Legislature(2009 - 2010)BARNES 124

02/11/2010 03:00 PM ENERGY

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03:22:58 PM Start
03:23:12 PM HB305
04:48:20 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Testimony <Invitation Only> --
from members of the Alaska Federation of
+ Bills Previously Heard/Scheduled TELECONFERENCED
                      HB 305-OMNIBUS ENERGY BILL                                                                            
3:23:13 PM                                                                                                                    
CO-CHAIR EDGMON  announced that further  testimony would be  heard from                                                         
representatives  of the  Alaska Federation  of Natives  (AFN) on  HOUSE                                                         
BILL NO.  305, "An  Act relating to  energy; relating  to the  board of                                                         
directors  of  the  Alaska  Energy Authority;  amending  the  size  and                                                         
composition of  the board of directors  of the Alaska  Energy Authority                                                         
by  removing  the members  of  the  Alaska Industrial  Development  and                                                         
Export  Authority  as directors  of  the  Alaska Energy  Authority  and                                                         
providing  for designation  or appointment  of other  members; amending                                                         
the quorum requirement for the board  of directors of the Alaska Energy                                                         
Authority; and relating to nuclear waste material."                                                                             
3:24:12 PM                                                                                                                    
CO-CHAIR EDGMON  thanked AFN for hosting  a House Special  Committee on                                                         
Energy meeting  at its convention  in Anchorage.   He then  displayed a                                                         
slide that summarized aspects of HB  305-Omnibus Energy Bill.  Co-Chair                                                         
Edgmon  also announced  the upcoming  round table  discussion scheduled                                                         
for 2/18/10.                                                                                                                    
3:26:59 PM                                                                                                                    
CO-CHAIR MILLETT  welcomed the  representatives from  AFN spoke  of the                                                         
value of  the committee meeting  held during  the AFN convention.   She                                                         
told them "your voice is strong".   She said the committee wanted their                                                         
help with many  issues, not just energy.  She  thanked Speaker Chenault                                                         
for his support of the committee's travels during interim and session.                                                          
3:28:15 PM                                                                                                                    
REPRESENTATIVE CHENAULT  stated the importance of traveling  across the                                                         
state to highlight  the issue with energy.  He  expressed his hope that                                                         
energy  does  not become  a  factor  between  rural and  urban  Alaska.                                                         
Lastly, he  thanked the communities  that hosted the committee  and the                                                         
committee members for their hard work.                                                                                          
3:29:38 PM                                                                                                                    
RALPH ANDERSEN, CEO,  Bristol Bay Native Association  (BBNA); Co-Chair,                                                         
Human Resources  Committee, AFN; Chairman,  Energy Working  Group, AFN,                                                         
thanked  the  committee  for  its  visit  to  Dillingham  and  for  the                                                         
opportunity to  testify.  Mr. Andersen  informed the committee  that he                                                         
served on  the stakeholder group that  worked on the bill  last summer,                                                         
and recalled  that the  co-chairs brought a  diverse group  together to                                                         
work towards  consensus on a draft  energy bill.  Mr.  Andersen pointed                                                         
out that the high cost of energy  for electricity, gas, diesel, or home                                                         
heating fuel  has the biggest  impact on  the lives of  everyone across                                                         
the state.  Although he was  encouraged by the legislature's efforts to                                                         
plan for  the state,  Alaska's future  is tied  to the  availability of                                                         
affordable  energy  resources  throughout Alaska.    His  organizations                                                         
support  the  fundamentals  of  a state  energy  policy  that  promotes                                                         
affordable   energy,   energy   efficiency,   conservation,   and   the                                                         
development  of renewable  and nonrenewable  energy sources.   The  AFN                                                         
also  supports  a policy  that  promotes economic  development,  energy                                                         
research, education,  and workforce  development.  Mr.  Andersen stated                                                         
that these policy goals will guide  development and implementation of a                                                         
successful  energy  plan.    He  supported  the  following  steps:  (1)                                                         
declaring an energy  policy;  (2) establishing a  department of energy;                                                         
(3) following  an energy plan with  clear, immediate short-,  mid-, and                                                         
long-term goals  for programs and  infrastructure, and  that recognizes                                                         
that assistance  is needed for  some;   (4) following a  clear schedule                                                         
for the implementation of energy programs  and projects.  Regarding the                                                         
nine bills included in HB 305, he  offered the following comments:  (1)                                                         
energy  efficiency  standards  for  public buildings  are  needed;  (2)                                                         
revival of the alternative energy revolving  loan fund is needed; (3) a                                                         
state department  of energy  is crucial; (4)  funding of  the renewable                                                         
energy grant fund is necessary; (5)  renewable energy tax credits are a                                                         
good  idea; (6)  an  energy use  index database  is  supported; (7)  an                                                         
emerging energy technology fund can  benefit Alaskans.  Furthermore, he                                                         
expressed  his  support for  the  Senate  companion omnibus  bill  that                                                         
offers a  possible solution  to the economies  of scale  regarding fuel                                                         
deliveries  in  rural  Alaska,  and for  continued  funding  of  Alaska                                                         
Housing Finance Corporation's (AHFC)  weatherization program.  Finally,                                                         
he  encouraged   the  continued   full  funding   of  the   Power  Cost                                                         
Equalization  (PCE) program  that makes  a difference  for families  in                                                         
rural Alaska.  He  gave a personal example of the benefit  of PCE.  Mr.                                                         
Andersen concluded  that HB  305 raises the  hopes and  expectations of                                                         
rural communities  that there  may be  a solution to  the high  cost of                                                         
3:40:17 PM                                                                                                                    
JULIE  KITKA, President,  AFN,  commended the  committee  for its  work                                                         
toward  the  omnibus  energy  bill.    She  opined  affordable,  clean,                                                         
alternative, and renewable energy, as  well as developing resources, is                                                         
critically  important  to Alaska's  communities.    Furthermore, as  an                                                         
energy state,  it is important  that the  residents of Alaska  can heat                                                         
their homes.   This bill will address multiple aspects of  the goals of                                                         
clean and  affordable energy and of  upgrading the delivery  systems in                                                         
communities.   Ms. Kitka explained  that she  is a commissioner  in the                                                         
Denali Commission and one of its first  fundings was to bring bulk fuel                                                         
storage in rural areas up to  Environmental Protection Agency (EPA) and                                                         
Coast Guard  compliance.   During that  process, the  Denali Commission                                                         
concluded  that it  did not  want  diesel fuel  to be  the only  option                                                         
available,  although it  was the most  affordable.   She expressed  her                                                         
hope  that the  present technology  will  put access  to other  options                                                         
within our  reach.   Ms. Kitka  stressed that  state investment  in new                                                         
technologies  is investment  in  the  future.   In  fact, investing  in                                                         
energy  alternatives  and  ideas  is  building the  future  and  is  no                                                         
different  than building  schools, hospitals,  clinics, and  technology                                                         
infrastructure.   She observed that energy  "is life and death  for our                                                         
people in  our communities," and for  residents to choose  between heat                                                         
and food  is unacceptable.   She noted  that the omnibus  bill includes                                                         
the  various aspects  of  the aforementioned,  and  she encouraged  the                                                         
committee  to  go  forward  and   invest  sizable  resources  into  the                                                         
infrastructure of communities.   Furthermore, affordable energy  is the                                                         
key to economic development and  sustainable communities.  She informed                                                         
the committee that the AFN board consists  of 37 members made up of the                                                         
presidents or CEOs of the regional  Alaska Native Claims Settlement Act                                                         
(ANCSA) corporations, heads of the  regional tribal consortiums, and 12                                                         
elected village  representatives.   AFN membership includes  nearly 200                                                         
villages  and  is  the  largest umbrella  organization  in  the  Native                                                         
community.  Energy is one of AFN's  top priorities; in fact, its energy                                                         
working group  is pledged to work  with the House Special  Committee on                                                         
3:45:33 PM                                                                                                                    
MR.  ANDERSEN, in  response to  Co-Chair Edgmon,  expressed his  belief                                                         
that the  AFN energy working group  is addressing two types  of issues:                                                         
policy  issues  such  as  legislation,   and  recommending  changes  in                                                         
existing policy.   One of its recommended changes was  addressed by the                                                         
Palin  Administration,  during  the  period of  high  fuel  prices,  by                                                         
providing  additional  funds  for  family   assistance  and  the  early                                                         
distribution of  the Permanent Fund  Dividend (PFD).  Since  the energy                                                         
working group was formed, there are  various projects occurring such as                                                         
wind generation, and the development  of alternative energy sources; in                                                         
fact, the  energy committee  saw some  of these  projects during  their                                                         
visit.   The  work at  the  AFN level  continues to  be advocating  for                                                         
policy  and  at  the  regional level  it  is  participating  in  policy                                                         
development and recommendations, and  the implementation of projects to                                                         
bring down energy costs.                                                                                                        
3:48:09 PM                                                                                                                    
MS. KITKA observed  that AFN has also recognized  its responsibility to                                                         
contribute the country by modeling innovation.   She has heard that the                                                         
Pacific Northwest will need sources  of energy from Alaska; thus, after                                                         
taking care  of the  home front  and communities,  Alaska will  need to                                                         
contribute to  the rest of the  nation, particularly after  the decline                                                         
of oil from the Trans-Alaska Pipeline System (TAPS).                                                                            
3:49:27 PM                                                                                                                    
CO-CHAIR EDGMON said  that the bill purports to create  two new funding                                                         
sources:  (1) a loan fund  for emerging technologies; (2) smaller scale                                                         
loan programs geared  to individual, or household,  renewable projects.                                                         
He  asked whether  AFN  has  sources of  federal  funds  that might  be                                                         
available to compliment the state programs.                                                                                     
3:50:20 PM                                                                                                                    
MS. KITKA offered to provide the  committee with information on sources                                                         
of  federal funds.    She suggested  that  the  committee consider  how                                                         
Alaska can  become a catalyst for  private sector investment  in energy                                                         
development.   For example, a private  entity made contributing  to the                                                         
national  dialog on  how  to create  alternative  energy resources  for                                                         
technology,  a priority.   In  this  way, the  state can  put in  place                                                         
incentives  to  attract  private  sector  partnerships.    Furthermore,                                                         
resources  put  into  the  University   of  Alaska  (UA)  can  put  the                                                         
university  on the  cutting  edge of  energy  development for  emerging                                                         
technologies.    However,  she cautioned  that  Alaska's  villages  and                                                         
communities must be taken care of first.                                                                                        
3:52:15 PM                                                                                                                    
MR. ANDERSEN observed that the  federal government has departments that                                                         
have  established,  for  the  first time,  tribal  offices  and  Native                                                         
American  divisions  within  them;   for  example,  the  Department  of                                                         
Commerce (DOC)  and the  Department of  Energy (DOE).   The  DOE offers                                                         
tribal organizations  competitive energy  grants that were  inspired by                                                         
the current economic  crisis; in fact, there are  reservations in other                                                         
states in dire  need of assistance.  Thus Alaska is  competing with all                                                         
of the  tribal interests in other  states.  Mr. Andersen  recalled that                                                         
DOE  representatives  in  Washington,  D.C., are  concerned  about  how                                                         
Alaska, with all  of its oil revenue, is contributing  to improving the                                                         
cost of living in Native villages.                                                                                              
3:54:51 PM                                                                                                                    
MS.  KITKA  pointed  out  that when  state  resources  are  offered  as                                                         
matching funds, more federal resources  are attracted, particularly for                                                         
innovative programs.                                                                                                            
REPRESENTATIVE   JOHANSEN  reiterated   that  the   AFN  goal   is  for                                                         
sustainable  communities with  economic development  and activity,  and                                                         
the underlying "first step" is to take care of the energy problem.                                                              
3:56:30 PM                                                                                                                    
MS. KITKA said yes; for example,  a business shipping fish from Bristol                                                         
Bay cannot exist if energy costs are too high to run the cold storage.                                                          
REPRESENTATIVE JOHANSEN  asked whether  the cost of  energy is  the top                                                         
limiting factor for AFN members.                                                                                                
3:57:31 PM                                                                                                                    
MS.  KITKA explained  that  communities have  multiple  needs, such  as                                                         
access to  good education  and a  health care  system and  clinics, but                                                         
affordable energy is essential for survival.                                                                                    
REPRESENTATIVE  RAMRAS asked  for a  corporeal example  of the cost  of                                                         
electricity for Christmas lights, after the PCE calculation.                                                                    
3:59:16 PM                                                                                                                    
MR. ANDERSEN  responded that his normal  electric bill is  between $250                                                         
and $300 per month for a three bedroom house with PCE.                                                                          
REPRESENTATIVE RAMRAS  said his  constituents pay  over $200  per month                                                         
for electricity without PCE.                                                                                                    
4:00:00 PM                                                                                                                    
CO-CHAIR  EDGMON  advised  that  in "small  village  Alaska"  the  cost                                                         
doubles, or more, and has a cumulative effect.                                                                                  
MR. ANDERSEN noted that some  villages are taking action independently;                                                         
for example, Perryville has installed  an array of ten wind generators.                                                         
He opined a  state energy department would help  coordinate the efforts                                                         
that are being made, and prevent  state government from being "all over                                                         
the place."                                                                                                                     
4:03:19 PM                                                                                                                    
REPRESENTATIVE  RAMRAS has  heard  that placement  of  the Division  of                                                         
Agriculture  in the  Department of  Natural  Resources (DNR)  is not  a                                                         
benefit, because the division is ignored.   Therefore, the existence of                                                         
a  commissioner of  energy  does not  ensure  that  specific needs  are                                                         
better met, even though the intention is excellent.                                                                             
MS. KITKA recalled a visit by the  Secretary of Energy and expects more                                                         
opportunity  for  collaboration  between  the  state  and  the  federal                                                         
government.   Secretary Chu has created  a climate of  innovative ideas                                                         
on the national level.                                                                                                          
4:05:08 PM                                                                                                                    
CO-CHAIR  MILLETT noticed  innovation taking  place in  every community                                                         
the committee  visited last year.   She saw the displacement  of diesel                                                         
fuel  by  energy generated  by  wind  farms  and high  efficiency  wood                                                         
stoves; in fact,  rural Alaska is doing  a lot and should  be supported                                                         
by  the  coordination  of  government  programs,  such  as  the  Denali                                                         
Commission, the DOE, and the state.                                                                                             
REPRESENTATIVE TUCK  added that  the other needs  of villages  would be                                                         
better served with the reduction in energy costs.                                                                               
4:07:20 PM                                                                                                                    
REPRESENTATIVE  RAMRAS   asked  what  message  AFN  heard   from  state                                                         
officials such  as Steve  Haagenson, Gene  Therriault, and  Joe Balash,                                                         
who have been specifically tasked with urban and rural energy issues.                                                           
MS. KITKA said AFN has met with them in the past.                                                                               
MR. ANDERSEN said that the governor's  energy person was not present at                                                         
today's AFN meeting.                                                                                                            
4:09:03 PM                                                                                                                    
REPRESENTATIVE RAMRAS asked whether this was a missed opportunity.                                                              
4:09:27 PM                                                                                                                    
MS. KITKA said improving the legislation was an ongoing process.                                                                
CO-CHAIR EDGMON thanked Ms. Kitka and Mr. Andersen                                                                              
MS.  KITKA  concluded   that  this  a  good  time   to  make  progress,                                                         
particularly on the federal level.                                                                                              
4:10:34 PM                                                                                                                    
LORETTA BULLARD, President,  Kawerak, Inc., informed the  committee her                                                         
organization  is  the  regional tribal  non-profit  consortium  for  16                                                         
communities  in the  Bering Straits  region.   She expressed  Kawerak's                                                         
welcome of  HB 305,  especially in  view of  the situation  last winter                                                         
when its  members were  paying from  $5 to  $8 per  gallon for  heating                                                         
fuel.   Furthermore,  a number  of businesses,  public facilities,  and                                                         
offices without access to  PCE, were paying in excess of  $1 per kWh of                                                         
electricity.  Ms. Bullard gave an example  of the cost of utilities for                                                         
commercial  users.  She  encouraged  the creation  of a state  clearing                                                         
house to advise  villages and residents on energy  products and systems                                                         
to  prevent  purchases of  the  wrong  technology, and  cautioned  that                                                         
mistakes are being made.  She  advised that the weatherization of homes                                                         
is really needed; unfortunately, AHFC's  program is not taken advantage                                                         
of by those  living in the Bush.   For example, in Nome  there are only                                                         
one  or two  auditors, and  there  are 60  or 70  homes  waiting to  be                                                         
audited.    Also,   the  pre-audit,  post-audit,  forward   funding  of                                                         
materials, and  the shortage  of contractors, are  all barriers  to the                                                         
program at the  village level.  Her  suggestion was to have  a regional                                                         
non-profit or  housing authority  do the  audits, order  the materials,                                                         
and  arrange  for the  labor  to  take  the  onus off  of  individuals.                                                         
Responding to  the question of what  village residents are  doing about                                                         
the high  cost of energy,  she relayed  that the Norton  Sound Economic                                                         
Development Corporation (NSEDC)  donated $1 million to  each village in                                                         
its  region,  to assist  with  the  development of  alternative  energy                                                         
resources.   A state  or federal match  to these  funds would  help get                                                         
projects  started  that  will  offset  the  need  for  diesel  fuel  in                                                         
4:16:05 PM                                                                                                                    
CO-CHAIR  MILLETT  asked  whether the  local  housing  authorities  can                                                         
accept funds from AHFC and hold the money until the work is done.                                                               
4:16:28 PM                                                                                                                    
MS. BULLARD  assumed so;  in fact, housing  authorities have  access to                                                         
money in certain circumstances.                                                                                                 
REPRESENTATIVE PETERSEN heard in previous  testimony that some areas of                                                         
the  state have  success  with the  weatherization  program, and  other                                                         
areas have little  participation.  He suggested that  the committee get                                                         
information from the successful areas and provide it to others.                                                                 
MS. BULLARD opined the  lack of energy auditors is a  large part of the                                                         
4:17:51 PM                                                                                                                    
CO-CHAIR EDGMON announced that AHFC  will return to the committee after                                                         
its regional analysis is completed,  and provide a better understanding                                                         
of the programs.                                                                                                                
4:18:39 PM                                                                                                                    
MS. BULLARD  encouraged the creation of  a state energy plan  that puts                                                         
alternative  energy,  and the  alleviation  of  Alaska's dependence  on                                                         
diesel fuel, at the forefront in the long term.                                                                                 
4:19:45 PM                                                                                                                    
JOE  CHYTHLOOK,  Chairman, Board  of  Directors,   Bristol  Bay  Native                                                         
Corporation (BBNC);  board member,  AFN, said after  a long  absence he                                                         
has heard from  village residents about problems that are  not new.  He                                                         
told a  story about  Yup'ik elders.   Mr.  Chythlook opined  that rural                                                         
villages  have similar  problems when  it comes  to energy,  and he  is                                                         
hoping  that those who  do not  live in  the Bush  will understand  the                                                         
extent to  which energy costs  have risen.   He recalled  that gasoline                                                         
cost $.32 to  $.40 cents per gallon  in 1964.  Now,  diesel costs close                                                         
to  $4 per  gallon and  in  Dillingham it  costs $6  per  gallon.   Mr.                                                         
Chythlook recently  retired from the  Alaska Department of Fish  & Game                                                         
(ADFG),  and  he said  he  would  be hard  pressed  to  survive on  his                                                         
retirement during the winter.                                                                                                   
4:25:07 PM                                                                                                                    
MR. CHYTHLOOK explained that energy  issues in Alaska are fractured and                                                         
even in  Bristol Bay there is  not an area  wide system; in fact,  at a                                                         
village 17 miles west of Dillingham,  the cost of electricity is double                                                         
the  cost  in Dillingham.    A  significant  problem  is that  fuel  is                                                         
delivered  twice  per year  and  the  price  is  set at  the  delivery,                                                         
although fuel prices  may go down during  the months that follow.   Mr.                                                         
Chythlook assured the  committee that organizations in  Bristol Bay are                                                         
planning to  address energy  and economic problems.   He  expressed his                                                         
hope that  the bill will  be successful for  the residents that  do not                                                         
live on the road system.                                                                                                        
4:30:17 PM                                                                                                                    
REPRESENTATIVE RAMRAS  recalled that Denali Bio-Diesel, a  company that                                                         
converts fish parts to gasoline,  targeted the Dillingham community for                                                         
a pilot program.  He asked how  many people lived in Dillingham and the                                                         
surrounding area.                                                                                                               
MR. CHYTHLOOK estimated that 4,500  people are BBNC shareholders in the                                                         
Dillingham area  and the shareholder base  is 8,400 people.   He agreed                                                         
with Mr.  Andersen that during shareholder  meetings the main  topic of                                                         
discussion  for the last  several years  has been  energy.   Throughout                                                         
Western Alaska only diesel fuel is available for heating.                                                                       
4:41:00 PM                                                                                                                    
THOMAS  TILDEN, Representative,  Curyung Tribe,  thanked the  committee                                                         
for  visiting   Dillingham  and   putting  testimony   from  Dillingham                                                         
residents into  action.  He encouraged  the committee to move  the bill                                                         
forward.   He informed the committee  that his tribe takes  energy very                                                         
seriously and has formed a committee  that is putting energy efficiency                                                         
tips in the  newspapers to educate residents.  Mr.  Tilden stressed the                                                         
need for all  public facilities to be energy efficient,  in addition to                                                         
schools.  Another matter  in Western Alaska is the  need to address the                                                         
transport  and  delivery  companies  to  find  the  reason  behind  the                                                         
difference in transportation costs.   He heard that deliveries to water                                                         
locations can be cheaper due to the  regulations that drive up the cost                                                         
for deliveries on land.                                                                                                         
4:47:52 PM                                                                                                                    
CO-CHAIR  EDGMON   thanked  the  participants  and   requested  written                                                         
4:48:20 PM                                                                                                                    
[Although not formally announced, HB 305 was held.]                                                                             

Document Name Date/Time Subjects
HB305 Sectional.pdf HENE 2/11/2010 3:00:00 PM
HB 305
HB0305A.pdf HENE 2/11/2010 3:00:00 PM
HB 305
HB 305 Sponsor Statement.pdf HENE 2/11/2010 3:00:00 PM
HB 305