02/10/2011 03:00 PM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Presentation(s) Assessments of the Alaska Sustainable Energy Act of 2010 | |
| HB39 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 39 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
February 10, 2011
3:04 p.m.
MEMBERS PRESENT
Representative Lance Pruitt, Co-Chair
Representative Bob Lynn
Representative Dan Saddler
Representative Pete Petersen
Representative Chris Tuck
Representative Kurt Olson
MEMBERS ABSENT
Representative Neal Foster, Co-Chair
COMMITTEE CALENDAR
- PRESENTATION(S) ASSESSMENTS OF THE ALASKA SUSTAINABLE
ENERGY ACT OF 2010 BY:
-ALASKA POWER ASSOCIATION -ALASKA CENTER FOR ENERGY & POWER -
RENEWABLE ENERGY ALASKA PROJECT -COLD CLIMATE HOUSING RESEARCH
CENTER -ALASKA DIVISION OF PUBLIC ASSISTANCE
- HEARD
HOUSE BILL NO. 39
"An Act requiring a utility applying to the Regulatory
Commission of Alaska for a new or revised rate to have a refund
procedure in place."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 39
SHORT TITLE: RCA UTILITY RATES; REFUND PROCEDURES
SPONSOR(s): REPRESENTATIVE(s) PETERSEN
01/18/11 (H) PREFILE RELEASED 1/7/11
01/18/11 (H) READ THE FIRST TIME - REFERRALS
01/18/11 (H) ENE, L&C
02/10/11 (H) ENE AT 3:00 PM BARNES 124
WITNESS REGISTER
JOHN DAVIES, PhD, Senior Researcher-Energy Policy
Cold Climate Housing Research Center (CCHRC)
Fairbanks, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation titled,
"Alaska Energy Efficiency Policy."
SUSAN MARSHALL, Program Coordinator
Alaska Heating Assistance Program (AKAHP)
Division of Public Assistance
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Provided information on the Alaska
Affordable Heating Program (AKAHP) during the hearing on
assessments of the Alaska Sustainable Energy Act of 2010.
GWEN HOLDMANN, Director
Alaska Center for Energy and Power (ACEP)
University of Alaska Fairbanks (UAF)
Fairbanks, Alaska
POSITION STATEMENT: Provided information on the Alaska Center
for Energy and Power (ACEP) during the hearing on assessments of
the Alaska Sustainable Energy Act of 2010.
CRYSTAL ENKVIST, Director
Member and Public Relations
Alaska Power Association (APA)
Anchorage, Alaska
POSITION STATEMENT: Presented a report prepared by the Alaska
Power Association Managers Forum titled, "Initiatives for
Alaska's Energy Security."
HANNAH GUSTAFSON, Deputy Director
Renewable Energy Alaska Project (REAP)
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on assessments
of the Alaska Sustainable Energy Act of 2010.
DAVID DUNSMORE, Staff
Representative Pete Petersen
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided a sectional analysis of the
proposed committee substitute (CS) for HB 39 on behalf of
Representative Petersen, sponsor.
STUART GOERING, Assistant Attorney General
Commercial/Fair Business Section
Civil Division (Anchorage)
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Testified on behalf of the Regulatory
Commission of Alaska (RCA) during the hearing on HB 39.
ACTION NARRATIVE
3:04:19 PM
CO-CHAIR LANCE PRUITT called the House Special Committee on
Energy meeting to order at 3:04 p.m. Representatives Pruitt,
Petersen, Saddler, Tuck, and Olson were present at the call to
order. Representative Lynn arrived as the meeting was in
progress.
^PRESENTATION(S) ASSESSMENTS OF THE ALASKA SUSTAINABLE ENERGY
ACT OF 2010
PRESENTATION(S) ASSESSMENTS OF THE ALASKA SUSTAINABLE ENERGY ACT
OF 2010
3:05:45 PM
CO-CHAIR PRUITT announced that the first order of business would
be assessments of the Alaska Sustainable Energy Act of 2010 by
the following: the Alaska Cold Climate Housing Center (CCHRC);
the Alaska Division of Public Assistance; the Alaska Center for
Energy & Power (ACEP); the Alaska Power Association (APA); the
Renewable Energy Alaska Project (REAP).
3:06:33 PM
JOHN DAVIES, PhD, Senior Researcher-Energy Policy, Cold Climate
Housing Research Center (CCHRC), began his presentation on how
the Alaska Sustainable Energy Act of 2010 fits into the state's
energy efficiency policy. In 2008, CCHRC was funded by the
Alaska Energy Authority (AEA) and the Alaska Housing Finance
Corporation (AHFC) to complete a review of the state's energy
efficiency policy. Dr. Davies said that he would restate
highlights of that review for use as a baseline, compare the
state's progress since that time, and present the current
recommendations made by the research center. He advised that
energy efficiency is action that can be taken immediately - not
conservation - but getting the same output for less input by
relying on new technologies. Energy efficiency work usually
saves money and reduces pollution and CO2 emissions. The 2008
project was a major body of work that included a literature
review and contributions from professionals and stakeholders.
From the policy side, CCHRC studied energy building codes,
appliance standards, energy efficiency funding, energy
efficiency in state facilities, financing programs, utility
issues, and the funding of energy efficiency projects. The
educational issues that were studied included those of consumer
education, contractor, architect, and professional training, and
school curricula. The final recommendations were presented in
nine categories, one of which was state leadership. Dr. Davies
opined the state leadership issue was addressed last session by
House Bill 306, which pointed the state in the right direction,
but without a state-level, single point of focus. The second
category was funding for energy efficiency programs, which have
taken a giant leap forward through the funding of successful
programs such as the weatherization and energy efficiency rebate
programs. Dr. Davies noted that CCHRC also made recommendations
to the Regulatory Commission of Alaska (RCA) that have not been
implemented; however, his understanding is that the RCA has
opened a docket to consider the state's end-use energy
efficiency issues from the RCA's perspective. He suggested that
funding for education and outreach should be at $1 million per
year, although he acknowledged that a lot of consumer education
is reaching residents through the energy rebate program. As a
matter of fact, Senate Bill 220, which was enacted last year,
specifies that AEA should take the lead on an outreach program,
and the agency has organized a working group to explore
available grant funds to leverage the state's investment. He
continued to the category of baseline data and CCHRC's
recommendation that energy use data on the residential and
commercial use of energy is needed. The Office of Management &
Budget (OMB) has begun the task of establishing an energy use
index of information from public buildings, and he stressed the
need for the same information on existing and new residential
and commercial buildings.
3:16:55 PM
DR. DAVIES said CCHRC also recommended that the legislature
adopt the Building Energy Efficiency Standard (BEES) that AHFC
requires for any project it funds, including the retrofit of a
public building. He advised that the Alaska Building Energy
Efficiency Standard is merely a standard internal to AHFC, and
is not a statewide standard adopted by the fire marshal. Dr.
Davies restated that CCHRC recommends the adoption of statewide
standards, although he acknowledged this is a complicated issue.
Generally, there is support from the building industry for
standards and he advised the state has a direct interest on how
buildings are built because it subsidizes much of the cost of
energy. Dr. Davies said the next recommendation was that there
should be a focus on existing commercial buildings; in fact,
AHFC now has a revolving loan fund for that purpose. He
restated the recommendation for changes by the RCA. Turning to
recommendations regarding new commercial construction, he
advised AEA now has a program in place to assist with a process
to develop a commercial energy efficiency building code for new
construction. Regarding public buildings, he pointed out that
the revolving loan fund also supports Department of
Transportation & Public Facilities (DOTPF) as well as University
of Alaska (UA) and school buildings. Dr. Davies then reviewed
the status of energy efficiency programs in the state in 2009:
weatherization funding in the amount $200 million; rebate
funding in the amount of $160 million; renewable energy bill
funding in the amount of $100 million; market-driven
conservation issues; a developing awareness of energy issues
across the state; supply-side solutions such as reducing demand;
federal funding provided by the American Recovery and
Reinvestment Act (ARRA) funds. He then reviewed the
recommendations made by CCHRC in 2009, the first of which was
the recommendation to adopt a statewide building code. He
stressed that the absence of a code puts AHFC at a slight
disadvantage because AHFC mortgage requirements conform to meet
Alaska BEES standards, but federal lending agencies do not.
3:22:16 PM
REPRESENTATIVE SADDLER surmised the absence of a statewide code
causes problems for AHFC.
DR. DAVIES agreed because an applicant for a home loan chooses
the lender, and if he or she chooses AHFC, building energy
efficiency standards must be met; however, federally-backed
mortgage programs do not have to meet standards. Therefore, a
substandard house could be built due to the lack of statewide
standards. In further response to Representative Saddler, he
said it is not more expensive to use AHFC because the homeowner
may qualify for a mortgage rate reduction and will save on
energy costs. Dr. Davies repeated his point that home energy
efficiency saves the state money because it would spend less
supporting the Low Income Home Energy Assistance Program
(LIHEAP) and the Power Cost Equalization (PCE) program.
Although not a direct recommendation from the original report,
he noted that CCHRC has founded the Sustainable Northern
Communities program which uses current oil wealth to transition
to an economy based more on renewable energy. In addition,
great benefits would stem from designing power plants and
buildings in rural Alaska using a "Whole Village Retrofit"
concept which looks at all of the aspects of energy use in a
community. In fact, CCHRC is currently undertaking a number of
projects in villages around the state using this approach. He
opined the enactment of HB 306 established a vision and
legislative intent - although it is not a mandate - and can
provide guidance for future legislation to continue the support
of energy efficiency and conservation, the encouragement of
economic development, the support of energy research, education,
and workforce development, and calls for increased coordination
of governmental functions. Additionally, he summarized the
following facets of the Sustainable Energy Act: establishes a
variety of funds such as the Alaska Energy Efficiency Revolving
Loan Fund, the Southeast Energy Fund, the Emerging Energy
Technology Fund, the Alternative Energy Conservation Revolving
Loan Fund, and the Alaska Affordable Heating Program; creates a
database; converts public vehicles to increase fuel efficiency;
provides enabling clauses related to nuclear power; provides
public education; addresses issues of state land leases;
addresses energy codes and standards; addresses municipal
taxation exemptions. Dr. Davies then relayed CCHRC's goals for
2011, the first and foremost being the creation of a statewide
building energy efficiency code. Next was the RCA work that
could lead to legislation necessary for utilities-based end-use
electrical efficiency programs. The reduction of statewide
transportation energy was a subject included in the original
recommendations; however, CCHRC will consider energy use for
transportation and industrial use in its final reporting.
Issues on workforce development for energy efficiency will still
be under consideration, in fact, the UA program on training
energy efficiency workers is noteworthy on a national level.
3:30:41 PM
DR. DAVIES concluded that CCHRC is sufficiently funded to
continue to brainstorm with other experts and agencies, and to
issue an interim report to the legislature in March or April
with an expanded scope including transportation, utilities, and
industrial energy efficiency topics. The research center will
issue its final report in December, prior to the next session.
3:31:19 PM
REPRESENTATIVE TUCK asked for an explanation of the RCA's
implementation of a systems benefit charge.
DR. DAVIES explained that a systems' benefit charge is a small,
mandatory charge intended to generate a fund to support energy
efficiency programs. This recommendation was made prior to
enactment of the current legislation, but may be needed in the
future to fund end-use electrical efficiency programs at the
utility level. For example, Golden Valley Electric Association
(GVEA) has a consumer education program supported by its
electrical rates.
3:33:17 PM
REPRESENTATIVE TUCK asked how an endowment for end-use
efficiency programs would work.
DR. DAVIES said it is an alternative mechanism for funding these
programs - like a permanent fund - that would provide funding
for a long period of time.
3:34:07 PM
CO-CHAIR PRUITT asked how a statewide construction code could
serve the wide variety of housing that is found in different
regions of the state.
DR. DAVIES agreed the state includes many different kinds of
territory. Nonetheless, AHFC has implemented BEES by following
the international protocol of established climate zones. For
Alaska AHFC redefined the zones into Southeast, Southcentral and
the Aleutians, Interior, and North Slope. The zones are
determined by heating degree days and have different climate
requirements for insulation and so forth. Additionally, there
could be two compliance approaches; a prescriptive approach, or
a more flexible performance approach using AkWARM predicting
models. Both of these approaches would allow the state to
create a set of standards that is sufficiently flexible.
3:37:33 PM
SUSAN MARSHALL, Program Coordinator, Alaska Heating Assistance
Program (AKAHP), Division of Public Assistance, Department of
Health and Social Services (DHSS), informed the committee that
since the Sustainable Energy Act became law in June 2010, the
Division of Public Assistance has been able to update its
regulations, applications, and grants with tribal partners, in
order to have AKAHP "up and running" by October 2010. This
program is designed to mirror the Low Income Home Energy
Assistance Program (LIHEAP), except that LIHEAP provides funds
to households with income up to 150 percent of federal poverty
income guidelines, whereas AKAHP provides funds to households
with income of 151-225 percent of the poverty income guidelines.
Another difference is that AKAHP is directed to base the dollar
value of benefits on the average price of a barrel of North
Slope Crude Oil between the previous September through October.
Benefits are determined and paid for both LIHEAP and AKAHP using
this formula. Both programs also use a point system to
determine benefits based on the location of the home and
community, heating degree days, price of fuel, size of the
dwelling, family size and income, and whether the household
includes an Elder, a disabled person, or a young child. The
final benefit per household is determined by multiplying points
by the benefit dollar amount thus, for federal fiscal year 2011,
the agency is paying benefits of $140 per point. Ms. Marshall
explained that the program is administered by the state and
seven tribal organizations. So far this year the program has
served about 1,200 families, an increase of 30 percent over last
year, which is attributed to the division's outreach efforts and
increased awareness of the program.
3:42:11 PM
REPRESENTATIVE SADDLER asked how the money is distributed.
MS. MARSHALL explained that after the division receives funds
from the legislature, it processes one application from each
client for both programs, and determines the amount of the
benefit. The client is then notified of the action, and the
money is sent directly to the vendor. In further response to
Representative Saddler, she said the vendor could be ENSTAR
Natural Gas Company, an oil company, or an electric company. At
the client's direction, the benefit can be divided between two
vendors. Ms. Marshall said three-fourths of the households
served by AKAHP have included an elder, a disabled person, or a
young child, and one-half of the households fall within the
income level of 151-175 percent of the poverty income
guidelines. She concluded that the program serves many who are
just barely over the income guidelines for LIHEAP; in fact,
during fiscal year 2010 (FY 10), LIHEAP and AKAHP - which was
formerly known as the Alaska Heating Assistance Program (AKHAP)
- served 19,000 households, including those administered by
tribal organizations, and met the division's mission by serving
vulnerable households, and keeping people safe in their homes.
3:44:29 PM
CO-CHAIR PRUITT asked whether AKAHP and LIHEAP differ, in
addition to the differences in income levels.
MS. MARSHALL indicated there is no difference, except for the
point factors. For example, a one-room dwelling garners lower
points. The income factor is based on a sliding scale, with a
multiplier of 1.0 for a household with income between 0-25
percent of the poverty income guideline and a multiplier of .20
for households with income between 201-225 percent of the
poverty income guideline. Therefore, LIHEAP clients with lower
income receive a higher benefit, but the real difference is only
the source of the funds.
3:46:33 PM
REPRESENTATIVE SADDLER asked for the sources of the funding.
MS. MARSHALL responded that LIHEAP is funded by the federal
government, and AKAHP is funded from the Alaska general fund.
She clarified that the division has the authority to supplement
federal funds with state funds, if necessary.
3:47:23 PM
REPRESENTATIVE TUCK asked if LIHEAP is not fully funded, whether
state funds would be directed to applicants that qualify with
income up to 150 percent of poverty level, before those with
income between 151-225 percent.
MS. MARSHALL expressed the division's belief that there is
sufficient funding at this time. In further response to
Representative Tuck, she confirmed that the intention of the
program is to fund those with the lowest income first.
3:48:18 PM
REPRESENTATIVE PETERSEN asked whether the tribal organizations
that administer the program receive funding through the division
and the federal government.
MS. MARSHALL explained that LIHEAP funds from the federal
government are paid directly to the tribes. The state program,
AKAHP, is funded through the division by grants to tribal
organizations.
3:49:02 PM
REPRESENTATIVE PETERSEN surmised the funding amount is
determined by projections from the previous year.
MS. MARSHALL clarified that federal and state governments base
their funding on percentages served, the number of applicants in
a community, and a comparable benefit. Census data for this
purpose has proven incomplete in the past.
3:50:30 PM
GWEN HOLDMANN, Director, Alaska Center for Energy and Power
(ACEP), University of Alaska Fairbanks (UAF), stated that ACEP
is a University of Alaska (UA) applied research program housed
at UAF with staff, faculty, and students working on projects
located statewide. The center was organized in 2008 to meet the
immediate energy research needs of Alaska residents, industry,
and businesses. Ms. Holdmann explained that the center is
focused on providing information for decision makers so that
good decisions about energy will be made, and experience for
students who wish to work with energy-related projects in the
energy industry of Alaska. The center has about $15 million,
primarily from competitive grants and contracts, and about 30
active projects ranging from low-cost specific projects in
communities to a $6 million study of geothermal exploration
techniques.
3:53:49 PM
REPRESENTATIVE SADDLER asked for background information on ACEP
staff.
MS. HOLDMANN responded that ACEP is located within the College
of Engineering and Mines, thus the core of the staff is research
engineers; however, the center also partners closely with the
Institute of Social and Economic Research (ISER), University of
Alaska Anchorage (UAA), and with geologists, biologists,
chemists, and others who are required to conduct research for
its clients. She returned to her presentation and recalled that
ACEP was involved in the development of HB 306 last year. She
opined that writers of that legislation are to be commended as
it set on paper the direction of the future of the state and its
overarching energy policy. She acknowledged that legislators
have many large issues before them in addition to the
implementation of the Alaska Sustainable Energy Act, and noted
that her remarks today will be directed on two tasks directly
related to the act. The first is the Emerging Energy Technology
Grant Fund (EETGF) that was funded by the state at $2.4 million.
Although this is a small amount of funding, it is an important
first step. The manager of the program, the Alaska Energy
Authority (AEA) has released a request for application (RFA) and
has begun with implementation. However, before enactment of the
sustainable energy act, ACEP and the Denali Commission funded $8
million for a pilot program that resulted in 11 statewide
projects ranging from fossil fuel energy efficiency technologies
to all facets of energy generation, such as the wood pellet-
fired boiler at Sealaska Corporation in Juneau. Furthermore,
ACEP's role is also to collect data from these projects to
analyze performance and help decide which projects to fund in
the future. Ms. Holdmann pointed out that the second task
directed ACEP to lead the state in renewable energy technology
and to continue to lead in the development of petroleum
resources; for example, Alaska should be a leader in the
integration of wind power into diesel systems because this is an
issue that is not common in other states, but which is needed in
Alaska and in other parts of the world. Therefore, ACEP has
formed the Wind-Diesel Applications Center that is compiling
research from all over the world. Similarly, the best source of
oil revenue is the extraction of resources on state land, and
the research taking place at the university will ensure that the
state owns the technology it needs to maximize the extraction of
difficult-to-reach resources.
4:01:05 PM
MS. HOLDMANN again referred to aspects of the sustainable energy
act, which included changes to the restrictions that were placed
on the consideration of nuclear energy in Alaska. These changes
caused ACEP to study the nuclear powered small modular reactor
(SMR) that was proposed for the Galena Nuclear Power Plant; in
fact, ACEP's draft report on nuclear energy will be issued in
late February. She opined the report is a comprehensive
document that explores SMR nuclear technology which will be
available sometime in 2020-2025, and the economics thereof. For
example, if the technology were available today, the communities
of Fairbanks and Bethel have a viable potential to benefit from
reduced energy cost by nuclear generation. Ms. Holdmann then
turned to the subject of future work for ACEP and suggested that
additional funding for research is needed to study emerging
technologies, an overhaul of the Power Cost Equalization (PCE)
program, and the restructuring of the Alaska Renewable Energy
Fund. In response to Representative Saddler, she clarified that
a study of PCE would determine whether it is serving its purpose
which is to equalize the cost of power between rural regions of
the state and the Railbelt. Regarding funding for energy
research, she informed the committee that ACEP has a $250,000 FY
12 budget request in the UA Board of Regent's budget that would
provide funding for critical energy initiatives such as the
Wind-Diesel Center.
4:05:13 PM
CO-CHAIR PRUITT returned to the discussion of nuclear SMRs and
asked whether nuclear technology is advancing for units small
enough for small villages and the regions around them.
MS. HOLDMANN advised that ACEP studied many small scale options
such as radioisotope thermoelectric generators (RTGs) and
nuclear research reactors, and found that these smaller systems
are extremely expensive. In addition, the smallest unit that is
expected to be permitted by the Nuclear Regulatory Commission
(NRC) is the Toshiba 4S; however, neither this company nor any
other SMR manufacturer has submitted an application to the NRC.
4:06:53 PM
CO-CHAIR PRUITT surmised there is potential for nuclear energy.
MS. HOLDMANN recommended that Alaska watches for new technology,
but makes no decision at this time.
4:07:39 PM
CRYSTAL ENKVIST, Director, Member and Public Relations, Alaska
Power Association (APA), said she was testifying in the place of
the executive director of APA. Ms. Enkvist said APA is a
statewide trade association representing the electric utilities
that supply power to about 500,000 Alaskans. The association
supported the sustainable energy act, and she addressed the
sections that relate to electric utilities. The association
supports section 1 that contains language removing barriers to
the development of nuclear energy as it is an important
technology that needs to be considered. The association also
supports section 14 that creates the Emerging Energy Technology
Grant Fund (EETGF) and advisory committee populated by experts
in the science and engineering fields. One concern raised by
APA about EETGF's advisory committee is that the bill prohibits
a business or organization represented by a member of the
advisory committee from receiving a grant, and APA urges the
removal of this restriction. The association also supports
section 42 that allows the Alaska Housing Finance Corporation
(AHFC) to issue bonds for the Alaska Energy Efficiency Revolving
Loan Fund. Ms. Enkvist advised that the legislature should now
focus on the following initiatives: develop an implementation
plan for Alaska's energy policy; develop large-scale
hydroelectricity (hydro) for the Railbelt, and develop renewable
energy resources - hydro, geothermal, and wind - for other
regions of the state; encourage the development of a Cook Inlet
Gas Management Plan for continued gas delivery to Southcentral;
fund $15 million to the Renewable Energy Fund and fully fund the
Power Project Loan Fund; continue to fully fund the PCE; develop
policy and legislation that expands funding for energy
efficiency and conservation activities.
4:14:32 PM
MS. ENKVIST then noted several successful projects and
initiatives: Kotzebue Electric Association Wind Farm; Kodiak
Electric Pillar Mountain Wind Farm and Terror Lake Hydroelectric
Facility; Alaska Village Electric wind generators; Cordova
Electric Cooperative Power Creek Hydro; Alaska Electric Light &
Power Company's Snettisham and Lake Dorothy hydro projects;
AEA's Bradley Lake Hydroelectric Project. She concluded that
the Greater Railbelt Energy and Transmission Corporation is
"poised to do great things in Southcentral Alaska," and
complimented the legislature on the creation of the sustainable
energy act.
4:15:37 PM
REPRESENTATIVE PETERSEN heard plans to close ConocoPhillip's
liquefied natural gas export facility on the Kenai Peninsula.
He asked how the plant closure will affect natural gas
projections for Cook Inlet.
MS. ENKVIST said she will provide an answer as soon as possible.
In response to Co-Chair Pruitt, she said she would also provide
a list of successful projects.
4:17:10 PM
REPRESENTATIVE SADDLER asked whether the village electrical
cooperatives are availing themselves of the plethora of grants
and programs.
MS. ENKVIST deferred to Meera Kohler, President and CEO, Alaska
Village Electric Cooperative (AVEC).
4:18:09 PM
HANNAH GUSTAFSON, Deputy Director, Renewable Energy Alaska
Project (REAP), stated that REAP is a coalition of over 70
Alaska electric utilities, businesses, consumer groups,
conservation groups, Alaska Native organizations, and local,
state, and federal entities that share the goals of increasing
the production of renewable energy and promoting energy
efficiency in Alaska. Ms. Gustafson said the enactment of the
sustainable energy act provided a landmark for Alaska with its
bounty of renewable and nonrenewable energy resources. In fact,
the availability of renewable energy "provides a hedge against
the inevitable rise in fossil fuel prices." She said her
testimony would address two areas: specific provisions contained
in the legislation and issues for future consideration by the
legislature. She recalled REAP's strong support of the creation
of the Emerging Energy Technology Grant Fund (EETGF) and noted
that this program will help demonstration projects for energy
generation technologies such as biomass, river current, and
tidal and wave resources, leverage private and federal monies to
accelerate innovation in Alaska. Ms. Gustafson expressed her
organization's support for the continued funding of EETGF and
pointed out that the legislature, through its recent funding of
energy measures and programs, has recognized that efficiency
measures result in a quicker payback than investment in
generation resources. Furthermore, sections 9 and 42 of the
sustainable energy act created a revolving loan fund for
retrofitting public buildings, which is another step toward the
state's mandate, although she expressed concern that no funds
have been appropriated to address the energy efficiency of
commercial buildings at this time. Lastly, Ms. Gustafson
expressed her support for the sections of the legislation
directing the collection and storage of energy consumption data,
reporting, and providing technical assistance to municipalities
on energy matters. Turning to the governor's report on energy
programs, she said REAP supports adding the position of an
energy policy coordinator (EPC) to the governor's office,
however, the structure of this position should "be
institutionalized so it outlives individual administrations."
Furthermore, there is a need for the House Special Committee on
Energy to hold informational hearings on "administrative
approaches that are successfully being applied in other states."
Ms. Gustafson then addressed REAP's recommendations on issues
that the legislature should consider in the future and
encouraged adequate funding and personnel for all of the energy
programs and initiatives that have been established. As a
matter of fact, in order to meet the state's goals, a long-term
administrative structure is important so that energy programs
can function efficiently and without duplication. Additionally,
designing and building a sustainable energy infrastructure is
necessary to allow Alaska to be competitive. Next, the state
should develop a strategic energy focus so that programs like
the Renewable Energy Grant Fund may be more fully utilized to
drive technology, innovation, and to build improvements.
4:25:44 PM
MS. GUSTAFSON continued, saying the state should develop a
production-based tax credit for renewable energy. The last
recommendation was to urge the state to increase its investment
in energy efficiency programs because with energy efficiency,
Alaska increases its attractiveness to new business. She noted
that savings in fuel cost are being made by investments in the
weatherization and rebate programs, and the Renewable Energy
Grant Fund, and opined loans, grants, and other financing
mechanisms should also be made available to large Railbelt
utilities for the development of large scale hydro and other
renewable energy projects. Alaska must also continue the
funding of energy innovation programs such as EETGF in order to
compete with the rest of the world in the search to find more
sustainable energy solutions and systems. Ms. Gustafson
concluded that although Alaska has abundant natural resources,
in order for its communities to diversify their energy
portfolios, they will need assistance from the state.
4:29:20 PM
REPRESENTATIVE PETERSEN referred to EETGF and asked whether $2.4
million is sufficient funding.
MS. GUSTAFSON was unsure about the total of the applications for
this year, and expressed REAP's hope that the program will
continue to be funded in the future.
4:30:44 PM
CO-CHAIR PRUITT observed that the governor's budget, without
responding to the many requests for additional funding, may dip
into the state's savings. He asked whether REAP's member
organizations would contribute funds to energy programs along
with the state.
MS. GUSTAFSON pointed out that last year the Denali Commission
contributed $3.1 million to EETGF and has offered to contribute
again this year. In further response to Co-Chair Pruitt, she
expressed her belief that the Denali Commission has $2.4 million
in matching funds budgeted for this year.
4:33:21 PM
CO-CHAIR PRUITT requested her written testimony.
4:33:58 PM
The committee took an at-ease from 4:34 p.m. to 4:38 p.m.
HB 39-RCA UTILITY RATES; REFUND PROCEDURES
4:38:50 PM
CO-CHAIR PRUITT made a motion to adopt proposed committee
substitute (CS) for HB 39, Version 27-LS0228\D, Kane, 2/9/11, as
the working draft.
4:39:21 PM
REPRESENTATIVE PETERSEN objected. As the sponsor, he introduced
HB 39, which requires that before a utility can collect a
refundable rate, it must have an approved refund plan in place.
The bill also directs the Regulatory Commission of Alaska (RCA)
to devise a standard refund procedure available for all
utilities to use in their rate filings. Representative Petersen
explained that this issue came to his attention when his
constituents questioned the delay in receiving refunds due after
litigating against a utility. Although the decision was not
appealed by the utility, the refund procedure took over nine
months to complete. He opined the bill would allow consumers to
receive refunds faster, utilities would save legal costs and
interest, and the RCA would not have to adjudicate refund
procedures.
4:41:20 PM
DAVID DUNSMORE, Staff, Representative Pete Petersen, Alaska
State Legislature, informed the committee the bill would only
apply to refundable rate cases. Beginning a sectional analysis,
he said section 1 explicitly creates the option of having a plan
preapproved by the RCA. Section 2 incorporates implementation
language, Section 3 directs that the bill, if enacted, would
take effect on 7/1/13, and Section 4 directs that the
implementation section would take effect immediately. Mr.
Dunsmore recognized Anchorage Water and Wastewater Utility
(AWWU) and Chugach Electric Association, Inc. for their
contributions to the bill.
4:43:27 PM
REPRESENTATIVE SADDLER asked whether there are cases in which a
rate refund may not be possible.
MR. DUNSMORE explained the general procedure is for a utility to
request a tariff filing to modify its tariff to a new rate. The
RCA has 45 days to accept the change or to open a docket and
schedule a hearing for testimony from the attorney general.
Utilities can request a nonrefundable option, but if the RCA
opens a docket, the utility will usually wish to charge the new
rate on an interim basis while awaiting the RCA's decision, but
that is not required.
4:45:14 PM
REPRESENTATIVE SADDLER clarified that in every request for a
rate change, there is the possibility of a refund.
MR. DUNSMORE indicated no, because the utility "could choose not
to ask for the option of refundable rates." He opined that in
most cases the utility will request the contingency that if the
rates are not accepted at first, customers will be charged on an
interim basis. In further response to Representative Saddler,
he confirmed that if the rate is denied, there will be a refund
due, although the approved rate is often "somewhere in the
middle."
4:46:34 PM
CO-CHAIR PRUITT asked whether there is support for the bill from
utilities or others.
REPRESENTATIVE LYNN inquired as to any opposition.
4:47:04 PM
REPRESENTATIVE PETERSEN said he was not aware of any opposition
at this time.
4:47:18 PM
CO-CHAIR PRUITT referred to the additional staff required by the
RCA as indicated on the accompanying fiscal note. He asked for
the purpose of this staff.
4:47:51 PM
REPRESENTATIVE PETERSEN said that according to the chairman of
the RCA, the commission is very short-handed right now.
4:48:29 PM
REPRESENTATIVE TUCK reviewed the circumstances of a refund. He
observed that the bill would require that a refund plan is in
place before the refund process begins, "so everybody knows what
is to be expected, and the plan is in place, and that way the
ratepayers can be paid sooner."
REPRESENTATIVE PETERSEN indicated yes.
4:49:57 PM
REPRESENTATIVE SADDLER recalled that the ENSTAR Natural Gas
Company (ENSTAR) litigation on a rate refund [RCA docket U-08-
142 ENSTAR] took about two years to resolve. He asked how
ratepayers who move out-of-state are reached.
MR. DUNSMORE advised that ENSTAR sent notices to its customers'
last known addresses.
4:51:13 PM
CO-CHAIR PRUITT asked whether the utilities have indicated that
enactment of the bill would cause additional cost that they
would pass on to their customers.
REPRESENTATIVE PETERSEN said the intent of the bill is to lower
cost by making refunds simpler and easier for everyone.
4:51:54 PM
MR. DUNSMORE added that this issue is addressed by a committee
substitute (CS). Chugach Electric Association, Inc. suggested
adding language to the bill that specifically states the option
that the utility does not have to create a refund plan "from
scratch, [but] the RCA will have a preapproved plan in place
that utilities can take advantage of when they file their
rates."
4:52:43 PM
STUART GOERING, Assistant Attorney General, Commercial/Fair
Business Section, Civil Division (Anchorage), Department of Law
(DOL), disclosed the various functions of the attorney general
related to the Regulatory Commission of Alaska (RCA). He
clarified that he was now representing the RCA and his duties
are to advise the RCA during adjudication processes, and to
represent it on appeal. Mr. Goering stated that his testimony
was at the request of the RCA's chairman, and that he was
primarily available for questions, but advised that the scope of
his comments would be limited to technical and procedural
matters. If the committee desires testimony from the commission
on policy matters, an issue must be raised in a public meeting
with the commissioners as a whole to establish the RCA's
position. Calling attention to the bill, Mr. Goering noted
Section 2 addresses the "procedures and guidelines for an
acceptable utility refund plan." He stated that the only way
for the RCA, or any state agency, to set policy and to establish
enforceable guidelines and procedures is through the regulations
process governed by the Alaska Administrative Procedures Act,
and that the act "is not actually a, something that's designed
for rapid action." These procedures are outside the control of
the RCA, and it would be unlikely that the RCA could adopt
regulations implementing the concept of the bill by 1/1/2012.
He described the regulation procedure. In addition, he pointed
out that RCA docket U-08-142 ENSTAR, seems to be the basis for
the proposed bill; however, that was a truly unique case
involving not a normal rate, but a rate under a special
provision in the commission's regulations relating to adjustment
clauses. As those rates become effective in a different manner,
he stressed that the abovementioned docket was "a really
extraordinary situation and it is very unlikely that any refund
plan ... in advance could have taken, could have anticipated,
there being a refund ...." Mr. Goering opined that refunds in
general have to be viewed on a case-by-case basis, and often it
is unknown what will be appropriate for the refund procedure.
He then addressed an earlier question of when there could be a
situation in which a utility would never face a refund
obligation. He answered that a utility may file for a rate that
is lower than its existing rate thus there would be no refund.
Returning to the language in proposed HB 39, he said there are
two ways a utility can handle the way money is collected under
an interim rate. The first is that the money can be used by the
utility for operations, with allowances for the possibility that
it may be needed to meet a refund obligation.
5:01:49 PM
MR. GOERING continued to explain that the other option is for
the utility to put the difference between the previous and
interim rates in escrow, thereby preventing a situation where
there is a potential refund in the tens of millions of dollars
that the utility cannot pay. On the other hand, the
administrative costs of issuing a refund could far exceed the
amount of a very small refund. He concluded that each refund
case is unique and designing a refund plan "that will cover all
possible situations would be a lot more difficult than
adjudicating them case-by-case."
5:03:37 PM
REPRESENTATIVE SADDLER asked the RCA to explain its fiscal note.
MR. GOERING deferred to RCA Commissioner Patch.
5:05:04 PM
CO-CHAIR PRUITT announced that HB 39 was heard and held.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 5:05 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 39 - 1 Hearing request table of contents D.pdf |
HENE 2/10/2011 3:00:00 PM |
HB 39 HB 39 - RCA utility rates and refund procedures |
| HB 39 - 3 version D (draft CS).pdf |
HENE 2/10/2011 3:00:00 PM |
HB 39 HB 39 - RCA utility rates and refund procedures |
| HB 39 - 4 Summary of changes D.pdf |
HENE 2/10/2011 3:00:00 PM |
HB 39 HB 39 - RCA utility rates and refund procedures |
| HB 39 - 2 version A (original bill).pdf |
HENE 2/10/2011 3:00:00 PM |
HB 39 HB 39 - RCA utility rates and refund procedures |
| HB 39 - 5 Sectional Analysis for version D.pdf |
HENE 2/10/2011 3:00:00 PM |
HB 39 HB 39 - RCA utility rates and refund procedures |
| HB 39 - 6 Supporting Documents - Enstar refund plan filing with the RCA.pdf |
HENE 2/10/2011 3:00:00 PM |
HB 39 HB 39 - RCA utility rates and refund procedures |
| HB 39 - 7 Supporting Documents - Timeline of Enstar case by Rep. Pete Petersen's office.pdf |
HENE 2/10/2011 3:00:00 PM |
HB 39 HB 39 - RCA utility rates and refund procedures |
| HB 39 - 8 Fiscal Note-CCED-RCA-2-4-11.pdf |
HENE 2/10/2011 3:00:00 PM |
HB 39 HB 39 - RCA utility rates and refund procedures |
| A - Cold Climate Housing Research Center Presentation.pptx |
HENE 2/10/2011 3:00:00 PM |
A - Cold Climate Housing Research Center Cold Climate Housing Research Center Presentation |
| B - Alaska Affordable Heating Program Fact Sheet by the Alaska Division of Public Assistance.pdf |
HENE 2/10/2011 3:00:00 PM |
B - Alaska Division of Public Assistance Presentation |
| HB 39 - 9 Sponsor Statement.pdf |
HENE 2/10/2011 3:00:00 PM |
HB 39 |
| D - Alaska Power Association 2011 Energy Initiatives.pdf |
HENE 2/10/2011 3:00:00 PM |
D - Alaska Power Association 2011 Energy Initiatives Presentation |
| C - Alaska Center for Energy and Power.ppt |
HENE 2/10/2011 3:00:00 PM |
C - Alaska Center for Energy and Power Presentation |
| E - Renewable Energy Alaska Project.pdf |
HENE 2/10/2011 3:00:00 PM |
E - Renewable Energy Alaska Project |