Legislature(2011 - 2012)BARNES 124

03/22/2012 03:00 PM House ENERGY


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03:08:09 PM Start
03:08:49 PM Presentation: Polarconsult - Hvdc Transmission
04:29:27 PM HB323
05:07:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 323 NONATTAIN AREA HOME HEATING SYSTEM GRANTS TELECONFERENCED
Heard & Held
+ Presentation: Polarconsult HVDC Transmission TELECONFERENCED
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                         March 22, 2012                                                                                         
                           3:08 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Lance Pruitt, Co-Chair                                                                                           
Representative Bob Lynn                                                                                                         
Representative Dan Saddler                                                                                                      
Representative Pete Petersen                                                                                                    
Representative Chris Tuck                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                              
Representative Kurt Olson                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION:  POLARCONSULT - HVDC TRANSMISSION                                                                                 
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 323                                                                                                              
"An Act relating to the  Alaska energy efficient home grant fund;                                                               
and  creating a  grant program  for converting  homes in  regions                                                               
designated   as  particulate   matter   nonattainment  areas   to                                                               
efficient home heating systems."                                                                                                
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 323                                                                                                                  
SHORT TITLE: NONATTAIN AREA HOME HEATING SYSTEM GRANTS                                                                          
SPONSOR(s): REPRESENTATIVE(s) T.WILSON                                                                                          
                                                                                                                                
02/17/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/17/12       (H)       ENE, FIN                                                                                               
03/06/12       (H)       ENE AT 3:00 PM BARNES 124                                                                              
03/06/12       (H)       <Bill Hearing Postponed to 3/13/12>                                                                    
03/13/12       (H)       ENE AT 3:00 PM BARNES 124                                                                              
03/13/12       (H)       Heard & Held                                                                                           
03/13/12       (H)       MINUTE(ENE)                                                                                            
03/22/12       (H)       ENE AT 3:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOEL GROVES, P.E.                                                                                                               
Civil Engineer                                                                                                                  
Polarconsult Alaska, Inc.                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a  PowerPoint   presentation                                                             
entitled, "Low Power HVDC System  for Rural Alaska Applications,"                                                               
dated 3/22/12.                                                                                                                  
                                                                                                                                
REPRESENTATIVE TAMMIE WILSON                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Speaking as  the sponsor,  presented further                                                             
information on HB 323 and answered questions.                                                                                   
                                                                                                                                
JOHN ANDERSON, Program Officer                                                                                                  
Weatherization                                                                                                                  
Alaska Housing Finance Corporation (AHFC)                                                                                       
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the hearing on HB
323.                                                                                                                            
                                                                                                                                
ROSIE RICKETTS, Program Manager                                                                                                 
Home Energy Rebate Program                                                                                                      
Alaska Housing Finance Corporation (AHFC)                                                                                       
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Answered a  question during the  hearing on                                                             
HB 323.                                                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:08:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LANCE  PRUITT called  the  House  Special Committee  on                                                             
Energy meeting  to order  at 3:08  p.m.   Representatives Pruitt,                                                               
Petersen, Saddler,  and Tuck were  present at the call  to order.                                                               
Representatives Lynn  and Foster  arrived as  the meeting  was in                                                               
progress.                                                                                                                       
                                                                                                                                
^PRESENTATION:  POLARCONSULT - HVDC TRANSMISSION                                                                                
        PRESENTATION:  POLARCONSULT - HVDC TRANSMISSION                                                                     
                                                                                                                              
3:08:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT announced that the  first order of business would                                                               
be a presentation by  Polarconsult Alaska, Inc. ("polarconsult"),                                                               
on high-voltage direct current (HVDC) electrical transmission.                                                                  
                                                                                                                                
3:08:58 PM                                                                                                                    
                                                                                                                                
JOEL  GROVES, P.E.,  Civil Engineer,  polarconsult, informed  the                                                               
committee  he  is   the  project  manager  for   a  research  and                                                               
development  program to  develop a  low-power, HVDC  transmission                                                               
system  for rural  Alaska applications.   Mr.  Groves gave  brief                                                               
background information on polarconsult,  saying his company is an                                                               
Anchorage-based  engineering consulting  firm  that  has been  in                                                               
business since 1978  and has served over  200 municipal, private,                                                               
and public  sector clients  statewide.   Polarconsult specializes                                                               
in affordable  engineering and energy solutions  for rural Alaska                                                               
including all  phases of the design,  construction, and operation                                                               
of small  hydroelectric projects.    He provided a  brief history                                                               
of HVDC.   The first commercial power station in  the world was a                                                               
direct current  generating and  transmission system,  however, in                                                               
the  1880s,   direct  current  was  not   a  commercially  viable                                                               
technology,  and alternating  current became  the system  used to                                                               
transmit electricity.   In the 1950s, HVDC  was used commercially                                                               
in Europe, and  today there are about 30  HVDC converter stations                                                               
throughout  North America,  and  over 100  in service  worldwide.                                                               
Mr.  Groves  advised  that  HVDC   is  a  proven  and  affordable                                                               
technology  in  its  niche  market,   which  is  typically  as  a                                                               
transmission  system that  can  move  a lot  of  power over  long                                                               
distances.                                                                                                                      
                                                                                                                                
3:12:48 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT  observed many of the  existing HVDC transmission                                                               
lines are underwater.                                                                                                           
                                                                                                                                
MR. GROVES  said HVDC is  well-suited to  long-distance submarine                                                               
cable applications.                                                                                                             
                                                                                                                                
REPRESENTATIVE  PETERSEN  asked  how  much  power  is  lost  when                                                               
converting  HVDC power  back to  alternating  current (AC)  after                                                               
long distance transmission.                                                                                                     
                                                                                                                                
MR.  GROVES  responded  that  the   loss  associated  with  power                                                               
converters is estimated  to be 1 percent to 2  percent for a very                                                               
large converter station.   On small scale converters,  there is a                                                               
3 percent to 4 percent per  terminal loss, which must be factored                                                               
into the overall economics of the power intertie.                                                                               
                                                                                                                                
3:14:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK  asked  whether  there  is  also  line  loss                                                               
associated with direct current (DC) power.                                                                                      
                                                                                                                                
MR. GROVES  said yes; however,  the line loss is  typically lower                                                               
than with an AC  line.  One of the reasons  DC is well-suited for                                                               
rural Alaska applications is by  the use of a single-wire, earth-                                                               
return circuit,  which has  an insulated  cable or  overhead line                                                               
operating  at  high  voltage,  and   the  electrical  circuit  is                                                               
completed through  ground electrodes.   This  type of  circuit is                                                               
more  efficient   than  a  two-wire   circuit  because   the  net                                                               
resistance of  the ground is less  than that of the  second wire.                                                               
Mr.  Groves, in  further  response to  Representative Tuck,  said                                                               
there  is no  concern  with  phases because  it  is a  completely                                                               
asynchronous intertie.                                                                                                          
                                                                                                                                
REPRESENTATIVE TUCK  observed most  power generation  is AC.   He                                                               
asked  if  DC  is  used   just  for  main  transmission,  or  for                                                               
distribution as well.                                                                                                           
                                                                                                                                
MR.  GROVES advised  that all  DC applications  are transmission.                                                               
The majority of existing commercial DC applications are point-                                                                  
to-point   power  transmission,   although  there   is  currently                                                               
industry research into multi-terminal DC networks.                                                                              
                                                                                                                                
REPRESENTATIVE TUCK  then asked  how large  a facility  is needed                                                               
for power conversion from 50 kilovolts down to "distribution."                                                                  
                                                                                                                                
3:17:36 PM                                                                                                                    
                                                                                                                                
MR. GROVES said a one megawatt  power converter will fit inside a                                                               
12 foot x  20 foot enclosure.  Returning to  the presentation, he                                                               
stated  existing  HVDC  applications  are  for  the  large  scale                                                               
transfer  of large  amounts of  power  over long  distances.   In                                                               
fact, the commercial range of  existing HVDC converters goes from                                                               
about  50 megawatts  (MW) to  5,000 MW;  in comparison,  the peak                                                               
load in  the Railbelt is about  800 MW.    One example of  a HVDC                                                               
application is  the system  from Three Gorges  Dam, which  is the                                                               
world's largest hydroelectric facility  and which moves thousands                                                               
of MW of power hundreds of miles  to China's coastal cities.   In                                                               
the U.S., there  is the Pacific DC Intertie, which  is a 3,100 MW                                                               
intertie between the Columbia River  and Southern California.  In                                                               
rural Alaska,  however, loads are  between hundreds  of kilowatts                                                               
(kW) and tens of MW,  and existing commercial DC technologies are                                                               
too large  to be economic.   Mr. Groves said, "That's  where this                                                               
project comes  in, is where developing  a much smaller -  what we                                                               
call a low-power one MW -  DC technology to try and capitalize on                                                               
a lot of  the benefits of HVDC and bring  those benefits to rural                                                               
Alaska markets and energy needs."                                                                                               
                                                                                                                                
MR. GROVES pointed out that an  HVDC intertie would cost less per                                                               
mile than  an AC  line in  rural Alaska,  because an  AC intertie                                                               
requires three or four wires,  and a DC earth-return circuit only                                                               
needs a  single or two-wire  line.  Fewer overhead  wires require                                                               
fewer structures, saving 20 percent to  30 percent on the cost of                                                               
the  power   line.    Furthermore,  construction   standards  for                                                               
overhead lines and  support poles were developed  in the Midwest,                                                               
and do  not work very  well in  rural Alaska because  of shipping                                                               
costs and  geotechnical conditions such as  permafrost and frozen                                                               
slump.   Steel piles must often  be used to support  power poles,                                                               
also adding  expense.   Thus, the higher  costs of  the technical                                                               
requirements of  a DC intertie  can become economic,  because the                                                               
installation cost is cut in half.   Other benefits are the use of                                                               
long-distance  submarine cables  and  the use  of fewer  overhead                                                               
wires, which is a benefit  to migratory birds.  Furthermore, HVDC                                                               
systems  have lower  line losses  and an  asynchronous connection                                                               
for the  transfer of power.   Some  of the disadvantages  of HVDC                                                               
are:  the   converter  stations   are  more  expensive   than  AC                                                               
transformers  by   a  factor  of   ten;  HVDC  is   strictly  for                                                               
transmission;  converters  have  higher   power  losses  than  AC                                                               
transformers;  and  HVDC  one  MW   technology  is  a  developing                                                               
technology  that   lacks  a   performance  record,   has  limited                                                               
suppliers, and garners reluctance on the part of the utilities.                                                                 
                                                                                                                                
3:25:21 PM                                                                                                                    
                                                                                                                                
MR.  GROVES  displayed  slide 5,  entitled,  "Rural  Alaska  HVDC                                                               
Economics  (Cap. Cost),"  that indicated  generic cost  estimates                                                               
applicable  to  a  challenging  setting   in  the  Bush  for  the                                                               
construction  of an  AC  intertie, a  HVDC  intertie of  standard                                                               
Rural  Utilities Service  (RUS), U.S.  Department of  Agriculture                                                               
(USDA)  construction,  and  a HVDC  intertie  of  Alaska-specific                                                               
design.  The breakeven point  for the overhead HVDC interties was                                                               
between six and  twenty-two miles.  He advised  that interties of                                                               
lengths shorter than  that are not good candidates  for HVDC, but                                                               
longer interties  can be  built with greater  savings.   Slide 6,                                                               
entitled, "Rural  Alaska HVDC Economics (Life  Cycle)," indicated                                                               
life  cycle  costs, taking  into  consideration  that HVDC  power                                                               
converters have  higher line losses  and are  very sophisticated,                                                               
thus  have  higher operation  and  maintenance  (O&M) and  repair                                                               
costs.   Mr. Groves  said on  a life  cycle basis,  the breakeven                                                               
point moves out between twelve and thirty-one miles.                                                                            
                                                                                                                                
3:28:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER asked  why Alaska-specific construction is                                                               
less costly.                                                                                                                    
                                                                                                                                
MR.  GROVES  explained  that Alaska-specific  design  allows  for                                                               
greater distances  between poles, and  the use of  lighter poles,                                                               
guy-wires, and unique foundations.                                                                                              
                                                                                                                                
MR.  GROVES displayed  slide 7,  entitled "Comparative  Economics                                                               
Low-Power  HVDC  vs. AC  Interties,"  that  indicated 30  percent                                                               
savings over  the cost  of an  AC intertie on  a 25-mile,  one MW                                                               
overhead HVDC intertie, and 40  percent savings on a 60-mile, one                                                               
MW  overhead  HVDC  intertie.   Furthermore,  case  studies  have                                                               
revealed 50 percent savings over the  cost of an AC intertie on a                                                               
25-mile, two MW  submarine HVDC intertie, and  30 percent savings                                                               
on  a 60-mile,  five MW  overhead HVDC  intertie.   He said  this                                                               
technology has profound cost savings for rural Alaska interties.                                                                
                                                                                                                                
3:33:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK asked  for  a comparison  of the  insulation                                                               
qualities of AC and DC cable.                                                                                                   
                                                                                                                                
MR. GROVES  explained that the  nominal voltage  of a DC  line is                                                               
its  stated  voltage, so  a  50  kV  DC  line must  be  insulated                                                               
approximately  to the  equivalent  of  a 34.5  kV  AC  line.   In                                                               
further response  to Representative Tuck, he  said the equivalent                                                               
is  about  40 percent  less.    There  is  an issue  on  overhead                                                               
applications with exposed insulators,  because a DC conductor has                                                               
a static electric  field that attracts contamination  by dust and                                                               
salt spray.  Again to Representative  Tuck, he said he was unsure                                                               
whether birds land on a DC line, and offered to find out.                                                                       
                                                                                                                                
3:35:19 PM                                                                                                                    
                                                                                                                                
MR. GROVES turned attention to a  case study of a submarine cable                                                               
from Green's  Creek Mine  to Hoonah.   The  estimated cost  for a                                                               
five MW  DC cable and two  MW power converters to  serve Hoonah's                                                               
existing  load -  with room  for growth  - was  approximately $23                                                               
million, which is about one-half of the  cost of an AC cable.  In                                                               
response to  Co-Chair Pruitt, he  said the project  was discussed                                                               
to  a  limited  extent  with  the  general  manager  of  Hoonah's                                                               
utility,  Inside Passage  Electric  Cooperative (IPEC),  however,                                                               
polarconsult conducted the analysis  as an independent conceptual                                                               
cost estimate of pre-commercial  technology in order to determine                                                               
if  the continued  development of  this technology  is justified.                                                               
He said  the results of the  case study are "significant,  to say                                                               
the least."   Another site-specific conceptual case  study was on                                                               
a line from the known  geothermal resource at Pilgrim Hot Springs                                                               
to  Nome.    If  there  were an  economically  feasible  five  MW                                                               
resource  developed at  Pilgrim  Hot Springs,  a conventional  AC                                                               
overhead intertie  to transmit  the power to  the market  in Nome                                                               
would cost  about $37 million.   A bi-polar overhead  HVDC system                                                               
would  cost  about  $26  million, which  is  approximately  a  30                                                               
percent savings.   At this time there is no  estimate on the cost                                                               
of  developing  the geothermal  plant,  so  there is  no  overall                                                               
economic  analysis of  the power  supply,  and this  is simply  a                                                               
comparison  of  the power  intertie.    Returning to  the  Hoonah                                                               
system, he  said if IPEC could  buy electricity at six  cents per                                                               
kilowatt hour from  Alaska Electric Light and  Power (AEL&P), and                                                               
displace  diesel-generated  power,   the  estimated  cost-benefit                                                               
ratio for  the Hoonah project  is approximately 0.6, and  with an                                                               
increased load the cost-benefit ratio would approach 1.                                                                         
                                                                                                                                
3:41:22 PM                                                                                                                    
                                                                                                                                
MR.  GROVES continued  to discuss  how  less expensive  interties                                                               
help rural  Alaska.  For  example, interconnecting  power between                                                               
villages would create  the economies of scale  that are necessary                                                               
to reduce  energy costs.   In addition,  interties allow  for the                                                               
consolidation  of  bulk  fuel  storage  and  the  elimination  of                                                               
duplicate  power  plants.   Larger  plants  serving larger  loads                                                               
through  mini-grids   would  result  in  more   efficient  diesel                                                               
generation,  and  combined  loads allow  for  the  cost-effective                                                               
development  of  local  energy   resources.    He  described  the                                                               
possible   cost  savings   from  building   larger  hydroelectric                                                               
resources  because  the  cost  of permitting  is  the  same,  and                                                               
design,  transmission,  and access  costs  are  similar, but  the                                                               
larger load will serve two to three villages instead of one.                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER observed  that polarconsult  estimated AC                                                               
interties cost $400,000 per mile to construct.                                                                                  
                                                                                                                                
MR.  GROVES said  yes, this  data was  compiled from  rural power                                                               
lines that  have been built in  the last 10 years.   Although not                                                               
precise, those  costs ranged from  $200,000 to $600,000  per mile                                                               
to  build.   In further  response to  Representative Saddler,  he                                                               
said the costs  are high because of  logistics and transportation                                                               
problems  that  arise  from  working  in  permafrost  and  tundra                                                               
regions where heavy equipment to build  the line can only be used                                                               
in the winter,  but the equipment has to be  barged up the summer                                                               
before.  So,  expensive equipment is mobilized for  one full year                                                               
in order  to complete  a two-month  construction project.   Also,                                                               
the cost of shipping is high.                                                                                                   
                                                                                                                                
3:44:15 PM                                                                                                                    
                                                                                                                                
MR.  GROVES displayed  slide  11, "Where  do  Economies of  Scale                                                               
Begin?," explaining  that this is  an analysis of the  power cost                                                               
equalization  (PCE)   database.    Participating   villages  were                                                               
organized  by  their amount  of  annual  generation, with  annual                                                               
demand for  2007, 2008, and  2009, identified  on the graph.   He                                                               
pointed  out  the  graph  shows that  very  small  villages  have                                                               
extremely  expensive electricity,  and  about 70  percent of  the                                                               
villages that  participate in PCE  generate between  40 kilowatts                                                               
(kW)  and  300 kW  annually,  and  as  the amount  of  generation                                                               
increased, the  residential price lowers  by about 10 cents.   In                                                               
the section of the graph  showing the largest communities - those                                                               
that generate  over 300 kW  - there  are no extreme  high prices.                                                               
He  concluded that  moving villages  into "half  a megawatt,  one                                                               
megawatt, two megawatt class[es], that's  where you can expect to                                                               
see some significant economies of scale."                                                                                       
                                                                                                                                
3:49:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER surmised linking  communities will lead to                                                               
cost savings.                                                                                                                   
                                                                                                                                
REPRESENTATIVE TUCK noted  some villages have been  able to lower                                                               
their costs over the three reported years.                                                                                      
                                                                                                                                
MR. GROVES advised  the point of slide 11 is  to look for general                                                               
statewide trends.                                                                                                               
                                                                                                                                
There was discussion on the vagaries of the chart.                                                                              
                                                                                                                                
CO-CHAIR PRUITT  pointed out the  trend indicated was  that costs                                                               
in communities are going up.                                                                                                    
                                                                                                                                
3:52:02 PM                                                                                                                    
                                                                                                                                
MR. GROVES  acknowledged that some  of the increases in  costs in                                                               
2009 were  a reflection of  the increase  in the global  price of                                                               
oil.   Also,  in  some small  villages,  utilities have  "postage                                                               
stamp rates" which can skew the  data, as can poor reporting.  He                                                               
returned attention to the HVDC  project overview:  Develop a low-                                                               
power HVDC transmission  system suitable for use  in rural Alaska                                                               
applications.    From 2005  to  2007,  polarconsult conducted  an                                                               
internal  technology review  to  determine whether  this type  of                                                               
technology could  be developed and  - in 2007 -  received funding                                                               
from  the  Denali Commission  to  pursue  preliminary design  and                                                               
feasibility analysis.   This phase of the project  was managed by                                                               
Alaska Village  Electric Cooperative  Inc. (AVEC),  and consisted                                                               
of  working  with Princeton  Power  Systems  Inc., to  develop  a                                                               
prototype  of  the  converter.    From 2009  to  2011,  Phase  11                                                               
prototyping and testing were funded  by the Denali Commission and                                                               
managed  by  the  Alaska  Center for  Energy  and  Power  (ACEP),                                                               
University of Alaska Fairbanks (UAF).   Phase 11 consisted of the                                                               
successful construction, specification, testing,  and design of a                                                               
full-scale one  MW prototype converter  with two 500  kW modules.                                                               
This phase proved the efficiency,  functionality, and cost of the                                                               
unit.    On  the intertie  side,  polarconsult  found  innovative                                                               
overhead system  designs and  has determined  that the  system is                                                               
technically  viable, economically  robust, and  promises profound                                                               
savings for rural Alaska interties.   Therefore, polarconsult has                                                               
applied for  a grant from  the Denali Commission  emerging energy                                                               
technology grant  (EETG) program  for Phase  111 of  the project,                                                               
which will  consist of additional development  on the converters,                                                               
the  definition of  technical  compliance  standards, and  safety                                                               
testing.    The  converters  will  then  be  tested  at  ACEP  in                                                               
Fairbanks and following that, will be  operated as a DC link on a                                                               
utility  system  to  prove the  units  under  Alaska  conditions.                                                               
Sometime between  2015 and 2016,  the technology will  be mature,                                                               
validated, and ready for commercial deployment.                                                                                 
                                                                                                                                
3:59:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK asked where the prototype was manufactured.                                                                 
                                                                                                                                
MR. GROVES  said the hardware  is in  Princeton, New Jersey.   In                                                               
further response  to Representative  Tuck, he said  the prototype                                                               
is solid-state  power electronics  and the overall  efficiency of                                                               
the prototype converter  is 96 percent to 97 percent,  thus the 3                                                               
percent to  4 percent loss is  heat that must be  dissipated.  To                                                               
accomplish this, the 500 kW  converter is housed in a low-voltage                                                               
cabinet  that is  air-cooled, and  in a  high-voltage transformer                                                               
tank that is cooled by passive convection.                                                                                      
                                                                                                                                
4:01:43 PM                                                                                                                    
                                                                                                                                
MR. GROVES  further explained the  one MW system consists  of two                                                               
500  kW powertrains  operating in  parallel, and  two low-voltage                                                               
cabinets so,  if there  is a  single point  of failure,  one unit                                                               
will  continue  to transmit  up  to  500  kW  of power  over  the                                                               
intertie.   If  needed, repairs  are not  made on  site, but  bad                                                               
units can be unplugged, airlifted out, and replaced.                                                                            
                                                                                                                                
4:04:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER asked what size village  would be served by a one                                                               
MW converter.                                                                                                                   
                                                                                                                                
MR. GROVES said he was unsure,  however, the peak load in Nome is                                                               
10 MW and the average load is 2 MW to 4 MW.                                                                                     
                                                                                                                                
CO-CHAIR  FOSTER advised  that the  population of  Nome is  3,500                                                               
people and the average load is 3.5 MW.                                                                                          
                                                                                                                                
MR. GROVES said  a one MW converter system will  serve 70 percent                                                               
to 80 percent  of all of the  villages in the state.   In fact, a                                                               
500 kW system will serve about  50 percent of the villages in the                                                               
state.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  TUCK  asked whether  the  DC  converter can  also                                                               
convert DC to AC.                                                                                                               
                                                                                                                                
MR.  GROVES said  this is  a  bidirectional system  and the  same                                                               
equipment functions on either end of  the system.  The power flow                                                               
on an  intertie can  be automatically or  manually reversed.   He                                                               
displayed several slides showing the prototype unit.                                                                            
                                                                                                                                
4:10:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked for  the life  cycle of  the system                                                               
compared to that of AC lines.                                                                                                   
                                                                                                                                
MR. GROVES said  the power electronics are designed  for 50 years                                                               
- which  is comparable to  an electrical intertie -  with routine                                                               
preventative maintenance.   The control interface  is expected to                                                               
be replaced  in five years,  circuit boards are good  for twenty-                                                               
five years, and basic hardware has a fifty-year life.                                                                           
                                                                                                                                
MR.  GROVES displayed  slide  19  that was  a  photograph of  the                                                               
installation of  micro-thermopiles at a  foundation test  site in                                                               
Fairbanks.   The micro-thermopiles are  1.5 inch in  diameter and                                                               
25 feet  long, and  are a  smaller version of  those used  on the                                                               
overhead  portions of  the Trans-Alaska  Pipeline System  (TAPS),                                                               
which  freeze the  ground  and keep  the  foundation stronger  in                                                               
permafrost areas  during summer.   In response  to Representative                                                               
Saddler, he confirmed that the  micro-thermopiles are thermal and                                                               
structural, because  they have  a guy-wire  structure.   Slide 21                                                               
was a photograph of the  first fiberglass power pole installed in                                                               
Alaska.    It was  also  the  first  spliced pole;  spliced  pole                                                               
technology  will allow  for the  use of  taller poles  shipped in                                                               
sections of standard 40-foot and 20-foot lengths.                                                                               
                                                                                                                                
4:17:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK asked whether  the thermopiles are drilled in                                                               
the ground.                                                                                                                     
                                                                                                                                
MR. GROVES  explained a  hole was drilled  and backfilled  with a                                                               
sand  and water  slurry.   At some  point it  may be  possible to                                                               
airlift all the equipment to the  job site, which would allow for                                                               
summer  installation and  save  money.   In  further response  to                                                               
Representative  Tuck, he  described  several  methods to  utilize                                                               
poles depending on the type of circuit installed.                                                                               
                                                                                                                                
4:23:08 PM                                                                                                                    
                                                                                                                                
MR.  GROVES  closed,  saying  polarconsult   formed  a  Phase  11                                                               
stakeholders advisory  group comprised of electric  utilities and                                                               
entities associated  with the electric  industry from  across the                                                               
state.  Furthermore, some of the  key team members on the project                                                               
were experts from international, national, and local sources.                                                                   
                                                                                                                                
CO-CHAIR PRUITT asked  whether the utilities are  ready to accept                                                               
this technology.                                                                                                                
                                                                                                                                
MR. GROVES  advised that  AVEC is  supportive of  the technology,                                                               
but conservative in its implementation.                                                                                         
                                                                                                                                
4:27:29 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:27 p.m. to 4:29 p.m.                                                                       
                                                                                                                                
        HB 323-NONATTAIN AREA HOME HEATING SYSTEM GRANTS                                                                    
                                                                                                                                
4:29:27 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT announced  that the next order  of business would                                                               
be HOUSE  BILL NO.  323, "An  Act relating  to the  Alaska energy                                                               
efficient  home grant  fund;  and creating  a  grant program  for                                                               
converting  homes in  regions  designated  as particulate  matter                                                               
nonattainment areas to efficient home heating systems."                                                                         
                                                                                                                                
4:29:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TAMMIE WILSON,  Alaska State Legislature, informed                                                               
the committee  Fairbanks North Star  Borough (FNSB)  contains the                                                               
only  U.S.  Environmental  Protection  Agency  (EPA)  particulate                                                               
matter  (PM-2.5) nonattainment  area in  the state,  since Juneau                                                               
avoided this  status by  banning the burning  of wood  on certain                                                               
days.   She provided a  map of  the Fairbanks area  that outlined                                                               
the boundary  of the nonattainment  area - where the  majority of                                                               
people in the  borough live - noting that Eielson  Air Force Base                                                               
is out of  the area, but Fort Wainwright Army  Base is within the                                                               
area.    Representative T.  Wilson  then  responded to  questions                                                               
raised  at a  previous  hearing, saying  that  other states  have                                                               
received EPA grants;  in fact, Libby, Montana  is a nonattainment                                                               
area  that received  an EPA  grant  for a  change-out program  to                                                               
convert  wood stoves.   Spokane,  Washington  has a  state-funded                                                               
program to convert non-EPA certified  wood stoves.  To answer the                                                               
question as  to whether an energy  rater may be liable  if his or                                                               
her estimate  was lower  than the final  cost of  the conversion,                                                               
she said someone can always be  sued.  The purpose of the program                                                               
is to  bring an  energy rater in,  not only to  look at  the oil-                                                               
fired  furnace and  non-EPA  certified wood  stove,  but also  to                                                               
discuss issues  specific to the home  such as the proper  size of                                                               
the wood  stove or  oil furnace.   The  rater will  also identify                                                               
other  problems   such  as  gaps  in   windows,  insulation,  and                                                               
inefficient light  bulbs, in a  similar way to the  Golden Valley                                                               
Electric Association  (GVEA) program.   Representative  T. Wilson                                                               
stressed  that  this program  is  specifically  designed to  help                                                               
those in  the middle class  who cannot  qualify for, or  have not                                                               
participated in,  the Alaska Housing Finance  Corporation (AHFC),                                                               
Department  of Revenue  (DOR),  weatherization  or energy  rebate                                                               
programs.                                                                                                                       
                                                                                                                                
4:33:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK understood  that  for a  rebate program  the                                                               
homeowner pays  for the work  up-front and gets  reimbursed after                                                               
an inspection.   He asked whether HB 323 provides  for the vendor                                                               
to  perform the  work  and  then turn  in  vouchers  to AHFC  for                                                               
payment, up to $10,000.                                                                                                         
                                                                                                                                
4:34:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T.  WILSON said correct.   The intent of  the bill                                                               
is to  help those without the  up-front cash.  She  expressed her                                                               
belief that  the air quality  in FNSB  will improve, but  EPA has                                                               
forced this  issue to be resolved  by 2014.  On  3/15/12, control                                                               
measures  for  the  nonattainment  area were  issued  for  public                                                               
comment, and FNSB must submit  a state implementation plan (SIP).                                                               
The control  package includes the expansion  of existing programs                                                               
which  are: the  use of  dry wood,  wood stove  change-outs, AHFC                                                               
programs,  and  outdoor boiler  retrofits.    These programs  are                                                               
helping  reduce  emissions,  but  FNSB will  not  meet  its  goal                                                               
without the change-out  program or something similar  "to help us                                                               
out  a  little  further."     Most  worrisome  is  that  on  high                                                               
particulate matter  days - that  are also low-temperature  days -                                                               
wood burning would be banned in the borough.                                                                                    
                                                                                                                                
4:37:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked for an explanation  of the emission                                                               
standards.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  T. WILSON  explained the  relevant issue  is that                                                               
the   wood  stove   change-out   control   program  has   reduced                                                               
particulate matter 2.1 percent thus  far.  In further response to                                                               
Representative Saddler,  she acknowledged  there was  an increase                                                               
in  sulfur  dioxide  of  0.96   percent,  which  illustrated  her                                                               
frustration that taking care of  one problem may increase another                                                               
problem.  Again  to Representative Saddler, she  said the control                                                               
measures have  reduced emissions by  a cumulative total  of 22.04                                                               
percent,  which  is  a  reduction  of  between  6.8  and  8.7  in                                                               
micrograms per  cubic meter.  The  goal is for a  reduction of 11                                                               
micrograms per cubic meter.                                                                                                     
                                                                                                                                
REPRESENTATIVE  T.  WILSON  continued, saying  the  2/9/12  draft                                                               
proposed rules  are out for  public hearings,  demonstrating that                                                               
FNSB  is going  down the  right  road by  educating residents  on                                                               
proper  burning  procedures.    In  addition,  EPA  will  tighten                                                               
emission  standards  on  new wood  stoves,  wood  pellet  stoves,                                                               
hydronic  heaters,   new  camp  stoves,  and   new  cook  stoves.                                                               
Representative T.  Wilson concluded  that HB  323 was  drafted to                                                               
address nonattainment areas because  other statewide programs may                                                               
not  help FNSB  residents, and  because these  expensive upgrades                                                               
may  only  be in  effect  for  five or  six  years  until gas  is                                                               
available.                                                                                                                      
                                                                                                                                
4:42:30 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT acknowledged that it  is unknown as to the future                                                               
of  power generation  in the  Interior  due to  changes in  state                                                               
policy.   He asked, "What  would be  expected [in five  years] by                                                               
the ... people of Fairbanks, where would they be?"                                                                              
                                                                                                                                
REPRESENTATIVE  T.  WILSON related  that  EPA  has set  a  number                                                               
without  providing modeling  or guidelines  for attainment.   The                                                               
Department  of  Environmental  Conservation (DEC)  and  FNSB  are                                                               
trying to  figure out what is  needed to reach that  number.  She                                                               
said there  are no guarantees  that the control measures  will be                                                               
sufficient  to  comply with  EPA  standards.   Representative  T.                                                               
Wilson opined  the best solution is  for the state to  ask EPA to                                                               
wait for gas to come to  the downtown area of Fairbanks, but that                                                               
is not the administration's chosen  option, due to the importance                                                               
of federal  transportation funding to  the northern region.    In                                                               
response  to  Representative  Saddler,   she  explained  that  if                                                               
compliance  is not  met, EPA  can recall  millions of  dollars of                                                               
transportation funding.   Therefore, FNSB must show  a good faith                                                               
effort, averaged over 2012, 2013, and 2014.                                                                                     
                                                                                                                                
4:46:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked why  EPA is resistant  to providing                                                               
funding for compliance, as it has in other states.                                                                              
                                                                                                                                
REPRESENTATIVE  T. WILSON  said  the money  for  that program  is                                                               
gone.                                                                                                                           
                                                                                                                                
CO-CHAIR  PRUITT,  returning attention  to  facets  of the  bill,                                                               
asked why it  was written to allow for grants,  instead of loans,                                                               
for portions of homeowners' costs.                                                                                              
                                                                                                                                
REPRESENTATIVE  T.  WILSON said  the  intent  was to  follow  the                                                               
guidelines of the  rebate program, and to focus  on replacing the                                                               
appliance that would make the most difference.                                                                                  
                                                                                                                                
REPRESENTATIVE  PETERSEN   asked  whether  residents   have  been                                                               
encouraged to buy propane heating  devices, which are more easily                                                               
converted to natural gas.                                                                                                       
                                                                                                                                
REPRESENTATIVE T. WILSON observed propane costs more than oil.                                                                  
                                                                                                                                
CO-CHAIR PRUITT asked  what impact Fort Wainwright  Army Base has                                                               
on the situation.                                                                                                               
                                                                                                                                
4:49:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   T.  WILSON   advised  that   all  projects   and                                                               
expansions in Fairbanks now require  special permitting to verify                                                               
that  construction  and  such would  not  negatively  impact  air                                                               
quality.   In response to  Co-Chair Pruitt, she said  the borough                                                               
changed from number two heating  fuel to number one heating fuel,                                                               
but there was  no substantial change in air quality.   Within the                                                               
city,  there is  district heat,  gas,  wood fuel,  and oil  fuel.                                                               
Because  of  inversion,  pollution  from  the  power  plants  and                                                               
commercial buildings is  higher in the clouds.   Residential wood                                                               
smoke  from  shorter   chimneys  is  lower  and   is  more  often                                                               
registered by the  EPA monitors.  In addition,  as more certified                                                               
wood stoves are  being used, on very cold days  wood smoke levels                                                               
stay high.   She compared  the problem  to that of  air pollution                                                               
which was  improved by  auto emission controls.   Fairbanks  is a                                                               
bowl  with very  little wind,  and the  pollution settles  on the                                                               
town.                                                                                                                           
                                                                                                                                
REPRESENTATIVE PETERSEN  recalled other legislation for  the home                                                               
energy rebate program  that tried to create a  voucher system but                                                               
the contractors  would have  to wait  45 days to  60 days  to get                                                               
reimbursed.    He  asked  whether the  bill  would  have  similar                                                               
problems.                                                                                                                       
                                                                                                                                
REPRESENTATIVE T.  WILSON this is  a simpler program -  one item,                                                               
the appliance - one  check.  If vendors say no,  no money will be                                                               
spent.                                                                                                                          
                                                                                                                                
4:56:34 PM                                                                                                                    
                                                                                                                                
JOHN  ANDERSON, Program  Officer,  Weatherization, AHFC,  advised                                                               
that the  previous voucher idea  created an  unmanageable process                                                               
due to  the volume  of suppliers in  the state,  however, because                                                               
this program  addresses specific mechanical appliances,  it would                                                               
be more manageable.                                                                                                             
                                                                                                                                
REPRESENTATIVE SADDLER asked  for the balance of  the home energy                                                               
efficiency grant fund.                                                                                                          
                                                                                                                                
4:57:35 PM                                                                                                                    
                                                                                                                                
ROSIE  RICKETTS, Program  Manager,  Home  Energy Rebate  Program,                                                               
AHFC, said the balance is approximately $64 million.                                                                            
                                                                                                                                
REPRESENTATIVE SADDLER  asked what the  cost would be  to provide                                                               
$10,000  grants  for  enough  new   stoves  to  reduce  pollution                                                               
sufficiently so that Fairbanks can reach attainment.                                                                            
                                                                                                                                
MR.  ANDERSON estimated  10,000 units  at $10,000  each would  be                                                               
equivalent to $100 million.                                                                                                     
                                                                                                                                
REPRESENTATIVE T. WILSON pointed out  the program would only have                                                               
whatever funding  is allocated by the  legislature.  Furthermore,                                                               
the grants are for an amount  up to $10,000, and most wood stoves                                                               
cost  much  less than  that,  ranging  in  price from  $2,500  to                                                               
$3,500.    In fact,  only  oil  furnaces  older than  1990  would                                                               
qualify for  a replacement  cost of $10,000.   She  stressed that                                                               
the program  would be "first  come, first served," and  urged for                                                               
the initial funding of the program  to be $1 million.  In further                                                               
response to Representative  Saddler, she said it is  hard to know                                                               
what investment would  be necessary to reduce  emissions to reach                                                               
the  standard,  because  the  modeling  is  not  done,  but  more                                                               
information should be available from DEC by this summer.                                                                        
                                                                                                                                
REPRESENTATIVE PETERSEN  questioned whether $1  million allocated                                                               
to replace  100 stoves would result  in enough of a  reduction to                                                               
attain the goal of the bill.                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON  said the number of old  oil furnaces in                                                               
use  is  unknown,  and  replacing them  may  cost  $10,000  each.                                                               
However, replacing  wood stoves will  cost from $3,000  to $3,500                                                               
each because  the grant will  only replace the appliance  and not                                                               
the chimney and other parts.                                                                                                    
                                                                                                                                
5:02:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER was  interested in a way for  the state to                                                               
recover some  of the cost,  perhaps by a  lien that is  paid when                                                               
the home is sold.                                                                                                               
                                                                                                                                
REPRESENTATIVE  T. WILSON  pointed  out  that the  weatherization                                                               
program to  upgrade homes  does not  require repayment,  nor does                                                               
the rebate  program.  The  benefit to the  state is that  it will                                                               
not lose  its federal transportation  funding.   She acknowledged                                                               
there  are  other  programs,  but  oil  furnaces  have  not  been                                                               
addressed.   Fairbanks tests the air  every day and will  know if                                                               
the program is  working in a specific area, and  the test results                                                               
are provided to EPA.  The  program is limited by close parameters                                                               
in order to  target the dirtiest sources of  pollution.  Although                                                               
the  income qualifications  for  other  assistance programs  seem                                                               
high, the  average cost of  heat and electricity in  the Interior                                                               
is from $700  to $1,000, and many residents don't  have the extra                                                               
cash for improvements because of the cost of energy.                                                                            
                                                                                                                                
5:05:40 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER  agreed with funding  the program for  $1 million                                                               
the first year.  He suggested  there should be a priority for the                                                               
dirtiest appliances.                                                                                                            
                                                                                                                                
REPRESENTATIVE TUCK clarified that the intent of the previous                                                                   
voucher energy rebate program was to pay the homeowner, not                                                                     
individual vendors, which was objected to by AHFC.                                                                              
                                                                                                                                
5:07:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT held over HB 323.                                                                                               
                                                                                                                                
5:07:22 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Energy meeting was adjourned at 5:07 p.m.                                                                  

Document Name Date/Time Subjects
A - Presentation Polar Consult Inc. HVDC.pdf HENE 3/22/2012 3:00:00 PM
Polar Consult Inc HVDC Presentation
B- HB 323 Presentation.pdf HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
1 HB 323 version M).pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
2 HB 323 sponsor statement.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
3 HB 323 - Fiscal Note AHFC.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
4HB 323-DOR-AHFC-03-01-12.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
5 HB 323 - State Implementation Plan (SIP).pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
6 HB 323 standards.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
7 HB 323 - EPA Wood Stove Certification.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
8 HB 323 annual savings.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
9 HB 323 Supporting Map.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
10 HB 323 - Support Letter Fairbanks.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
11 HB 323 - Air Quality Highway Sanctions.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
12 HB 323 - Support Letter FNSB.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323
13 HB 323 - Support Letter North Pole.pdf HENE 3/13/2012 3:00:00 PM
HENE 3/22/2012 3:00:00 PM
HENE 3/27/2012 3:00:00 PM
HB 323