02/10/2015 10:15 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Alaska Power Association; Alaska Village Electric Cooperative; Inside Passage Electric Cooperative | |
| Presentation: Alaska Energy Authority, Department of Commerce, Community & Economic Development | |
| HB58 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 58 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
February 10, 2015
10:17 a.m.
MEMBERS PRESENT
Representative Jim Colver, Co-Chair
Representative David Talerico
Representative Cathy Tilton
Representative Matt Claman
Representative Adam Wool
MEMBERS ABSENT
Representative Liz Vazquez, Co-Chair
Representative Benjamin Nageak
COMMITTEE CALENDAR
PRESENTATION(S): ALASKA POWER ASSOCIATION; ALASKA VILLAGE
ELECTRIC COOPERATIVE; INSIDE PASSAGE ELECTRIC COOPERATIVE
- HEARD
PRESENTATION: ALASKA ENERGY AUTHORITY~ DEPARTMENT OF COMMERCE~
COMMUNITY & ECONOMIC DEVELOPMENT
- HEARD
HOUSE BILL NO. 58
"An Act making an entity that is exempt from federal taxation
under 26 U.S.C. 501(c)(3) (Internal Revenue Code) and a
federally recognized tribe eligible for a loan from the Alaska
energy efficiency revolving loan fund; and relating to loans
from the Alaska energy efficiency revolving loan fund."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 58
SHORT TITLE: ELIGIBILITY FOR AK ENERGY EFFIC LOANS
SPONSOR(s): REPRESENTATIVE(s) KREISS-TOMKINS, MILLETT
01/21/15 (H) PREFILE RELEASED 1/16/15
01/21/15 (H) READ THE FIRST TIME - REFERRALS
01/21/15 (H) ENE, L&C, FIN
02/10/15 (H) ENE AT 10:15 AM CAPITOL 17
WITNESS REGISTER
CRYSTAL ENKVIST, Executive Director
Alaska Power Association
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation
entitled, "Electric Utility Issues: Perspectives from the
Industry that Powers Alaska."
MEERA KOHLER, President and CEO
Alaska Village Electric Cooperative
Anchorage, Alaska
POSITION STATEMENT: Provided information on the Power Cost
Equalization program and answered questions.
JODI MITCHELL, Chief Executive Officer
Inside Passage Electric Cooperative
Juneau, Alaska
POSITION STATEMENT: Provided information on the renewable
energy grant fund and answered questions.
EMILY FORD, Public Outreach Liaison
Alaska Energy Authority
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation entitled
"Alaska Energy Authority," and dated 2/10/15.
SARA FISHER-GOAD, Executive Director
Alaska Energy Authority
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the presentation
by the Alaska Energy Authority, Department of Commerce,
Community & Economic Development.
SEAN SKALING, Deputy Director
Rural Energy Group
Alaska Energy Authority
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Participated in the presentation by the
Alaska Energy Authority, Department of Commerce, Community &
Economic Development.
REPRESENTATIVE JONATHAN KREISS-TOMKINS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Speaking as the sponsor, introduced HB 58,
Version H.
ACTION NARRATIVE
10:17:23 AM
CO-CHAIR JIM COLVER called the House Special Committee on Energy
meeting to order at 10:17 a.m. Representatives Talerico,
Tilton, Claman, and Colver were present at the call to order.
Representative Wool arrived as the meeting was in progress.
^PRESENTATION(S): ALASKA POWER ASSOCIATION; ALASKA VILLAGE
ELECTRIC COOPERATIVE; INSIDE PASSAGE ELECTRIC COOPERATIVE
PRESENTATION(S): ALASKA POWER ASSOCIATION; ALASKA VILLAGE
ELECTRIC COOPERATIVE; INSIDE PASSAGE ELECTRIC COOPERATIVE
10:17:52 AM
CO-CHAIR COLVER announced that the first order of business would
be a presentation by the Alaska Power Association.
10:19:00 AM
CRYSTAL ENKVIST, Executive Director, Alaska Power Association
(APA), stated her presentation would highlight three programs
that have successfully lowered energy costs in Alaska: the
Power Cost Equalization (PCE) program, the renewable energy
grant fund, and the emerging energy technology fund (slide 2).
She informed the committee APA is the statewide trade
association for the electric utility industry. Members include
member-owned electric cooperatives, municipal-owned utilities,
joint action agencies, investor-owned utilities, and other
utilities. Although having a diverse membership, APA seeks to
speak with one voice before lawmakers and regulators (slide 3).
The association members provide power to a majority of Alaskans,
from Barrow to Kodiak, Unalaska, the Inside Passage, the
Interior, Southcentral, and 56 villages in Western Alaska (slide
4). The electric generation mix in Alaska at this time is 58
percent by natural gas, 20 percent by hydroelectric (hydro), 16
percent by diesel, 5 percent by coal, and 2 percent by wind. By
location, Barrow has natural gas, most other communities on the
North Slope have diesel generation, the West Coast has wind and
diesel, the Interior has coal, diesel, and wind, Southcentral
has natural gas, hydro, and wind, Southeast has hydro, and
Kodiak has almost 100 percent renewable electric generation.
She concluded that there is a diversity of fuel sources in the
state for electric generation (slide 5).
10:23:38 AM
MEERA KOHLER, President and CEO, Alaska Village Electric
Cooperative (AVEC), provided a brief history of her background
in the industry. She informed the committee AVEC serves 56
communities spread widely across the state, the largest of which
is Bethel, and all but one are remote and mostly small villages.
Almost all of the communities are diesel-powered, although AVEC
has recently installed wind generation, and now owns 34 wind
turbines. Wind accounted for 6 percent of AVEC's gross electric
generation last year. The cooperative is a major consumer of
the Power Cost Equalization (PCE) program because the cost of
energy in Rural Alaska is very high due to the high cost of
diesel. The price of diesel has not dropped in Rural Alaska
because its supply was purchased at last year's prices. She
noted that residential electric rates in Rural Alaska range from
$0.36 per kilowatt (kW) hour to $1.80 per kW hour, depending on
the size of the community. Ms. Kohler said high cost cripples
economic development and PCE only provides relief to ratepayers
of about 20-28 percent of the electricity sold; all of the
energy used by commercial users is purchased at full cost (slide
7). Power Cost Equalization was established in fiscal year 1985
(FY 85) when the state determined - after study - there was no
alternative to diesel fuel in Rural Alaska. At the time PCE was
established, all users received PCE on their first 700 kW hours;
however, subsequent low oil prices led to a change in the
program that eliminated commercial customers and state and
federal government entities, which reduced the cost of the
program by about 40 percent. Currently, PCE is funded by an
annual appropriation of about $40 million, leaving 80 percent of
the cost of producing energy in Rural Alaska carried by each
local community. The Regulatory Commission of Alaska (RCA)
allocates the amount of PCE to each community; residential
consumers qualify for the first 500 kW hours used, and community
facilities qualify for up to 70 kW hours per resident per month.
At this time, AVEC represents about 41 percent of all PCE used
in the state. To distribute PCE, local utilities post a credit
to each consumer each month, and the Alaska Energy Authority
(AEA), Department of Commerce, Community & Economic Development
(DCCED), is billed for reimbursement. She characterized this
arrangement as a "direct pass-through to the consumer" (slide
8).
10:30:56 AM
MS. KOHLER displayed a map showing PCE eligible communities,
none of which are in the Railbelt because those communities
receive other benefits. The cost of electricity in most of the
villages on the North Slope is subsidized by the North Slope
Borough (slide 9). Currently, PCE is funded by an endowment
fund which was established in 2000, and capitalized with
$100,000 from the Constitutional Budget Reserve (CBR) and $85
million in proceeds from the sale of the Four Dam Pool projects.
Later, appropriations of $187 million and $400 million were
added to the endowment fund - both payments a result of
compromise funding for parity between urban and rural Alaska -
and the endowment fund has grown to its current level of $950
million. The statute allows up to 7 percent of the average
principal balance of the fund over the previous five years, to
be appropriated for PCE; in fact, last year was the first year
the endowment was sufficient to pay PCE, and the endowment
should continue to be sufficient. Ms. Kohler stressed the fund
is essential to the program (slide 10).
10:34:50 AM
REPRESENTATIVE WOOL asked whether endowment funds can used to
subsidize other sources of energy besides diesel fuel.
MS. KOHLER responded that PCE is available to communities that
were eligible in 1984; for example, in 1984, Cordova was all
diesel, but now 80 percent of its electricity is provided by
hydro generation. However, Cordova is still eligible, and
receives PCE, thus PCE is available to communities that have
renewable energy, but is not available as a source of capital.
10:36:36 AM
JODI MITCHELL, Chief Executive Officer, Inside Passage Electric
Cooperative (IPEC), introduced members of the IPEC board of
directors. She expressed her support for the PCE program and
for comments made by the previous speaker. She clarified that
each utility has a different PCE rate based on the cost of
power, thus adding renewables results in a lower amount of PCE
paid by the state for a community. Ms. Mitchell directed
attention to the renewable energy grant fund, created by the
legislature in 2008, and which supports renewable energy
projects, particularly in areas with the highest energy costs;
grant applications are scored in part on the cost of energy, as
well as on local median household income. Differing from PCE,
the renewable energy grant fund supports lower costs on a
permanent basis, and benefits all of a community, including
businesses, not just residential consumers. Administered by
AEA, grants are awarded in different phases of projects such as
reconnaissance, feasibility, design, and construction. She
informed the committee that IPEC used the grant fund for all
phases of the Gartina Falls Hydroelectric Project in Hoonah.
The grant fund is a successful program that has provided a large
rate of return for the state's investment (slide 12). She
pointed out that Southeast Alaska is able to use hydro and a
hydro project can last much longer than 30 years, although
projects are scored on a term of 30 years. Since 2008,
appropriations to the fund have totaled $247.5 million, matched
with $152 million from other sources. She cautioned that other
sources for funds are unknown, and the renewable energy grant
fund is the biggest hope for Rural Alaska to reduce its use of
diesel; in fact, federal funds for hydro projects are limited to
existing projects because hydro is not considered renewable
energy.
10:43:28 AM
CO-CHAIR COLVER questioned whether this point should be brought
to the attention of U.S. Senator Lisa Murkowski.
MS. MITCHELL recalled there has been a past effort by the
legislature to urge for a change by the federal government.
CO-CHAIR COLVER suggested the committee prepare a letter to
Senator Lisa Murkowski.
MS. ENKVIST noted that Senator Lisa Murkowski has been working
on this issue and some incremental progress has been made.
MS. MITCHELL returned attention to the renewable energy fund,
noting that in 2014, the fund projects displaced close to 15
million diesel equivalent gallons. Since 2009, an estimated
347,575 metric tons of greenhouse gas emissions have been
reduced. Renewable energy fund projects create local employment
and local energy independence (slide 13). Ms. Mitchell urged
that the legislature provide appropriations to the renewable
energy grant fund at the funding levels recommended by AEA, even
in light of the funding crisis. Projects recommended for
funding help advance Alaska's goal of producing 50 percent of
the state's power with renewable energy by 2025, especially in
Rural Alaska. Ms. Mitchell expressed her support for funding
$15 million in the governor's FY 16 capital budget (slide 14).
10:47:55 AM
CO-CHAIR COLVER stated his support for the program.
MS. MITCHELL then directed attention to the emerging energy
technology fund which allows local scientists such as those
working with the Alaska Center for Energy and Power, University
of Alaska Fairbanks, to search for new alternative energy
sources. Alaska is a resource-rich state, and it is important
to learn how to tap its resources. The FY 16 capital budget
contains $1 million for this program, which is a significant
reduction, and she urged for the continuation of this level of
funding (slide 15).
CO-CHAIR COLVER asked whether there is sufficient earnings from
the PCE endowment fund to offer help to schools.
MS. KOHLER advised that up to $65 million from the endowment
fund could be made available for other programs such as schools
or commercial users; however, school funding comes from the
state thus "it would essentially be money out of one pocket into
another pocket." Instead, she said the expansion of PCE should
be to small commercial users and to increase the number of
eligible hours.
MS. MITCHELL agreed.
CO-CHAIR COLVER observed the principal balance of the PCE
endowment fund is at about $959 million, and expenditures are
currently about $45 million.
10:52:06 AM
MS. KOHLER explained the fund is just now at the point where it
will generate $44-$45 million. Although many believe allowing
up to 7 percent from the principal balance is not sustainable,
she opined that 6 percent is sustainable, and about $50 million
could come out of the PCE endowment fund.
CO-CHAIR COLVER assumed the PCE reimbursement is a proportional
reimbursement depending on the total amount appropriated out of
the fund each year.
10:53:26 AM
MS. KOHLER advised that PCE has been fully funded for the last
several years; however, there is a directive in the statute that
says if funds are insufficient, the PCE rate would be prorated
by the Regulatory Commission of Alaska (RCA). She recalled that
in the 1990s and early 2000s reimbursement was lower. In
further response to Co-Chair Colver, she said:
[PCE] is a set amount per kilowatt hour based upon the
individual community's cost experience. So, for
example, in one of our villages, if our cost of power
is 50 cents a kilowatt hour, what will happen is that,
this is not the rate, this is the cost, if we're
selling it for 53 cents a kilowatt hour and our costs
are 15 cents a kilowatt hour, then the RCA subtracts
first the base rate, and the base cost is the average
cost of power in Anchorage, Fairbanks, or Juneau, and
currently that's at about 14 and one-half cents, so
that comes off the top, and then off the remaining
balance - say its 50 cents minus 15 cents - that's 35
cents, that's then multiplied by 95 percent, and that
is the PCE rate. So the consumer will then get that
PCE rate on all of their consumption, as long as it's
under 500 kilowatt hours. If they use more than 500
kilowatt hours, then all the additional kilowatt hours
are at full cost.
MS. KOHLER continued to explain that the average residential
consumption is about 300 kW hours per month, but the hours
fluctuate between winter and summer, thus some users exceed 500
kW hours in winter.
10:57:09 AM
CO-CHAIR COLVER asked whether there are hurdles to converting
the diesel generators used by AVEC utilities to another source
of fuel.
MS. KOHLER opined most diesel-fired generators can accept
another liquid, such as propane, for a portion of fuel; however,
the efficiency of the diesel generator is reduced. Also,
storage is a problem because propane must be stored under
pressure, and a gallon of propane has two-thirds of the British
thermal unit (Btu) value of diesel fuel. An advantage is that
propane and liquefied natural gas (LNG) are easier to handle.
CO-CHAIR COLVER referred to a proposal to ship international
standards organization (ISO) tanks by rail and barge, and then
use the ISO tanks for storage. He expressed his interest in
this method as an alternative to diesel for long-term use in
Rural Alaska. The question is what to use for long-term sources
of power, and how to make a transition from diesel; the private
sector will respond with products that make economic sense in
Rural Alaska. He also questioned whether the existing assets
can be converted to use alternative fuels without significant
capital investment.
MS. KOHLER stated AVEC welcomes an alternative to its reliance
on diesel. Minto, a village on the road system, could be used
to test an alternative fuel source. Furthermore, she said she
is in strong support of the construction of electrical
transmission to interconnect the state, which is critically
needed in the Railbelt and across the state. Electrical
interconnection would supply the energy needed to prevent
shipping the state's natural resources outside, and would
enhance Alaska's economy "across the board."
11:01:38 AM
The committee took an at ease from 11:01 a.m. to 11:03 a.m.
^PRESENTATION: ALASKA ENERGY AUTHORITY, DEPARTMENT OF COMMERCE,
COMMUNITY & ECONOMIC DEVELOPMENT
PRESENTATION: ALASKA ENERGY AUTHORITY, DEPARTMENT OF COMMERCE,
COMMUNITY & ECONOMIC DEVELOPMENT
11:03:05 AM
CO-CHAIR COLVER announced that the next order of business would
be a presentation by the Alaska Energy Authority, Department of
Commerce, Community & Economic Development.
11:03:11 AM
EMILY FORD, Public Outreach Liaison, Alaska Energy Authority
(AEA), Department of Commerce, Community & Economic Development
(DCCED), provided a PowerPoint presentation entitled "Alaska
Energy Authority," and dated 2/10/15.
11:03:37 AM
SARA FISHER-GOAD, Executive Director, AEA, DCCED, said she was
interested in hearing about AEA programs from the perspective of
participants such as the Alaska Power Association (APA), and
noted the benefits to legislators hearing this information as
well. She informed the committee that the mission of AEA is to
reduce the cost of energy in Alaska. The authority is an
independent corporation of the state created in 1976;
subsequently, there have been adjustments to AEA's power and
authority, and many of the programs under discussion have been
assigned by the legislature under AS 42.45 (slide 2).
11:05:14 AM
MS. FORD advised that AEA administers the Power Cost
Equalization (PCE), AEA, DCCED, program, the Regulatory
Commission of Alaska (RCA) regulates the program, and the fund
is managed by the Department of Revenue (DOR). She noted AEA's
community assistance staff has been working with DCCED, local
governments, and RCA to qualify more communities for PCE by
assisting their utilities with AEA's reporting requirements. At
this time the number of participating communities is 192 (slide
4). She directed attention to a graph which illustrated the
average rate of power in Anchorage, Fairbanks, and Juneau, the
rates paid without PCE, and the rates paid post-PCE (slide 5).
She noted that the four communities with the highest energy
costs all have very low populations and are in remote areas;
Adak is also affected by a loss of a military presence. She
highlighted AEA's regional energy plan efforts that began in
2008 after the publication of the Energy Pathways document,
which revealed the importance of a regional focus on energy
issues. Regional planning seeks to capitalize on local
resources, address local challenges, create a locally-driven and
community-vetted blueprint for sustainability, and provide
specific and actionable recommendations (slide 6). She
acknowledged the support of the Southeast Conference in regional
planning efforts. Energy regions closely follow Alaska Native
Claims Settlement Act (ANCSA) boundaries, and plans have been
completed for the Railbelt and Southeast Integrated Resources.
She characterized these plans as living documents that are under
continuing review. Ongoing plans are implemented by the local
Alaska Regional Organization (ARDOR), Division of Economic
Development, DCCED, and in the Upper Tanana Yukon-Koyukuk
region, AEA is partnering with the Tanana Chiefs Conference
(TCC). The plans should be completed by July, and will include
community and regional priorities. In addition, AEA holds an
advisory role in the Lower Yukon-Kuskokwim and North Slope plans
(slide 7). Ms. Ford stated that Senate Bill 138 [passed in the
28th Alaska State Legislature] included a provision for AEA to
conduct the Alaska affordable energy strategy ["strategy"] due
1/1/17 on how to deliver more affordable energy to areas in the
state that would not be served by a natural gas pipeline (slide
8). She pointed out how the plans and strategy differ: the
regional plans are independent of state funding; the strategy is
asking how to deliver affordable energy when a gas line is
generating significant revenues for the state.
11:09:53 AM
MS. FORD advised that currently communities fall into four
quadrants of access to energy resources for electricity:
natural gas/renewables; no natural gas/renewables; no natural
gas/no renewables; natural gas/no renewables. The largest
quadrant falls into the no access to natural gas or renewables
quadrant (slide 9). The division of access to energy resources
for heat is similar (slide 10). She continued to explain that
the strategy explores how to move a community from one quadrant
to another; once the drivers of cost are identified, the tools
to reduce costs will also be identified (slide 11). Alaska
Energy Authority's energy efficiency and conservation efforts
are focused on commercial buildings, rural public buildings,
industrial facilities, and electrical efficiency; furthermore,
AEA leads the Alaska Energy Efficiency Partnership which
comprises of stakeholders, state entities, federal partners,
nonprofits, and regional utilities. She pointed out that
measures implemented by the Alaska commercial energy audit
program produce a 30 percent immediate savings (slide 12).
Found in the committee packet are AEA's annual report and the
renewable energy fund status. Highlighted in the annual report
is "revisiting Nightmute." Five years ago, energy efficiency
measures were simultaneously deployed in the community of
Nightmute by multiple state, regional, and private sector
entities. Measures included weatherization, upgrades to
buildings and commercial building lighting. Interested parties,
along with Nuvista Electric Cooperative and the Cold Climate
Housing Research Center were brought back to together to explore
whether this model was effective. After five years the village
store estimated a savings of $11,000 per year and the community
was engaged in the process. Nightmute was able to extend some
of the programs, although there is a need for continued and
ongoing education regarding the maintenance of facilities (slide
13).
11:14:32 AM
MS. FORD turned to AEA's bulk fuel and rural power system
upgrade (RPSU) programs. In 2000, the Denali Commission
provided funding for both programs; however, Denali Commission
funding is declining and AEA is completing the programs.
Related to these programs are the Circuit Rider program which
provides mechanical and trouble-shooting training to rural
powerhouse operators, and the emergency response program, which
provides assistance to a community that has lost power, or is
near a lights-out situation (slide 14). The RPSU program is a
grant to communities, and AEA found that if a small community
needs to debt finance an upgrade to its powerhouse, its electric
rate will increase by $0.19 per kilowatt (kW) hour, thus
providing grants for upgrades reduces the cost of energy for
communities (slide 15). She turned to AEA's emerging energy
technology fund (EETF) and noted that the fund fills a critical
void in technology; the fund supports projects that have a
reasonable expectation of commercial success within five years.
Projects include renewables, fossil fuels, efficiency measures,
and new and existing technologies. Two rounds of solicitations
have occurred, the first round for $4.5 million in state funds
and $4.5 million in Denali Commission funds, and the second
round for $2.0 million. Interest was particularly focused on
three hydrokinetic projects that were tested this summer (slide
16).
11:17:19 AM
CO-CHAIR COLVER asked whether there were any positive results
from the hydrokinetic tests.
MS. FORD deferred to Mr. Skaling.
11:17:49 AM
SEAN SKALING, Deputy Director, Rural Energy Group, Alaska Energy
Group, Department of Commerce, Community & Economic Development
(DCCED), answered that there were three successful deployments,
and their challenges were in design, implementation, testing
moorings, and deploying and retrieving successfully. Two of the
devices will be deployed next summer for more testing, although
the projects are not yet economically competitive. He advised
the purpose of the program was to help emerging technologies
advance to commercialization.
CO-CHAIR COLVER surmised submerged designs are not effected by
ice and drifting logs.
MR. SKALING said two designs are mounted on the bottom and one
is surface-mounted on a barge. Testing was done on the Kvichcak
River because the water is very clean with little debris. Other
testing is being done on the Nenana River. In further response
to Co-Chair Colver, he said ground source heat is being
successfully deployed in Fairbanks to determine how the soil
temperature is affected. Generally, ground source heat works
best in locations with low electric cost and high heating fuel
costs.
CO-CHAIR COLVER suggested in Southeast.
MR. SKALING said yes. He added that baseboard heating uses one
unit of energy and produces one unit of heat; ground source heat
uses one unit of energy and generally produces two or three
units of heat.
REPRESENTATIVE WOOL knows of heat pumps installed in Fairbanks
with success.
MR. SKALING said he was interested in the data.
REPRESENTATIVE WOOL understood power output by river turbines is
fairly low for the complexity of the apparatus.
11:22:47 AM
MR. SKALING responded that the Ocean Renewable Power Company
(ORPC) turbine in the Kvichak River has an output of about 50
kW, thus the community would need two devices to supply a load
that averages 200-250 kW per year. He added that some
deployments have been improved since tested last summer.
11:23:55 AM
MS. FORD continued with the presentation, noting that the
Susitna-Watana Hydro project is in the process of Federal Energy
Regulatory Commission (FERC) licensing, although the schedule is
in abeyance at this time. The project as proposed would provide
50 percent of the Railbelt electricity load and is located at
River Mile 189 on the Susitna River. Initial data has shown
that the project could provide wholesale power at a 50-year
average rate of $0.06 per kW hour (slide 17).
CO-CHAIR COLVER understood that the budget request to proceed to
FERC licensing is $100 million, and there are existing funds of
$25 million. He asked for the work schedule for the upcoming
summer using the remaining funds.
MS. FISHER-GOAD answered in response to [Office of the Governor
Administrative Order. No. 271, signed by Governor Bill Walker
12/26/14], AEA has currently encumbered funds for the completion
of reports from data collected during the past field season. At
this point, AEA is continuing to evaluate the project's
licensing options, in consultation with FERC. The intent is to
ensure that AEA preserves the investment the state has already
made, and has opportunities for licensing in the future. She
confirmed that AEA has estimated that $100 million is needed to
complete the study plan; however, the schedule is suspended
until all of the options are considered. Ms. Fisher-Goad
advised that minimal to no field work would be done this season.
CO-CHAIR COLVER referred to fisheries research on the Susitna
River drainages, and asked whether the field research was
completed. He expressed his concern over different efforts
ongoing in the Susitna drainage: Alaska Department of Fish &
Game (ADF&G); Susitna-Watana Hydro; and others, all looking at
salmon habitat, the distribution of species, and production
levels.
11:27:51 AM
MS. FISHER-GOAD stated that AEA has not completed its field work
for a license application to FERC. It is known that the work
that has been done is valuable to ADF&G for its efforts to
manage the fisheries and resources in the area. The two
agencies have sought to prevent a duplication of effort; in
fact, ADF&G has been the lead agency on some of the fisheries
research for the project. Additional funding is needed to
complete the field work.
CO-CHAIR COLVER requested that AEA provide a spreadsheet of all
of the reports, project work status, coordinating agencies, and
the scope of the research plan regarding fisheries in the
drainage, in addition to points of contact and managers of the
data. He expressed his concern that if the project is "winding
down," there may be a loss of data related to the restoration of
the stocks in the drainage.
MS. FISHER-GOAD agreed, and further advised that "a lot of that
information has been submitted in our admin. order response,
that has been posted on the [Office of Management & Budget,
Office of the Governor] web page."
CO-CHAIR COLVER restated his concern.
11:31:19 AM
MR. SKALING directed attention to the renewable energy grant
fund, which helps achieve the state's goal of 50 percent
renewable electricity by 2025, provides a vetting mechanism for
the legislature including technical and economic evaluations,
and capitalizes on local energy resources. He stressed that the
program has expanded the knowledge base of renewable energy in
Alaska; in fact, state employees, communities, and contractors
have been on a strong learning curve for seven or eight years.
In addition, the program provides local employment and the
resulting savings in energy costs are disbursed to local
communities, utilities, and businesses, also reducing state
expenses by benefitting schools and PCE. For example, the
program funded the Coffman Cove School Garn boiler system (slide
18). The grant fund has a strong emphasis on areas with high
energy costs, as well as on ensuring regional balance in the
distribution of funds and benefits. Eligible applicants include
utilities, local governments, tribal councils, and Independent
Power Producers (IPPs); eligible projects include wind,
hydroelectric (hydro), biomass, heat recovery, heat pumps,
geothermal, solar, wave, tidal, river hydrokinetic, landfill
gas, local natural gas, and the transmission of renewables
(slide 19). For the first time the "Checklist for Successful
Applications" was posted with the application form on the AEA
web site. The following was a list of some of the fund's
achievements: AEA and Kodiak Electric Association received
national recognition by the Clean Energy States Alliance; 15
million gallons of diesel were displaced in 2014; overall
program benefit cost ratio of 2.8 (slide 20). The following was
a summary of the program: 277 applications have been funded,
representing 38 percent of the applications received and
approximately 200 projects; 125 grants are in place;
appropriated funding in the amount of $247.5 million (slide 21).
11:37:16 AM
MR. SKALING illustrated the location and resource type of
projects that have been funded (slide 22), and illustrated the
percent of funding allocated for each type of resource, noting
that about 70 percent is wind and hydro (slide 23).
REPRESENTATIVE WOOL observed that the .5 percentage of funding
for solar projects seemed very low.
MR. SKALING advised that solar projects are very small projects
with low cost and low generation. He noted that the grant
program is focused on regional equity and illustrated the
funding by region (slide 24). A chart showed the number of
grants, total amounts, and percentages by region (slide 25).
Turning to fuel savings, he remarked:
In the early years, as we were getting through the
early phases, and construction and getting on to
construction, it took some time for the projects to
develop, and now they are really producing a lot of
energy, and expected to continue to grow.
MR. SKALING expected the 2014 annualized number of gallons of
displaced diesel to grow to just under 15 million gallons (slide
26). He explained that $100 million in funds from the renewable
energy fund and $200 million from other sources were used to
build the first 44 projects, which have now generated $900
million in net present value (NPV) lifecycle benefits resulting
in a benefit/cost ratio of 2.8. The life of a project was
estimated to be 20 years for wind and biomass projects, and 50
years for hydro projects (slide 27). This year, AEA recommended
40 projects at a cost of $28.3 million; however, to comply with
the governor's budget, AEA chose 34 projects with funding caps:
18 heat projects for $5.1 million, and 16 standard projects for
$9.8 million (slides 28-32). Reviewing two past projects, he
observed that there has been tremendous growth in the
understanding of biomass and how generating energy from biomass
creates jobs to harvest local material. The community of Thorne
Bay installed a biomass boiler which heats its school and a
greenhouse. The school provides vegetables for school lunches
and sells excess produce as part of its curriculum (slide 33).
In Unalakleet, a renewable energy fund wind project installed
six 100 kilowatt wind turbines that are now performing well for
the community (slide 34). Mr. Skaling closed, noting that a
status report summary, project evaluation summaries, and the
status of past projects are also available on AEA's web site
(slide 35).
11:44:01 AM
The committee took an at ease from ll:44 a.m. to 11:46 a.m.
HB 58-ELIGIBILITY FOR AK ENERGY EFFIC LOANS
11:46:41 AM
CO-CHAIR COLVER announced that the final order of business would
be HOUSE BILL NO. 58, "An Act making an entity that is exempt
from federal taxation under 26 U.S.C. 501(c)(3) (Internal
Revenue Code) and a federally recognized tribe eligible for a
loan from the Alaska energy efficiency revolving loan fund; and
relating to loans from the Alaska energy efficiency revolving
loan fund."
11:47:01 AM
The committee took a brief at ease.
11:47:15 AM
REPRESENTATIVE TALERICO moved to adopt the proposed committee
substitute (CS) for HB 58, labeled 29-LS0254\H, Nauman, 1/27/15,
as the working document. There being no objection, Version H
was before the committee.
11:47:48 AM
REPRESENTATIVE JONATHAN KREISS-TOMKINS, Alaska State
Legislature, speaking as the sponsor, introduced HB 58, Version
H. He informed the committee the bill concerns the Alaska
energy efficiency revolving loan fund (AEERLP), which - since
its creation in 2010 - has not been used, despite its
capitalization potential of $250 million. The goal of the fund
was to make buildings in Alaska more energy efficient, and HB 58
would create more value for an existing fund. Research revealed
that one reason AEERLP has not been utilized was that grants
were previously available, which is no longer the case. The
bill allows nonprofits and tribes to access the fund, in
addition to public entities such as school districts and
municipalities, and thus would create more interest in the fund.
REPRESENTATIVE TALERICO thanked Representative Kreiss-Tomkins
for sponsoring the bill.
CO-CHAIR COLVER surmised HB 58 opens the loan fund to nonprofits
and federally-recognized tribes and Native organizations.
REPRESENTATIVE KREISS-TOMKINS said correct.
CO-CHAIR COLVER opened public testimony on HB 58. After
ascertaining no one wished to testify, public testimony was
closed.
11:51:07 AM
HB 58 was held over.
11:51:50 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 11:51 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB58 ver W.pdf |
HENE 2/10/2015 10:15:00 AM |
HB 58 |
| HB58 Sponsor Statement (2).pdf |
HENE 2/10/2015 10:15:00 AM |
HB 58 |
| HB58 Sectional Analysis.pdf |
HENE 2/10/2015 10:15:00 AM |
HB 58 |
| HB58 Supporting Documents-AEERLFP Guide.pdf |
HENE 2/10/2015 10:15:00 AM |
HB 58 |
| HB58 Supporting Documents-Energy Efficiency of Public Buildings in Alaska Rural Retrofits.pdf |
HENE 2/10/2015 10:15:00 AM |
HB 58 |
| HB58 Supporting Documents-Public Facilities Whitepaper.pdf |
HENE 2/10/2015 10:15:00 AM |
HB 58 |
| HB58 Draft Proposed Blank CS Ver H.pdf |
HENE 2/10/2015 10:15:00 AM |
HB 58 |
| 2015-02-10 - HENE - APA Presentation.ppt |
HENE 2/10/2015 10:15:00 AM |
|
| 2015-02-10 - HENE - AEA Presentation.pdf |
HENE 2/10/2015 10:15:00 AM |
|
| 2015-02-10 - HENE - APA Presentation.pdf |
HENE 2/10/2015 10:15:00 AM |
|
| HB58 Letter of Support CCS Diocese.pdf |
HENE 2/10/2015 10:15:00 AM |
HB 58 |