Legislature(2021 - 2022)ADAMS 519
04/28/2022 09:00 AM House FINANCE
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Audio | Topic |
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Start | |
HB172 | |
HB170 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | HB 413 | TELECONFERENCED | |
+ | HB 350 | TELECONFERENCED | |
+ | TELECONFERENCED | ||
+= | HB 172 | TELECONFERENCED | |
+= | HB 170 | TELECONFERENCED | |
HOUSE BILL NO. 170 "An Act establishing the Alaska energy independence program and the Alaska energy independence fund in the Alaska Industrial Development and Export Authority; and providing for an effective date." 10:13:24 AM Co-Chair Merrick indicated that the committee would continue to hear amendments on HB 170, starting with Amendment 8 Replacement. Representative LeBon WITHDREW Amendment 8 Replacement. 10:14:11 AM Co-Chair Merrick MOVED to ADOPT Amendment 9 (copy on file): Page 11, Line 5 Delete "2022" Insert "2023" Vice-Chair Ortiz OBJECTED for discussion. Co-Chair Merrick reviewed the amendment which was a technical date change from January 2022 to January 2023. Vice-Chair Ortiz WITHDREW the OBJECTION. There being NO further OBJECTION, Amendment 9 was ADOPTED. 10:14:41 AM Representative LeBon MOVED to ADOPT Amendment 10, 32- GH1074\W.14 (Klein, 4/27/22) (copy on file): Page 7, line 13, following "AS 44.99.115": Insert "and prioritize programs that support energy efficiency and renewable energy projects for residential buildings, commercial buildings, and community facilities" Page 7, line 19, following "loaned,": Insert "the amount loaned in communities that receive, or have a resident who receives, power cost equalization under AS 42.45.100 - 42.45.150," Page 9, following line 3: Insert a new subsection to read: "(d) In this section, "community facility" means a water and sewer facility, public outdoor lighting, a charitable educational facility, or another community building whose operations are not paid for by the state, the federal government, or private commercial interests." Page 9, lines 16- 19: Delete all material. Page 10. following line 16: Insert a new bill section to read: "*Sec. 12. The law of the State of Alaska is by adding a new section to read: CLEAN ENERGY FUND: INITIAL APPROPRIATION. At least 35 percent of the initial appropriation made by the Thirty-Second Alaska State Legislature to the Alaska clean energy fund for loans and other forms of financing for sustainable energy development under AS 44.88.450 - 44.88.456 must be distributed in communities that receive or that have residents who receive, cost equalization under AS 42.45.100 - 42.45.150. Renumber the following bill sections accordingly. Co-Chair Merrick OBJECTED for discussion. Representative LeBon read from the amendment. He explained that community facilities were defined in the same way as in the power cost equalization (PCE) statutes. He thought that the addition of the language in the amendment would better direct the Alaska Industrial Development and Export Authority (AIDEA) to develop programs that would help most Alaskans. He reiterated that the monies were for loans, not grants, and that AIDEA could not force people to undertake or apply for loans. He hoped the amendment was a workable solution to ensure that rural Alaska did not get left behind. 10:18:28 AM Representative Edgmon asked how commercial buildings would be impacted by the legislation. He wondered if a title change was necessary for the bill due to the numerous references to PCE. Representative LeBon responded that he envisioned the program to benefit commercial buildings. He could not anticipate whether a large commercial property would apply for the program. He did not know if the intent of the bill was to exclude privately owned properties. He hoped the program would elicit projects that the legislature wanted to support. He asked Representative Edgmon to repeat his second question. Representative Edmon repeated his question. Representative LeBon thought Legislative Legal Services should comment. Co-Chair Merrick indicated her staff was trying to get someone on the line to respond to the question. Representative Josephson understood that when the funds were appropriated by the legislature, rural Alaska would receive a 35 percent share of the appropriation. After the initial appropriation, rural Alaska would have no assurance of receiving additional funds. He asked if he was correct. Representative Wool responded that he had an earlier amendment that addressed the issue. The amendment included PCE language and acted as a defining statement. He did not think the bill was a grant program, which was why the initial language was difficult. He thought that AIDEA was trying to reduce the risk associated with the loans to attract commercial banks. If additional funds became available after the initial appropriation, there was nothing preventing a portion of the funds from being distributed to rural Alaska. The intent was to ensure that 35 percent of the initial appropriation would go to rural Alaska because it was not possible to force a loan onto anyone. He thought a commercial building like the BP building in Anchorage would still be eligible because the building itself was not responsible for fossil fuel projects. Co-Chair Merrick relayed the names of people available online for questions. 10:25:43 AM Representative LeBon thought the AIDEA representative might want to respond. Representative Edgmon suggested the BP buildings might want to add solar panels. He did not see anything in the bill that was tied to energy standards. 10:26:33 AM MORGAN NEFF, CHIEF INVESTMENT OFFICER, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY (via teleconference), replied that the programs that AIDEA had been envisioning under the green bank were similar to what Representatives Wool and LeBon had been describing. He intended there to be incentives to attract the private capital to adopt new loans and to engage with all communities in Alaska. Representative Josephson appreciated Representative Wool's answer regarding the fund appropriations to rural Alaska, but the response went in the direction he feared. He was concerned that rural Alaska would only receive appropriations from the first tranche of funds. Representative Wool replied that the first tranche of funds had a specific target. Anyone in Alaska could apply for the remainder of the funds and there was no limitation. It was important to first evaluate from where the loans would derive and who would request the loans. Designating 35 percent to rural Alaska was a good start and subsequent appropriations could be made in the future. He thought the language in the bill was improved by the amendment. 10:31:03 AM Representative Thompson thought the language stated that the appropriations could be up to 35 percent. Representative Wool corrected Representative Thompson by explaining that the bill used the term, "at least." The 35 percent appropriation was the minimum. 10:32:14 AM Representative LeBon explained the meaning of credit enhancement. Banks typically looked to secure a loan with the property in question, and AIDEA might partner with the bank for financing purposes under the bill. The bank and AIDEA would look for equity on behalf of the owner, which would be considered a credit enhancement. The green bank could also finance a project in a subordinated position and stretch out the financing at a lower rate than AIDEA or the commercial bank. He would also look at the possibility of partnering with the United States Department of Agriculture (USDA) through the loan guarantee program. It was conceivable that the commercial banks might want to partner with a rural program and finance a project in rural Alaska, which would be another credit enhancement. He noted that the enhancements could get creative. If multiple lenders were involved, the risk for each party would decrease and willingness to participate in financing would increase. Banks could also be motivated to finance projects to meet investment opportunities to underserved communities. He thought that the success of the program would hinge on the willingness of commercial banks to offer the loans to meet federal obligations under the Community Reinvestment Act. 10:35:36 AM Representative Wool suggested that if a person wanted to put up solar panels on their house, they could get a short- term loan at a high interest rate. He thought the interest rate made solar panels not feasible for many people. The program would help to stretch out a loan for a longer period of time at a lower interest rate. He thought it would be an improvement. 10:36:43 AM Co-Chair Merrick asked Ms. Emily Nauman to comment on a potential title change. Representative Edgmon restated his question and asked if a title change to include a reference to PCE would be needed if Amendment 10 were to be adopted. EMILY NAUMAN, DEPUTY DIRECTOR, LEGISLATIVE LEGAL SERVICES, ALASKA STATE LEGISLATURE (via teleconference), did not believe a title change would be needed. She thought the changes would fall under the responsibility of AIDEA. She would have the drafter of the amendment look and get back to the committee. Co-Chair Merrick WITHDREW the OBJECTION. There being NO further OBJECTION, Amendment 10 was ADOPTED. Representative Wool WITHDREW Amendment 1. 10:39:00 AM Representative Wool MOVED to ADOPT Amendment 2, 32-GH1074\W.11 (Klein 4/20/22) (copy on file): Page 9, following line 7: Insert a new subsection to read: "(b) The authority may not use the Alaska clean energy fund established in AS 44.88.452 for construction or renovation of fossil fuel power generation projects." Reletter the following subsections accordingly. Representative Rasmussen OBJECTED for discussion. Representative Wool MOVED to ADOPT conceptual Amendment 1 to Amendment 2 (copy on file). Page 1, lines 3-4 of the Amendment Delete all material Replace with (b) The authority may not use the Alaska clean energy fund established in AS 44.88.452 for construction or renovation of power generation projects greater than one megawatt that use fossil fuel combustion. Co-Chair Merrick OBJECTED for discussion. 10:39:29 AM AT EASE 10:40:11 AM RECONVENED Co-Chair Merrick invited Representative Wool to restate his motion. Representative Wool MOVED to ADOPT conceptual Amendment 1 to Amendment 2 [SEE ABOVE]. Co-Chair Merrick OBJECTED for discussion. Representative Wool reviewed the conceptual amendment. He explained that the amendment would prevent the fund from being used for construction of fossil fuel power generation projects. However, he acknowledged that much of rural Alaska was reliant on power houses, many of which needed to be upgraded. If the conceptual amendment was adopted, it would allow monies from the fund to be used for power generation projects of fossil fuel of one megawatt or less, which would cover most power houses. He explained that power houses typically used "fossil fuel combustion," which was included in the conceptual amendment. 10:42:52 AM Representative Rasmussen asked if Mr. Curtis Thayer was online. Co-Chair Merrick asked Mr. Thayer if he had a copy of the conceptual amendment. Representative Rasmussen wondered if the 190 diesel power houses across the state would be precluded from the fund if the conceptual amendment passed that restricted construction or renovation of power generation projects larger than one megawatt. She was concerned that it would constrain communities that wanted to participate and start moving towards renewable energy. 10:44:09 AM CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT (via teleconference), replied that the amendment would fix the issue identified by Representative Rasmussen. He explained that the aforementioned 190 power houses were under one megawatt. He added that it would also allow for communities to switch between energy sources and better transaction away from fossil fuels. He supported the amendment and thought it would be beneficial for rural Alaska. Co-Chair Foster appreciated the amendment. He asked for more detail about the 190 communities. He wondered if hubs such as Nome, Dillingham, and Bethel were above one megawatt. 10:46:47 AM AT EASE 10:57:28 AM RECONVENED Co-Chair Foster relayed that Nome had two 5.4 megawatt generators and would be more comfortable if the limit in the amendment was closer to six megawatts. He wanted to learn more about other communities and come back to the amendment. Representative Wool thought that one megawatt covered most of the small communities. He acknowledged that hub communities had larger power generation needs. He did not want to inhibit enhancement to facilities or the addition of green energy. If the Nome, Kotzebue, or Dillingham hubs wanted to add solar panels to their capacity, he did not want it to be interpreted as renovation of fossil fuels. He wanted communities to be able to add other forms of energy to the grid and did not want it to be limiting. Mr. Thayer responded that he was in alignment with Representative Wool in that they both acknowledged that adding a renewable energy source in a community would necessitate renovation to the power house first. For example, Kotzebue was developing an ambitious wind program, but it had to connect to the power house. He did not want that to be a disqualifier. Representative Wool agreed and did not view the renovation as being focused on the power house, but on the grid. However, if it was considered renovation to a power house, he was happy to take the word "renovation" out of the amendment. His goal was to discourage new construction of larger power houses that would generate fossil fuels. Mr. Thayer indicated removing the language relating to renovation would help provide clarity. Many rural communities in the state were already developing renewable energy sources, but all projects were also interfaced with power houses. He thought the legislation would increase the availability of more loans in rural Alaska. Representative Wool thought taking out the word "renovation" would alleviate the issue. 11:03:21 AM Representative Johnson suggested that most places with a large energy capacity would need a hybrid system. Power needed to be consistent, and she did not think green energy was consistent without a back-up. She would like someone to speak to the integration of technologies. She questioned how to leave one technology behind while moving towards a different energy source. She thought Alaska should have all energy sources available in order to avoid short-changing any communities. Mr. Thayer agreed with the comments by Representative Johnson. He acknowledged that diesel power houses were the backbone of many communities and when communities introduced a green source of energy, battery technology was needed. When the wind stopped blowing, the battery allowed a smooth transition back to diesel. It was an evolving topic in terms of finding the right mix for each community. The next step would be financing the projects, especially in rural Alaska. 11:07:14 AM Co-Chair Foster was okay with moving forward with the amendment knowing that it covered most of the smaller villages in Alaska. He thought Nome might not qualify for the fund. He could introduce an amendment on the floor if he talked to his utility manager and found a change was needed. 11:08:14 AM AT EASE 11:09:08 AM RECONVENED Representative Rasmussen WITHDREW the OBJECTION. There being NO further OBJECTION, conceptual Amendment 1 to Amendment 2 was ADOPTED. Co-Chair Merrick indicated that the committee would now discuss Amendment 2 as amended. 11:09:46 AM Representative Edgmon thought the bill benefited larger communities and would benefit smaller communities as the program grew. He was concerned that the committee had not yet heard utility managers' opinions on the bill. He did not think he had enough information to support the bill. Co-Chair Merrick indicated it was not her intent to move the bill out of committee yet. She offered to invite testifiers to provide more information at subsequent hearings of the bill. Representative Edgmon appreciated it. Representative Wool reviewed Amendment 2. The motivation for the amendment was to prevent the development of new fossil fuel sources. He thought adding renewable energy sources to an existing power house would be acceptable and he wanted to encourage it. He hoped the program would succeed and that many people would apply for loans. He wanted to take large fossil fuel power generation plants reliant on diesel off the table. 11:14:02 AM Representative Carpenter was concerned that during the transition to green energy sources, there was a period of time where "clean fossil fuel" would be needed to facilitate a clean transition. He would not want to prohibit developing renewable energy sources but was concerned that sources such as wind and solar would not be reliable enough in Alaska. He did not want to move towards green technology that did not meet the needs of Alaska. He did not think he could convert from diesel to natural gas in his home if the bill passed. Representative Edgmon had a question for Mr. Weitzner to think about and respond to in future meeting. He asked if the state's ability to attract outside investors would be enhanced if additional safeguards were inserted into the bill. Representative Wool assured Representative Carpenter that he could convert from diesel to natural gas in his house already if he wanted to, unless his house burned more than one megawatt which was unlikely. He reiterated that the funds were intended for smaller projects for smaller consumers. He did not think big power companies would benefit. 11:19:54 AM Representative Carpenter agreed that his house did not generate more than one megawatt. However, he suggested that there were businesses in the state that did. He did not think there would be a lot of demand and that the amendment would not cover a significant number of businesses. 11:20:44 AM AT EASE 11:21:04 AM RECONVENED Representative Rasmussen WITHDREW the OBJECTION. Representative Carpenter OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Josephson, LeBon, Ortiz, Rasmussen, Thompson, Wool, Edgmon, Foster, Merrick OPPOSED: Johnson, Carpenter The MOTION PASSED (9/2). There being NO further OBJECTION, Amendment 2 as amended was ADOPTED. 11:22:10 AM Co-Chair Merrick concluded the amendment process on HB 170. She noted that Mr. Thayer had some updated information to share. Mr. Thayer responded to the earlier discussion about the capacities of regional hub powerplants. He relayed that Bethel generated 15 megawatts, Kotzebue was just under 14 megawatts, Nome was 18 megawatts, and Dillingham was 6.3 megawatts. The communities also had some wind turbines that were incorporated into the numbers, and most of the turbines were running about 1.5 to 2 megawatts. Co-Chair Foster clarified that Nome's 18 megawatts were comprised of various power generating modules. He thought the amendment was referring to each unit separately and not the cumulative number. 11:23:52 AM Representative Edgmon relayed he had heard from his utility manager that Dillingham peaked at about 6.5 megawatts in the winter, but at less difficult times of the year it averaged around three megawatts. HB 170 was HEARD and HELD in committee for further consideration. Co-Chair Merrick reviewed the agenda for the following meeting.
Document Name | Date/Time | Subjects |
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HB 350 Sectional.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 350 |
HB 350 Sponsor Statement.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 350 |
HB 350 Supporting Docs.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 350 |
HB 350 ASD Bond Debt vs Facility Backlog for HB 350 070121.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 350 |
HB 350 Sectional.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 350 |
HB 170 Amendment 10 LeBon.Wool W.14 042822.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 170 |
HB 170 Conceptual Amendment 1 to Amendment 2 Wool 042822.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 170 |
HB 170 - AIDEA Response Letter to HF Committee 042822.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 170 |
HB 226 Additional Documents- DOL Presentations 4.29.22.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 226 |