Legislature(2019 - 2020)BUTROVICH 205

02/19/2020 09:00 AM RAILBELT ELECTRIC SYSTEM

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Audio Topic
09:05:14 AM Start
09:05:41 AM SB123
09:34:23 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Location Change --
+= SB 123 ELECTRIC RELIABILITY ORGANIZATIONS TELECONFERENCED
Heard & Held
           SB 123-ELECTRIC RELIABILITY ORGANIZATIONS                                                                        
                                                                                                                                
9:05:41 AM                                                                                                                    
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 advised  that he had  intended to adopt  and move  the proposed                                                              
committee substitute  (CS) after  Ms. Miller reviewed  the changes                                                              
that  were proposed  during the  previous  meeting, but  questions                                                              
about transmission  have come up  that need to be  answered before                                                              
the bill can move.                                                                                                              
                                                                                                                                
CHAIR  COGHILL  asked  Ms.  Miller to  discuss  the  changes  from                                                              
Version E to Version G of SB 123.                                                                                               
                                                                                                                                
9:07:16 AM                                                                                                                    
RENA  MILLER, Staff,  Senator Giessel,  Alaska State  Legislature,                                                              
Juneau,  Alaska, advised  that she  is on loan  to this  committee                                                              
for the purposes of SB 123.                                                                                                     
                                                                                                                                
CHAIR  COGHILL  solicited  a  motion   to  adopt  the  work  draft                                                              
committee substitute (CS) for SB 123, Version G.                                                                                
                                                                                                                                
9:07:48 AM                                                                                                                    
SENATOR GIESSEL moved  to adopt the committee substitute  (CS) for                                                              
SB 123, work order 31-LS0959\G, as the working document.                                                                        
                                                                                                                                
CHAIR COGHILL objected for an explanation of changes.                                                                           
                                                                                                                                
9:08:19 AM                                                                                                                    
RENA  MILLER, reviewed  the following  changes  between Version  E                                                              
and Version G of SB 123:                                                                                                        
                                                                                                                                
     Page  1, line  4: Amends  title to  remove reference  to                                                                   
     project     preapproval     for    'public     utilities                                                                   
     interconnected   with   interconnected   bulk   electric                                                                   
     systems'  and  replaces  with  project  preapproval  for                                                                   
     'certain interconnected large energy facilities'.                                                                          
                                                                                                                                
This better reflects the heading of that section of the bill.                                                                   
                                                                                                                                
     Page 2, line  1: Changes 'electric utilities'  to 'load-                                                                   
     serving entities'.                                                                                                         
                                                                                                                                
     Page   2,  line   8:   Conforming  change   related   to                                                                   
     restructuring  [that occurred  in  the previous  version                                                                   
     of the bill].                                                                                                              
                                                                                                                                
     Page  2,  line  12:  Switches   sections  (d)  and  (e).                                                                   
     Prefaces    new    (d)   with    'Notwithstanding    the                                                                   
     requirements in (e)'.                                                                                                      
                                                                                                                                
     Page 3,  line 7: Changes  'an integrated resource  plan'                                                                   
     to 'integrated resource plans'.                                                                                            
                                                                                                                                
     Page  3,   line  19:  Removes  'developing   reliability                                                                   
     standards  and' so  that the  provisions  cited must  be                                                                   
     part of all ERO duties.                                                                                                    
                                                                                                                                
     Page 5, line  19: Expanded section heading  from 'Rules'                                                                   
     to    'Electric    reliability    organization    rules;                                                                   
     approval.'  Legislative  Legal   made  this  change  for                                                                   
     conformity to the section.                                                                                                 
                                                                                                                                
     Page 6, line  3: Changed 'provisions' to  'standards' to                                                                   
     conform with style [in that subsection].                                                                                   
                                                                                                                                
     Page  6, lines  24, 25:  Removed  'of an  interconnected                                                                   
     electric   energy   transmission   network'   to   avoid                                                                   
     redundancy.  At Legislative  Legal's advice,  maintained                                                                   
     first reference within subsection (b).                                                                                     
                                                                                                                                
     Page 7, lines  9, 13: Added 'all' before  'customers' to                                                                   
     reflect  the intent  that integrated  resource  planning                                                                   
     address  the  needs  of  all   customers  on  a  network                                                                   
     [within the Railbelt].                                                                                                     
                                                                                                                                
     Page 7, line  19: Removed requirement for RCA  to hold a                                                                   
     hearing   to  approve   an   integrated  resource   plan                                                                   
     petition.                                                                                                                  
                                                                                                                                
The requirement to hold a hearing to modify an IRP remains.                                                                     
                                                                                                                                
     Page  7,  line  20: Removed  reference  to  rejecting  a                                                                   
     petition.                                                                                                                  
                                                                                                                                
     Page 7, lines  23-25: Added ability for RCA  to reject a                                                                   
     petition, but only for form and filing.                                                                                    
                                                                                                                                
     Page  8, line  7: Changed  'the' public  utility to  'a'                                                                   
     public utility                                                                                                             
                                                                                                                                
     Page 8, line  27-28: Moved 'in a cost-effective  manner'                                                                   
     within  the provision  so it  modifies the  needs of  an                                                                   
     entity and not the facility served by the facility.                                                                        
                                                                                                                                
     Page  9, line 5:  Corrected error  in previous  version;                                                                   
     hydro projects  licensed by FERC before Sept.  30, 2016,                                                                   
     are exempt from the requirement for pre-approval                                                                           
                                                                                                                                
9:12:36 AM                                                                                                                    
CHAIR COGHILL removed his objection and Version G was adopted.                                                                  
                                                                                                                                
9:13:01 AM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
9:14:36 AM                                                                                                                    
CHAIR COGHILL  reconvened the  meeting and  asked Mr.  Thompson to                                                              
provide his testimony.                                                                                                          
                                                                                                                                
9:15:08 AM                                                                                                                    
DEAN THOMPSON,  Legal Counsel, Municipal  Light and  Power (ML&P),                                                              
Anchorage,  Alaska, stated  that he  has litigated  issues in  the                                                              
Alaska Railbelt  since 1990 and  was testifying today  to preserve                                                              
the  status  quo  ante of  the  longstanding  exemption  under  AS                                                              
42.05.431(c)  that  exempts  from commission  review  or  approval                                                              
issues dealing  with the  Bradley Lake  hydroelectric project.  He                                                              
said  he  didn't  believe  anything   in  SB  123  could  credibly                                                              
challenge that  exemption but because  of the time and  money ML&P                                                              
has  spent  litigating   over  the  scope  of   the  Bradley  Lake                                                              
agreement and the  Bradley Lake exemption, he was  proposing a one                                                              
sentence addition at the end of Section 1 of SB 123:                                                                            
                                                                                                                                
          Sec.  42.05.795.   Interpretation.   Nothing in  AS                                                                 
     42.05.760      AS  42.05.790   shall  be  construed   to                                                                   
     conflict   with  a  wholesale   agreement,  or   related                                                                   
     contracts,  that are  exempt from  commission review  or                                                                   
     approval under  AS 42.05.431(c), or with  any amendments                                                                   
     to such wholesale agreement or related contracts.                                                                          
                                                                                                                                
MR.  THOMPSON   concluded  his  comments  reiterating   that  ML&P                                                              
supports  SB 123  but  does  not want  it  to upset  the  existing                                                              
exemption for Bradley  Lake that has been in place  since the mid-                                                              
1980s. Responding  to a  question, he confirmed  that he  sent the                                                              
suggested language to Ms. Miller.                                                                                               
                                                                                                                                
CHAIR COGHILL  asked if  the Bradley  Lake exemption is  currently                                                              
under litigation.                                                                                                               
                                                                                                                                
MR. THOMPSON answered  yes; one case regarding  the interpretation                                                              
of  the Bradley  Lake  agreement  is  before the  Alaska  Superior                                                              
Court. He reiterated  that ML&P does not want to  block SB 123 but                                                              
requests  an amendment  or a clear  statement  on the record  that                                                              
the legislature  does  not intend  to change  the status quo  ante                                                              
regarding litigation.                                                                                                           
                                                                                                                                
9:21:22 AM                                                                                                                    
CHAIR  COGHILL asked  if  he agrees  that  [adopting the  proposed                                                              
amendment] would codify one side of the litigation.                                                                             
                                                                                                                                
MR. THOMPSON answered  no but it would clarify that  nothing in SB
123 intends to change the status quo ante.                                                                                      
                                                                                                                                
CHAIR  COGHILL offered  his understanding  that  the exemption  is                                                              
based on the timing of a bond payment.                                                                                          
                                                                                                                                
MR. THOMPSON replied that is part of it.                                                                                        
                                                                                                                                
9:22:28 AM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
9:22:50 AM                                                                                                                    
CHAIR  COGHILL  reconvened the  meeting  and  asked Mr.  Scott  to                                                              
offer the RCA's perspective.                                                                                                    
                                                                                                                                
9:23:45 AM                                                                                                                    
ANTONY  SCOTT,   Commissioner  Regulatory  Commission   of  Alaska                                                              
(RCA),  Anchorage, Alaska,  stated that  he was  not speaking  for                                                              
the commission  as a whole,  but his perspective  was that  SB 123                                                              
does not  affect any  Bradley Lake exemptions  from RCA  review or                                                              
approval of any  of their contracts or amendments to  any of their                                                              
contracts.                                                                                                                      
                                                                                                                                
CHAIR COGHILL asked if there is any directive in the bill                                                                       
                                                                                                                                
MR.  SCOTT answered  no; it's  that the  Bradley Lake  exemptions,                                                              
which were  put in  place in the  1980s, are  not addressed  by SB
123. He mentioned  the question of project preapproval  if Bradley                                                              
Lake were to  do a new project  that required the issuance  of new                                                              
debt  before  the  existing exemptions  expire,  and  offered  his                                                              
opinion that  it would in  no way be a  review or approval  of any                                                              
contract. He reiterated  his view saying that he  struggles to see                                                              
how SB  123 could  be construed  as affecting  RCA authority  over                                                              
any contract  or contract  amendment associated  with the  Bradley                                                              
Lake agreements.                                                                                                                
                                                                                                                                
9:27:35 AM                                                                                                                    
CHAIR COGHILL  asked if  this is  something the  RCA has  ruled on                                                              
and is in litigation.                                                                                                           
                                                                                                                                
MR. SCOTT  answered no; the issues  in litigation have  nothing to                                                              
do with the bill.                                                                                                               
                                                                                                                                
9:28:22 AM                                                                                                                    
CHAIR COGHILL  asked the  bill drafter if  he'd seen  the language                                                              
ML&P proposed and come to a conclusion.                                                                                         
                                                                                                                                
9:28:42 AM                                                                                                                    
NOAH   KLEIN,   Legal   Counsel,   Legislative   Legal   Services,                                                              
Legislative  Affairs Agency,  Juneau, Alaska,  replied he  had not                                                              
seen  the language  and therefore  had  not come  to a  definitive                                                              
conclusion, but he  did not think that anything in  the bill would                                                              
affect the exemption under AS 42.05.431(c).                                                                                     
                                                                                                                                
CHAIR COGHILL  said the  remining questions he  had center  on the                                                              
Bradley Lake  exemption,  the timing, the  authority, and  whether                                                              
SB 123 does and/or should impact the exemption.                                                                                 
                                                                                                                                
9:30:38 AM                                                                                                                    
MS.  MILLER  said  she  believes  that  Homer  Electric  wants  to                                                              
comment  but  they  may  not be  available  today  due  to  travel                                                              
between Anchorage and Kenai.                                                                                                    
                                                                                                                                
CHAIR COGHILL said he would reach out to get their perspective.                                                                 
                                                                                                                                
9:31:31 AM                                                                                                                    
SENATOR GRAY-JACKSON  asked Mr.  Scott if he  would object  if the                                                              
language Mr. Thompson proposed were included in the bill.                                                                       
                                                                                                                                
9:32:04 AM                                                                                                                    
MR.  SCOTT  replied he  would  like  to  confer with  ML&P  before                                                              
answering;  first, he  hadn't  seen the  language  and second,  he                                                              
wasn't  sure  what  primary  concern the  language  was  meant  to                                                              
address.                                                                                                                        
                                                                                                                                
SENATOR GRAY-JACKSON offered her understanding that ML&P wants                                                                  
assurance in black and white.                                                                                                   
                                                                                                                                
CHAIR COGHILL said he'd make sure that all concerned have a copy                                                                
of the proposed language.                                                                                                       
                                                                                                                                
9:33:56 AM                                                                                                                    
CHAIR COGHILL held SB 123 in committee for future consideration.                                                                

Document Name Date/Time Subjects
SB 123 - Version G Work Draft.pdf SRBE 2/19/2020 9:00:00 AM
SB 123
SB 123 - Version G Summary of Changes E to G 2.18.2020.pdf SRBE 2/19/2020 9:00:00 AM
SB 123