Legislature(2013 - 2014)BARNES 124
03/11/2013 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB74 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 74 | TELECONFERENCED | |
HB 74-AIDEA: LNG PROJECT; DIVIDENDS; FINANCING
3:25:55 PM
CHAIR OLSON announced that the only order of business would be
HOUSE BILL NO. 74, "An Act relating to development project
financing by the Alaska Industrial Development and Export
Authority; relating to the dividends from the Alaska Industrial
and Export Authority; authorizing the Alaska Industrial
Development and Export Authority to provide financing and issue
bonds for a liquefied natural gas production system and natural
gas distribution system; and providing for an effective date."
3:27:01 PM
SARA FISHER-GOAD, Executive Director, Alaska Energy Authority
(AEA), Department of Commerce, Community & Economic Development
(DCCED), stated the fiscal note from Alaska Industrial
Development and Export Authority (AIDEA) was developed in
conjunction with AEA during extensive discussions on the
companion bill with the Division of Legislative Finance.
Several things were changed from the original fiscal note, she
stated. The fiscal note prepared by AIDEA originally described
revenues to AIDEA and AIDEA was asked to reflect potential
revenues to the state through the AIDEA's dividend program
rather than to show revenues direct to AIDEA. She pointed out
that this fiscal note also reflects revenues to AIDEA in FY 2014
since the dividend calculation for AIDEA is calculated from the
"base year" and has a two-year lag. Thus the revenue earned in
FY 2014 is reflected in FY 2016, she said. She highlighted this
was the primary adjustment made to the original fiscal note.
Additionally, the fiscal note has an attachment that shows a
comprehensive evaluation of the fiscal note with respect to the
Interior Energy Plan and the direct financing program
incorporated into HB 74. Further, AIDEA has provided another
fiscal note that reflects that the Sustainable Energy
Transmission and Supply Development (SETS) program is
capitalized by $125 million in Governor's FY 14 budget request.
Specifically, this fiscal note was added to reflect a
comprehensive view with respect to the different parts of the
financing package related to the Interior Energy Plan. Both
fiscal notes also reflect the proposed FY 14 capital
appropriation of $50 million to AIDEA. Even though she believed
she previously addressed all of this in her earlier PowerPoint
presentation to the committee, with respect to the program and
the bill, she wanted to explicitly explain this in the fiscal
notes, as well.
3:32:57 PM
REPRESENTATIVE CHENAULT asked whether this bill would expand
AIDEA's authority beyond the trucking [of LNG to Fairbanks]. He
clarified that he is interested in whether this bill would
allow, for instance, the state to finance Brooks Range
Petroleum's [North Slope] project without any additional
authorization from [the legislature]. He further asked whether
HB 74 would allow AIDEA to participate in ownership of a
processing facility or to finance any other project AIDEA does
not currently have authority to do.
3:33:59 PM
MARK DAVIS, Deputy Director, Alaska Industrial Development and
Export Authority (AIDEA), Department of Commerce, Community &
Economic Development (DCCED), responded that [Section 1] of HB
74 provides the direct financing capability for AIDEA. He
assumed the question was directed at the direct financing
provisions, which would allow AIDEA to use funds from AIDEA's
Revolving Fund, but AIDEA currently has this authority. He
explained that AIDEA can own or operate a project - to provide
project financing from [the Revolving Fund] for a project -
without having to have an equity ownership in the project.
However, the same definitions of project that currently apply to
AS 44.88.172 (a) would still apply so it doesn't really broaden
AIDEA's authority for the types of projects it would fund;
instead [the bill] would only change the funding mechanism.
3:35:04 PM
REPRESENTATIVE CHENAULT understood that AIDEA can currently fund
these projects without any new authority.
MR. DAVIS answered that currently if a project comes within a
definition of a project under AIDEA's statutes that meets its
statutory test, AIDEA is authorized by the board to provide
funds from AIDEA's Revolving Fund to own or operate those
projects or a portion of these projects. For example, Buccaneer
Energy's jack-up rig, Endeavor, project was [financed] by using
AIDEA's Revolving Fund as the funding source without going back
to the legislature, he said.
3:35:50 PM
REPRESENTATIVE CHENAULT asked whether AIDEA owns part of the
Endeavor project. He further asked whether this [bill] would
allow AIDEA to own or control any part of a project.
MR. DAVIS answered that HB 74 would allow AIDEA to provide
financing without having to own the project and to avoid certain
liabilities, but it would not eliminate AIDEA's control over the
project. He clarified that the project financing portion
represents a form of control to achieve the goals of the agency,
which is to alleviate unemployment or assist in natural resource
development. Thus AIDEA would maintain control, he concluded.
3:36:36 PM
REPRESENTATIVE CHENAULT asked whether [AIDEA assumes] any
liability for the Endeavor project.
MR. DAVIS answered that an equity owner always has potential
liability for tortious conduct created by the chattel - the hard
assets - but AIDEA is a passive investor. He offered his belief
that this exposure is limited; however, it does exist. He said
that engaging in project financing can eliminate these types of
risks.
3:37:21 PM
REPRESENTATIVE SADDLER asked whether the direct financing is a
significant expansion of [AIDEA's] authority. He further asked
whether this authority would be limited specifically to the
Interior Energy Plan.
MR. DAVIS answered yes; that Section 10 is an uncodified
amendment just for this project and it does not change the
codified structure of AIDEA's statutes. He stated that the
direct financing portion of the bill is a change to the codified
statutes, which would apply to any project that AIDEA could
currently finance under AIDEA's Revolving Fund in AS 44.88.172
(a).
REPRESENTATIVE SADDLER understood this would be an expansion of
AIDEA's Revolving Fund.
MR. DAVIS answered no; the bill does not expand what the fund
can be used for since the definitions of what AIDEA can invest
in are the same; however, it will change the mechanism for
financing. Thus AIDEA has not broadened the types of projects
at all - they are the same projects, he said.
[HB 74 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB74 Fiscal Note-DCCED-AIDEA-03-06-13.pdf |
HL&C 3/11/2013 3:15:00 PM |
HB 74 |
| HB74 Fiscal Note-DCCED-AIDEA-03-06-13B.pdf |
HL&C 3/11/2013 3:15:00 PM |
HB 74 |
| HB74 Draft Proposed Amendment.pdf |
HL&C 3/11/2013 3:15:00 PM |
HB 74 |