  by   developing  integrated  energy  solutions.     He                                                               
clarified that the  desire is not just to meet  energy needs, but                                                               
to do  so in a  manner that  provides economic development.   The                                                               
second  goal is  to  find a  way to  obtain  energy security  and                                                               
stability  with  heating  fuel  such  that  it's  affordable  and                                                               
equitable.  He suggested that  rural electric utility rates could                                                               
be  made  more affordable  through  the  Alaska Railbelt  utility                                                               
legislation by making an  All-Alaskan Generation and Transmission                                                               
Utility  (AAG&T).   He expressed  the desire  for the  integrated                                                               
solution   to  include   expansion  of   wind  energy   projects.                                                               
Furthermore, the region has hydro  power potential.  He mentioned                                                               
that work  with the tribes  to acquire  funds to expand  the wind                                                               
projects in the region is occurring.                                                                                            
                                                                                                                                
1:40:16 PM                                                                                                                    
                                                                                                                                
MYRON NANENG, SR, President, Association of Village Council                                                                     
Presidents (ACVP), paraphrased from the following written                                                                       
testimony [original punctuation provided]:                                                                                      
                                                                                                                                
     We  are  pleased  to  have  this  Committee  formed  in                                                                    
     response  to the  Energy  Crisis a  large  part of  the                                                                    
     State  experiences.  Quyana, thanks  to  Representative                                                                    
     Co-Chairs,  Charisse  Millett   and  Bryce  Edgmon  for                                                                    
     hosting  this   hearing,  and  for  bringing   such  an                                                                    
     important   Legislative    presence   to    parts   not                                                                    
     traditionally  visited in  the  course  of your  duties                                                                    
     representing your own districts.                                                                                           
                                                                                                                                
     We'd also like to thank  the Speaker of the House, Mike                                                                    
     Chenault and Rules Chairman,   John Coghill for joining                                                                    
     the  other  Committee  members to  hear  directly  from                                                                    
     Rural  Alaska on  our  lack  of energy  infrastructure,                                                                    
     consumption,  needs,  challenges  and  longterm  plans.                                                                    
     Senator   Lyman  Hoffman   has  long   represented  our                                                                    
     interests for  the greater parts  of Rural  Alaska, and                                                                    
     we are glad to have  Representative Bob Herron join him                                                                    
     in Juneau.                                                                                                                 
                                                                                                                                
     We  continue   to  present  our  position   in  seeking                                                                    
     appropriate  and  adequate   energy  relief  for  rural                                                                    
     regions  of  this  great state  outside  the  railbelt,                                                                    
     natural gas, hydro-electric and roadsystem.                                                                                
                                                                                                                                
     AVCP   recognizes   the   many   attempts   the   State                                                                    
     Legislature  has  made  to  address  the  rural  energy                                                                    
     crisis as it loomed in the  last session, as well as in                                                                    
                                     th                                                                                         
     the  first few  weeks of  the 26  Legislature.  We have                                                                    
     presented  supporting   comments  to  many   pieces  of                                                                    
     legislation like SB 88 (extending  the PCE program), 91                                                                    
     (a   fuel   cap    subsidy),   114   (utilizing   State                                                                    
     transportation  resources  for   compassionate  aid  to                                                                    
     Yukon  villages)   115  and   116  (to   authorize  and                                                                    
     appropriate  funds  for  emergency energy  relief)  and                                                                    
     most  recently,  for  the   $28.6  million  in  federal                                                                    
     stimulus money for  weatherization and renewable energy                                                                    
     projects that the Governor has rejected.                                                                                   
                                                                                                                                
     I  want to  make it  perfectly clear,  that we  did not                                                                    
     want to advocate for  costly emergency legislation this                                                                    
     winter.  Last  summer,  we  wanted   very  much  to  be                                                                    
     proactive  in addressing  the high  fuel costs  most of                                                                    
     our  villages had  to lock-in  at in  order to  service                                                                    
     their communities  when oil was  going for over  $140 a                                                                    
     barrel. What may  have been good for  State coffers was                                                                    
     ironically a debt sentence  for our village households,                                                                    
     corporations  and   services.  SB  4002   attempted  to                                                                    
     address our  concerns in a comprehensive  and long-term                                                                    
     manner that  were trumped  by the  well-intentioned but                                                                    
     badly  formulated   energy  rebate.  However,   we  are                                                                    
     grateful  for the  far-sighted  benefits  that a  fully                                                                    
     funded Renewable Energy  Grant program authorized under                                                                    
     the  Alaska Energy  Authority  (AEA)  beyond the  first                                                                    
     $100 million in FY2009 would  provide for areas such as                                                                    
     ours.                                                                                                                      
                                                                                                                                
     When  oil prices  plummeted, the  State went  through a                                                                    
     very   serious  budget   shortfall  and   fears  of   a                                                                    
     monumental  deficit  -  that  affected  intended  state                                                                    
     capital  projects  and   other  appropriated  mandates.                                                                    
     Since  mid-January, the  price  of  Alaska North  Slope                                                                    
     crude  oil has  rebounded  by a  third, bringing  money                                                                    
     back  into   the  state  treasury  through   taxes  and                                                                    
     royalties.                                                                                                                 
                                                                                                                                
     Petroleum  Dependency at  the  YK Level  and living  in                                                                  
     Disaster Mode                                                                                                            
     Because we  are roadless, all  of our villages  have to                                                                    
     import fuel by barge or  by air in emergencies. In most                                                                    
     cases,  we   have  no  choice  but   to  sign  no-fault                                                                    
     contracts with fuel  vendors if weather or  acts of god                                                                    
     prevent  a scheduled  delivery. Some  of our  villages,                                                                    
     with  human resources  turnover  or other  constraints,                                                                    
     are unable to make their  fuel orders in concordance to                                                                    
     State programs  such as the  bulk fuel loan in  time to                                                                    
     lock in at more agreeable  rates. Factors such as these                                                                    
     aggravate the  already challenging nature  of providing                                                                    
     light and  heat to  our communities  with little  or no                                                                    
     energy infrastructure.                                                                                                     
                                                                                                                                
     There  have always  been constantly  expressed concerns                                                                    
     by some of  your colleagues within the  Senate and your                                                                    
     House counterpart that the subsidy  in [Senate Bill] 88                                                                    
     creates an unending entitlement  program, that it is an                                                                    
     insufficient one-size-fits-all solution  to an enduring                                                                    
     program. Truthfully,  it could  be that way  should the                                                                    
     commercial  fisheries  continue to  collapse;  however,                                                                    
     the  circumstances that  brought about  this particular                                                                    
     energy  crisis are  unusual. The  price of  oil topping                                                                    
     over $100  a barrel,  the commercial salmon  fishery on                                                                    
     either  river no  good, but  catastrophic on  the Lower                                                                    
     Yukon,  the  early   freeze-up  and  particularly  hard                                                                    
     winter has  sopped up whatever energy  program and cash                                                                    
     most families need for  our sub-arctic winters. Because                                                                    
     of the poor fishing  season, the cash usually generated                                                                    
     by  that commercial  practice was  not there  to outfit                                                                    
     seal,  small  whale  or  moose  hunting  and  gathering                                                                    
     expeditions   that  make   up   most   of  our   winter                                                                    
     sustenance.                                                                                                                
                                                                                                                                
     Frankly,  this winter's  river  break-ups and  flooding                                                                    
     that  finally  prompted  a Governor  Declared  Disaster                                                                    
     also heavily  exacerbates our region's economy.  By the                                                                    
     time the National Weather Service  called off its flood                                                                    
     warning  for  Emmonak  and   other  Lower  Yukon  River                                                                    
     villages Tuesday,  May 26, breakup flooding  had soaked                                                                    
     a  total  of roughly  40  communities  along more  than                                                                    
     3,000 miles  of rivers,  according to the  state. There                                                                    
     is no  limit to how  much federal money Alaska  can get                                                                    
     in disaster  funding and the  state is  still assessing                                                                    
     the  damages  on  both rivers  even  after  the  letter                                                                    
     requesting aid  has gone out  to President  Obama. Even                                                                    
     with a cap  on how much a single family  can receive at                                                                    
     $30,300, it  is rare  for families  to get  the maximum                                                                    
     amount allowed.                                                                                                            
                                                                                                                                
     We appreciate the state authorized  spending up to $2.5                                                                    
     million  on the  emergency  response to  the floods  to                                                                    
     cover things  like delivering  food, testing  water and                                                                    
     travel, but  we hope  that a coordinated  response with                                                                    
     the  federal government  and tribal  organizations such                                                                    
     as  AVCP,   the  Housing   Authority  and   the  Health                                                                    
     Corporation will  maximize the  benefits of  the effort                                                                    
     and   provide  for   smart,  lasting   and  sustainable                                                                    
     results.                                                                                                                   
                                                                                                                                
1:47:15 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  EDGMON  opined  that  population  trends  in  Southwest                                                               
Alaska  can largely  be attributed  to the  high cost  of living,                                                               
which  revolves  around  the  high  cost of  fuel.    Either  the                                                               
population of  these communities are decreasing  or are remaining                                                               
stagnate with  changing demographics  such that  some communities                                                               
are mainly  the young  and the old.   He asked  if Mr.  Naneng is                                                               
observing similar changes in the Bethel area.                                                                                   
                                                                                                                                
MR. NANENG indicated that's the plight in the Bethel region.                                                                    
                                                                                                                                
1:49:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON related  his disappointment  with Governor                                                               
Palin's   rejection   of   the   federal   stimulus   funds   for                                                               
weatherization  and energy.    He  asked if  Mr.  Naneng had  any                                                               
recommendations  as to  how the  legislature  should handle  that                                                               
decision of the governor.                                                                                                       
                                                                                                                                
MR.  NANENG pointed  out that  the legislature  can find  ways to                                                               
support  the regional  nonprofits which  can receive  those funds                                                               
directly.  He  mentioned hearing that last year  Anchorage had to                                                               
return over $2 million in  home energy [rebates] that rural areas                                                               
could've used.                                                                                                                  
                                                                                                                                
1:51:02 PM                                                                                                                    
                                                                                                                                
GENE PETOLA,   President/CEO, Yukon-Kuskokwim  Health Corporation                                                               
(YKHC),   paraphrased  from   the  following   written  testimony                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
          YKHC is the regional tribal health organization                                                                       
     for  the  58  Tribes  of  the  YK  Delta,  and  as  the                                                                    
     principal health care provider  in the region, we serve                                                                    
     Natives and  non-Natives alike.  Within  a service unit                                                                    
     the  size  of Oregon,  we  operate  a hospital,  5  sub                                                                    
     regional clinics,  44 village clinics and  a variety of                                                                    
     outpatient and inpatient services here in Bethel.                                                                          
                                                                                                                                
          The impact of high energy costs on the delivery                                                                       
     of health care  to our residents and its  affect on the                                                                    
     Company are  staggering and certainly  not sustainable.                                                                    
     For  village residents,  high energy  costs effectively                                                                    
     deny  access to  higher  levels of  health  care.   For                                                                    
     example,  if  a  patient  in Kotlik  was  seen  at  our                                                                    
     village  clinic   and  was   referred  to   the  Bethel                                                                    
     hospital, travel  costs alone could likely  prevent the                                                                    
     visit.                                                                                                                     
                                                                                                                                
          The one-way air fare from Kotlik to St. Mary's is                                                                     
     $125  and $150  from  St.  Mary's to  Bethel.   If  the                                                                    
     patient was  then referred to Anchorage  for treatment,                                                                    
     the  round-trip  Alaska   Airlines  fare  is  currently                                                                    
     $542.60.    Patients  are  beginning  to  forego  their                                                                    
     health  care  visits,  simply  because  patient  travel                                                                    
     costs  are  too expensive  as  a  result of  high  fuel                                                                    
     costs.  This often leads  to higher acuity patients not                                                                    
     being seen in a timely manner.                                                                                             
                                                                                                                                
          YKHC owns and operates five Sub-Regional Clinics                                                                      
     in Aniak,  St. Mary's, Emmonak, Toksook  Bay and Hooper                                                                    
     Bay.  In 2004 we spent  $84,000 and this year we expect                                                                    
     to spend $150,000 on heating  fuel and utilities at the                                                                    
     Emmonak  Sub-Regional Clinic.   We  experienced similar                                                                    
     costs and increases at the other Sub-Regional Clinics.                                                                     
                                                                                                                                
          Here in Bethel, the Yukon-Kuskokwim Delta                                                                             
     Regional  Hospital consumes  approximately  10% of  the                                                                    
     local   power  production   and   YKHC's  total   power                                                                    
     consumption for all our Bethel  facilities is closer to                                                                    
     15% of  local power generation.   We are  struggling to                                                                    
     manage the  steady rise in  energy costs.  In  2006 the                                                                    
     electric  bill   for  the  Hospital  alone   was  $1.19                                                                    
     million.   We are projecting electrical  costs for 2009                                                                    
     at nearly  $2 million.   In 2004 YKHC,  corporate wide,                                                                    
     spent  a total  of $3  million on  fuel and  utilities.                                                                    
     These  energy  cost  increases   are  not  due  to  any                                                                    
     significant  increases  in   our  demand,  instead  the                                                                    
     substantial  rise in  fuel costs.   Unfortunately,  for                                                                    
     every   dollar  increase,   we  must   decrease  health                                                                    
     services  that we  otherwise would  have  been able  to                                                                    
     provide to the residents of the YK Delta.                                                                                  
                                                                                                                                
          A strong and fully funded Power Cost Equalization                                                                     
     (PCE) program  is extremely important for  residents to                                                                    
     be  able to  continue living  in rural  Alaska, and  is                                                                    
     necessary for nonprofit  businesses operating community                                                                    
     facilities.                                                                                                                
                                                                                                                                
          Unfortunately, the PCE statutes and regulations                                                                       
     do  not differentiate  between a  small  village and  a                                                                    
     larger rural  hub like Bethel.   There is  no allowance                                                                    
     for the  fact that a  hub community will have  more and                                                                    
     larger community  facilities that  in fact  serve their                                                                    
     larger  regions.    The   current  PCE  allocation  for                                                                    
     community  facilities  is  70   KWH  per  resident  per                                                                    
     community.   This gives  Bethel a  community facilities                                                                    
     allocation  of about  420  thousand  kilowatt hours  of                                                                    
     electricity   per  month.      The  current   community                                                                    
     facilities formula  should be  revisited.  My  staff is                                                                    
     prepared to work with your  Committee on this important                                                                    
     statewide issue.                                                                                                           
                                                                                                                                
          We endorse the concept of an All-Alaskan                                                                              
     Generation and  Transmission Utility bringing  low cost                                                                    
     electricity  to every  community on  our State  through                                                                    
     interties  and power  purchasing agreements.   We  know                                                                    
     that this  is being  seriously considered for  the road                                                                    
     system and should be extended to all of Rural Alaska.                                                                      
                                                                                                                                
          YKHC has had the benefit of lessons learned from                                                                      
     our Rural  Utility Cooperative, or RUC,  which provides                                                                    
     a  variety  of   technical  assistance  and  management                                                                    
     services to  community water and sewer  systems.  These                                                                    
     lessons point  to two things  - economies of  scale and                                                                    
     the  need  for continuity  in  system  components.   My                                                                    
     point  here is  that it  should  be the  policy of  the                                                                    
     State, as new energy  systems are developed and brought                                                                    
     on  line to  ensure  uniformity of  technology and  the                                                                    
     provision of technical assistance.                                                                                         
                                                                                                                                
          While we encourage the development of new                                                                             
     generating  systems, particularly  wind systems,  we do                                                                    
     not believe  it is economical for  an organization like                                                                    
     ours  to build  stand-alone  capacity.   A  50 KW  wind                                                                    
     powered   turbine   contributing   about  1%   of   the                                                                    
     Hospital's electric needs hardly  offsets the high cost                                                                    
     of  construction   and  operation.     Aggregated  wind                                                                    
     systems like AVECs and Chaninik's make far more sense.                                                                     
                                                                                                                                
          There is no incentive here in Bethel for the                                                                          
     local power  utility to  explore alternative  energy to                                                                    
     reduce energy costs  when they can simply  pass on fuel                                                                    
     costs to  their consumers, including YKHC.   Also waste                                                                    
     heat costs from the local  power plant per BTU [British                                                                    
     thermal unit] are nearly the  same as heating oil costs                                                                    
     per BTU when it seems it should be substantially less.                                                                     
                                                                                                                                
          Thank you, and I will be happy to answer any                                                                          
     questions you might have.                                                                                                  
                                                                                                                                
2:01:01 PM                                                                                                                    
                                                                                                                                
MR.  PELTOLA, in  response to  Representative  Ramras, said  that                                                               
currently  the Yukon  Kuskokwim  Delta region  is experiencing  a                                                               
transfer  in population  from  [the rural  areas]  to Bethel  and                                                               
Anchorage.   He indicated  that villages will  scale down  to the                                                               
point  some  won't have  viable  population  bases to  justify  a                                                               
school or other services.  (Indisc.)                                                                                            
                                                                                                                                
2:05:24 PM                                                                                                                    
                                                                                                                                
FELIX  HESS,  Board  Secretary,  Calista  Corporation,  began  by                                                               
welcoming  everyone  in  his  Native tongue.    He  then  thanked                                                               
Representative Ramras who helped with  the food drive for Emmonak                                                               
and  Kotlik.   He  also  mentioned  Senator  Hoffman.   Mr.  Hess                                                               
discussed the difference  in fuel prices between  rural and urban                                                               
Alaska.   He informed the committee  that in his region  fuel can                                                               
only be delivered  once in spring and  once in the fall.   By the                                                               
time  fuel  reaches the  Bethel  area,  residents pay  more  than                                                               
double  for it  due to  transportation costs.   He  discussed the                                                               
Yukon  River  area where  the  economy  is  very depressed.    He                                                               
indicated that  the bycatch reduction impacted  the region, which                                                               
can't be  taken lightly.   He then  mentioned that Alaska  has an                                                               
international  treaty that  requires allowing  the escapement  of                                                               
Chinook salmon  into Canada.   Mr. Hess emphasized that  those in                                                               
the villages  have been  voicing the  difficulties they  face for                                                               
some time.  However, it seems  that it's sometimes to a deaf ear.                                                               
He then highlighted the tragic  reality of the increasing suicide                                                               
rate, which he attributed to the  loss of hope.  He mentioned the                                                               
need  to  provide  employment [in  rural  areas]  when  possible,                                                               
particularly for  young people.   Mr. Hess charged  the committee                                                               
to do  the best it  can with regard  to helping people  [in rural                                                               
areas].  In  conclusion, he thanked the committee  and noted that                                                               
a copy of his testimony has been provided to the committee.                                                                     
                                                                                                                                
2:14:09 PM                                                                                                                    
                                                                                                                                
ROBERT  NICK, Chairman,  AVCP Regional  Housing Authority  Board,                                                               
AVCP    Regional   Housing    Authority,   began    by   thanking                                                               
Representative   Herron  for   showing  interest   in  the   wind                                                               
generation  and the  intertidal generation.   He  highlighted the                                                               
success story of wind generation  in his region, and related that                                                               
prior to the wind generation project  he paid over $300 per month                                                               
for  electricity.   However, since  the  wind generation  project                                                               
came on  line, his  bill has  only once totaled  over $100.   Mr.                                                               
Nick expressed thanks for this  opportunity to testify before and                                                               
provide  input on  rural energy  issues,  which are  dramatically                                                               
affecting  rural areas  in  many ways.    The aforementioned,  he                                                               
said,  has left  him  very  encouraged that  the  members of  the                                                               
Alaska State Legislature are willing  to come this far and listen                                                               
to the concerns.                                                                                                                
                                                                                                                                
MR. NICK  reminded the committee  that in rural Alaska  there are                                                               
unique challenges.   He pointed out that as of  today regular gas                                                               
in Anchorage costs  under $3 while in rural areas  such as Bethel                                                               
it costs $5.65 and  up.  The energy prices of  the last two years                                                               
have been very  distressing on rural Alaska residents.   In fact,                                                               
the aforementioned has resulted in  many using all their personal                                                               
resources just to  stay warm and fed.  However,  some were forced                                                               
to  use their  resources to  purchase fuel  rather than  food and                                                               
instructed their children  to eat breakfast and  lunch at school.                                                               
The  parents  made  do  with   what  they  could.    Furthermore,                                                               
households  are  getting by  on  100  percent subsistence  foods,                                                               
which  becomes difficult  to do  in late  winter.   The situation                                                               
became so difficult, the crisis in Emmonak occurred.                                                                            
                                                                                                                                
MR. NICK informed  the committee that this past winter  it was so                                                               
cold  residents used  various electric  appliances to  heat their                                                               
homes, which  created a financial  burden itself.  He  noted that                                                               
households  heating their  homes with  electrical appliances  had                                                               
electric  bills as  high as  $1,000  per month.   He  highlighted                                                               
specific villages in  which the increase in  electrical costs was                                                               
astronomical  and many  residents  fell behind  in their  monthly                                                               
electric payments.  Furthermore, it  was difficult even in wooded                                                               
areas because  there was so  much snow  that it was  difficult to                                                               
collect firewood.   The situation is even  more difficult because                                                               
many  village  residents have  low  paying  jobs because  of  the                                                               
depressed economies in their areas.   Moreover, grocery items are                                                               
very  expensive due  to the  items being  flown into  these rural                                                               
communities.   The lack  of jobs makes  it difficult  for village                                                               
residents  who  rely  upon  store   bought  foods  to  supplement                                                               
subsistence foods.                                                                                                              
                                                                                                                                
2:21:49 PM                                                                                                                    
                                                                                                                                
MR. NICK  pointed out that  the Yukon Kuskokwim area  consists of                                                               
the  Bethel   and  Wade-Hampton   census  districts,   which  had                                                               
unemployment  rates  in  April  2009 of  16.8  percent  and  24.5                                                               
percent   respectively.      In  comparison,   Alaska's   overall                                                               
unemployment  rate is  8.4 percent  while  the U.S.  unemployment                                                               
rate is  8.9 percent.  He  then related that the  poverty rate in                                                               
Alaska  is 7.8  percent  while  the poverty  rate  in the  Bethel                                                               
census area  is 20.7  percent in  2004.   The residents  of these                                                               
areas already lived  a tough life prior to the  energy crisis, he                                                               
noted.  These  residents rely upon fishing in both  the Yukon and                                                               
Kuskokwim Rivers to provide cash  resources for the summer, fall,                                                               
and coming winter.   However, the money made  from fishing barely                                                               
pays for expenses.   Furthermore, due to the  expected low number                                                               
of  salmon, the  Alaska Department  of  Fish &  Game (ADF&G)  has                                                               
(indisc.) which means  that fishermen in the area  won't make the                                                               
money  they   once  did  to   push  through  the   winter  slump.                                                               
Therefore, bills and loans can't be  paid and there won't be much                                                               
cash  for summer  and fall  gathering  activities.   The lack  of                                                               
bills being paid  means that businesses don't have  the funds due                                                               
them and find  themselves in a difficult situation as  well.  All                                                               
of  the   aforementioned  coupled   with  the  lack   of  fishing                                                               
opportunities resulted in some of  the [rural] nonprofits calling                                                               
on the  governor to  issue an  economic disaster  declaration for                                                               
the Yukon-Kuskokwim Delta.                                                                                                      
                                                                                                                                
MR. NICK, in conclusion, relayed  that he wholeheartedly supports                                                               
the  House Special  Committee on  Energy's  activities and  fact-                                                               
finding missions throughout the state.   He opined that there are                                                               
many options that  should be considered to combat  the high costs                                                               
of energy.   First, efforts to  drill for more oil  in Alaska and                                                               
environmental  safety  fines  should be  pursued.    Furthermore,                                                               
alternative energy  options should  be pursued  and funded.   For                                                               
example,  harnessing  wind energy  would  seem  to be  the  first                                                               
easily available  alternative energy technology for  rural Alaska                                                               
villages.   In fact, wind  turbines have stabilized  energy costs                                                               
wherever they  have been  deployed, and  thus some  rural village                                                               
residents  are paying  what an  average Anchorage  resident would                                                               
pay  for  electricity.   Still,  although  energy  costs  haven't                                                               
decreased  in the  vast  majority of  villages,  those with  wind                                                               
turbines have  kept costs  below those  in villages  without wind                                                               
turbines.   Since wind  projects are  expensive to  maintain, Mr.                                                               
Nick urged  the legislature to  support and fund  wind generation                                                               
projects  in  rural  Alaska.    Additionally,  the  state  should                                                               
support and  provide funding  for other  green projects,  such as                                                               
geothermal, hydro  power, tidal power,  acidification, interties,                                                               
and biomass  projects.   Even nuclear  energy projects  should be                                                               
supported  and funded  by the  legislature, he  said.   He opined                                                               
that  if the  military  can safely  harness  and utilize  nuclear                                                               
energy  in their  submarines, then  there ought  to be  a way  to                                                               
provide energy  options to Bush  Alaska.  Support should  also be                                                               
given to  the governor's  idea to  merge Railbelt  utilities into                                                               
one entity.   However,  rural Alaska should  be included  in that                                                               
merger, he said.                                                                                                                
                                                                                                                                
2:28:25 PM                                                                                                                    
                                                                                                                                
MR. NICK then  asked the legislature to request  all the economic                                                               
stimulus  funding slated  for Alaska  from the  American Recovery                                                               
and  Reinvestment   Act  of  2009  (ARRA),   including  that  for                                                               
weatherization and  renewable energy  projects.  He  relayed that                                                               
he's  deeply disheartened  that the  governor turned  down slated                                                               
for  the aforementioned.    He  said that  there  should also  be                                                               
support  for  improvement  and expansion  of  the  weatherization                                                               
programs  by nonprofits,  tribes, and  local organizations.   Mr.                                                               
Nick  told the  committee  that ACVP  Regional Housing  Authority                                                               
weatherized  114  homes  this  past   winter  and  is  slated  to                                                               
weatherize 121 homes  this year.  Although ACVP  is only required                                                               
to do 90 homes a year, the  organization wants to do more.  There                                                               
are 6,500-7,000  homes in the Yukon-Kuskokwim  Delta, which means                                                               
that the  ACVP Regional Housing Authority  only weatherized fewer                                                               
than  2 percent  of the  homes in  the area.   The  $28.6 million                                                               
turned   down  by   the  governor   could've   resulted  in   the                                                               
weatherization of  more homes.   He noted that the  ACVP Regional                                                               
Housing Authority  and the  other 14  housing authorities  in the                                                               
state are already required to  comply with Alaska building energy                                                               
efficiency  standards in  the state,  which  applies to  private,                                                               
public, and commercial buildings alike.                                                                                         
                                                                                                                                
MR.  NICK encouraged  the  state to  develop  a statewide  energy                                                               
policy,  which would  be appropriate  in helping  Alaska have  an                                                               
energy  plan.   The  energy  plan  should address  strategies  on                                                               
development of sustainable energy  along with funding strategies.                                                               
A plan  should also assist  communities with little  expertise to                                                               
implement energy options best suited for their area.                                                                            
                                                                                                                                
2:32:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  inquired  as   to  what  Mr.  Nick  would                                                               
recommend  the legislature  do in  response  to Governor  Palin's                                                               
rejection of the $28.6 million in stimulus funds.                                                                               
                                                                                                                                
MR.  NICK  recommended  that  the  legislature  simply  needs  to                                                               
override  the governor's  vetoes  of that  funding  and use  some                                                               
mechanism that  allows those  funds to  be available  directly to                                                               
the housing authority.                                                                                                          
                                                                                                                                
REPRESENTATIVE HERRON offered his  understanding that even if the                                                               
legislature overrides  the governor's  veto, she  wouldn't comply                                                               
with taking the funds.  He  surmised that Mr. Nick was suggesting                                                               
that the legislature make a statement on this matter.                                                                           
                                                                                                                                
MR. NICK offered  his belief that Governor Palin  needs to accept                                                               
all of the stimulus funds being offered to the State of Alaska.                                                                 
                                                                                                                                
2:34:41 PM                                                                                                                    
                                                                                                                                
RON HOFFMAN,  CEO, ACVP Regional  Housing Authority,  pointed out                                                               
that  energy  issues have  caused  great  hardship for  families,                                                               
organizations,  and businesses.    Ever since  the  price of  oil                                                               
skyrocketed last  summer, a  lot has  been learned  about various                                                               
options  to  generate  energy  and   electricity.    Mr.  Hoffman                                                               
paraphrased from the following written testimony [original                                                                      
punctuation provided]:                                                                                                          
                                                                                                                                
          Wind, hydroelectricity projects, biomass (wood                                                                        
     and  organic solid  waste), and  to  some degree  solar                                                                    
     energy  along with  alternative fuels  can provide  the                                                                    
     AVCP   Calista  region   with  energy   sustainability,                                                                    
     independence  and  rural   community  development.  The                                                                    
     recently  completed  Alaska   Energy  Authority  Energy                                                                    
     guide demonstrates the  potential generation capability                                                                    
     for renewable  energy based upon location  to potential                                                                    
     hydroelectric power and wind  class and other available                                                                    
     renewable energy sources.                                                                                                  
                                                                                                                              
     Wind                                                                                                                     
          There is abundant wind energy resource available                                                                      
     in  the AVCP  Calista  region. The  2002 Nuvista  study                                                                    
     evaluated  wind  generation  in  those  villages  where                                                                    
     there   is  sufficient   wind   resources  to   justify                                                                    
     installation of  wind turbines. The study  assumed wind                                                                    
     generation would be considered  in areas where the Wind                                                                    
     Power Class is  4 to 5 or greater as  designated in the                                                                    
     Wind  Energy Resource  Atlas of  the United  States. 16                                                                    
     villages are rated 7, 3 are  rated 6, 5 are rated 5 and                                                                    
     2 are rated class 4.                                                                                                       
                                                                                                                                
          There are two wind generation projects developed                                                                      
     and   managed   by    the   Alaska   Village   Electric                                                                    
     Cooperative. These  are located  in the  communities of                                                                    
     Toksook Bay on Nelson Island  on the Eastern Bering Sea                                                                    
     Coast, and Kasigluk which is 20 miles west of Bethel.                                                                      
                                                                                                                                
          In recent years local utilities have become more                                                                      
     interested  in  co-generation capabilities  based  upon                                                                    
     the  wind   energy  potential  demonstrated   by  these                                                                    
     projects. Four  villages of  the lower  Kuskokwim River                                                                    
     Bay area  joined together under an  organization called                                                                    
     the Chaninik  Wind Group whose  aim is to  develop wind                                                                    
     generation capacity  of the four villages  in that area                                                                    
     and reduce  their dependence  on fossil  fuel generated                                                                    
     electricity and heating. They  are currently engaged in                                                                    
     developing a wind development  project to determine the                                                                    
     feasibility  of  a  subregional wind  farm  project  to                                                                    
     serve  the four  villages and  will also  determine the                                                                    
     wind resource  availability for expansion  and possible                                                                    
     build-out to other parts of the region.                                                                                    
                                                                                                                                
     Regional Hydroelectric Power                                                                                             
          It has been estimated from previous studies                                                                           
     conducted involving  a potential  Hydroelectric project                                                                    
     in   the  Kuskokwim   region   that  approximately   24                                                                    
     megawatts  of  power and  roughly  130  million kwh  of                                                                    
     energy  may be  available  for  nearby Bethel  villages                                                                    
     from Tuluksak to Quinhagak  located along the Kuskokwim                                                                    
     River.  This project  has  the  potential of  replacing                                                                    
     diesel as the primary source  of energy in this region.                                                                    
     In  today's  dollars  energy   costs  could  equate  to                                                                    
     approximately  23¢  per  kwh  based  upon  conservative                                                                    
     estimates  of  inflation  costs. PCE  reports  indicate                                                                    
     costs up  to 60¢  per kwh  without PCE  adjustments for                                                                    
     continued   diesel   power   generation   demonstrating                                                                    
     greater   potential   savings    per   household   with                                                                    
     hydroelectric  power. Additional  savings to  the state                                                                    
     in the  form of reduced PCE  requirements provide added                                                                    
     cost saving benefit to the state over the long term.                                                                       
                                                                                                                                
2:42:41 PM                                                                                                                    
                                                                                                                                
MR.  HOFFMAN  then  turned  to   biomass  projects.    The  Yukon                                                               
Kuskokwim   Delta  has   many   biomass   resources  for   energy                                                               
generation.   Biomass resources available  in the  region include                                                               
wood, plant,  and fish  waste to some  extent.   Currently, there                                                               
are no  biomass fuels for generation  for electricity, commercial                                                               
heat,  and transportation.   Wood-fired  heaters  and stoves  are                                                               
used in  the region as  a major source of  heat.  In  fact, wood-                                                               
fired  steam  baths exist  in  most  communities in  the  region.                                                               
Approximately, 36 percent  of heat is derived from wood.   A 2006                                                               
University of Alaska Cooperative  Extension Service study for the                                                               
Kuskokwim Native  Association found that nearly  23 million cubic                                                               
feet of commercial  stands of spruce and 22.7  million board feet                                                               
of noncommercial  stands amounts to  45.7 million feet  of growth                                                               
in the  Lower Kuskokwim River  area.  The study  illustrates that                                                               
it  increases 1.3  feet annually.   A  similar analysis  would be                                                               
appropriate for  the Lower  Yukon River area,  he remarked.   The                                                               
AEA biomass  energy program  provides practical  working examples                                                               
in other  parts of  Alaska that  are applicable  to Alaska.   For                                                               
instance, the City of Craig's  gasification heater system and the                                                               
Interior's  wood-fired heating  system for  community facilities.                                                               
Furthermore,  the  fuel  for  schools program  in  the  Lower  48                                                               
provides  a working  program model  for  local school  districts.                                                               
There are  a number of  low cost  equipment and options  that are                                                               
available for  community and business  development consideration.                                                               
In conclusion,  Mr. Hoffman returned  to his written  remarks, as                                                               
follows:                                                                                                                        
                                                                                                                                
     It  is  our  strong recommendation  for  an  Integrated                                                                  
     Renewable  Energy Solutions  approach  in rural  Alaska                                                                  
     for  achieving   energy  sustainability   and  economic                                                                  
     viability.                                                                                                               
                                                                                                                              
     In our region we seek to:                                                                                                
                                                                                                                              
   „Expand Wind Energy Projects along the eastern Bering                                                                     
     Sea Coast and the Bethel area                                                                                            
   determine feasibility for integrated                                                                                     
     wind/diesel/solar/biomass heating and electric systems                                                                   
     with community heat storage system.                                                                                      
                                                                                                                              
   „Determine feasibility of Regional Hydroelectric                                                                          
     Project (Lake Chikuminuk) to provide region-wide                                                                         
     electricity and heat.                                                                                                    
                                                                                                                              
      Develop and install Biomass projects: including wood                                                                    
     fired boilers, heaters and wood chippers for community                                                                   
     facilities and buildings.                                                                                                
                                                                                                                                
MR. HOFFMAN then  echoed Mr. Nick's testimony  regarding the need                                                               
for the  state to  develop a statewide  energy policy  that works                                                               
toward  the development  of a  statewide plan.   The  plan should                                                               
consider sustainability,  funding strategies, and relief  for all                                                               
Alaskan residents.   He  urged the need  to decrease  the state's                                                               
dependence  on fossil  fuels  and to  work  toward making  energy                                                               
prices more affordable for  Alaska's residents while implementing                                                               
a state saving strategy for them.                                                                                               
                                                                                                                                
2:46:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS provided his  understanding that the Senate                                                               
Resources Standing Committee said that  it was developing a state                                                               
energy plan, but  unnamed staff from the  administration said the                                                               
state already  has an energy  plan.  Noting  that representatives                                                               
from  the  administration are  present,  he  questioned what  the                                                               
administration thinks of Mr. Hoffman's  suggestions for the Yukon                                                               
Kuskokwim region.   Representative Ramras asked  if Mr. Hoffman's                                                               
plan  takes  into account  the  cost  of amortizing  the  initial                                                               
capital  investment  or does  the  plan  call  for the  state  to                                                               
provide that at no cost (indisc.).                                                                                              
                                                                                                                                
MR.  HOFFMAN  replied that  many  of  the projects  he  mentioned                                                               
reduce the  high cost of  energy.   He said that  he's requesting                                                               
that the  state adopts  a statewide  energy plan  so that  it can                                                               
develop strategies  to fund  projects throughout  the state.   He                                                               
noted that this  morning he met with Mr.  Haagenson, who provided                                                               
a review of  the preliminary information for  the Yukon Kuskokwim                                                               
Delta  region  and  discuss  the  aforementioned  projects.    In                                                               
further  response to  Representative Ramras,  Mr. Hoffman  opined                                                               
that  there  should  be  a  legislative  mandate  to  direct  all                                                               
electric utilities  to allow [alternative  electrical generation]                                                               
to be part of the electrical grid.                                                                                              
                                                                                                                                
2:51:27 PM                                                                                                                    
                                                                                                                                
ELAINE BROWN,  NorthStar Gas, LLC,  referring to the  first slide                                                               
of  her presentation,  explained that  NorthStar Gas,  LLC, (NSG)                                                               
was:   "Created  to  serve  the people  of  Rural  Alaska."   The                                                               
company was formed  in July of 1998 to grant  Native ownership of                                                               
a fuel company,  primarily to deliver bulk fuel  to rural Alaskan                                                               
villages.   As a Native-owned  petroleum retailer, NSG  manages a                                                               
gas  station  in  Bethel,  delivers  heating  fuel  and  unleaded                                                               
gasoline  in  the  Yukon  Kuskokwim  Delta  Region,  and  retails                                                               
petroleum products.  The company  is owned by 18 corporations, of                                                               
which   2  are   regional   corporations  and   16  are   village                                                               
corporations.   She reviewed the specific  corporations involved,                                                               
which are listed on the first slide.                                                                                            
                                                                                                                                
MS. BROWN moved  on to the second slide entitled,  "Fuel Costs to                                                               
Rural Alaska."   She explained  that fuel prices in  rural Alaska                                                               
are made up  of the following three components:   market pricing,                                                               
transportation  costs, and  overhead,  maintenance and  community                                                               
profit margin.   The market  pricing is determined either  by the                                                               
Oil Price  Information Service  (OPIS), Platt's,  or Jet  A fuel,                                                               
and is determined  the day the fuel is lifted  from the refinery.                                                               
The transportation costs  vary by location such  that the further                                                               
one  goes up  the river,  the more  expensive the  fuel is.   The                                                               
overhead  and maintenance,  and  community profit  margin is  the                                                               
landed  cost  of  fuel  plus  overhead  and  maintenance  plus  a                                                               
percentage for  profit margin.   She noted that  each community's                                                               
overhead  and maintenance  plus the  percentage of  profit margin                                                               
varies, which  is why  you see the  varied prices  in neighboring                                                               
communities.    Furthermore,  the  number of  employees  at  each                                                               
company and  the age  of the  tank farms  also contribute  to the                                                               
varied  prices.   She  then  directed  attention to  slide  three                                                               
entitled  "Fuel Cost  Example," which  provides an  example of  a                                                               
fuel  cost   per  the  applicable   fuel  index.     The  example                                                               
illustrates that the quantity makes a difference in the price.                                                                  
                                                                                                                                
MS. BROWN continued  with slide four entitled  "FUEL PRICE PARITY                                                               
-  HEATING  FUEL."    She  referred to  [the  possibility  of]  a                                                               
statewide  heating  fuel  price  cap of  $3.00  per  gallon  from                                                               
September  1 to  March  31.   The  reimbursement, she  explained,                                                               
would occur at the rural  community fuel distributor level rather                                                               
than on an individual basis.   She highlighted the formula, which                                                               
is  as follows:    the  number of  households  multiplied by  the                                                               
gallons  allowed  per  household  multiplied by  the  cost  above                                                               
$3.00.   The  responsibility  of tracking  gallons per  household                                                               
lies with the fuel distributor.                                                                                                 
                                                                                                                                
2:58:03 PM                                                                                                                    
                                                                                                                                
MS.  BROWN, referring  to slide  five, specified  that the  chart                                                               
illustrates the price  of fuel from 2004-2009,  which provides an                                                               
idea of what people are paying  in the various areas of the Yukon                                                               
Kuskokwim Delta  Region.  She  highlighted that in the  spring of                                                               
2004 the  heating fuel was more  expensive than in the  fall.  In                                                               
the  Lower Kuskokwim  Region in  2005, the  heating fuel  for the                                                               
fall was  more expensive than  in the  spring.  Although  NSG has                                                               
tried  to  determine  when  fuel   prices  are  cheaper  for  its                                                               
customers, there seems  to be no rhyme or reason  for the prices.                                                               
As the chart  illustrates pricing from year to  year, from spring                                                               
to fall,  varies drastically.   A  similar situation  exists with                                                               
unleaded  gas as  illustrated by  the chart  on slide  six.   She                                                               
clarified  that the  chart  only refers  to  delivered costs  and                                                               
doesn't  include any  overhead and  maintenance costs  or profit.                                                               
In response to  Chair Edgmon, Ms. Brown confirmed  that the chart                                                               
specifies the  cost to the  cooperatives and that the  final cost                                                               
in any  village could  be double what's  specified on  the chart.                                                               
Ms. Brown explained  that the chart on slide  seven specifies the                                                               
price per  barrel, delivered cost, and  the transportation costs.                                                               
The transportation costs average $1.25.                                                                                         
                                                                                                                                
3:01:49 PM                                                                                                                    
                                                                                                                                
MS.  BROWN  directed the  committee's  attention  to slide  eight                                                               
entitled "Example on Pricing Your  Fuel."  The slide details what                                                               
the  total operating  expenses per  gallon  of $64,000  includes.                                                               
The  slide also  specifies the  price  of fuel,  gas and  heating                                                               
fuel.   The overhead per  gallon works out  to $1.30.   The cost,                                                               
including only overhead and maintenance,  totals $5.15 for 50,000                                                               
gallons of  fuel.   Therefore, the total  cost of  50,000 gallons                                                               
would be $256,000, which would  only cover the operations and the                                                               
cost of (indisc.).                                                                                                              
                                                                                                                                
3:04:10 PM                                                                                                                    
                                                                                                                                
MS. BROWN  continued with  slide nine  entitled "Revision  of AEA                                                               
Loan  Application."   She  explained  that  she was  tasked  with                                                               
revising the AEA  loan application, which every  community has to                                                               
complete  every  year.    She   suggested  making  the  AEA  loan                                                               
application valid for  five years rather than for  a single year.                                                               
The  aforementioned  eliminates  annual   filing  of  an  11-page                                                               
application and allows the supporting  documentation, such as the                                                               
letter of  intent, promissory note, waivers,  and resolutions, to                                                               
be  valid   for  five  years.     The  supporting  documentation,                                                               
especially  those requiring  signatures,  is  often difficult  to                                                               
obtain  due to  seasonal activities.   However,  a two-page  bulk                                                               
fuel loan  agreement would need to  be filed annually.   In order                                                               
to expedite  the process, Ms.  Brown suggested  allowing approval                                                               
of  the  AEA loan  application  from  a  faxed copy  rather  than                                                               
waiting for the original mailed  application.  However, the funds                                                               
would  only  be released  upon  receipt  of the  original  signed                                                               
application.  She explained that  loan approval would be based on                                                               
the prior year's payment history.   Late payments or questionable                                                               
credit would  revoke the five-year  loan approval and  require an                                                               
annual  application to  be filled  out until  the credit  history                                                               
improves.                                                                                                                       
                                                                                                                                
3:06:24 PM                                                                                                                    
                                                                                                                                
MS. BROWN, upon  the request to summarize, said that  if a couple                                                               
of  the suggested  changes  to the  loan  application process  on                                                               
slides  nine and  ten occurred,  it would  expedite the  process.                                                               
She explained  that in a  situation in  which a loan  is approved                                                               
based on payment history but  the community still has outstanding                                                               
payments,  the  approved funds  wouldn't  be  released until  the                                                               
final prior  year's loan payment  is received.   In an  effort to                                                               
address  some of  the difficulties,  NSG is  working with  Alaska                                                               
Village  Electric  Cooperative,  Inc.  (AVEC) to  bring  in  fuel                                                               
together   in    order   to   decrease    transportation   costs.                                                               
Furthermore, there  are efforts  to have multiple  communities or                                                               
tank  farms to  purchase  fuel  in bulk  in  order  to reach  the                                                               
100,000 gallon  break point.   Ms. Brown related support  for the                                                               
merging of tank farms to form regional tank farms.                                                                              
                                                                                                                                
3:08:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS said he is not  in favor of the $3.00 plan.                                                               
He emphasized that the state, rural  and urban, is running out of                                                               
oil and money.  He asked Ms.  Brown what plan she would choose if                                                               
the  choices  were  the  $3.00   plan  or  capital  projects  for                                                               
alternative energy.                                                                                                             
                                                                                                                                
MS.  BROWN  answered that  she  would  choose alternative  energy                                                               
because she would like to have economic growth in rural Alaska.                                                                 
                                                                                                                                
REPRESENTATIVE  RAMRAS pointed  out that  half of  the people  in                                                               
Alaska live  in Southcentral, and  therefore they are a  force at                                                               
the ballot box.   Although residents in  Southcentral Alaska have                                                               
the cheapest  natural gas  prices in the  nation, they  say their                                                               
gas prices  have doubled over  the last  few years and  that they                                                               
pay more in terms of  property taxes.  The aforementioned results                                                               
in many of these residents saying  that if the diesel part of the                                                               
economy wants  a break, they deserve  a break also.   He inquired                                                               
as to  how [rural communities]  and their small amount  of voters                                                               
can respond to such viewpoints.                                                                                                 
                                                                                                                                
MS.  BROWN  expressed  the need  for  a  comprehensive  statewide                                                               
[energy]  plan  such that  power  groups  are combined  and  that                                                               
there's one  large fuel purchasing consortium.   She acknowledged                                                               
that  the cost  of  living  in Anchorage  may  have doubled,  but                                                               
pointed out that  in rural Alaska the cost of  living has tripled                                                               
or quadrupled.  Therefore, there is no comparison.                                                                              
                                                                                                                                
CHAIR EDGMON commented that  Representative Ramras has identified                                                               
the major policy point that will  land squarely on the state in a                                                               
couple of  years.   He reminded  the committee  that when  he has                                                               
questioned  what rural  communities  will do  if there's  another                                                               
year  of  high  fuel  prices,  the answer  has  been  that  those                                                               
residents will move.  The  aforementioned, he said, is the policy                                                               
question [for  the state].   He  questioned what  can be  done to                                                               
keep rural communities alive, to  which he said he didn't believe                                                               
anyone has an answer.                                                                                                           
                                                                                                                                
MS. BROWN said  that programs such as  the weatherization program                                                               
will help  tighten homes.  She  noted that one of  the [goals] of                                                               
the Western Fuel  Task Force is to reduce fuel  consumption by 10                                                               
percent in 2009, which is  an aggressive goal.  Another important                                                               
aspect  is   to  educate  residents   with  regard   to  lowering                                                               
thermostats and dressing warmer.   She mentioned creating jobs in                                                               
rural   communities  and   using  tie   (ph)  lines   to  connect                                                               
communities,  which  she  predicted would  ultimately  result  in                                                               
connecting   roads.     The   aforementioned   could  result   in                                                               
consolidated  community  schools.    Although  such  would  cause                                                               
eliminate jobs in the school  district, new jobs would be created                                                               
for snow removal and bus drivers.                                                                                               
                                                                                                                                
CO-CHAIR EDGMON  emphasized that although the  aforementioned may                                                               
sound good  on paper, it may  not work if fuel  increases to $130                                                               
per barrel next winter.                                                                                                         
                                                                                                                                
3:16:22 PM                                                                                                                    
                                                                                                                                
MEERA KOHLER, President/CEO, Alaska Village Electric Cooperative                                                                
(AVEC), paraphrased from the following written testimony                                                                        
[original punctuation provided]:                                                                                                
                                                                                                                                
     We were established  40 years ago to  bring "the light"                                                                    
     to  Alaska's  villages  -  communities  where  Alaskans                                                                    
     relied  upon  kerosene lamps  and  seal  oil for  their                                                                    
     modest energy needs.                                                                                                       
                                                                                                                                
     I'm sure many of you  have read Willie Hensley's recent                                                                    
     book -  Fifty Years from  Tomorrow.  Willie  was AVEC's                                                                    
     first  president.     He  had   the  vision   that,  by                                                                    
     perseverance   and  dedication,   we  could   make  the                                                                    
     impossible happen.   That vision  led the way  to ANCSA                                                                    
     and to AVEC.                                                                                                               
                                                                                                                                
     But  AVEC was  not a  slam dunk.   We  teetered on  the                                                                    
     brink of bankruptcy  for many years.  It  was not until                                                                    
     the  early 80s  that we  were able  to finally  collect                                                                    
     enough revenue  to pay for  our very  modest operations                                                                    
     and PCE [power cost equalization] made that possible.                                                                      
                                                                                                                                
     It surprises  many to know  that AVEC's  generation and                                                                    
     distribution  assets  were  not  built  with  state  or                                                                    
     federal largesse.   We now have more  than $114 million                                                                    
     invested  in  our  utility systems,  not  counting  any                                                                    
     grant-funded plant.   All we had at  the beginning were                                                                    
     REA [Rural  Electric Association now know  as the Rural                                                                    
     Utility Service]  loans that had  to be paid back.   It                                                                    
     was  not until  this decade,  when we  became a  Denali                                                                    
     Commission  partner,   that  we  were  able   to  start                                                                    
     upgrading   our  power   plants  and   tank  farms   to                                                                    
     acceptable utility  standards.  Our villages  are still                                                                    
     the only communities that  actually bring a substantial                                                                    
     amount   of  cash   to   match   our  various   federal                                                                    
     construction grants.   We have  almost $100  million of                                                                    
     federally funded  plant improvements now and  more than                                                                    
     $12 million in AVEC equity match.                                                                                          
                                                                                                                                
     This morning, you visited Kasigluk  and toured the wind                                                                    
     farm there.   Kasigluk is  one of our villages.   Power                                                                    
     from the  diesel and wind  generators there  serve both                                                                    
     Kasigluk and  the nearby village  of Nunapitchuk.   The                                                                    
     power plant, wind turbines tank  farm and intertie cost                                                                    
     some $15  million.  10%  came from AVEC's equity  - the                                                                    
     rest  came  from  the Denali  Commission  and  the  RUS                                                                    
     [Rural Utility  Service].  Not  a penny of  state funds                                                                    
     were used.   About  20% of  the two  communities' power                                                                    
     comes from  wind and  the fuel  cost per  kWh [kilowatt                                                                    
     hour] is 12 cents lower than neighboring communities.                                                                      
                                                                                                                                
     But  wind is  not  the  answer to  reduce  the cost  of                                                                    
     power.   Our average cost  of electricity is  more than                                                                    
     62 cents a  kWh.  Fuel alone is 37  cents this year and                                                                    
     non  fuel costs  are 25  cents.   PCE helps  make power                                                                    
     affordable  for homes  and  public  facilities, but  it                                                                    
     does nothing for commerce and  schools.  We must find a                                                                    
     way  to do  away with  PCE so  that electricity  can be                                                                    
     affordable for everyone!                                                                                                   
                                                                                                                                
     The answer is for all  Alaskans to be treated the same,                                                                    
     at least as  far as electricity is concerned.   To that                                                                    
     end,  we   propose  the   All  Alaska   Generation  and                                                                    
     Transmission plan.   The concept  is very simple.   The                                                                    
     AAG&T  in  effect  operates   all  the  generation  and                                                                    
     transmission assets  in the state  of Alaska.   All the                                                                    
     existing utilities  become distrusting  utilities only.                                                                    
     Power  is sold  back from  AAG&T at  a "postage  stamp"                                                                    
     rate   and  the   local  utilities   add  their   local                                                                    
     administration, billing and  operating costs to achieve                                                                    
     local retail rates, likely ranging  from 13 cents to 25                                                                    
     cents a kWh.                                                                                                               
                                                                                                                                
     Currently, utilities  sell some 6.5 billion  kWh in the                                                                    
     state.  85%  of those sales are in the  Railbelt and in                                                                    
     other  low-cost areas  like Barrow,  Juneau and  Sitka,                                                                    
     where retail rates average less  than 13 cents kWh.  Of                                                                    
     the remaining 15%,  about 8.5% of sales  are in non-PCE                                                                    
     communities like  the Four Dam  Pool where the  cost of                                                                    
     power is now  around 30 cents and the  last 6.5% covers                                                                    
     the PCE  communities where the  average retail  rate is                                                                    
     around 55 cents.                                                                                                           
                                                                                                                                
     By pooling all  power and selling it to  utilities at a                                                                    
     uniform rate, we achieve many purposes:                                                                                    
                                                                                                                                
   · Communities outside the Railbelt are no longer second-                                                                     
     class citizens  when it comes to  reliable electricity.                                                                    
     Even  diesel power  plants are  complicated to  operate                                                                    
     and  many communities  have tenuous  generation systems                                                                    
     because of the lack of qualified local personnel.                                                                          
   · Economic development becomes feasible.  Unaffordable                                                                       
     electricity  is  a  prime  reason  why  local  commerce                                                                    
     cannot develop and flourish.                                                                                               
   · The need for PCE goes away, saving the state some $32                                                                      
     million a year.                                                                                                            
   · The cost of operating rural schools declines                                                                               
     dramatically  as electricity  cost drop,  likely saving                                                                    
     another $20 million annually.                                                                                              
   · Similarly, costs to operate other state facilities                                                                         
     decline,  estimated to  save another  $20 million  each                                                                    
     year.                                                                                                                      
   · The perennial challenges in keeping the lights on                                                                          
     across the  state diminish  as a  technically competent                                                                    
     operations team  will work across the  state to address                                                                    
     local generation challenges.                                                                                               
   · And of paramount importance, vying for scarce capital                                                                      
     grants disappears.  The entire  state will unite behind                                                                    
     generation projects  that deliver the  maximum benefits                                                                    
     to the largest area because  reducing the cost of power                                                                    
     in  Anchorage, for  example,  will  translate to  lower                                                                    
     generation  costs  for  the  entire  state.    Regional                                                                    
     projects  that deliver  the maximum  benefits will  not                                                                    
     have to  compete for funds because  they will naturally                                                                    
     fall into a state-wide priority list.                                                                                      
                                                                                                                                
     Honorable legislators,  it is time to  end the politics                                                                    
     of separation.   We are  all Alaskans equally.   We all                                                                    
     deserve    affordable    and   reliable    electricity.                                                                    
     Electricity  is   the  basic  underpinning   of  modern                                                                    
     society.    Without  it, we  would  not  have  schools,                                                                    
     potable water,  sewer systems, healthcare  or airports.                                                                    
     For too  long, electricity for rural  Alaskans has been                                                                    
     an  almost unaffordable  luxury.   You can  change that                                                                    
     and our  children and grandchildren will  thank you, as                                                                    
     I do.                                                                                                                      
                                                                                                                                
3:23:06 PM                                                                                                                    
                                                                                                                                
MS.  KOHLER,  in  response   to  Representative  Ramras'  earlier                                                               
question regarding  parity, related  that she lives  in Anchorage                                                               
where  the cost  of  natural gas  has tripled.    She reviewed  a                                                               
formula that  she used to illustrate  the high cost of  diesel in                                                               
rural  Alaska  as  compared  to  the  cost  of  natural  gas  [in                                                               
Southcentral Alaska].                                                                                                           
                                                                                                                                
REPRESENTATIVE   RAMRAS,   in    response,   pointed   out   that                                                               
constituents  in Anchorage  are focused  on the  fact that  their                                                               
energy costs have tripled.                                                                                                      
                                                                                                                                
REPRESENTATIVE  JOHANSEN  inquired  as   to  what  he  tells  his                                                               
constituents  who  already  pay  9.5  cents  kWh  when  [under  a                                                               
statewide plan] everyone's rates would increase.                                                                                
                                                                                                                                
MS.    KOHLER    clarified   that    Representative    Johansen's                                                               
constituents'   rates  wouldn't   necessarily   increase.     She                                                               
projected that the pooled cost  of generation would be parsed out                                                               
throughout the state.  By  focusing on specific projects, such as                                                               
the  Susitna, power  costs  would decrease  for  everyone in  the                                                               
state.   The formula  can be  utilized such that  no one  faces a                                                               
substantial increase in the cost of power.                                                                                      
                                                                                                                                
REPRESENTATIVE  JOHANSEN  opined that  any  increase  would be  a                                                               
substantial increase.   If there's  a solution for  rural Alaska,                                                               
the rest of Alaska will want such as well.                                                                                      
                                                                                                                                
MS. KOHLER said  that's why the plan she proposed  has merit.  In                                                               
Southeast Alaska,  she explained,  a grid with  a cost  of almost                                                               
$.5 billion is  being considered.  This  proposal would eliminate                                                               
the need  for the aforementioned  because those not  connected to                                                               
hydroelectric  power would  experience  a decrease  in costs  and                                                               
wouldn't  need or  want a  grid connection.   She  attributed the                                                               
decrease in costs  to lowering the cost of power  processing in a                                                               
virtual manner.  This proposal,  she clarified, doesn't mean that                                                               
physical plants have to be  built throughout the state but rather                                                               
it would be a virtual connection.                                                                                               
                                                                                                                                
3:27:56 PM                                                                                                                    
                                                                                                                                
DEBORAH VO,  Rural Development Specialist, Yukon  Delta Fisheries                                                               
Development  Association (YDFDA),  relayed that  YDFDA is  one of                                                               
the  six  community  development  quota  (CDQ)  organizations  in                                                               
Western  Alaska.     She  reviewed   the  communities   that  she                                                               
represents.  She then provided the following testimony:                                                                         
                                                                                                                                
     First  and  foremost,  YDFDA  supports  the  goals  and                                                                    
     deployment  objectives  outlined  at the  AVCP  Calista                                                                    
     Regional  Energy  Plan.   These  goals  and  objectives                                                                    
     reduce  the cost  of  generating  power by  integrating                                                                    
     renewable  energy  solutions,   such  as  wind,  hydro,                                                                    
     biomass,  and   biomass  projects.     Secondly,  YDFDA                                                                    
     supports   bulk  fuel   purchasing  under   cooperative                                                                    
     purchase  agreements.    This  will  reduce  purchasing                                                                    
     costs by our villages by  participating in this type of                                                                    
     arrangement.                                                                                                               
                                                                                                                                
     On the All Alaskan  Generation and Transmission Utility                                                                    
     ... YDFDA supports the concept  as a long-term solution                                                                    
     since the  benefits reaped  from this  arrangement will                                                                    
     be  advantageous  to  all Alaskans.    The  Power  Cost                                                                    
     Equalization subsidy that is  necessary to equalize the                                                                    
     cost  of  generated  power across  the  state  will  no                                                                    
     longer  be needed  under this  scenario.   However, the                                                                    
     high cost of energy must  be reduced in rural Alaska to                                                                    
     spark   economic   development   in   our   communities                                                                    
     immediately.   That means right now,  especially in the                                                                    
     Lower Yukon Region where we  have been very much in the                                                                    
     news these past  six months.  Until the  concept of the                                                                    
     AAG&T  is  realized,   YDFDA  recommends  and  supports                                                                    
     expanding the  PCE program  to private  enterprises and                                                                    
     public  facilities, such  as  schools  and clinics,  in                                                                    
     rural communities  at 50 percent of  what is subsidized                                                                    
     to  households  and   other  community  facilities  and                                                                    
     utilities.      Currently,  our   subsidiary,   Kwikpak                                                                    
     Fisheries, that  operates in Emmonak pays  for the full                                                                    
     cost  of  power, including  the  fuel  surcharge.   The                                                                    
     exorbitant cost of power coupled  with the high cost of                                                                    
     transportation,  transporting  our product  to  market,                                                                    
     which  is the  fish,  makes it  extremely difficult  to                                                                    
     compete globally  and with non-rural communities.   The                                                                    
     savings  incurred by  lowering the  cost of  power will                                                                    
     allow Kwikpak  Fisheries to pay  a higher price  to the                                                                    
     fishermen  and women  in our  villages for  their fish;                                                                    
     therefore contributing more cash  to the local economy.                                                                    
     Along  the same  lines, making  PCE available  to local                                                                    
     schools  and clinics  to operate  and maintain  quality                                                                    
     service  at  a  more  reasonable  cost  contributes  to                                                                    
     overall healthy and sustainable villages.                                                                                  
                                                                                                                                
     In closing,  private investment  by local  and regional                                                                    
     investment is  important to our  communities.   And for                                                                    
     our communities  to thrive,  affordable energy  must be                                                                    
     an important part of that equation.                                                                                        
                                                                                                                                
3:32:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  noted that he isn't  a big fan of  the 500                                                               
gallon plan,  which he characterized  as complex.   He questioned                                                               
utilizing a regional  solution in which the  state subsidizes the                                                               
price of fish  such that cash coming into the  community would be                                                               
guaranteed.  Such  a solution would place the onus  on the Alaska                                                               
Seafood Marketing Institute (ASMI) to  increase the value of fish                                                               
in the global market.                                                                                                           
                                                                                                                                
MS. VO indicated that the region  is open to solutions.  However,                                                               
the  key  remains  rejuvenating and  keeping  the  local  economy                                                               
going,  such that  cash  stays  in and  circulates  in the  local                                                               
community.   Therefore,  any solution  is  worth discussing,  she                                                               
opined.                                                                                                                         
                                                                                                                                
3:34:09 PM                                                                                                                    
                                                                                                                                
DENNIS CLINE,  related that  he has  lived in  Bethel off  and on                                                               
since 1967 and  is a retired school teacher and  retired from the                                                               
Alaska Army National  Guard in 2005.  He further  related that he                                                               
lives  in Girdwood,  Eagle River,  and Bethel,  which he  said is                                                               
exciting.   With  regard to  energy, he  characterized it  as the                                                               
common  denominator.    Mr. Cline  highlighted  that  while  this                                                               
discussion occurs, a barge is headed  up river with fuel that has                                                               
already been  purchased.   Fuel prices  have varied  according to                                                               
the summer surge,  which is what occurred last  year.  Therefore,                                                               
little  progress  has  been  made  in that  area.    However,  he                                                               
applauded the efforts with weatherization  programs.  Although he                                                               
applauded efforts  to focus on  the problem, he opined  that it's                                                               
somewhat subverted  due to generating  revenues within  the state                                                               
with  oil production.   Oil  is taken  from the  North Slope  and                                                               
shipped to the  West Coast to be refined and  returned the state,                                                               
which he estimated results in  a transportation factor of $1.5-$2                                                               
per gallon.  He questioned why  the oil can't be refined and have                                                               
it near those [in  the state] who use it.  He  then turned to the                                                               
royalty oil within  the state, which is sold  and becomes revenue                                                               
within the state.  Those revenues  are haggled over.  He informed                                                               
the committee that in his home  in Girdwood he pays about $60 per                                                               
month  for   electricity  and  gas,   in  Eagle  River   gas  and                                                               
electricity totals  about $200  per month, and  in Bethel  in the                                                               
month  of  January  his electricity,  propane,  and  oil  totaled                                                               
$2100.  Mr.  Cline said that he isn't the  person to worry about.                                                               
However,  he has  had  discussions with  others  for which  there                                                               
should be  concern.   For instance,  he had  a discussion  with a                                                               
village  public safety  officer  (VPSO) staying  at  his bed  and                                                               
breakfast.   The VPSO related  his relationship  with subsistence                                                               
in  which  he  purchased  the  fuel  for  his  snow  machine  and                                                               
ammunition for  his gun,  which totaled  in excess  of $80.   The                                                               
VPSO  said  that he  realized  he  could've  purchased a  lot  of                                                               
chicken  with that  money.   The high  cost of  fuel is  changing                                                               
things  in the  lifestyle  that  once allowed  folks  to live  on                                                               
subsistence with  part-time employment.  Mr.  Cline expressed the                                                               
need to  move on  to alternative  energy sources,  which could've                                                               
had a  jump start  with the federal  stimulus funds  the governor                                                               
rejected.    He opined  that  [the  governor's rejection  of  the                                                               
federal stimulus funds] was  unconscionable, particularly when no                                                               
other plan  has been  articulated that addresses  the issues.   A                                                               
plan  needs   to  come   from  the   governor  and   through  the                                                               
legislature's budget process.  Mr.  Cline then related his belief                                                               
that  the oil  companies,  through an  inducement process,  would                                                               
have  some ability  to stabilize  fuel costs  whether that  means                                                               
building extra  refineries in the  state or refinery  capacity in                                                               
the state, or addressing shipping  issues, liquefying natural gas                                                               
on the North  Slope and shipping down the western  coast in order                                                               
to decrease transportation costs.                                                                                               
                                                                                                                                
3:41:28 PM                                                                                                                    
                                                                                                                                
IVAN IVAN, Akiak Native Community,  described the Yukon Kuskokwim                                                               
Delta area, noting  the difference in its economy  as compared to                                                               
other areas.   He noted that in his younger  days the economy was                                                               
based upon fish and wildlife.   With regard to a statewide energy                                                               
policy, he suggested reviewing the  [government] in the villages.                                                               
For instance, in  Akiak there is an Akiak Tribal  Council and the                                                               
Akiak  Native Community.   He  remarked  that in  most cases  the                                                               
tribal  government   seems  to  be  invisible   in  the  process.                                                               
Therefore, he expressed the need  to include them and respect the                                                               
region's way of  life.  He discussed  alternative energy options,                                                               
including wind  energy.  He  recalled that  in the late  1970s or                                                               
1980s a  study was  performed regarding  hydro electric  power in                                                               
the region.  He also recalled  that recently there was a $250,000                                                               
appropriation whereby (indisc.).  He  told the committee that the                                                               
Akiak Tribal Council  put forth a resolution  that recognizes the                                                               
high  fuel  and   electricity  costs  and  the   need  to  pursue                                                               
alternative  energy opportunities,  including wind  energy.   The                                                               
council submitted  an application for  [hydro power] to  the U.S.                                                               
Department of  Energy and  is waiting  to hear  back.   Also, the                                                               
regional housing  authority is  being asked  for $120,000  of the                                                               
$250,000 appropriation to (indisc.).   He concluded by expressing                                                               
interest in pursuing alternative  energy sources while protecting                                                               
the area's natural resources.                                                                                                   
                                                                                                                                
3:49:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STOLTZE noted  his  appreciation  for Mr.  Ivan's                                                               
passion.  (Indisc.)                                                                                                             
                                                                                                                                
3:51:57 PM                                                                                                                    
                                                                                                                                
TIM MEYERS, Myers Farms, expressed  his enthusiasm because he has                                                               
learned how to  live in the region  for about half the  cost.  He                                                               
related that a couple of years  ago he started farming and now he                                                               
can  grow  enough  food for  a  family  of  eight.   He  is  also                                                               
supplying  produce for  350 people  on the  WIC program  in June.                                                               
Mr. Meyers informed the committee of  his plan to bury five forty                                                               
foot shipping  containers underground,  which will enable  him to                                                               
store possibly  200,000 pounds  of potatoes,  carrots, rutabagas,                                                               
cabbage, turnips,  collard greens, and  kale.  Such  storage will                                                               
be necessary  due to  his plans to  expand his  growing capacity.                                                               
He  opined that  if about  15-20 others  also grew  produce, they                                                               
could grow  enough food  to feed  a good  portion of  the region.                                                               
The plan, he  related, is to sell 30 pound  boxes of this produce                                                               
and  ship it  to the  villages  for approximately  $1 per  pound,                                                               
which  is  roughly  half  the  cost  of  current  produce  costs.                                                               
Furthermore,  this  produce is  100  percent  organic.   He  then                                                               
explained  that  he composts  chum  salmon  to create  dirt;  the                                                               
aforementioned could establish a market  for chum salmon that are                                                               
being caught and let go.                                                                                                        
                                                                                                                                
MR.  MEYERS explained  that he  has  been building  homes in  the                                                               
region  for about  30  years.   He opined  that  he has  mastered                                                               
building small, energy efficient,  affordable homes in the region                                                               
that beat  existing energy specifications.   The homes  are built                                                               
with   a  completely   different   building   system  than   that                                                               
traditionally  used in  the region.   Once  he began  farming, he                                                               
discovered that  he could  create rooms  underground in  which he                                                               
could farm  and utilize  free heat  where it's  30 degrees.   Mr.                                                               
Meyers said, "You  cannot afford to live in this  region, in this                                                               
environment when  fuel is $6  a gallon, above ground."   Although                                                               
he  said he  was impressed  with the  state's energy  program, he                                                               
stressed that  above ground houses  aren't efficient  enough when                                                               
heating  fuel  is  $6  per   gallon.    Therefore,  he  suggested                                                               
reviewing what he's  doing and putting 200-300 people  to work in                                                               
the region to build high  quality underground homes that everyone                                                               
can afford.                                                                                                                     
                                                                                                                                
3:57:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS commented that  underground housing is spot                                                               
on and  expressed his  desire to discuss  modular heat  pumps for                                                               
Fairbanks.                                                                                                                      
                                                                                                                                
3:58:26 PM                                                                                                                    
                                                                                                                                
MR. MEYERS  said he has  talked about  this for years,  but there                                                               
hasn't  been a  lot of  interest in  homes that  don't mimic  the                                                               
regular  construction/housing  building  system.   Therefore,  he                                                               
suggested following his building  methods to produce some totally                                                               
different, high  quality homes that  folks can afford to  live in                                                               
and  then  involve the  federal  government,  U.S. Department  of                                                               
Housing and  Urban Development.   Cold climate  research supports                                                               
the notion that stick-frame, foam-panel  houses don't work in the                                                               
region.   He told the committee  that he kept chickens  in one of                                                               
his structures  and he burned  less than a  gallon of fuel  a day                                                               
and  never  had  frozen  water   or  eggs.    Mr.  Meyers  shared                                                               
photographs of his farm with the  committee.  He then related the                                                               
need to get others  to follow his method and to  set them up with                                                               
land that they  will help tend for two years.   Furthermore, this                                                               
food allows folks to eat more healthfully and live sustainably.                                                                 
                                                                                                                                
4:08:38 PM                                                                                                                    
                                                                                                                                
GEORGE  GUY, Business  Manager, Kwethluk,  Incorporated, informed                                                               
the  committee that  Kwethluk, Inc.,  operates  its own  electric                                                               
utility.    He then  recounted  how  last  fall an  early  freeze                                                               
prohibited the community from receiving  fuel for its power plant                                                               
and the community.   The aforementioned triggered  a super energy                                                               
crisis for the community during  which the generators were low on                                                               
fuel and they ran out of stove  oil for consumers.  At that time,                                                               
Mr.  Guy activated  the strategy  plan for  the community,  which                                                               
entailed purchasing stove oil from  the local school and the City                                                               
of Kwethluk  sold five gallons  of fuel  to each household.   The                                                               
City of  Kwethluk, the Indian  Reorganization Act  (IRA) Council,                                                               
and the  Kwethluk, Inc. Board  of Directors issued  a declaration                                                               
of  emergency in  the  hope  of activating  state  agencies.   He                                                               
mentioned  the various  agencies  and  individuals he  contacted.                                                               
However, no remedies from the  State of Alaska have been received                                                               
and thus there was no choice other  than to fly in fuel at a cost                                                               
of $6.09  per gallon.  Mr.  Guy related the need  for the state's                                                               
policies  and procedures  to change  in order  to address  energy                                                               
emergencies in  rural Alaska.   He highlighted that  the majority                                                               
of  rural areas  use  diesel for  heat  and [Kwethluk]  currently                                                               
consumes approximately  108,000 gallons  of heating fuel  to keep                                                               
the generators running.   He pointed out that in  the rest of the                                                               
nation  the price  of fuel  fluctuates, but  rural areas  such as                                                               
Kwethluk are locked into the price  at the time of purchase.  The                                                               
various  alternative  and  renewable energy  resources  are  most                                                               
needed in  rural Alaska,  he opined.   He informed  the committee                                                               
that currently  stove oil/  heating fuel  costs $7.20  per gallon                                                               
and  unleaded gas  costs $[6].23  per gallon.   This  past winter                                                               
people often had to choose between food and fuel to survive.                                                                    
                                                                                                                                
4:14:40 PM                                                                                                                    
                                                                                                                                
DAVE TRANTHAM,  told the committee  that he has lived  in Western                                                               
Alaska since 1946, specifically in  Bethel for the last 43 years.                                                               
He noted  that since he retired  in 1979 he has  been a volunteer                                                               
in Bethel.   The cost of  energy impacts every Alaskan  no matter                                                               
the locale.  However, it  impacts some areas greater than others.                                                               
Currently, many  residents in the  Bethel region are  in survival                                                               
mode due to  the high cost of  energy.  He related  that he knows                                                               
elders who  live in  one room  in the  winter because  they can't                                                               
afford to heat the entire house.   He urged the committee to hear                                                               
"It's  heat or  eat  with  some people  ...  in many  communities                                                               
throughout the  state."   Mr. Trantham  thanked the  governor and                                                               
the legislature  for the $1,200  in energy assistance.   He noted                                                               
that oftentimes  Native people of  Bethel wouldn't say  thank you                                                               
as it's not their cultural way,  although they are.  Although Mr.                                                               
Trantham  said that  he didn't  know what  the solutions  are, he                                                               
encouraged  the committee  to listen  carefully  as there's  much                                                               
wisdom being  provided.  Furthermore, collectively  a solution to                                                               
the high cost of energy should be developed.                                                                                    
                                                                                                                                
MR. TRANTHAM related that since  he can't pay for electricity, he                                                               
doesn't  have a  television and  has no  refrigerator but  rather                                                               
uses a  hole in the ground.   He further related  that he doesn't                                                               
have  a clothes  dryer  and  thus dries  his  clothes outside  no                                                               
matter  the  season.    Methods  of  the  old  timers,  who  were                                                               
survivors,  should be  reviewed.    He stressed  the  need to  do                                                               
things  for  oneself  and  hope  a little  help  comes  from  the                                                               
government as  was the  case with  the $1,200.   He  reviewed the                                                               
various  methods  of conserving  energy  and  resources, such  as                                                               
changing light  bulbs and building  underground.   The collective                                                               
wisdom of those  in the area needs to be  used to find solutions.                                                               
Mr. Trantham concluded by relating that solutions can be found.                                                                 
                                                                                                                                
4:22:44 PM                                                                                                                    
                                                                                                                                
WILLIE KEPPEL, noted that he  provided a packet to the committee.                                                               
Mr.  Keppel  stated  that  the  problem  is  that  everything  is                                                               
connected to  Bethel.   He identified  two monopolies  in Bethel:                                                               
the Bethel  power plant and  the Crowley  fuel plant.   No matter                                                               
how hard one tries to  regulate Bethel's utilities, it won't work                                                               
because a social  conscious can't be legislated.   He related his                                                               
belief  that the  reason Bethel  has the  highest cost  of diesel                                                               
generation in the state is  collusion, which he attributed to the                                                               
lack  of oversight  and rules  that would  make Bethel  utilities                                                               
operate at  a cost efficient  rate for  the people.   He recalled                                                               
Representative  Herron's and  Senator Hoffman's  visit to  Bethel                                                               
this past fall during which  there was a discussion regarding the                                                               
cost  of electricity.   During  that discussion,  Senator Hoffman                                                               
said that nothing  can be done about  Bethel's electricity prices                                                               
because the utilities  negotiate for the highest  price.  Senator                                                               
Hoffman  also brought  up  the need  to  purchase fuel  together.                                                               
However,  that's not  an  option because  the  two providers  are                                                               
"Siamese  twins,"  he  opined.    "There  is  no  competition  in                                                               
Bethel,"  he  charged.    Furthermore, there's  no  place  for  a                                                               
competitor to  haul fuel because  the major tank farms  are owned                                                               
by the two  providers.  Mr. Keppel opined that  there needs to be                                                               
an independent  tank farm in  Bethel that's operated by  the most                                                               
efficient corporation on  the Delta, AVEC.  The  AVEC has figured                                                               
out  how  to  partner  with  the  school  districts  and  village                                                               
corporations, and purchase  fuel in bulk.  He  also expressed the                                                               
need to allow the Aleuts to  come to Bethel with their barges and                                                               
totes to  sell fuel  to the region,  which would  provide another                                                               
option for the  villages as well as AVEC.   The aforementioned is                                                               
how to obtain fair competition.                                                                                                 
                                                                                                                                
MR. KEPPEL reminded the committee  of what the legislature did in                                                               
the  1980s when  Bethel utilities  couldn't deal  with the  waste                                                               
heap  so  they allowed  radiator  waste  to  be pumped  into  the                                                               
ground,  which resulted  in  a huge  environmental  problem.   In                                                               
order   to  address   the  aforementioned,   the  state   bought,                                                               
purchased, and  built all the waste  heat lines in the  city.  He                                                               
then informed  the committee of the  time when it was  found that                                                               
the city's  utilities overcharged its  residents by $70,000.   In                                                               
conclusion, Mr.  Keppel said  that numerous  times the  laws have                                                               
been  violated  by Bethel  utilities  and  the  only way  to  cut                                                               
electricity costs in  Bethel is to revoke  the utility's license.                                                               
He  requested  that  AVEC  be utilized  to  temporarily  run  the                                                               
utilities.  The desire, he related,  is to pay the appraised rate                                                               
in  the tariff.    The AVEC  will  work for  the  people, and  he                                                               
suggested  that  electricity costs  will  be  at least  one-third                                                               
less.                                                                                                                           
                                                                                                                                
4:31:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  said that he shares  Mr. Keppel's concerns                                                               
regarding Fairbanks Natural  Gas as well as  the Bethel Utilities                                                               
Corporation.                                                                                                                    
                                                                                                                                
MR. KEPPEL applauded  Governor Palin for not  taking the stimulus                                                               
funds.   He  said  he believes  in investing  the  money in  [the                                                               
residents].   Therefore, if  one is  interested in  building wind                                                               
towers, only  the state's  constitution has  to be  consulted and                                                               
the legislature  merely has to pass  a loan that's paid  back for                                                               
with interest.                                                                                                                  
                                                                                                                                
4:34:09 PM                                                                                                                    
                                                                                                                                
SUE TRANTHAM,  Askinuk Corporation  of Scammon Bay,  related that                                                               
she has heard that the  commercial fishermen, mostly from Scammon                                                               
Bay,  aren't going  to fish  in  Black River.   These  commercial                                                               
fishermen fish  to pay for  their electricity, gas, and  put away                                                               
food for  the winter.   She noted that  most of the  residents of                                                               
Scammon Bay live at the poverty  level.  She related that her 93-                                                               
year-old mother  spends most of  her time  sewing to pay  for her                                                               
electricity.  Ms. Trantham asked  the committee members to try to                                                               
get the stimulus  funding rejected by the governor  in order that                                                               
each village  has something in  the future.   With regard  to the                                                               
legislation before  the committee, Ms. Trantham  opined that they                                                               
should've been worked on 20 years ago.                                                                                          
                                                                                                                                
                                                                                                                                
4:37:09 PM                                                                                                                    
                                                                                                                                
BOB  GRAHAM  (ph)*  No address  provided*  Discussed  the  energy                                                               
crisis in rural Alaska.{ told  the committee that a multi-pronged                                                               
approach to energy  is necessary.  Addressing  energy begins with                                                               
individuals,  who should  conserve,  recycle,  and use  renewable                                                               
energy  and  manual mechanisms  such  as  bicycles.   He  further                                                               
recommended that  everyone should turn  down the heat,  wear more                                                               
clothes in the house, and  use energy efficient devices.  Second,                                                               
helpful  designs  such  as LED  lights  and  compact  fluorescent                                                               
lights  should be  supported and  utilized.   Mr. Graham  related                                                               
that he  is going back to  the older ways.   He indicated support                                                               
for  the construction  of underground  houses  and using  gravity                                                               
flow  stoves   that  don't  require  electricity.     Wind,  sun,                                                               
geothermal,    and   water    flow   are    [alternative   energy                                                               
possibilities]  that may  require  help from  the government  [to                                                               
implement].                                                                                                                     
                                                                                                                                
MR.  GRAHAM expressed  concern with  the things  that he  doesn't                                                               
have control  over, such  as the prices  charged by  the electric                                                               
and fuel  companies.  He related  that he has considered  that it                                                               
may be best for him to move where  the costs aren't as high.  Mr.                                                               
Graham opined  that government  should encourage  individuals and                                                               
groups to  be more  efficient and  cost effective.   Furthermore,                                                               
the funds available  should be directed to those  who really need                                                               
it  without  administrative costs  and  stretched  profits.   The                                                               
government  could  provide  oversight  with  the  aforementioned.                                                               
However, government shouldn't  force folks to live  a more costly                                                               
lifestyle.  He  told the committee that he has  rentals for which                                                               
80  percent of  the money  coming in  went toward  city services,                                                               
electricity, and fuel oil.                                                                                                      
                                                                                                                                
4:45:19 PM                                                                                                                    
                                                                                                                                
DAN  LEINBERGER,  Vice  Mayor,  City  of  Bethel,  addressed  the                                                               
concept of  capping $3 heating  oil.   Under the AAG&T,  the best                                                               
projects would  enjoy the  dollars contributed  to it.   However,                                                               
under  the  existing  system  it's not  the  best  projects  that                                                               
receive the  funding, but  rather which  legislator has  the most                                                               
political clout  [to obtain funds  for his/her  area's projects].                                                               
He acknowledged  that currently the  Bethel region enjoys  a very                                                               
influential Senator.   Therefore,  he said  that AAG&T  does make                                                               
sense from  a financial  standpoint.  With  regard to  an earlier                                                               
statement that one  can't have alternative energy  and $3 heating                                                               
fuel,  Mr.  Leinberger  contended  that  both can  be  had.    He                                                               
explained  that  this winter  the  City  of Bethel  reviewed  the                                                               
possibility of  hedging its  fuel cost,  but since  Bethel's fuel                                                               
comes from  Nikiski rather than  Cherry Point,  Washington, there                                                               
is no  direct correlation between  the fuel price derived  out of                                                               
Nikiski and  the New  York Mercantile  Exchange price  of heating                                                               
oil or  gasoline.  Therefore,  the City of Bethel  couldn't, with                                                               
any confidence, hedge  fuel and guarantee an at  least break even                                                               
proposition.  However,  most of the fuel in Alaska  is pulled out                                                               
of  Cherry Point,  which does  have a  direct correlation  to the                                                               
spot  price on  the  New  York Mercantile  Exchange.   The  state                                                               
would,  therefore, be  in a  much better  position to  hedge fuel                                                               
throughout the  state than a  city would.   Conceptually, futures                                                               
contracts  would be  purchased  at a  specific  price per  gallon                                                               
regardless  of  the  oil  prices  increasing  or  decreasing,  he                                                               
explained.  He noted that when  the City of Bethel first reviewed                                                               
hedging fuel  oil was $.97 a  gallon, whereas now fuel  oil costs                                                               
about $1.80  a gallon.   "The point is,"  he said, "that  I think                                                               
the state can  pull off alternative energy and a  $3 cap via fuel                                                               
hedging."                                                                                                                       
                                                                                                                                
4:50:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   RAMRAS   stated   his  disagreement   with   Mr.                                                               
Leinberger.   He explained that  he believes  Commissioner Galvin                                                               
lost over $1 billion for the  state when he tried to aggressively                                                               
manage the  state's money.   He opined that  the administration's                                                               
staff doesn't have any business trying to sell contracts.                                                                       
                                                                                                                                
CO-CHAIR EDGMON suggested  that Mr. Leinberger may  want to speak                                                               
with  Ms.  Kohler regarding  what  the  Alaska Power  Association                                                               
encountered when it tried to hedge fuel prices.                                                                                 
                                                                                                                                
4:51:24 PM                                                                                                                    
                                                                                                                                
MR. LEINBERGER then  turned to PCE, which was  brought about many                                                               
years ago during construction of  several large projects in order                                                               
to  lower  the  cost  of   electricity  to  various  communities.                                                               
Although PCE  was a  balancing effort to  do something  for rural                                                               
Alaska,   it  continually   remains  a   challenge  to   get  the                                                               
legislature  and   the  governor's   office  to   recognize  that                                                               
consumers still  benefit from the  lower power costs  of projects                                                               
that were funded  many years ago.  The  challenge, he identified,                                                               
is that PCE  seems to be viewed as a  give-away program for rural                                                               
Alaska.  The legislature has  moved toward a $250 million program                                                               
for alternative  energy, most  of which is  being spent  in rural                                                               
Alaska.   The aforementioned is a  good method to remove  some of                                                               
the burden of  PCE.  However, the state does  need to go farther,                                                               
which comes  back to AAG&T  and thus  the projects that  make the                                                               
most sense receive the funding,  regardless of the location.  The                                                               
aforementioned, he said, is why he supports AAG&T.                                                                              
                                                                                                                                
4:54:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STOLTZE expressed frustration with (indisc.).                                                                    
                                                                                                                                
CO-CHAIR EDGMON added (indisc.).                                                                                                
                                                                                                                                
MR.  LEINBERGER  clarified that  he  is  aware of  Representative                                                               
Stoltze's support of PCE, but  is trying to illustrate that AAG&T                                                               
takes away all political argument out of the equation.                                                                          
                                                                                                                                
4:57:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT  pointed out that  PCE isn't a good  energy plan                                                               
and to expand  it isn't appropriate.  Although  such action might                                                               
be a  short-term fix, the  problem is long  term.  From  an urban                                                               
perspective,   Co-Chair  Millett   said  that   her  constituents                                                               
understand the issues that rural  Alaska faces, particularly when                                                               
the prices spiked.                                                                                                              
                                                                                                                                
4:58:51 PM                                                                                                                    
                                                                                                                                
DENNIS  MEINERS  (PH)*  Chaninik   Wind  Group*  Bethel,  Alaska*                                                               
Discussed the  energy crisis in  rural Alaska.{ related  that the                                                               
Chaninik Wind  Group started  about five years.   He  opined that                                                               
it's inevitable that wind will be  used for energy purposes.  The                                                               
group came  together as  an effort to  lower costs,  support each                                                               
other, and build capability.   The objective of the Chaninik Wind                                                               
Group, he  related, is to  seriously displace fuel with  wind for                                                               
electrical and  heat generation and  possibly transportation.   A                                                               
baseline survey  regarding how much  energy is being used  in the                                                               
areas has  begun and provided  some interesting  information with                                                               
regard  to where  the  costs  are occurring.    Mr. Meiners  then                                                               
related  his  support of  the  Renewable  Energy Fund,  which  he                                                               
characterized as probably the most  important thing the state has                                                               
done  for rural  communities since  PCE.   He recalled  that last                                                               
year  the  legislature provided  $150  million  to this  program,                                                               
which   is  a   commitment  that   no  other   state  has   made.                                                               
Furthermore, judging  from the  types of  energy problems  in the                                                               
state, these investments have the  potential to create value much                                                               
greater  than   the  money  invested   in  the  programs.     The                                                               
aforementioned  is  what the  committee  is  concerned about,  he                                                               
opined.                                                                                                                         
                                                                                                                                
5:01:57 PM                                                                                                                    
                                                                                                                                
MR. MEINERS  specified that  the program  is important  for three                                                               
reasons.  He explained that a  different source of money is being                                                               
injected  into  the  utility sector,  and  it's  rearranging  the                                                               
utility structure by unleashing  opportunities for innovation and                                                               
competition that  didn't exist.   The dynamics of  innovation and                                                               
competition will drive  the system to lower  costs while creating                                                               
new opportunities.                                                                                                              
                                                                                                                                
5:02:29 PM                                                                                                                    
                                                                                                                                
CO-CHAIR MILLETT highlighted that HB  219 adds an economic aspect                                                               
to the  oversight of  [alternative energy]  projects in  order to                                                               
ensure  that those  projects are  successful  and don't  increase                                                               
rural  Alaska's  energy  costs.   Recalling  when  the  renewable                                                               
energy  projects were  going through  the Legislative  Budget and                                                               
Audit Committee,  there was  testimony that  the projects  had no                                                               
accountability.  Therefore, the  legislation before the committee                                                               
attempts to  include accountability  and an economic  aspect into                                                               
all the energy projects prior to receipt of funds.                                                                              
                                                                                                                                
5:03:18 PM                                                                                                                    
                                                                                                                                
MR. MEINERS said  that is exactly what he's addressing.   He then                                                               
related his belief that there  are four strategies that should be                                                               
incorporated  into   the  management  of  the   program.    These                                                               
strategies, he  opined, would strengthen  the program  and create                                                               
value for the entire state above  and beyond the investment.  The                                                               
components have  to work together to  achieve the aforementioned,                                                               
he said.   He further opined that AEA has  good leadership and he                                                               
supports Mr. Haagenson's efforts.   The first strategy is to pick                                                               
the   right   projects   by  selecting   and   evaluating   those                                                               
technologies  that  are  thought  to have  the  greatest  overall                                                               
impact, which he indicated can  be achieved by utilizing the cost                                                               
benefit analysis.  The second  strategy is to educate and attract                                                               
others.   The  aforementioned draws  investors and  increases the                                                               
pool of  money.   The third  strategy is to  move from  a funding                                                               
agency to  a fully engaged partner,  which is important.   If the                                                               
grantees  are  successful  and  funds are  provided  to  reach  a                                                               
specific   measurable   goal,    that   success   increases   the                                                               
effectiveness of  the investment.   Therefore,  the value  of the                                                               
investment is  magnified.  The  fourth strategy, and  perhaps the                                                               
most  important, is  to  advance  the state  of  the  art.   This                                                               
strategy probably creates the greatest  value because there would                                                               
be  funding  of a  systematic  progression  of increasingly  more                                                               
efficient projects  and effective ways  in which to  address with                                                               
the  energy problem.   The  aforementioned  pursuit of  knowledge                                                               
results in breakthroughs that establish  new standards, which can                                                               
benefit millions  of people while  creating new jobs  and funding                                                               
for  innovation.   Mr. Meiners  clarified  that he's  advocating,                                                               
particularly  in terms  of small  villages, [determining]  how to                                                               
get  to  the  solutions  that are  necessary  while  making  good                                                               
decisions  about  the  renewable  energy fund  that  benefit  the                                                               
entire state.   The aforementioned, he remarked,  is an important                                                               
obligation of the fund.                                                                                                         
                                                                                                                                
5:09:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STOLTZE  related  that   he  was  struck  by  the                                                               
viability  of  the project  because  it  was  tied to  the  state                                                               
maintaining  economic development.    He indicated  the need  for                                                               
affordable energy for the fisheries  industry not just to survive                                                               
but to sustain.                                                                                                                 
                                                                                                                                
5:11:17 PM                                                                                                                    
                                                                                                                                
GEORGE LAMONT,  talked about  the rising cost  of fuel,  which is                                                               
over $8.00  a gallon in his  village.  [Much of  the testimony is                                                               
inaudible.]   He indicated the  need for state assistance  in the                                                               
region.    He mentioned  that  it  now  costs  less to  fly  from                                                               
Tuluksak than it  does to take a motorboat.   Mr. Lamont told the                                                               
committee that  in his village  two generators run all  the time,                                                               
one  of which  is  for the  school.   He  indicated  that it's  a                                                               
problematic  and  costly  situation.     He  requested  that  the                                                               
legislature help the area obtain  renewable energy for the school                                                               
system.  He mentioned flooding in  the area that was an emergency                                                               
situation.   In conclusion, Mr. Lamont  maintained the importance                                                               
of energy.                                                                                                                      
                                                                                                                                
5:16:10 PM                                                                                                                    
                                                                                                                                
LAUREN  WILLIAMS  (PH),  Alaska Municipal  League,  informed  the                                                               
committee that his  region covers 39 communities  from the Bering                                                               
Sea to  the Canadian Border,  which encompasses three  Senate and                                                               
three House districts.   The communities in the  region are rural                                                               
and isolated,  which results in a  very high cost of  energy.  He                                                               
acknowledged  that transportation  costs and  the low  demand for                                                               
each  community are  contributing  factors in  the  high cost  of                                                               
energy.   Mr. Williams  opined that  AML wants  to work  with the                                                               
legislature  to  find energy  solutions  across  the state.    In                                                               
closing,  he expressed  the hope  that the  legislature overturns                                                               
the  governor's veto  on the  stimulus money  in order  to ensure                                                               
that  residents can  better equip  their homes  to save  money on                                                               
fuel in the future.                                                                                                             
                                                                                                                                
5:18:42 PM                                                                                                                    
                                                                                                                                
NORMAN AYAGALRIA, reminded the committee  that many years ago his                                                               
ancestors traveled  the Kuskokwim River  using a power  boat that                                                               
harnessed wind  and, at times,  tidal energy.  He  recalled being                                                               
told stories by the elders regarding  travel by sled dogs.  Based                                                               
on  the stories  from  his elders,  Mr.  Ayagalria surmised  that                                                               
energy resources  used by  his elders  required small  amounts of                                                               
hydrocarbons,  such   as  oil,  natural  gas,   and/or  gasoline,                                                               
although they  required physical and  mental work.   Since moving                                                               
to Bethel,  he realized that  he uses lots  of stove oil  to heat                                                               
his  home.   Due  to the  high  energy prices,  he  and his  wife                                                               
invested  in a  wood stove,  which has  proven to  be a  positive                                                               
investment   so  far,   although  it   requires  many   hours  of                                                               
maintenance  and hard  work.   Instead of  paying a  $300 heating                                                               
bill each  month, he  is down  to at  least $150  a month  in the                                                               
winter.    Furthermore, he  recently  invested  in a  small  wind                                                               
energy system  capable of delivering  500 watts.  When  there was                                                               
enough wind  to turn the turbine,  it would charge at  least four                                                               
batteries.   The  aforementioned  provided enough  energy on  the                                                               
batteries to  run his power tools,  shed lights, as well  as some                                                               
[electrical  needs] in  the  house.   In  terms  of finances,  he                                                               
estimated  that he  has  saved  at least  $10-$20  a  month.   He                                                               
related  that  he  also  replaced  his  incandescent  bulbs  with                                                               
[compact]  fluorescent bulbs,  which  he estimated  has saved  at                                                               
least $10  a month.   Moreover,  he and his  family turn  off and                                                               
unplug appliances when not in  use, which saves another $5-$10 on                                                               
electricity costs.   He related that  he also rides a  bicycle in                                                               
the  summer, which  saves at  least  $30 a  week.   His goal,  he                                                               
relayed, is  to ride his bicycle  all summer in order  to save at                                                               
least  $1,000.    "What  does  this all  mean:    it  means  that                                                               
individual  energy conservation  adds more  disposable income  to                                                               
individual families,"  he specified.   The  aforementioned simple                                                               
measures  allowed his  wife and  daughter to  recently travel  to                                                               
participate   in  subsistence   activities,  which   hasn't  been                                                               
possible in the past.   Furthermore, energy conservation provides                                                               
a physical benefit, which he said  he has experienced in terms of                                                               
losing  weight,   gaining  muscle   mass,  having   more  energy,                                                               
participating  in  more  family   activities,  and  his  family's                                                               
quality of life has improved.   He noted that it took three years                                                               
worth of permanent  fund dividend checks from  himself, his wife,                                                               
and  daughters  to invest  in  these  systems  and now  they  are                                                               
finally paying off.                                                                                                             
                                                                                                                                
5:24:09 PM                                                                                                                    
                                                                                                                                
ERIC MIDDLEBROOK, opined that the  committee coming out to Bethel                                                               
illustrates  its willingness  to  work together  with [the  rural                                                               
communities].  He  related that although he is the  vice mayor of                                                               
Bethel, he  is speaking on  his own  behalf.  He  first addressed                                                               
the  issue of  the tank  farm and  opined that  there isn't  real                                                               
competition as  the residents are  still paying a high  price for                                                               
fuel because  the company says  the fuel was delivered  last year                                                               
and it needs to sell all  of it.  However, Mr. Middlebrook opined                                                               
that  if  there  was  competition, a  competitor  would  purchase                                                               
cheaper fuel on the world market  and sell it to Bethel residents                                                               
for less right  now.  He endorsed regulation of  the fuel company                                                               
since  the Bethel  area doesn't  have a  situation in  which free                                                               
competition or a free market can be achieved.                                                                                   
                                                                                                                                
MR. MIDDLEBROOK then told the  committee that PDC (Indisc.) Group                                                               
is seeking a community with which  to perform a pilot study for a                                                               
natural gas delivery project.   The idea is to purchase liquefied                                                               
natural  gas at  market prices  at Nikiski  or the  world market,                                                               
deliver  it by  barge  to  Bethel where  it  would  be stored  as                                                               
compressed natural  gas, and  then it would  be delivered  to the                                                               
community.  He informed the  committee that liquefied natural gas                                                               
is  a fraction  of the  cost of  petroleum products  in terms  of                                                               
price per million British thermal units  (Btu).  The group made a                                                               
proposal that was endorsed by the  Bethel tribe and a pilot study                                                               
grant was  submitted to AEA, but  AEA turned it down  on what was                                                               
said to be a technicality in  the legislation.  The grant funding                                                               
for Phase  I and Phase II  of the project stated  that no natural                                                               
gas would be  done in areas with a renewable  resource.  The wind                                                               
is considered  to be a  renewable resource for Bethel.   Although                                                               
Mr. Middlebrook said  he endorsed wind projects,  he predicted it                                                               
would be several  years before Bethel would see  any real benefit                                                               
from something like  [wind energy].  The [wind]  systems in place                                                               
now  are achieving  25 percent  penetration on  electricity alone                                                               
and don't  really address transportation or  home heating issues,                                                               
whereas the  proposed liquefied natural  gas project may  be able                                                               
to  provide cheaper  energy across  the board  for all  facets of                                                               
energy usage.   If  the legislation can't  be adjusted  such that                                                               
the  pilot   study  can  be   performed  through  AEA   with  the                                                               
endorsement of  local communities and leaders,  then he expressed                                                               
the need to  put in place some other mechanism  to review such an                                                               
energy  distribution system.   The  aforementioned would  benefit                                                               
all  of rural  Alaska.   At the  moment, the  price of  liquefied                                                               
natural  gas is  low due  to a  market flooded  with it  and it's                                                               
likely  to remain  that way  for  many years.   If  the price  of                                                               
petroleum  decreases  and  the price  of  liquefied  natural  gas                                                               
increases, rural Alaska would still benefit.                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT  inquired  as  to the  amount  of  the  funding                                                               
request.                                                                                                                        
                                                                                                                                
MR. MIDDLEBROOK specified  that it was for $750,000.   He offered                                                               
to provide  the committee  with the  grant proposal  submitted to                                                               
AEA.   He related  his hope  to bring it  before the  Bethel City                                                               
Council,  who he  hopes will  pass  a resolution  to endorse  the                                                               
project or a project similar in nature.                                                                                         
                                                                                                                                
5:29:45 PM                                                                                                                    
                                                                                                                                
RAYMOND  PETE, informed  the  committee that  he  is a  volunteer                                                               
coordinator for the  Berry Very Clean Fish,  Moose Harvest, which                                                               
is a yearly potluck to  show appreciation for all volunteers that                                                               
serve the Yukon Kuskokwim Delta.   The potluck began in 2007.  He                                                               
emphasized  that he,  a legally  disabled  individual that  still                                                               
works,  made a  difference  as  can anyone.    In 2008  donations                                                               
decreased, which he attributed to  the increased costs of heating                                                               
fuel and gas.   He stressed the  need to place a cap  on the cost                                                               
of heating oil and fuel because it impacts everyone.                                                                            
                                                                                                                                
5:32:42 PM                                                                                                                    
                                                                                                                                
JERRY  DRAKE,  Executive   Director,  Bethel  Community  Services                                                               
Foundation,  suggested that  the  way wind  and  solar energy  is                                                               
being  marketed doesn't  work, which  he based  on the  fact that                                                               
there aren't  systems in (indisc.).   An  example of this  was on                                                               
the Anchorage evening news last  week, which featured a gentleman                                                               
who  purchased a  $2,000 home  solar water  heating system.   Mr.                                                               
Drake  opined  that only  the  wealthy  will  be able  to  afford                                                               
renewable  energy  for  which   there's  a  questionable  payback                                                               
period.  He suggested research into the area of what off-the-                                                                   
shelf  components are  available that  provide supplemental  heat                                                               
alone.  Supplemental  heat wouldn't be intended  as a replacement                                                               
for the existing  heating system in the home.   Converting a home                                                               
to complete  reliance on wind  or solar energy is  very expensive                                                               
and  complicated.   The  aforementioned  are  project killers  in                                                               
rural   Alaska.     Mr.  Drake   opined   that  the   appropriate                                                               
combinations  of off-the-shelf  wind, solar,  and (indisc.)  that                                                               
are inexpensive, reliable,  and easy to maintain  would result in                                                               
an effective  system.  The  target cost  would be in  the $3,000-                                                               
$7,500 range with  (indisc.) payback timeframe.  If  the state is                                                               
unable to  conduct such  research, perhaps  a competition  with a                                                               
cash prize could be offered.   The aforementioned, he said, could                                                               
be an excellent use of stimulus funding.  (Indisc.)                                                                             
                                                                                                                                
CO-CHAIR EDGMON thanked  everyone for hosting and  attending.  He                                                               
then  suggested that  those who  didn't have  the opportunity  to                                                               
testify should feel free to  speak with members after the meeting                                                               
and/or submit written comments.                                                                                                 
                                                                                                                                
[HB 218 and HB 219 were held over.]                                                                                             

Document Name Date/Time Subjects
AVCP Calista Region Energy Plan 2009.pdf HENE 5/29/2009 1:00:00 PM
AVCP Presentation.pdf HENE 5/29/2009 1:00:00 PM
Felix Hess Presentation.pdf HENE 5/29/2009 1:00:00 PM
Regional Energy Powerpoint.pdf HENE 5/29/2009 1:00:00 PM
NorthStarGas Presentation.pdf HENE 5/29/2009 1:00:00 PM
AVEC Presentation.pdf HENE 5/29/2009 1:00:00 PM
Jerry Drake Letter.pdf HENE 5/29/2009 1:00:00 PM
Mary Pete Testimony.pdf HENE 5/29/2009 1:00:00 PM
Napaskiak Inc Testimony.pdf HENE 5/29/2009 1:00:00 PM
ONC Letter.pdf HENE 5/29/2009 1:00:00 PM
Richard Robb Letter.pdf HENE 5/29/2009 1:00:00 PM
Robert Nick Presentation.pdf HENE 5/29/2009 1:00:00 PM
RonHoffman Presentation.pdf HENE 5/29/2009 1:00:00 PM
Willie Keppel Presentation.pdf HENE 5/29/2009 1:00:00 PM
YDFDA Presentation.pdf HENE 5/29/2009 1:00:00 PM
YKHC Presentation.pdf HENE 5/29/2009 1:00:00 PM