Legislature(2001 - 2002)

04/26/2001 08:43 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 175                                                                                                            
                                                                                                                                
     An Act making an appropriation to the Alaska Industrial                                                                    
     Development and Export Authority for power projects;                                                                       
     and providing for an effective date.                                                                                       
                                                                                                                                
HOUSE BILL NO. 238                                                                                                            
                                                                                                                                
     An Act relating to the power transmission intertie fund                                                                    
     of the Alaska Energy Authority.                                                                                            
                                                                                                                                
Members were  provided with a proposed  committee substitute,                                                                   
work draft for HB 175 22-LS0705\T, Cramer 4/26/01.                                                                              
                                                                                                                                
Members were provided with proposed  committee substitute for                                                                   
HB 238, work draft 22-LS0868\F, 4/26/01 (copy on file).                                                                         
                                                                                                                                
MIKE   TIBBLES,  STAFF,   REPRESENTATIVE  WILLIAMS   provided                                                                   
information on  HB 175 and HB  238. He noted that  there were                                                                   
previous  discussions  regarding  where the  funding  source,                                                                   
payment mechanism and repayment.                                                                                                
                                                                                                                                
Vice-Chair   Bunde   MOVED  to   ADOPT   proposed   committee                                                                   
substitute,  work  draft   for  HB 175,  22-LS0705\T,  Cramer                                                                   
4/26/01. There being NO OBJECTION, it was so ordered.                                                                           
                                                                                                                                
Mr. Tibbles explained that the  proposed committee substitute                                                                   
splits  into  two separate  appropriations  the  amount  that                                                                   
would  be  a grant  and  the  amount  that  would be  a  zero                                                                   
interest  loan.  House  Bill  238 creates  a  new  fund.  The                                                                   
appropriation  in HB  175, section  1  would be  appropriated                                                                   
into the  new fund created  in HB 238.  The problem  with the                                                                   
previous version  was that state of Alaska  law required that                                                                   
loans  from  the Alaska  Industrial  Development  and  Export                                                                   
Authority  (AIDEA) Revolving  Loan Fund  be repaid back  into                                                                   
the  fund.  Money would  be  appropriated  to the  new  Power                                                                   
Transmission Intertie Loan Fund  and then be loaned on a zero                                                                   
interest basis. The repayments  would be made to the Railbelt                                                                   
Energy Fund.  Section 2  of HB 238  sets up the  requirements                                                                   
for  the  loan  program.  Subsection   (e)  states  that  the                                                                   
authority shall  deposit repayments of loans  to the Railbelt                                                                 
Energy Fund.                                                                                                                    
                                                                                                                                
Representative  John  Davies   questioned  why  the  Railbelt                                                                   
Energy Fund  would be appropriate. Co-Chair  Mulder explained                                                                   
that when the natural gas pipeline  is developed and there is                                                                   
gas power  there would be a  need for an intertie  throughout                                                                   
South Central  Alaska. The  purpose is  to assure that  there                                                                   
are enough funds in the Railbelt  Energy Fund to intertie the                                                                   
entire Railbelt.                                                                                                                
                                                                                                                                
Mr.  Tibbles referred  to  page  2, line  14  of  HB 175.  He                                                                   
explained that  the appropriation of $2.5 million  dollars to                                                                   
the Matanuska  Electric Association, which is  contained as a                                                                   
loan in section 1,  should be  included as a grant in section                                                                   
2.                                                                                                                              
                                                                                                                                
Representative Harris  MOVED to ADOPT Amendment  1: change "a                                                                   
no interest  loan" on  line 14,  page 2  to "grant"  and move                                                                   
lines  14 - 18  into section  2. He  explained  that it  is a                                                                   
railbelt energy project and would qualify as a grant.                                                                           
                                                                                                                                
Representative  John  Davies  pointed out  that  the  funding                                                                   
source is the Constitutional Budget Reserve.                                                                                    
                                                                                                                                
Mr. Tibbles  explained  that the project  is consistent  with                                                                   
the other grant projects.                                                                                                       
                                                                                                                                
Representative  Croft thought that  it would make  more sense                                                                   
to leave the project in section 1.                                                                                              
                                                                                                                                
Representative Lancaster explained  that funds were requested                                                                   
from the Railbelt Energy Fund.  The decision was made to take                                                                   
the  funds from  the Constitutional  Budget  Reserve and  put                                                                   
into  the  Railbelt  Energy Fund.  Projects  related  to  the                                                                   
Railbelt  would  be grants;  others  would  be made  as  zero                                                                   
interest  loans  repaid  to  the  Railbelt  Energy  Fund.  He                                                                   
stressed that all those in receipt of funds are in support.                                                                     
                                                                                                                                
Representative  Hudson  summarized that  the  funds from  the                                                                   
Constitutional   Budget   Reserve    to   Alaska   Industrial                                                                   
Development   and   Export   Authority   (AIDEA)   would   be                                                                   
appropriated  as loans or  grants and never  be paid  back to                                                                   
the CBR.                                                                                                                        
                                                                                                                                
Representative Croft acknowledged  that it is a loan from the                                                                   
Constitutional Budget Reserve  and pointed out that a debt is                                                                   
being created  in two places.  He stressed the  difficulty of                                                                   
assessing which  projects should be logically  related to the                                                                   
Railbelt.                                                                                                                       
                                                                                                                                
Representative Lancaster  explained that the grant  to Copper                                                                   
Valley for  $500 thousand dollars is  a pay back for  a study                                                                   
they completed for the Glennallen  Intertie, which never came                                                                   
to  fruition.   Grants  to  Southeast  Communities   are  for                                                                   
studies, not physical plants.                                                                                                   
                                                                                                                                
Representative  Whitaker   summarized  that  there   is  $101                                                                   
million  dollars  for  power   transmission  projects:  $32.5                                                                   
million  dollars for  non-Railbelt areas;  and $60.8  million                                                                   
dollars  for the  Railbelt. He  stressed that  there is  $101                                                                   
million  dollars  for  power   transmission  projects:  basic                                                                   
infrastructure.  Some of  the money  would go  back into  the                                                                   
Railbelt Energy Fund  for future use. He pointed  out that 80                                                                   
percent of  the state's  population is  in the Railbelt,  but                                                                   
only 60  percent of  the funds  go to  the Railbelt.  He felt                                                                   
that this  discrepancy would be  offset by building  the fund                                                                   
for future need. He stressed the  importance of funding basic                                                                   
infrastructure.                                                                                                                 
                                                                                                                                
Representative  Lancaster  pointed out  that  section 3  also                                                                   
funds the Power Cost Equalization FY02 shortfall.                                                                               
                                                                                                                                
Representative  Lancaster observed that  section 6 of  HB 175                                                                   
refers to  HB 238, which is  the mechanism that  allows AIDEA                                                                   
to receive the funding.                                                                                                         
                                                                                                                                
Representative Foster  MOVED to report CSHB 175  (FIN) out of                                                                   
Committee. There being NO OBJECTION, it was so ordered.                                                                         
                                                                                                                                
CSHB  175 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation.                                                                                                           
                                                                                                                                
Representative Lancaster  MOVED to report CSHB  238 (FIN) out                                                                   
of Committee with  the accompanying fiscal note.  There being                                                                   
NO OBJECTION, it was so ordered.                                                                                                
                                                                                                                                
CSHB  238 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation  and with a new zero fiscal  note by the                                                                   
House Finance  Committee for the Department of  Community and                                                                   
Economic Development.                                                                                                           

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