Legislature(2019 - 2020)CAPITOL 17

02/20/2020 10:15 AM ENERGY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Teleconference <Listen Only> --
+= HB 151 ELECTRIC RELIABILITY ORGANIZATIONS TELECONFERENCED
Heard & Held
-- Public & Invited Testimony --
+= HB 232 MUNICIPAL TAX CREDITS TELECONFERENCED
Moved CSHB 232(ENE) Out of Committee
-- Public & Invited Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
           HB 151-ELECTRIC RELIABILITY ORGANIZATIONS                                                                        
                                                                                                                                
[Contains discussion of SB 123.]                                                                                                
                                                                                                                                
10:20:02 AM                                                                                                                   
                                                                                                                                
CHAIR HOPKINS  announced that the  first order of  business would                                                               
be HOUSE  BILL NO.  151, "An  Act relating  to the  regulation of                                                               
electric  utilities and  electric reliability  organizations; and                                                               
providing  for  an  effective  date."    [Before  the  committee,                                                               
adopted as a working draft  during the House Special Committee on                                                               
Energy meeting on 2/11/20, was  the proposed committee substitute                                                               
(CS) for  HB 151, Version  31-LS0870\K, Klein,  2/10/20 ("Version                                                               
K").]                                                                                                                           
                                                                                                                                
10:20:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LINCOLN moved  to  adopt  the proposed  committee                                                               
substitute (CS) for HB 151,  Version 31-LS0870\E, Klein, 2/19/20,                                                               
as the  working draft.  There  being no objection, Version  E was                                                               
before the committee.                                                                                                           
                                                                                                                                
10:21:17 AM                                                                                                                   
                                                                                                                                
JOE G.  HARDENBROOK, Staff, Representative Grier  Hopkins, Alaska                                                               
State Legislature, presented changes  proposed under Version E of                                                               
HB  151, on  behalf of  the  House Special  Committee on  Energy,                                                               
sponsor, on  which Representative  Hopkins serves  as chair.   He                                                               
paraphrased the  written statement of  the changes in  Version E,                                                               
[included in members' packets], which read:                                                                                     
                                                                                                                                
     Page 1, line 4:     Amends  title  to remove  reference                                                                    
     to   project   preapproval    for   'public   utilities                                                                    
     interconnected   with   interconnected  bulk   electric                                                                    
     systems'  and  replaces  with project  preapproval  for                                                                    
     'certain interconnected large energy facilities'.                                                                          
      Page 2, line 1:     Changes 'electric utilities' to                                                                       
     'load-serving entities'.                                                                                                   
    Page 2, line 8:     Conforming   change    related   to                                                                     
     restructuring.                                                                                                             
     Page 2, line 12:    Switches  sections   (d)  and  (e).                                                                    
     Prefaces    new   (d)    with   'Notwithstanding    the                                                                    
     requirements in (e)'.                                                                                                      
     Page 3, line 7:     Changes  'an   integrated  resource                                                                    
     plan' to 'integrated resource plans'.                                                                                      
     Page 3, line 19:    Removes   'developing   reliability                                                                    
     standards  and' so  that the  provisions cited  must be                                                                    
     part of all ERO duties.                                                                                                    
     Page 5, line 19:    Expanded   section   heading   from                                                                    
     'Rules'  to 'Electric  reliability organization  rules;                                                                    
     approval.'  Legislative  Legal  made  this  change  for                                                                    
     conformity to the section.                                                                                                 
     Page 6, line 3:     Changed       'provisions'       to                                                                    
     'standards' to conform with style.                                                                                         
     Page 6, lines 24, 25:    Removed 'of  an interconnected                                                                    
     electric   energy   transmission  network'   to   avoid                                                                    
     redundancy.  At   the  advice  of   Legislative  Legal,                                                                    
     maintained first reference within subsection (b).                                                                          
     Page 7, lines 9, 13:     Added       'all'       before                                                                    
     'customers'  to  reflect  the  intent  that  integrated                                                                    
     resource planning  address the  needs of  all customers                                                                    
     on a network.                                                                                                              
     Page 7, line 19:    Removed  requirement   for  RCA  to                                                                    
     hold a  hearing to approve an  integrated resource plan                                                                    
     petition.                                                                                                                  
     Page 7, line 20:    Removed  reference  to rejecting  a                                                                    
     petition.                                                                                                                  
     Page 7, lines 23-25:     Added   ability  for   RCA  to                                                                    
     reject a petition, but only for form and filing.                                                                           
     Page 8, line 7:     Changed  'the'  public  utility  to                                                                    
     'a' public utility.                                                                                                        
     Page 8, line 27-28:      Moved  'in   a  cost-effective                                                                    
     manner' within  the provision so it  modifies the needs                                                                    
     of  an  entity  and  not the  facility  served  by  the                                                                    
     facility.                                                                                                                  
     Page 9, line 5:     Corrected    error   in    previous                                                                    
     version; hydro  projects licensed by FERC  before Sept.                                                                    
     30,  2016, are  exempt  from the  requirement for  pre-                                                                    
     approval.                                                                                                                  
                                                                                                                                
10:25:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ asked about the change removing the                                                                    
requirement on page 7, line 19 for the RCA to hold a hearing on                                                                 
an integrated resource plan.                                                                                                    
                                                                                                                                
MR. HARDENBROOK said  that he would research  the "specific logic                                                               
behind that."                                                                                                                   
                                                                                                                                
10:26:18 AM                                                                                                                   
                                                                                                                                
ANTONY  SCOTT,  Commissioner,  Regulatory  Commission  of  Alaska                                                               
(RCA), Department of Commerce,  Community & Economic Development,                                                               
declared  that  important  reform  was very  close  for  building                                                               
institutions  to   create  value   for  consumers   and  economic                                                               
development  benefits.   He  reported that  six  years prior  the                                                               
Alaska  State  Legislature had  charged  the  RCA with  providing                                                               
recommendations around Railbelt electric  system reform.  The RCA                                                               
held numerous  public hearings,  heard testimony,  and ultimately                                                               
provided findings  and recommendations  back to  the legislature.                                                               
He shared  that there  had been  a process  recommendation, which                                                               
suggested that  the utilities  voluntarily craft  solutions among                                                               
themselves.  He  offered his belief that, although  this had been                                                               
a  difficult,  long, and  painful  process,  it had  resulted  in                                                               
material  movement  by the  utilities  and  a  first draft  of  a                                                               
memorandum  of understanding  (MOU) amongst  themselves had  been                                                               
signed in 2018.                                                                                                                 
                                                                                                                                
MR.  SCOTT  related  that  after  the  recommendations  had  been                                                               
forwarded to the RCA, a  workshop was convened for discussion and                                                               
the  utilities recommended  formation of  a Railbelt  Reliability                                                               
Council (RRC).  He reported that  the utilities wanted the RCA to                                                               
provide  some  oversight although  the  RCA  did not  have  clear                                                               
statutory  authority   for  these.    The   RCA  issued  language                                                               
"substantially  cribbed   from  federal  legislation   which  had                                                               
created the  relationship between  the Federal  Energy Regulatory                                                               
Commission  (FERC) and  the North  American Electric  Reliability                                                               
Council (NAERC)" and  was modified for Alaskan  conditions.  This                                                               
was put out for public comment.                                                                                                 
                                                                                                                                
MR. SCOTT acknowledged the  proposed bill substantially reflected                                                               
this   proposed  language   and  would   clarify  the   statutory                                                               
authority, which  had then been revised  in proposed SB 123.   He                                                               
noted that  SB 123 was  consistent with "where we  thought things                                                               
needed to go."   He added that the RCA  had endorsed the proposed                                                               
bill  as the  preferred  vehicle to  move  forward with  Railbelt                                                               
electric reform.   The  subsequent committee  substitute, Version                                                               
K, had  been reaffirmed as  on track  and improved.   He declared                                                               
the unanimous  support of  the RCA  and stated  "this has  been a                                                               
group effort.   It began with  you all.   We did some work.   The                                                               
utilities have  done some work."   He  pointed out that  once the                                                               
bill passed, the  real work for forming  the durable institutions                                                               
would take  place.  He  declared that this was  important because                                                               
of  the reliability,  explaining that  utilities would  build the                                                               
infrastructure  to provide  instantaneous  supply  with safe  and                                                               
reliable service, when the demand was required.                                                                                 
                                                                                                                                
MR. SCOTT  noted that  the capital  expenditures in  the electric                                                               
utility industry were materials and  reported that almost half of                                                               
what  was  paid in  2018  by  Railbelt  consumers was  for  these                                                               
capital  costs.   He pointed  out that  currently there  were six                                                               
different  entities  with  each  responsible to  meet  their  own                                                               
needs.   He stated  that, as there  could be  better coordination                                                               
for  decisions  across the  utilities,  the  proposed bill  would                                                               
ensure  coordination  and  would  create  a  viable  process  for                                                               
establishing and enforcing the reliability standards.                                                                           
                                                                                                                                
MR. SCOTT  pointed out that currently  there was not a  system of                                                               
fines and  enforcement.   He declared  that electricity  rates in                                                               
the  Railbelt had  a direct  and  material effect  on power  cost                                                               
equalization  (PCE)  payments  in  Rural  Alaska  as  these  were                                                               
"geared  off of  utility  rates in  Fairbanks  and Anchorage  and                                                               
Juneau."  He pointed out that  the proposed bill had been crafted                                                               
to  be  flexible,   so  it  did  not   create  disincentives  for                                                               
efficiencies and interconnections in  Rural Alaska and it created                                                               
an  opportunity for  future additional  reliability organizations                                                               
without a request for statutory  reforms.  He reiterated that the                                                               
RCA was in support of the proposed bill.                                                                                        
                                                                                                                                
10:35:52 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ asked  about the  change to  remove the                                                               
requirement  for  the   RCA  to  hold  hearings   to  approve  an                                                               
integrated resource plan petition.                                                                                              
                                                                                                                                
MR.  SCOTT  explained that  filings  came  to  the RCA  and  were                                                               
approved  if  everything  appeared  correct.   He  noted  that  a                                                               
hearing must be held, as a  due process matter, if the RCA wanted                                                               
to deny  or modify.   He opined  that the RCA  should be  able to                                                               
approve  a  filing  after  review if  it  conformed  with  filing                                                               
requirements.    He  expressed his  concern  with  the  shortened                                                               
timelines during  a 45-day  review period,  but pointed  out that                                                               
the RCA would  write rules concerning the conduct of  the ERO for                                                               
openness  of  meetings, retention  of  records,  openness to  the                                                               
public for input, etc.   He added that the RCA  would have an ex-                                                               
officio seat on  the ERO, which allowed  for non-voting feedback.                                                               
He  declared  that  it  was  important for  the  RCA  to  have  a                                                               
"backstop  role so  that, if  things should  go awry,  we can  go                                                               
ahead and say, 'this doesn't quite work.'"                                                                                      
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ asked  for clarification  that the  RCA                                                               
was required to have at least one  hearing if a request was to be                                                               
denied.                                                                                                                         
                                                                                                                                
MR. SCOTT replied, "absolutely."                                                                                                
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ asked  for more  information about  the                                                               
PCE being driven by expenditures on the Railbelt.                                                                               
                                                                                                                                
MR. SCOTT  explained that PCE  payments were formula  driven, the                                                               
difference  between local  electricity  rates of  a PCE  eligible                                                               
utility and  the weighted average  rate of  Fairbanks, Anchorage,                                                               
and Juneau.  He noted that  the higher the weighted average rate,                                                               
the  smaller  the difference  with  the  rural utility,  and  the                                                               
smaller  the PCE  payments.   He offered  that the  proposed bill                                                               
would attempt  to ensure that Railbelt  rates would be as  low as                                                               
possible  by capturing  efficiencies across  utilities.   He said                                                               
that  this required  a lot  of conversation  and negotiation  and                                                               
that, without  a structure  that forced people  to do  this, some                                                               
opportunities would be by-passed.                                                                                               
                                                                                                                                
10:41:30 AM                                                                                                                   
                                                                                                                                
CHAIR  HOPKINS   asked  whether  a  public   comment  period  was                                                               
initiated when an IRP was submitted to the RCA.                                                                                 
                                                                                                                                
MR.  SCOTT said  that  was correct.   He  added  that there  were                                                               
requirements for  public notice, with a  minimum of 30 days.   He                                                               
pointed  out that  any  drafts and  materials  would be  publicly                                                               
posted.                                                                                                                         
                                                                                                                                
10:42:46 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LINCOLN asked  whether there  was an  expectation                                                               
that the  utilities would work  in a  cooperative way for  a more                                                               
efficient use of capital.                                                                                                       
                                                                                                                                
MR.  SCOTT replied,  yes.   He explained  that the  proposed bill                                                               
required that  the reliability organization, consistent  with yet                                                               
to be  written regulations, would produce  an integrated resource                                                               
plan  to  be   used  across  utilities  for   supply  and  demand                                                               
resources, transmission resources, and  battery resources to meet                                                               
load in a  reliable way.  He stated that  the integrated resource                                                               
plan  involved a  forecast  of  demand, usually  10  - 20  years,                                                               
because any  new construction took a  long time.  The  plan would                                                               
also review the most reliable  and cost-effective way to meet the                                                               
demand going forward.   The bill would also create  a process for                                                               
large projects  to first come  to the  RCA for pre-approval.   He                                                               
stated that projects that were  consistent with the most recently                                                               
approved integrated  resource plan were presumed  to be necessary                                                               
so there would be a process  to vet these large project additions                                                               
to the Railbelt to ensure  efficiency.  Generally, these projects                                                               
were  presumed to  be necessary  and  project pre-approval  would                                                               
most often  not require a  hearing unless something was  found to                                                               
have "gone  seriously awry."  He  noted that a large  project may                                                               
be  pre-approved  outside of  the  resource  planning process  as                                                               
sometimes needs  arise that did  not sync up with  the integrated                                                               
resource planning process.  He  pointed out that the pre-approval                                                               
process was  currently necessary given  the legal landscape.   He                                                               
referenced  the recent  rate  case for  Municipal  Light &  Power                                                               
plant 2A which had initially been  found by the RCA to be prudent                                                               
and allowable to be included  in rates; however, that decision by                                                               
the  RCA  was  appealed  to  superior court  where  it  had  been                                                               
determined  that the  RCA needed  to review  whether the  overall                                                               
planning had  been prudent.   This involved consideration  of the                                                               
various  alternatives, which  he  labeled "a  veritable gumbo  of                                                               
items," that had  not been adequately addressed in  totality.  He                                                               
emphasized that  this was exactly  the process for  an integrated                                                               
resource plan.  This would minimize  the risk for a project being                                                               
found imprudent  with a  portion of costs  not being  included in                                                               
rates.    He  opined  that the  proposed  bill  rationalized  the                                                               
process  and addressed  a recent  judicial  decision regarding  a                                                               
current need.                                                                                                                   
                                                                                                                                
10:49:17 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  LINCOLN asked  whether  there had  been a  formal                                                               
assessment on the system for generation capacity versus need.                                                                   
                                                                                                                                
MR. SCOTT  explained that  when the RCA  first made  its findings                                                               
and  recommendations to  the legislature  in 2015,  it was  found                                                               
that there were  necessary improvements for the  capital spend on                                                               
the system.   He pointed out that in the  last 10 years, although                                                               
there had been a suite  of generational asset additions, if there                                                               
had  been  tighter coordination,  "probably  we  could have  done                                                               
better."  He stated that this  assessment was very high level and                                                               
was included  in the RCA findings  to the legislature.   He noted                                                               
that  load, in  general, in  the  Railbelt had  been in  decline.                                                               
While energy efficiency  was increasing on a  per customer basis,                                                               
energy consumption was  declining on a per customer  basis in the                                                               
Railbelt,  at a  rate faster  than the  decline in  the State  of                                                               
Alaska which was  declining faster than the rest  of the country.                                                               
He  pointed out  that  the projections  for  demand had  probably                                                               
planned  for more  load  than was  needed.   He  stated that  the                                                               
integrated planning process would allow  for a lot of peer review                                                               
for the demand projections.                                                                                                     
                                                                                                                                
10:52:49 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FIELDS  asked for any  plans by the RCA  for plant                                                               
retirements to bring the generation  more in line with the actual                                                               
load.                                                                                                                           
                                                                                                                                
MR.  SCOTT explained  that the  RCA  only found  out about  these                                                               
planned  retirements based  on filings  from the  utilities.   He                                                               
said that this  was best addressed to the utilities  and that the                                                               
RCA did not exercise any authority over this.                                                                                   
                                                                                                                                
10:53:45 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAUSCHER  asked   whether  this  would  guarantee                                                               
successful outcomes.                                                                                                            
                                                                                                                                
MR. SCOTT replied that it  did not guarantee successful outcomes,                                                               
noting that "there's  not much that does that" but  he added that                                                               
the process would be helpful, and  he offered his belief that the                                                               
Railbelt utilities would see value in this arrangement.                                                                         
                                                                                                                                
10:54:47 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE LINCOLN  asked whether  there was any  priority or                                                               
preference for renewable energy.                                                                                                
                                                                                                                                
MR.  SCOTT reported  that there  had not  yet been  an integrated                                                               
resource  plan.   He  did  not see  any  priority for  non-fossil                                                               
options compared  to conventional generation although  it did not                                                               
rule out  this preference  going forward.   He reminded  that, as                                                               
the energy load per customer in  the Railbelt had been in decline                                                               
since  2008, there  was  not  currently any  need  for  a lot  of                                                               
additional  generation resources  to  meet customer  demand.   He                                                               
pointed  out that  there would  need to  be a  case made  for why                                                               
additional generation  would be  needed.   He suggested  that the                                                               
legislature be open and flexible,  and not be prescriptive in the                                                               
planning process.   The structure  allowed for  legislative input                                                               
going forward  as the planning  process would need to  be renewed                                                               
every two to  three years and new priorities  could be introduced                                                               
for  consideration.    He  referenced   an  earlier  question  by                                                               
Representative Spohnholz for the change  of phrase from "leads to                                                               
cost" to "greatest  value."  He explained that  this would ensure                                                               
that planning criteria  were indeed flexible so  that value could                                                               
appropriately  weigh  the  trade  offs  between  reliability  and                                                               
minimum  cost, as  well as  include other  potential values.   He                                                               
stated  that  cost may  not  be  "merely  pecuniary in  terms  of                                                               
showing on  a customers  bill, but  there might  be environmental                                                               
cost that  people are concerned  about."   He stated that  use of                                                               
the phrase  "greatest value"  was more  encompassing for  a wider                                                               
range of potential values.                                                                                                      
                                                                                                                                
10:59:11 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ expressed  a  concern  for the  process                                                               
through which the  energy production capacity may  have just been                                                               
overbuilt, at a  time when the load was decreasing,  and the need                                                               
to  reduce  the  carbon  footprint and  produce  lower  cost  and                                                               
predictable energy  had been identified.   She questioned whether                                                               
there  would be  the  opportunity to  add  more renewable  energy                                                               
capacity along the Railbelt during the foreseeable future.                                                                      
                                                                                                                                
MR.  SCOTT spoke  about  a recent  solar  installation which  was                                                               
economically  viable and  justified on  the basis  for offsetting                                                               
the  variable cost  for production.    He pointed  out that  this                                                               
system was  competitive, reporting  that the costs  for renewable                                                               
energy resources were rapidly declining.   He noted that, to some                                                               
degree, those resources could be  accommodated within the system.                                                               
He  declared that  renewable resources  had a  harder time  being                                                               
base loaded  for firm capacity needs,  therefore the conventional                                                               
resource additions  were necessary.   He reported that  the rapid                                                               
evolution  of  battery  technology  with  the  dropping  cost  of                                                               
batteries further extended the ability  of renewables to meet the                                                               
load  demand.   He said  there  was a  social set  of values  for                                                               
trading off  reliable energy  and the willingness  to pay  for it                                                               
versus the cost and environmental attributes.                                                                                   
                                                                                                                                
11:04:39 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FIELDS   asked  how  much  the   IRP  could  push                                                               
retirement of some  older generation assets that  seemed to drive                                                               
up the consumer costs.                                                                                                          
                                                                                                                                
MR. SCOTT  reported that  the whole  system was  reviewed, noting                                                               
that retirements  "are a  little bit tricky,  though."   He added                                                               
that, as  reliability was so important  and there were not  a lot                                                               
of interconnected utilities to draw  upon if there was a problem,                                                               
it was  "nice to have  spares in the  backyard."  He  pointed out                                                               
that, as those had mostly  been paid for, the ongoing operational                                                               
cost tended to be low.                                                                                                          
                                                                                                                                
11:06:07 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE LINCOLN  reflected on  the excess capacity  in the                                                               
system and asked whether there  were any opportunities to provide                                                               
power  for adjacent  communities.   He asked  whether the  system                                                               
could grow.                                                                                                                     
                                                                                                                                
MR.  SCOTT  said that  he  was  not  aware  of the  viability  of                                                               
extending  the   Railbelt  system  to  include   communities  not                                                               
currently interconnected  as this would require  new transmission                                                               
lines, a  difficult and expensive  process requiring a  long lead                                                               
time and a lot of planning.                                                                                                     
                                                                                                                                
REPRESENTATIVE   LINCOLN  asked   how   the  new   organizational                                                               
structure  would  impact  the opportunity  for  growth  in  other                                                               
areas.                                                                                                                          
                                                                                                                                
MR. SCOTT offered his belief that  there was not a direct impact,                                                               
although there was a greater  likelihood for the opportunities to                                                               
be  captured and  critically evaluated.    He said  that, as  the                                                               
utilities worked  hard to  minimize operational  costs, personnel                                                               
were  kept at  a minimum  and  the expertise  was "pretty  thin."                                                               
With this new organization, it  would help pool the expertise and                                                               
the opportunities could be better identified and evaluated.                                                                     
                                                                                                                                
11:10:11 AM                                                                                                                   
                                                                                                                                
JULIE  ESTEY, Director  of External  Affairs, Matanuska  Electric                                                               
Association (MEA),  said that she represented  the organizational                                                               
development  team consisting  of one  member of  each of  the six                                                               
utilities, working in a parallel  process to develop the Railbelt                                                               
Reliability  Council which,  if the  proposed bill  passed, would                                                               
apply  to  become  the Electric  Reliability  Organization  (ERO)                                                               
referenced  in the  proposed  bill.   She  acknowledged that  the                                                               
utilities working  together had  been a  very critical  step with                                                               
the goal  to expand to  include a broader range  of stakeholders.                                                               
She  said   that  there   had  been   an  impressive   amount  of                                                               
collaboration,  involvement,  and   transparency  among  all  the                                                               
stakeholders.   She reported  that the  feedback on  the proposed                                                               
bills, HB  151 and SB  123, indicated  that the council  had been                                                               
heard and  properly challenged when necessary,  with the feedback                                                               
incorporated  as  appropriate.    She  declared  support  of  the                                                               
proposed  committee  substitute,  noting  that  the  council  had                                                               
provided six  different points to  the committee on  February 12,                                                               
which  were  all  satisfactorily handled  through  the  committee                                                               
substitute  or development  of regulations.    She referenced  an                                                               
earlier meeting  in the  Senate when a  priority of  ensuring the                                                               
exemptions provided in statute for  the Bradley Lake project were                                                               
raised, and she  opined that was being handled  with an effective                                                               
resolution.  She  declared that the utilities  council was "ready                                                               
to  make  this happen."    She  shared  that the  utilities  were                                                               
committed  to  "doing   things  in  a  different   way  and  that                                                               
commitment represents a big moment for the utilities."                                                                          
                                                                                                                                
11:15:37 AM                                                                                                                   
                                                                                                                                
BRIAN   HICKEY,  Chief   Operating   Officer,  Chugiak   Electric                                                               
Association,  expressed  support  for  the  legislation  and  the                                                               
proposed committee substitute.                                                                                                  
                                                                                                                                
11:16:22 AM                                                                                                                   
                                                                                                                                
JEFF WARNER,  Strategic Coordinator,  Municipal Light  and Power,                                                               
testified in support of the process.                                                                                            
                                                                                                                                
11:16:55 AM                                                                                                                   
                                                                                                                                
MS. ESTEY  shared an update to  the process for formation  of the                                                               
Railbelt  Reliability  Council,  being conducted  in  a  parallel                                                               
path.  She  relayed that a memorandum of  understanding (MOU) had                                                               
been signed  on December  18 which triggered  a process  by which                                                               
the  organizational development  team was  working to  set up  an                                                               
implementation committee that would  create all the documents and                                                               
"stand  up the  Railbelt Reliability  Council."   She added  that                                                               
public notice for applications of  the non-utility seats had been                                                               
published and 16 applications had  been received:  5 applications                                                               
for  the 2  independent power  producers' seats,  10 applications                                                               
for  the 2  independent non-affiliated  seats, and  1 application                                                               
for the  single consumer  advocacy seat.   The  independent power                                                               
producer  applications had  been sent  to the  Alaska Independent                                                               
Power  Producer  Association  with   a  request  to  provide  the                                                               
designees for  the 2  seats by  March 20.   Once these  seats had                                                               
been established,  the rest of  the process would begin,  with an                                                               
independent  firm retained  to verify  qualifications and  form a                                                               
subcommittee   to  select   the  consumer   advocacy  group   and                                                               
subsequently form another subcommittee  from that group to select                                                               
the 2 unaffiliated  seats.  She expressed the desire  for that to                                                               
be implemented by the end of May.                                                                                               
                                                                                                                                
11:19:03 AM                                                                                                                   
                                                                                                                                
CHRIS ROSE,  Executive Director, Renewable Energy  Alaska Project                                                               
(REAP),  testified   in  support  of  the   proposed  legislation                                                               
declaring that it was necessary to  have a collective way to work                                                               
together.   He pointed  out that, as  the Railbelt  utilities had                                                               
spent $1.5 billion  on new generation, it should be  for the most                                                               
economic means.  He stated  that the integrated resource planning                                                               
process was  key to looking at  the balance of supply  and demand                                                               
for transmission versus generation  and renewables versus fossil.                                                               
He reported that this effort had  been carried on for the past 30                                                               
years and  for the last  decade REAP  had been involved  with the                                                               
Alaska  Energy  Authority   (AEA)  regional  integrated  resource                                                               
planning (IRP)  process.  He  relayed that,  as there was  not an                                                               
ERO,  he had  questioned  who would  execute the  IRP  plan.   He                                                               
pointed out  that REAP was  a renewables and  efficiency advocacy                                                               
group pushing the  idea since 2004 that these were  good for many                                                               
reasons.  He pointed  out that in the past 10  years, the cost of                                                               
renewable energy  had decreased  significantly, with the  cost of                                                               
wind decreased by  70 percent and the cost of  solar decreased by                                                               
89  percent.   He reported  that the  Railbelt was  more than  80                                                               
percent  reliant  on  natural  gas,   even  though  the  Railbelt                                                               
utilities paid  rates almost  three times that  of the  Lower 48,                                                               
even as natural gas was produced  nearby in Cook Inlet.  This was                                                               
subsidized by the  State of Alaska.  He reported  that 80 percent                                                               
of the Cook  Inlet natural gas had gone to  two anchor users that                                                               
no  longer  existed, the  Agrium  Fertilizer  plant and  the  LNG                                                               
plant.   He shared the concern  that natural gas prices  could go                                                               
even  higher  as this  was  such  a  small  market, even  as  new                                                               
generation  projects had  just been  built which  required a  gas                                                               
supply.   He shared  some of the  history for  prior legislation.                                                               
He  offered a  suggestion  for more  independent system  operator                                                               
members  on the  board.   He declared  this to  be a  "great step                                                               
forward"  with the  need for  a  more diversified  grid, even  as                                                               
there were a lot of risks in the  future and he spoke of a future                                                               
carbon tax.   He offered  his belief that this  legislation would                                                               
remove some of  the barriers for renewable energy  as, instead of                                                               
six  different interconnection  standards  for independent  power                                                               
producers in  the Railbelt, there  would be one set  of standards                                                               
which  would make  it a  consistent and  transparent process  for                                                               
connection  to the  grid.   He added  that the  legislation could                                                               
also lead  toward a consistent, transparent  cost of transmission                                                               
tariffs.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  LINCOLN  asked  how  the  state  was  subsidizing                                                               
natural gas for the Railbelt.                                                                                                   
                                                                                                                                
MR. ROSE  replied that  there had  been production  subsidies and                                                               
incentives in  Cook Inlet  to ensure  that someone  would produce                                                               
gas, and the Railbelt was the only current off taker.                                                                           
                                                                                                                                
11:27:58 AM                                                                                                                   
                                                                                                                                
KIRK  WARREN,  Director,   Engineering  and  Energy  Development,                                                               
Alaska Energy Authority (AEA),  Department of Commerce, Community                                                               
&  Economic  Development,  testified   that  AEA  looked  at  the                                                               
legislation as an asset owner  of Bradley Lake, the largest hydro                                                               
facility  in the  State of  Alaska and  the Alaska  intertie, the                                                               
interconnection from the Southcentral  utilities to Golden Valley                                                               
Electric Association in  Fairbanks.  He stated  that the proposed                                                               
legislation  did not  materially  affect the  operation of  those                                                               
assets.   As a  state energy  office, AEA was  in support  of the                                                               
proposed legislation.                                                                                                           
                                                                                                                                
11:30:05 AM                                                                                                                   
                                                                                                                                
CHAIR  HOPKINS  opened  public  testimony   on  HB  151.    After                                                               
ascertaining that there was no one  who wished to testify at that                                                               
time, he announced that he would leave public testimony open.                                                                   
                                                                                                                                
CHAIR HOPKINS announced that HB 151 was held over.                                                                              
                                                                                                                                

Document Name Date/Time Subjects
2020-02-20 - HB 151 Summary of Changes K to Workdraft E.pdf HENE 2/20/2020 10:15:00 AM
HB 151
2020-02-20 - HB 151 version E.pdf HENE 2/20/2020 10:15:00 AM
HB 151
2020-02-20 - HB 232 Alaska Miners Association Letter of Support.pdf HENE 2/20/2020 10:15:00 AM
HL&C 3/2/2020 3:15:00 PM
HB 232
2020-02-20 - HB 232 Interior Gas Utility Letter of Support.pdf HENE 2/20/2020 10:15:00 AM
HL&C 3/2/2020 3:15:00 PM
HB 232
2020-02-20 - HB 232 Version S.pdf HENE 2/20/2020 10:15:00 AM
HL&C 3/2/2020 3:15:00 PM
HB 232
2020-02-20 - HB 232 Usibelli and Aurora Energy Letter of Support.pdf HENE 2/20/2020 10:15:00 AM
HL&C 3/2/2020 3:15:00 PM
HB 232