Legislature(2009 - 2010)BARNES 124
04/12/2010 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB301 | |
| SB144 | |
| SB305 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 144 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 301 | TELECONFERENCED | |
| += | SB 305 | TELECONFERENCED | |
SB 301-POWER PROJECT FUND
1:03:46 PM
CO-CHAIR JOHNSON announced that the first order of business is
SENATE BILL NO. 301, "An Act relating to the power project fund;
authorizing the Alaska Energy Authority to charge and collect
fees relating to the power project fund; authorizing the Alaska
Energy Authority to sell and authorizing the Alaska Industrial
Development and Export Authority to purchase loans of the power
project fund; providing legislative approval for the sale and
purchase of loans of the power project fund under the memorandum
of understanding dated February 17, 2010; and providing for an
effective date."
CO-CHAIR JOHNSON reviewed the day's schedule, including the
intent to go into executive session at 4:00 p.m. during which
Commissioner Galvin will discuss decoupling per SB 305.
1:04:58 PM
SARAH FISHER-GOAD, Deputy Director - Operations, Alaska
Industrial Development and Export Authority (AIDEA) and Alaska
Energy Authority (AEA), Department of Commerce, Community, &
Economic Development (DCCED), on behalf of the governor,
informed the committee that SB 301 relates to the Power Project
Fund (PPF), which is an AEA-owned fund. This legislation allows
AEA to sell the loan portfolio to AIDEA, which will provide cash
to the PPF for upcoming projects. Ms. Fisher-Goad related that
there has been much more demand of this fund, particularly for
renewable energy projects. She clarified that SB 301 would
allow AEA to sell the PPF and for AIDEA to purchase it. The
aforementioned would recapitalize the PPF with approximately
$20.6 million. This legislation also authorizes AEA to
establish fees for the program as there are currently no
application or origination fees. The Bulk Fuel Revolving Loan
Fund does charge application and origination fees and the intent
is to do something similar for PPF loans
1:06:22 PM
CO-CHAIR JOHNSON inquired as to why this is necessary.
MS. FISHER-GOAD explained that the primary purpose is to provide
new cash for new projects. The PPF is approximately $35 million
worth of assets, of which it's not a lot of cash. Therefore, SB
301 would provide a way to raise cash for new projects.
1:06:58 PM
CO-CHAIR NEUMAN, referring to Section 2 of SB 301, asked if Ms.
Fisher-Goad anticipates any changes in the regulations as they
are repealed and reenacted.
MS. FISHER-GOAD clarified that Section 2 repeals and reenacts
[AS 42.45.010(d)] in order to allow AIDEA to charge fees. In
further response to Co-Chair Neuman, Ms. Fisher-Goad reiterated
that SB 301 would allow AIDEA to charge an application fee and
an origination fee. She noted that in order to adopt a fee
schedule, a public process will have to be followed. In further
response to Co-Chair Neuman, Ms. Fisher-Goad explained that the
Renewable Energy Fund is a new program, a grant recommendation
program. The program is set to go through five rounds of
project evaluation and funding. Round 1 was the $100 million
that AEA received in fiscal year (FY) 2009 and that was the only
round that went through a Legislative Budget and Audit Committee
approval process. Last year, the legislature appropriated $25
million and directed AEA to use its list of projects to fund $25
million worth of projects. Before the legislature this year is
a request for the Round 3 projects to be funded. In the capital
budget that's still being considered in the Senate, the funding
level requested is $50 million for [the Renewable Energy Fund].
One of the evaluation criteria for the Renewable Energy Fund is
matching funds. The PPF, which has been in existence for some
time, has been a funding source that's being used for the match
requirement for many local entities that apply for the Renewable
Energy Fund. The PPF, she clarified, exists independently on
its own and has a separate evaluation process. Ms. Fisher-Goad
further clarified that no new program is being created, funds
are just being provided to continue to provide loans for power
projects.
1:11:06 PM
CO-CHAIR NEUMAN asked from where the initial funds for the PPF
originated.
MS. FISHER-GOAD said that although the PPF has existed for a
long time, she didn't know when it was established. However,
the PPF had to have legislative action to provide funds to the
program. She estimated that the aforementioned may have
occurred in the 1980s. Over the last 10 years, AEA hasn't had a
new injection of cash into the PPF, save some specific projects
through a match requirement that was through the Energy Cost
Reduction program, which was a Denali Commission funded program.
1:12:27 PM
REPRESENTATIVE SEATON related his understanding that this is a
discussion of transferring actual securities rather than a
securitized package.
MS. FISHER-GOAD explained that AIDEA would purchase [the PPF] as
an investment, and therefore AIDEA receives the loans and the
associated cash flow. However, AEA receives the cash that is
the value of those loans. She further explained that AEA would
receive the cash to be injected into the fund, while AIDEA would
receive the investment and the cash flow of those loan payments
from now until they mature. She recalled that one of the loans
matures in 20 years.
REPRESENTATIVE SEATON said that he wanted to be clear that
[AIDEA] is actually purchasing the entire loan, but isn't
creating a securitized loan package.
MS. FISHER-GOAD guaranteed that [under SB 301] it's strictly a
"cash for future cash flow" transaction.
1:14:19 PM
CO-CHAIR JOHNSON pointed out that there are some zero interest
loans, and inquired as to the value they have.
MS. FISHER-GOAD clarified that a discount rate for the cash flow
is applied for AIDEA's purchase price. For example, the cash
flow is the 30 years of principal and interest payments, which
is discounted back at a 6.02 percent interest rate discount.
Therefore, AIDEA would pay approximately $20.6 million for
future cash flow of approximately $24-$27 million.
1:15:15 PM
CO-CHAIR JOHNSON, after ascertaining no one wished to testify,
closed public testimony.
1:15:55 PM
CO-CHAIR JOHNSON requested an explanation of the larger picture
of what is being done.
MS. FISHER-GOAD informed the committee that with the passage of
SB 301, HB 412 will receive capitalization that was originally
proposed in the governor's budget for the PPF. Therefore, it's
a situation in which the $7 million requested in the governor's
budget would be reduced by the $3.5 million to pay for the
fiscal note on [HB 412], the micro loan program.
1:17:17 PM
CO-CHAIR JOHNSON noted that SB 301, with a savings of $3
million, will next go to the House Finance Committee.
1:17:33 PM
CO-CHAIR NEUMAN moved to report SB 301 out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, it was so ordered.
1:18:09 PM
The committee took a brief at-ease.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 144 Bill Packet.pdf |
HRES 4/12/2010 1:00:00 PM |
SB 144 |
| SB 301 Bill Packet.pdf |
HRES 4/12/2010 1:00:00 PM |
SB 301 |