05/10/2019 01:00 PM House RESOURCES

            SB 91-NUYAKUK RIVER: HYDROELECTRIC SITE                                                                         
                                                                                                                                
1:03:27 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR  announced that the  first order of  business would                                                               
be  CS FOR  SENATE  BILL NO.  91(FIN), "An  Act  relating to  the                                                               
development and operation of a  hydroelectric site at the Nuyakuk                                                               
River Falls; providing  for the amendment of  the management plan                                                               
for the Wood-Tikchik  State Park; and providing  for an effective                                                               
date."                                                                                                                          
                                                                                                                                
CO-CHAIR TARR opened invited testimony on CSSB 91(FIN).                                                                         
                                                                                                                                
1:04:03 PM                                                                                                                    
                                                                                                                                
ROBERT  HIMSCHOOT,  CEO/General  Manager,  Nushagak  Cooperative,                                                               
provided    a    PowerPoint    presentation    titled    "Nuyakuk                                                               
Hydroelectric, Hydropower for Bristol Bay."   Turning to slide 2,                                                               
he said  the [proposed] location  offers some  natural advantages                                                               
for hydroelectric production.  He  noted that the glacial moraine                                                               
that  creates the  lake systems  of the  Tikchik drains  all five                                                               
lakes across  that glacial moraine.   He explained that  the lake                                                               
is a natural  sediment sink, that there is about  40 feet of head                                                               
across 2500 feet  of river for a diversion project,  and that the                                                               
2500 feet  of river  is in an  oxbow configuration,  which allows                                                               
for running a 1500-foot penstock.                                                                                               
                                                                                                                                
MR. HIMSCHOOT  moved to slide  3 and  stated that since  1953 the                                                               
U.S. Geological Survey (USGS) has  had a flow-monitoring gauge on                                                               
the river just  above the proposed hydro site.   He reported that                                                               
evaluation  of  these  60  years  of flow  data  shows  that  4.5                                                               
megawatts  of power  could still  be  made during  the low  three                                                               
months of the low three years,  using less than 25 percent of the                                                               
flow;  and  during  the  summer   considerably  greater  than  10                                                               
megawatts  could be  made.   He further  reported that  the power                                                               
curve from  this projected production  matches the  load dynamics                                                               
in Bristol Bay very well.   Loads considerably peak in the summer                                                               
with  salmon production,  he explained,  so being  able to  use a                                                               
consistent  amount of  the  flow using  the  same dynamics  would                                                               
produce  power when  it is  needed the  most as  well as  produce                                                               
enough power  in the winter.   He  said the projection  from this                                                               
curve  is that  the diesels  can be  turned off  24/7/365 in  the                                                               
communities  of   Dillingham,  Aleknagik,   Koliganek,  Stuyahok,                                                               
Ekwok, and  Levelock.  Other  than during maintenance  periods or                                                               
outages, he  added, diesel power  production would  be completely                                                               
replaced  by hydropower.   He  further  pointed out  that if  the                                                               
actual  study  confirms the  current  projections,  there is  the                                                               
potential to also include Naknek,  South Naknek, and King Salmon.                                                               
He  specified that  the diesel  displacement  projection for  the                                                               
first subset of communities is 1.5  million gallons a year and if                                                               
the second subset  is able to be included it  will be 2.9 million                                                               
gallons a year.                                                                                                                 
                                                                                                                                
MR.  HIMSCHOOT displayed  slide  4 and  described  how the  power                                                               
plant facility  would look on the  river.  He said  1,500 feet of                                                               
penstock would divert a portion of  the flow across 2,500 feet of                                                               
river, so  only 2,500  feet would  be affected.   He  offered the                                                               
cooperative's  belief that  this project  can be  done with  very                                                               
minimal impact to  the viewshed and stated the  studies will show                                                               
how much  impact there would be  to the natural environment.   He                                                               
stated that while there is  a considerable amount of data, modern                                                               
geographical  information system  (GIS) data  would help  quite a                                                               
bit  in evaluation.   The  process requires  that a  considerable                                                               
amount  of studying  be  done  to be  able  to  get an  operating                                                               
license,  he  explained, and  that  is  the  point at  which  the                                                               
cooperative is  right now.  He  said the cooperative has  gone as                                                               
far as  it can without  getting in  there and doing  the physical                                                               
studies  that  will  actually  define   whether  the  project  is                                                               
feasible.                                                                                                                       
                                                                                                                                
1:09:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK observed the  statement on slide 4, "Affected                                                               
water flow  3000 feet from the  top of the falls  to the bottom".                                                               
He inquired whether  this is referring to a  vertical or diagonal                                                               
drop of 3,000 feet.                                                                                                             
                                                                                                                                
MR. HIMSCHOOT replied that until  there is the actual design [the                                                               
estimate  is]  3,000 feet  or  2,500  feet of  longitudinal,  not                                                               
vertical.  That  is the actual river flow, he  clarified, and the                                                               
penstock, the  pipeline that is put  in there, is expected  to be                                                               
closer to 1,500 feet.                                                                                                           
                                                                                                                                
1:10:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HOPKINS asked how  many miles of transmission line                                                               
would need to be built to get power to the different villages.                                                                  
                                                                                                                                
MR. HIMSCHOOT  responded it would  be 130-150  [miles], depending                                                               
on  whether Naknek,  South Naknek,  and King  Salmon are  able to                                                               
benefit from the project as well.                                                                                               
                                                                                                                                
1:10:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK  asked how  many people  would be  covered by                                                               
the project.                                                                                                                    
                                                                                                                                
MR.  HIMSCHOOT  answered it  would  be  between 3,500  and  4,500                                                               
people, depending on the scope of the project.                                                                                  
                                                                                                                                
1:11:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN  noted the  bill just gives  the Department                                                               
of Natural Resources (DNR) and  the Alaska Department of Fish and                                                               
Game  (ADF&G) the  authority  to amend  the  management plan  for                                                               
Wood-Tikchik State  Park so that  the appropriate  permitting can                                                               
go forward.  She asked how much  the project is going to cost and                                                               
how long it will take to construct.                                                                                             
                                                                                                                                
MR.  HIMSCHOOT   replied  that  the  Federal   Energy  Regulatory                                                               
Commission (FERC)  is the permitting authority  for anything over                                                               
five megawatts  on an  operating license.   He stated  this would                                                               
just allow  the cooperative to get  in there and follow  the FERC                                                               
procedures  and do  the studies  that will  be necessary  to that                                                               
process.   The  estimate right  now, he  continued, is  $120-$150                                                               
million to construct the project.   He said much of that would be                                                               
defined by  the studies and  if the studies  show it is  a viable                                                               
project,  then  the  design  that  follows  the  studies  if  the                                                               
cooperative can acquire an operating permit.                                                                                    
                                                                                                                                
REPRESENTATIVE  HANNAN  inquired how  long  the  FERC process  is                                                               
anticipated to take to get to a project that can be permitted.                                                                  
                                                                                                                                
MR. HIMSCHOOT responded that the  studies themselves are expected                                                               
to take  three years.  He  said the FERC process  allows a three-                                                               
year window,  which the cooperative  is one year into  right now.                                                               
As  long  as progress  is  being  made,  he continued,  the  FERC                                                               
process also  allows a two-year  extension.  He related  that the                                                               
cooperative  expects  it  will   need  that  extension  and  that                                                               
sometime between  now and four years  from now the study  will be                                                               
completed.  Once  the studies are completed, he  stated, there is                                                               
roughly one year for engineering  and design and then hopefully a                                                               
two-year build  process to  bring this into  production.   So, he                                                               
added, if everything goes according to plan it is about a six-                                                                  
year process from here.                                                                                                         
                                                                                                                                
1:13:38 PM                                                                                                                    
                                                                                                                                
MR. HIMSCHOOT related that the  Nushagak Cooperative started this                                                               
process  in late  2017 and  since then  the cooperative  has done                                                               
more  than 70  meetings  and presentations  to  build the  social                                                               
license and  support for the  project that the  cooperative knows                                                               
it will need in the region.   Even though Nushagak Cooperative is                                                               
the entity  that will  be doing  the studies  here, he  said, the                                                               
cooperative understands fully that this  is a regional impact and                                                               
regional benefit  and is doing  everything it can to  involve the                                                               
region.  He pointed out that  the substitute language seen in the                                                               
bill was  part of that  process.  He  explained that as  the bill                                                               
entered  the  legislative  process, the  cooperative  found  some                                                               
local opposition  to language  in the bill.   But,  he continued,                                                               
the cooperative  was able to  bring everybody together  through a                                                               
series of meetings  and to come up with  some additional language                                                               
that continues  to build that  needed local support and  does not                                                               
materially  affect the  cooperative's ability  to do  the studies                                                               
that are needed.                                                                                                                
                                                                                                                                
MR. HIMSCHOOT  addressed the  [$20,000] fiscal  note accompanying                                                               
the bill.  He stated the  cooperative has agreed to reimburse DNR                                                               
for  its actual  costs, estimated  to be  $20,000, to  update the                                                               
management plan should the bill  pass.  That has several benefits                                                               
for the project as  well as the bill, he added,  which is why the                                                               
cooperative engaged in that process.                                                                                            
                                                                                                                                
1:15:21 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  TARR  pointed out  that  before  the committee  is  the                                                               
Senate-passed version,  CSSB 91(FIN).   She noted that  the House                                                               
companion  bill, HB  99, has  the same  original language  as the                                                               
original Senate  bill.  She  explained the original  bill version                                                               
only added  the Nuyakuk River  Falls into existing statute  as an                                                               
area  where  this activity  could  take  place.   She  said  more                                                               
specific restrictions would be added  into statute by the amended                                                               
version, [CSSB 91 (FIN), page 1, lines 6-12], which read:                                                                       
                                                                                                                                
          (e)   The   development   and   operation   of   a                                                                    
       hydroelectric site at the Nuyakuk River Falls is a                                                                       
     compatible use if the development and operation                                                                            
               (1) does not include a dam that full spans a                                                                     
     river;                                                                                                                     
               (2) maintains at least 70 percent of the                                                                         
      daily upstream water flow of an affected river along                                                                      
     the natural course of the river; and                                                                                       
               (3) after July 1, 2024, is licensed by the                                                                       
     Federal Energy Regulatory Commission.                                                                                      
                                                                                                                                
1:17:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR opened public testimony on CSSB 91(FIN).                                                                          
                                                                                                                                
1:17:13 PM                                                                                                                    
                                                                                                                                
CORY  WARNOCK,   Senior  Licensing  and   Regulatory  Consultant,                                                               
McMillen  Jacobs Associates,  testified  he  is representing  the                                                               
Nushagak  Cooperative regarding  the regulatory  side of  things.                                                               
He related  that in the past  concern has been raised  about this                                                               
bill somehow expediting the  overall licensing process associated                                                               
with  this project.   Responding  to Co-Chair  Tarr, he  provided                                                               
more details related to the FERC  regulatory process.  He said it                                                               
isn't a unique  issue for park plans to be  inconsistent with, or                                                               
incompatible with, the  use of a hydroelectric project.   What is                                                               
unique,  he continued,  is  some  of the  concern  that has  been                                                               
raised.  But, he stated, the  reality is that the FERC regulatory                                                               
process is going to drive this  overall licensing.  All this bill                                                               
will  allow,  he advised,  is  for  the Nushagak  Cooperative  to                                                               
actually conduct  the requisite natural resource  and engineering                                                               
studies required  to determine whether  this project  is actually                                                               
feasible  to construct  and operate.   The  federal process  will                                                               
trump anything else,  he added, and if in four  or five years the                                                               
natural resource  and engineering studies show  that this project                                                               
can't  be built  because of  fish  impacts, or  flow impacts,  or                                                               
other issues,  Nushagak Cooperative  has no intention  of pushing                                                               
it through,  nor could  it.   Things are at  the infancy  of this                                                               
overall  federal process,  he  explained, and  this  is just  the                                                               
light switch to allow that process to continue.                                                                                 
                                                                                                                                
1:19:26 PM                                                                                                                    
                                                                                                                                
CHRISTINE   O'CONNOR,   Executive    Director,   Alaska   Telecom                                                               
Association (ATA),  stated her personal support  for CSSB 91(FIN)                                                               
and noted she is a former  board member and a current customer of                                                               
Nushagak Cooperative.   Speaking  as a long-time  former resident                                                               
of the region, she said the  high cost of energy is a significant                                                               
economic drag  on quality of  life and therefore this  project is                                                               
very exciting.                                                                                                                  
                                                                                                                                
MS. O'CONNOR testified that ATA  supports the bill because it has                                                               
a broadband  component.  She  explained that, should  the studies                                                               
prove it  feasible to go  forward, the infrastructure  that would                                                               
eventually accompany  the project would allow  broadband fiber to                                                               
be deployed, which would also be a benefit to the region.                                                                       
                                                                                                                                
1:20:48 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  TARR  closed public  testimony  on  CSSB 91(FIN)  after                                                               
ascertaining that no one else wished to testify.                                                                                
                                                                                                                                
CO-CHAIR  TARR requested  Mr. Gease  of the  Division of  Parks &                                                               
Outdoor Recreation to confirm that  DNR anticipates entering into                                                               
a funding  agreement with the  project proponent under  which DNR                                                               
would  collect   approximately  $20,000  in  receipts   from  the                                                               
proponent to cover  costs incurred to revise  the park management                                                               
plan  and department  regulations using  the division's  existing                                                               
receipt authority.                                                                                                              
                                                                                                                                
1:21:29 PM                                                                                                                    
                                                                                                                                
RICKY GEASE,  Director, Division  of Parks &  Outdoor Recreation,                                                               
Department of Natural Resources  (DNR), confirmed Co-Chair Tarr's                                                               
statement is  correct and accurate.   He said the  division would                                                               
follow that process moving forward.                                                                                             
                                                                                                                                
1:21:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HANNAN noted  that  the original  version of  the                                                               
bill  listed  two lakes,  but  now  [the  bill as  amended]  only                                                               
considers a  project that  would be on  the Nuyakuk  River Falls.                                                               
She inquired whether  Lake Elva and Grant Lake are  both in Wood-                                                               
Tikchik State Park.                                                                                                             
                                                                                                                                
MR.  GEASE offered  his belief  that hydro  studies were  done on                                                               
those lakes in the past, but  that they proved to be not feasible                                                               
"and  so  this  would  be  including   this  area  to  be  a  not                                                               
incompatible use with park purposes."                                                                                           
                                                                                                                                
CO-CHAIR  TARR stated,  "They  had previously  tried  and so  the                                                               
original bill  was just  going to  add the  new location  so that                                                               
they were  all in that  same section, but  then I guess  from the                                                               
community input, have further revised that."                                                                                    
                                                                                                                                
REPRESENTATIVE  HANNAN explained  she is  looking to  see whether                                                               
those lakes were removed because  of engineering infeasibility or                                                               
because of  community response that  a project was not  wanted in                                                               
those lakes.                                                                                                                    
                                                                                                                                
1:22:55 PM                                                                                                                    
                                                                                                                                
MR.  HIMSCHOOT responded  that Nushagak  Cooperative was  granted                                                               
funding  in 2009  to  study  Lake Elva  and  Grant  Lake and  the                                                               
studies were  completed in 2012.   There was potential  for hydro                                                               
production, he  said, but the  amount that could be  produced for                                                               
the cost of the project didn't  allow the project to move forward                                                               
as  it wasn't  responsible financially  to move  it forward.   At                                                               
that point,  he continued, Nushagak Cooperative  declared the two                                                               
projects  not  feasible,  returned  the remainder  of  the  grant                                                               
funding to  Alaska Energy  Authority (AEA),  and even  though the                                                               
lakes remain in  the statutory language the study  results are in                                                               
the park management plan as far as feasibility is concerned.                                                                    
                                                                                                                                
1:24:16 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LINCOLN  moved to report  CSSB 91(FIN) out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.  There  being no objection, CSSB 91(FIN)  was reported out                                                               
of the House Resources Standing Committee.