Legislature(2013 - 2014)BARNES 124

03/15/2013 03:15 PM House LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 112 REPEAL FILM PRODUCTION TAX CREDIT TELECONFERENCED
Heard & Held
+= HB 76 UNEMPLOYMENT; ELEC. FILING OF LABOR INFO TELECONFERENCED
Heard & Held
+= HB 74 AIDEA: LNG PROJECT; DIVIDENDS; FINANCING TELECONFERENCED
Heard & Held
         HB 74-AIDEA: LNG PROJECT; DIVIDENDS; FINANCING                                                                     
                                                                                                                                
4:19:10 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the final 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."                                                                  
                                                                                                                                
4:19:49 PM                                                                                                                    
                                                                                                                                
MICHAEL  POLLEN informed  the  committee that  he  has served  12                                                               
years on  the Fairbanks North  Star Borough (FNSB)  Air Pollution                                                               
Control Commission.   During this past winter  Fairbanks has been                                                               
experiencing  what  he  characterized   as  Beijing  quality  air                                                               
quality with  respect to 2.5  particulate matter counts.   One of                                                               
the only truly sustainable answers  to the air quality problem is                                                               
natural gas.  He recalled the  FNSB mayor, Luke Hopkins, spoke to                                                               
that problem.   He reiterated that this is a  very serious health                                                               
problem in  Fairbanks and the  proposed LNG and  trucking project                                                               
is  a very  effective solution.   Thus,  on the  basis of  health                                                               
issues  alone the  project  is worth  it;  however, this  project                                                               
would have a  tremendous economic impact, which  many people have                                                               
highlighted.     Additionally,  this   bill  would   improve  the                                                               
economics in Fairbanks and would  promote industry, bring jobs to                                                               
the  city and  to the  Railbelt.   In particular,  he said  he is                                                               
tired  of  buying  his propane  from  Calgary,  Alberta,  Canada.                                                               
Instead,  he suggested  Alaska  should  make it  in  Alaska.   In                                                               
essence, this  bill could  bring LNG to  Fairbanks and  provide a                                                               
short-term solution  since it would  mesh well with  any pipeline                                                               
project.  He  reiterated his support for HB 74  and urged members                                                               
to support the bill.                                                                                                            
                                                                                                                                
4:21:58 PM                                                                                                                    
                                                                                                                                
GEORGE  BERRY offered  his belief  that Fairbanks,  the Fairbanks                                                               
area, and those  who live on the river system  will be positively                                                               
affected by this  bill.  He said HB 74  would lower space heating                                                               
costs in  Fairbanks, along  the road system,  and other  areas of                                                               
the state  as this  bill has wide  ranging impact  for residents.                                                               
He said that  natural gas and in particular propane  will be able                                                               
to reach out  and lower space heating costs in  rural Alaska.  He                                                               
explained that  propane is  a direct  byproduct of  the liquefied                                                               
natural gas (LNG)  process, which would be produced  on the North                                                               
Slope.    Thus,  once  LNG  is produced,  propane  will  also  be                                                               
produced and  become available,  which is  a positive  aspect for                                                               
those who  do not have access  to a pipeline.   Furthermore, this                                                               
bill   could  compliment   various   pipeline   proposals.     In                                                               
conclusion,  Mr.   Berry  expressed   hope  that   residents  can                                                               
encourage the legislature  to perform its due  diligence and move                                                               
HB 74 along  and allow residents to invest in  their families and                                                               
the future.                                                                                                                     
                                                                                                                                
4:24:23 PM                                                                                                                    
                                                                                                                                
DAVE MESSIER, Rural Energy  Coordinator, Tanana Chiefs Conference                                                               
(TCC), explained that  TCC is a nonprofit  tribal consortium that                                                               
represents 42  communities in Interior  Alaska.  He  then related                                                               
his support  for HB 74  and the Governor's Interior  Energy Plan.                                                               
He offered his  belief that more affordable  energy in Fairbanks,                                                               
the hub for  most of TCC's communities,  generally means cheaper,                                                               
more affordable energy  for its tribes.  Specifically,  HB 74 has                                                               
the  potential  to  significantly   lower  the  cost  of  propane                                                               
delivered to rural  communities in Alaska.  Since  nearly half of                                                               
TCC's  tribal members  live  in and  around  Fairbanks this  bill                                                               
would have a positive impact on  TCC's members.  He reported that                                                               
at  the  TCC's  annual  convention,   the  full  board  passed  a                                                               
resolution supporting HB  74 and the governor's energy  plan.  He                                                               
concluded that  access to  low-cost energy  has led  to increased                                                               
economic activity and opportunity in  the Lower 48, which the TCC                                                               
believes would be  the case in Fairbanks as well.   Therefore, he                                                               
strongly encouraged members to move  HB 74 forward since it helps                                                               
address the  needs of all of  Interior Alaska and the  state as a                                                               
whole.   He stressed  the importance of  an energy  strategy that                                                               
includes  funding  for   energy  efficiency,  weatherization,  or                                                               
renewable  energy  as a  combined  approach.    He said  the  TCC                                                               
greatly appreciates the committee's support for HB 74.                                                                          
                                                                                                                                
4:25:43 PM                                                                                                                    
                                                                                                                                
KARL  GOHLKE,  Outside  Sales,  Frontier  Supply  Company  (FSC),                                                               
stated that  FSC has been in  Fairbanks since 1989 and  have been                                                               
long  time  members of  the  Alliance,  the Resource  Development                                                               
Council (RDC),  Alaska Miners  Association (AMA),  Association of                                                               
General Contractors  (AGC), and the Greater  Fairbanks Chamber of                                                               
Commerce.  Originally  as Co-Chair and later as the  chair of the                                                               
Transportation  Committee for  the Greater  Fairbanks Chamber  of                                                               
Commerce, he  has been involved  in the trucking gas  project for                                                               
the past  five years  when it was  first introduced  by Fairbanks                                                               
Natural Gas  (FNG).  The project,  although it had merit  when it                                                               
began, has  even more merit  today than five  years ago.   At the                                                               
time,  competing projects,  community politics  and disagreements                                                               
regarding  the   North  Slope  trucking  projects   hindered  its                                                               
progress.   However, Fairbanks Natural  Gas (FNG)  stayed focused                                                               
on  the  project.    Today,   FNG,  the  Golden  Valley  Electric                                                               
Association (GVEA),  and local politicians are  in agreement that                                                               
the trucking  project is  a bridge to  remove Fairbanks  from the                                                               
national  list as  the number  one city  with the  highest energy                                                               
cost.                                                                                                                           
                                                                                                                                
MR. GOHLKE said  it has always been a challenge  to live and work                                                               
in Fairbanks,  but in  the past  several years  the high  cost of                                                               
energy has  made it much  more challenging.   In fact,  many have                                                               
found it  impossible and  have moved  from Alaska.   The  cost of                                                               
providing   electricity,  heating,   and   water  combined   with                                                               
rent/mortgage  and   food  leaves  little  discretionary   or  no                                                               
discretionary income.   He said  that this lack  of discretionary                                                               
income places  a strain on  businesses and families that  is felt                                                               
in  the  Interior  as  well   as  Anchorage.    Today's  economic                                                               
situation has many unknowns; however,  one thing that is known is                                                               
that Fairbanks is challenged with the  high cost of energy.  This                                                               
makes it  hard for businesses  to keep people employed  and keeps                                                               
businesses from coming to Fairbanks.   He offered his belief that                                                               
the Interior  remains the place  to do business; however,  it has                                                               
been  made  more  difficult  by each  year  that  passes  without                                                               
actions for solutions that address the  high cost of energy.  The                                                               
consensus  for a  near-term immediate  solution  is trucking  gas                                                               
from  the North  Slope as  a bridge  to a  long-term solution  of                                                               
piped natural  gas.  He  offered that HB 74  is a great  start to                                                               
provide gas to the Interior and  the trucking of natural gas from                                                               
the North Slope is broader than  just Fairbanks.  He related that                                                               
GVEA  and FNG  have received  inquiries and  have responded  with                                                               
operational  plans  for  the  extended   plan  to  truck  gas  to                                                               
Southcentral Alaska.  This energy  project would leverage natural                                                               
gas  from smaller  communities  and other  regions  of Alaska  to                                                               
create  a backbone  for economic  expansions to  fit in  with the                                                               
pipeline   plan   and   be  a   catalyst   for   private   sector                                                               
participation.   He asked members to  support HB 74 and  not lose                                                               
sight  of getting  the  lowest  cost gas  to  as many  Fairbanks,                                                               
Interior Alaskan  residents, and  businesses as possible  by 2015                                                               
and help  to make  Fairbanks and  the Interior  a vital  place to                                                               
live and to do business.                                                                                                        
                                                                                                                                
4:29:11 PM                                                                                                                    
                                                                                                                                
DAN  PORTWINE,  noting that  he  has  been  in the  plumbing  and                                                               
heating business for  nearly 40 years, stated that at  the end of                                                               
the Trans-Alaska  Pipeline System  (TAPS) construction,  in 1977,                                                               
his business did  numerous heat conversions from  electric to oil                                                               
since electricity  costs had  skyrocketed.   He recalled  that at                                                               
that  time most  people wanted  to be  sure the  boiler could  be                                                               
converted  to  natural  gas;  however,  the  community  is  still                                                               
waiting for that.  With regard  to a concern raised at a previous                                                               
hearing about the  cost of conversion, he pointed  out that there                                                               
has been  a push  in Fairbanks  in recent  years to  replace aged                                                               
boilers  with more  efficient  boilers.   The  majority if  these                                                               
boilers can  easily be converted to  gas for a cost  of $1,500 to                                                               
$2,000, he  noted.   Mr. Portwine related  a conversation  with a                                                               
retiree  last year  during  which the  retiree  said he  couldn't                                                               
afford the utility costs in  Fairbanks and was planning his "exit                                                               
strategy," which  is a term that  has bothered Mr. Portwine.   He                                                               
urged the committee to support and pass HB 74.                                                                                  
                                                                                                                                
4:30:49 PM                                                                                                                    
                                                                                                                                
JEREMY  HOLAN,  Business  Representative,  Teamsters  Local  959,                                                               
informed the committee  that prior to his current  job, he worked                                                               
as a fuel  truck driver when heating oil prices  rose from $1 per                                                               
gallon to $4.50 per gallon.   The heating oil market continues to                                                               
remain unstable, he said.  In  fact, the current price for number                                                               
one heating  oil is $4.23 per  gallon and for number  two heating                                                               
fuel  at $4.16  per  gallon.   He  personally  burns about  1,100                                                               
gallons  of fuel  oil per  year, along  with coal  and wood  use.                                                               
These  energy   costs  are  hurting   Fairbanks  and   the  rural                                                               
communities.   In 2009,  he noticed  homes going  up for  sale or                                                               
going into foreclosure as he  learned that people could no longer                                                               
afford to live in Fairbanks.   He pointed out the choices to heat                                                               
homes  in  Fairbanks  include  electric,   oil,  wood,  or  coal.                                                               
Currently, individuals  and organizations  are in the  process of                                                               
curbing homeowner  use of wood  or coal since these  fuels create                                                               
health issues.   He offered his support for the  LNG project.  He                                                               
concluded that  Fairbanks and the rural  communities need cheaper                                                               
costs of  living and need HB  74 to pass since  it will stimulate                                                               
the economy and lower fuel costs.                                                                                               
                                                                                                                                
4:32:45 PM                                                                                                                    
                                                                                                                                
BILL ST.  PIERRE, speaking  as a  30-year Fairbanks  resident who                                                               
has  owned   and  operated   many  local   businesses,  including                                                               
software,  media, and  others,  including  an Anchorage  business                                                               
with over  30 employees, said he  can vouch for the  large number                                                               
of advertising dollars that come  to Fairbanks from Anchorage and                                                               
other parts of  the state.  These  advertising dollars illustrate                                                               
the investment in Fairbanks by  Anchorage businesses and business                                                               
owners,  including sandwich  shops, furniture  stores, banks  and                                                               
credit unions, medical facilities,  and the contractors who build                                                               
them.  He hoped members would  realize HB 74 does not just affect                                                               
Fairbanks residents, but  relates to the hundreds  of millions of                                                               
dollars in  Anchorage-owned assets and investments  in Fairbanks.                                                               
He  said the  high cost  of energy  is needlessly  stripping away                                                               
value from these  businesses and the cost of  energy in Fairbanks                                                               
is  simply too  high  causing many  residents  and businesses  to                                                               
leave, consider  leaving, or to refrain  from further investment.                                                               
This trucking  plan is a good  plan that will solve  problems and                                                               
create statewide  opportunities, as well as  provide a foundation                                                               
for further development  of Alaska's gas resources  in the longer                                                               
term, he  opined.   This bill, he  further opined,  would protect                                                               
the  millions  of  dollars  that   statewide  investors  have  in                                                               
Fairbanks  and  would create  millions  more  in development  and                                                               
operational  opportunities.   He  asked members  to support  this                                                               
bill since it is in the interest of the entire state.                                                                           
                                                                                                                                
4:34:46 PM                                                                                                                    
                                                                                                                                
DICK BRICKLEY, Chair, ICE Alaska,  noted his appreciation for the                                                               
funding the legislature  and the governor put in the  budget.  He                                                               
stated  that  it is  critically  important  to the  Interior  and                                                               
Fairbanks that this bill move forward.   Speaking as the Chair of                                                               
ICE Alaska,  he related  that HB  74 will  save the  company over                                                               
$40,000 in  energy costs.   He reiterated  that it  is critically                                                               
important that  this bill moves  forward as Fairbanks  needs help                                                               
and it will be a great thing for the entire state of Alaska.                                                                    
                                                                                                                                
4:35:52 PM                                                                                                                    
                                                                                                                                
MARIA RENSEL  asked members to  pass HB  74 out of  the committee                                                               
for  the reasons  already stated,  including  space heating,  air                                                               
quality, and  electricity generation.   The  high cost  of energy                                                               
doesn't  leave people  a  lot  of choice  and  many families  are                                                               
leaving the Fairbanks  area.  She concluded  that Fairbanks needs                                                               
to  have  HB  74  pass  out of  committee,  signed,  sealed,  and                                                               
delivered this legislative session.                                                                                             
                                                                                                                                
4:36:44 PM                                                                                                                    
                                                                                                                                
TIMOTHY GUNDERSON related that he  came to Alaska with his family                                                               
in 1971 and has raised three  children, who have also married and                                                               
raised families here.  He  now has married grandchildren who want                                                               
to raise their  families here as well.  However,  one child moved                                                               
away last year  due to the percentage of income  the family spent                                                               
for heating and electricity and  in order to have better economic                                                               
opportunities.   He asked to add  his voice to those  in favor of                                                               
LNG; however, he  would like to focus on the  propane issue since                                                               
that  reaches  a  large  group  of  people  that  have  not  been                                                               
discussed and  certainly reaches  far beyond the  Fairbanks area.                                                               
He explained that  propane is a byproduct of  creating LNG, which                                                               
is created when natural gas is  reduced to 261 degrees below zero                                                               
in order  to liquefy the gas.   However, propane must  be removed                                                               
from the  LNG since the  propane will turn  solid.  He  said that                                                               
Cook Inlet natural gas contains propane  in the amount of about 1                                                               
percent, whereas Prudhoe  Bay gas contains propane  in the amount                                                               
of 12-15 percent.   In short, when GVEA begins  its [North Slope]                                                               
production, it  will produce  30,000 gallons  per day  of propane                                                               
byproduct, which could be trucked  and barged up the Yukon River.                                                               
Additionally, the  infrastructure necessary for using  propane is                                                               
considerably  smaller   since  it   does  not  require   a  piped                                                               
distribution system,  a storage facility,  or need to be  kept at                                                               
below zero temperatures.   Currently, all propane  used in Alaska                                                               
is  imported from  Canada, which  is  shipped by  rail to  Prince                                                               
Rupert, then  barged to  Whittier, shipped  by rail  to Fairbanks                                                               
and Anchorage, and  trucked to other points.   Currently, propane                                                               
costs, he reported,  are $4 per gallon in Fairbanks.   He related                                                               
that  the Anchorage  Port Authority  and FNG  have estimated  the                                                               
price would  be reduced from  $1.20-$1.50 per gallon  for Prudhoe                                                               
Bay produced  natural gas.   He  concluded that  this could  be a                                                               
huge consideration for  energy for Bush Alaska  and Fairbanks, as                                                               
well as  for those who will  not be served by  pipeline for years                                                               
to come.  He shared his  background, including that he worked for                                                               
the Teamsters Training Center, has  been involved in the trucking                                                               
industry  for 40  years, and  teaches commercial  drivers how  to                                                               
drive  the  Dalton  Highway.    He mentioned  that  he  has  five                                                               
students  from  TCC   who  will  likely  benefit   from  this  as                                                               
commercial drivers.                                                                                                             
                                                                                                                                
CHAIR OLSON remarked that he has hit  on a point, which is how to                                                               
reach  people outside  the core  areas, noting  that propane  and                                                               
other liquids may be the way to do so.                                                                                          
                                                                                                                                
4:40:51 PM                                                                                                                    
                                                                                                                                
ANDREW REIMHERR  said he wanted to  speak to this issue  since he                                                               
is  very concerned  with the  economy in  Fairbanks, particularly                                                               
since  he learned  from  the  boss of  his  wife,  a real  estate                                                               
appraiser,  that  Fairbanks  has   had  a  phenomenal  number  of                                                               
foreclosures this  year, which were  attributed to  energy costs.                                                               
In fact,  many people  just packed  up and  left similar  to what                                                               
happened in the  1980s.  He offered his belief  that the solution                                                               
to  the heating  energy and  air quality  issues is  gas and  the                                                               
necessary infrastructure.                                                                                                       
                                                                                                                                
4:42:20 PM                                                                                                                    
                                                                                                                                
JIM LAITI began  by relating that four generations  of his family                                                               
actively  live  in Fairbanks  as  well  as numerous  friends  and                                                               
neighbors.  A  common topic of conversation among them  is a lack                                                               
of  optimism,  especially  among   young  people.    The  obvious                                                               
solution, he  opined, is  natural gas for  Fairbanks and  the LNG                                                               
project  is the  perfect jump  start to  build the  project.   In                                                               
hindsight,  bringing  natural  gas  at that  the  time  TAPS  was                                                               
constructed  by extending  the pipeline  to Fairbanks  would have                                                               
been  a benefit  to  the  Interior.   Although  people are  often                                                               
concerned  about starting  a project,  good benefits  result from                                                               
projects  such as  this one,  he  opined.   He acknowledged  that                                                               
pipeline discussions have  occurred for 50 years,  but he offered                                                               
his  belief that  this  LNG  project could  be  symbiotic with  a                                                               
pipeline in that  infrastructure and a consumer base  would be in                                                               
place in  Fairbanks and in large  areas of rural Alaska  as well.                                                               
He urged members to move HB 74 forward.                                                                                         
                                                                                                                                
4:45:11 PM                                                                                                                    
                                                                                                                                
JIM   DODSON,    President,   Fairbanks    Economic   Development                                                               
Corporation  (FEDC) stated  he has  seen first-hand  the problems                                                               
created by the  high cost of energy in Alaska,  in particular, in                                                               
Fairbanks.   Currently, the Fairbanks community  is spending over                                                               
$600  million   on  energy   costs,  of   which  68   percent  or                                                               
approximately  $400  million is  being  spent  on space  heating.                                                               
These  costs  are stifling  the  economy's  ability to  grow  and                                                               
opportunities for children to live  and enjoy Alaska.  This bill,                                                               
HB 74,  is the right  legislation for the Fairbanks  community at                                                               
this time,  as well as  being the  right type of  legislation for                                                               
other  communities to  build their  energy  portfolio around  and                                                               
start  to  diversify  Alaska's   economy  by  creating  jobs  and                                                               
opportunities  around the  development of  Alaska resources.   He                                                               
urged members to support HB 74.                                                                                                 
                                                                                                                                
4:46:46 PM                                                                                                                    
                                                                                                                                
RENE  STALEY stated  that she  works for  Birchwood Homes  and is                                                               
also a city  council member for the City of  Fairbanks.  She read                                                               
a prepared statement in support of HB  74.  She said this bill is                                                               
imperative  to  Alaskans to  take  a  closer look  at  increasing                                                               
energy costs.   At Birchwood homes, the company  provides heat to                                                               
400 homes  on 76  acres of property.   Each home  is heated  by a                                                               
dual boiler  system, which helps  keep the home quiet  and energy                                                               
efficient  for   space  heating  requirements.     However,  with                                                               
increasing  costs, the  area's  future and  energy  needs are  of                                                               
utmost  importance.   Trucking LNG  from the  North Slope  to the                                                               
Interior as  a means to replace  fuel oil needs to  be addressed.                                                               
The  stated goal  of  securing project  financing  by the  Alaska                                                               
Industrial  Development and  Export Authority  (AIDEA) will  help                                                               
provide  public  interest  in promoting  the  prosperity  of  new                                                               
housing   development,   new   employment,   and   new   business                                                               
development.  She the related  support for resolution number 4566                                                               
from the  Fairbanks City  Council.  She  closed her  testimony by                                                               
thanking members for their service to the state.                                                                                
                                                                                                                                
4:48:13 PM                                                                                                                    
                                                                                                                                
JACK  WILBUR, President,  Design Alaska,  informed the  committee                                                               
that  Design Alaska  is a  small local  business that  employs 60                                                               
Fairbanks residents.  He spoke in  support of HB 74 and explained                                                               
how  getting natural  gas to  Fairbanks will  help his  business.                                                               
Obviously, one reason  would be to decrease  utility, heating and                                                               
electricity  costs; however,  more importantly,  this bill  would                                                               
also  decrease the  cost for  the 60  families he  supports.   He                                                               
stated that with  the high cost of energy, his  employees look to                                                               
him to increase their  wages in order for them to  be able to pay                                                               
their bills.  He said he  essentially not only pays the high cost                                                               
of energy  for his own  business, but he  also pays for  the high                                                               
cost of energy  for his employees' homes.   He encouraged support                                                               
for  HB 74  because he  is concerned  about Fairbanks's  economy,                                                               
particularly  as the  president of  an architectural  engineering                                                               
company  that  depends heavily  on  the  economic health  of  the                                                               
community.   Unless the  community can grow  and be  healthy, Mr.                                                               
Wilbur said his business cannot  continue to grow and be healthy,                                                               
either.  He concluded by saying it  is very important to him as a                                                               
businessman in  Fairbanks that HB  74 be supported and  bring gas                                                               
to Fairbanks in a timely fashion.                                                                                               
                                                                                                                                
4:50:12 PM                                                                                                                    
                                                                                                                                
CAM CARLSON  related that her  electric heating bills  run $1,100                                                               
to  $1,200 in  the winter.   If  GVEA can  benefit from  this and                                                               
decrease  her heating  bills, she  would be  elated.   She echoed                                                               
earlier comments  regarding conversations  about people  who have                                                               
to leave due  to the percentage of their income  that is used for                                                               
energy  costs.   Although the  aforementioned might  be hard  for                                                               
Anchorage residents to  believe since their costs are  so low, it                                                               
is  tough in  Fairbanks and  she appreciated  the opportunity  to                                                               
express this.                                                                                                                   
                                                                                                                                
4:51:49 PM                                                                                                                    
                                                                                                                                
BOB  SHEFCHIK,  Chair,  Fairbanks   Chamber  of  Commerce  Energy                                                               
Committee; Chair,  Interior Gas  Utility Board, related  he would                                                               
not  make repetitive  comments since  many of  his comments  have                                                               
already been made.  He informed  the committee that the groups he                                                               
represents  have consistently  supported HB  74 and  SB 23;  this                                                               
support  has  been conveyed  during  the  legislative session  in                                                               
writing and in public testimony.   He said that the leadership of                                                               
Governor  Parnell  on  energy  issues   Alaskans  face  is  truly                                                               
appreciated.   This bill, HB  74, would provide  authorization to                                                               
AIDEA  to  participate  in  the development  of  a  gas  trucking                                                               
project  designed to  lower the  space heating  and other  energy                                                               
costs in  Fairbanks.  The governor's  goal of low cost  gas to as                                                               
many  residents as  quickly  as possible  in  Interior Alaska  is                                                               
broadly  supported.   The combined  effects of  the high  cost of                                                               
energy  on  homeowners,  small business,  and  industry  and  the                                                               
impending  consequences of  non-attainment  to community  growth,                                                               
state  highway   funding,  and  community  health   threaten  the                                                               
economic viability of  Fairbanks.  All of these  impacts are real                                                               
and  immediate.   He stated  that the  provision of  low-cost LNG                                                               
trucking  via the  North Slope  has combined  the lowest  capital                                                               
cost and the quickest delivery  schedule of any energy project on                                                               
the  horizon.   He  highlighted  that  although gas  trucking  is                                                               
considered a  near-term solution, it  will also provide  a bridge                                                               
to a  long-term pipeline, building  the demand and  capacity that                                                               
helps the economic  future of any future pipeline  project.  This                                                               
bill   would  provide   a   means  for   the   state  to   create                                                               
infrastructure critical to the Interior  and would bring benefits                                                               
to FNSB  residents, the highway  system across the  Interior, and                                                               
over  time to  the  more  difficult areas  to  reach.   He  urged                                                               
committee members to support HB 74.                                                                                             
                                                                                                                                
4:54:08 PM                                                                                                                    
                                                                                                                                
JOMO   STEWART,  Energy   Project  Manager,   Fairbanks  Economic                                                               
Development Corporation (FEDC),  stated that he also  sits on the                                                               
Fairbanks Chamber of  Commerce's energy committee.   He said that                                                               
sometimes  there  is a  tendency  to  let  the perfect  stand  in                                                               
opposition to  good projects by  delaying them while  waiting for                                                               
projects  farther  down  the  horizon.     Although  this  is  no                                                               
different, he opined  that it is an opportunity for  the state to                                                               
begin to take good steps on the  way to a better future, which he                                                               
hoped the  legislature would  agree with  and help  the community                                                               
move forward.   He acknowledged  that the LNG trucking  option is                                                               
not  the  perfect solution,  nor  is  it  the most  efficient  or                                                               
cheapest way  to move gas;  however it is  a good option.   Every                                                               
analysis  that has  been  done has  shown that  it  will make  an                                                               
appreciable  savings in  the  cost of  energy  to the  community.                                                               
Furthermore, the LNG trucking project  would open the gateway off                                                               
the North  Slope, which  are good things.   He  also acknowledged                                                               
that the funding  package isn't perfect, but it is  good since it                                                               
will create  a more  sustainable funding  mechanism to  allow the                                                               
state to participate in projects and  advance them.  He said that                                                               
[the community]  may not  be able to  participate in  large scale                                                               
grants in  the future, but the  state can make an  investment and                                                               
the target investment will allow  those projects to move forward.                                                               
In  essence,  instead  of  allowing   the  perfect  to  stand  in                                                               
opposition to  the good, he reiterated  this is a very  good step                                                               
on  the  way  to  a brighter  future  using  sustainable  funding                                                               
mechanisms.   Moreover, the LNG  trucking option offers  a short-                                                               
term  solution that  brings real  benefits to  the community  and                                                               
sets up  Fairbanks and  other communities  statewide to  tap into                                                               
larger, better,  cheaper solutions.   He asked members  for their                                                               
support.                                                                                                                        
                                                                                                                                
4:56:53 PM                                                                                                                    
                                                                                                                                
WES MADDEN, Owner,  Madden Estate, said as a  real estate broker,                                                               
he  has been  able to  help people  buy, sell,  and manage  their                                                               
property.    He offered  his  belief  that  no single  threat  is                                                               
greater than  the high  cost of  energy in  Interior Alaska.   He                                                               
said that families are struggling  to heat their homes, make ends                                                               
meet, and  with their confidence  in the state's ability  to what                                                               
is right  for Alaska's sustainable  future.  He  recalled earlier                                                               
testimony  by  the  homebuilders  on   behalf  of  HB  74.    The                                                               
homebuilding profession  has been  all but decimated  in Interior                                                               
Alaska due  to the lower demand  for housing and lack  of profits                                                               
due to slowly  declining property values and  the increasing cost                                                               
to  build.    Additionally,  new  construction  home  sales  have                                                               
dropped  71 percent,  from  157 in  2007  to 45  last  year.   He                                                               
reiterated  that the  high cost  of energy  affects everyone  and                                                               
everything.  For instance, rental  costs are at an all-time high,                                                               
which is solely  due to cost of energy that  is passed through to                                                               
the tenants who struggle to make rent payments.                                                                                 
                                                                                                                                
MR.  MADDEN  said  that  his  property  management  firm  manages                                                               
several  multi-family apartments  and homeowner  associations and                                                               
he does not  know how his company can get  through another winter                                                               
let alone this  one due to fuel cost increases.   In Fairbanks an                                                               
abundance  of commercial  property  sits  vacant while  investors                                                               
spend money  in other  states.   Last year,  he said  his company                                                               
lost a sale on an  apartment complex to an out-of-state investor,                                                               
mostly due to Alaska Housing  Finance Corporation's assessment of                                                               
the  Fairbanks  market.   Calls  from  property owners  in  rural                                                               
communities in Interior Alaska come  through his office; however,                                                               
their property is unsellable since there  are not any buyers.  He                                                               
related that  the communities are  losing long  time generational                                                               
Alaskan families,  some with names  that appear on  street signs;                                                               
these  families  aren't  just  leaving  the  Interior,  they  are                                                               
leaving the  state.   He said that  HB 74 is  the good  news that                                                               
will  ignite  the  spirit  of   the  Interior  Alaskan  since  it                                                               
represents hope  and will provide  the much needed  confidence in                                                               
[the state's] leadership and decision  making.  "However, we need                                                               
action and we  need action this session," he said.   He concluded                                                               
by echoing  that there's no such  thing as a perfect  plan, and a                                                               
good plan  executed now  is better than  a perfect  plan executed                                                               
next week.   He expressed hope that his business  will grow as he                                                               
does  not want  to plan  his  own exit  strategy and  be able  to                                                               
confidently suggest to high school  students that Interior Alaska                                                               
is a  great place  to start  a career.   He  also would  like his                                                               
community  to develop,  keep Alaskans  in Alaska,  and raise  his                                                               
family in this great state.  He urged members to support HB 74.                                                                 
                                                                                                                                
5:00:04 PM                                                                                                                    
                                                                                                                                
LISA HERBERT, Executive Director,  Fairbanks Chamber of Commerce,                                                               
stated  that   the  Fairbanks  Chamber  of   Commerce's  critical                                                               
priority  this year  is reducing  the high  cost of  energy since                                                               
space  heating and  electricity is  driving away  business.   She                                                               
related  comments from  one  of her  members,  Auto Trim  Alaska.                                                               
Steve Vincent,  General Manager,  Auto Trim  Design, has  a 2,000                                                               
square foot  house and  his friend  in Kenai  has a  1,900 square                                                               
foot  home.   The natural  gas  cost to  heat the  Kenai home  is                                                               
$1,080, but the  cost to heat Mr. Vincent's home  in Fairbanks is                                                               
$5,040 and  is supplemented by oil  heat with a wood  stove.  Mr.                                                               
Vincent's 13,000 square  foot store has heating  costs of $70,000                                                               
annually, just three years ago  after investing $40,000 in better                                                               
roofing and insulation.  To  offset his utility costs, his entire                                                               
staff of 34 employees had to take  a 10 percent pay cut and loose                                                               
some benefits in order for them  to keep their jobs.  He foresees                                                               
probable  layoffs  without  changes  on  the  horizon.    As  the                                                               
committee has  heard, and  has continued  to hear,  the Fairbanks                                                               
community  has mobilized  and stands  before  the committee  this                                                               
afternoon offering its wholehearted support  for HB 74.  She said                                                               
the Fairbanks Chamber of Commerce  continues to advocate that the                                                               
target goal  of $15 per  thousand thousand British  thermal units                                                               
(MMBtu)  for  delivered  natural  gas  will  effectively  act  at                                                               
conversion by  cutting space heating  bills in half,  bringing in                                                               
$200 million of disposable income  to the Fairbanks and statewide                                                               
economy.   The  Fairbanks Chamber  of Commerce  looks forward  to                                                               
continuing to be  the legislature's partner in  what the governor                                                               
has referred to  as a persistent unrelenting effort  to bring low                                                               
cost energy to Interior Alaska.                                                                                                 
                                                                                                                                
5:02:38 PM                                                                                                                    
                                                                                                                                
LISA  PEGER  stated that  such  a  project would  give  residents                                                               
relief year after  year.  She urged members to  move forward with                                                               
HB 74.   She suggested savings will result in  the social welfare                                                               
arena  from this  proposal.   Drawing  from her  experience as  a                                                               
landlord, she informed  the committee that she  has fielded phone                                                               
calls from families  living on top one another  since they cannot                                                               
afford two or  three bedrooms.  She then related  her support for                                                               
the  bullet   line  since  having   an  open  season   will  give                                                               
proprietary   information  and   encourage  movement   since  the                                                               
producers  will know  the state  can  build its  own gasline  for                                                               
several hundred  million dollars.   She suggested  these projects                                                               
complement  one another  since having  the trucking  will give  a                                                               
larger bid  for gas  on the  open market of  a gasline  since the                                                               
area will  have a larger  consumer base.   She could not  see any                                                               
downside to the plan except [the  need] to fix the Dalton Highway                                                               
from time  to time.  The  LNG plant will  be on skids and  can be                                                               
sold,  moved, or  repurposed.   Ms. Peger  expressed interest  in                                                               
having some good movement on some good projects.                                                                                
                                                                                                                                
5:05:53 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 74.                                                                                      
                                                                                                                                
[HB 74 was held over.]