Legislature(2007 - 2008)SENATE FINANCE 532

03/27/2008 09:00 AM Senate FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 13 RETIREMENT SYSTEM LIABILITY/BONDS/CORP. TELECONFERENCED
Moved SCS CSHB 13(FIN) Out of Committee
+ HB 315 EXTEND BIG GAME COMMERCIAL SERVICES BOARD TELECONFERENCED
Moved HB 315 Out of Committee
+ HB 233 UNCLAIMED PHONE/ELEC COOP DISTRIBUTIONS TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
= HB 152 ESTABLISH RENEWABLE ENERGY FUND/ACCOUNT
Heard & Held
CS FOR HOUSE BILL NO. 152(FIN)                                                                                                
                                                                                                                                
     "An Act establishing a renewable energy project account                                                                    
     and a renewable energy fund and describing their uses                                                                      
     and purposes."                                                                                                             
                                                                                                                                
SARAH  FISHER-GOAD,   DEPUTY  DIRECTOR,  OPERATIONS,   ALASKA                                                                   
INDUSTRIAL  DEVELOPMENT  AND  EXPORT  AUTHORITY  (AIDEA)  AND                                                                   
ALASKA  ENERGY  AUTHORITY  (AEA),   DEPARTMENT  OF  COMMERCE,                                                                   
COMMUNITY  AND   ECONOMIC  DEVELOPMENT,  reported   that  the                                                                   
Administration  does support the  establishment of  the fund;                                                                   
Governor   Palin   stated   support  for   a   $250   million                                                                   
appropriation.   Ms. Fisher-Goad  said that Steve  Haagenson,                                                                   
Executive Director of the Alaska  Energy Authority, is in the                                                                   
process  of working  on  developing  the state  energy  plan,                                                                   
which would emphasize regional planning for rural areas.                                                                        
                                                                                                                                
Ms.  Fisher-Goad  noted  that   several  recommendations  for                                                                   
changes from the Senate Resources  Committee's version of the                                                                   
bill  have  been  submitted.     She  reported  some  concern                                                                   
regarding  the appropriation  process  as  the projects  move                                                                   
forward.                                                                                                                        
                                                                                                                                
She referred  to a handout  in the members' packets  entitled                                                                   
"Alternative Energy RFP - Eligible  and Complete Applications                                                                   
Preconstruction."   She  reported that  AEA, with the  Denali                                                                   
Commission, solicited alternative  energy projects.  The list                                                                   
of the projects  is unranked.  There was $4  million from the                                                                   
Denali  Commission and  $1 million  in state  funds for  this                                                                   
RFP.  There are more projects  than funding available at this                                                                   
time.                                                                                                                           
                                                                                                                                
9:17:37 AM                                                                                                                    
                                                                                                                                
PETER CRIMP,  PROGRAM MANAGER, ALASKA INDUSTRIAL  DEVELOPMENT                                                                   
AND EXPORT AUTHORITY AND ALASKA  ENERGY AUTHORITY, DEPARTMENT                                                                   
OF  COMMERCE, COMMUNITY  AND ECONOMIC  DEVELOPMENT,  observed                                                                   
that  there  is  a  lot  of  demand  for  alternative  energy                                                                   
projects.                                                                                                                       
                                                                                                                                
Senator Huggins  thought it  was important  for the  state to                                                                   
have  goals regarding  alternative energy.   Ms.  Fisher-Goad                                                                   
commented  on projects that  address the  goals of  the state                                                                   
energy plan.                                                                                                                    
                                                                                                                                
Senator Thomas suggested that  there were already a number of                                                                   
projects in place  in the state, and he thought  there should                                                                   
be coordination between existing and new projects.                                                                              
                                                                                                                                
Ms.  Fisher-Goad thought  it  was an  excellent  point.   AEA                                                                   
provides  consultation  and  technical  assistance  regarding                                                                   
effective projects.                                                                                                             
                                                                                                                                
9:22:18 AM                                                                                                                    
                                                                                                                                
Senator Elton referred to Section  2, the responsibilities of                                                                   
the authority.   He concluded  that the only  involvement the                                                                   
legislature  has, according to  Section 2,  is to set  up the                                                                   
account.  He  opined that the legislature cedes  authority to                                                                   
make a loan or grant.  Ms. Fisher-Goad  reported that Section                                                                   
2 was  an amendment to the  AEA Existing Power  Project Fund.                                                                   
It emphasizes the grant portion  of the program.  The section                                                                   
that  deals  with  the  legislature's  role  is  on  page  4,                                                                   
paragraph  (i).   She  pointed  out  that  it where  it  says                                                                   
"fiscal year may be used for grants"  should say "fiscal year                                                                   
may be appropriated for grants."                                                                                                
                                                                                                                                
Co-Chair Stedman  asked why the  projects are not  ranked and                                                                   
do not  use annual appropriations.   Ms. Fisher-Goad  thought                                                                   
it was  a timing issue.   It depends  on how the  legislature                                                                   
wants the structure.                                                                                                            
                                                                                                                                
9:26:57 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman reported that  fuel costs are adjusted after                                                                   
the barge gets to Bethel and will  soon be $7 per gallon.  He                                                                   
thought the  passage of this  bill assumes that  it addresses                                                                   
the high  cost of  energy.   He thought  the state should  be                                                                   
looking at viable, renewable projects  that provide immediate                                                                   
effects.  He  referred to the list of $1.2  billion potential                                                                   
projects.  He thought there was  a need for a more aggressive                                                                   
approach in order to bring rural  costs down.  He requested a                                                                   
plan from ASA to address that issue.                                                                                            
                                                                                                                                
Ms. Fisher-Goad related  the number one concern,  the cost of                                                                   
energy  in  rural   communities.    She  reported   that  Mr.                                                                   
Haagenson was  in Bethel to meet  about with a  housing group                                                                   
in order to find rural solutions  to energy issues.  Co-Chair                                                                   
Hoffman asked  when a concrete plan  might be in place.   Ms.                                                                   
Fisher-Goad thought  by December 2008.  She termed  it a very                                                                   
aggressive approach.                                                                                                            
                                                                                                                                
9:31:45 AM                                                                                                                    
                                                                                                                                
Senator Dyson  identified with  Co-Chair Hoffman's  comments.                                                                   
He thought  that on  page 2,  line 20,  coal should  be added                                                                   
along with  natural gas.  He noted  that on page 3,  line 27,                                                                   
the list should also include clean coal.                                                                                        
                                                                                                                                
Ms.  Fisher-Goad responded  that it  is a  matter of  renewal                                                                   
energy vs. alternative  energy development and  what the fund                                                                   
should be  used for.  The focus  of the fund is  on renewable                                                                   
energy.   Senator  Dyson maintained  that if  natural gas  is                                                                   
considered, only  after the  renewables are considered,  coal                                                                   
should likewise  be considered.   Ms. Fisher-Goad  reiterated                                                                   
that the  fund is for renewable  sources.  She  questioned if                                                                   
natural  gas should  be in  the bill.   She said  AEA is  not                                                                   
taking a position on that.                                                                                                      
                                                                                                                                
9:35:42 AM                                                                                                                    
                                                                                                                                
Senator Dyson referred  to page 2.  He repeated  his argument                                                                   
that if clean coal is available,  it should be included.  Ms.                                                                   
Fisher-Goad  thought the  policymakers  should  look at  that                                                                   
issue.    The  bill emphasizes  a  clean  fuel,  a  renewable                                                                   
resource.                                                                                                                       
                                                                                                                                
Senator Dyson  asked about  page 4, line  15.  He  questioned                                                                   
why a  community the  size of Juneau  could not be  included.                                                                   
He wondered if  the Administration is in favor  of the 10,000                                                                   
population  cut  off.    Ms.   Fisher-Goad  said  Juneau  has                                                                   
renewable resources.   Senator  Dyson wondered if  any larger                                                                   
communities should be included.                                                                                                 
                                                                                                                                
Mr.  Crimp   addressed  the  coal  vs.   renewable  resources                                                                   
question.  He  related that there are many  ways, in addition                                                                   
to renewable  energy, to  get to the  goal of displacing  the                                                                   
use of  diesel fuel.   He  listed several  methods of  energy                                                                   
conservation.  The emphasis of  the bill is renewable energy.                                                                   
Senator Dyson  inferred that  the fund could  not be  used to                                                                   
develop  a non-renewable  energy like  fish waste or  logging                                                                   
slashings.                                                                                                                      
                                                                                                                                
9:40:57 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  related  that  on the  list  of  submitted                                                                   
projects there is  only one geothermal project.   He wondered                                                                   
why there seems  to be a lack  of interest in this  area.  He                                                                   
also  thought  communities that  could  not get  natural  gas                                                                   
should  be given priority.   Mr.  Crimp replied  that AEA  is                                                                   
reacting to the proposals that  have been submitted.  He said                                                                   
there  is another  group that  looks  at helping  communities                                                                   
develop projects and there should be more in the future.                                                                        
                                                                                                                                
Co-Chair Hoffman  reported that  Naknek Cooperative  has been                                                                   
trying to  drill for a geothermal  source.  He said  that AEA                                                                   
has not  been supportive of this  endeavor because of  a fear                                                                   
that no thermal energies would  be found.  He argued that the                                                                   
attempt should be  made.  He questioned AEA's  decision.  Mr.                                                                   
Crimp  replied that  AEA  has not  responded  to any  funding                                                                   
request  from  Naknek.   Co-Chair  Hoffman  argued  that  the                                                                   
process needs to go forward and should be supported by AEA.                                                                     
                                                                                                                                
9:46:03 AM                                                                                                                    
                                                                                                                                
Senator Elton summarized that  any waste from a resource that                                                                   
is managed on  a sustained yield basis would  be eligible for                                                                   
this  loan  fund.   Mr.  Crimp  said that  interpretation  is                                                                   
correct.   He listed the energy  sources that the  bill would                                                                   
address  such as  logging slash,  sawmill  waste, paper  from                                                                   
municipal waste, and other biomass  resources.  Senator Elton                                                                   
added fish oil to the list.                                                                                                     
                                                                                                                                
MIKE NOTAR, IBEW  LOCAL 1547, JUNEAU, spoke in  support of HB
152  because  it  helps  to address  lower  energy  costs  by                                                                   
utilizing    renewable    energy   sources    and    provides                                                                   
opportunities  for   training  and  work   opportunities  for                                                                   
Alaskan electrical workers.                                                                                                     
                                                                                                                                
9:48:57 AM                                                                                                                    
                                                                                                                                
MEERA  KOHLER,   PRESIDENT,  CEO,  ALASKA   VILLAGE  ELECTRIC                                                                   
COOPERATIVE, testified  in support of HB 152.   She discussed                                                                   
pioneer wind projects  and the difference they  are making in                                                                   
rural Alaska.   She explained  the potential for  wind energy                                                                   
in rural Alaska and the need for additional funds.                                                                              
                                                                                                                                
Co-Chair Hoffman said it seems  as though, with the continued                                                                   
escalation in  fuel costs,  there needs to  be a  more active                                                                   
role  in  trying  to  address  energy  problems.    The  wind                                                                   
projects   are   a  significant   advancement   in   reducing                                                                   
dependence on  fossil fuels, especially  in rural areas.   He                                                                   
wondered how  much the wind projects  cost.  Ms.  Kohler said                                                                   
about $3 million.  The $20 million  could be used to leverage                                                                   
other  federal  dollars.    She explained  that  there  is  a                                                                   
practical limit to  how many wind turbans can  be constructed                                                                   
each year.   She campaigned  for a reliable funding  program.                                                                   
Co-Chair  Hoffman said  that  the solution  will  have to  be                                                                   
stretched  out for  many years  at $20 million  funding.   He                                                                   
maintained that more effort and  funding must be provided now                                                                   
in order  to solve  high energy costs  problems.   He thought                                                                   
AEA and the Administration should take the lead.                                                                                
                                                                                                                                
JOHN BITNEY,  STAFF, REPRESENTATIVE JOHN HARRIS,  pointed out                                                                   
that  there could  be  some modifications  to  the bill  that                                                                   
would  address some  of the  questions posed  today, such  as                                                                   
clarifying that the  funds are subject to appropriation.   He                                                                   
addressed  Senator Dyson's  concerns about  the exclusion  of                                                                   
coal.  He said  he would check into expanding  the options to                                                                   
include coal.  The intent of the  bill is not to try to limit                                                                   
access to energy, but to try to expand it.                                                                                      
                                                                                                                                
9:56:16 AM                                                                                                                    
                                                                                                                                
Senator Dyson suggested  other types of fuel  that should not                                                                   
be  excluded: logging  slashing,  fish oil,  fish waste,  and                                                                   
farm waste.                                                                                                                     
                                                                                                                                
Senator Thomas asked  if the sponsor would be  moving forward                                                                   
quickly on this  legislation.  Mr. Bitney commented  that the                                                                   
bill should  be viewed  as long  term.   He spoke  positively                                                                   
about  trying  to  address  energy cost  needs  in  a  timely                                                                   
manner.                                                                                                                         
                                                                                                                                
Senator  Elton  voiced  concern  about  the  Administration's                                                                   
reimbursable   services  agreement   for  funding   of  AEA's                                                                   
executive  director's  salary,  since the  Governor  appoints                                                                   
every  member of the  authority.   He worried  that it  would                                                                   
become  a  political  actor's  fund.   Mr.  Bitney  said  the                                                                   
sponsor  was   trying  to  identify  a  process   of  getting                                                                   
previously  evaluated  projects   to  the  legislature.    He                                                                   
assured  that  the  legislature  would  be  included  in  the                                                                   
appropriation process.                                                                                                          
                                                                                                                                
Senator  Huggins noted  that the  Railbelt Energy  Fund is  a                                                                   
political animal.   He wanted assurance that  this bill would                                                                   
not become the  same.  Mr. Bitney thought there  were several                                                                   
ways to address energy needs in  Alaska.  He pointed out that                                                                   
this  bill  deals with  smaller  renewable  energy  projects,                                                                   
unlike  the  Railbelt  Fund,  which  is  at  a  larger,  more                                                                   
expensive level.                                                                                                                
                                                                                                                                
Senator  Huggins compared  this fund to  the Railbelt  Energy                                                                   
Fund  and the  potential  for  abuse.   He  wished  to see  a                                                                   
viable,  functional,  long-term,  time-tested  approach  that                                                                   
will  not fall  victim to  "how  we see  the Railbelt  Energy                                                                   
Fund".                                                                                                                          
                                                                                                                                
10:03:36 AM                                                                                                                   
                                                                                                                                
Senator Olson  asked Ms. Kohler  about the expense  of energy                                                                   
in  rural  Alaska  and  how  to  facilitate  the  cooperation                                                                   
between the renewable energy fund,  AEA, and power producers.                                                                   
Ms.  Kohler responded  that that  could  be achieved  through                                                                   
this   legislation   with  the   impartial   advisory   board                                                                   
mechanism.  She  thought that was the difference  between the                                                                   
Railbelt Energy Fund and this  fund.  Senator Olson commented                                                                   
on the  frustrations in Naknek  possibly being  alleviated by                                                                   
such a process.                                                                                                                 
                                                                                                                                
AT-EASE:       10:05:56 AM                                                                                                    
                                                                                                                                
RECONVENED:    10:12:29 AM                                                                                                    
                                                                                                                                
HB  152  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
                                                                                                                                
AT-EASE:       10:13:24 AM                                                                                                    
                                                                                                                                
RECONVENE:     10:13:54 AM                                                                                                    
                                                                                                                                

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