Legislature(2021 - 2022)BARNES 124
04/15/2021 10:15 AM House ENERGY
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB170 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 170 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
April 15, 2021
10:17 a.m.
MEMBERS PRESENT
Representative Calvin Schrage, Chair
Representative Chris Tuck
Representative Matt Claman
Representative Tiffany Zulkosky
Representative Zack Fields
Representative George Rauscher
Representative James Kaufman
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative DeLena Johnson (via teleconference)
Representative Tom McKay
COMMITTEE CALENDAR
HOUSE BILL NO. 170
"An Act establishing the Alaska energy independence program and
the Alaska energy independence fund in the Alaska Industrial
Development and Export Authority; and providing for an effective
date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 170
SHORT TITLE: ENERGY INDEPENDENCE PROGRAM & FUND: AIDEA
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
04/09/21 (H) READ THE FIRST TIME - REFERRALS
04/09/21 (H) ENE, L&C, FIN
04/13/21 (H) ENE AT 10:15 AM BARNES 124
04/13/21 (H) Heard & Held
04/13/21 (H) MINUTE(ENE)
04/15/21 (H) ENE AT 10:15 AM BARNES 124
WITNESS REGISTER
CHRIS ROSE, Executive Director
Renewable Energy Alaska Project
Anchorage, Alaska
POSITION STATEMENT: Gave an update on REAP and answered
questions during the hearing on HB 170.
ALAN WEITZNER, Executive Director
Alaska Industrial Development and Export Authority
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
170.
BERT HUNTER, Chief Investment Officer
Connecticut Green Bank
Stamford, Connecticut
POSITION STATEMENT: Gave an overview of the Connecticut
Greenbank and answered questions during the hearing on HB 170.
JEFF SCHUB, Executive Director
Coalition for Green Capitol
Washington, D.C.
POSITION STATEMENT: Gave a presentation and responded to
questions during the hearing on HB 170.
MORGAN NEFF, Chief Investment Officer
Alaska Industrial Development and Export Authority
Anchorage, Alaska
POSITION STATEMENT: Responded to questions during the hearing
on HB 170.
ACTION NARRATIVE
10:17:25 AM
CHAIR CALVIN SCHRAGE called the House Special Committee on
Energy meeting to order at 10:17 a.m. Representatives Claman,
Zulkosky, Rauscher, and Schrage were present at the call to
order. Representatives Tuck, Fields, and Kaufman arrived as the
meeting was in progress. Also present were Representatives
Johnson (via teleconference) and McKay.
HB 170-ENERGY INDEPENDENCE PROGRAM & FUND: AIDEA
10:18:02 AM
CHAIR SCHRAGE announced that the only order of business would be
HOUSE BILL NO. 170, "An Act establishing the Alaska energy
independence program and the Alaska energy independence fund in
the Alaska Industrial Development and Export Authority; and
providing for an effective date."
10:18:14 AM
CHRIS ROSE, Executive Director, Renewable Energy Alaska Project
(REAP), offered an update on REAP during the hearing on HB 170
via a PowerPoint, titled "Financing Clean Energy in Alaska"
[hard copy included in the committee packet]. He gave the
background on REAP [slide 2], then he highlighted REAP's
educational programs [slide 3]. He noted the advocacy of REAP
[slide 4], from 2008 to 2021, including a renewable energy fund,
railbelt electric grid reform, and the green bank. He reported
that Alaskans spend almost $6 billion annually on energy, and at
least 20 percent of that is wasted [slides 5-6]. He discussed
weatherization and rebate programs [slide 7] and the advantage
of keeping money circulating in the state economy. He said $640
million was appropriated by the state since 2008 to over 50,000
homes, with an average savings of 30 percent; the average annual
fuel savings is over 25 million gallons of diesel equivalent;
this was all done through grant monies. He mentioned the
renewable energy grant fund [slide 8] and a cost of energy
comparison between alternative energy and conventional energy
[slide 9], and he emphasized that currently, large-scale solar
and wind is the most economical energy on the planet. He talked
about why financing for clean energy is lacking [slide 10].
10:27:45 AM
MR. ROSE, in response to Representative Fields, said REAP would
love to see more funding for the renewable energy fund. He said
the Alaska energy independence fund (AEIF) could build a
financing stack for projects. He expressed his hope that energy
efficiency projects are at the top of the Alaska Industrial
Development and Export Authority's (AIDEA's) list, as they are
the least risky projects. Village scale projects may be handled
by the renewable energy fund through a tailored program; the
very large projects can get financing via the open market.
10:29:46 AM
MR. ROSE continued with the presentation. He covered the
elements and functions of green banks [slides 11-12]. The
elements would be a focus on commercial technologies; a
dedicated source of capital; a focus on leveraging private
investment; and a relationship with government. The functions
would be to design loan products and programs; to "de-risk" by
educating private banks on the opportunity; to market loan
products and programs; and to leverage private investment
capital. He wrapped up the presentation by listing what the
Alaska energy independence fund will do for the state [slide
13]: Lower the energy burden of Alaskans; develop investment
opportunities for Alaskan lending institutions; create jobs and
promote business development; keep precious energy dollars
circulating in the economy; and position the state to receive
federal operating and investment capital.
10:33:37 AM
MR. ROSE, in response to a question from Representative
Rauscher, said there is a perceived risk regarding loans, but
the money borrowed to improve a property increases the value of
the property. He underscored the need of banks to understand
that which they finance.
10:37:08 AM
MR. ROSE, in response to Representative Kaufman, replied that
installation of rooftop solar systems has risen while costs have
lowered, so despite limitations, this energy source is still
economical. He said he could provide "the numbers" regarding
this energy source in Alaska.
10:40:06 AM
REPRESENTATIVE ZULKOSKY said she would like to hear from Mr.
Weitzner regarding whether AIDEA is committed to developing
energy efficiency project development "first."
ALAN WEITZNER, Executive Director, Alaska Industrial Development
and Export Authority, responded that there is no first phase in
the proposed legislation. He said AIDEA is proposing "broad
access under the programs for what's defined as sustainable
energy development." He talked about establishing an advisory
board to oversee the process, as well as getting technical
advice from the sister agency, the Alaska Energy Authority. In
response to follow-up questions, he assured there would be
programs for sustainable energy. He said the programs would be
established to achieve the most optimal results across the
state.
10:44:33 AM
BERT HUNTER, Chief Investment Officer, Connecticut Green Bank,
gave an overview on the Connecticut Green Bank during the
hearing on HB 170 via PowerPoint [hard copy included in the
committee packet]. He offered a description of the Connecticut
Greenbank [slide 2], a quasi-public organization created in 2011
and successor to the Connecticut Clean Energy Fund, with a focus
on the financing of clean energy. He mentioned funding, federal
support, non-competitive resources, and a portfolio. He then
directed attention to the names of the board of directors [slide
3]. He highlighted the focus of the green bank [slide 4],
including sustainable financing, energy efficiency, the support
of all sectors, and the leveraging of private sector capital.
10:50:36 AM
MR. HUNTER discussed the methodologies by which green banks
leverage public capital with more private capital [slide 5]. He
mentioned the bank's current programs and products [slide 6],
including co-investment, credit support, and warehousing. He
emphasized the importance of working with energy utility
partners [slide 7].
10:54:14 AM
MR. HUNTER showed a graph [slide 8] illustrating the ramping up
in investments from 2012 to 2019. He discussed the Connecticut
Greenbank's impact [slide 9] on investment, economics,
environmental protection, tax revenues, energy burden, and
public health savings. He showed pie charts [slides 10-11]
illustrating the transition over eight years, from $13 million
in 2012 to nearly $180 million at the end of fiscal year 2020
(FY 20), and how the funds are allocated across the program.
10:57:16 AM
MR. HUNTER, in response to questions from Representative Fields,
confirmed that the investment breakdown was intentional rather
than opportunistic, and he specified that energy efficiency
provides the greatest return on investment. In response to a
question from Representative Kaufman, regarding a dip in the
leverage ratio shown in 2014, shown on slide 8, he explained
that depending on the transaction, the leverage is lower because
of a larger project that came on in 2014.
11:02:32 AM
MR. HUNTER returned to the presentation and noted the layout of
the organization [slide 12] and a list of public/private
partnerships [slide 13].
11:05:06 AM
MR. HUNTER, in response to a question from Representative Fields
about where HB 170 should set the spending cap, said Connecticut
Greenbank's project sizes are generally well below $20,000.
11:08:10 AM
MR. WEITZMAN clarified that the reference cap is a cap on
AIDEA's guarantee on the $20 million; it is not a project cap.
11:08:57 AM
MR. HUNTER continued with the presentation. He pointed to the
information source regarding green liberty bonds [slide 14],
which he said are popular. He said in two years, Connecticut
Greenbank will have issued $80 million of bonds. In response to
Representative Fields, he said the bonds were structured with a
below average purchase price, at $1,000; buyers include "mom and
pop" retailers and institutional entities, at a ratio of 35:65
percent. He directed attention to the topic of bond awards
[slide 15] to point out the recognition the bonds have received.
He said that concluded his presentation.
11:11:11 AM
MR. HUNTER, at the request of Representative Zulkosky, discussed
interest rates. The idea was to have a loan with the same kind
of loss rate as a car loan. A loss reserve allowed Connecticut
Greenbank to bring the interest rate heretofore in the 9-14
percent rate down to a 4-6 percent range. He mentioned the
commercial energy efficiency loan in the C-PACE program, which
started at approximately 6 percent for a 20-year loan, and it
was increased to 6.25 percent; it drops to about 5 percent for a
10-year loan. He cautioned that lending at rock bottom rates
would "chase private capital out of the market." He talked
about "finding that sweet spot" a balance to keep private
capital players involved while providing "market discipline"
with a reasonable rate of return based on risk. In response to
a follow-up question, he confirmed that the loan products are
fixed rates.
11:14:52 AM
MR. HUNTER, in response to a question from Representative Claman
about regarding for those of lower means, talked about the
smart-e program and loan loss reserve. The program is set up
for less than prime borrowers, he explained, and in return for
lenders agreeing to go into the lower tier, Connecticut
Greenbank doubles its loan loss rate. He reflected that lower
income does not necessarily equate low credit rating. He spoke
about opening the program to credit unions and alternative
credit underwriters. In response to a follow-up question, he
said there is no legislative requirement regarding loans to
lower tiers; however, it is part of Connecticut Greenbank's
comprehensive plan.
11:19:14 AM
MR. HUNTER, in response to a question from Representative
Fields, pointed out that as the first green bank, Connecticut
Greenbank had to demonstrate why investing capital into energy
projects can be successful.
11:21:55 AM
JEFF SCHUB, Executive Director, Coalition for Green Capitol
(CGC), gave a PowerPoint presentation [hard copy included in the
committee packet] during the hearing on HB 170, on the topic of
the Alaska energy independence fund. He introduced CGC [slide
2] as a nonprofit expert on public clean energy finance
institutions that leverage private capital. He said CGC works
with governments, capital providers, and stakeholders to explain
the opportunities surrounding clean energy. The coalition, a
team of nearly 20 experts, currently works in over a dozen
states, which has led to over $5 billion in new investment. Mr.
Schub discussed the impacts around the country [slide 3],
stating that the green bank model has been proven. The amount
in investments has risen to over $7 billion through 2020. He
said, "This is a market-based approach to driving investments
into solutions that make people better off, create jobs, and
support communities." Mr. Schub showed a map [slide 4]
depicting which states have existing green banks, which are
developing green banks, and which are in the category of green
banks "to be formed."
11:26:16 AM
MR. SCHUB, in response to Representative Rauscher, clarified
that "developing" green banks means either a government has
taken some official action or there is a collective effort to
work with a government to create a green bank.
11:27:43 AM
MR. SCHUB continued with the presentation. He noted that last
year CGC analyzed opportunity in Anchorage [slide 5], which is a
potential starting point for EIF, although the needs are
broader. He mentioned a bi-partisan bill in Congress [slide 6]
"to establish a clean energy and sustainability accelerator."
He said funds would flow through EIF and join private capital to
fund businesses, build projects, and serve communities [slide
7]. He stated that investment would target disadvantaged,
underserved communities to reduce energy costs and support
economies [slide 9].
11:31:58 AM
MR. SCHUB, in response to Representative Fields, noted that
private lenders can lower transaction costs for smaller
projects, for example for home owners. He talked about reducing
the time, effort, and cost of issuing loans by educating lenders
as to the mechanism of energy loans. In response to a follow-up
question, he said the percentage of green bank loans for grid-
type projects is typically low, and that is because most green
banks don't have enormous amounts of capital at the state level,
and because "a lot of this is also derived from what the actual
financing needs are in certain markets."
11:37:15 AM
MR. SCHUB, in response to Representative Zulkosky, offered his
understanding that in the case of an unsecured energy efficiency
loan, land status would not pose a problem.
MR. ROSE agreed that with no lien on the property, [land status]
would be less important to a local participant lender.
11:39:05 AM
MR. SCHUB, in response to a question from Representative Fields
regarding transactions costs and scale for residential
weatherization, said depending on the state, some loans are
individual, while some green banks operate as a wholesale
provider of capital.
11:40:46 AM
CHAIR SCHRAGE announced that concluded invited testimony, and he
indicated those available for questions.
11:41:06 AM
MR. WEIZNER, in response to a question from Representative
Zulkosky regarding finding the sweet spot for interest rates,
said he believes through benchmarking best practices, "we" will
be able to identify the programs that work best within Alaska's
energy requirements. He mentioned the loan participation
program through AIDEA as being structured to provide long-term,
fixed-rate, cost-effective capital for Alaska. He indicated
that the interest rates would be handled the same way to engage
the largest amount possible for underlying sustainable
development projects. In response to a follow-up question, he
confirmed that AIDEA would aim for interest rates of 4-6
percent, provided it results in the greatest efficiency in
materializing sustainable energy programs.
11:43:47 AM
MR. ROSE, in response to a question from Representative Fields
as to whether a program could be viable for individual home
weatherization, said he hoped the program could encourage single
participants, as well as for a contractor to borrow a larger
amount of money and refinance it to his/her clients.
11:45:27 AM
MR. WEITZNER, in response to Representative Claman, said AIDEA
does not have established advisory boards for its established
programs that were determined by AIDEA's board. There was an
advisory board benchmarked through AIDEA's sister agency, the
Alaska Energy Authority (AEA), via the renewable energy fund.
He said that through HB 170, AIDEA is looking to establish a
similar advisory board that "would provide that input and
structure the different programs" ultimately with approval by
AIDEA's board. In response to a follow-up question, he
clarified that there is a common board that exists between AIDEA
and AEA; they are independent boards but with the same seven
people serving on each. To another question, he shared that the
night before, AIDEA had passed a resolution in support of HB
170.
11:50:10 AM
The committee took a brief at-ease at 11:50 a.m. to address a
technical issue.
11:50:50 AM
MORGAN NEFF, Chief Investment Officer, Alaska Industrial
Development and Export Authority, in response to a question from
Representative Fields, remarked on the partnership between AEA
and AIDEA and said there would be proactive outreach to the 197
communities currently served in Alaska to leverage project
management and engineering expertise alongside the loan program
to identity energy sustainable projects.
11:52:30 AM
MR. WEITZNER, in response to a question from Chair Schrage
regarding the prioritization of projects, said the process of
the advisory board would be to identify the programs with the
broadest applications to address Alaska's unique energy needs.
11:54:18 AM
MR. WEITZNER, in response to Representative Tuck, said AEA and
AIDEA are independent boards that pass resolutions separately,
despite having the same members serve on each board.
11:56:33 AM
MR. WEITZNER, in response to a question from Representative
Claman regarding the fiscal note, said AIDEA sees [the
provisions under HB 170] having the same level of success as the
loan participation program.
MR. NEFF, in response to a follow-up question from
Representative Claman, said the subscriptions proposed pertain
to specific energy sustainability and clean energy databases
that facilitate the development and monitoring of best practices
from both deployment and reporting perspectives.
MR. WEITZNER explained the initial input under HB 170 relates to
past successes under the AK CARES program. He said AIDEA is
looking to extend that in the implementation and administration
of this fund. He remarked on upscaling AIDEA's operations to
match the financial service aspect of this fund.
MR. NEFF highlighted that HB 170 contains two fiscal notes: one
for the initial capitalization of $10 million, and the other for
the operating expense. The latter is tied to the fund being a
self-sufficient entity; it would cover operating expenses from
the returns of the fund. Additionally, it will be there to
receive and manage potential federal appropriations in the Act
that could come in the form of additional capital to be deployed
at the green bank or operational capital to be used as
subsidized operating expenses with the Alaska independent energy
fund, he said.
12:00:38 PM
MR. WEITZNER, in response to Representative Claman, said AIDEA
has a limited number of position controls numbers (PCNs) and
ultimately would increase the number for marketing and
utilization of the programs, while contracting separately for
Internet technology (IT). In response to a follow-up question,
he said through analysis of needs and ultimate costs, AIDEA
found a solution in external contracts, and it is looking to
duplicate that with the Alaska independence energy fund.
12:03:18 PM
MR. WEITZNER answered yes to Representative Fields' question as
to whether HB 170 would limit the growth of the fund to returns
from initial capitalization and any one-time "shot of money from
a prospective job" [investment]. He then noted that there is
flexibility under HB 170 to receive additional capital into the
fund and allow it to grow through other means.
12:05:01 PM
MR. WEITZNER, in response to a question from Representative Tuck
as to why the program would need to deviate from a prudent
investor rule or traditional institutional financing criteria,
explained the different structures that would not follow
specific issues of the prudent investor rule. In response to a
follow-up question, he talked about having the flexibility to
address programs with the credit enhancement needed, to bundle
different programs, and to access external capital markets that
may be necessary to compliance but may not be the ultimate form
of the private sector partner with which AIDEA is working.
REPRESENTATIVE TUCK clarified that he wants to know what
restrictions there may be that would prevent AIDEA from doing
everything Mr. Weitzner just described.
12:08:49 PM
CHAIR SCHRAGE referenced [subparagraph] B [in Section 7 of HB
170, on page 8, lines 7-8], which is one of the items listed
under the definition of "sustainable energy development" and
read as follows:
(B) building energy efficiency,
including fuel switching to renewable fuels and
electrification;
CHAIR SCHRAGE asked if that definition "could limit the scope"
of building energy efficiency to the point where "this no longer
meets the intent of the program."
MR. WEITZNER offered his understanding that it would not do so.
He said he thinks the language is meant to be inclusive, not
exclusive.
CHAIR SCHRAGE, regarding [subparagraph] (G) in the same section,
which addresses "electric vehicle charging and fueling
infrastructure", questioned the term "fueling infrastructure" in
regard to electric vehicles.
MR. WEITZNER replied that electric vehicles need charging; the
fueling pertains to "other forms" of energy.
12:10:41 PM
MR. SCHUB added that the language would include "future hydrogen
fueled vehicles."
CHAIR SCHRAGE next cited [subparagraph] (H), which includes as
the last item in the definitions: "any other emissions
reduction or energy efficiency technology the authority
determines to be consistent with the Alaska energy independence
program". He asked for an example that would not already be
included in the previous items defining "sustainable energy
development".
MR. SCHUB suggested carbon capture technology or direct air
capture.
12:12:01 PM
MR. SCHUB, in response to Representative Tuck, acknowledged that
nuclear technology could qualify under that category, although
those projects are not likely feasible, as they cost billions of
dollars.
12:12:42 PM
MR. WEITZNER, in response to a new line of questioning from
Representative Tuck as to whether there is any practical reason
to have two independent boards with the same members, said he
wished to provide an answer in writing at a later time.
12:14:07 PM
CHAIR SCHRAGE announced that HB 170 was held over.
12:14:34 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 12:14 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 170 REAP - Chris Rose - Presentation 4.15.21.pdf |
HENE 4/15/2021 10:15:00 AM |
HB 170 |
| HB 170 CT Green Bank - Bert Hunter - Presentation 4.15.21.pdf |
HENE 4/15/2021 10:15:00 AM |
HB 170 |
| HB 170 Coalition for Green Capital - Jeffrey Schub - Presentation 4.15.21.pdf |
HENE 4/15/2021 10:15:00 AM |
HB 170 |
| HB0170A (1).PDF |
HCRA 4/15/2021 10:15:00 AM HENE 4/13/2021 10:15:00 AM HENE 4/15/2021 10:15:00 AM HL&C 4/26/2021 3:15:00 PM |
HB 170 |
| HB 170 Sectional Analysis (Version A).pdf |
HENE 4/13/2021 10:15:00 AM HENE 4/15/2021 10:15:00 AM |
HB 170 |
| HB 170 Fiscal Note - Version A (Fund Capitalization).pdf |
HENE 4/13/2021 10:15:00 AM HENE 4/15/2021 10:15:00 AM |
HB 170 |
| HB 170 Fiscal Note - Version A (AIDEA).pdf |
HENE 4/13/2021 10:15:00 AM HENE 4/15/2021 10:15:00 AM |
HB 170 |
| HB 170 Sponsor Statement-Transmittal Letter (4.8.21).pdf |
HCRA 4/15/2021 10:15:00 AM HENE 4/13/2021 10:15:00 AM HENE 4/15/2021 10:15:00 AM HL&C 4/26/2021 3:15:00 PM |
HB 170 |
| HB 170 Supporting - Green Banks in the U.S. - 2020.pdf |
HCRA 4/15/2021 10:15:00 AM HENE 4/13/2021 10:15:00 AM HENE 4/15/2021 10:15:00 AM HL&C 4/26/2021 3:15:00 PM |
HB 170 |
| HB 170 Supporting - Green Bank Opportunity Report - MOA - May 2020.pdf |
HCRA 4/15/2021 10:15:00 AM HENE 4/13/2021 10:15:00 AM HENE 4/15/2021 10:15:00 AM HL&C 4/26/2021 3:15:00 PM |
HB 170 |
| HB 170 Supporting - A Green Bank for Alaska - REAP - 2020.pdf |
HCRA 4/15/2021 10:15:00 AM HENE 4/13/2021 10:15:00 AM HENE 4/15/2021 10:15:00 AM HL&C 4/26/2021 3:15:00 PM |
HB 170 |
| REAP - HB 170 & SB 123 Letter of Support - 4.11.21.pdf |
HENE 4/15/2021 10:15:00 AM |
HB 170 SB 123 |