Legislature(2007 - 2008)BELTZ 211

03/04/2008 01:30 PM Senate LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 289 HOME ENERGY CONSERVATION TELECONFERENCED
Heard & Held
*+ SB 293 ELECTRONIC COMMUNICATION DEVICES TELECONFERENCED
Heard & Held
+ HB 65 PERSONAL INFORMATION & CONSUMER CREDIT TELECONFERENCED
Heard & Held
Bills Previously Heard/Scheduled
+= SB 147 WORKERS' COMP EMPLOYER LIABILITY TELECONFERENCED
<Bill Moved Out of Committee 2/28/08>
                SB 289-HOME ENERGY CONSERVATION                                                                             
1:32:56 PM                                                                                                                    
CHAIR ELLIS announced SB 289 to be up for consideration.                                                                        
                                                                                                                                
1:34:02 PM                                                                                                                    
DR.  JOHN WEISE,  Staff to  Senator Hoffman,  sponsor of  SB 289,                                                               
explained  that Alaska  has roughly  670,000 people  who live  in                                                               
260,000 - 280,000  homes; one third of them have  an income under                                                               
$30,000 and  it's estimated that  45,000 of those  households are                                                               
eligible  for low  income weatherization  through Alaska  Housing                                                               
Finance Corporation (AHFC).                                                                                                     
                                                                                                                                
He  said  in  developing  the  bill  they  looked  for  something                                                               
responsive  to  Alaskans  impacted  by  high  energy  costs.  The                                                               
proposal  is a  short-term fix  that will  update and  expand the                                                               
home energy efficiency and weatherization  program and the rebate                                                               
program  in AHFC.  Targeted improvements  include insulation  and                                                               
improved heater efficiencies including water heaters.                                                                           
                                                                                                                                
Eligibility for  the weatherization  program is  now based  on 60                                                               
percent median income; the proposal  changes that to 100 percent.                                                               
Low  income Alaskans  will  receive priority,  but  going to  100                                                               
percent will help even more Alaskans.                                                                                           
                                                                                                                                
1:37:43 PM                                                                                                                    
DR. WEISE  said in  past years AHFC  has spent  $4.8 million/year                                                               
($1.8  million federal  and $3  million  from AHFC)  to help  600                                                               
households  or 1,700  people. With  $48 million  they can  help a                                                               
little over 4,000  households and almost 12,000  people. A survey                                                               
showed that  45,000 households would  meet the 60  percent median                                                               
income requirements and  the sponsor felt that  wasn't enough. SB
289 recommends  spending $200  million to  expand the  program to                                                               
100  percent median  income  which is  projected  to help  17,000                                                               
households and almost 50,000 people.                                                                                            
                                                                                                                                
1:38:32 PM                                                                                                                    
SENATOR  STEVENS  asked  him  how 60  percent  of  median  income                                                               
translates into annual income.                                                                                                  
                                                                                                                                
DR.  WEISE replied  according to  AHFC's figures  the 60  percent                                                               
median goes from $23,887 for a family  of one up to $71,660 for a                                                               
family  of  14.  At  100  percent it  goes  from  $39,800  up  to                                                               
$119,400.                                                                                                                       
                                                                                                                                
1:39:23 PM                                                                                                                    
SENATOR HOFFMAN asked about families of 2 and 4.                                                                                
                                                                                                                                
DR. WEISE answered at 60 percent a  family of 2 would be a little                                                               
over $31,000  and at 100 percent  median at $52,000. A  family of                                                               
four  is at  almost  $46,000 at  60 percent;  and  a little  over                                                               
$76,000 for 100 percent.                                                                                                        
                                                                                                                                
1:39:50 PM                                                                                                                    
He  said the  second part  of the  proposal funds  a home  energy                                                               
rating rebate program which is  not income dependent. Any Alaskan                                                               
could apply for  it and would have to first  be accepted by AHFC,                                                               
then do  an as-is and a  post-energy rating on the  home using an                                                               
AHFC computer  program. A  one star rating  would equal  a $2,500                                                               
rebate; each  additional step would  earn a  $500 rebate up  to a                                                               
maximum of  $5,000. AHFC would  expect a 30 percent  reduction in                                                               
home energy costs.                                                                                                              
                                                                                                                                
1:41:40 PM                                                                                                                    
He  said  the  cost  for   this  portion  is  $100  million,  but                                                               
investment would  have to  be made  by the  homeowners of  $175 -                                                               
$200 million.  This is a  great relief program until  the housing                                                               
market recovers.                                                                                                                
                                                                                                                                
1:42:50 PM                                                                                                                    
SENATOR  STEVENS asked  the rationale  for cutting  it off  where                                                               
they did because  people earning $50,000 are barely  able to make                                                               
ends  meet. The  cost of  living in  some communities  like Dutch                                                               
Harbor is more than Anchorage for instance.                                                                                     
                                                                                                                                
1:43:55 PM                                                                                                                    
SENATOR HOFFMAN answered  he did not feel  comfortable going over                                                               
100 percent and realized further  discussions were needed, but he                                                               
didn't have any conclusions.                                                                                                    
                                                                                                                                
SENATOR  BUNDE asked  why he  thought this  would be  a temporary                                                               
program.                                                                                                                        
                                                                                                                                
SENATOR  HOFFMAN  answered they  are  adding  on to  an  existing                                                               
program because he  wanted to help as many  Alaskans as possible.                                                               
The program could be reevaluated in a few years.                                                                                
                                                                                                                                
1:47:04 PM                                                                                                                    
DR. WEISE commented that the  bill cleans up language in existing                                                               
statute  that removes  reference to  two programs,  the Craftsman                                                               
Program  and the  Home  Energy  Program, that  are  no longer  in                                                               
existence or have been privatized.                                                                                              
                                                                                                                                
SENATOR  HOFFMAN  clarified  that  both  of  these  programs  are                                                               
existing, but  have been modified in  SB 289 as presented  by Dr.                                                               
Weise.                                                                                                                          
                                                                                                                                
1:47:54 PM                                                                                                                    
DAN FAUSKE, CEO, Alaska Housing  Finance Corporation (AHFC), said                                                               
the rebate program had fallen  off lately because of funding, but                                                               
he still  offers interest rate reductions  for energy efficiency,                                                               
which AHFC funds  on a limited basis with  arbitrage proceeds for                                                               
its bonding capability, but it is a finite amount of money.                                                                     
                                                                                                                                
MR. FAUSKE  said people  could make  improvements to  their homes                                                               
that they won't  have to make in the near  future - simple things                                                               
like re-insulating an attic and  caulking windows and door seals.                                                               
The energy savings used  to be recouped in 6 to  7 years, but now                                                               
with oil being $100/barrel, it's 1.5 - 2 years.                                                                                 
                                                                                                                                
He said  there is a slowdown  from the house building  peaks of a                                                               
few years  ago, and while he  didn't view it as  a downturn, this                                                               
is work  that can be  taken up by  those homebuilders as  well as                                                               
the  homeowner   himself.  He  said  the   legislature  and  AHFC                                                               
developed the rating  software years ago, and it  gets updated on                                                               
a regular  basis; it's known  throughout the state and  is easily                                                               
used and quite accurate.                                                                                                        
                                                                                                                                
1:52:35 PM                                                                                                                    
BRIAN BUTCHER,  Public Affairs Director, AHFC,  explained that an                                                               
energy rater rates  the house (one to five stars)  and lists what                                                               
needs to be  done. The more that gets done,  the more the rebate.                                                               
The  rater   would  come  back   in  and  rate  it   again.  Home                                                               
construction  has  slowed  and  those  folks  are  excited  about                                                               
getting involved in this program.                                                                                               
                                                                                                                                
1:53:40 PM                                                                                                                    
MR.  FAUSKE  said he  had  seen  numerous  cases where  a  couple                                                               
thousand  dollar   investment  generates  $300  to   $500/mo.  in                                                               
savings; quality of  life improves while reducing  the demand for                                                               
energy. He  emphasized that  this is an  ongoing program  so they                                                               
would not be reinventing the wheel.                                                                                             
                                                                                                                                
1:55:33 PM                                                                                                                    
SENATOR HOFFMAN asked how long  ago the graduated $2,500 - $5,000                                                               
rates for the rebate program  were set because construction costs                                                               
have risen substantially in the last few years.                                                                                 
                                                                                                                                
MR.  BUTCHER replied  those are  estimates of  what they  thought                                                               
reasonable costs would be right now.                                                                                            
                                                                                                                                
SENATOR BUNDE asked if this  program applies to existing homes or                                                               
to homes that will be built.                                                                                                    
                                                                                                                                
MR. BUTCHER  replied that it would  apply to new homes,  but most                                                               
new homes are being  built with a 4 and 5  star energy rating and                                                               
this would probably apply mostly to older homes.                                                                                
                                                                                                                                
MR.  FAUSKE  added  that  combining   this  program  with  AHFC's                                                               
existing program will deliver a double bang for their bucks.                                                                    
                                                                                                                                
1:57:53 PM                                                                                                                    
BOB  BREAN,  Director,  Research   and  Rural  Development,  AHFC                                                               
supported SB 289.  He echoed comments made by Mr.  Fauske and Mr.                                                               
Butcher.  These  kinds of  programs  have  a great  payback.  The                                                               
opportunities for  savings are  greater in  retrofitting existing                                                               
houses, but  they can make energy  efficiency recommendations for                                                               
new housing as well.                                                                                                            
                                                                                                                                
SCOTT  WATERMAN,  Energy  Specialist  II,  AHFC,  supported  what                                                               
previous comments on SB 289.                                                                                                    
                                                                                                                                
MR. FAUSKE added that the  AHFC's existing program can't purchase                                                               
mortgages on  homes that don't  meet a certain standard  by state                                                               
law.                                                                                                                            
                                                                                                                                
1:59:55 PM                                                                                                                    
SENATOR BUNDE said  the existing program was aimed  at low income                                                               
people, but this expands it to middle income people.                                                                            
                                                                                                                                
MR. FAUSKE  agreed that it  is an all-inclusive program  that was                                                               
designed to reach out across the  state, and it could be changed.                                                               
He said $76,000/year  sounds like a lot, but it  depends on where                                                               
you live. Some people in  Fairbanks pay a couple thousand dollars                                                               
a month  for energy.  This proposal  is targeted  specifically to                                                               
affect the energy efficiency of homes, not to add solariums.                                                                    
                                                                                                                                
SENATOR STEVENS  said he was  thinking about a worker  and spouse                                                               
both working  in a cannery in  Kodiak and $52,000 could  be their                                                               
annual  income.   They  would   be  hard   pressed  to   pay  for                                                               
weatherization themselves.                                                                                                      
                                                                                                                                
MR. FAUSKE  agreed and  said they  should have  frequent targeted                                                               
reports. "It's our  goal, if we are given  the responsibility and                                                               
privilege to do this, to make it work and do it right."                                                                         
                                                                                                                                
MR. BUTCHER said they are  already talking with legislators about                                                               
raising the current  60 percent, because it is  clear that people                                                               
in the  over 60 percent category  also don't have the  means. The                                                               
priority is and will continue to  always be the lowest income and                                                               
work up from there.                                                                                                             
                                                                                                                                
2:05:02 PM                                                                                                                    
PAUL KENDALL,  representing himself,  Anchorage, opposed  SB 289.                                                               
He  said   because  it   continues  to   fund  the   fossil  fuel                                                               
distribution network,  it is  a distraction to  what needs  to be                                                               
done. He said 1 megawatt of  wind covers 250-300 homes and taking                                                               
that original $500 million and putting  it into a wind farm would                                                               
generate electricity for  75,000 homes and would last  over a 25-                                                               
year period.  This would  not only  move the  technology forward,                                                               
but it would begin  to replace the gas that could  be sold on the                                                               
open market, which would generate more revenue for the state.                                                                   
                                                                                                                                
MR. KENDALL  said that people  in Las Vegas  did a lot  of energy                                                               
conservation, but it  was for nothing because  programs like this                                                               
come  along and  enable them  to continue  using that  energy. He                                                               
advised  "You  have to  find  a  formula  that  says we  all  are                                                               
accountable to  each other  for reasonable  prices of  energy and                                                               
reasonable  availability." That  would  exclude distribution  and                                                               
maintenance of lines.  He said conservation is a  big mistake and                                                               
that  big   companies  are   already  investing   in  alternative                                                               
technologies.  He  called it  a  habit  and  a form  of  economic                                                               
subjugation.                                                                                                                    
                                                                                                                                
CHAIR ELLIS said SB 289 would be held for another hearing.                                                                      

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