Legislature(2011 - 2012)
01/14/2011 02:38 PM House BUD
| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Audit Requests | |
| Subcommittee Report | |
| Executive Session | |
| Release of Audits | |
| Aea-renewable Energy Project Updates |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
Anchorage, Alaska
January 14, 2011
2:38 p.m.
MEMBERS PRESENT
Senator Kevin Meyer, Chair
Senator Linda Menard (via teleconference)
Representative Mike Hawker, Vice Chair
Representative Mark Neuman (via teleconference)
Representative Bill Stoltze
Representative Bill Thomas (via teleconference)
Representative Mike Doogan (via teleconference)
Representative Chris Tuck (alternate) (via teleconference)
MEMBERS ABSENT
Senator Lyman Hoffman
Senator Charlie Huggins
Senator Bert Stedman
Senator Donald Olson (alternate)
Representative Chenault (alternate)
COMMITTEE CALENDAR
APPROVAL OF MINUTES
AUDIT REQUESTS
SUBCOMMITTEE REPORTS
EXECUTIVE SESSION
RELEASE OF AUDITS
RENEWABLE ENERGY PROJECT UPDATES
OTHER COMMITTEE BUSINESS
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
REPRESENTATIVE ALAN AUSTERMAN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Requested an audit of the taxes and
assessments related to the fishing industry.
PAT DAVIDSON
Legislative Auditor
Legislative Audit Division
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions pertaining
to both the audit requests.
PETER CRIMP
Alternative Energy Program Manager
Alaska Energy Authority (AEA)
Anchorage, Alaska
POSITION STATEMENT: Presented an update and answered questions
on the Renewable Energy Fund Program.
SARA FISHER-GOAD
Deputy Director, Operations
Alaska Energy Authority (AEA)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the update of the
Renewable Energy Fund Program.
ACTION NARRATIVE
2:38:02 PM
CHAIR KEVIN MEYER called the Legislative Budget and Audit
Committee meeting to order at 2:38 p.m. Representatives Hawker,
Neuman (via teleconference), Stoltze, Doogan (via
teleconference), and Tuck (via teleconference), and Senators
Meyer and Menard (via teleconference) were present at the call
to order. Representative Thomas (via teleconference) arrived as
the meeting was in progress.
^Approval of Minutes
Approval of Minutes
2:38:44 PM
CHAIR MEYER announced that the first order of business would be
the approval of the minutes.
2:39:23 PM
REPRESENTATIVE HAWKER made a motion to approve the minutes of
December 14, 2010. There being no objection, the minutes from
the meeting of December 14, 2010 were approved.
2:39:54 PM
REPRESENTATIVE STOLTZE noted that the minutes were far "more
accurate and reflective of what went on in the committee than
the Legislative Council committee ... and more accurately
reflected what transpired."
^Audit Requests
Audit Requests
2:40:42 PM
CHAIR MEYER announced that the next order of business would be
the Audit Requests.
2:40:54 PM
REPRESENTATIVE ALAN AUSTERMAN, Alaska State Legislature,
requested an audit to clarify that the Department of Revenue
(DOR) had collected the full value of the raw fish tax, and had
not based it solely on the payment at the time of the landing.
Based on differing assessments by the entities, he also
questioned the revenue distribution by DOR to the Alaska Seafood
Marketing Institute (ASMI). He requested an audit of the taxes
and assessments related to the fishing industry: the Fishery
Business Tax, the Fishery Resource Landing Tax, the Seafood
Marketing Assessment, Regional Seafood Development Tax, the Dive
Fishery Management Assessment, and the Salmon Enhancement Tax.
2:43:49 PM
PAT DAVIDSON, Legislative Auditor, Legislative Audit Division,
Alaska State Legislature, in response to Representative Hawker,
acknowledged that the objectives for this audit request were
clearly stated. She pointed out that a study of a five year
time period would be sufficient.
2:44:41 PM
REPRESENTATIVE HAWKER moved to approve the request by
Representative Austerman for an audit of the fisheries tax and
assessments by DOR.
2:45:06 PM
CHAIR MEYER asked if there were any questions. There being no
objection, the audit request was approved.
2:45:46 PM
CHAIR MEYER announced that the next audit request was a follow
up to an earlier request by Senator Bettye Davis.
2:45:57 PM
MS. DAVIDSON explained that this audit request, previously
submitted by Senator Bettye Davis, was for a Legislative Audit
of the Alaska State Human Rights Commission and the State
Ombudsman's Office. She pointed out that the Legislative Budget
and Audit Committee had earlier approved the audit request for
the Alaska State Human Rights Commission, but had taken no
action with regard to the audit request of the State Ombudsman's
Office. She directed attention to a concern that, as the Office
of the Ombudsman and the Legislative Audit Division were both
Legislative Agencies, there was not the organizational
independence of the two entities necessary for an independent
audit. She reflected that both offices had stringent statutory
requirements for maintaining confidential information, but that
the Legislative Audit Division was the only office to have legal
access to the records of the Office of the Ombudsman. She
proposed that the Legislative Budget and Audit Committee
contract for a management review, which would realize the
request objectives of Senator Davis. This review would be
subject to the same release procedures as the audit reports,
prior to its release to the public.
2:49:00 PM
CHAIR MEYER agreed that Ms. Davidson's suggestion would resolve
the audit request by Senator Davis.
MS. DAVIDSON, in response to Chair Meyer, replied that she had
been working toward this resolution with the staff in Senator
Davis's office.
REPRESENTATIVE STOLTZE reflected on his past disagreements with
the Office of the Ombudsman.
2:50:34 PM
REPRESENTATIVE HAWKER pointed out that the Ombudsman was a
constituent and, in order to avoid any perceived conflict of
interest, any future business with the Office of the Ombudsman
would be conducted by the Vice Chair for the Legislative Budget
and Audit Committee.
2:51:34 PM
REPRESENTATIVE HAWKER moved to approve the audit request by
Senator Davis as discussed by Ms. Davidson. There being no
objection, the audit request was approved.
2:51:59 PM
^Subcommittee Report
Subcommittee Report
2:52:19 PM
CHAIR MEYER announced that the next order of business was the
Audit Review Subcommittee Report on the Alcoholic Beverage
Control (ABC) Board. He summarized that the Subcommittee had
recommended the transfer of the operation of the ABC Board to
the Department of Commerce, Community & Economic Development
(DCCED).
2:53:35 PM
REPRESENTATIVE HAWKER reported that, as incoming Chair of the
Legislative Budget and Audit Committee, he would introduce
legislation for this transfer. He asked if the suggestions of
the Subcommittee were supported by the other committee members.
2:54:29 PM
CHAIR MEYER surmised that DCCED was a good compromise as it
dealt with small businesses.
2:54:53 PM
REPRESENTATIVE STOLTZE agreed with the change, but he cautioned
that there was no intent to diminish enforcement.
2:55:52 PM
SENATOR MENARD concurred with the final Subcommittee report.
2:56:42 PM
There being no objection, the Subcommittee Report was accepted.
^Executive Session
Executive Session
2:57:12 PM
REPRESENTATIVE HAWKER made a motion to move to executive session
for the purpose of discussing confidential audit reports under
AS 24.20.301. There being no objection, the committee went into
executive session at 2:57 p.m.
3:32:58 PM
CHAIR MEYER brought the committee back to order at 3:32 p.m.
^Release of Audits
Release of Audits
3:33:10 PM
REPRESENTATIVE HAWKER made a motion for the final audits of the
Sunset Reviews of the Department of Commerce, Community &
Economic Development and the Regulatory Commission of Alaska,
and the special report on the Department of Natural Resources
Alaska Coastal Management Program, Part 1, to be released to the
public for response. There being no objection, it was so
ordered.
3:33:36 PM
REPRESENTATIVE HAWKER made a motion for the preliminary audit
for the Special Report for the Department of Natural Resources
Alaska Coastal Management Program, Part 2, to be released to the
appropriate agency for response. There being no objection, it
was so ordered.
^AEA-Renewable Energy Project Updates
AEA-Renewable Energy Project Updates
3:33:57 PM
CHAIR MEYER announced that the last order of business would be
an update on the Alaska Energy Authority (AEA) Renewable Energy
Projects.
3:35:20 PM
PETER CRIMP, Alternative Energy Program Manager, Alaska Energy
Authority (AEA), stated that he would review the hand-outs
[Included in the members' packets], point out the trends, and
answer any questions. He referred to the Renewable Energy Fund
Program Update, which reflected that 461 applications had been
received, 133 applications had been funded, and that 116 grants
were in place. He noted that only 4 grants had been cancelled.
He shared that AEA had recommended payment of $202.6 million of
the $1,094 million requested, with $44.4 million dispersed to
date. He reported that $4.7-$10 million from delayed grants was
now available for reallocation. He directed attention to the
footnotes which further detailed individual projects.
3:38:23 PM
CHAIR MEYER asked for details on the savings generated from the
completed projects. He opined that it was necessary for the
rate payers to recognize a savings.
3:39:05 PM
MR. CRIMP agreed and said that AEA would collect the performance
and operational data to answer these questions. He reported
that a detailed status update with fuel savings for power and
heating projects would be available to the legislature by the
end of the month. He projected an anticipated savings of 2.5
million gallons of oil during 2011, with a projected fuel
savings of 6.5 million gallons per year from future construction
projects. He opined that analysis had shown the project
paybacks to be inherently economic.
3:40:58 PM
CHAIR MEYER offered his belief that the "bottom line savings to
the rate payers" was the objective. He asked if an estimate of
savings was available prior to project approval.
3:41:45 PM
MR. CRIMP offered to provide the estimates of savings to date,
as well as the methodology.
3:42:20 PM
REPRESENTATIVE STOLTZE opined that there had not been
sustainability criteria at the onset of the projects.
3:42:58 PM
REPRESENTATIVE THOMAS offered an example of the savings effects
for Gustavus.
3:43:57 PM
SENATOR MENARD related an example for the cost savings generated
by the Pillar Mountain Wind Project in Kodiak. She asked for
more information regarding the Bethel Wind Project.
3:44:37 PM
MR. CRIMP explained that the Bethel Wind Project would develop
400 kilowatts of wind power, but that it was still necessary for
this project to obtain a power purchase agreement with Bethel
Utilities. He revealed that TDX Power was taking over the
utilities in Bethel, and that TDX had proposed to install larger
turbines. He suggested that this could generate greater
savings, and that AEA was working with Bethel Utilities and TDX
to study the feasibility of the larger turbines with the
possibility that the projects could merge, and qualify for an
increased cost allocation.
3:45:58 PM
CHAIR MEYER pointed out that the Swan-Tyee Intertie electric
transmission line project had lowered both rates and diesel use.
3:46:48 PM
MR. CRIMP, in response to Chair Meyer, offered to provide the
requested project information. He directed attention to the
"pie chart" handout titled "Round 1-3 Funding by Phase", which
depicted the expense allocations, the majority of which were for
construction. He reported that 11 construction projects and 11
design and feasibility projects were currently completed, with
21 more construction projects projected for completion by the
end of 2011. He called attention to the "Outlook" graph on the
same handout, which reflected the projected drawdown of funds
through June, 2014, and noted that $115 million would be drawn
down by September, 2012. He pointed out that the discrepancy
between the $150 million project allocation and the $115 million
drawdown reflected the need for more information from a few
projects before the drawdown of those funds would be scheduled.
He introduced the Renewable Energy Fund Construction Schedule,
which reflected the cumulative drawdown schedule.
3:51:24 PM
CHAIR MEYER asked about plans for the remainder of the Round 1
funding which had not yet been dispersed.
MR. CRIMP, in response, affirmed that some projects had been
delayed. He informed the committee that caps had been placed on
projects, $4 million for higher cost areas and $2 million for
lower cost areas, and that these caps had necessitated the
grantees to come up with the remaining financing. He pointed
out that, prior to funding, all financing and permitting needed
to be in place. He summarized the delayed projects, and listed
those projects which were now proceeding. He reported that AEA
was sending letters to grantees detailing the need for
"deliverables by a date certain, otherwise we will need to start
the process of bringing the grants back."
3:55:24 PM
REPRESENTATIVE STOLTZE asked if Governor Parnell had recognized
the correct funding for backlogged projects in his capital
budget recommendations.
3:56:02 PM
SARA FISHER-GOAD, Deputy Director, Operations, Alaska Energy
Authority (AEA), offered her belief that the $35 million funding
available for Round 4 should be sufficient.
3:57:55 PM
MR. CRIMP directed attention to the project completion schedule
outlined on the Renewable Energy Fund Construction Schedule.
3:58:46 PM
CHAIR MEYER asked for specifics on the Anchorage Municipal
Landfill Gas project.
3:59:18 PM
MR. CRIMP replied that this project should be completed by 2012.
He expressed his pleasure with the project, and explained that
the project had ensured that its solicited competitive proposals
were consistent with the terms of the grant. The accepted
proposal would allow for the gas to be sold and piped to Joint
Base Elmendorf-Richardson and Fort Wainwright for power and heat
generation. He affirmed that the proposal provided a good
economic solution for the Anchorage municipality.
4:01:05 PM
SENATOR MENARD asked for more information about the Fishhook
Creek Hydro project.
4:01:34 PM
MR. CRIMP replied that this was a project proposal from an
independent power producer. He relayed that AEA had informed
the contractor that, prior to any funding, completion of the
pre-construction activities and the power purchase agreement
were necessary.
4:02:46 PM
MR. CRIMP, in response to Chair Meyer, explained that the
Kvichak River project was being combined with an AEA world power
system upgrade program, which was receiving Denali Commission
funds. He noted that both projects needed to be constructed
simultaneously. He opined that the project cost presented on
this construction schedule would be revised after the final
design data was submitted.
4:03:53 PM
MR. CRIMP gave a brief explanation of the Kvichak River project
and opined that the project could be funded through the emerging
energy technology fund.
4:04:56 PM
REPRESENTATIVE DOOGAN established that his son-in-law was a
consultant for the Fishhook Creek Hydro project. He asked for
more information about the 12 projects listed with funding of
more than $2 million.
4:06:12 PM
MR. CRIMP explained that the two levels of caps included $4
million for high cost areas and $2 million for lower cost areas.
He pointed out that in Round 3, after there had been caps in the
first two rounds, it was decided to "not cap it by project but
we will cap it by round." He explained that in the final Round
4 the projects cumulatively could not go over $4 million for
high cost areas, and $2 million for the low cost areas. He
asserted that the project developers would need to find other
sources of financing, if additional funding were necessary.
4:08:03 PM
REPRESENTATIVE DOOGAN questioned projects well beyond any cap,
specifically the NW Arctic Borough Wind Farm which was projected
at almost $11 million.
4:08:40 PM
MR. CRIMP, in response, said that this was a project from three
communities, with project co-ordination by the NW Arctic
Borough. He disclosed that AEA had since changed its
guidelines, so that the grantee would now be the project owner
and developer.
4:10:02 PM
SENATOR MENARD asked for more information about the solar
projects.
MR. CRIMP replied that photovoltaic solar projects were not
economic in Alaska. He explained that solar thermal projects,
which captured heat and used it more directly, appeared to be
more economic.
4:12:12 PM
SENATOR MENARD thanked Chair Meyer for his work as Chair of the
Legislative Budget and Audit Committee.
REPRESENTATIVE DOOGAN agreed.
4:14:12 PM
^Adjournment
Adjournment
There being no further business before the committee, the
Legislative Budget and Audit Committee was adjourned at 4:14
p.m.
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