Legislature(2013 - 2014)BARNES 124
02/05/2014 08:00 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Energy Authority | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
February 5, 2014
8:02 a.m.
MEMBERS PRESENT
Representative Doug Isaacson, Co-Chair
Representative Charisse Millett, Co-Chair
Representative Neal Foster
Representative Pete Higgins
Representative Shelley Hughes
Representative Benjamin Nageak
Representative Andy Josephson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION: ALASKA ENERGY AUTHORITY
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
SARA FISHER-GOAD, Executive Director
Alaska Energy Authority (AEA)
Department of Commerce, Community, and Economic Development
(DCCED)
Anchorage, Alaska
POSITION STATEMENT: Presented an overview of the Alaska Energy
Authority.
WAYNE DYOK, Project Manager
Susitna-Watana Hydro
Alaska Energy Authority (AEA)
Department of Commerce, Community and Economic Development
(DCCED)
Anchorage, Alaska
POSITION STATEMENT: Provided a presentation on the Susitna-
Watana Hydro project.
ACTION NARRATIVE
8:02:04 AM
CO-CHAIR DOUG ISAACSON called the House Special Committee on
Energy meeting to order at 8:02 a.m. Representatives Higgins,
Hughes, Nageak, Josephson, and Isaacson were present at the call
to order. Representatives Foster and Millett arrived as the
meeting was in progress.
^PRESENTATION: ALASKA ENERGY AUTHORITY
PRESENTATION: ALASKA ENERGY AUTHORITY
8:03:09 AM
CO-CHAIR ISAACSON announced that the only order of business
would be an update on the roles and responsibilities governing
the Alaska Energy Authority (AEA) by Sara Fisher-Goad, Executive
Director. To introduce this topic, he paraphrased from
[legislation passed in the 26th Alaska State Legislature] AS
44.99.115 Declaration of state energy policy, as follows:
Alaska recognizes its economic prosperity is dependent
on available, reliable, and affordable residential,
commercial, and industrial energy to supply the
state's electric, heating, and transportation needs.
CO-CHAIR ISAACSON informed the committee more information is
forthcoming on the closure of the Flint Hills Resources oil
refinery - the largest oil refinery in Alaska - and on the
status of instate oil refining.
CO-CHAIR ISAACSON resumed paraphrasing from the above statute:
The state also recognizes that worldwide supply and
demand for fossil fuels and concerns about global
climate change will affect the price of fossil fuels
consumed by Alaskans and exported from the state to
other markets. In establishing the state energy
policy, the state further recognizes the immense
diversity of the state's geography, cultures, and
resource availability.
CO-CHAIR ISAACSON stated Ms. Fisher-Goad has been asked how AEA
can institute a comprehensive and coordinated approach to
support energy efficiency and conservation.
8:05:47 AM
SARA FISHER-GOAD, Executive Director, AEA, Department of
Commerce, Community & Economic Development (DCCED), provided a
PowerPoint presentation entitled, "Alaska Energy Authority
Overview." She first pointed out the challenge that Alaska has
diversified resources, but because it is a very large state, the
amount of electrical energy produced and used in each region
varies greatly [slide 2]. Also, the cost of energy varies from
communities that are supplied with natural gas as is Anchorage,
to rural areas that rely on diesel fuel for heating. The cost
of electricity is consistently higher in less populated areas.
An additional challenge - related to projects recommended for
funding by AEA's Renewable Energy Fund Grant program - is that
by statute new projects are to be directed at areas where the
cost is highest, and are also to be regionally spread. Ms.
Fisher-Goad noted that the lowest cost of electricity is in
Juneau, Ketchikan, Wrangell, and Petersburg, which are supplied
by mature hydroelectric (hydro) projects [slide 3]. Sources of
energy also vary from a heavy dependency on diesel fuel and a
small amount of energy generated from wind and combined cycle
sources in the Lower Yukon-Kuskokwim (YK) region, to the
Railbelt, which is heavily dependent on gas, steam, or combined
cycle, and with additional supplies from hydro, wind, and diesel
[slide 4].
8:09:34 AM
REPRESENTATIVE HUGHES asked for a description of the cost of
energy by region.
MS. FISHER-GOAD acknowledged slide 4 shows only the sources of
energy by region for heating and electricity.
REPRESENTATIVE HIGGINS asked whether the Interior was included
as part of the Railbelt.
MS. FISHER-GOAD said yes, the Fairbanks and Tanana Valley areas
are included in the Railbelt. In further response to
Representative Higgins, she said although Fairbanks does not
have natural gas, slide 4 combines both heat and electricity,
and the Railbelt includes the Anchorage area, which has
significant supplies of natural gas.
REPRESENTATIVE HIGGINS suggested the Interior should be shown
separately from the Railbelt, "because that really tells the
story."
MS. FISHER-GOAD agreed. However, slide 4 is a broad look to
demonstrate the idea of how complex the regions are. For
example, Southeast generally has lower cost electrical
generation, but there are still many small communities without
hydro in the Southeast region that are dependent on expensive
diesel; thus within regions there is great disparity, as is the
case in the Railbelt with the difference in energy costs between
the Interior and Southcentral.
8:12:34 AM
REPRESENTATIVE NAGEAK asked whether AEA has further information
on the sources of energy for other areas of the state that are
missing from slide 4.
MS. FISHER-GOAD said yes, in AEA's Alaska Energy Statistics
report, and offered to provide additional information as slide 4
does not represent the differences in the entire state. In
further response to Representative Nageak, she said AEA would
provide information on local sources of geothermal, wind, and
solar energy.
CO-CHAIR ISAACSON agreed with the need to separate the Interior
from the Railbelt because it is not accurate to say 100,000
people in the Interior have sources of energy that they do not;
also not represented are constraints on transmission lines. He
stressed that the complex situation in the Interior must be
understood properly in the context of air quality and ground
water contamination issues.
MS. FISHER-GOAD informed the committee the goal of AEA's annual
statistical report is to provide useful analyses and summary
information to stakeholders, legislators, nonprofits, and
utilities.
8:16:17 AM
REPRESENTATIVE HUGHES suggested presentations for legislators
should include all areas of the state for a complete picture.
MS. FISHER-GOAD assured the committee AEA seeks to provide
useful information in its statistical report. The primary
mission of AEA is to reduce the cost of energy; however, the
long-term benefit of this may not mean that tomorrow the cost of
kilowatts hours may be less than today, but that ten years from
now, the cost should not be higher. This task influences AEA's
choice of which projects and programs to develop. There are
four primary areas of work AEA uses to reduce the cost of
energy: planning and policy; investing in energy
infrastructure; diversifying Alaska's energy portfolio through
funding and grant programs; providing technical and community
assistance [slide 5].
8:19:23 AM
REPRESENTATIVE NAGEAK said a program to reduce the cost of
energy in Alaska should include the effect of federal land use
policies on finding oil and gas, and other sources of energy.
In many areas, land use policies in the state and the permitting
process "gets in the way of a lot of things in terms of trying
to reduce the cost of energy," especially in rural Alaska where
most of the land is owned by the federal government.
MS. FISHER-GOAD agreed the situation described by Representative
Nageak is part of the overall picture of energy and resource
development. She returned to the presentation and said AEA is
now Alaska's Energy Office - after taking over from the Alaska
Housing Finance Corporation (AHFC) last year - for the purposes
of administering planning funds from the U.S. Department of
Energy and taking a greater role in energy planning and
development [slide 6]. As Alaska's Energy Office, AEA sits on
the board of directors of the National Association of State
Energy Officials (NAESO). Other tasks of Alaska's Energy Office
include acting as the lead on Alaska's energy policy and
development; coordinating regional energy plans on a statewide
level; monitoring state energy goals; coordinating multi-agency
efforts such as the Interior Energy Plan; maintaining a role in
project analysis through the Emerging Energy Technology Fund and
the Renewable Energy Fund Grant program; transmission planning
[slide 6].
CO-CHAIR ISAACSON asked why the Emerging Energy Technology Fund
was not funded in the governor's budget.
MS. FISHER-GOAD advised that AEA is processing Round 2 of
applications to the Emerging Energy Technology Fund; there is a
portfolio of about 16 projects from Round 1, and from Round 2
will be funding a "handful of projects on emerging technology."
In further response to Co-Chair Isaacson, she explained that
without additional funding there will not be another
solicitation for emerging energy technology.
8:25:56 AM
REPRESENTATIVE HUGHES surmised fiscal year 2014 (FY 14) funds
were distributed, there is a smaller amount of funding still
available for FY 15, and funding for FY 16 will be zero.
MS. FISHER-GOAD clarified that AEA received $2 million in FY 14
for projects that are being evaluated now and funding will soon
be announced; however, the FY 15 budget, which is before the
legislature now, does not have funds for Round 3 of emerging
energy technology. She then directed attention to slide 7,
which was a graph showing AEA's coordination with other
agencies, stakeholders, non-governmental organizations (NGOs),
on slide 8, slide 7 illustrated the relationship that AEA has
with entities, and specifically that its work and programs, such
as diesel displacement, are a direct result of policy direction
and funding through the legislature. For example, the Renewable
Energy Fund Grant program is a successful process that AEA
developed and has seen through its seventh round of projects.
The governor provides leadership and policy direction as does
AEA's board of directors, along with the legislative and
executive branch process. Ms. Fisher-Goad advised other
examples of agency coordination on energy programs are AEA's
work with AHFC on energy efficiency issues, and with AHFC and
AEA's sister agency, the Alaska Industrial Development and
Export Authority (AIDEA), on the Interior Energy Project (IEP).
Furthermore, AEA and AIDEA share services, financing functions,
boards of directors, staff, and a building. There are also
shared facets of programs such as the Sustainable Energy
Transmission and Supply (SETS) and Power Project Fund (PPF) loan
programs, and shared responsibilities on the due diligence of
loan applications and loan servicing. The agency also has a
relationship with the Alaska Center for Energy and Power (ACEP)
to assist with data collection and analysis, with the Department
of Military & Veterans' Affairs (DMVA) on emergency response in
rural communities, and with the Department of Transportation &
Public Facilities (DOT&PF) to supply power to airports and on
potential transportation corridors. Regarding federal agencies,
AEA is providing information to the U.S. Department of Defense
Energy Initiatives Task Force on the use of renewable sources of
energy on military bases, and to the U. S. Department of State
on Arctic policy issues related to energy. These are examples
of AEA's core function as a resource for technical expertise to
a variety of agencies.
8:34:33 AM
MS. FISHER-GOAD continued, noting that AEA retains analyses of
energy statistics from its management of state programs and
projects, and continues to fulfil its mission of sharing said
information [slide 7].
CO-CHAIR ISAACSON inquired as to AEA's role in the coordination
of energy policy development with all of the interested
agencies.
MS. FISHER-GOAD responded that AEA's energy policy development
follows its energy pathway to planning on a regional level.
Although regional plans must be "owned" by regional entities,
AEA examines regional plans and provides internal technical
resources, and those from other agencies, to ensure consistency
within the state. The intent is for regional plans to address
the priorities of each region in order for the development of
energy projects that translate into economic drivers, such as
proposed liquefied natural gas (LNG) production in the Fairbanks
and North Slope Borough areas. This potential production raises
the possibility that compressed natural gas can play a role in
the future of coastal Alaska as well. Communities and local
utilities also seek assistance from AEA regarding economics.
CO-CHAIR ISAACSON summarized that AEA is able to "tap the
network, when someone has an issue," and brings components
together to solve a particular regional problem.
MS. FISHER-GOAD agreed.
8:39:46 AM
REPRESENTATIVE HUGHES asked for AEA's point of contact in each
region, and whether AEA facilitates the development of regional
plans. She further asked, "Do you ever assemble them all and
talk about how that feeds into the statewide plan ...?"
MS. FISHER-GOAD explained that through appropriations, AEA funds
entities like the Alaska Regional Development Organizations
(ARDORs), Division of Economic Development, DCCED, and the
Southwest Alaska Municipal Conference (SWAMC), to help with
regional planning. The Southeast Conference was helpful in the
development of the Southeast Alaska Integrated Resource Plan.
In fact, her agency does bring regional planners together to
exchange information on similar issues, often in conjunction
with Alaska Municipal League (AML) meetings. She offered to
provide additional details on the coordinators in each region.
REPRESENTATIVE HIGGINS asked for more information on the
specific projects that are currently underway. He remarked, "I
guess what I would like to know is what exactly do you oversee,
what projects are you talking about?" Slide 8 showed several
AEA projects such as the Power Cost Equalization (PCE) program,
the Power Project Loan Fund, Rural Power System Upgrades, and
Bulk Fuel Upgrades; he characterized AEA's role as that of a
broker - bringing parties together - but not as a source of
funding, and restated his interest in AEA's role in overseeing
programs.
8:43:41 AM
MS. FISHER-GOAD explained that the funding AEA has to provide
programs and projects comes primarily from general fund (GF)
appropriations - AIDEA funding is not used. The two agencies
have shared employees, and costs for their services are
allocated accordingly. She said AEA has approximately 400
projects "on the books" including rural energy infrastructure
and renewal energy fund projects that are overseen. Again, more
information will be provided to the committee about who is
working on rural energy planning.
CO-CHAIR ISAACSON expressed his belief that energy program
coordination is important in understanding some of the projects
because of "all of the players that are involved." Government
agencies gather information in a different way, and he asked how
AEA ensures that it has access to the most current resources and
technical expertise from all of the entities.
MS. FISHER-GOAD referred back to slide 7, and said AEA knows
what is available from different organizations, but sometimes is
in a different role; for example, as a member of the governor's
Subcabinet on Economic Development. There is interest in
scheduling quarterly meetings with state agencies to discuss
energy, energy policy, and program development, but it is hard
to digress from the implementation of existing programs. In the
past, there were regular regional meetings during the writing of
Senate Bill 220, energy-related legislation that was passed in
the 26th Alaska State Legislature. She then referred to slide
8, and noted that programs must be assigned to the proper
agency.
8:50:52 AM
CO-CHAIR ISAACSON read from AS 44.99.115 (4)(B) as follows:
By using one office or agency, as may be specified by
law,
CO-CHAIR ISAACSON suggested that the AEA board is constrained by
law as it is only able to fund energy projects, and asked
whether the legislature needs to restructure the statute so that
AEA can complete long-term planning and implementation, and so
there is a clear vision that AEA is a clearinghouse.
MS. FISHER-GOAD disagreed that the statute is a restriction, but
instead the administration has created an opportunity for AEA to
"take the lead on energy policy and development" whether
specified by law or not. There have been good results from the
programs the legislature has asked AEA to develop and manage.
She assured the committee that AEA has shown through the
development of programs that the statute does not need to
change. Her agency is also funded for specific projects which
enable it to provide coordination and leadership; thus the
legislature has a variety of ways - and also through funding -
to enable AEA to function.
CO-CHAIR ISAACSON cautioned that AEA's success is tied to
support from the administration, which could be withdrawn. He
expressed his concern that AEA's coordinated approach should be
described in statute to prevent roadblocks. Co-Chair Isaacson
relayed his experience as the mayor of North Pole.
8:55:11 AM
CO-CHAIR MILLETT recalled her years studying statewide energy
issues and deciding that one state energy plan does not work for
Alaska, because each region of the state is very different. She
opined the structure of AEA is sufficiently broad and flexible
so the agency can work with other departments and is not limited
to one mission. In addition, it was found that AEA's
cooperation with AIDEA, AHFC, and the Department of Health and
Social Services (DHSS) is a pliable system that will function
after a change in administration. The existing structure allows
AEA to use other organizations; in fact, one of the best
outcomes from AEA is the use of pathways to explore the needs of
communities. It is nearly impossible for the legislature to
write an energy plan for the whole state, because communities
seek to write their own energy plans and decide what resources
to utilize. The perception may be that AEA is spread out and
not coordinated, but the agency is in an advantageous position
statutorily. She warned that "if we do narrow down [the] focus
or narrow down [the] ability ... the statute would disallow
[AEA] to do some of the things [it is] able to do on a
cooperative basis with other agencies." She expressed
admiration for AEA's accomplishments such as the Renewable
Energy Grant Fund, and she restated that AEA's statutory
authority should not be restricted. Representative Millet said
she was reluctant to make any changes as AEA is able to respond
to the tasks assigned to it by the legislature. Energy planning
with AEA is not broken.
9:00:30 AM
CO-CHAIR ISAACSON observed AEA holds "flexible coordination" but
there are statutory constraints because its board of directors
is only authorized to fund energy projects, and thus is not
involved in policy implementation, which is a weakness. He
urged for giving the board a greater influence on operations,
policy, and implementation.
MS. FISHER-GOAD advised that AEA projects are not directed by
the board but are projects that have been funded by the
legislature. As with the Renewable Energy Grant Fund program,
AEA vets and ranks projects and provides its recommendations to
the legislature. For the last six rounds, the legislature has
funded projects following the recommendations of the AEA board,
which indicates this is "a good, objective process." The
executive branch has influence also.
CO-CHAIR ISAACSON surmised the AEA board has a minimal impact.
MS. FISHER-GOAD reiterated that AIDEA and AEA board members are
the same. The AEA board members are involved with issuing bonds
and managing outstanding bonds and the assets that AEA owns.
The AEA board also approves loans over a certain threshold.
When the board meets there may be more action items under the
structure and function of AIDEA. The AEA board is very
interested in the agencies work in implementation and at an
upcoming strategic planning session she expects to discuss the
synergy between AIDEA and AEA, and AEA's role in economic
development, as a project to reduce the cost of energy often has
a large economic development component and benefits to a
community in a different way. Ms. Fisher-Goad expressed her
interest in guidance from the board on the evaluation of that
type of project. This guidance is always in conjunction with
the legislature, the executive branch, and stakeholders.
9:06:26 AM
CO-CHAIR ISAACSON summarized that at this point the AEA board,
although it may serve a greater purpose in the future, does not
have much interaction and oversight in the direction of AEA's
operations - the direction comes from governor.
MS. FISHER-GOAD acknowledged that AEA has more of a direct
relationship through capital budget items, legislative funding,
and the governor's budget, than through direction from the
board, in contrast with AIDEA.
9:08:14 AM
REPRESENTATIVE HUGHES recalled last year AEA projected a certain
amount for the Susitna-Watana Hydro project, but that amount is
not in the governor's budget. She asked for an update on the
negotiations with the landowners on property issues, when the
property issues are expected to be resolved, the amount of
funding requested, and the level of the board's involvement.
MS. FISHER-GOAD explained the entire AEA budget is subject to
the Executive Budget Act. The governor's message is that
additional progress must be made on the permits from the village
corporations that are needed to complete studies on the Susitna-
Watana Hydro project; negotiations with the village corporations
should result in land-access approval in February, 2014.
Following that, the budget issue would then be revisited.
Furthermore, AEA has requested an extension from the Federal
Energy Regulatory Commission (FERC) for the initial study
report, although the draft initial study report has been filed.
Ms. Fisher-Goad assured the committee the project had a very
successful field season, as land access was limited to only
three of the ten focus areas.
9:13:00 AM
CO-CHAIR ISAACSON, in response to Representative Josephson,
advised that updates on Railbelt Transmission, the Susitna-
Watana Hydro project, and the Interior Energy Project will be
provided by AEA and AIDEA on 2/12/14.
REPRESENTATIVE JOSEPHSON asked the presenter whether all six
village corporations were going to issue permits and land access
approval this month.
MS. FISHER-GOAD stated the Cook Inlet region village
corporations have formed a working group on this matter; she
said, "I think the intention is that, that everybody would,
would be essentially agreeing to the same ... permit structure
... so, that's our understanding ...."
CO-CHAIR ISAACSON directed the presenter to divert to an update
on the Susitna-Watana Hydro project.
CO-CHAIR MILLETT observed that the committee needs to have
updates on all of the projects AEA is managing. She expressed
her interest in the progress of AEA's projects rather than the
functionality of the agency. Her constituents are especially
interested in the Susitna-Watana Hydro project.
9:17:10 AM
MS. FISHER-GOAD offered to also provide information on the
significant progress that is being made on rural energy
projects. She reviewed a history of the search for a large
hydroelectric project that led to the determination that
Susitna-Watana was the preferred project. Legislative funding
through the FERC licensing process has been received, and a
project manager was hired two years ago. Susitna-Watana Hydro
is a long-term diversification project to provide a clean,
reliable energy source, and promote integration of variable
power sources, including wind projects and other hydroelectric.
This project also diversifies resources and maximizes fossil
fuel resources for heat [slide 22]. The project is located on
River Mile 184 of the Susitna River - 87 river miles from
Talkeetna and 22 miles upstream from Devils Canyon - and would
provide about 50 percent of the Railbelt's energy demand [slide
23]. A Department of Transportation and Public Facilities study
is being used to determine which one of three access and
transmission routes will be recommended to FERC [slide 24].
REPRESENTATIVE JOSEPHSON pointed out because of trespass issues,
field crews looked at 2,000 acres out of 160,000 acres of land
affected by the project, and questioned why this was regarded as
a successful field season.
9:21:56 AM
WAYNE DYOK, Project Manager, Susitna-Watana Hydro, AEA, DCCED,
answered that a successful field season is based on what was
accomplished. There were 58 studies involved, but not all
required field effort. In May, 2013, when approval from the
village corporations and Cook Inlet Region, Inc. (CIRI) was not
forthcoming, the field studies were conducted on other lands or
by alternative means. For example, the radio telemetry studies
were done using helicopters instead of fixed towers. He
acknowledged that access would have been preferred, but each
study was successful. There was also a very good safety record
this season. The draft report filed with FERC reveals "an
incredible amount of information" from water quality, ice, and
fisheries studies. Two field study seasons are required and the
first season accomplished its goals in getting the information
required to assess impacts.
MS. FISHER-GOAD corrected Representative Josephson and said AEA
did not have access to approximately 2,000 acres, but did have
access to most of the area.
MR. DYOK, in further response to Representative Josephson, said
on May 10, 2013, there was a death of a subcontractor who
deviated from the mapped route. The subcontractor was not part
of the field program; however, additional safety procedures were
implemented even for consultants, prime contractors, and
subcontractors.
9:26:38 AM
REPRESENTATIVE HUGHES inquired as to why the project is not
described as a renewable source of energy towards Alaska's goal
of renewable energy.
MS. FISHER-GOAD assured the committee AEA considers the Susitna-
Watana Hydro project a renewable source and important to
Alaska's goal; in fact, Alaska has 20-22 percent renewable now,
most of which is hydro. This project will play a significant
role in achieving the goal of 50 percent renewable by 2025.
MR. DYOK highlighted winter and summer season studies of ice,
moose, caribou, and fish. Extensive fish studies included
looking at their life-stages, habits, and conditions, and
sampling from the river [slides 27 and 28]. There have been
many inquiries as to whether adult salmon travel upstream of the
Watana dam site. In addition to studies of life stages and
habitat, radio telemetry studies were conducted in 2012 and 2013
of salmon that were tagged 20 miles upstream of the confluence
of the Talkeetna, Susitna, and Chulitna Rivers. Fish at the
Yentna River were also tagged. As an aside, he noted that the
Alaska Department of Fish & Game (ADF&G) is using the
aforementioned data in its management plans.
9:31:20 AM
REPRESENTATIVE NAGEAK asked if the 2012 and 2013 studies
collected one year of information.
MR. DYOK explained AEA radio-tagged 603 fish at Curry, and 18
were tracked into Devils Canyon, 3 were tracked upstream of
Devils Canyon, and one was tracked upstream of the project site.
The 603 fish represent approximately 6 percent of the total
number of fish that traveled upstream.
REPRESENTATIVE NAGEAK restated his question.
MR. DYOK said the study was done in 2012 and 2013, and one more
year is planned [slide 29]. Moose and caribou were also radio-
collared, and evaluations were done on Dall sheep, raptors,
brown bats, and wood frogs [slide 30]. Slide 31 was a map that
"shows you the complexity of the work that we are doing." Water
is being collected at 10 focus areas between the upstream and
downstream boundary, and within each focus area is recorded the
flow of water, water quality, fish presence, and the riparian
habitat. The information collected will be used to model the
effects that the project will have on each of the focus areas.
He estimated that the cost to model each focus area is $2
million.
9:34:11 AM
REPRESENTATIVE NAGEAK recalled there have been problems with the
flow of water and erosion, and asked whether erosion and the
flow of water over the past several years - along the route of
the dam - have been studied.
MR. DYOK said AEA will undertake a major study to look at the
dromorphic aspects of the river; the study will model from the
dam downstream into the lower river for an undetermined
distance. At this time, it is anticipated geomorphic studies
will go down to the confluence of the Yentna River, from river
mile (RM) 26 to RM 184, and will be used to understand and model
how much erosion will take place in 50 years. He returned to
the presentation, saying the project is in the preapplication
phase, after AEA applied to FERC for a 120-day extension;
however, the initial study report is complete except for
information related to the timing of the studies and
modifications thereof. The goal over the next 120 days is to
discuss appropriate modifications with stakeholders. As access
and budget issues are concluded, AEA will have complete
information at the filing on June 3, 2014. After filing, there
is a comment period for participants of 120 days, and FERC will
issue its decision in January of 2015; thus the second field
season is planned for 2015, and the license application will be
filed towards the end of 2016. It is expected that the
construction phase would begin in 2018 and the operational phase
would begin in 2024 [slide 32].
9:37:40 AM
REPRESENTATIVE JOSEPHSON stated that according to the
presentation, AS 44.99.115 (4)(B) directs AEA to avoid
duplication; furthermore, one of AEA's tasks is to do project
analysis and vetting. He asked,
Is there a point at which AEA, based on its mission
statement or based on the necessity to avoid
duplication, which is in statute, would say "This is
duplicative ... and it's ten years out, just as the
large diameter LNG pipeline would be, it's duplicative
of that, its redundant of that, there's a lack of
resources." Are those kinds of analyses made as well?
... Is this comparable to the Knik Arm Bridge ...?
9:38:58 AM
MS. FISHER-GOAD responded that AEA has been funded to pursue the
hydro project and the natural gas pipeline project has been
funded because they are viewed as complementary, and not in
competition with each other. The hydro project is to meet the
renewable energy goal for electricity, and instate use of
natural gas is most effective as a source of heat. She restated
that AEA received its direction from a variety of ways -
including from the legislature - to look at large hydro and
complete an analysis on which project made sense; in fact, data
from financing consultants has consistently supported the
assumptions made about the project - that it can achieve its
expected cost of power over 50 years. She concluded that the
overall costs of the project and the amount of energy produced
are remaining consistent.
REPRESENTATIVE JOSEPHSON referred to the bullet point on slide 9
entitled, "Energy Planning and Policy," that read:
Locally driven and community-vetted blueprint for
sustainability
REPRESENTATIVE JOSEPHSON then asked whether AEA has the support
of residents of the Susitna River basin, and if the project is
locally driven.
MS. FISHER-GOAD reminded the committee that Susitna-Watana Hydro
would serve residents from the Fairbanks area to the Homer area
and 80 percent of the state's population. The project has been
specifically driven by the passage of Senate Bill 42 [in the
27th Alaska State Legislature] and AEA's task to complete
analysis on hydro projects in the Railbelt. She stressed that
AEA has a certain flexibility and the power to pursue projects
that are directed by the legislature and the governor's office.
9:44:21 AM
REPRESENTATIVE JOSEPHSON recalled a statement that other states
have removed hydroelectric projects from their renewable energy
portfolios. He asked whether that was true and for the
reasoning.
MR. DYOK explained that in states that are predominately hydro,
such as Washington, hydro projects are removed for baseline
calculations, not because they are not considered renewable, but
so as to not distort statistics on renewable resources. He said
he was unaware of any plans to remove large hydro projects.
CO-CHAIR MILLETT expressed her preference to complete the
project update rather than debate support for the project. At
this time, the committee is hearing about AEA's status and
progress on the project. She suggested hearing public testimony
at a later time so that constituents could speak about the
social aspects of the dam. In response to Representative
Josephson, she agreed that other topics could be addressed at a
later committee meeting.
REPRESENTATIVE HUGHES inquired as to what the 50-year average
electrical rate will be if there is a gas pipeline, but the dam
is not completed.
MS. FISHER-GOAD compared the project to the Bradley Lake
Hydroelectric Project, which at the time it was built produced
at approximately 4.5 cents per kilowatt hour (kWh) - a little
higher than the cost of natural gas at that time - and continues
at that rate. If Susitna-Watana is not built, the greater
amount of natural gas used would be subject to inflationary
costs. The agency expects the project to produce power at an
average of about 18 cents per kWh for 50 years, thus the
breakeven point with natural gas should occur earlier than 12
years [slide 34]. She stressed the cost of natural gas is
projected to increase.
9:49:31 AM
REPRESENTATIVE HIGGINS pointed out the fluctuations of the
hydrocarbon supply and market as compared to that of the flat
cost of hydro.
CO-CHAIR ISAACSON agreed that a commodity is unpredictable.
9:50:44 AM
MS. FISHER-GOAD continued to the next steps of the Susitna-
Watana Hydro project. The project team will use the additional
extension time to consult with AEA and ensure that discussions
are held with stakeholders and governmental resource agencies.
Other tasks include: the feasibility report to accompany the
license application; the financing plan and economics; utility
coordination; stakeholder engagement.
MR. DYOK added that his team is looking forward to completing
the final initial study report and getting continuing responses
from agencies, stakeholders, and NGOs.
CO-CHAIR ISAACSON referred to the season of field studies and
asked how much traditional and local knowledge has been
incorporated in the site surveys and modeling.
MR. DYOK confirmed that AEA relied on local knowledge from a
cultural resources perspective. Interviews were conducted and
staff worked closely with Ahtna, Incorporated, and biologists
contacted elders; this information was coupled with site
investigation efforts and modeling. He acknowledged the
importance of understanding the history of the resource that
Alaska Native and local communities can provide, and to research
social sciences and subsistence practices.
REPRESENTATIVE JOSEPHSON, in order to clarify the scope of the
committee's questions, acknowledged that there are authorizing
statutes, but pointed out that the legislature routinely
reassesses projects such as the Knik Arm Bridge and Toll
Authority (KABATA) and the Alaska Gasline Development
Corporation (AGDC). He asked whether any U.S. dam of comparable
size has been built in the past 40 years, and if not, why.
9:55:11 AM
MR. DYOK answered that significant dams have been built, but
FERC has not licensed a large project. Generally, most of the
good sites in the Lower 48 have been selected. Internationally,
many projects are underway and the International Hydropower
Association has a process to determine all of the impacts; in
fact, the process for this project aligns with what is done on
an international scale.
REPRESENTATIVE JOSEPHSON obtained information on the Nisqually
River that [indicated] some fish species are doing well, but not
the original species that inhabited the river. He then asked
for examples where the original anadromous species is doing as
well, after the construction of a dam, as before. He expressed
his concern for "downriver."
MR. DYOK agreed that the downriver area is also his main area of
concern, and offered to provide the requested information.
9:57:49 AM
REPRESENTATIVE NAGEAK informed the committee that in Barrow and
on the North Slope pink salmon and other species are taking over
the native fish such as whitefish, cisco, and burbot. These
fish are being displaced by salmon, even in areas where there
are no projects nearby. He urged the committee to look at other
causes for this problem, such as [climate] warming.
CO-CHAIR MILLETT related her research last year revealed that
dams are being removed in the Lower 48 - not because of fish -
but because of poor construction. Those decisions are based on
the structural design of a dam, and she opined that is not the
type of dam construction that will be used on Susitna-Watana
Hydro.
MR. DYOK acknowledged that a number of dams have been removed
for structural reasons and a few others because they prevented
fish from access upstream. However, hydro development at
existing dams is experiencing a Renaissance; in fact, Congress
has passed legislation to facilitate adding run-of-the-river
hydro to existing projects. He projected a growth in hydro
projects over the next 20 years.
CO-CHAIR ISAACSON encouraged members to research sourcing
construction materials in Alaska.
10:01:04 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 10:01 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| PRESENTATION - House Energy Committee - AEA Presentation Overview (02-05-14).pdf |
HENE 2/5/2014 8:00:00 AM |
|
| House Energy Committee AGENDA (02-05-14).pdf |
HENE 2/5/2014 8:00:00 AM |