Legislature(2017 - 2018)CAPITOL 17

02/07/2017 10:15 AM ENERGY

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Audio Topic
10:21:30 AM Start
10:21:53 AM HB81
11:00:48 AM Presentation: Alaska Affordable Energy Strategy
12:00:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 81 AK ENERGY EFFICIENCY LOANS: ELIGIBILITY TELECONFERENCED
Heard & Held
+ Presentation: AK Affordable Energy Strategy TELECONFERENCED
Findings & Recommendations by Katie Conway &
Cady Lister, AK Energy Authority
+ Bills Previously Heard/Scheduled TELECONFERENCED
         HB 81-AK ENERGY EFFICIENCY LOANS: ELIGIBILITY                                                                      
                                                                                                                                
10:21:53 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL  announced that the  first order of business  would be                                                               
HOUSE BILL NO.  81, "An Act making an entity  that is exempt from                                                               
federal taxation  under 26 U.S.C.  501(c)(3), (4), (6),  (12), or                                                               
(19)  (Internal Revenue  Code) and  a federally  recognized tribe                                                               
eligible for a  loan from the Alaska  energy efficiency revolving                                                               
loan fund;  relating to loans  from the Alaska  energy efficiency                                                               
revolving loan fund; and relating  to the annual report published                                                               
by the Alaska Housing Finance Corporation."                                                                                     
                                                                                                                                
10:22:20 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ  moved to  adopt Amendment  A.4, labeled                                                               
30-LS0353\A.4, Nauman, 2/6/17, which read:                                                                                      
                                                                                                                                
     Page 1, line 1:                                                                                                            
          Delete "an entity that is"                                                                                          
          Insert "certain entities that are"                                                                                  
                                                                                                                                
     Page 1, line 2:                                                                                                            
          Delete "a federally recognized tribe"                                                                               
          Insert "federally recognized tribes"                                                                                
                                                                                                                                
     Page 5, line 8, following "Code)":                                                                                     
          Insert ", but does not include an entity                                                                          
     organized with the primary purpose of owning,                                                                          
     operating, managing, or controlling a plant or system                                                                  
     for furnishing electric service by generation,                                                                         
     transmission, or distribution"                                                                                         
                                                                                                                                
CHAIR WOOL objected for discussion.                                                                                             
                                                                                                                                
10:22:57 AM                                                                                                                   
                                                                                                                                
BERRETT  WILBER, Staff,  Representative Jonathan  Kreiss-Tomkins,                                                               
Alaska State  Legislature, explained that the  proposed Amendment                                                               
A.4  resulted from  discussions with  the Alaska  Housing Finance                                                               
Corporation (AHFC)  and the Alaska  Energy Authority (AEA).   She                                                               
pointed  out that  501(c)(12)  non-profit organizations  included                                                               
electric cooperatives.   She reported  that AHFC had  expressed a                                                               
lack of  expertise in  its loan vetting  process to  offer energy                                                               
efficiency loans  to power  generators for  the purpose  of power                                                               
generation  and distribution.    She offered  her  belief that  a                                                               
conceptual  amendment   could  allow  electric   cooperatives  to                                                               
receive efficiency loans for  building envelope efficiencies, but                                                               
not allow for distribution to the power grid.                                                                                   
                                                                                                                                
REPRESENTATIVE  WESTLAKE asked  for clarification  that this  was                                                               
specific to the efficiencies to each individual building.                                                                       
                                                                                                                                
MS. WILBER replied, "yes, that's correct in my estimation."                                                                     
                                                                                                                                
10:25:22 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  WESTLAKE offered  a conceptual  amendment to  the                                                               
proposed Amendment A.4, at the end of line 12, which read:                                                                      
                                                                                                                                
     except   when   used   for  building   end-use   energy                                                                    
     efficiency  improvements unrelated  to the  generation,                                                                    
     distribution  or  transmission  of power  or  recovered                                                                    
     heat.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  WOOL  reiterated  that  the  proposed  conceptual                                                               
amendment to  proposed Amendment  A.4 would make  funds available                                                               
for  building envelope  energy efficiencies,  but  not for  power                                                               
generation.                                                                                                                     
                                                                                                                                
REPRESENTATIVE WESTLAKE  expressed his  agreement and  asked that                                                               
AEA further address the issue.                                                                                                  
                                                                                                                                
10:27:32 AM                                                                                                                   
                                                                                                                                
CADY  LISTER, Chief  Economist,  Alaska  Energy Authority  (AEA),                                                               
Department of Commerce, Community  & Economic Development, stated                                                               
that  AEA  supported  the proposed  conceptual  amendment.    She                                                               
explained that AEA had the  Power Project Loan Fund program which                                                               
offered  financing  for  generation and  transmission  of  energy                                                               
systems  projects, as  well  as some  efficiency  measures.   She                                                               
offered the belief  that it was important to  maintain lending to                                                               
the power generators,  especially in Rural Alaska.   She reported                                                               
that AEA staff had the  technical capacity to assess and evaluate                                                               
the appropriateness  and legality  of a  project.   She explained                                                               
that there were many  Environmental Protection Agency regulations                                                               
regarding  the use  of diesel  fuel  as prime  power, that  these                                                               
regulations  changed often,  and  that the  State  of Alaska  had                                                               
special waivers and exemptions.                                                                                                 
                                                                                                                                
CHAIR  WOOL asked  if  AEA offered  loans  for building  envelope                                                               
energy efficiency  or simply for power  distribution, generation,                                                               
and transmission.   He opined that augmenting the  AHFC loans for                                                               
efficiency would dovetail with the AEA program.                                                                                 
                                                                                                                                
MS. LISTER offered her belief that it would dovetail.                                                                           
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ  asked  for  an  at-ease  for  language                                                               
clarification to  the proposed conceptual  amendment in  order to                                                               
avoid any unintended consequences.                                                                                              
                                                                                                                                
10:30:39 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 10:30 a.m. to 10:33 a.m.                                                                     
                                                                                                                                
10:33:01 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL  explained that the  proposed conceptual  amendment to                                                               
proposed Amendment  A.4 stated that  the loans could be  used for                                                               
energy, building envelope, or consumption  efficiency but not for                                                               
any power distribution, transmission, or generation.                                                                            
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ  reiterated   the  proposed  conceptual                                                               
amendment, stating that it "does  not include an entity organized                                                               
for the purpose of owning,  operating, managing, or controlling a                                                               
plant or  system for furnishing  electric service  by generation,                                                               
transmission,  or  service, except  for  the  purposes of  energy                                                               
efficiency of the building."                                                                                                    
                                                                                                                                
CHAIR WOOL added "or buildings that they may own."                                                                              
                                                                                                                                
10:34:19 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS,  in  response  to  Representative                                                               
Westlake,  expressed  his  support for  the  proposed  conceptual                                                               
amendment and declared that it  was consistent with the intent to                                                               
improve energy efficiency.                                                                                                      
                                                                                                                                
[There being  no objection, the proposed  conceptual amendment to                                                               
proposed Amendment A.4 was adopted.]                                                                                            
                                                                                                                                
10:34:42 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL removed  his objection to Amendment A.4.   There being                                                               
no further objection, Amendment A.4, as amended, was adopted.                                                                   
                                                                                                                                
10:35:24 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAUSCHER moved  to adopt  Amendment A.2,  labeled                                                               
30-LS0353\A.2, Nauman, 2/1/17, which read:                                                                                      
                                                                                                                                
     Page 5, line 14, following "section,":                                                                                     
          Insert "(1)"                                                                                                          
                                                                                                                                
     Page 5, line 15, following "enterprise":                                                                                   
          Insert ";                                                                                                             
               (2)  the corporation may not make a loan                                                                         
     under this  section to a  tax exempt  entity, federally                                                                    
     recognized tribe, or regional  housing authority if, at                                                                    
     the  time  of making  the  loan,  the total  amount  of                                                                    
     outstanding  loans under  this  section  to tax  exempt                                                                    
     entities,  federally  recognized tribes,  and  regional                                                                    
     housing  authorities exceeds  10 percent  of the  total                                                                    
     amount of bonds the  corporation is authorized to issue                                                                    
     to secure loans under this section."                                                                                       
                                                                                                                                
CHAIR WOOL objected for discussion.                                                                                             
                                                                                                                                
REPRESENTATIVE  RAUSCHER explained  that  proposed Amendment  A.2                                                               
would  add language  to limit  the loan  funds available  to tax-                                                               
exempt  entities,   federally  recognized  tribes,   or  regional                                                               
housing  authorities.   He  allowed  that  although the  proposed                                                               
amendment stated  a limit of 10  percent of the total  amount, he                                                               
acknowledged  that there  had been  discussion  to increase  this                                                               
amount to  30 percent.  He  stated that the limit  would preserve                                                               
the loan  funds available  for use  by municipal  governments, as                                                               
intended by the original legislation in 2010.                                                                                   
                                                                                                                                
10:37:19 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  CLAMAN  questioned  the intent  of  the  proposed                                                               
amendment,  as testimony  indicated  that the  existing fund  had                                                               
only issued  one loan in four  years.  He asked  why there should                                                               
be a restriction  on loan amounts when there was  not an existing                                                               
demand.                                                                                                                         
                                                                                                                                
REPRESENTATIVE RAUSCHER  explained that, although the  purpose of                                                               
proposed  HB 81  was to  generate a  source for  newer loans,  it                                                               
should allow  funds for the original  intent of the program.   He                                                               
stated that  "just because they  weren't used, doesn't  mean they                                                               
won't be."   He  suggested that  opening up  use could  drain and                                                               
deplete  the  fund,  so  that  there would  no  longer  be  money                                                               
available for its original intent.                                                                                              
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ opined  that  the original  legislation                                                               
still  allowed   for  a  priority  to   the  originally  intended                                                               
beneficiaries.  She  stated that the proposed  bill was "widening                                                               
the  net"  and   not  putting  non-profits  in   a  position  "of                                                               
essentially  trumping pubic  agencies  for the  benefit of  these                                                               
services."   She  declared that  this  was an  attempt to  reduce                                                               
energy  costs across  the state  and be  more efficient  with our                                                               
resources,  especially as  many  of the  non-profits were  funded                                                               
through state government.  She  suggested that proposed Amendment                                                               
A.2 was "a solution in search of a problem."                                                                                    
                                                                                                                                
CHAIR WOOL asked for AHFC to address the issue.                                                                                 
                                                                                                                                
10:40:27 AM                                                                                                                   
                                                                                                                                
STACY   SCHUBERT,  Director,   Governmental   Affairs  &   Public                                                               
Relations,  Alaska  Housing  Finance Corporation,  Department  of                                                               
Revenue, stated  that AHFC  would be  able to  implement proposed                                                               
Amendment A.2, but that AHFC was neutral and had no preference.                                                                 
                                                                                                                                
CHAIR WOOL reflected  that, in the history of  the program, there                                                               
had only been two applicants resulting  in one loan, and asked if                                                               
it  was foreseeable  for  an increase  in  applications by  those                                                               
tribal  entities and  non-profits addressed  through proposed  HB                                                               
81, or  an increase in  applications from public entities  as the                                                               
availability of grants had decreased.                                                                                           
                                                                                                                                
MS. SCHUBERT  relayed that the  original legislation  allowed for                                                               
$250  million  in funding,  and  that,  should there  be  greater                                                               
necessity for funds, AHFC could  ask the Alaska State Legislature                                                               
for an increase to the availability of loan funds.                                                                              
                                                                                                                                
REPRESENTATIVE CLAMAN asked if  any municipalities had complained                                                               
about a lack of ability to apply for these funds.                                                                               
                                                                                                                                
REPRESENTATIVE RAUSCHER replied, no.                                                                                            
                                                                                                                                
REPRESENTATIVE  CLAMAN asked  if any  municipality had  contacted                                                               
Representative  Rauscher with  concerns for  the availability  of                                                               
loan funds.                                                                                                                     
                                                                                                                                
REPRESENTATIVE RAUSCHER replied, no.                                                                                            
                                                                                                                                
10:42:54 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHNSON,  reflecting  on   her  time  working  in                                                               
municipal government  as a mayor,  acknowledged that she  was not                                                               
aware of this  loan fund.  She offered her  belief that this lack                                                               
of  awareness  could   be  wide  spread,  and,   as  a  municipal                                                               
representative, she  would want "a  chance at the pot  of money."                                                               
She suggested that most people were not aware of this loan fund.                                                                
                                                                                                                                
CHAIR  WOOL  offered his  belief  that  $250 million  of  bonding                                                               
ability  was  a   large  amount  of  money   that  was  currently                                                               
underutilized.   He reminded the  committee that AHFC  had stated                                                               
that more  money could be requested  if all of the  loan fund was                                                               
committed.    He opined  that  loans  to all  the  aforementioned                                                               
entities would  be a  good thing, as  energy efficiency  and less                                                               
fuel consumption  was a goal.   He  acknowledged that use  of the                                                               
entire  fund could  be  a  problem, but  "maybe  not  such a  bad                                                               
problem."                                                                                                                       
                                                                                                                                
10:45:03 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE CLAMAN  stated that he opposed  proposed Amendment                                                               
A.2.   He expressed his  agreement with  Representative Spohnholz                                                               
that this  was "a solution  in search of  a problem."   He opined                                                               
that  the  original intent  of  the  legislation was  to  resolve                                                               
energy  efficiency issues  with funding,  and limiting  access to                                                               
the funds was a disservice to the communities.                                                                                  
                                                                                                                                
10:46:50 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   JOHNSTON   asked   about  negotiation   to   the                                                               
percentage  of the  total amount  of the  bonds available  to the                                                               
aforementioned entities.                                                                                                        
                                                                                                                                
REPRESENTATIVE RAUSCHER  in response,  explained that  his intent                                                               
was to  ensure there  was money  for the  original intent  of the                                                               
fund, and  "not to limit  anybody's ability  to make any  kind of                                                               
efficiency loans."                                                                                                              
                                                                                                                                
REPRESENTATIVE   JOHNSTON  offered   her  support   for  proposed                                                               
Amendment  A.2, as  there was  a changing  environment, and  that                                                               
many  public buildings  would require  greater  efforts and  more                                                               
money.   She  suggested that  an increase  to 30  percent of  the                                                               
total amount  of bonds was  "a rather  large number" and  that it                                                               
was a  good compromise to  allow for  the intent of  the original                                                               
language.                                                                                                                       
                                                                                                                                
REPRESENTATIVE RAUSCHER offered to renegotiate the percentage.                                                                  
                                                                                                                                
CHAIR WOOL allowed that there  could also be renegotiation if all                                                               
the funds were depleted.                                                                                                        
                                                                                                                                
REPRESENTATIVE   JOHNSON  offered   her   support  for   proposed                                                               
Amendment A.2,  stating that these  were public buildings  in the                                                               
public trust, paid for with public  monies, and the fund had been                                                               
originally intended  for public  monies to  be borrowed  and paid                                                               
back.   She stated  that the original  intent was  fulfilling the                                                               
public  trust,  and  that the  proposed  changes  were  enhancing                                                               
buildings in the private, non-profit sector.                                                                                    
                                                                                                                                
CHAIR WOOL  offered his  belief that  the proposed  amendment did                                                               
not address  privately owned buildings, only  tribal entities and                                                               
non-profits.                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS,   in   response,   stated   that                                                               
technically non-profit organizations  were private, although they                                                               
had to satisfy public benefit and a public good.                                                                                
                                                                                                                                
REPRESENTATIVE JOHNSON  clarified that a  non-profit organization                                                               
was a private entity.                                                                                                           
                                                                                                                                
10:50:36 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
10:52:50 AM                                                                                                                   
                                                                                                                                
CHAIR  WOOL brought  the committee  back to  order.   He declared                                                               
that   the  objection   to  proposed   Amendment  A.2   had  been                                                               
maintained.                                                                                                                     
                                                                                                                                
10:53:00 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAUSCHER   offered  a  conceptual   amendment  to                                                               
proposed Amendment A.2  which would change the  percentage of the                                                               
total amount of bonds on line 10 from 10 percent to 30 percent.                                                                 
                                                                                                                                
10:53:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  CLAMAN stated  that, although  he did  not oppose                                                               
the proposed  conceptual amendment,  he maintained  his objection                                                               
to proposed Amendment A.2.                                                                                                      
                                                                                                                                
10:54:09 AM                                                                                                                   
                                                                                                                                
A roll call  vote was taken.   Representatives Rauscher, Johnson,                                                               
and Johnston  voted in favor  of Amendment A.2.   Representatives                                                               
Claman,  Spohnholz,  and  Wool  voted  against  it.    Therefore,                                                               
Amendment A.2 failed  the House Special Committee on  Energy by a                                                               
vote of 3 yeas - 3 nays.                                                                                                        
                                                                                                                                
10:55:02 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
10:55:41 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL stated that proposed Amendment A.2 did not pass.                                                                     
                                                                                                                                
10:55:52 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL asked  if there was consensus for  passage of proposed                                                               
HB 81, as amended, out of committee.                                                                                            
                                                                                                                                
REPRESENTATIVE CLAMAN reiterated that  the original intent of the                                                               
proposed  bill  was  to  get  energy  efficient  loans  into  the                                                               
community,  and it  was  never  intended to  be  specific to  any                                                               
particular group.   He  pointed out  that the  municipalities had                                                               
not applied for  the loans.  He offered his  belief that proposed                                                               
HB 81, as amended, was  "100 percent consistent with the original                                                               
goal  and intent  of the  original  legislation which  is to  get                                                               
funds available  for energy efficiencies throughout  Alaska."  He                                                               
declared his support of the bill.                                                                                               
                                                                                                                                
REPRESENTATIVE  JOHNSON  stated that  she  was  not in  favor  of                                                               
passing the bill out of committee.   She reiterated that the fund                                                               
was  a large  amount of  public funds  for the  public trust  and                                                               
administered by  a public  entity.  She  offered her  belief that                                                               
the intent of the bill was  to further allow public buildings and                                                               
municipalities  to upgrade  facilities, so  it would  save public                                                               
money.                                                                                                                          
                                                                                                                                
REPRESENTATIVE    RAUSCHER   expressed    his   agreement    with                                                               
Representative Johnson.                                                                                                         
                                                                                                                                
10:57:51 AM                                                                                                                   
                                                                                                                                
CHAIR  WOOL stated  that AHFC  was  a state  entity which  loaned                                                               
money to  private individuals  to buy homes  and that  this money                                                               
was also bonded for public buildings.   He said that the proposed                                                               
bill opened  the funding  up to  other entities  as the  fund had                                                               
been barely  used although, he acknowledged,  many municipalities                                                               
may not  have been aware  of the fund.   Chair Wool said  that he                                                               
would hold over HB 81.                                                                                                          

Document Name Date/Time Subjects
AEA Presentation for HENE - 2.7.17.pdf HENE 2/7/2017 10:15:00 AM
A.2.pdf HENE 2/7/2017 10:15:00 AM
HB 81
A.4.pdf HENE 2/7/2017 10:15:00 AM
HB 81