Legislature(2009 - 2010)BUTROVICH 205
03/15/2010 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB301 | |
| HB44 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 301 | TELECONFERENCED | |
| + | HB 44 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 301-POWER PROJECT FUND
3:36:02 PM
CO-CHAIR MCGUIRE announced SB 301 to be up for consideration.
3:36:09 PM
SARAH FISCHER-GOAD, Deputy Director, Operations, Alaska Energy
Authority (AEA), and the Alaska Industrial Development and
Export Authority (AIDEA), thanked them for scheduling SB 301.
3:37:06 PM
SENATOR STEVENS joined the committee.
MS. GOAD explained that the bill does two things relating to the
Power Project Fund. It will allow AEA to charge and collect fees
for loans for the Power Project Fund, which they currently do
not do. Also it will allow AEA to sell loans from the Power
Project Fund to AIDEA. This will provide about $20.6 million of
additional loans for AEA to issue through the Power Project
Fund. She noted the committee has copies of the MOU that was
executed between AEA and AIDEA that outline the terms of the
sale.
The one issue that they made sure to include in the sale process
is that AEA will retain the risk by repurchasing the loans that
are sold to AIDEA if they default. Right now AEA has the risk if
any of these loans go bad. It allows them to have a discount
closer to the par amount of the loans that would be sold.
CO-CHAIR MCGUIRE said that she liked the bill and had touted it
in different speeches she had given on energy.
3:38:40 PM
BRUCE CHERTKOW, no stated affiliation, said he was available to
answer questions.
3:39:13 PM
CO-CHAIR MCGUIRE noted that Senator Linda Menard was in
attendance.
3:39:25 PM
CO-CHAIR WIELECHOWSKI asked Ms. Goad to describe what types of
projects are funded under this program.
MS. GOAD replied a variety of energy projects, lately renewable
energy projects. Loans that would be sold to AIDEA are for wind
and hydro electric projects.
CO-CHAIR WIELECHOWSKI asked the repayment rate.
MS. GOAD answered the repayment rate is based upon the average
weekly yield of muni bonds for the 12 months preceding period,
currently at 5.32 percent. The rate has varied and they can go
down to zero percent if a project warrants a lower interest
rate.
CO-CHAIR WIELECHOWSKI asked if they had any loan defaults.
MS. GOAD answered none currently, but one when the Power Project
Fund was inherited from the Division of Energy. About five or
six years ago, appropriations have been made to turn loans into
grants.
CO-CHAIR WIELECHOWSKI asked if this is essentially a revolving
loan fund and if it has had any delinquencies in the last few
years.
MS. GOAD answered that the program had been very successful and
has a very low delinquency and default rate.
CO-CHAIR WIELECHOWSKI asked how they decide where to loan these
funds.
MS. GOAD answered that it is really a first come first serve
basis for qualifying projects for which the agency goes through
a due diligence analysis for providing a loan. Sometimes the
agency requires loan guarantees or collateral from the
applicants.
3:42:54 PM
SENATOR FRENCH asked the basic advantage in shifting these from
AEA over to AIDEA.
MS. GOAD answered that the Power Project Fund is running out of
cash. In February it had a cash balance of slightly above $5
million. There is an expectation that as they do more renewable
energy funds that this is a source for matching dollar amounts.
So cash is needed in the fund. AIDEA is purchasing the loans as
an investment.
SENATOR FRENCH asked if AIDEA would give cash money to AEA; AEA
transfers the loans to AIDEA; and then AEA uses the cash it gets
from AIDEA to begin the process anew by loaning money out.
MS. GOAD said that was correct.
3:44:59 PM
CO-CHAIR MCGUIRE said SB 301 would be held over.
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