Legislature(2009 - 2010)BUTROVICH 205
03/13/2009 11:00 AM Senate ENERGY
| Audio | Topic |
|---|---|
| Start | |
| SB132 | |
| SB54 | |
| SB71 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 54 | TELECONFERENCED | |
| *+ | SB 131 | TELECONFERENCED | |
| *+ | SB 132 | TELECONFERENCED | |
| *+ | SB 71 | TELECONFERENCED | |
SB 132-SOUTHEAST ENERGY FUND
11:06:30 AM
CHAIR MCGUIRE announced the consideration of SB 132.
SENATOR STEDMAN, sponsor of SB 132, said this issue is partially
left over from back when the state created the Railbelt Energy
Fund. During that era there was a lot of need to expand energy
systems throughout the state, and the state is in that arena
again a couple of decades later. So, he went back in and "dusted
off some old language" and found what the state has to help
communities move forward with alternative energies, particularly
Southeast hydro. A lot of focus has been on getting gas to
Alaskans, but Southeast is a little detached from the main
corridor of the gas line; so this would be our bullet line.
CHAIR MCGUIRE agreed that the legislature has spent a lot of
time talking about a gasline for rural and western Alaska, but
not as much on Southeast.
DARWIN PETERSON, staff to Senator Stedman, said SB 132 provides
a funding mechanism for construction of power generation
projects in Southeast and for completion of the regional
electric grid. The state's goal should be to provide low-cost,
renewable energy to all Alaskans, and natural gas doesn't
satisfy the energy needs of every region of the state.
The communities in Southeast have a long history of working
towards the long-term goal of energy independence by
collaborating on power generation and transmission. However,
most communities in the region still are not on hydro power and
the majority still burn oil to generate electricity and heat. In
addition, many of the hydroelectric assets in Southeast are at
or near capacity which severely limits regional economic growth
opportunities, and while hydroelectric projects provide low-
cost, renewable power over the long-term, they are extremely
capital intensive - as high as $1.5 billion for completing the
electric grid. The state has a critical role to play in
capitalizing these projects on the front end, and SB 132
broadens the authority of the existing Southeast Energy Fund to
provide that mechanism. The list of critical hydroelectric
projects that may be funded through the Southeast Energy Fund
include:
· Ketchikan-Whitman Lake Hydroelectric Project
· Petersburg-Ruth Lake Hydroelectric Project
· Sitka-Takatz Lake Hydroelectric Project
· Metlakatla Intertie to Ketchikan Sitka-Blue Lake
Hydroelectric Project
· Prince of Wales Island Intertie Reynolds Creek
Hydroelectric Project
· Falls Creek Hydroelectric Project
· Kake-Petersburg Intertie Metlakatla-Triangle Lake
Hydroelectric Project
11:10:07 AM
SENATOR STEDMAN said a map in their packets indicates current
and future electrical intertie projects. The black line
connecting some blue dots from Ketchikan to Wrangell is totally
constructed or it will be energized this summer. The portion
between Tyee Lake and Swan Lake, which basically hooks Ketchikan
to Petersburg and Wrangell should be energized sometime this
summer. The subcomponent of the Southeast intertie is to balance
the draw on those two dams.
The grey line going to Kake is in the proposed stage and is an
access road and power line. Kake runs totally on diesel fuel and
has a fishing fleet, a cold storage and fish processing within
the community as well as home heating and commercial business
needs. It has a population of about 600 people. That is the next
community they are trying to hook up along with Metlakatla on
the southern end. Metlakatla has excess power and they are in
the process of hooking it up to Ketchikan with a little less
than a mile of submarine cable. These connections are being done
in an incremental methodical order so when the highly capital
intensive hydros gets built, all the juice can be drawn out of
them almost immediately to offset the high capital cost.
11:13:46 AM
SENATOR STEDMAN said Ruth Lake, a little north of Petersburg, is
under consideration for a new hydro sight; Takatz, a 28 mgW dam
is north and east of Baranof Island. Thayer Lake would feed
Angoon, but getting that on line will be a multi-decade process.
Juneau has Lake Dorothy and Snettisham, but has no power source
coming out of the north end. So the intertie will have some
redundancy, particularly for Juneau, either through Greens Creek
out of Takatz or from Haines/Skagway down. So, if the power
lines are lost like what has happened in the last two winters in
Juneau, it can still run on hydro. Multiple meetings are
happening within the region to get all the communities working
together, not much unlike what they are trying to do with the
Railbelt energy utilities; so they are moving forward.
SENATOR STEDMAN reminded them of the misconception that
Southeast is all on hydro and therefore they have very
inexpensive energy sources, but most of the homes in the
communities on hydro, Juneau and Sitka are examples, heat with
diesel fuel and the hydro is at or near capacity. Sitka is
looking at extending the height of Blue Lake Dam and increasing
its generation capacity to hold the community over till Takatz
gets built. Lake Dorothy is another one that is going to be put
in, in phases. The projects are very expensive capital-wise and
cheap to operate. But they want to make sure in solving the
energy needs of Anchorage, Fairbanks, and the Kenai Peninsula
that they also look south and west to the Alaskans that live
along the coast and come up with a statewide energy solution.
SENATOR STEDMAN said Alaska may be the wealthiest state in the
nation, but he wants to make sure the state can take care of its
energy needs and can develop and expand its employment and
educational opportunities. The need to expand hydro capacity in
Southeast is directly tied to the area's employment and economic
stagnation. "If we don't find some way to create competitively
priced energy, then we're going to continue to have stagnation
problems in Southeast." This bill puts the Southeast Energy Fund
in front of the legislature to consider as a tool as it moves
forward to solve the energy needs of all Alaskans.
SENATORS KOOKESH and HOFFMAN joined the committee a while ago.
11:18:08 AM
SENATOR KOOKESH said the sponsor statement mentions $1.5 billion
for the fund, and he wanted people to understand that this just
establishes the fund, but the money would go into it over time.
SENATOR STEDMAN said that is correct. A FERC process is under
way at Ruth Lake, and Takatz probably wouldn't be ready for
construction in six or seven years at the earliest. There is
also interest in coming up with a more formal regional plan so
everyone including the state agrees on the order in which
projects will be constructed. So they can take steps precisely -
because the projects will most likely it will be done with heavy
debt loads and some equity help from the state and communities.
11:20:05 AM
CHAIR MCGUIRE asked about what kind of jobs will come out of
these projects.
SENATOR STEDMAN said Mahoney Lake in Ketchikan is 9.6 mgW,
Takatz is possibly 28 mgW or larger and may cost $250 million.
If they could get to the point of having an orderly and fairly
quick build out over a period of 15 years, tunnel crews could be
kept busy, but that is probably optimistic. Most of the tunnel
crews and special crews are brought in. A lot of operating
engineers, laborers, and truck drivers will be needed - roads
will have to be built. It would help employ a lot of
construction forces and give communities' members an opportunity
to have some high-paying Davis Bacon jobs through that process.
The whole town of Sitka boomed for a couple of years when it
built Green Lake in the mid-80s. Juneau still feels the economic
stimulus from the construction of Lake Dorothy.
11:21:57 AM
CHAIR MCGUIRE said there may be some opportunities for hydro
specialties in education at the University of Alaska Southeast,
which is a unique place for hydro - and folks may want to be
experts.
MR. PETERSON said the Southeast Energy Fund already exists in
statute, but is just being amended. The original Southeast
Energy Fund was project-specific to deal with Swan Lake and Tyee
Lake hydro projects. SB 132 just amends that existing fund to
look at a broader scope of energy projects, not just hydro.
CHAIR MCGUIRE asked Senator Stedman if any other energy projects
are out there.
SENATOR STEDMAN said there is interest in tidal. Not shown on
the map is a connection up the Bradfield Valley into the
Canadian grid, which would allow them to import or sell power.
That is part of the Southeast long range plan. Some geothermal
possibilities are located near Ketchikan, Baranof Island and the
north end of Hoonah Sound.
11:24:29 AM
ROBERT VENABLES, Energy Coordinator, Southeast Conference (SEC),
supported SB 132. He said the SEC is a private membership
organization that is one of the state's many ARDORs (regional
development organizations) it is also the federally recognized
economic development district representative. The Railbelt
Energy Fund, mentioned earlier, was established in 1986 and
between 1986 and 2005 a total of $486 million was appropriated
to it; $437 million of that was appropriated for various energy
projects in that region including the Susitna Bradley Lake, the
Alaska northern and southern interties as well as the Healy Co-
generation project. In 1993 lawmakers amended that fund's
enabling legislation to include a broader authorization for
programs and projects and other expenditures to assist in
meeting the Railbelt's energy needs much like SB 132 will amend
the Southeast Energy Fund.
In 1997, the Southeast Conference formed an energy committee,
originally called the Intertie Committee, committed to working
on the development of the regional electrical grid system in
Southeast. This is not a new idea. Plans go back as far as the
1920s. The Alaska Energy Authority (AEA) put together what they
said would be a 20-year plan to put together the Southeast
electrical intertie system in the 1980s. Had it been funded,
communities would already be plugged into it. But unfortunately,
when the price of oil goes up, everyone panics, then when it
goes down again, they say we can't afford it. So when prices
spike again we are unprepared - although he has heard that this
time it is different.
11:27:32 AM
MR. VENABLES said progress is being made and the best example is
the 57-mile Swan/Tyee intertie that connects those communities
and allows the next logical legs to Metlakatla and Kake to be
interconnected to that grid system. In 1997 when the Southeast
Conference formed the committee, it commissioned Hatch Acres to
put together a study that was called "The Southeast Alaska
Electrical Intertie System Plan," and that has been their
blueprint for all of their efforts to date. As Senator Stedman
mentioned, that plan needs to be updated with a new integrated
resource plan. It is the report that the U.S. Congress in
February 2001 authorized and cited in public law (Pub.L.) 106-
511 and authorized $384 million to develop this intertie along
with a 20 percent match from private and state sources. So, if
the state does put money aside, the authorization and plan are
in place. Since the 1997 Acres report and the 2001 Congressional
authorization, the SEC has continued to work with its member
communities and funding partners such as USDA Rural Development,
the Denali Commission, and the State Legislature to further
develop the regional electrical intertie system.
While progress is being made, there are many energy needs in the
region that are costly to build without any funding mechanism
available. Today the intertie system needs they are focusing on
are two-fold - the obvious need for the physical links that
connect the transmission lines community to community, and
funding for the HB 152 grants that AEA has forwarded for the
legislature's approval that have allowed many of these projects
to move forward.
11:30:07 AM
MR. VENABLES said that the estimated cost for developing such an
intertie system is now approaching $500 million. Obviously it
can't be done all at once, but a plan is needed and this will
help fund it in an orderly fashion.
The second system need is to develop capacity along the line to
meet the ever-increasing growth of electrical use. The spike in
oil prices last year brought that to the fore. Also, it is
needed to quicken the pace towards conversion from diesel
generated space heat to electrical, which is already consuming
the excess capacity in many of the communities that are having
to supplement their hydro with diesel or they can see the date
that diesel will have to be run on a regular basis.
He said that many projects in Southeast can meet these growing
needs and the map is just a snapshot. Southeast Alaska has been
called the Saudi Arabia of hydro. The intertie allows resources
to be developed that aren't just within a community. Some
communities will be forced to do biomass or geothermal and that
can be fed into the grid system and can become economic engines
and opportunities for all the communities. Often technology is
not quite ready like with tidal and wind, but as they become
more cost effective, it can all be integrated.
11:32:26 AM
MR. VENABLES said the Southeast communities have worked together
to forge a vision to develop its vast renewable resources into a
regional electrical intertie system, but a funding mechanism to
construct such a system still alludes them. SB 132 can be the
needed mechanism.
CHAIR MCGUIRE asked if the federal stimulus package has any
monies that might be coming to municipalities to assist in
development in this area.
MR. VENABLES replied that even if they were shovel ready, which
they are not, the stimulus package is designed to ignore hydro
development. He has heard of some discussions within the
legislature on writing a resolution urging a new definition for
renewable resources because of that. The other point is that the
shovel-ready status, because they have not been able to commit
resources to design and get projects ready, they would not be
ready to do very many projects within the 90-day time frame many
are talking about.
11:34:12 AM
CHAIR MCGUIRE said the potential for exporting energy to
Canadian neighbors and attracting manufacturing and jobs in
terms of low cost energy is another potential opportunity. SB 31
that Senator Stedman has been helping her with has a production
tax credit for renewable energy, and hydro has been specifically
included in that definition. She is hoping that will give some
moral authority to his conversation. Oregon has allowed hydro to
remain a part of its definition of renewable energy, but
Washington State has chosen not to.
11:35:20 AM
GORDON WROBEL, Elfin Cove Nonprofit Corporation, said Elfin Cove
is 85 miles due west of Juneau on Chichagof Island. It sits on
top of one of the most prolific fisheries in all of Alaska. He
supported SB 132 because it provides support for small
communities like his that are interested in eliminating their
dependence on fossil fuel generation. Currently they are paying
about 50 cents per kilowatt; at that rate virtually all economic
development that is energy dependent is not possible for them to
be competitive.
11:36:40 AM
ANDREW THOMAS, Executive Director, Sitka Conservation Society,
supported SB 132 saying Sitka is very excited about increasing
the potential for developing renewable energy resources there. A
lot of different entities in the community have been looking at
how to develop their renewable energy in Sitka and how to take
action on climate change. In addition to all the economic
benefits this bill will create in terms of community resiliency
and sustainability, and long-term economic development, it will
help them get away from using oil. Sitka has two hydro electric
facilities that were installed in 1950 and in 1980. The one in
the 1980s was built in response to the 1970 oil crisis.
Currently their total energy budget is 80 percent oil and 20
hydroelectric. This bill will provide an opportunity for Sitka
to really develop its renewable energy resources and it is a
priority for the community to take action on climate change.
This bill will help them continue to do that.
11:38:24 AM
SENATOR STEDMAN moved to report SB 132 from committee with
individual recommendations and attached zero fiscal note(s).
There being no objection, the motion carried.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 54 - CS (Version S) Energy.pdf |
SENE 3/13/2009 11:00:00 AM |
SB 54 |
| SB 132 - Bill Packet.pdf |
SENE 3/13/2009 11:00:00 AM |
SB 132 |
| SB 71 - Bill Packet.pdf |
SENE 3/13/2009 11:00:00 AM |
SB 71 |