Legislature(2007 - 2008)BUTROVICH 205

04/13/2007 03:30 PM Senate RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 96 ESTABLISHING A RENEWABLE ENERGY FUND TELECONFERENCED
Heard & Held
-- Testimony <Time Limit May Be Set> --
+= SB 109 OIL & GAS CONSERVATION COMMISSION TELECONFERENCED
Moved CSSB 109(RES) Out of Committee
-- Testimony <Time Limit May Be Set> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
          SB  96-ESTABLISHING A RENEWABLE ENERGY FUND                                                                       
4:36:34 PM                                                                                                                    
CHAIR HUGGINS announced SB 96 to be up for consideration.                                                                       
                                                                                                                                
SENATOR ELLIS, sponsor of SB 96,  said renewable energy is a very                                                               
mainstream issue  and Alaska can  be a  leader in the  country by                                                               
moving  forward on  it now.  All our  congressional leaders  have                                                               
mentioned it  as a priority  and there is recognition  across the                                                               
political  spectrum  about the  value  and  wisdom of  developing                                                               
renewable  energy resources  in  the  State of  Alaska  so it  is                                                               
timely.  There is  money to  be  saved and  money to  be made  by                                                               
selling  the  power  and the  technology.  Alaska  has  excellent                                                               
sources for renewable  energy - such as  wind, geothermal, solar,                                                               
biomass and  hydropower to name a  few - and the  intelligence to                                                               
develop them.                                                                                                                   
                                                                                                                                
He  said SB  96 would  establish a  renewable energy  fund to  be                                                               
administered  by the  Alaska Energy  Authority  (AEA) that  would                                                               
offer both grants  and loans to communities  to develop renewable                                                               
and cost-effective sources of energy  around the state. AEA would                                                               
take advice from an advisory  committee with members appointed by                                                               
the governor from various stakeholder groups.                                                                                   
                                                                                                                                
SENATOR  ELLIS  said  SB  96  is  a  logical  progression  toward                                                               
developing Alaska's  inexhaustible energy resources and  it means                                                               
looking ahead  to the next  100 years.  He said there  is amazing                                                               
support for  this building  across the state  and the  list grows                                                               
daily.  To  name  a  few   -  Mat-Su  Borough,  Southeast  Alaska                                                               
Municipal Conference, Alaska  Municipal League, Chugach Electric,                                                               
Golden Valley Electric Association,  Alaska State Chamber, Alaska                                                               
Federation of Natives and Municipal Light and Power.                                                                            
                                                                                                                                
4:40:30 PM                                                                                                                    
PETER  CRIMP,  Program  Manager, Alternative  Energy  and  Energy                                                               
Efficiency, Alaska  Energy Authority, said AEA  supported efforts                                                               
to  further develop  the state's  renewable energy  resources. He                                                               
said the  market for  renewable energy is  increasing due  to the                                                               
increase in oil and gas  prices. Hydropower has been providing 25                                                               
percent of the state's energy for  a long time and there are many                                                               
potential  hydro  projects  throughout  Southeast,  Railbelt  and                                                               
rural Alaska  that look promising.   They range in size  from 200                                                               
kilo watt  project in Chignik Lagoon  to a 430 mega  watt project                                                               
in the  Chakachamna project. He  said wind energy has  been shown                                                               
to  be cost  effective in  30 to  45 locations  in rural  Alaska.                                                               
Kodiak is developing an 8  mega watt wind facility, Golden Valley                                                               
has been working toward developing  a large wind farm near Healy,                                                               
and CIRI  with a number  of Railbelt utilities is  moving forward                                                               
on Fire Island.                                                                                                                 
                                                                                                                                
As for geothermal, Chena Hot  Springs in Fairbanks has shown that                                                               
it  is  looking pretty  good.  That  project is  displacing  over                                                               
100,000 gallons  of diesel per year.  The Valley is looking  at a                                                               
potential project at Mt. Spur of 25 to 100 mega watts.                                                                          
                                                                                                                                
4:42:53 PM                                                                                                                    
MR. CRIMP said that wood  is abundant throughout the Interior and                                                               
areas where  there isn't wind  and is being used  for small-scale                                                               
thermal   applications  like   heating   schools  and   community                                                               
facilities.   Small-scale   modular  bio-power   technology   and                                                               
innovative  harvesting techniques  are being  looking at  also as                                                               
well  as cellulosic  ethanol development  in Southeast  Alaska by                                                               
Sealaska. The economics  of that are still  questionable, but the                                                               
technology is under development.                                                                                                
                                                                                                                                
He said that AEA and its  utility partners are continuing to work                                                               
in other  areas such  as fish oil  bio-diesel and  tidal industry                                                               
using the  flow of the  rivers in  the Interior and  elsewhere to                                                               
generate power.                                                                                                                 
                                                                                                                                
4:47:35 PM                                                                                                                    
CHAIR  HUGGINS  asked  if  there  was a  market  for  birch  bark                                                               
pellets.                                                                                                                        
                                                                                                                                
MR. CRIMP  replied that AEA  and AIDEA have  considered financing                                                               
pellet  manufacturing  facilities  both  as  an  industrial-grade                                                               
pellet  that could  be used  to produce  power in  a conventional                                                               
power  plant as  well as  a  feeding a  residential market.  Just                                                               
about all  pellets from all  species burn quite cleanly  and have                                                               
been widely used throughout the Lower 48.                                                                                       
                                                                                                                                
CHAIR HUGGINS asked why he  thought the Chakachamna project would                                                               
be any different than the Susitna hydro project.                                                                                
                                                                                                                                
MR. CRIMP replied both projects  are large with potential impacts                                                               
that  would need  to  be  studied before  they  move forward.  He                                                               
didn't want  to portray the Chakachamna  project as a go.  It has                                                               
many  hurdles  in terms  of  power  market, fish  migration,  and                                                               
economics  that would  have  to  be leapt  over  and the  Susitna                                                               
project has many of the same hurdles.                                                                                           
                                                                                                                                
4:48:34 PM                                                                                                                    
CHAIR HUGGINS asked how he got into this business.                                                                              
                                                                                                                                
MR. CRIMP said  he had worked with  the AEA for 14  years and has                                                               
moved up  through the ranks.  He is a  forester and a  planner by                                                               
background and  got hired  to manage  the state's  biomass energy                                                               
program.  His duties  have expanded  onto  the economic  analysis                                                               
side and overall project planning.                                                                                              
                                                                                                                                
4:49:22 PM                                                                                                                    
SARAH  FISHER-GOAD,  Deputy  Director, Alaska  Energy  Authority,                                                               
said that  Mr. Crimp did a  good job on an  overview of renewable                                                               
energy projects.  She said the companion  bill is HB 152  and she                                                               
pointed out that based on  AEA's recommendation the House changed                                                               
the bill from being a combination  grants and loan fund to just a                                                               
grant fund.  This is  because the loan  provision was  actually a                                                               
duplication of an existing program in the Power Projects Fund.                                                                  
                                                                                                                                
4:51:21 PM                                                                                                                    
SENATOR STEVENS asked her to explain  language on page 4 of SB 96                                                               
where it  says "must link  a renewable energy project  or natural                                                               
gas project to the electric grid."                                                                                              
                                                                                                                                
MS.  FISHER  replied  that  language had  changed  in  the  House                                                               
version  to  "transmission  or distribution  infrastructure"  and                                                               
doesn't refer to the electric grid at all.                                                                                      
                                                                                                                                
4:52:47 PM                                                                                                                    
MITCH  ERICKSON, Executive  Director, Nome  Chamber of  Commerce,                                                               
supported SB 96.  He said the Nome Chamber held  a two-day energy                                                               
summit  to look  for  alternatives to  diesel  in both  community                                                               
power  generation and  home heating.  It  was spurred  by the  20                                                               
percent  annual increases  in diesel  fuel prices  over the  past                                                               
several years. Very  few people receive pay raises  to match this                                                               
cost  of living  and some  locals  see their  winter heating  and                                                               
utility bill  is higher than  their mortgage payment.  Their goal                                                               
is to  wean their community  from diesel  as a primary  source of                                                               
energy. Experts addressed wind,  hydrogen, solar, geothermal, and                                                               
nuclear as well  as the funding and financing  available. He said                                                               
members of  AEA participated  and that  the City  of Nome  is now                                                               
conducting an  energy study along  with the Department  of Energy                                                               
and the  AEA to  see what  individuals and  businesses can  do to                                                               
lower  their  energy costs.  It  included  better insulation  and                                                               
using wind and  solar as a secondary source of  energy. One point                                                               
that came out of  the energy summit was the need  for a fund such                                                               
as SB 96.                                                                                                                       
                                                                                                                                
He said the Chamber  has not been able to find  an expert to work                                                               
with  them  on  these  issues  and it  is  trying  to  develop  a                                                               
relationship with  the University  of Minnesota solar  energy lab                                                               
for its technical expertise.                                                                                                    
                                                                                                                                
4:55:52 PM                                                                                                                    
NELS ANDERSON, Jr., Chair,  Southwest Municipal Conference Energy                                                               
Committee, Dillingham,  said he is  also a member of  the Bristol                                                               
Bay  Alternative Energy  Task  Force.  He said  SB  96 is  needed                                                               
because  their villages  are almost  totally dependent  on diesel                                                               
for their  electricity. Many  pay 50  to 75  cents per  kilo watt                                                               
hour for their electricity; most  individuals spend any available                                                               
money on lighting  and heating their homes. He said  "SB 96 needs                                                               
to pass as soon  as possible" and they believe the  AEA can do an                                                               
excellent job  in implementing the  renewable energy fund.  SB 96                                                               
is  the key  to unlocking  all of  Alaska's remarkable  renewable                                                               
energy resources.                                                                                                               
                                                                                                                                
MERRA  KOHLER,   President  and  CEO,  Alaska   Village  Electric                                                               
Cooperative  (AVEC), supported  SB 96.  She said  AVEC is  a non-                                                               
profit  electric utility  that  serves 52  villages primarily  in                                                               
northwest and  western Alaska.  Their 21,000  residents represent                                                               
almost  half  of Alaska's  village  population.  They operate  47                                                               
power plants,  almost all of  them are exclusively  diesel. Since                                                               
2000 they have  made tentative efforts to add a  few renewables -                                                               
all  wind. They  now have  supplemental wind  generation in  four                                                               
villages  and the  benefits of  those  four flow  to another  two                                                               
communities through interties. One  more intertie is being built.                                                               
Two  more wind  projects  are  being planned  for  this year  and                                                               
another two for next year.                                                                                                      
                                                                                                                                
She said these projects have  been almost exclusively funded with                                                               
federal and  local dollars; very  little or no state  dollars are                                                               
involved in any  of those projects. Utility  generation in Alaska                                                               
is  very expensive.  They can  only use  small wind  turbines and                                                               
their construction  costs are  staggering due  to the  arctic and                                                               
sub-arctic  conditions  and  that  is why  development  of  these                                                               
projects  is   very  slow.  Other  technologies   are  only  just                                                               
emerging. Alaska  needs a  renewable energy  bill to  support the                                                               
development of  renewable power sources in  its communities. AVEC                                                               
supported both versions of this bill.                                                                                           
                                                                                                                                
5:00:26 PM                                                                                                                    
SENATOR  WAGONER  asked if  she  could  relate any  reduction  in                                                               
diesel electric generation because of using wind generation.                                                                    
                                                                                                                                
MS.  KOHLER answered  that their  two most  recent projects  that                                                               
became functional last year in  Kasigluk and Toksook Bay are both                                                               
excellent  wind  regimes  and  expectations  have  been  exceeded                                                               
during the high wind months of  this last winter. In January they                                                               
displaced  more than  30 percent  of  their diesel  fuel in  both                                                               
communities.  The cost  of  fuel in  those  communities is  about                                                               
$2.50/gallon.                                                                                                                   
                                                                                                                                
CHAIR  HUGGINS said  members  had other  meetings  to attend  and                                                               
adjourned the meeting at 5:02:48 PM.                                                                                          

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