03/20/2012 03:00 PM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| HB294 | |
| Presentation: Ruralcap Energy Wise Program | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 294 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 20, 2012
3:07 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Lance Pruitt, Co-Chair
Representative Bob Lynn
Representative Kurt Olson
Representative Dan Saddler
Representative Pete Petersen
Representative Chris Tuck
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 294
"An Act relating to the power cost equalization program."
- MOVED CSHB 294(ENE) OUT OF COMMITTEE
PRESENTATION: RURALCAP ENERGY WISE PROGRAM
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 294
SHORT TITLE: POWER COST EQUALIZATION
SPONSOR(s): REPRESENTATIVE(s) EDGMON
01/25/12 (H) READ THE FIRST TIME - REFERRALS
01/25/12 (H) ENE, FIN
02/14/12 (H) ENE AT 3:00 PM BARNES 124
02/14/12 (H) Heard & Held
02/14/12 (H) MINUTE(ENE)
03/13/12 (H) ENE AT 3:00 PM BARNES 124
03/13/12 (H) Heard & Held
03/13/12 (H) MINUTE(ENE)
03/20/12 (H) ENE AT 3:00 PM BARNES 124
WITNESS REGISTER
ADAM BERG, Staff
Representative Bryce Edgmon
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Speaking on behalf of Representative Bryce
Edgmon, prime sponsor, reviewed the changes in the proposed
committee substitute (CS) for HB 294.
SARA FISHER-GOAD, Executive Director
Alaska Energy Authority (AEA)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
294.
RAE BELLE WHITCOMB, Director
Workforce Development
Bristol Bay Native Association (BBNA)
Dillingham, Alaska
POSITION STATEMENT: Speaking on behalf of herself and
representing Bristol Bay Native Association (BBNA), testified in
support of HB 294.
DAVID PELUNIS-MESSIER
Fairbanks, Alaska
POSITION STATEMENT: Speaking on his own behalf, testified in
opposition to HB 294.
CHUCK WHEELER
Nome, Alaska
POSITION STATEMENT: Testified in support of the intent of HB
294.
MEERA KOHLER, President and CEO
Alaska Village Electric Cooperative, Inc., (AVEC)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 294.
MARY ERICKSON
Hoonah, Alaska
POSITION STATEMENT: Speaking as a business owner, testified in
support of HB 294.
ELMER SEETOT, JR, Delegate
Alaska Village Electric Corporation (AVEC)
Brevig Mission, Alaska
POSITION STATEMENT: Testified in support of HB 294.
ED PHILLIPS, Owner
Icy Strait Lodge
Hoonah, Alaska
POSITION STATEMENT: Testified in support of HB 294.
BRIAN HIRSCH, Alaska Representative
National Renewable Energy Laboratory
U.S. Department of Energy
Homer, Alaska
POSITION STATEMENT: Provided comments during the testimony on
HB 294. Spoke in support of the Rural Alaska Community Action
Program, Inc. (RurAL CAP) Energy Wise Program.
INGEMAR MATHIASSON, Energy Coordinator
Northwest Arctic Borough
Kotzebue, Alaska
POSITION STATEMENT: Testified in support of HB 294.
CATHIE CLEMENTS, Division Director
Community Development
Rural Alaska Community Action Program, Inc., (RurAL CAP)
Anchorage, Alaska
POSITION STATEMENT: Introduced the Energy Wise Program.
ELLEN KAZARY, Manager
Community Development
Rural Alaska Community Action Program, Inc., (RurAL CAP)
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation
entitled, "Rural Alaska Community Action Program, Inc.'s Energy
Wise Program."
RICARDO WORL, Vice President
Tlingit-Haida Regional Housing Authority
Juneau, Alaska
POSITION STATEMENT: Provided comments in support of the Energy
Wise Program.
LATASHA MCKOY, Tax Credit/HOME Program Assistant
Tlingit-Haida Regional Housing Authority
Juneau, Alaska
POSITION STATEMENT: Provided statistical data during the
hearing on the Energy Wise Program.
ELIZABETH HENSLEY, Corporate and Public Policy Liaison
NANA Regional Corporation, Inc.
Kotzebue, Alaska
POSITION STATEMENT: Provided comments in support of the Energy
Wise Program.
ROSS COHEN, Rural Energy Specialist
Tanana Chiefs Conference
Fairbanks, Alaska
POSITION STATEMENT: Provided comments in support of the Energy
Wise Program.
ACTION NARRATIVE
3:07:53 PM
CO-CHAIR LANCE PRUITT called the House Special Committee on
Energy meeting to order at 3:07 p.m. Representatives Pruitt,
Foster, Petersen, Olson, and Lynn were present at the call to
order. Representatives Saddler and Tuck arrived as the meeting
was in progress.
HB 294-POWER COST EQUALIZATION
CO-CHAIR PRUITT announced that the first order of business would
be HOUSE BILL NO. 294, "An Act relating to the power cost
equalization program."
3:09:45 PM
ADAM BERG, Staff to Representative Bryce Edgmon, Alaska State
Legislature, prime sponsor, speaking on behalf of Representative
Edgmon, reviewed the changes in the committee substitute (CS),
identified as Version 27-LS1108\B, for HB 294. Mr. Berg said
the first change increases the residential kilowatt hours, to
which power cost equalization (PCE) can be applied, from 500
hours to 600 hours. The second change allows PCE to be applied
to small businesses up to 600 kilowatt hours per month, although
to qualify as a small business, the business may not exceed the
ceiling of 2,400 kilowatt hours per month. The CS also removes
schools and larger commercial consumers from the list of
eligible recipients.
3:10:58 PM
CO-CHAIR PRUITT agreed with the intent of HB 294, but asked for
clarification about the endowment; for example, whether the
endowment can withstand the increases in cost to the program,
and its effect on the $400 million appropriated last year.
3:11:49 PM
MR. BERG deferred questions on the endowment to the Alaska
Energy Authority (AEA).
CO-CHAIR FOSTER asked for a description of the original program
and why it was changed.
MR. BERG recalled, prior to 1998, the PCE program had a 700
kilowatt hour maximum for residences, and schools were also
eligible. A blue ribbon commission report issued at that time
recommended reductions to the program, because PCE was viewed as
a subsidy to rural Alaska, and was "under fire from the
legislature."
3:14:13 PM
CO-CHAIR FOSTER understood that at that time the price of oil
had dropped to around $9 per barrel; the point is that now the
state is flush with surplus, and the price of oil is about $120
per barrel.
CO-CHAIR PRUITT added that there was no endowment at that time
and the program was funded from general funds (GF).
MR. BERG said yes.
REPRESENTATIVE SADDLER asked whether the bill contains
provisions requiring those who receive PCE to be more efficient
and conserve energy.
MR. BERG said no.
3:15:52 PM
REPRESENTATIVE SADDLER then asked whether the sponsor of the
bill considered linking the increased amount of PCE per month
with improved efficiency.
MR. BERG said many provisions were discussed, including whether
the conservation community would support increasing the amount
of kilowatt hours that residents can use. As a matter of fact,
residents living in areas of high energy costs are not coming
close to using the 500 kilowatt hours per month, at least in
summer. He said an increase of 100 kilowatt hours per month
would not cause residents to burn more power, because they are
already in a conservation mode due to high costs, even with PCE.
Mr. Berg noted that the weatherization program works great, but
can be slow to reach some areas of the state. He asked, "Why
penalize somebody? If they're waiting for work on their house,
they're already paying high power bills. If their house is
inefficient ... they're paying the price ...."
3:17:42 PM
CO-CHAIR FOSTER asked for the general qualifications that make a
community eligible for PCE.
MR. BERG explained that the base price is determined by power
costs in Fairbanks, Anchorage, and Juneau. He deferred to AEA
for clarification.
3:18:42 PM
SARA FISHER-GOAD, Executive Director, AEA, Department of
Commerce, Community & Economic Development, advised the
qualification for a community to be eligible for PCE is based on
whether its utility was using a certain percentage of diesel
fuel to generate power in 1985. Utilities that were excluded
from eligibility are the Railbelt utilities, the Four Dam Pool
communities, and some small "road" communities served by Golden
Valley Electric Association and Copper Valley Electric
Association. Although Cordova is generating with hydroelectric
now, in the '80s it was generating with diesel, and is eligible
for PCE. In response to Co-Chair Pruitt, she said Cordova does
take advantage of its PCE eligibility.
MS. FISHER-GOAD further explained that if a utility chooses not
to use its eligibility, there is a provision for residents to
petition the utility to take advantage of the program. She then
noted that another way a community is not eligible is if its
costs are below the "floor," which is currently 13 cents to 13
and one-half cents per kilowatt hour.
3:20:28 PM
CO-CHAIR PRUITT restated his earlier question on whether the
endowment fund can "handle this," and how the appropriation of
$400 million from last year is affected.
MS. FISHER-GOAD said the power cost equalization endowment fund
is a percent of market value (POMV) fund that is invested to
earn 7 percent over time and - on an annual basis - 7 percent
can be used for the PCE program. This is based upon a three-
year, monthly, average market value, so the $400 million
appropriated as of 6/30/11, does not calculate for the PCE cost
for fiscal year 2013 (FY 13). The fund balance is based on the
three years prior, for FY 12, FY 11, and FY 10. Therefore, one-
third of the fund can be incorporated into FY 14, two-thirds by
FY 15, and the full $400 million would be utilized by FY 16.
She advised that is the reason there is a delay. Further, she
opined the program, without the changes proposed by HB 294,
would only need to use 5 percent of the fund, instead of 7
percent. In fact, part of the 7 percent is invested in
equities, and she said there were concerns that 7 percent is a
very aggressive investment rate in these times.
3:22:34 PM
CO-CHAIR PRUITT asked for the amount of the principal.
MS. FISHER-GOAD estimated the principal is a little over $700
million. She pointed out that with the changes to the program
in HB 294, Version B, even though there could be $51 million
available from the endowment in FY 16, the fund would still
require $7.3 million from the GF for the total cost of the
program, which is estimated at $58.3 million. The fiscal note
indicated a $21.1 million increment this year would have to be
covered by the GF, in addition to what is already in the
governor's FY 13 budget.
CO-CHAIR PRUITT concluded that even after the $400 million is
fully utilized in three years, the program would still need $7
million from the GF to support the changes in HB 294.
3:24:08 PM
MS. FISHER-GOAD acknowledged it is very difficult to estimate
the cost of the PCE program because AEA must predict costs one
and one-half years ahead. Also, the floor of the program is
unknown because it is based on the cost of fuel for the prior
year, after the cost is averaged between Fairbanks, Anchorage,
and Juneau. To determine rough cost estimates on commercial
facilities, AEA assumed 25 percent of the commercial customers
in eligible communities would qualify, bringing the estimate to
about $12.5 million. The additional 100 eligible kilowatt hours
added by the bill is estimated to increase the cost to the
program by $7.5 million. Ms. Fisher-Goad closed, saying her
expectation is that there would continue to be a need for GF
support, depending on the market performance of the fund, and on
other factors, such as fuel costs.
3:25:38 PM
CO-CHAIR PRUITT estimated an appropriation of $100 million to
$150 million would be required to prevent the need to pull
monies from the GF in FY 16.
MS. FISHER-GOAD offered to provide the committee with additional
analysis on this matter.
3:26:33 PM
REPRESENTATIVE SADDLER recalled the intent of the PCE endowment
was to "take a big lump-sum of money, put it aside and have the
spin-off from that - the proceeds - pay for PCE so we don't come
back for annual GF appropriations. That's not happening in this
case." He surmised the additional hours have affected this
calculation. Representative Saddler then asked, "Does raising
the amount ... of kilowatt hours per month and increasing those
who receive it, [does] that put ... the fundamental structure of
PCE at risk again?"
MS. FISHER-GOAD responded that is a "policy call" with respect
to the endowment as a funding source for the program. She
explained the GF dollars have been made available at 100 percent
of the formula cost, thus it really depends on whether the
intent is for the endowment to fully sustain the program. In
2001, the estimate for full funding of the program was $15.7
million per year, which is significantly less than now, because
fuel prices were lower then.
3:29:03 PM
REPRESENTATIVE SADDLER asked whether the PCE endowment was ever
envisioned as the one, sole source of funding.
MS. FISHER-GOAD said at one time it was necessary to prorate the
program for the appropriation. She advised, "There's a couple
different ways that you can get there and the legislature has
chosen, and ... the governor's budget includes, the assumption
[that] the goal is to pay PCE at 100 percent."
REPRESENTATIVE PETERSEN referred to renewable energy projects
coming online, and the weatherization and energy rebate
programs. He asked whether these programs would reduce the
demand for PCE.
MS. FISHER-GOAD expressed her belief that renewable projects
leading to significant reductions in PCE is a far-reaching goal;
however, there have been reductions in costs where projects have
been completed, but some projects - such as wind generation - do
not displace all of the diesel fuel needed for a community to
run its utilities.
CO-CHAIR PRUITT opened public testimony.
3:32:23 PM
RAE BELLE WHITCOMB, Director, Workforce Development, Bristol Bay
Native Association (BBNA), informed the committee she was
speaking on behalf of BBNA and as a small business owner. She
said BBNA manages a low-income heating assistance program and is
finding that PCE is a significant benefit for rural families
towards paying for their household heating needs. Further,
because many communities are running out of fuel, and residents
are using electric heat, the cost of electricity per kilowatt is
increasing; in fact, households are facing electric bills of
$500 to $700 per month and higher. Ms. Whitcomb confirmed that
the weatherization program has not reached all of the
communities of her region, and some homes may be on a waiting
list for years. As a small business owner, she advised having
PCE would make a big difference to rural businesses, and may
enable a business in a small community to hire a local employee
and provide local supplies at a reasonable cost. Ms. Whitcomb
expressed her support for the additional kilowatt hours, and
said from the perspective of workforce development, the benefit
of PCE to businesses will spur economic business development.
3:35:18 PM
CO-CHAIR FOSTER observed the Institute of the North recently
reported that rural Alaska households are paying 47 percent of
their household income for heating and electricity. He asked
what the kilowatt rate per hour is - before and after PCE - in
Dillingham.
MS. WHITCOMB said the rate in Dillingham is 48 cents, but the
rate is closer to one dollar per kilowatt in villages along the
river.
CO-CHAIR PRUITT asked whether Ms. Whitcomb could determine what
percentage of the cost of milk in Dillingham is attributed to
energy.
MS. WHITCOMB gave the example of a small grocery store that pays
between $30,000 and $40,000 per month for the electricity to run
freezers and coolers. This expense is passed along to the
customer. Small businesses of all kinds are greatly affected by
the cost of power.
3:38:11 PM
DAVID PELUNIS-MESSIER disclosed that he works for the Yukon
River Inter-Tribal Watershed Council and was speaking on his own
behalf. Mr. Pelunis-Messier cited his experience working on
energy projects in rural Alaska for three years, and expressed
his concern that extending the amount of PCE credits to rural
businesses will act as a disincentive for businesses to make
energy efficient modifications. For example, in certain
buildings in PCE communities, there is no incentive to change to
high efficiency lighting because with PCE credits, the heat
produced by inefficient lighting sources is cheaper than the
extra fuel oil burned to make up the heat in the building.
However, creating electricity from fuel with village generators
is about 30 percent efficient, and creating heat from fuel oil
is 80 percent to 90 percent efficient. Also, an Alaska entity
was unwilling to spend American Recovery and Reinvestment Act
(ARRA) funds on a lighting retrofit, because PCE credits
lengthened the payback period on the project to 10 years. Mr.
Pelunis-Messier said he supported solutions to the energy crisis
in Alaska through the renewable energy grant fund and the
emerging energy technology fund, and proposed using a matching
grant program for businesses, rather than PCE credits. He
provided a personal example of the energy savings for a business
in Anaktuvuk Pass, and said he supports the state's efforts to
make living in rural Alaska more affordable, and more
sustainable, by rewarding innovation, rather than enabling
inefficiency.
CO-CHAIR FOSTER stressed the importance of looking at a problem
from multiple angles, noting that PCE was intended to be a
"bridge" and not to be relied on in the long-term.
3:42:11 PM
CHUCK WHEELER stated he is a life-long resident of Nome, and
uses heating fuel. Mr. Wheeler said he supported the intent of
the bill, but the bill does not take care of the problems of the
coastal villages, which need to utilize alternate fuels. In the
coastal villages, PCE covers the fuel surcharge and nothing
more. He urged that the amount of electricity eligible for PCE
should be raised to 700 or 800 kilowatt hours, because residents
have no choice but to run electric heaters. Power assistance
programs are available in other parts of the state, but a
northern energy fund is needed for the coastal villages and for
the Interior. Mr. Wheeler opined the cost of the PCE program is
low when compared to what is spent for other energy projects.
3:44:15 PM
MEERA KOHLER, President and CEO, Alaska Village Electric
Cooperative, Inc., (AVEC), stated AVEC serves 54 villages across
the state. She stated her support for HB 294, saying the bill
is quite significant, primarily because of the addition of
commercial customers to those eligible for PCE. In 2011, AVEC
reported the average PCE consumption for a residential user was
about 250 kilowatt hours per month. As the average electricity
usage was about 400 kilowatt hours per month, only about 60
percent of the residential electricity usage receives PCE
benefits. She expected that an increase to 600 eligible
kilowatt hours would result in the maximum of a 20 percent to 25
percent increase for residential users. However, the addition
of 600 eligible kilowatt hours for commercial users is fairly
significant. Ms. Kohler recalled the original PCE legislation
included 700 eligible kilowatt hours per month for all users,
including commercial consumers. She pointed out that one of the
original requirements for a community to be eligible for PCE was
that the residential kilowatt per hour sales had to be equal to
- or less than - seven and one-half million kilowatt hours, thus
all of the larger communities were excluded. Also, 75 percent
of the electricity generated in the community in 1984 had to
come from diesel fuel. Ms. Kohler advised AVEC and other
utilities in rural Alaska are installing renewable energy
projects - primarily funded by the Denali Commission and the
Rural Utility Services, Rural Development, U.S. Department of
Agriculture - resulting in the cost of the fuel for electricity
decreasing by five or more cents per kilowatt hour. This
reduces the PCE rate, thereby saving the state money. Ms.
Kohler opined raising the amount of eligible kilowatt hours to
600 will result in a net PCE cost to the state that will not
exceed the 7 percent "spin off" from the existing endowment
fund.
3:48:47 PM
CO-CHAIR FOSTER asked Ms. Kohler to provide to the committee
copies of the report issued by Commonwealth of the North
entitled, "Energy for a Sustainable Alaska The Rural Conundrum,"
dated February 2012. He then asked her to respond to Mr.
Pelunis-Messier's comments on the effects of PCE on businesses.
MS. KOHLER offered to present the aforementioned report to the
committee. In response to Mr. Pelunis-Messier, she said his
position that commercial establishments are reluctant to change
from incandescent to more energy efficient lighting - because
PCE pays for part of the electricity - is part of the conundrum.
She acknowledged that would be true in a facility receiving PCE
for all of its electricity, such as a community facility that is
already receiving PCE in an amount up to 70 kilowatt hours per
resident; however, most community facilities are below the
maximum, and it is her experience that most community buildings
are using fluorescent tubes. Ms. Kohler opined the bill would
not have an impact on conservation measures.
3:53:32 PM
CO-CHAIR PRUITT asked whether incandescent lighting will still
be available in two years.
MS. KOHLER advised incandescent 100 watt bulbs are slated to
"vanish" in 2014, followed by those of lower wattages, but she
cautioned that they are being hoarded by some. She recalled
that compact fluorescent (CFL) bulbs were met with resistance
originally, but are now available at a reasonable cost. Her
utility informs its members about savings in energy from the use
of CFL bulbs. In further response to Co-Chair Pruitt, she noted
that the collection of CFL bulbs for recycling is taking place
at city offices and landfills. Recycling bulbs is a minor issue
that can be addressed locally.
CO-CHAIR PRUITT encouraged the proper handling of a hazardous
product.
3:57:43 PM
MARY ERICKSON said she was speaking as a business owner in
Hoonah. She, along with the previous testifiers, was concerned
about the high cost of diesel fuel needed to generate
electricity, which is causing a severe hardship on those with
fixed incomes. Ms. Erickson said her main concern was for local
businesses. She noted the cost to weatherize her business by
changing lighting, removing fans, and turning off machinery.
Ms. Erickson encouraged the use of PCE for businesses, in
addition to long-term solutions such as the intertie and
hydroelectric power. Hoonah has jobs available, but residents
cannot afford to live there due to the cost of energy. She
stated her strong support of HB 294 and long-range solutions.
In response to Co-Chair Pruitt, she said her business is The
Office Bar.
4:02:19 PM
ELMER SEETOT JR said he is an AVEC delegate in Brevig Mission.
Mr. Seetot relayed that the cost of fuel is determined on the
day the fuel is loaded on the barge, and local businesses have
to choose whether to pay for the fuel in full, or make
installments. In communities, customers pay a high price for
groceries and retail items due to shipping costs. In Brevig
Mission, fuel prices are not as high as those on the river
system where the water level is low. There has been a radical
shift in rural Alaska to a dependency on electricity, except
during subsistence seasons. Mr. Seetot pointed out there is
only seasonal employment, and more young people depend on
commercial goods instead of a subsistence lifestyle. He stated
his support of HB 294.
4:05:59 PM
REPRESENTATIVE SADDLER asked whether one questions if the shift
to electricity is good.
MR. SEETOT said some community members have discussed that
issue. In further response to Representative Saddler, he said
he lives an outdoor lifestyle and does not need the Internet or
a computer.
CO-CHAIR FOSTER asked how much electricity costs per kilowatt
hour.
MR. SEETOT said 30 cents to 35 cents.
4:07:53 PM
ED PHILLIPS said he owns the Icy Strait Lodge in Hoonah and
expressed his strong support of HB 294. His business experience
indicates that the residents of Hoonah have little discretionary
income due to the high cost of electric heat. He opined more
attention should be paid to educating residents on energy
efficiency. There are also many homes with defective electrical
systems that could be corrected by a program similar to the
weatherization program, but that analyzes electric consumption.
Mr. Phillips stressed that diesel-electric communities are
slowly dying because the high cost of living is causing a loss
of businesses and jobs, which are necessary for a healthy
society. Mr. Phillips said in the past 12 years, the high cost
of energy in Hoonah has caused an increase in the cost of
freight and a loss of school population that is eroding the
community. As noted in other communities, the high cost makes
purchasing groceries at local stores a "last resort." He
pointed out that most of the economy left in communities is
based on government projects instead of business. Mr. Phillips
suggested the mechanism of HB 294 could track electrical
consumption and quickly determine the cost of the program. He
urged for an understanding of the severity of the problem. Mr.
Phillips closed, pointing out that using the consumption of
2,400 kilowatts to determine a small business is not a relevant
number.
4:15:55 PM
BRIAN HIRSCH, Alaska Representative, National Renewable Energy
Laboratory, U.S. Department of Energy, commissioned a study by
the University of Alaska Anchorage (UAA), Institute for Social
and Economic Research (ISER), to look at various aspects of PCE.
Some of the conclusions from the study indicate that increasing
the amount of eligible kilowatt hours monthly increases the
state's liability, yet he agreed with Ms. Kohler that many
recipients of PCE do not exceed or reach the limit. He proposed
that a solution would be "a seasonal fixed payment," meaning
that in summer and winter rates would be a different amount;
however, if consumption is reduced, the resident would "keep the
difference" as an incentive. Mr. Hirsch agreed there would be
an increased cost to extend PCE to commercial customers,
although there is a clear need and benefit that would come from
supporting businesses. He offered to provide further
information on his suggestion.
4:19:53 PM
INGEMAR MATHIASSON, Energy Coordinator, Northwest Arctic
Borough, said his region has the highest cost of energy in the
state and the borough has taken steps to raise awareness, such
as installing smart energy meters that tell residents when they
reach the PCE limit. In addition, the energy meters provide
useful data. He said the borough strongly supports HB 294, as
households and businesses have reached their limits, and
communities must have jobs and businesses. Mr. Mathiasson then
pointed out that AEA grants do not benefit communities that have
no recognized renewable resources. He expressed his support of
Mr. Hirsch's proposal.
CO-CHAIR PRUITT observed that the bill sponsors looked at many
options - some with varying amounts - that were deemed too
complex.
4:24:02 PM
CO-CHAIR FOSTER related that affordable energy is a concern of
all Alaskans, and is becoming more of a problem in Fairbanks and
Anchorage. Alaska is an energy-rich state which may build a $5
billion dam in the Railbelt and a $7 billion to $8 billion gas
line from the North Slope to Southcentral. In addition,
Southeast has hydroelectric to expand via an intertie system.
For rural Alaska, PCE was meant to be a bridge to the day when
all residents have fully benefitted from all of the energy
programs, and perhaps from consolidating utilities.
Representative Foster agreed with the governor that the focus
should be on the development of sources of energy on a regional
level, such as biomass in the Interior and Copper River basin,
natural gas in Kotzebue, shipping propane to Western Alaska, and
geothermal in Nome and the Bering Strait region. The PCE
program is one of many programs across the state.
4:27:15 PM
CO-CHAIR PRUITT closed public testimony.
4:27:36 PM
REPRESENTATIVE SADDLER acknowledged that the PCE program is
important and urged for a portion of the funds to be dedicated
to increased fuel efficiency, energy efficiency, and
weatherization.
4:28:13 PM
REPRESENTATIVE SADDLER moved to report the proposed committee
substitute (CS) for HB 294, Version 27-LS1108\B, Nauman,
3/12/12, out of committee with individual recommendations and
the accompanying fiscal notes. There being no objection, CSHB
294(ENE) was reported from the House Special Committee on
Energy.
4:28:36 PM
The committee took an at-ease from 4:28 p.m. to 4:31 p.m.
4:31:34 PM
^PRESENTATION: RURALCAP ENERGY WISE PROGRAM
PRESENTATION: RURALCAP ENERGY WISE PROGRAM
4:31:38 PM
CO-CHAIR PRUITT announced that the final order of business would
be a presentation by RurAL CAP on its Energy Wise Program.
4:33:14 PM
CATHIE CLEMENTS, Division Director, Community Development, Rural
Alaska Community Action Program, Inc., (RurAL CAP), acknowledged
the important strategies the state has undertaken to address the
high cost of energy in rural Alaska, such as weatherization,
renewable energy investment, and possibly raising the cap on
PCE. However, a strategy that should not be overlooked is
consumer education, and RurAL CAP's Energy Wise program looks at
the behaviors and habits of consumers. RurAL CAP has decades of
experience working with weatherization and energy efficiency,
beginning in the 1970s, and now through its for-profit
subsidiary, Rural Energy Enterprises. The most effective
consumer education and ways of behavior change are part of that
experience, which led to the strategies incorporated in the
Energy Wise program. New this year is RurAL CAP's partnership
with NANA Regional Corporation, which has funded Energy Wise
programs in six NANA communities, with the goal of upgrading all
homes in the NANA region within two years. Ms. Clements said
the program has been tested over the last three years with
proven results: saving money for residents and the state. RurAL
CAP has developed the Energy Wise program with guidance from the
Alaska Energy Authority (AEA), Alaska Housing Finance
Corporation (AHFC), the U.S. Department of Energy (DOE), and
other partners. In addition, there is interest in the program
from all corners of the state, and these activities warrant
RurAL CAP's $20 million Capital Budget Submission and
Information System (CAPSIS) funding request. The request
funding is intended to have a real impact by using $4 million
each year, for five years, to continue partnerships with NANA
and Tlingit and Haida Regional Housing Authority (THRHA), and to
develop new partnerships with the Kawerek, Inc., region, Tanana
Chiefs Conference (TCC), Dillingham, and Calista. Ms. Clements
advised that with this funding from the state, the Energy Wise
program can continue to leverage funding and serve even more
homes.
4:36:23 PM
ELLEN KAZARY, Manager, Community Development, RurAL CAP,
provided a PowerPoint presentation entitled, "Rural Alaska
Community Action Program, Inc.'s Energy Wise Program." She said
RurAL CAP began its study of energy efficiency education about
10 years ago, looking at the "why" behind the high energy bills
in rural areas. RurAL CAP developed a model for searching for
sources of energy loss from homes that was used and tested for
seven years. About three years ago, the model was expanded and
used in twelve communities. The expanded model, called Energy
Wise, is a comprehensive residential energy efficiency and
conservation education program. RurAL CAP now works in
partnership with energy providers and local communities to
reduce energy consumption, save money, save PCE cost, and create
local jobs. Ms. Kazary restated that this model is tested and
has proven to get the following great results: 99 percent of
households participate; 80 percent of households are maintaining
improvements and have lower bills; residents save $20 per month
in electricity; and the state saves $39 per month in PCE cost.
Furthermore, although the cost is about $2,000 per home, the
return on investment in electricity is less than three years.
She reviewed aspects of RurAL CAP's CAPSIS request: $20 million
for a tested and proven program with immediate and long-term
results; relief is needed immediately; the agency's mission is
to build healthy economies; a five-year plan to spend $4 million
per year on 2,000 homes per year; employ 150 rural Alaskans; and
use a competitive selection process to evaluate which
communities to serve.
4:40:35 PM
MS. KAZARY presented slide 6 and pointed out Energy Wise is a
collaborative effort facilitated in partnership with energy
service providers around the state, and which leverages funding
through DOE, the Denali Commission, and the Department of Labor
& Workforce Development (DLWD). Furthermore, local communities,
regional organizations, and utilities contribute services and
funding. Energy Wise complements weatherization efforts by
prioritizing communities that have not been served by the
weatherization program, and by focusing on immediate
improvements to each home, thereby engaging residents and the
entire community. Simple key components to making the program
effective are community partnership and that the work is done by
local crews. Four to ten people are hired and employed for
about twelve weeks, and they receive training and professional
certifications from DLWD. Ms. Kazary explained that the program
model is to help people identify ways to save energy, change
their behavior, and use the energy efficiency supplies. The
first step is to hold a community energy fair where residents
sign up for a home assessment. During the eight-hour home
assessment, two crew members teach residents the workings of a
home, the basics of utility bills, and about PCE. Using a set
of steps, crew members also identify "hot spots," and residents
ask questions. Afterward, an individual energy plan shows the
resident how to save money. Also, at that time the crew members
install $300 worth of energy efficiency supplies, such as water
heater blankets, and door sweeps. Slide 13 pictured crew
members looking for hot spots, insulating light switches,
installing water heater blankets, and sealing doors and windows.
4:45:55 PM
MS. KAZARY continued to explain a resident's third contact with
an Energy Wise crew member is three months to six months later
at a follow-up survey. The survey is intended to gauge the
effectiveness of the program, receive comments from residents,
and answer questions. In 2010, 120 rural Alaskans were trained
and employed with Energy Wise in 12 communities, the crews
served 1,000 homes, and 7,500 residents participated in
education activities. The following was based on 700 follow-up
surveys and observations: 86 percent reported they were still
practicing energy efficiency and conservation measures; 82
percent reported decreased home heating costs; and 80 percent
reported decreased electric bills.
4:48:03 PM
MS. KAZARY related the results of a 12-month case study in
Kasigluk that indicated the average bill after an Energy Wise
assessment reflected about a 25 percent reduction, saving the
resident about $20 per month, and saving the state about $39 per
month in PCE costs. She restated the return on investment is
less than three years. Ms. Kazary presented a budget breakdown
of the program: 50 percent to local employment and training; 25
percent to supplies and shipping; and 25 percent to management,
logistics, and evaluation of the project. Returning to the
partnership between NANA and RurAL CAP, she pointed out NANA
contributed $860,000 in matching funds so that all residents can
be assisted, even those of middle income who do not qualify for
other programs. Ms. Kazary listed Energy Wise partnerships and
the contributions made by each: Energy Wise program 2011-2012
outcomes: 6 communities served; 42 crew members received
professional certification; 50 crew members employed; 530 home
visits; 99 percent participation rate; over 2,000 people
received energy efficiency and conservation education.
Sustained change 2011-2012 outcomes: average savings on
electric bill was $35 per month; 82 percent said homes felt
warmer and were easier to keep warm.
4:51:22 PM
CO-CHAIR FOSTER said he was impressed with the impact of jobs in
the communities and with the savings to the PCE program.
REPRESENTATIVE SADDLER asked what Energy Wise can accomplish
with $20 million.
MS. KAZARY explained the plan is to improve two thousand
households per year for five years.
MS. CLEMENTS added that the program would seek matching funds
from regional organizations in order to serve twice as many
households.
4:53:40 PM
RICARDO WORL, Vice President, Tlingit-Haida Regional Housing
Authority (THRHA), informed the committee the housing authority
serves 14 communities in Southeast Alaska and owns approximately
1,000 units. Mr. Worl advised that THRHA is a recipient of the
state weatherization program, utilizing $3 million to upgrade
230 homes last year, and appreciates the accomplishments of the
weatherization program. In past years, the mission of the
housing authority has been is to address affordable housing
issues, focusing on overcrowding, homelessness, senior housing,
and the dilapidated conditions of housing in rural communities.
However, its focus recently has been forced toward reducing
energy costs; in fact, about one-third of the housing
authority's budget is consumed by heating costs. Solving this
problem began with weatherization, but weatherization
improvements must be supported by the homeowner's behavior and
efforts to conserve. Mr. Worl stated that the Energy Wise
program from RurAL CAP is an effective program that is "owned by
the community," and which motivates the community by cost
savings.
4:57:29 PM
LATASHA MCKOY, Tax Credit/HOME Program Assistant, Tlingit-Haida
Regional Housing Authority, presented statistical data that
showed in Angoon, Kake, Hoonah, and Yakutat electricity costs
are 275 percent above the national average. Also, she cautioned
that funding for the federal low-income home energy assistance
program (LIHEAP) has been reduced, but applications are
increasing, thus there is a need to find other ways to help
residents.
MS. MCKOY, in response to Representative Saddler, said last year
THRHA received $1,000,100 in LIHEAP funds, but this year it
received $851,000 in LIHEAP funds.
4:59:01 PM
ELIZABETH HENSLEY, Corporate and Public Policy Liaison, NANA
Regional Corporation, Inc., said NANA is the Alaska Native
Claims Settlement Act (ANCSA) corporation belonging to over
12,900 Inupiat shareholders in Northwest Alaska. Ms. Hensley
stated there is an energy crisis in her region; as a matter of
fact, NANA president Marie Greene stated that the cost of energy
is the single largest barrier to regional economic development.
Ms. Hensley then provided examples of the high cost of gas in
several locations. She said NANA is happy to team with RurAL
CAP, the Northwest Arctic Borough, the Northwest Inupiat Housing
Authority, and tribal and municipal governments, to offer the
Energy Wise program. In 2011, the NANA board of directors
approved $860,000 to fund the first of three phases of the
program, making each household in the six highest-need villages
eligible. Upon the completion of phase 1, efficiency upgrades
will have been provided to more than 500 homes, education
provided to more than 2,000 residents, and jobs provided to 50
local residents. She emphasized the value of the local hire
element of the program, and that phase 2 and phase 3 will expand
the program's benefits to other communities. Ms. Hensley said
NANA is in full support of RurAL CAP's capital funding request,
and that the program is enthusiastically supported by its
shareholders.
5:02:46 PM
ROSS COEN, Rural Energy Specialist, Tanana Chiefs Conference
(TCC), said TCC is a nonprofit consortium of 42 tribes in the
Interior. He expressed his strong support of the RurAL CAP
Energy Wise program. At the rural energy department at TCC, a
lot of work is done in rural energy development, particularly in
alternative and renewable energy sources, and weatherization.
There is also a growing interest in behavioral training and how
people consume and conserve electricity, thus TCC's interest in
partnering with RurAL CAP for programs in the communities of
Huslia and Ruby. The first anecdotal information from these
communities is that electric bills have decreased. Mr. Coen
also spoke in support of RurAL CAP'S funding request that would
enable TCC to partner with RurAL CAP in the future.
5:05:01 PM
BRIAN HIRSCH, Alaska Representative, National Renewable Energy
Laboratory, DOE, said he is funding data collection on the RurAL
CAP Energy Wise program to dispel any remaining doubts about the
effectiveness of the program. The data will be distributed so
that people can recognize the value of a proven model. He said
his experience working in Alaska for 20 years on energy issues
is that RurAL CAP visits every home in a community and completes
its mission in an impressive manner. Mr. Hirsch expressed his
hope that the state will continue its support on a broad basis.
5:07:11 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 5:07 p.m.