Legislature(2019 - 2020)BUTROVICH 205

02/03/2020 03:30 PM RAILBELT ELECTRIC SYSTEM

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Audio Topic
03:32:38 PM Start
03:33:24 PM SB123
04:20:27 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 123 ELECTRIC RELIABILITY ORGANIZATIONS TELECONFERENCED
Heard & Held
-- Public Testimony --
            SB 123-ELECTRIC RELIABILITY ORGANIZATIONS                                                                       
                                                                                                                                
3:33:24 PM                                                                                                                    
CHAIR  COGHILL announced  the consideration  of  SENATE BILL  NO.                                                               
123, "An  Act relating  to the  regulation of  electric utilities                                                               
and  electric reliability  organizations;  and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
He  asked  Ms.  Miller  to review  the  questions  and  suggested                                                               
changes to the bill that will affect the policy calls.                                                                          
                                                                                                                              
3:36:09 PM                                                                                                                  
RENA  MILLER,   Staff,  Senator   Cathy  Giessel,   Alaska  State                                                               
Legislature, Juneau,  Alaska, stated that  she is on loan  to the                                                               
committee for the  purposes of SB 123. She agreed  with the chair                                                               
that  it has  been  a collaborative  process  to incorporate  the                                                               
testimony  to the  committee and  the conversations  she has  had                                                               
with the stakeholders to address  the questions and concerns that                                                               
were voiced.  She advised  that she would  walk through  the bill                                                               
highlighting  the potential  changes  so the  members could  make                                                               
notes in the relevant areas.                                                                                                    
                                                                                                                                
MS.  MILLER advised  that the  term "bulk-power  system" that  is                                                               
defined  in the  bill and  referenced throughout  will change  to                                                               
"interconnected bulk  electric system." The utilities  prefer the                                                               
word "electric"  over "power" and  the RCA feels it  is important                                                               
to clarify that it is an interconnected system.                                                                                 
                                                                                                                                
She directed  attention to the  dates and timelines in  version M                                                               
that clearly  need to be changed  because they were based  on the                                                               
original, May 2019, draft of the bill.                                                                                          
                                                                                                                                
MS. MILLER  stated that the  two effective  dates on page  8 will                                                               
change to July 1, 2021. This  reflects that the bill takes effect                                                               
one year after it  passes and the RCA has that  year to write the                                                               
regulations to  implement the bill.  Assuming the bill  passes on                                                               
July 2020, the effective date would be July 1, 2021.                                                                            
                                                                                                                                
The date on page  7, line 28, would also change  to July 1, 2021.                                                               
She said those  dates are tied to subsection (c)  near the bottom                                                               
of  page 2  that tells  the RCA  that if  nobody has  applied for                                                               
certification to  be an ERO within  3 months of the  RCA adopting                                                               
regulations and being ready to  take applications, the commission                                                               
shall create  an ERO on  its own. Thus the  date on page  2, line                                                               
29, would change to October 1, 2021.                                                                                            
                                                                                                                                
MS.  MILLER  said  she  and   the  chair  realized  the  need  to                                                               
incorporate  another  date.  The   RCA  has  explained  that  the                                                               
application to be  an ERO would be treated like  a certificate of                                                               
public  convenience and  necessity  (CPCN)  application. Once  an                                                               
application has been received and  deemed properly filed, the RCA                                                               
would have  6 months to accept  it, or not. She  pointed out that                                                               
somebody  may have  applied in  that timeframe  but they  haven't                                                               
been certificated,  and the RCA is  instructed to form an  ERO if                                                               
nobody  has applied  within  three months.  But  if somebody  has                                                               
applied   and  after   some  time   it  was   pulled  or   deemed                                                               
insufficient, there  is no date for  the RCA to stand  up an ERO.                                                               
The solution  is to  extend another  three months.  Therefore, if                                                               
nobody  files the  RCA  will  form an  ERO  in  three months;  if                                                               
somebody  has filed  but hasn't  received certification,  the RCA                                                               
will stand up an ERO six months after the filing.                                                                               
                                                                                                                                
3:39:38 PM                                                                                                                    
CHAIR  COGHILL added  that the  application process  could go  on                                                               
forever without this additional clarification.                                                                                  
                                                                                                                                
MS. MILLER  agreed and  cited the  situation the  RCA encountered                                                               
last  year when  a  couple  of utilities  and  a private  company                                                               
applied  to  the   RCA  for  certification  as   a  TRANSCO.  The                                                               
application was deemed insufficient  and the applicant pulled it.                                                               
She said  that is an  example of  someone who applied  but nobody                                                               
had been certificated.                                                                                                          
                                                                                                                                
CHAIR  COGHILL noted  that House  Energy Committee  Chair Hopkins                                                               
was listening online.                                                                                                           
                                                                                                                                
3:40:40 PM                                                                                                                    
SENATOR  MICCICHE referenced  the date  on page  2, line  29, and                                                               
asked Ms. Miller to repeat  the explanation of the deadline after                                                               
October 1, 2021 for someone who has submitted an application.                                                                   
                                                                                                                                
MS.  MILLER explained  that if  someone has  applied but  has not                                                               
been certified as an ERO, the  RCA will wait six months before it                                                               
forms an ERO on its own. The new date will be January 1, 2022.                                                                  
                                                                                                                                
CHAIR  COGHILL added  that those  instructions were  sent to  the                                                               
drafters.                                                                                                                       
                                                                                                                                
MS. MILLER, responding  to a further query, explained  that it is                                                               
six months from  July 2021 when the RCA is  open to applications.                                                               
Three months  after that is  October 2021 and three  months after                                                               
that is January 2022. .                                                                                                         
                                                                                                                                
CHAIR COGHILL advised that the RCA brought the issue forward.                                                                   
                                                                                                                                
3:42:07 PM                                                                                                                    
MS. MILLER  continued to discuss  the proposed changes.  She said                                                               
no changes have  been proposed for the sections on  pages 1 and 2                                                               
that talk about  the application process for the ERO  and what an                                                               
applicant  must  demonstrate  regarding governance  and  internal                                                               
rules.                                                                                                                          
                                                                                                                                
She directed attention  to the dates on the bottom  of page 2 and                                                               
advised that  Chair Coghill was  interested in adding  a backstop                                                               
provision to  authorize the RCA  to waive the requirement  for an                                                               
interconnected network  to have an ERO  in certain circumstances.                                                               
The reasoning is  that in five or ten years  rural areas may have                                                               
interconnected utilities and it may  or may not be appropriate to                                                               
have an ERO in that  network. The language that's contemplated is                                                               
that the  utilities would need to  agree to petition the  RCA for                                                               
the waiver.                                                                                                                     
                                                                                                                                
CHAIR COGHILL clarified that the  RCA retains its authority; this                                                               
just contemplates the potential of a different organization.                                                                    
                                                                                                                                
MS.  MILLER agreed  that in  the  future there  may be  instances                                                               
where  an  ERO  isn't   appropriate  for  certain  interconnected                                                               
utilities.                                                                                                                      
                                                                                                                                
She directed attention to the bottom  page 2 and onto page 3 that                                                               
discusses  what reliability  standards  should  provide for.  The                                                               
language on page  3, lines 10-12, says  reliability standards may                                                               
provide for additions  or modifications to a  facility to provide                                                               
for reliable operation of the  system. Then the language on lines                                                               
13-14  says   the  standards  may  not   require  enlargement  of                                                               
facilities  or construction  of  new  transmission or  generation                                                               
capacity.  To  avoid potential  conflict,  the  suggestion is  to                                                               
change the  language on lines 13-14  to say "may not  be designed                                                               
with the  intent to require"  so the standard doesn't  require an                                                               
enlargement. If  an enlargement is necessary  to meet reliability                                                               
or a  security need,  that is  potentially a  different standard.                                                               
The  proposed language  was developed  in collaboration  with the                                                               
RCA.                                                                                                                            
                                                                                                                                
3:45:10 PM                                                                                                                    
MS. MILLER reminded the committee  that utilities will be able to                                                               
comment individually  on standards  that the  ERO submits  to the                                                               
RCA for approval. She said  there has been collaborative work and                                                               
there is  a backstop  if a  utility believes  a standard  may not                                                               
cover their needs.                                                                                                              
                                                                                                                                
CHAIR COGHILL  added that  an individual  utility would  have the                                                               
ability to make their case to  the RCA on a particular issue that                                                               
the ERO isn't interested in.                                                                                                    
                                                                                                                                
MS. MILLER  agreed. She added that  an ERO applicant has  to show                                                               
it  created  a  rule  that   the  representatives  of  users  and                                                               
stakeholders   are  working   independently  of   their  specific                                                               
organization or utility  when they are serving as  the ERO board.                                                               
But nothing  waives a utility's right  to intervene independently                                                               
of the ERO.                                                                                                                     
                                                                                                                                
3:46:23 PM                                                                                                                    
MS. MILLER directed attention to  subsection (e) on page 3, lines                                                               
15-22, relating  to the ability  of the RCA to  modify standards.                                                               
She said the utilities voiced concern  that the RCA may, at will,                                                               
modify  a standard  that the  ERO has  put forward.  Commissioner                                                               
Scott testified  that it is  the RCA's  practice to have  a back-                                                               
and-forth  with the  utility to  talk about  a modification,  but                                                               
there is  no rule. The  suggested modification in  subsection (e)                                                               
is that when the RCA receives a  standard or an IRP and decides a                                                               
modification  is   required,  the  commission  must   return  the                                                               
standard with an order and the  ERO has the opportunity to modify                                                               
it.  She  said  the  RCA's  ability to  modify  is  the  ultimate                                                               
backstop.                                                                                                                       
                                                                                                                                
CHAIR  COGHILL added  that while  the utilities  recommended this                                                               
change,  Legislative Legal  Services  has been  asked to  develop                                                               
appropriate language.                                                                                                           
                                                                                                                                
MS.  MILLER  agreed. The  intent  is  to balance  the  utilities'                                                               
concern  as  well  as  the  RCA's concern  that  it  retain  that                                                               
ultimate backstop.                                                                                                              
                                                                                                                                
3:48:20 PM                                                                                                                    
SENATOR GIESSEL  directed attention  to the  sentence on  page 3,                                                               
lines 20-21,  and said she crossed  it out and made  the notation                                                               
"recommend remove."                                                                                                             
                                                                                                                                
CHAIR COGHILL asked Ms. Miller to respond.                                                                                      
                                                                                                                                
MS. MILLER  confirmed that  the sentence  should be  removed. She                                                               
explained that the section that  relates to standards and how the                                                               
RCA  processes  them  relies  on   the  existing  public  utility                                                               
statute, AS  42.05. The process and  how it takes effect  is very                                                               
clear in  existing statute. That  sentence creates a  question as                                                               
to whether  a standard  or modification is  meant to  apply, when                                                               
they absolutely are intended to apply.                                                                                          
                                                                                                                                
Continuing,  she said  pages 3  and 4  talk about  penalties that                                                               
that can  be assessed by both  the ERO and the  RCA. The language                                                               
in  subsection (i)  on  page  4, line  8,  allows  the appeal  of                                                               
penalties to  the commission. However, it  is counterintuitive to                                                               
say a commission  assessed penalty can be appeal  to and reviewed                                                               
by the commission. The suggestion  is to delete the references to                                                               
subsection (h)  on lines 9  and 10. Thus,  if the ERO  assesses a                                                               
penalty, it  can be appealed  to the  RCA and the  commission can                                                               
review it. If the RCA  assesses a penalty, existing processes are                                                               
in  place for  the party  to question  the penalty.  This process                                                               
includes taking the question outside the RCA.                                                                                   
                                                                                                                                
3:50:19 PM                                                                                                                    
MS. MILLER  directed attention to  the language on page  5, lines                                                               
6-7,  that  states  that regulations  related  to  standards  may                                                               
include a requirement that an  ERO obtain a certificate of public                                                               
convenience  and  necessity. The  suggestion  is  to remove  that                                                               
provision because the bill already say  that an ERO has to have a                                                               
CPCN.                                                                                                                           
                                                                                                                                
SENATOR GRAY-JACKSON asked if the  reference to subsection (h) on                                                               
page 4,  line 16,  should be  removed since  it was  removed from                                                               
lines 9 and 10.                                                                                                                 
                                                                                                                                
MS.  MILLER answered  no; that  reference should  stay because  a                                                               
penalty that  is imposed, regardless  of who imposes it,  must be                                                               
reasonable relative to the violation.                                                                                           
                                                                                                                                
MS.  MILLER  directed  attention  to  the  language  on  page  5,                                                               
starting  on line  15 relating  to integrated  resource planning.                                                               
She advised  that a  process should be  inserted in  this section                                                               
that  relates  to  the  RCA's   ability  to  modify  what's  been                                                               
submitted to  them. It  would be  a process  similar to  what was                                                               
discussed for standards.  To that end, Sec.  42.05.293(a) and (b)                                                               
would be  amended to clarify that  when an IRP is  submitted, and                                                               
the RCA decides it should be  modified, it must first be returned                                                               
to the  ERO with the  suggested modification. The  backstop (just                                                               
as for standards)  is that the RCA retains the  authority to make                                                               
the modification.                                                                                                               
                                                                                                                                
She explained  that because an  IRP would  not be submitted  as a                                                               
standard tariff  provision, the  language must  be clear  that an                                                               
IRP is  to be filed with  the RCA as  a petition. That is  a term                                                               
the RCA is familiar with and  it works with their other statutes.                                                               
She said  the utilities  recommended inserting  a time  limit for                                                               
the RCA to  take action whether it is to  accept the petition as-                                                               
filed  or  to  open  a docket  for  investigation  and  potential                                                               
modification after  the investigation. She said  the parties seem                                                               
to think 45  days is reasonable and would mimic  the timeline for                                                               
the standards that are filed as tariff provisions.                                                                              
                                                                                                                                
CHAIR COGHILL asked if the  timeline would be added to subsection                                                               
(b) or in a new subsection.                                                                                                     
                                                                                                                                
MS. MILLER replied Legislative Legal  Services is working on that                                                               
right now,  but she believes  it would be inserted  in subsection                                                               
(b).                                                                                                                            
                                                                                                                                
She noted  the reference to lowest  cost on page 5,  line 23, and                                                               
relayed  that  a  number  of  stakeholders  want  assurance  that                                                               
"lowest  possible cost"  is not  the  only consideration  because                                                               
other values  should sometimes factor  into decisions  of whether                                                               
something is in  the public necessity or  interest. That language                                                               
will perhaps  be changed to  look at  the greatest value  and the                                                               
RCA   will  be   encouraged   to  define   that  in   regulation.                                                               
Stakeholders have been party to this discussion, she said.                                                                      
                                                                                                                                
CHAIR COGHILL  added that the  idea has  been to create  a system                                                               
approach  to balance  cost-effective  and load-serving  so it  is                                                               
consistent with the public interest and has a value statement.                                                                  
                                                                                                                                
3:55:46 PM                                                                                                                    
SENATOR   GIESSEL  commented   that   the   lowest  value   isn't                                                               
necessarily the best consideration.                                                                                             
                                                                                                                                
CHAIR COGHILL clarified that he said value statement.                                                                           
                                                                                                                                
MS. MILLER  pointed out  that the  range of  things that  must be                                                               
considered in the plan have to  be cost effective, but the lowest                                                               
cost may  not necessarily be  what the stakeholders, the  ERO, or                                                               
the RCA feels is in the best interest.                                                                                          
                                                                                                                                
SENATOR MICCICHE  suggested that the  parts of the  sentence that                                                               
evaluate lowest cost  and overall impact need  to be independent,                                                               
but both should be considered.                                                                                                  
                                                                                                                                
CHAIR  COGHILL said  the goal  is to  get an  organization to  do                                                               
economic  dispatch and  the question  is how  to get  there under                                                               
planning.                                                                                                                       
                                                                                                                                
SENATOR MICCICHE  suggested that  the emphasis  should be  on the                                                               
lowest cost but the other factors should be considered as well.                                                                 
                                                                                                                                
CHAIR COGHILL said  the language that was  sent for consideration                                                               
was cost/value  but if  it's lowest  cost there  will need  to be                                                               
balancing language.  If the primary  consideration is to  be cost                                                               
effective  then  that has  to  be  considered through  the  whole                                                               
system. For example, an IPP may  not be cost effective on one end                                                               
of the  line but it  is somewhere else.  He noted that  REAP made                                                               
that point.                                                                                                                     
                                                                                                                                
3:58:35 PM                                                                                                                    
SENATOR MICCICHE opined that the  current wording takes that into                                                               
account.                                                                                                                        
                                                                                                                                
CHAIR   COGHILL  said   it's   good  to   have  the   discussion,                                                               
particularly   because    the   stakeholders,   the    RCA,   the                                                               
organizational  development  team,  and  REAP  came  at  it  from                                                               
different perspectives.  "If that's  the way the  language stays,                                                               
we'll have  a public record on  it, but if it  does change, we'll                                                               
have to debate that change." He  asked Ms. Miller to confirm that                                                               
they asked the drafters to craft a cost/value statement.                                                                        
                                                                                                                                
3:59:52 PM                                                                                                                    
MS.  MILLER responded  that they  are working  through that.  She                                                               
said she's  clearly hearing from  the committee that low  cost to                                                               
the ratepayers is very important, but  it has to be balanced with                                                               
questions of  the public good. It  should not be just  a monetary                                                               
equation.                                                                                                                       
                                                                                                                                
CHAIR  COGHILL  said   he  believes  there  is   balance  in  the                                                               
statement.                                                                                                                      
                                                                                                                                
SENATOR MICCICHE  suggested that lines  26 and 27  are redundant.                                                               
He  added that  he  believes the  committee  discussion has  been                                                               
sufficient.                                                                                                                     
                                                                                                                                
4:00:58 PM                                                                                                                    
MS.  MILLER said  she'd  look at  that. She  added  that the  ERO                                                               
stakeholders  raised a  different question  about those  same two                                                               
lines. They expressed  a desire to have the RCA's  decision on an                                                               
IRP include  an account of the  process that went into  the ERO's                                                               
plan.  They  want  some  weight  given to  the  effort  to  build                                                               
consensus  among  the  ERO  board   and  other  stakeholders  and                                                               
evidence to show  that people had a voice.  Further, the language                                                               
should  reflect the  need to  consider the  process to  build the                                                               
IRP.                                                                                                                            
                                                                                                                                
4:02:05 PM                                                                                                                    
MS. MILLER  directed attention  to page 6,  line 13,  relating to                                                               
project  preapproval.  She said  this  area  generated a  lot  of                                                               
comment and  recommendations from  all stakeholders.  She advised                                                               
that the  term "the most  cost-effective manner" on line  20 will                                                               
be  massaged to  be more  representative of  the range  of values                                                               
used to determine  whether a project is  necessary. The utilities                                                               
want to understand  how the RCA would treat  projects between now                                                               
and when  an integrated  resource plan  is in  place in  terms of                                                               
preapproval. The forthcoming  CS will try to ensure  that the RCA                                                               
is directed to write regulations  that make it clear how projects                                                               
under  development  will  be handled  during  the  transition  to                                                               
project preapproval.                                                                                                            
                                                                                                                                
CHAIR COGHILL summarized the intent.                                                                                            
                                                                                                                                
MS. MILLER  agreed that  the idea is  to give  some consideration                                                               
without creating a loophole.                                                                                                    
                                                                                                                                
SENATOR  MICCICHE referenced  the RRC  Organizational Development                                                               
Team's suggested change for preapproval  that says, "Exclude from                                                               
RCA   jurisdiction   authority   over   facility   location   and                                                               
transmission  route and  to preserve  local authority."  and "Add                                                               
undersea transmission lines, storage  and ancillary services." He                                                               
asked  if the  suggestion is  to add  to the  exemptions for  RCA                                                               
jurisdiction or include those in the conditions for preapproval.                                                                
                                                                                                                                
MS. MILLER  explained that the  utilities want to make  sure that                                                               
undersea and  buried cables  are subject  to preapproval  so they                                                               
are part of  the large energy facilities. She  said Chair Coghill                                                               
wanted  the record  to  be  clear about  why  the  length for  an                                                               
undersea line is shorter than  the larger transmission lines. She                                                               
said  the  utilities  have  recommended  changing  the  provision                                                               
(starting on page  6) in subsection (c)(2)(B)  that describes the                                                               
length  of a  high-voltage transmission  line of  a large  energy                                                               
facility. The  utilities recommend  increasing the length  from 5                                                               
miles  10 miles,  which would  accommodate utilities  that supply                                                               
power to homes and other  facilities in sparsely populated areas.                                                               
It would  apply to high-voltage  undersea lines that  are greater                                                               
than  3 miles  in  length.  She cited  the  example  of the  line                                                               
between Beluga and  Anchorage. People agree that  when that needs                                                               
to be  replaced, it will be  put into the IRP  process. She noted                                                               
that there  has also been a  request to add battery  projects and                                                               
reactive compensation  devices to the  group of things  that need                                                               
preapproval.                                                                                                                    
                                                                                                                                
CHAIR COGHILL agreed with Senator  Micciche that battery projects                                                               
are  used  to  address  power   storage  needs.  He  offered  his                                                               
understanding  that battery  projects  for power  would be  under                                                               
this definition.                                                                                                                
                                                                                                                                
4:09:04 PM                                                                                                                    
MS.  MILLER  suggested  the  committee  check  with  one  of  the                                                               
utilities to get an accurate answer.                                                                                            
                                                                                                                                
CHAIR COGHILL said  a utility would go to the  RCA for a specific                                                               
need, but he wasn't sure if  it would fall under the large energy                                                               
facility or the  reliability requirements. He said  that needs to                                                               
be answered.                                                                                                                    
                                                                                                                                
MS. MILLER agreed to follow up.                                                                                                 
                                                                                                                                
She  advised that  there  have also  been  suggestions to  exempt                                                               
refurbishments and  capitalized maintenance from  the requirement                                                               
to get  preapproval. The RCA  will also need direction  to define                                                               
those terms in regulation.                                                                                                      
                                                                                                                                
MS. MILLER  said suggestions have  been made about  ensuring that                                                               
project preapproval  addresses an allowance for  local government                                                               
bodies  and planning  commissions to  have their  own rules.  The                                                               
thinking is that  the RCA probably should not  be solely involved                                                               
in deciding where to reroute local  lines. She said the intent at                                                               
this point  is to include  an appropriate acknowledgement  of the                                                               
consideration  that the  RCA should  be  given when  it looks  at                                                               
preapproval.                                                                                                                    
                                                                                                                                
She  added that  there was  also discussion  about the  desire to                                                               
have preapproval  of cost. However, because  preapproval has been                                                               
restricted  to  the concept  of  preapproving  the need  for  the                                                               
project,  Chair   Coghill  was  not  inclined   to  include  cost                                                               
preapproval in that early stage of the process.                                                                                 
                                                                                                                                
CHAIR COGHILL  opined that cost  will still  be an issue  but the                                                               
requirement is off-base.                                                                                                        
                                                                                                                                
4:12:03 PM                                                                                                                    
MS. MILLER directed  attention to the definitions on  page 7 that                                                               
she characterized as clean up  rather than substantive. She noted                                                               
that she previously discussed the dates  on page 7, [line 28] and                                                               
page 8.                                                                                                                         
                                                                                                                                
4:12:30 PM                                                                                                                    
CHAIR  COGHILL  stated  that the  directions  to  the  Regulatory                                                               
Commission of  Alaska have been very  clear and both the  RCA and                                                               
Legislative  Legal Services  agree that  Southeast utilities  are                                                               
not included in  the requirements of SB 123. He  asked Ms. Miller                                                               
if any  other suggested language  had come forward that  might be                                                               
needed.                                                                                                                         
                                                                                                                                
MS.  MILLER  replied that  Southeast  utilities  would like  very                                                               
specific exclusionary language, but  the legal drafters said that                                                               
would be redundant and not recommended.                                                                                         
                                                                                                                                
CHAIR COGHILL  commented on the misunderstandings  that can arise                                                               
from redundant language in statute. He reiterated:                                                                              
                                                                                                                                
     All the legal team and the regulatory team that we've                                                                      
      talked to said this has no impact on the connections                                                                      
     that are down here in Southeast Alaska.                                                                                    
                                                                                                                                
4:14:18 PM                                                                                                                    
MS.  MILLER offered  to  walk through  the  mechanics where  that                                                               
appears in the bill.                                                                                                            
                                                                                                                                
CHAIR COGHILL requested she do so.  "We've said it, now they have                                                               
to believe us," he said.                                                                                                        
                                                                                                                                
MS. MILLER  directed attention to  the definition  of "bulk-power                                                               
system"  on  page  7,  line  5, and  reminded  members  that,  as                                                               
discussed, the term will change  to "interconnected bulk electric                                                               
system." She explained that to be  one of these systems, at least                                                               
one  of  the interconnected  utilities  must  be subject  to  the                                                               
provisions  in   AS  42.05.291.  AS  42.05.711   exempts  certain                                                               
instrumentality of  state utilities  from regulation by  the RCA;                                                               
they are exempt  from .291. She directed  attention to subsection                                                               
(c) on page  2, lines 26-29, that talks about  how the commission                                                               
shall form  an electric  reliability organization  (ERO). Anybody                                                               
that is not a bulk-power system doesn't need an ERO.                                                                            
                                                                                                                                
4:15:48 PM                                                                                                                    
MS. MILLER articulated  the disclaimer that as she  and the chair                                                               
work with  the legal drafters,  additional small changes  will be                                                               
needed. Those will  be flagged in the summary of  changes for the                                                               
forthcoming committee substitute (CS).                                                                                          
                                                                                                                                
CHAIR COGHILL advised that he  will entertain amendments once the                                                               
committee has the CS. He  noted that public testimony will remain                                                               
open to allow comments on the CS.                                                                                               
                                                                                                                                
SENATOR MICCICHE mentioned Bradley  Lake, the Battle Creek bonds,                                                               
and the exemptions going forward.  He said he believes that there                                                               
is an issue with the exemption  and that may need to be addressed                                                               
in the bill.  He asked the chair  to look at the  material he had                                                               
gathered so they could have  a discussion and allow the utilities                                                               
to  come  together  on  a   potential  solution.  He  stated  his                                                               
preference to have the discussion before the amendment process.                                                                 
                                                                                                                                
4:18:44 PM                                                                                                                    
CHAIR COGHILL asked when the rate exemption sunsets.                                                                            
                                                                                                                                
SENATOR  MICCICHE replied  the  [Bradly  Lake] exemption  doesn't                                                               
change for  awhile and if the  Battle Creek bonds become  part of                                                               
that  agreement it  could  be  an ongoing  problem.  He said  the                                                               
discussion  is timely  and including  the utilities  and possibly                                                               
Bradley Lake as an IPP may help to resolve the issue.                                                                           
                                                                                                                                
CHAIR COGHILL indicated  that he would welcome  a simple solution                                                               
but not if it becomes an Achilles Heel.                                                                                         
                                                                                                                                
SENATOR MICCICHE nodded.                                                                                                        
                                                                                                                                
CHAIR  COGHILL  asked  Senator  Micciche  to  help  him  and  the                                                               
committee  understand  a  simple  solution.  He  noted  that  the                                                               
explanation may need  to include some of the  history and details                                                               
of the project. He added that he needed to be convinced that                                                                    
this isn't a misfit for the bill.                                                                                               
                                                                                                                                
SENATOR MICCICHE requested he review the information before                                                                     
making a determination.                                                                                                         
                                                                                                                                
[SB 123 was held in committee.]                                                                                                 

Document Name Date/Time Subjects
SB 123 - REAP Comments on Version M 01-31-2020.pdf SRBE 2/3/2020 3:30:00 PM
SB 123
SB 123 - RRC Recommended Pillars 1.31.20.pdf SRBE 2/3/2020 3:30:00 PM
SB 123