Legislature(2009 - 2010)SENATE FINANCE 532

02/10/2009 03:00 PM House ENERGY


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03:06:32 PM Start
03:07:06 PM Work Session: Pathway to Energy Committees' Comprehensive Statewide Energy Plan
04:49:51 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Joint with Senate ENE
Overview: Cold Climate Center
<Above Item Canceled from Agenda>
+ Work Session: "Pathway to Energy TELECONFERENCED
Committee's Comprehensive Statewide
Energy Plan"
               ALASKA STATE LEGISLATURE                                                                                       
                     JOINT MEETING                                                                                            
           HOUSE SPECIAL COMMITTEE ON ENERGY                                                                                  
          SENATE SPECIAL COMMITTEE ON ENERGY                                                                                  
                   February 10, 2009                                                                                            
                       3:06 p.m.                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
HOUSE SPECIAL COMMITTEE ON ENERGY                                                                                               
                                                                                                                                
 Representative Bryce Edgmon, Co-Chair                                                                                          
 Representative Charisse Millett, Co-Chair                                                                                      
 Representative Nancy Dahlstrom                                                                                                 
 Representative Kyle Johansen                                                                                                   
 Representative Jay Ramras                                                                                                      
 Representative Pete Petersen                                                                                                   
 Representative Chris Tuck                                                                                                      
                                                                                                                                
SENATE SPECIAL COMMITTEE ON ENERGY                                                                                              
                                                                                                                                
 Senator Lesil McGuire, Chair                                                                                                   
 Senator Lyman Hoffman                                                                                                          
 Senator Albert Kookesh                                                                                                         
 Senator Bill Wielechowski                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                              
HOUSE SPECIAL COMMITTEE ON ENERGY                                                                                               
                                                                                                                              
 All members present                                                                                                          
                                                                                                                                
SENATE SPECIAL COMMITTEE ON ENERGY                                                                                              
                                                                                                                                
 Senator Bert Stedman                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
Work Session:  "Pathway to Energy Committees'                                                                                   
Comprehensive Statewide Energy Plan"                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                              
No previous action to record.                                                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KATE MARKS, Energy Program Director                                                                                             
National Conference of State Legislatures                                                                                       
Denver, Colorado                                                                                                                
POSITION   STATEMENT:     Gave  a  presentation   titled                                                                      
Developing an Energy Strategy.                                                                                                  
                                                                                                                                
CHRIS ROSE, Executive Director                                                                                                  
Renewable Energy Alaska Project (REAP)                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Gave a presentation  titled Energy                                                                      
for Alaskans.                                                                                                                   
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:06:32 PM                                                                                                                    
                                                                                                                                
CHAIR  LESIL MCGUIRE  called  the joint  meeting of  the                                                                      
House  Special  Committee  on   Energy  and  the  Senate                                                                        
Special  Committee  on  Energy  to order  at  3:06  p.m.                                                                        
Present  at the  call to  order from  the House  Special                                                                        
Committee  on  Energy  were  Representatives  Dahlstrom,                                                                        
Johansen,   Petersen,   Tuck,   Millett,   and   Edgmon.                                                                        
Representative  Ramras arrived  as  the  meeting was  in                                                                        
progress.  Present at the call  to order from the Senate                                                                        
Special  Committee  on  Energy  were  Senators  Hoffman,                                                                        
Kookesh, Wielechowski, and McGuire.                                                                                             
                                                                                                                                
^Work   Session:     Pathway   to   Energy   Committees'                                                                      
Comprehensive Statewide Energy Plan                                                                                           
                                                                                                                                
3:07:06 PM                                                                                                                    
                                                                                                                                
CHAIR MCGUIRE announced that  the only order of business                                                                        
would be a work session:   Pathway to Energy Committees'                                                                        
Comprehensive  Statewide Energy  Plan.   She  introduced                                                                        
the presenters,  and noted that the  presentations today                                                                        
are  the first  of  many  opportunities for  the  energy                                                                        
committees to  gather information and  develop statewide                                                                        
energy  policies.    Chair  McGuire  observed  that  the                                                                        
energy committees are reflective  of the majority of the                                                                        
regions  of  the  state  and   are  uniquely  suited  to                                                                        
determine what  type of energy  policy is  effective for                                                                        
each region.   She assured  members that all  ideas will                                                                        
be considered by the joint committee.                                                                                           
                                                                                                                                
3:09:46 PM                                                                                                                    
                                                                                                                                
KATE   MARKS,   Energy    Program   Director,   National                                                                        
Conference   of   State   Legislatures,   introduced   a                                                                        
PowerPoint presentation  that was an overview  of energy                                                                        
policies developed  in other  states over the  last five                                                                        
years.   She informed  the committee  that the  National                                                                        
Conference of State Legislatures (NCSL) is a bi-                                                                                
partisan  organization for  legislators  and staff  from                                                                        
all  fifty states  and  the  territories, and  explained                                                                        
that  the  presentation  covers  the  process  that  was                                                                        
followed in  each state by  the "task  force" developing                                                                        
energy policy.  The topics  addressed by each task force                                                                        
include:  petroleum, natural  gas, coal, fuel diversity,                                                                        
transportation, economic development,  coal bed methane,                                                                        
electricity  reliability,  security,  transmission,  net                                                                        
energy   balance,   imports   versus   exports,   energy                                                                        
efficiency  and  conservation, wind,  biomass,  ethanol,                                                                        
solar, oil, and electric utilities.   The critical first                                                                        
step is  to establish objectives; the  objectives should                                                                        
be broad and  reflect the reason behind  the development                                                                        
of an energy  policy.  Goals and objectives  should also                                                                        
include  a "metric"  in order  to gauge  the success  as                                                                        
goals are reached.                                                                                                              
                                                                                                                                
3:13:20 PM                                                                                                                    
                                                                                                                                
MS. MARKS  began with  the State  of Kansas  and advised                                                                        
that the  Kansas Energy Council  was established  by the                                                                        
governor  in  2004.    The  council  adopted  an  annual                                                                        
process to  develop policy recommendations on  topics of                                                                        
high priority.   These topics  were published  each year                                                                        
and  are available  on-line  for review  by the  public.                                                                        
She  further explained  that the  Kansas Energy  Council                                                                        
began  with 13  members  and was  expanded  later to  34                                                                        
members,  including  representatives  from  all  of  the                                                                        
different  relevant entities  in  the state.   Four  key                                                                        
points in  the planning process  were: the  frequency of                                                                        
meetings;  the  diversity  of the  council;  short-  and                                                                        
long-term  goals; and  the consideration  of all  energy                                                                        
issues.   The  Kansas Energy  Council established  focus                                                                        
committees   for  issues   such  as  greenhouse   gases,                                                                        
electricity, biomass, and energy  efficiency, as well as                                                                        
goals  and  missions.    The  council's  accomplishments                                                                        
include legislation related  to ethanol, efficiency, and                                                                        
electricity  transmission,  and  the  development  of  a                                                                        
transmission authority.  In  addition, a wind generation                                                                        
study  came  from  the council's  direction  and  Kansas                                                                        
became the  seventh state  to exceed 1,000  megawatts of                                                                        
electricity  generated  from  wind  power.    Ms.  Marks                                                                        
pointed  out that  the wind  generation working  group's                                                                        
three  goals were:  to make  wind generated  electricity                                                                        
competitive; to  address transmission  of power  and the                                                                        
federal tax  credits thereof;  and to look  at community                                                                        
development  and  wind   [technology]  manufacturing  in                                                                        
Kansas.     Unfortunately,   the   governor  of   Kansas                                                                        
disbanded the council, although  members felt their work                                                                        
was successful;  in fact, the legislature  has formed an                                                                        
energy  committee and  the wind  and renewable  resource                                                                        
task force remains active.                                                                                                      
                                                                                                                                
3:18:08 PM                                                                                                                    
                                                                                                                                
MS. MARKS  displayed a  quote from Representative  Tanya                                                                        
Pullin of Kentucky  who said, "We're doing  this for the                                                                        
next generation,  not the  next election."   She relayed                                                                        
that  after   years  of   inaction,  Kentucky's   energy                                                                        
committee  created  a  task  force  comprised  of  seven                                                                        
members   including   the    secretaries   of   finance,                                                                        
education,  economic  development,   natural  resources,                                                                        
commerce, and  the senate  and house  energy committees.                                                                        
The task  force put public  engagement at  the forefront                                                                        
of  its policy  and quickly  formed  a "guiding  policy"                                                                        
that   resulted  in   executive   orders  and   proposed                                                                        
legislation.   In  2005, a  permanent  office of  energy                                                                        
policy was  established in the commerce  department that                                                                        
will  oversee the  implementation  of the  comprehensive                                                                        
energy strategy.                                                                                                                
                                                                                                                                
3:21:48 PM                                                                                                                    
                                                                                                                                
MS.  MARKS   offered  that   Oregon  and   Colorado  are                                                                        
potential models for how to  establish a state agency to                                                                        
oversee  and  administer  energy-related   tasks.    She                                                                        
turned  to the  situation in  North  Carolina, where  an                                                                        
out-dated energy  plan was re-worked by a  working group                                                                        
comprised of representatives  appointed by the governor,                                                                        
four  legislators, and  five  department  heads.   After                                                                        
nine days  of expert sessions, including  testimony from                                                                        
over 25 stakeholders and 300  members of the public, the                                                                        
working group drafted a set  of recommended policies and                                                                        
programs.   The recommendations resulted in  93 measures                                                                        
that became part of the  energy plan and required action                                                                        
by  the governor,  the general  assembly, the  utilities                                                                        
commission,  and other  agencies.    In addition,  North                                                                        
Carolina  used  its  university   system  as  an  energy                                                                        
consultancy and  its energy office  to keep a  matrix of                                                                        
accomplishments.                                                                                                                
                                                                                                                                
MS.  MARKS described  the procedures  in California  and                                                                        
said  that  Senate  Bill 1389  outlines  the  California                                                                        
Energy  Commission's (CEC's)  requirement  to create  an                                                                        
Integrated Energy Policy Report  (IEPR) every two years.                                                                        
The report is  developed by the CEC  with direction from                                                                        
state organizations and is reviewed  and approved by the                                                                        
governor and the legislature at set intervals.                                                                                  
                                                                                                                                
3:25:53 PM                                                                                                                    
                                                                                                                                
MS. MARKS, in  response to Chair McGuire,  said that the                                                                        
report is  prepared every two  years and updated  in the                                                                        
year  following.   She  continued  her presentation  and                                                                        
said that  in 2006,  Idaho's legislature  established by                                                                        
concurrent  resolution an  interim committee  of energy,                                                                        
environment,   and   technology.       The   committee's                                                                        
objectives were:  to ensure  a reliable, low-cost energy                                                                        
supply;  to  protect  the environment;  and  to  promote                                                                        
economic  growth.   The  committee  collected  testimony                                                                        
from  stakeholders   and  members  of  the   public  and                                                                        
developed broad  support for its recommendations.   Each                                                                        
of the  recommended findings and actions  held consensus                                                                        
support   and   recognized   the  need   for   increased                                                                        
conservation and diversity,  while maintaining access to                                                                        
conventional resources for energy suppliers.                                                                                    
                                                                                                                                
3:28:17 PM                                                                                                                    
                                                                                                                                
MS. MARKS stated  there are similarities between  all of                                                                        
the states' approaches  to an energy policy.   The first                                                                        
general principle  is the development of  a non-specific                                                                        
guiding  policy that  allows flexibility  and that  uses                                                                        
legislation  or executive  orders to address  specifics.                                                                        
Next,  she  advised  adopting specific  goals  that  the                                                                        
recommendations  in the  policy  will  help to  achieve.                                                                        
Instituting an  entity for  analysis is vital  to ensure                                                                        
the  state  has current  information  on  energy-related                                                                        
issues.   Furthermore, the policy must  include "teeth,"                                                                        
such as  regulations and  permits, and she  gave several                                                                        
samples from various states.                                                                                                    
                                                                                                                                
3:29:50 PM                                                                                                                    
                                                                                                                                
MS.  MARKS presented  the  last  slide that  listed  the                                                                        
general  process beginning  with an  overview of  energy                                                                        
statistics   and  trends;   the  involvement   of  state                                                                        
government  leadership;   consultation  with   national,                                                                        
state,  and local  organizations  and  experts; and  the                                                                        
involvement of the public.   She observed that most task                                                                        
forces are  bi-partisan  and have issued  a report  with                                                                        
their  recommendations.     Lastly,  she   stressed  the                                                                        
importance of  tracking the  progress of the  task force                                                                        
and keeping within a time-frame  for review and updates.                                                                        
Ms. Marks concluded her presentation  with an offer from                                                                        
NCSL to serve as a resource  to the committee and to all                                                                        
legislators.                                                                                                                    
                                                                                                                                
3:31:57 PM                                                                                                                    
                                                                                                                                
SENATOR HOFFMAN noted that  Alaska is sparsely populated                                                                        
except  for  a  large   concentration  of  residents  in                                                                        
Southcentral.  For the most  part, many utilities have a                                                                        
vast knowledge  about what is needed to  produce energy.                                                                        
However, different areas of  the state rely on different                                                                        
sources  of  energy.   He  asked  whether  other  states                                                                        
address a  similar diversity  and how to  coordinate "so                                                                        
that we can get a more  uniform and lower cost of energy                                                                        
for Alaska."                                                                                                                    
                                                                                                                                
3:33:07 PM                                                                                                                    
                                                                                                                                
MS. MARKS opined Idaho is a  good example for Alaska for                                                                        
three reasons.   Idaho developed a policy  that garnered                                                                        
public  support  and  included   the  utilities  in  the                                                                        
process.   Also,  the policy  considered new  resources,                                                                        
but recognized a  limit to their cost  and required cost                                                                        
benefit analyses.                                                                                                               
                                                                                                                                
3:34:23 PM                                                                                                                    
                                                                                                                                
SENATOR  HOFFMAN  further  asked  whether  other  energy                                                                        
producing states have utilized  their resources to lower                                                                        
costs to residents.                                                                                                             
                                                                                                                                
3:35:00 PM                                                                                                                    
                                                                                                                                
MS. MARKS offered to research this question.                                                                                    
                                                                                                                                
3:35:07 PM                                                                                                                    
                                                                                                                                
CHAIR  MCGUIRE  asked how  many  states have  an  energy                                                                        
policy that is codified in law.                                                                                                 
                                                                                                                                
3:35:28 PM                                                                                                                    
                                                                                                                                
MS.  MARKS estimated  that  more  than one-half  of  the                                                                        
states  have  an  energy  policy due  to  rising  energy                                                                        
costs,  the  concern  about   climate  change,  and  the                                                                        
development of  new and  alternative technology  for the                                                                        
extraction of resources.  She  advised that a long-term,                                                                        
long-standing  plan  has  become  a  priority  for  many                                                                        
states.  Regarding  codification, she was  unsure of the                                                                        
percentage,  but  stated  that   most  policies  are  in                                                                        
statute and offered to provide further details.                                                                                 
                                                                                                                                
3:36:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EDGMON first  observed that developing an                                                                        
energy  plan requires  participation  from  an array  of                                                                        
resources  beyond  the  legislature   or  the  executive                                                                        
branch.   Secondly, the  term "energy  plan" encompasses                                                                        
the areas  of cost, environment,  economics, efficiency,                                                                        
tax policy, and more.                                                                                                           
                                                                                                                                
3:38:03 PM                                                                                                                    
                                                                                                                                
MS.  MARKS  stated that  comprehensive  energy  policies                                                                        
highlight the importance of this  issue.  In response to                                                                        
Representative Edgmon,  she said that the  initial steps                                                                        
to develop an  energy policy can come from  any level of                                                                        
government.  In  some states, the legislature  has taken                                                                        
the leadership role; in others,  direction has come from                                                                        
the governor  or  state agencies.   In  any case,  it is                                                                        
critical to get approval from  each level to ensure that                                                                        
"everyone understands  their role  in what they  need to                                                                        
do, to make ... these recommendations happen."                                                                                  
                                                                                                                                
3:40:00 PM                                                                                                                    
                                                                                                                                
CHRIS ROSE, Executive Director,  Renewable Energy Alaska                                                                        
Project   (REAP),  informed   the  committee   that  his                                                                        
presentation was  a "SWOT"  analysis that  contained the                                                                        
basic business  analysis  of the strengths,  weaknesses,                                                                        
opportunities,  and threats  to  the  development of  an                                                                        
energy  policy.    As introduction,  he  said  that  the                                                                        
Renewable Energy  Alaska Project  (REAP) is  a coalition                                                                        
of   61  organizations   around   the  state   including                                                                        
utilities,  businesses, environmental  groups,  consumer                                                                        
groups,   Alaska   Native  organizations,   and   energy                                                                        
agencies.   Its goal  is to  increase the  production of                                                                        
renewable  energy  in  Alaska.    Mr.  Rose  listed  the                                                                        
strengths for  Alaska beginning with its  vast renewable                                                                        
energy  (RE) resources  that are  stably priced,  clean,                                                                        
local, and  inexhaustible; reserves of natural  gas; and                                                                        
other fossil fuels.  Also,  there are economic strengths                                                                        
such as  the Alaska Permanent  Fund and [the  influx of]                                                                        
federal  stimulus  money.   Further  strengths  are  the                                                                        
excellent  staff at  the Alaska  Energy Authority  (AEA)                                                                        
and at  Alaska Housing  Finance Corporation  (AHFC); the                                                                        
AEA  "Alaska Energy"  Report; the  Cold Climate  Housing                                                                        
and  Resource  Center (CCHRC)  Report;  the  legislative                                                                        
commitments through the Renewable  Energy Grant Fund and                                                                        
Weatherization  Rebate  Programs;   and  many  motivated                                                                        
people and communities.                                                                                                         
                                                                                                                                
3:44:48 PM                                                                                                                    
                                                                                                                                
MR.  ROSE  turned  to  weaknesses  and  began  with  the                                                                        
state's heavy  dependence on  natural gas and  diesel to                                                                        
generate  heat  and electricity.  With  this  dependence                                                                        
come the risks of increasing  prices on the world market                                                                        
and  the cost  of future  penalties for  carbon.   Other                                                                        
weakness  are:   energy agencies  are decentralized  and                                                                        
understaffed;    there   is    limited   research    and                                                                        
development;  there   is  a  lack  of   coordinated  job                                                                        
training  for energy  related jobs;  many renewable  and                                                                        
fossil resources  are stranded;  populations  are small;                                                                        
and distances for the transmission of energy are great.                                                                         
                                                                                                                                
3:48:17 PM                                                                                                                    
                                                                                                                                
MR. ROSE  continued to  explain that  further weaknesses                                                                        
are  the  six  small Railbelt  utilities  that  are  not                                                                        
mandated to do integrated  planning for power generation                                                                        
and transmission.                                                                                                               
                                                                                                                                
3:50:08 PM                                                                                                                    
                                                                                                                                
CHAIR MCGUIRE asked how other  states have addressed the                                                                        
distance issue.                                                                                                                 
                                                                                                                                
3:50:22 PM                                                                                                                    
                                                                                                                                
MR.  ROSE responded  that,  besides  Nebraska and  Iowa,                                                                        
other states  do not  have a  utilities "co-op"  system.                                                                        
Furthermore, Nebraska  and Iowa  are not as  isolated as                                                                        
Alaska.    He  expressed   his  understanding  that  the                                                                        
governor  is  introducing  a  bill  to  consolidate  the                                                                        
Railbelt  utilities;  for  now,   however,  the  current                                                                        
situation  limits  financing capabilities  and  prevents                                                                        
individual    utilities    from   developing    a    big                                                                        
[infrastructure] project.                                                                                                       
                                                                                                                                
3:51:34 PM                                                                                                                    
                                                                                                                                
CHAIR  MCGUIRE  pointed  out   an  analogy  between  the                                                                        
aforementioned  situation and  the  lack of  integration                                                                        
between the state's energy agencies.                                                                                            
                                                                                                                                
3:52:32 PM                                                                                                                    
                                                                                                                                
MR. ROSE presented more weaknesses  that have to do with                                                                        
energy  efficiency:  inefficient  housing  and  building                                                                        
stock; no statewide  codes; no baseline data;  no public                                                                        
education programs;  no statewide efficiency  goals; and                                                                        
efficiency  is  not  rewarded through  regulation.    In                                                                        
addition, there  is no consistent funding,  no mechanism                                                                        
in place to reach the  50 percent renewable energy goal,                                                                        
and  a   weak  regulatory  commission,   the  Regulatory                                                                        
Commission of Alaska (RCA).                                                                                                     
                                                                                                                                
3:54:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLETT asked  whether the existing state                                                                        
agencies are  sufficient, but are  not aligned in  a way                                                                        
that  supports the  AEA  with  financing and  regulatory                                                                        
assistance in rural areas.                                                                                                      
                                                                                                                                
3:55:10 PM                                                                                                                    
                                                                                                                                
MR.  ROSE agreed  that  there  is informal  coordination                                                                        
between agencies;  however, programs are  duplicated and                                                                        
it is  very hard for  the public  to know "who  is doing                                                                        
what."  He said that he  does not get too many questions                                                                        
about regulatory policy, except for  PCE.  Mr. Rose then                                                                        
discussed opportunities and suggested  that the first is                                                                        
to strengthen AEA as it  is seriously understaffed.  Now                                                                        
is  also  a  good  time  to  do  things  differently  by                                                                        
creating a  unified power  producer in the  Railbelt and                                                                        
to  begin regulatory  reforms  with  a focus  on  energy                                                                        
efficiency.                                                                                                                     
                                                                                                                                
3:58:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT  suggested  AEA suffers  from  a                                                                        
lack of authority.                                                                                                              
                                                                                                                                
3:58:52 PM                                                                                                                    
                                                                                                                                
MR. ROSE  explained that AEA  is not a department  but a                                                                        
corporation   connected   to   the   Alaska   Industrial                                                                        
Development  & Export Authority  (AIDEA), Department  of                                                                        
Commerce, Community & Economic  Development (DCCED).  He                                                                        
gave some  of the  history of the  agency; in  fact, AEA                                                                        
and AIDEA share the same  board of directors.  Returning                                                                        
to  the topic  of  opportunities,  Mr. Rose  listed  the                                                                        
following ideas:  create a  funding pool for performance                                                                        
contracting;  leverage  the  Alaska Permanent  Fund  for                                                                        
"blended  value" investing;   expand  the power  project                                                                        
loan  fund;  diversify  and strengthen  the  economy  by                                                                        
developing  and   perfecting  small   scale  technology;                                                                        
strengthen  the University  of Alaska energy  curriculum                                                                        
and research and development  efforts; expand efficiency                                                                        
programs  and  improve  job  training  for  contractors;                                                                        
retrofit  all public  buildings over  time; and  support                                                                        
public  energy  efficiency  and  conservation  education                                                                        
programs.                                                                                                                       
                                                                                                                                
4:04:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAHLSTROM  asked whether revision  of the                                                                        
Uniform  Building   Code  is  necessary  prior   to  the                                                                        
regulation of energy efficiency standards.                                                                                      
                                                                                                                                
4:05:06 PM                                                                                                                    
                                                                                                                                
MR. ROSE  cautioned that  there will be  some resistance                                                                        
to new building codes  for new residential construction;                                                                        
however, there  will be less "push back"  for commercial                                                                        
and  retrofit   buildings.     Furthermore,   as  energy                                                                        
efficiency   becomes  an   important  selling   feature,                                                                        
builders will be more receptive to regulation.                                                                                  
                                                                                                                                
4:06:19 PM                                                                                                                    
                                                                                                                                
MR.    ROSE    relayed    the    following    additional                                                                        
opportunities:     encourage  electric   transportation,                                                                        
particularly in cities like  Sitka and Juneau; encourage                                                                        
electric  heat;  remain  an  "energy  exporter"  in  the                                                                        
future  by exporting  excess  electricity through  power                                                                        
lines and  hydrogen by tanker;  increase competitiveness                                                                        
and  improve   the  investment   climate  by   producing                                                                        
renewable energy; and preserve  communities and cultures                                                                        
by producing renewable energy.                                                                                                  
                                                                                                                                
4:09:54 PM                                                                                                                    
                                                                                                                                
MR. ROSE  then listed the  following threats:   delaying                                                                        
action; competing  solutions such  as the  Susitna Hydro                                                                        
Project  versus  the  [AGIA  or  Denali-The  Alaska  Gas                                                                        
Pipeline  Project]   gas  pipeline;   and  uncoordinated                                                                        
efforts.                                                                                                                        
                                                                                                                                
4:10:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLETT observed  that competing projects                                                                        
are not a threat, but the  way to determine the best and                                                                        
most economical project.                                                                                                        
                                                                                                                                
4:11:19 PM                                                                                                                    
                                                                                                                                
MR. ROSE clarified that competing  projects are a threat                                                                        
when they are analyzed independently in isolation.                                                                              
                                                                                                                                
4:11:56 PM                                                                                                                    
                                                                                                                                
CHAIR MCGUIRE agreed and added  that the state needs the                                                                        
ability to  follow its policy  and balance  the projects                                                                        
so all regions  benefit.  She cautioned  against looking                                                                        
at individual  projects in an uncoordinated  way instead                                                                        
of looking  "from 35,000  feet" to determine  what makes                                                                        
sense   for   the  state.   Chair   McGuire   understood                                                                        
Representative  Millett's  concern;  however,  competing                                                                        
projects must be recognized as fitting together.                                                                                
                                                                                                                                
MR. ROSE warned  that there are not  enough engineers in                                                                        
the U.S.  to build  the gas line  and the  Susitna Hydro                                                                        
Project  at  the  same  time.    In  response  to  Chair                                                                        
McGuire, he said that  competing hydro electric projects                                                                        
raise technical  integration issues such as  the balance                                                                        
of resources  and the  staging or  phasing of  projects.                                                                        
At  this  time,  the AEA  is  beginning  its  integrated                                                                        
resources  plan  (IRP)  to  look  at  the  six  Railbelt                                                                        
utilities.   He is deeply  concerned that  the utilities                                                                        
may reject  the IRP.     He stressed that  uncoordinated                                                                        
efforts  are  a  big  issue and  tie  into  the  overall                                                                        
problem  of  "getting  everybody  working  on  the  same                                                                        
page."   Mr.  Rose returned  to the  listing of  threats                                                                        
that included:  entrenchment,  meaning all parties  have                                                                        
business  to protect  and  may stall  the  process;   an                                                                        
inordinate   focus  on  fossil   fuels;  declining   oil                                                                        
revenues; competition from around  the world, especially                                                                        
Iceland and Norway; ignoring  heating and transportation                                                                        
with  a  myopic  focus  on  electricity;  the  costs  of                                                                        
climate  change  and the  future  price on  carbon;  and                                                                        
Alaska's food supply.    Regarding Alaska's food supply,                                                                        
Mr. Rose  informed the committee  that the  average food                                                                        
in  the  Lower  48  moves   1,500  miles  to  reach  the                                                                        
consumer.  In Alaska, the average  is 5,000 miles to get                                                                        
to the  consumer.  This  situation makes  Alaskans super                                                                        
dependent  on transportation  systems  for  food and  as                                                                        
food  is energy,  it must  be  intricately connected  to                                                                        
energy policy.   For example,  how to protect  farm land                                                                        
and protect resources to grow food.                                                                                             
                                                                                                                                
4:19:49 PM                                                                                                                    
                                                                                                                                
MR.  ROSE displayed  the next  slide  titled Why  Policy                                                                        
Now?  He  explained that Alaska needs  affordable energy                                                                        
to prosper  even though  the price  of fossil  fuel will                                                                        
continue to  increase.   More importantly,  the decision                                                                        
to  build a  power plant  carries economic  implications                                                                        
for 20 to 100 years.  In  the Lower 48, a state can sell                                                                        
its  excess  energy  via   power  lines  to  neighboring                                                                        
states;  however, Alaska  will be stuck  with the  power                                                                        
plants  it builds  and it  must  make careful  decisions                                                                        
over the  next five to  six years.   Mr. Rose  said that                                                                        
the time is ripe for  policy creation and regulatory and                                                                        
structural reform.   His last slide  projected Iceland's                                                                        
vision of a  fully hydrogen-driven economy by  2050.  He                                                                        
pointed out that  93 percent of Icelanders  support this                                                                        
vision and the nation currently  uses nearly 100 percent                                                                        
renewable electricity  and heat.  He concluded  that, in                                                                        
order to meet  its goals and objectives,  Alaska needs a                                                                        
long-term vision for where it wants to be in 50 years.                                                                          
                                                                                                                                
4:22:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHANSEN  reminded  the  committee  that                                                                        
there is  a proposal in  Southeast to connect  its hydro                                                                        
grid with British Columbia, Canada.                                                                                             
                                                                                                                                
4:23:40 PM                                                                                                                    
                                                                                                                                
MR.  ROSE  stated that  he  was  aware of  the  proposed                                                                        
British  Columbia  intertie.     He  questioned  whether                                                                        
Alaska's excess hydro or tidal  power should be sold out                                                                        
on  the  national  grid, eventually  to  California,  or                                                                        
first  used  to provide  affordable  transportation  and                                                                        
heat  for Southeast  residents  first.   There  will  be                                                                        
trade-offs between  selling the power for  a high profit                                                                        
and using  it for  the needs  of local  residents.   The                                                                        
sale  of   electricity  is  unlike   the  constitutional                                                                        
mandate  that forces  the sale  of oil  and gas for  the                                                                        
highest price, he opined.                                                                                                       
                                                                                                                                
4:24:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN  surmised that  in 50  years, it                                                                        
will be  advantageous  for Southeast  to run its  excess                                                                        
electricity out  to the national grid. He  asked whether                                                                        
there was a downside to this connection.                                                                                        
                                                                                                                                
4:25:25 PM                                                                                                                    
                                                                                                                                
MR. ROSE  said he was unsure.   He assumed there  was no                                                                        
downside  if  you  serve  the  needs  of  the  Southeast                                                                        
residents first.                                                                                                                
                                                                                                                                
4:25:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DAHLSTROM  concurred   with  Mr.  Rose's                                                                        
comment  about food  as energy,  and encouraged  respect                                                                        
for farmers and the land.                                                                                                       
                                                                                                                                
4:27:05 PM                                                                                                                    
                                                                                                                                
MR. ROSE acknowledged that soil  is a finite resource in                                                                        
Alaska.                                                                                                                         
                                                                                                                                
4:27:29 PM                                                                                                                    
                                                                                                                                
CHAIR MCGUIRE  expressed her  desire to learn  about the                                                                        
"carbon foot printing" of food.                                                                                                 
                                                                                                                                
4:27:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EDGMON reflected  on Alaska's large-scale                                                                        
industry and its tremendous  use of power for extractive                                                                        
resources; in fact, this use  of energy may be viewed as                                                                        
a threat in  a SWOT analysis.  On the  other hand, there                                                                        
is   also   opportunity    for   public-private   sector                                                                        
partnerships and  he gave  examples of  the oil  and gas                                                                        
industries'  support for  its  neighbors  in Noatak  and                                                                        
Kivalina.                                                                                                                       
                                                                                                                                
4:29:02 PM                                                                                                                    
                                                                                                                                
MR. ROSE  agreed and  added that industry  will be  in a                                                                        
position  to move  industrial development  north as  the                                                                        
Arctic becomes ice-free.                                                                                                        
                                                                                                                                
4:29:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS told the  committee that replacing                                                                        
the  transmission   line  grid   in  most   small  rural                                                                        
communities  and villages  would save  more energy  than                                                                        
installing new wind towers would generate.                                                                                      
                                                                                                                                
4:31:09 PM                                                                                                                    
                                                                                                                                
MR. ROSE  agreed.  He  said that AEA  specifically looks                                                                        
at the  ability of  the transmission  grid to  integrate                                                                        
power and  assigns low  technical feasibility  scores to                                                                        
old transmission grids.                                                                                                         
                                                                                                                                
4:31:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS   then  referred  to   two  basic                                                                        
problems with wind power generation.   The first problem                                                                        
is funding  and the  other is the  cost of  building the                                                                        
transmission lines.   Unless an  entity is able  to take                                                                        
advantage of  federal subsidies, wind generation  is not                                                                        
economically  feasible.   He said  that in his  personal                                                                        
experience   with  alternative   energy  generation   in                                                                        
Fairbanks, it  is only economic  because of  the federal                                                                        
tax credits  and deductions;  in fact, profits  from the                                                                        
sale of kilowatts  back to the utility will  not pay for                                                                        
the capital  expenses.  He  asked whether  the renewable                                                                        
energy  projects contemplated  in  the Northwest  Arctic                                                                        
region  should be  constructed  by  state and  municipal                                                                        
governments   that  would   not   qualify  for   federal                                                                        
subsidies and  tax credits, or by private  entities that                                                                        
would qualify.  Representative Ramras remarked:                                                                                 
                                                                                                                                
    ...  it's  a  $15,000 million  project  if  it's                                                                            
    built  by  the City  of Nome,  it's $7.5  or  $8                                                                            
    million  if  it's built  by the  Bering  Straits                                                                            
    Native  Corporation, and that's a fact,  because                                                                            
    of the  nature of the subsidies and the  credits                                                                            
    that come with it.  And  yet it creates a really                                                                            
    important  policy question for  us, I think,  in                                                                            
    which kind  of entity are we going to  reach out                                                                            
    to  if we're  really trying  to maximize  energy                                                                            
    and we're always sensitive  to the kilowatt cost                                                                            
    that's going to be paid by the consumer ... .                                                                               
                                                                                                                                
4:35:21 PM                                                                                                                    
                                                                                                                                
MR. ROSE  concurred that  federal subsidies  are helpful                                                                        
for   renewable  energy   development.     The   federal                                                                        
production tax  credit (PTC)  was passed by  Congress to                                                                        
level  the playing  field  between  [RE] and  the  heavy                                                                        
subsidies for  oil and gas, nuclear [energy],  and coal.                                                                        
More  recently,   Congress  developed   another  program                                                                        
available to  non-profits called Clean  Renewable Energy                                                                        
Bonds  (CREBs); in  fact,  Kodiak Electric  Association,                                                                        
Inc.,  received  $5  million  to  $6  million  worth  of                                                                        
financing at  zero percent  interest.   This is  one way                                                                        
that the federal  government is trying to  deal with the                                                                        
fact that  only entities with  a tax burden  can benefit                                                                        
from PTC.   He also agreed  that there are many  ways to                                                                        
use partnerships  on major projects.  For  instance, the                                                                        
Fire  Island [wind  farm] project  is  a partnership  of                                                                        
private businesses.  Mr.  Rose acknowledged legislators'                                                                        
concern that providing grant  money to independent power                                                                        
producers is  without a guaranty  that there will  be an                                                                        
eventual  benefit   to  the  consumer.     An  imperfect                                                                        
solution to  this problem would  be to have the  RCA set                                                                        
the tariffs.   Moreover,  private companies  may not  be                                                                        
willing  to   build  new  infrastructure   in  villages,                                                                        
leaving the  local tribal  government or the  state with                                                                        
the  responsibility.   However,  private enterprise  and                                                                        
competition  can play  a bigger  role  in the  Railbelt,                                                                        
similar to what is happening in Canada.                                                                                         
                                                                                                                                
4:39:03 PM                                                                                                                    
                                                                                                                                
CHAIR   MCGUIRE   advised  that   proposed   legislation                                                                        
granting geothermal tax incentives  has been expanded to                                                                        
include  earned  tax  credits for  co-ops  and  publicly                                                                        
traded entities.  This legislation  is supported by many                                                                        
public entities in Alaska.                                                                                                      
                                                                                                                                
4:39:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS recommended  the committees  hear                                                                        
from  the  Golden  Valley  Electric  Association  (GVEA)                                                                        
about  their  involvement  in  the  Sustainable  Natural                                                                        
Alternative Power  (SNAP) program.   He pointed  out the                                                                        
SNAP  program  is  applicable to  small  commercial  and                                                                        
residential  uses because  it  creates a  pool of  money                                                                        
from  like-minded  contributors  that is  divided  among                                                                        
producers of  "green" kilowatts.   Representative Ramras                                                                        
strongly advocated for a presentation on this program.                                                                          
                                                                                                                                
4:41:57 PM                                                                                                                    
                                                                                                                                
MR.  ROSE  affirmed  that  the  SNAP  program  has  been                                                                        
successful  for GVEA;  furthermore,  the Homer  Electric                                                                        
Association   Inc.,    and   the    Matanuska   Electric                                                                        
Association Inc.,  are interested in participating.   He                                                                        
said  if the  Railbelt consolidates  its utilities,  the                                                                        
region  could  be  like   Demark,  Germany,  Spain,  and                                                                        
Ontario, Canada, where  tariffs are set at  a rate above                                                                        
market for  the use  of resources  that the  governments                                                                        
want to  incentivize.  Individuals  can sell  power into                                                                        
the grid and  the higher rate is spread  among all users                                                                        
of the  system.  This  has resulted  in the high  use of                                                                        
solar power  in Germany; in  fact, Germany has  become a                                                                        
major  manufacturer of  solar  panels.   He opined  that                                                                        
consolidation of  the Railbelt utilities could  have the                                                                        
same result in Alaska.                                                                                                          
                                                                                                                                
4:44:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   PETERSEN  asked   how  much  money   is                                                                        
available  in AEA's Power  Project Loan  Fund, what  the                                                                        
qualifications  for a  loan  are, and  whether the  fund                                                                        
should be increased.                                                                                                            
                                                                                                                                
4:44:39 PM                                                                                                                    
                                                                                                                                
MR. ROSE  responded that there  is about $10  million in                                                                        
the revolving fund and almost  all energy power projects                                                                        
are  eligible.   In further  response to  Representative                                                                        
Petersen, he advised that a  village utility could get a                                                                        
loan to  build a wind farm,  except there is  not enough                                                                        
money to go around.                                                                                                             
                                                                                                                                
4:45:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK  recalled  his  visit  to  Kotzebue                                                                        
where the  residents proved energy efficiency  is better                                                                        
than   energy   production    by   weatherizing   homes.                                                                        
Conserving  energy benefits  every family and  business.                                                                        
Furthermore, he  agreed that  Alaska should  work toward                                                                        
sustaining  itself regarding  food  and energy;  perhaps                                                                        
with  hydroponic  agriculture  and  other  creative  and                                                                        
innovative ideas.                                                                                                               
                                                                                                                                
4:47:48 PM                                                                                                                    
                                                                                                                                
MR. ROSE  encouraged the  committee to  go to  Chena Hot                                                                        
Springs to see tomatoes growing  in the cold and dark of                                                                        
February.   This is  an example  of taking  advantage of                                                                        
excess energy.                                                                                                                  
                                                                                                                                
4:48:12 PM                                                                                                                    
                                                                                                                                
CHAIR MCGUIRE  told the history  of Iceland that  led to                                                                        
the  development of  sustainable  geothermal energy  and                                                                        
hydroponic   food   production    there.      She   then                                                                        
acknowledged  the attendance  by  telephone  of:   Steve                                                                        
Haagenson,  Executive  Director,  AEA;  Karsten  Rodvik,                                                                        
External Affairs Director, AEA;  Eric Lidji of Petroleum                                                                        
News; and Gwen Holdman, University of Alaska.                                                                                   
                                                                                                                                
4:49:51 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being  no further  business before  the committee,                                                                        
the  joint meeting  of the  House  Special Committee  on                                                                        
Energy  and  the  Senate  Special  Committee  on  Energy                                                                        
meeting was adjourned at 4:49 p.m.                                                                                              

Document Name Date/Time Subjects
Alaska State Energy Policy Final.pdf HENE 2/10/2009 3:00:00 PM
NCSL and FERC RPS documents.TIF HENE 2/10/2009 3:00:00 PM
Rose REAP 02102009.pdf HENE 2/10/2009 3:00:00 PM