Legislature(2023 - 2024)BARNES 124
02/09/2023 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s):update by Utility Companies | |
| 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 9, 2023
10:18 a.m.
DRAFT
MEMBERS PRESENT
Representative George Rauscher, Chair
Representative Tom McKay
Representative Stanley Wright
Representative Mike Prax
Representative Calvin Schrage
Representative Ashley Carrick
MEMBERS ABSENT
Representative Josiah Patkotak
COMMITTEE CALENDAR
PRESENTATION(S):UPDATE BY UTILITY COMPANIES
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ARTHUR MILLER, CEO
Chugach Electric Association
Anchorage, Alaska
POSITION STATEMENT: Offered information and answered questions
during the Update by Utility Companies presentation.
JOHN BURNS, CEO
Golden Valley Electric Association
Fairbanks, Alaska
POSITION STATEMENT: Offered information and answered questions
during the Update by Utility Companies presentation.
TONY IZZO, CEO
Matanuska Electric Association
Palmer, Alaska
POSITION STATEMENT: Offered information and answered questions
during the Update by Utility Companies presentation.
ACTION NARRATIVE
10:18:08 AM
CHAIR GEORGE RAUSCHER called the House Special Committee on
Energy meeting to order at [10:18] a.m. Representatives
Rauscher, McKay, Wright, Prax, Schrage, and Carrick were present
at the call to order.
^PRESENTATION(S):UPDATE BY UTILITY COMPANIES
PRESENTATION(S):UPDATE BY UTILITY COMPANIES
[Contains discussion of HB 50.]
10:20:09 AM
CHAIR RAUSCHER announced that the only order of business would
be a presentation titled: "Update by Utility Companies."
[The presentation was a continuation from 2/2/23.]
10:23:08 AM
ARTHUR MILLER, CEO, Chugach Electric Association, gave a price
comparison analysis for the price of Cook Inlet natural gas and
the Henry Hub market price. He stated that over the years the
Railbelt utilities have fared better in pricing than the Henry
Hub market price.
10:26:18 AM
MR. MILLER stated that there are areas in regard to renewable
energy in which the Railbelt utilities are working together and
others in which they are acting independently. He said that
Chugach Electric has placed a high emphasis on transitioning to
renewable sources of energy. He said that Chugach Electric has
explored renewable energy opportunities and is currently
studying the possibilities for a large-scale wind and a large-
scale solar project. He said that one of the challenges with
renewable energy sources was integrating them into the current
system. He said that Chugach Electric has a goal of reducing
its carbon emissions by 35 percent by 2030 and 50 percent by
2040, provided that it would not create a substantial increase
in electric rates.
10:31:01 AM
MR. MILLER stated that Chugach Electric and Matanuska Electric
have collaborated on installing a 40 megawatt (MW) battery in
Anchorage, Alaska. He said that Chugach Electric has increased
its number of customers in the net metering program in order to
increase its ability to integrate renewable sources of energy
into the system.
10:33:05 AM
JOHN BURNS, CEO, Golden Valley Electric Association, stated that
all of the utilities are working on adding renewables to their
systems, but said that the primary obligation of the utilities
is to ensure that customers have the lowest rates possible. He
said that the utilities want to add renewable energy sources but
will not do so in a way that affects reliability or cost. He
said that in 2003, Golden Valley Electric Association installed
a 25 MW battery, the largest at the time. Golden Valley is in
the process of replacing that battery, but the prices of
batteries have continued to increase while Golden Valley
customers already pay the highest rates on the Railbelt. He
stated that integrating 25 MW of electricity generated by wind
has not brought down the rates for Golden Valley because of
regulatory and integration costs.
10:37:01 AM
MR. BURNS stated that Golden Valley built a solar farm in 2018
with a capacity of half a MW, and it is continuing with a
community solar program. Golden Valley currently has 681
members participating in the program. He said that the
utilities continue to pursue renewable sources of energy, but
they prioritize reliability and costs. He added that
transmission of electricity would be a major factor in how well
the utilities would be able to perform in their goals of using
more renewable sources of energy. He said that the greatest
constraints on transmission are in Southcentral Alaska, and he
advised that's where the transmission work should begin. He
stated that improving transmission would require a large initial
investment, and he compared the eventual payoff to the initial
cost and later payoff of the Bradley Lake hydroelectric project.
10:41:49 AM
MR. BURNS answered a question from a previous meeting by stating
that coal is the cheapest form of energy generation currently
available. He said that Golden Valley currently has plans to
shut down the Healy 2 coal power plant because of issues with
its reliability.
10:45:14 AM
TONY IZZO, CEO, Matanuska Electric Association, stated that the
four biggest issues facing the Railbelt utilities are natural
gas supply, diversification of energy generation, transmission,
and legislative action. He said that Matanuska Electric
Association (MEA) has a goal to reduce carbon usage by 28
percent by 2028 and has already achieved a reduction of 27
percent. He said that a major contributor to this is the Willow
Solar Farm, which provides 1.2 MW of electricity generation. He
said that the Willow Solar Farm is a part of Renewable
Independent Power Producers (IPP), which MEA has partnered with
on renewable energy projects. He said that MEA is working with
Renewable IPP to build a 6 MW solar farm, which will be the
largest in the state. He said that the amount of energy
generated by the new solar project is not a large amount but
added that it still contributes towards the goal of energy
diversification. He said that the Renewable IPP projects allow
MEA to have greater efficiency without having to run its own
sources of energy generation at maximum capacity. He said that
the shares of energy for the utilities from Bradley Lake are
based on the historical demands of each system. The utilities
are working together to find the most efficient ways to generate
energy regardless of the source. He said that MEA will use
Chugach Electric's Anchorage battery because of the scale
involved in having its own battery.
10:52:10 AM
MR. IZZO stated that MEA created an electric vehicle charging
program in which they provided 50 level 3 chargers at no cost to
the customer. He said that in exchange, the customer would
provide data to MEA in order for them to gain a better
understanding of how electric vehicle charging affects the power
grid. He said that MEA wants to know what the demand for
electric vehicle charging is at certain times so that it can
manage its load management. He said that MEA has chosen not to
place a limit on net metering, and he added that 414 members now
make up 3 percent of MEA's total load.
10:54:13 AM
CHAIR RAUSCHER asked Mr. Burns when he expects the Healy 2 plant
to be fully shut down.
MR. BURNS answered that the original plan was to have it shut
down by the end of 2024 but said that the plan is dependent on
being able to secure another 30-50 MW for Golden Valley Electric
Association. He said that both commercial and residential
members want Golden Valley to reduce its emissions, and he said
that one measure the utility is taking to achieve this is adding
a selective catalytic reduction (SCR) system to Healy 1. He
said that Golden Valley also plans on adding large scale wind
projects and a large battery for storage.
10:56:48 AM
CHAIR RAUSCHER asked about the effectiveness of Senate Bill 123,
passed in 2020, [during the Thirty-First Alaska State
Legislature].
MR. MILLER answered that the Railbelt Reliability Council (RRC)
is still in the process of being formed. He said that its
certificate of public convenience & necessity (CPCN) had been
approved by the Regulatory Commission of Alaska. The operating
tariff for the RRC is still under review, which he said is a
normal procedure. He related that there is a budget and
inception rate under review, which would allow the RRC to hire a
CEO and begin operations.
10:59:17 AM
REPRESENTATIVE PRAX asked if the transmission line upgrade was a
key component for the accomplishment of the utilities' other
goals.
MR. BURNS answered that transmission is "vitally important." He
added that the utilities are more focused on the efficiency of
the power generation they receive than the specific location of
its generation.
REPRESENTATIVE PRAX asked about the balance between the cost of
power transmission and the cost of power generation.
MR. BURNS answered that a good transmission system allows the
different utilities the flexibility to use cheaper forms of
generation when it's available.
REPRESENTATIVE PRAX asked if transmission upgrades are necessary
to take full advantage of a conceptual project like Susitna Dam.
MR. BURNS answered that generating power is the first step, and
once that occurs the focus can shift to better transmission.
11:03:58 AM
REPRESENTATIVE PRAX remarked that there were previous
transmission projects that had failed in the past and suggested
that the utilities should provide a picture of what the
transmission plan would really look like.
MR. BURNS answered that there is a plan in place for
transmission system upgrades.
11:06:38 AM
REPRESENTATIVE CARRICK asked if the three energy storage
facilities represented the full amount of energy storage, and
she asked if there is a point in which energy storage becomes a
barrier for transmission.
MR. IZZO answered that the Kenai and Fairbanks storage
facilities are operational, and the Anchorage facility is not
yet finished. He said that there is a deficit in energy storage
batteries partially because the majority of the Railbelt's
energy comes from natural gas. He said that there are currently
limitations with battery technology, and he noted that the
utilities do not have the same kind of resources available in
the Lower 48.
11:11:45 AM
REPRESENTATIVE CARRICK asked how the state should invest in
energy storage.
MR. IZZO answered that the utilities do not rely only on a
single powerplant in a single location, but he said that the
transmission system is lacking. He explained that having a
better transmission system reduces the burden of energy storage
and allows the utilities to receive energy generated by the
others, helping lower the cost for members.
11:15:49 AM
REPRESENTATIVE WRIGHT asked what the life expectancy of the
batteries is and if there were any possible alternatives.
MR. BURNS answered that long-duration energy storage can last up
to 50 years.
11:16:43 AM
REPRESENTATIVE SCHRAGE asked what the RRC's role has been in the
discussions about energy storage and transmission.
MR. MILLER answered that the nine utility stakeholders are
represented on the RRC board. In response to a follow up
question, Mr. Miller stated that the evaluation process is still
ongoing, and he said that the other stakeholders' involvement
has been minimal. He said that the utilities have expressed
their interest to the federal government for transmission
projects.
11:20:00 AM
REPRESENTATIVE SCHRAGE commented that he believes in the
importance of collaboration within the RRC because of the
natural gas situation.
MR. BURNS responded that the amount of collaboration has varied
and said that the goal for everyone is to lower electricity
prices as much as possible. He reiterated that transmission is
important regardless of timing or the source of power generation
used.
REPRESENTATIVE SCHRAGE asked about the overall cost benefit
analysis of building more transmission lines versus building
more smaller scale renewable energy projects. He asked about
the future cost of natural gas in the face of a society that is
trying to move towards a higher usage of renewable energy.
MR. IZZO answered that the United States Department of Energy
has invited the utilities to create a formal application on two
of their proposals, and the utilities are waiting to hear back
on another application. He said that the utilities do not
expect to receive the full amount of money but hope that they
receive an amount that would allow them to build the
transmission upgrades and open the door to other future
projects.
11:27:44 AM
MR. IZZO returned to Representative Wright's question and stated
in addition to lithium-ion battery storage, there is thermal
storage, pumped hydro storage, and nuclear storage. He said
that thermal storage is a longer duration type of storage.
11:29:11 AM
MR. MILLER returned to Representative Schrage's question and
stated that the natural gas situation is the greatest challenge
facing the utilities. He stated that transmission is
"critical", and he said that the utilities have already
contributed 166 million dollars towards upgrades on the
transmission and energy storage systems on the Railbelt. He
said that the utilities' preference is for in-state natural gas,
and that they would continue to need storage facilities for
natural gas. He said that the current storage facilities have a
capacity of 11 billion cubic feet (Bcf) but that the current
demand is 70 Bcf.
MR. MILLER stated that the utilities continue to look for new
technologies. He said that with the current technology, the
utilities are "driven by economics", and that rushing to 100
percent renewable energy could have a great adverse impact on
rates. He stated that he wants to see the usage of renewable
energy increased, but at a rate that will not affect the cost.
MR. BURNS added that the utilities benefit from acting as a
system rather than on their own. He said that without upgrades
to the transmission system, the utilities will continue to be
stuck in their own areas.
11:35:51 AM
REPRESENTATIVE PRAX asked if a smaller scale natural gas
pipeline from the North Slope had been reconsidered.
MR. MILLER answered that there are two natural gas pipelines
currently being considered.
REPRESENTATIVE PRAX commented that the previous Artic Fox
pipeline proposal was smaller scale than the two currently being
considered and gave his opinion that Artic Fox also warranted
consideration.
11:39:07 AM
CHAIR RAUSCHER asked what percentage of the utilities' energy is
being generated from renewable sources versus carbon sources.
MR. IZZO answered that MEA generates approximately 16 percent of
its energy from renewable sources and 84 percent from natural
gas. He said that the percentage can vary slightly due to
factors such as the amount of rainfall affecting the amount of
hydroelectric power that can be generated.
MR. MILLER answered that Chugach Electric generates
approximately 21 percent of its energy from renewable sources
and 81 percent from natural gas. He concurred with Mr. Izzo
that the percentage has the potential to vary and stated that
the numbers he gave are the average.
MR. BURNS answered that Golden Valley Electric Association
generates approximately 17 percent of its energy from renewable
sources and approximately 83 percent from coal and diesel.
11:41:12 AM
CHAIR RAUSCHER asked what a "realistic" percentage of energy
generated by renewable sources would be by 2040.
MR. MILLER answered that Chugach Electric tied its carbon
reduction goal to something it believes to be achievable. He
said that Chugach Electric has a goal of 24 percent renewable
energy by 2030 and a 42 percent reduction on carbon by 2040.
MR. BURNS answered that Golden Valley has a carbon reduction
goal of 26 percent by 2030, but that number is dependent on its
ability to effectively manage costs.
11:45:13 AM
MR. IZZO answered that MEA supports Senate Bill 123 and the RRC.
He said that MEA does not plan to build new generation on its
own. He stated that MEA wants to work with the other utilities
to create better reliability and efficiency. He said that these
factors make him hesitant to place a specific number on carbon
reductions.
MR. IZZO stated that even if MEA were to achieve 40 percent
renewable energy generation by 2040, it would still need 4.4 Bcf
of natural gas. He said that this shows the importance of
finding new sources of energy generation and upgrading
transmission; without this the utilities will continue to have
issues in the future.
11:50:12 AM
CHAIR RAUSCHER asked what the effect would be if the government
"got out of the way" and allowed the RRC to regulate new plans
for the utilities going forward.
MR. IZZO answered that it would be beneficial due to the RRC
having the technical knowledge and tools to face the issues of
Railbelt energy transmission.
11:51:04 AM
REPRESENTATIVE MCKAY asked what the effect would be if HB 50
were passed and the utilities were mandated to buy carbon tax
offsets.
MR. MILLER answered that the costs would have to be passed on to
the rate payer.
MR. IZZO and MR. BURNS agreed with his statement.
11:52:54 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 11:53 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Railbelt Legislative Presentation.FINAL v2.pdf |
HENE 2/9/2023 10:15:00 AM |
Railbelt Legislative Presentation |