Legislature(2009 - 2010)BUTROVICH 205
03/09/2009 03:30 PM Senate RESOURCES
Audio | Topic |
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Start | |
SB31 | |
SB121 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
*+ | SB 121 | TELECONFERENCED | |
+ | SB 31 | TELECONFERENCED | |
SB 121-ENERGY EFFICIENCY BLDGS/PUBLIC WORKS 4:21:57 PM CHAIR WIELECHOWSKI announced the consideration of SB 121, which requires the Alaska Department of Transportation and Public Facilities (DOTPF) to assess and retrofit heated and lighted buildings. It encourages performance-based contracting, which has guaranteed savings. Representatives Gara and Thomas have a similar bill in the House, and Senator Joe Thomas also has one. The bill could save hundreds of millions of dollars over the years in fuel costs. The state has done similar work on 24 buildings and saved $365,000 at 2006 energy rates and $557,000 at 2008 rates. They have cut natural gas use by 15 percent; electricity by 22 percent; fuel oil by 36 percent; and they have cut back on water usage. If the state had done 25 similar contracts the savings would be about $13 million per year at 2008 rates. SB 121 is a job creation bill because of the retrofitting jobs. It is a win-win bill. 4:23:43 PM SHELLY MORGAN, Staff to Senator Bill Wielechowski, Alaska State Legislature, said SB 121 will lower the cost of state buildings by reducing energy use. It requires the Alaska Energy Authority (AEA) to establish a database to identify energy consumption, and it will use that to prioritize retrofit schedules. The buildings that consume the most energy can be first. The bill requires DOTPF to retrofit buildings when it will be cost effective. Where there are no funds, this bill allows DOTPF to use performance contracting with a qualified energy service company so the state can achieve energy audits and efficiency upgrades through a pay-as-you-save system. No money will be spent out of pocket. Within 15 years or less all paybacks will be made, and then the state will be saving large sums of money. Beginning in 2004, DOTPF executed a performance contract for 8 facilities with Siemens Building Technologies. Siemens has completed 16 facilities under two contracts. Each contract took about two years to complete, and energy performance reports were provided for the first three years. The report on the first contract showed that the state saved $365,991. 4:26:50 PM SENATOR HUGGINS asked about the cost of the retrofits. MS. MORGAN said that because of the performance contracting, there are no upfront costs. The only costs in the fiscal note are for staffing and the database. She said DOTPF provided two fiscal notes that were based on the original bill, not the CS. They were based on a 10-year [pay back]. With it being 15 years, there will be less costs per year. If the state did not use performance contracting, it would cost about $17 million. The fiscal note is about $363,000 for DOTPF and $100,000 for the AEA to put together the energy index database. 4:28:31 PM SENATOR HUGGINS asked if there is an updated code for new construction. MS. MORGAN said any new construction built to the most recent international energy conservation code would be less costly than retrofitting. The costs of retrofitting are paid by the savings. SENATOR HUGGINS asked if new buildings have to be built under new energy codes. MS. MORGAN said, "If you build a new building under the guidelines of SB 121, that new building would be required to be built to the most recently published version of the international energy conservation code standards, which would bring it to what we're trying to bring these other buildings to through retrofitting." This bill also allows for updates to be made through utility bills. Currently it says every ten years, but DOTPF is more interested in doing it every year. Updates can be made every ten years or every year using utility bills. That allows for observation of any substantial inefficiencies. When the conservation code is updated, new buildings may not need any retrofitting for a longer time. 4:31:01 PM JOHN DAVIES, Research Director, Cold Climate Housing Research Center, Fairbanks, supports SB 121. It addresses two key recommendations that were in his group's report entitled: Alaska Energy Efficiency Program and Policy Recommendations. The report recommended establishing an energy-use index, which the committee has just been discussing. It also recommended that the governor require state agencies to reduce their energy consumption. SB 121 addresses both recommendations. MR. DAVIES noted that the CS has "cross talk" between the index and the database in Section 4, subsections 1 and 2. It should be clear that the index is the method for calculating the efficiency of a building, and the database just collects the information to make that calculation and report the index. The report helps prioritize what is needed; state agencies have an enormous number of buildings. MR. DAVIES said that new construction goes to the international energy conservation code, but he suggested that the standards be made stronger. People trying to save energy would try to achieve a higher target, or about 50 percent of the energy specified in that standard. He supports the bill but it could be more aggressive and save more energy. 4:34:51 PM SENATOR HUGGINS said Mr. Davies made a comment about the governor directing the AEA. He asked Mr. Davies if he has had "any conversations with Mr. Haagenson or any of his subordinates about the governor directing." MR. DAVIES said not in recent weeks, but Mr. Haagenson is very supportive "of this general idea." The specific recommendation in the report was to have the governor do the directing, but as long as it gets done it doesn't matter who does it. SENATOR HUGGINS asked if the energy index is a major new task for the AEA. MR. DAVIES said it is neither major nor trivial. It would cost about $50,000 to hire a consultant to get the database up and running with an easy way to enter data. The basic information that will be entered into the index is fuel bills and square footage of the building. The database needs to be maintained, and that may require a quarter of a person's time. 4:37:41 PM STEVE HAAGENSON, Executive Director, Alaska Energy Authority (AEA), Anchorage, said the AEA will measure the total energy going into buildings on a BTU basis, and then it will divide by occupancy or square footage to get an index. There will be a database that will do a lot of the math and be a repository. Once the data is there, there won't be a need to redo the math until the buildings have been modified. AEA will then work with DOTPF to put regulations in place. 4:39:21 PM SENATOR HUGGINS asked if AEA had the time to do this. MR. HAAGENSON said he hired someone three weeks ago who is all charged up, and that person will do the work. SENATOR HUGGINS said, "We continue to get way ahead of ourselves as far as having a state energy policy, and we're cramming square pegs in square holes and sometimes round pegs in square holes. Does that make you uncomfortable?" MR. HAAGENSON said not at all. There are energy policies and plans, but a large component is conservation and efficiency. Retention of heat in a building is one of the smartest things to do, and this is a great step in that direction. 4:41:33 PM RANDY VIRGIN, Director, Sustainability and Efficiency Projects, Municipality of Anchorage, said SB 121 is a win-win bill. Alaska is one of two states in the country without an efficiency policy. It is high time. Buildings account for 39 percent of total energy use and 72 percent of electricity use in the United States. Efficiency programs can achieve measurable results. California has the nation's leading efficiency effort and has kept its per capita energy use flat since 1974, and the rest of the nation has gone up around 50 percent. Anchorage has had success in outdoor lighting by installing over 4,000 high- efficiency LED fixtures that led to a 56 percent reduction in energy use. The payback on the capital investment is six years, and that assumes today's prices. The bulbs last five times as long, so they reduce the labor to change bulbs. This investment in efficiency is beating the market. It is a guaranteed return. If that money had been put into the market, it would be doing a lot worse. The bill sets out a goal of reducing energy use in buildings by 20 percent, but that could be easily doubled to 40 percent without trying. Mr. Virgin said the facility managers could reach a little, and the bar could be set at 60 percent. 4:44:39 PM MR. VIRGIN said the bill allows the department to determine that a retrofit is not cost effective. He urged the committee to set an objective standard to determine if a retrofit is feasible, and that could be done by setting a timeframe for the return on investment. If the return is 15 years or less, then the facility must do it. That will set the proper balance with the expenditures on the front end. Thirdly, the bill allows the department to not comply fully with ASHRAE [Heating, Refrigeration, Air Conditioning Engineering] standards if there are specific climate [issues], and he thinks that language could be made into a more objective standard. 4:46:10 PM CHRIS HODGIN, Project Manager, Department of Transportation and Public Facilities (DOTPF), Anchorage, said DOTPF supports the bill but has concerns with the 20 percent goal. It is a goal, not a mandate, but he wants it to be clear that it doesn't mean that 20 percent can be attained. Some buildings can save more and some less. Rather than updating the energy use index in only specific circumstances, he suggested continuous updates annually to allow managers to evaluate their buildings "using the same average of annual periods". That gives an apples-to-apples comparison that won't miss inefficiencies. Even though the capital costs are paid for through the realized energy savings, there will be increased work for managers and administrators. 4:48:47 PM CAITLIN HIGGINS, Outreach Organizer, Alaska Conservation Alliance (ACA), Anchorage, said ACA is a coalition of 40 Alaska conservation organizations with over 38,000 Alaskans. The bill is critical because it addresses the demand side of energy; it will result in instant savings for public facilities; and it will better position Alaska to receive federal stimulus money for efficiency. ACA has been very pleased with the legislature's work on supply-side renewable energy, but it is equally important to address the demand for energy. The cheapest energy is the energy we don't have to use. SB 121 will result in real savings for the state and a reduction in the impacts of greenhouse gases. Public dollars will no longer be wasted by inefficient lighting and drafty windows. The federal stimulus package has $3.2 billion to help local governments implement energy efficiency programs in a block grant program that seeks to decrease energy consumption and fossil fuel emissions. It can be used for energy audits; loan, rebate, and incentive programs; grants for retrofits by nonprofits; and developing programs to conserve energy and transportation. There is another $4 billion for bonds that states and municipalities can issue to finance renewable energy and efficiency projects. The bonds carry a low interest rate and the bond holder receives federal credits in lieu of interest. The bill appropriates $3.1 billion for the state energy program, which provides grants and other funding to state energy offices for energy efficiency and renewable energy. "The normal matching requirements under the program do not apply to the funding provided by the bill." Alaska should receive some of these funds. States with an energy efficiency plan in place will be higher on the list for receiving federal funds. This bill will send a clear signal that Alaska is ready to use federal dollars for efficiency upgrades. 4:52:26 PM STEVE ASH, Sitka Climate Action Plan Task Force, Sitka, said Sitka has already begun a process very similar to SB 121. It joined the International Council for Local Environmental Issues about one year ago. The first thing the task force did was established an energy use index, and it is called a carbon emissions inventory. It includes transportation, public and private buildings, boats, and everything that consumes energy. The task force focused on transportation and municipal buildings. The group set a goal of a 25 percent reduction in carbon emissions by 2020. There was a 2003 inventory, and in 2008 there was already a 10 percent reduction in emissions. This was achieved by updating an oil burning furnace in Sitka's middle school. This job will be easier than they thought. Another school furnace can be upgraded. At $3.00 per gallon for heating fuel, it will save over $250,000 per year for Sitka. By 2020, fuel will likely be more than $3.00 a gallon. 4:55:38 PM MARCUS WALKER, Student, University of Alaska, Anchorage, said he is a member of the Alaska Conservation Alliance and Alaska Conservation Voters. He supports SB 121. He has been studying how much energy Anchorage is using. He is working for Randy Virgin on an energy index. Anchorage buildings are using immense amounts of energy, and simple measures can significantly reduce this. SB 121 can save an enormous amount of money for Alaska. Some cities have been doing this work from the ground up, so it is time to help push everyone in the right direction. There are retrofitting programs in the villages, and just by replacing light bulbs brought a 60-percent savings, which is important since diesel costs so much. 4:57:33 PM SENATOR HUGGINS said the Dena'ina Center is wonderful, but he has heard people say they would hate to heat that place. MR. WALKER said "Unfortunately with no standards that building was built incredibly inefficient ... and Anchorage has to pay for the electricity for a long time." This bill could help retrofit it to save money. CHRIS ROSE, Executive Director, Renewable Energy Alaska Project, Anchorage, thanked the committee for the bill and said it will stimulate the economy by creating jobs. Performance contracting is proven, and more contractors might come into the state. The nine recommendations from the Cold Climate Research Center report included state leadership, and this is important state leadership by focusing on state buildings. "Hopefully that will lead to more public awareness of this issue." SENATOR HUGGINS asked about expanding this bill to qualify for more federal grants. MR. ROSE said that if Alaska has this program, "we are least in line." Without any program it is difficult for Alaska to apply. 5:00:55 PM KEN BAUER, Performance Contract Salesman, Siemens Building Technologies, Inc., Issaquah WA, said he doesn't have a lot to add because other testifiers pointed out the benefits of the bill. The best use of state funds is for projects that can be done without using millions of dollars. There are some upfront costs, but it is a very good investment and a way to reduce energy without incurring huge expenses. The upgrades create efficient buildings that are likely healthier buildings, and the workforce will be more productive. It will also increase jobs in designing, engineering, and building. TOM LAKOSH, Anchorage, said he supports the bill, and it should be combined with SB 119: efficiency standards for new construction. There is overlap and conflict with SB 119. Moreover, in order to get in line for the state's energy block grants, Alaska needs to comply with section 4.10 of the stimulus bill. It requires commercial and residential building codes that Alaska doesn't have. "We need a real comprehensive conservation bill for retrofit, new construction, commercial and residential building codes." The residential building code has to meet the international energy conservation code, and commercial codes need to meet the ASHRAE standard. He would support the bill on its own, but in order to get the stimulus money, "you need to sit down, combine this with 119 and add the residential and commercial building codes." Everyone in the state is so touchy about building codes... CHAIR WIELECHOWSKI said [the legislature] is working on building codes so Alaska will be eligible for the stimulus funds. MR. LAKOSH suggested putting that with SB 121 and SB 119. There are conflicts between SB 121 and SB 119 that need to be worked out. He supports having a 15-year payback period as the standard for what will be done. That is critical because it goes far beyond any of the standards and makes the most economical sense. It is somewhat addressed in SB 119, but it is not clearly spelled out. "Randy's language is the best on that." Get the governor to sign one combined bill so Alaska can get the funds and pay for all these energy savings that it really needs. SB 121 was held over.
Document Name | Date/Time | Subjects |
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SB 31 Bill Packet.pdf |
SRES 3/9/2009 3:30:00 PM SRES 3/13/2009 3:30:00 PM |
SB 31 |
SB 121 Bill Packet.pdf |
SRES 3/9/2009 3:30:00 PM SRES 3/13/2009 3:30:00 PM |
SB 121 |