03/15/2011 03:00 PM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| HB36 | |
| HB37 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 36 | TELECONFERENCED | |
| *+ | HB 37 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 15, 2011
3:05 p.m.
MEMBERS PRESENT
Representative Lance Pruitt, Co-Chair
Representative Bob Lynn
Representative Kurt Olson
Representative Dan Saddler
Representative Pete Petersen
Representative Chris Tuck
MEMBERS ABSENT
Representative Neal Foster, Co-Chair
COMMITTEE CALENDAR
HOUSE BILL NO. 36
"An Act establishing the Alaska energy efficient small business
grant fund and program."
- HEARD & HELD
HOUSE BILL NO. 37
"An Act relating to the net metering of electric energy for
electric utilities subject to economic regulation by the
Regulatory Commission of Alaska and for a utility's retail
consumers; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 36
SHORT TITLE: SMALL BUSINESS ENERGY EFFICIENCY GRANTS
SPONSOR(s): REPRESENTATIVE(s) OLSON
01/18/11 (H) PREFILE RELEASED 1/7/11
01/18/11 (H) READ THE FIRST TIME - REFERRALS
01/18/11 (H) ENE, FIN
03/15/11 (H) ENE AT 3:00 PM BARNES 124
BILL: HB 37
SHORT TITLE: NET ENERGY METERING
SPONSOR(s): REPRESENTATIVE(s) OLSON
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
03/15/11 (H) ENE AT 3:00 PM BARNES 124
WITNESS REGISTER
JENNIFER SENETTE, Staff
Representative Kurt Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 36 and HB 37 on behalf of
Representative Olson, sponsor.
CARY BOLLING, Government Relations Officer
Alaska Housing Finance Corporation (AHFC)
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
36.
SEAN SKALING, Program Manager for Energy Efficiency
Alaska Energy Authority (AEA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 36.
JAMES KEEN, Chief/Engineer
Regulatory Commission of Alaska (RCA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
37.
MARILYN LELAND, Executive Director
Alaska Power Association (APA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 37.
DEAN THOMPSON, Attorney
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
37.
JOE GALLAGHER, Public Relations Coordinator
Homer Electric Association, Inc. (HEA)
Homer, Alaska
POSITION STATEMENT: Testified during the hearing on HB 37.
JAMES ADAMS
Nome, Alaska
POSITION STATEMENT: Testified in support of HB 37.
MEGS TESTARMATA
Nome, Alaska
POSITION STATEMENT: Testified during the hearing on HB 37.
GENE THERRIAULT, Vice President
Golden Valley Electric Association, Inc. (GVEA)
Fairbanks, Alaska
POSITION STATEMENT: Testified during the hearing on HB 37.
ACTION NARRATIVE
3:05:38 PM
CO-CHAIR LANCE PRUITT called the House Special Committee on
Energy meeting to order at 3:05 p.m. Representatives Pruitt,
Saddler, Petersen, Tuck, and Olson were present at the call to
order. Representative Lynn arrived as the meeting was in
progress.
HB 36-SMALL BUSINESS ENERGY EFFICIENCY GRANTS
3:06:14 PM
CO-CHAIR PRUITT announced that the first order of business would
be HOUSE BILL NO. 36," An Act establishing the Alaska energy
efficient small business grant fund and program."
3:08:22 PM
JENNIFER SENETTE, Staff for Representative Kurt Olson, Alaska
State Legislature, stated that HB 36 "mirrors" the existing
successful Alaska Housing Finance Corporation (AHFC) energy
rebate program. The existing energy rebate program benefits
residential buildings and HB 36 intends to establish an energy
rebate program to benefit small businesses, such that small
business owners wishing to make energy efficiency improvements
on their businesses can receive a rebate for some of their
expenditures. In a manner similar to the residential program,
an energy rater will evaluate the business structure before and
after the improvements are made, thus the rebate is based on the
amount of energy efficiency gained. Furthermore, HB 36 includes
guidelines that businesses must meet as follows: 1. The
assessed value of the structure does not exceed $1 million; 2.
The structure must be owned by a business owner licensed in
Alaska and who does not have outstanding liabilities to the
state; 3. The structure must meet the additional criteria set by
AHFC. Ms. Senette explained that extending the energy
efficiency rebates to the commercial sector will encourage small
businesses in the state to embrace energy efficiency. She
acknowledged that some details of the proposed legislation are
yet to be worked out, such as how the program will be
capitalized.
3:11:42 PM
REPRESENTATIVE OLSON further explained that a committee
substitute (CS) is being prepared; one change under
consideration is to base the evaluation of a structure on its
square footage - instead of its assessed value - in order to
better serve rural communities. He urged the chair to hear
public testimony, but to hold the bill in committee.
REPRESENTATIVE SADDLER asked why rebates will be extended to new
construction.
3:13:17 PM
MS. SENETTE acknowledged that most new buildings are built with
energy efficiency in mind, however, the bill follows the
parameters set by AHFC's home energy rebate program, and new
homes are included in that program.
REPRESENTATIVE SADDLER then asked whether the bill will
authorize the state to provide second mortgages to businesses.
CARY BOLLING, Government Relations Officer, Alaska Housing
Finance Corporation (AHFC), Department of Revenue (DOR),
responded that the present home energy rebate program has a
separate component that allows an applicant to apply for a
$30,000 loan for energy-saving improvements. After the work is
done, the rebate is applied to the loan balance. However, AHFC
does not have a loan program for businesses at this time. In
further response to Representative Saddler, he said AHFC would
undertake a similar program for businesses if one were
appropriated by the legislature.
3:16:23 PM
REPRESENTATIVE SADDLER called attention to page 2, line 11, of
the bill and read, "None of the applicants for the grant has
outstanding liabilities to the state." He asked what the
sponsor intended by this language.
REPRESENTATIVE OLSON indicated he was unsure; however, it is
prudent to ensure that any previous liabilities to the state are
current.
REPRESENTATIVE PETERSEN asked whether a student loan from the
state would disqualify an applicant.
3:17:53 PM
MS. SENETTE offered to further define the language.
3:18:20 PM
REPRESENTATIVE PETERSEN asked whether a large chain store like
Wal-Mart would be able to apply if it had a small building.
MS. SENETTE indicated yes, if it met the guidelines.
REPRESENTATIVE OLSON opined the fiscal note would grow if
applicants are qualified on their assets and liabilities. His
personal experience with AHFC's home energy program was
favorable, and his intent by this legislation is to extend the
same benefits to small businesses.
3:20:22 PM
REPRESENTATIVE PETERSEN agreed with the idea, and asked whether
the legislation needs to define "a small business." The federal
definition of 100 employees may not apply in Alaska.
REPRESENTATIVE OLSON recalled legislation on this issue was to
be included in the "omnibus energy bill" that passed last year,
and offered to reassign HB 36 to the energy committee for
further refinement.
REPRESENTATIVE PETERSEN reminded the committee AHFC estimated an
additional $75 million was required to continue its existing
rebate and weatherization programs.
3:23:28 PM
SEAN SKALING, Program Manager for Energy Efficiency, Alaska
Energy Authority (AEA), Department of Commerce, Community &
Economic Development (DCCED), informed the committee AEA has in
place a commercial energy audit program funded by the American
Recovery and Reinvestment Act of 2009 (ARRA). During the six-
week application period, one hundred and thirty-five
applications were received. He explained that this program will
subsidize the cost of an energy audit for an amount from $1,000-
$6,000 on a commercial building up to one hundred and twenty-
five thousand square feet in size. Mr. Skaling opined the
number of applications received indicates that there is a need
for energy-related programs for the privately-owned commercial
sector.
3:26:35 PM
REPRESENTATIVE PETERSEN asked whether rental property would
qualify for the small business energy rebate program established
by HB 36.
MS. SENETTE said she was unsure.
REPRESENTATIVE SADDLER supported the idea of the bill.
3:27:26 PM
[HB 36 was held for further testimony.]
3:27:48 PM
The committee took an at-ease from 3:27 p.m. to 3:27 p.m.
3:30:34 PM
HB 37-NET ENERGY METERING
3:30:41 PM
CO-CHAIR PRUITT announced that the final order of business would
be HOUSE BILL NO. 37, "An Act relating to the net metering of
electric energy for electric utilities subject to economic
regulation by the Regulatory Commission of Alaska and for a
utility's retail consumers; and providing for an effective
date."
3:30:51 PM
JENNIFER SENETTE, Staff, Representative Kurt Olson, Alaska State
Legislature, stated that HB 37 incorporates the work the
Regulatory Commission of Alaska (RCA) has done regarding net
metering. In 2009, the RCA opened a docket to consider
implementing regulations for an Alaska-specific net metering
standard. Later in the year, the RCA heard public comment and
adopted net metering regulations. House Bill 37 codifies the
regulations adopted by the RCA. Ms. Senette provided a brief
description of the net metering process. She then began the
sectional analysis at page 1, subsections (a), (b), (c), and
(d), of the bill, which address the applicability of the net
metering requirement and the possibility of waivers. Generally,
the net metering requirement applies to all electric utilities
subject to regulation by the RCA, but for two exceptions. The
exceptions are described on page 2, subparagraph (A), for
utilities that get 100 percent of their power from an eligible
facility, and subparagraph (B), for an independent system with
retail sales of less than 5 million kilowatt hours (kWhs) during
the previous fiscal year. In addition, a utility that can
demonstrate that limiting net metering installations is
necessary due to its operational system is also exempt, and the
RCA can waive requirements. On page 2, subsections (e)-(i)
relate to net metering of electricity and set an overall
capacity limit on net metering. Subsection (f) allows a utility
to opt out of net metering service when the overall nameplate
capacity of all of the net metering systems interconnected with
the utility exceeds 1.5 percent of the utility's average retail
demand. On page 3, subsection (i) allows a utility to request
an increase to the 1.5 percent capacity limit. Further on page
3, subsection (g) precludes a utility from disconnecting
existing net metering customers, should the cumulative nameplate
capacity of net metering systems exceed the cap as a result of a
decrease in demand. Subsection (h) requires a utility to
annually publish in its tariff the number of kWhs that are
equivalent to 1.5 percent of the utility's average retail
demand. On page 5, subsection (l), specifies the eligibility
criteria for consumer generation facilities, including the
capacity limit of 25 kWhs. On page 5, subsections (m)-(p)
address charges and credits for net electricity, including a
description of net metering. Continuing on page 5, paragraph
(2) instructs that compensation is based on the utility's non-
firm purchase power rate and that credits can be carried forward
and do not expire. Subsection (n) allows utilities to charge a
net metering consumer for non-generation consumer charges, if
authorized by the utility's tariff. Subsection (p) allows a
utility to request a change to its rate design to incorporate a
net metering customer class, but to do this the utility would
have to demonstrate an adverse material rate impact on non-net
metering consumers. Ms. Senette advised the remainder of the
bill is definitions.
3:38:53 PM
MS. SENETTE noted that the utilities have reported mixed
responses to the legislation, primarily because the regulations
were adopted recently, thus it is too early to proceed further.
REPRESENTATIVE OLSON added that there were no negative comments
prior to yesterday and today; however, the Alaska Power
Association (APA) and other interested parties have now pointed
out that the regulations have not been completely implemented by
the RCA, or approved by the Department of Law (DOL). He
requested that the co-chairs hold the bill until 1/12, but
continue with today's testimony. Representative Olson cautioned
that codifying the regulations at this time could lead to
unintended consequences.
REPRESENTATIVE PETERSEN opined it makes sense to wait for
further changes in the regulations by the RCA.
REPRESENTATIVE SADDLER asked whether there is a technical limit
to how much power a utility can "take back into its system."
3:43:14 PM
JAMES KEEN, Chief/Engineer, Regulatory Commission of Alaska
(RCA), Department of Commerce, Community & Economic Development
(DCCED), stated that the utilities indicated there is a
limitation as to how much non-firm power a utility can receive
and still maintain stability in its system. The net metering
power addressed in the regulations is non-firm and is not
controlled by the utility, therefore, there are system stability
concerns for some utilities. He indicated that for the
regulations, this concern was addressed by the insertion of a
"low cap." In further response to Representative Saddler, he
said the utility may choose to install a second meter to measure
net metering power, and existing regulations state that the
utility is responsible for the cost of the additional meter so
that costs are equal for net metering and non-net metering
customers, and is part of the tariff.
3:45:03 PM
MARILYN LELAND, Executive Director, Alaska Power Association
(APA), informed the committee APA is the statewide trade
association that represents the electric utilities that supply
power to more than 500,000 Alaskans from Barrow to Southwestern
Alaska, through the Interior and Southcentral and down the
Inside Passage. She paraphrased from the following written
testimony [original punctuation provided]:
In the way of background I'd first like to give you a
little history of how we got to where we are today.
In 2006-2008 net metering was being considered by the
Regulatory Commission of Alaska in its docket on the
adoption of regulations to implement amendments to the
Public Utility Regulatory Policies Act of 1978 by the
Energy Policy Act of 2005. In that docket, the
Commission was required to make a decision as to
whether it would adopt the federal standard for Alaska
for net metering. The commission decided that it
would not adopt the federal standard, but opened a
docket to determine whether it would require net
metering standards specific for Alaska.
The docket was opened in January 2009 and several
workshops were held for interested parties to work on
proposed regulations. Because this docket was already
open and under consideration during the last
legislative session, APA recommended that the
legislature not take action on any of the net metering
bills that were before it. No further action was
taken by the legislature last session on any of the
bills and the RCA process was a success. There was
exceptionally good participation in the workshops,
with more public participation than the RCA has
experienced in any of its dockets. In the workshops,
Commission staff, utility representatives and a
variety of public participants worked through proposed
regulations and came to agreement that all who
participated could live with. I would like to commend
the RCA for the process it used in this docket.
The Commission issued an Order Adopting Regulations on
January 15, 2010. However - and this is very
important - the agency has not yet completed work on
its net metering regulations. The RCA is considering
further revisions to the currently effective net
metering regulations, to address interconnection
requirements for net metered generation. As presently
proposed, the new requirements will be added as a
section within the current net metering regulations.
An RCA order in R-09-2 is expected by May 5, but it
can take months for Department of Law review and
certifications before regulations are finalized and
placed into effect. APA and its members support the
intent of the sponsor of HB37.
However, we believe that codification is at the least
premature, and we urge that no action be taken at this
time.
In fact, we believe that putting the RCA's net
metering regulations is statute is not necessary. The
RCA has addressed the issue well and is the best
suited to address any needed changes in the future.
Codifying the current regulations will limit the RCA's
ability to implement any needed changes in the future
and could well lead to unintended consequences by not
allowing the RCA to make future changes using its
public docket process. Current net metering
requirements, and any future changes, involve careful
balancing of issues of utility ratemaking, utility
system operations, consumer input and policy. APA
understands the good intention that codifying net
metering regulations guards against precipitous future
changes, but based on the RCA's open and thoughtful
rulemaking process employed thus far, APA is
comfortable leaving net metering in the regulatory
arena. As I said, APA understands there are good
arguments for the statutory as well as the regulatory
approach, but favors the regulatory approach at this
point in time.
The RCA is empowered and tasked by statute, and has
the technical expertise and experience to conduct the
research and the balancing of interests necessary to
address net metering. In addition, APA believes the
RCA's well-established rulemaking process provides the
necessary opportunity for public comment, workshops,
and analysis. Also important to note is that some
state legislatures have enacted net metering statutes
because their public utilities commissions were not
able or willing to adequately address the issue. That
is not the case in Alaska.
The members of APA [are] not opposed to small scale
renewable generation, or to purchasing power from such
consumer-owned generation. Our members are likewise
not opposed to consumers reducing their electric
purchases by using their own generation. The issue is
making sure that a purchased-power rate is not just
fair for the seller of that power, but is equitable to
all ratepayers of a utility who must share in any
subsidized rate.
APA believes that the Regulatory Commission is best
equipped to make those determinations.
3:51:09 PM
CO-CHAIR PRUITT noted that utilities purchase power at a
wholesale rate and asked how customers who are not participating
in net metering will be affected.
DEAN THOMPSON, Attorney, disclosed he worked with APA and its
members through the RCA workshops, comments, and other
proceedings. He answered that as the regulations are now, the
amount by which the net metered customer is compensated for
excess generation is determined based upon the utility's avoided
cost. For example, if the utility burns one less gallon of
fuel, the cost of that fuel is paid to the net metered customer.
Thus, this process of calculation does not affect the non-net
metering customers. Also, net metering customers can offset
their own energy use by a decline in use, which will ultimately
reduce cost for everyone; however, this impact is very small on
the other customers. Mr. Thompson summarized that as long as
the pricing is based on avoided cost, there is no significant
impact.
REPRESENTATIVE PETERSEN surmised if the price of fuel goes up,
the compensation to the customer would also go up.
MR. THOMPSON said correct.
3:54:51 PM
JOE GALLAGHER, Public Relations Coordinator, Homer Electric
Association, Inc. (HEA), informed the committee HEA is the
member-owned cooperative serving the western Kenai Peninsula.
Mr. Gallagher relayed HEA is generally supportive of HB 37;
however, his organization agrees that action on the bill should
be delayed until 1/12. Shortly after the RCA regulations were
adopted, HEA incorporated the language as part of its tariff and
has 39 members - 28 wind projects and 11 solar projects - using
this system. At this point, the program seems to be working.
Although pleased with the results so far, HEA believes it is
premature to codify the regulations.
3:57:15 PM
REPRESENTATIVE SADDLER asked how many ratepayers HEA serves.
MR. GALLAGHER said HEA has approximately 28,000 meters on its
system.
REPRESENTATIVE SADDLER asked for the total number of people
involved in net metering.
MR. KEEN said currently four utilities have reported the
following: Chugach Electric Association has used .25 of its 1.5
percent cap; HEA has used 12.61 percent of its 1.5 percent cap;
Matanuska Electric has used 4.36 percent of its 1.5 percent cap;
Golden Valley Electric Association has used 1.12 percent of its
1.5 percent cap.
JAMES ADAMS said he has a private windmill connected to the Nome
Joint Utility System grid. He expressed his support for the
bill because it is good business to use renewable resources to
reduce the consumption of diesel fuel.
REPRESENTATIVE PETERSEN asked how much electricity Mr. Adams is
producing.
MR. ADAMS reported that he has had his windmill for two to two
and one-half years and it has reduced his light bill by $50 per
month. In response to Co-Chair Pruitt, he said this is a
savings of 20-25 percent.
4:01:45 PM
MEGS TESTARMATA said she is a renewable energy engineering
student. She noted that the previous speaker does not have net
metering available and does not get credit for the power he
generates. Ms. Testarmata asked whether net metering
percentages are available for Nome.
MR. KEEN advised that Nome Joint Utility System is not
economically regulated by the RCA, thus existing regulations and
the proposed legislation are not applicable.
MS. TESTARMATA said that is a big disappointment to Nome
residents. Although the state is supporting renewable energy,
her experience is that there is a consensus that the statewide
effort to use sources of renewable energy is being held back by
the utilities and their reluctance to work with renewables. She
opined that it is possible for rural systems to incorporate
renewables, as shown by the systems in Kanakanak and St. Paul.
Ms. Testarmata urged passage of the bill so that everyone in the
state can participate in Alaska's goal of becoming sustainable
in its use of energy. She emphasized her regret that the bill
will not benefit those in Nome who which to participate.
Referring to page 3, line 14, subsection (i), of the bill, she
suggested that because of the reluctance on the part of some
utilities, consumers should also be able to petition for an
increase in the 1.5 percent cap.
4:06:35 PM
GENE THERRIAULT, Vice President, Golden Valley Electric
Association, Inc. (GVEA), stated that GVEA is generally
supportive of HB 37; however, his company understands the
concerns of the smaller utilities because they have more
difficulty integrating net meter power into their systems which
are not as large and robust as that of GVEA. He noted that at
1.12 percent, GVEA is approaching its limit set out in the bill,
but can accommodate those participating in the Sustainable
Natural Alternative Power (SNAP) program. Mr. Therriault
supported holding the bill from final passage until 1/12, in
order to see how the regulations are implemented. Referring to
the previous speaker's suggestion, he pointed out that
ratepayers can petition for an increase to the 1.5 percent cap
through their elected officials. Mr. Therriault encouraged
legislators to ensure that the language in the bill, as it moves
through committees, continues to be closely related to the RCA
regulations.
4:09:57 PM
REPRESENTATIVE OLSON opined if the bill moved away from its
original intent, it would not pass.
4:11:17 PM
[HB 37 was heard and held.]
4:11:30 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 4:11 p.m.