Legislature(2017 - 2018)CAPITOL 17

01/26/2017 11:00 AM ENERGY

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Audio Topic
11:09:36 AM Start
11:10:05 AM HB80
11:12:48 AM Overview: Property Assessed Clean Energy (pace) Energy Efficiency Financing
11:46:44 AM HB80
11:58:57 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ Overview:Property Assessed Clean Energy (PACE) TELECONFERENCED
- Energy Efficiency Financing
*+ HB 80 MUNI ENERGY IMPROVEMNT:ASSESSMNTS/BONDS TELECONFERENCED
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                        January 26, 2017                                                                                        
                           11:09 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Adam Wool, Chair                                                                                                 
Representative Ivy Spohnholz, Vice Chair                                                                                        
Representative Matt Claman                                                                                                      
Representative DeLena Johnson                                                                                                   
Representative Jennifer Johnston                                                                                                
Representative George Rauscher                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Dean Westlake                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 80                                                                                                               
"An  Act adopting  the Municipal  Property Assessed  Clean Energy                                                               
Act; authorizing  municipalities to establish programs  to impose                                                               
assessments  for energy  improvements  in  regions designated  by                                                               
municipalities;  imposing fees;  and providing  for an  effective                                                               
date."                                                                                                                          
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
OVERVIEW:  PROPERTY ASSESSED CLEAN ENERGY (PACE) ENERGY                                                                         
EFFICIENCY FINANCING                                                                                                            
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 80                                                                                                                   
SHORT TITLE: MUNI ENERGY IMPROVEMNT:ASSESSMNTS/BONDS                                                                            
SPONSOR(s): REPRESENTATIVE(s) WOOL                                                                                              
                                                                                                                                
01/25/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/25/17       (H)       ENE, CRA                                                                                               
01/26/17       (H)       ENE AT 11:00 AM CAPITOL 17                                                                             
BILL: HB  80                                                                                                                  
SHORT TITLE: MUNI ENERGY IMPROVEMNT:ASSESSMNTS/BONDS                                                                            
SPONSOR(s): REPRESENTATIVE(s) WOOL                                                                                              
                                                                                                                                
01/25/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/25/17       (H)       ENE, CRA                                                                                               
01/26/17       (H)       ENE AT 11:00 AM CAPITOL 17                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ROB EARL, Staff                                                                                                                 
Representative Adam Wool                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 80 on behalf of the bill                                                                    
sponsor, Representative Wool.                                                                                                   
                                                                                                                                
SEAN SKALING, Assistant Executive Director                                                                                      
Energy Policy Director                                                                                                          
Alaska Energy Authority (AEA)                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Presented a PowerPoint on Property Assessed                                                              
Clean Energy (PACE) Energy Efficiency Financing and answered                                                                    
questions.                                                                                                                      
                                                                                                                                
GENE THERRIAULT, Energy Policy Assistant                                                                                        
Alaska Energy Authority (AEA)                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions during discussion of HB                                                               
80.                                                                                                                             
                                                                                                                                
CHRIS ROSE, Executive Director                                                                                                  
Renewable Energy Alaska Project (REAP)                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 80.                                                                           
                                                                                                                                
KATHIE WASSERMAN                                                                                                                
Executive Director                                                                                                              
Alaska Municipal League                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 80.                                                                           
                                                                                                                                
JIM DODSON, President                                                                                                           
Fairbanks Economic Development Corporation (FEDC)                                                                               
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 80.                                                                           
                                                                                                                                
BRITTANY SMART, Spokesperson                                                                                                    
Office of the Mayor                                                                                                             
Fairbanks North Star Borough (FNSB)                                                                                             
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 80.                                                                           
                                                                                                                                
JACK WILBUR, Vice-Chair                                                                                                         
Board of Directors                                                                                                              
Interior Gas Utility (IGU)                                                                                                      
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 80.                                                                           
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
11:09:36 AM                                                                                                                   
                                                                                                                                
CHAIR  ADAM WOOL  called the  House Special  Committee on  Energy                                                             
meeting to order at 11:09  a.m.  Representatives Wool, Spohnholz,                                                               
Claman, Johnson, Johnston, and Rauscher  were present at the call                                                               
to order.                                                                                                                       
                                                                                                                                
         HB  80-MUNI ENERGY IMPROVEMNT:ASSESSMNTS/BONDS                                                                     
HB 80-MUNI ENERGY IMPROVEMNT:ASSESSMNTS/BONDS                                                                               
                                                                                                                                
11:10:05 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL  announced that  the only order  of business  would be                                                               
HOUSE  BILL  NO. 80,  "An  Act  adopting the  Municipal  Property                                                               
Assessed   Clean  Energy   Act;  authorizing   municipalities  to                                                               
establish programs to impose  assessments for energy improvements                                                               
in  regions  designated  by municipalities;  imposing  fees;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
11:10:39 AM                                                                                                                   
                                                                                                                                
ROB  EARL,   Staff,  Representative   Adam  Wool,   Alaska  State                                                               
Legislature, clarified that  HB 80, with a zero  fiscal note, was                                                               
also known as PACE, the  Municipal Property Assessed Clean Energy                                                               
Act, which  would allow local  municipal governments to  create a                                                               
property  assessed   clean  energy   financing  mechanism.     He                                                               
explained  that local  PACE  financing  would incentivize  energy                                                               
efficiency  improvements to  commercial  buildings,  as it  would                                                               
allow use of the existing  property tax collection mechanism as a                                                               
means of  servicing loans for energy  efficiency improvements and                                                               
alternate energy installation on  commercial property.  He stated                                                               
that  local  governments  would  work  with  interested  business                                                               
owners to  identify energy improvements  under the  PACE program.                                                               
He  reported that  the  PACE financing  resulted  in low  default                                                               
rates,  which  facilitated  low  interest  lending,  allowed  for                                                               
longer  financing periods,  and offered  seamless transferability                                                               
with sale of the property.                                                                                                      
                                                                                                                                
[HB 80 was taken up later in the meeting.]                                                                                      
                                                                                                                                
^Overview:     Property  Assessed  Clean  Energy   (PACE)  Energy                                                               
Efficiency Financing                                                                                                            
    Overview:  Property Assessed Clean Energy (PACE) Energy                                                                 
                      Efficiency Financing                                                                                  
                                                                                                                              
11:12:48 AM                                                                                                                   
                                                                                                                                
SEAN  SKALING,   Assistant  Executive  Director,   Energy  Policy                                                               
Director, Alaska Energy Authority  (AEA), directed attention to a                                                               
PowerPoint presentation titled, "C-PACE  Scenario."  He presented                                                               
slide 3,  "How C-PACE  Works," and detailed  a scenario  in which                                                               
the owners  of a commercial  building had high energy  costs, and                                                               
even after  an energy  audit which  listed the  potential changes                                                               
and  associated costs  with a  measureable energy  savings of  30                                                               
percent, the business was not able  to afford a bank loan because                                                               
of the loan  payment schedule.  He pointed out  that the proposed                                                               
efficiency  changes were  cost effective,  and  with cash,  would                                                               
have been a  great investment.  He added that  this was a growing                                                               
business,  with  the possibility  of  a  move from  the  building                                                               
before  the   financial  return  from  those   savings  would  be                                                               
recognized.  He  declared that AEA had found this  business to be                                                               
"fairly  typical," noting  that  when AEA  had  run a  commercial                                                               
energy audit program, the difficulty  faced by the businesses had                                                               
been the hurdles  with financing.  He emphasized  that the C-PACE                                                               
program   was  voluntary,   offered  long-term   financing,  low-                                                               
interest, and  less risk for the  bank and investor.   The C-PACE                                                               
program  created  positive cash  flow  and  allowed for  seamless                                                               
transfer upon sale of the  loan, the building, and the efficiency                                                               
improvements.  He explained that  energy efficiency measures such                                                               
as  heating and  cooling systems,  lighting, and  insulation were                                                               
included  as eligible  improvements,  slide  4, "C-PACE  Eligible                                                               
Improvements."   He added that  alternative energy, such  as heat                                                               
pumps  and solar,  were also  eligible, slide  5.   Moving on  to                                                               
slide 6, "Cash  Flow from Energy Efficiency," he  reported that a                                                               
typical  business would  have a  lower payment  after the  energy                                                               
efficiency work with PACE refinancing.                                                                                          
                                                                                                                                
CHAIR WOOL  asked if  AEA would  limit the  loan payment  to help                                                               
with the cash flow.                                                                                                             
                                                                                                                                
MR. SKALING  explained that the  system was designed to  keep the                                                               
loan "long and low" as the program allowed a 20-year term.                                                                      
                                                                                                                                
11:18:37 AM                                                                                                                   
                                                                                                                                
MR. SKALING added that most places  where the PACE program was in                                                               
place extended the  loan a bit past the payback  period, and that                                                               
the energy  efficiency savings  lasted for  years after  the loan                                                               
was re-paid.   He  detailed that a  property owner  interested in                                                               
doing efficiency  measures would go  to an energy  contractor and                                                               
get an energy  efficiency audit report, which they  would take to                                                               
an  investor for  the  upfront  project capital  to  pay for  the                                                               
energy improvements, slides 6 and  7, "PACE: How Loan is Repaid."                                                               
He  explained that  the loan  payments were  made along  with the                                                               
existing  property tax  bill, as  a separate  line item,  and the                                                               
local government would  forward the payment to the  investor.  He                                                               
pointed out  that there was  security from the  contracts between                                                               
the property owner and the city,  and the city with the investor.                                                               
He added  that there  could also be  a performance  contract with                                                               
the energy company,  in which the energy  savings was guaranteed.                                                               
He  declared  that  this  was voluntary,  as  the  proposed  bill                                                               
allowed  municipalities   and  banks  the  option,   noting  that                                                               
Fairbanks, Anchorage  and Juneau were interested  in the program.                                                               
He reported that PACE was enabled  in 33 state, slide 9, and that                                                               
it was  time to add  Alaska, slide 10.   He emphasized  that this                                                               
created a program for property  owners to have lower payments and                                                               
offered  lenders  more  assurance   that  the  energy  efficiency                                                               
improvements were  real, while contractors, energy  auditors, and                                                               
vendors were kept working.                                                                                                      
                                                                                                                                
11:23:19 AM                                                                                                                   
                                                                                                                                
GENE   THERRIAULT,  Energy   Policy   Assistant,  Alaska   Energy                                                               
Authority, shared  that he had  a long-time interest in  the PACE                                                               
program  since he  had  served  on a  national  board for  energy                                                               
officials.  During this time,  his search for sources of low-cost                                                               
capital  that   could  help   Alaska  constituents   with  energy                                                               
improvement had discovered that  the PACE mechanism was effective                                                               
in other states.   He directed attention to  slide 12, "Financing                                                               
Options," and relayed  that, with some local banks,  a portion of                                                               
the loan  portfolio could be  made available at a  lower interest                                                               
rate, although these needed to be  assured of a low default rate.                                                               
While  working  with a  local  government  for the  issuance  and                                                               
collection of the property tax  bill, with an assessment added to                                                               
make the loan repayment, the  banks felt assured that there would                                                               
be a very  low default rate.  He pointed  out that a municipality                                                               
could also issue revenue to  be repaid under this same mechanism.                                                               
He  read   from  some   of  the   Rural  Utility   Service  (RUS)                                                               
regulations,  including the  energy  efficiency and  conservation                                                               
loan  program, which  was a  recurring fund  source in  RUS.   He                                                               
shared  that this  program was  underutilized, and,  consequently                                                               
the program  was interested  in finding ways  to link  users with                                                               
the funding.   He reported  that the current loan  interest rates                                                               
for ten-year financing was 2.5  percent, whereas the PACE program                                                               
allowed  repayment  over  a  ten   to  twenty-year  period.    He                                                               
reiterated  that the  long loan  repayment  period was  key.   He                                                               
shared  that  the  regulations  for  the  energy  efficiency  and                                                               
conservation  loan program  were  looking for  a mechanism  which                                                               
would lower  default rates,  noting that  the PACE  program would                                                               
most likely  qualify.   In response to  Chair Wool,  he clarified                                                               
that RUS was a Rural Utility Service.                                                                                           
                                                                                                                                
11:28:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE RAUSCHER asked if there  was a risk assessment and                                                               
default history for these loans.                                                                                                
                                                                                                                                
MR. THERRIAULT  replied that he  would provide  that information,                                                               
directing  attention  to  an  organization,  PACE  Nation,  which                                                               
worked with  the various  PACE programs  nationally.   He relayed                                                               
that  the  Alaska  program  had  been  modeled  after  the  Texas                                                               
program, as it had protections  for existing mortgage holders and                                                               
local  governments.   He shared  that the  requirement for  audit                                                               
recommendations,  as  well as  a  follow-up  audit to  prove  the                                                               
improvements were done  correctly, had cut down on  defaults.  He                                                               
pointed out that this was  similar to the home energy improvement                                                               
program under Alaska Housing Finance Corporation.                                                                               
                                                                                                                                
REPRESENTATIVE RAUSCHER asked if  profit margin affected everyone                                                               
equally.                                                                                                                        
                                                                                                                                
MR. THERRIAULT asked if this was regarding credit worthiness.                                                                   
                                                                                                                                
REPRESENTATIVE  RAUSCHER explained  that  sometimes an  applicant                                                               
could make  too much money, or  have too much profit,  to qualify                                                               
for a program.                                                                                                                  
                                                                                                                                
MR. THERRIAULT  replied that  this was not  a requirement  of the                                                               
proposed  legislation.     He  explained  that   should  a  local                                                               
government, when implementing the  program, want to direct monies                                                               
to lower-profit  businesses, there  could be  a "profit  test" to                                                               
ensure the  money went to  an applicant with  a higher need.   He                                                               
declared that  this decision  would be made  at the  local level,                                                               
and that it  would still be necessary to follow  the steps in the                                                               
legislation for implementation of the program.                                                                                  
                                                                                                                                
MR. THERRIAULT added  that a local government could  charge a fee                                                               
to cover the local costs or  build up the loan reserve to protect                                                               
against defaults.  He pointed out  that a limiting factor to fees                                                               
would  be  to keep  the  cost  for  participation low  enough  to                                                               
incentivize.  He  opined that a local government  would not "jack                                                               
up fees."                                                                                                                       
                                                                                                                                
11:34:34 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  CLAMAN asked  if  the assessment  process with  a                                                               
municipality  would put  the energy  improvement  loans ahead  of                                                               
collection of  other loans in  the event of default,  and whether                                                               
this was a problem with the banks.                                                                                              
                                                                                                                                
MR.  THERRIAULT  replied  that with  the  commercial  PACE  there                                                               
appeared to be "a growing  acceptance of that," pointing out that                                                               
the  proposed bill  had protection  for the  bank.   He explained                                                               
that  with an  existing commercial  mortgage on  the property,  a                                                               
PACE applicant  had to receive  permission from that lender.   He                                                               
relayed  that  many  lenders  gave permission  as  there  was  an                                                               
improvement being made to the collateral property.                                                                              
                                                                                                                                
REPRESENTATIVE CLAMAN asked for  clarification that the PACE loan                                                               
required permission from the existing lender.                                                                                   
                                                                                                                                
MR. THERRIAULT added that, should  there be a default, the entire                                                               
remaining PACE loan  did not have to be repaid,  only the current                                                               
year payment, as the new  owner received the ongoing benefit with                                                               
the ongoing payment.  He  stated that the federal funds available                                                               
under the aforementioned energy  efficiency and conservation loan                                                               
program  was about  $250 million  annually.   He spoke  about the                                                               
federal  Rural  Energy Saving  Program  (RESP)  which funded  $50                                                               
million  nationwide,   with  good   loan  terms   for  "repayment                                                               
mechanisms  that  are  demonstrated   to  have  appropriate  risk                                                               
mitigation features."   He relayed that this  was another program                                                               
looking for  a mechanism similar  to PACE.   He added  that there                                                               
was a zero-interest rate for the RESP money to the utility.                                                                     
                                                                                                                                
11:38:13 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHNSTON  asked which  congressional  delegations                                                               
supported  these   programs  and   whether  these   programs  had                                                               
sustainability.                                                                                                                 
                                                                                                                                
MR. THERRIAULT, in response, said  that the energy efficiency and                                                               
conservation  loan   program,  as  part  of   the  United  States                                                               
Department of Agriculture (USDA)  RUS program, annually had about                                                               
$250  million built  into its  base budget.   He  reiterated that                                                               
this was  underutilized, and  that USDA was  "anxious to  get the                                                               
money  out."   He  compared  this  program to  Alaska  Industrial                                                               
Development and Export  Authority (AIDEA), as it  had a portfolio                                                               
and  paid money  back  to  the federal  government.   In  further                                                               
response to Representative  Johnston, he allowed that  he was not                                                               
sure whether that  program received new dollars,  although it had                                                               
"a fair amount of congressional support."                                                                                       
                                                                                                                                
11:39:27 AM                                                                                                                   
                                                                                                                                
CHAIR  WOOL asked  for the  reason  that the  proposed bill  only                                                               
covered commercial properties.                                                                                                  
                                                                                                                                
MR. THERRIAULT explained that a  PACE loan would bump an existing                                                               
mortgage  into  a  secondary  position.   He  declared  that  the                                                               
residential   loans  from   the   Federal   Home  Loan   Mortgage                                                               
Corporation,  known  as Freddie  Mac,  and  the Federal  National                                                               
Mortgage Association,  known as Fannie  Mae, were not  willing to                                                               
take   a  secondary   position,  and   would  not   purchase  any                                                               
residential property loan  portfolios from banks.   He added that                                                               
although some  states had attempted  to maneuver around  this, it                                                               
had been found to necessitate  giving up main attributes of PACE,                                                               
including   the   senior   loan   position   and   the   seamless                                                               
transferability  of the  loan.   He offered  a recommendation  to                                                               
keep the proposed  bill for PACE loans  to commercial properties,                                                               
with the possibility of expansion in the future.                                                                                
                                                                                                                                
CHAIR  WOOL asked  if a  goal of  the proposed  legislation would                                                               
include an  owner who wanted  to convert  to natural gas,  as the                                                               
savings might be  undetermined although the air  quality would be                                                               
improved.                                                                                                                       
                                                                                                                                
MR. THERRIAULT acknowledged that  federal agencies were requiring                                                               
higher   air   quality   in  Fairbanks   by   imposing   stricter                                                               
requirements  on  the community.    He  stated that  the  current                                                               
program  targeted  energy savings,  and  he  pointed out  that  a                                                               
natural  gas appliance  was more  energy  efficient, hence  would                                                               
generate a savings for fuel and  efficiency.  He pointed out that                                                               
as  the use  of  wood burning  was  often low  cost,  a shift  to                                                               
another  energy  source   may  not  "clear  the   hurdle  of  the                                                               
economics."  He declared, however,  that the mechanism should not                                                               
be  available  and considered  as  a  means  to improve  the  air                                                               
quality.                                                                                                                        
                                                                                                                                
CHAIR WOOL  opined that the restriction  to commercial properties                                                               
would narrow the number of facilities using wood.                                                                               
                                                                                                                                
11:44:34 AM                                                                                                                   
                                                                                                                                
MR.  SKALING  directed  attention  to slide  13,  "Easy  Win  for                                                               
Alaska," and declared that this  had already been fully vetted in                                                               
the 29th  Legislative Session, had  strong support,  and achieved                                                               
economic goals  for the communities.   He pointed to  the impacts                                                               
of the PACE  program for lower bills and an  increase to property                                                               
value by supporting the proposed bill.                                                                                          
                                                                                                                                
         HB  80-MUNI ENERGY IMPROVEMNT:ASSESSMNTS/BONDS                                                                     
                                                                                                                                
11:46:44 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL  announced the committee  would open  public testimony                                                               
on HB 80.                                                                                                                       
                                                                                                                                
11:47:02 AM                                                                                                                   
                                                                                                                                
CHRIS ROSE,  Executive Director, Renewable Energy  Alaska Project                                                               
(REAP), reported  that REAP was a  statewide non-profit coalition                                                               
comprised  of about  80  organizations,  which included  electric                                                               
utilities, developers,  and independent businesses.   He referred                                                               
to  the  written testimony  previously  submitted.   He  declared                                                               
support for  HB 80 and  PACE legislation.  He  emphasized support                                                               
for  state  supported   weatherization  programs  which  provided                                                               
savings  from energy  efficiency.    He stated  that  PACE was  a                                                               
financing  tool to  allow the  money  necessary for  a return  on                                                               
investment,  adding  that  it  was a  voluntary  program  and  an                                                               
opportunity for  business owners.   He declared that  the program                                                               
would keep  money in the  community and  would add many  jobs for                                                               
qualified workers.   He reiterated  his support for  the proposed                                                               
bill.                                                                                                                           
                                                                                                                                
11:50:46 AM                                                                                                                   
                                                                                                                                
KATHIE  WASSERMAN, Executive  Director, Alaska  Municipal League,                                                               
declared  that the  Alaska Municipal  League (AML)  had supported                                                               
previous iterations of  the proposed bill, and  she expressed her                                                               
surprise that the proposed bill had  not been passed sooner.  She                                                               
stated that  it was not  a mandate,  as the commercial  owner and                                                               
the municipalities could  opt in if they so choose.   It provided                                                               
protections for  the public as  the municipality was  required to                                                               
have a resolution of intent,  with boundaries identified, and the                                                               
public  would  be  aware  of   the  program.    She  opined  that                                                               
municipalities would get support from  its residents.  She stated                                                               
that, as  energy issues were some  of the most difficult  for the                                                               
state,  the  proposed  bill  was  a tool  to  help  overcome  the                                                               
deficit.   She declared that the  members of AML were  in support                                                               
of HB 80.                                                                                                                       
                                                                                                                                
11:52:55 AM                                                                                                                   
                                                                                                                                
JIM   DODSON,    President,   Fairbanks    Economic   Development                                                               
Corporation  (FEDC),  stated that  this  was  the right  type  of                                                               
legislation for the  new economic era in Alaska.   He pointed out                                                               
that it  was voluntary  for the  municipality, the  borrower, and                                                               
the lender, and that it gave  the community a tool to effectively                                                               
contribute to  lowering the cost  of energy.  He  reiterated that                                                               
the cost  of energy  was a  barrier to growth  of the  economy in                                                               
Alaska.  He encouraged support for the proposed bill.                                                                           
                                                                                                                                
11:54:21 AM                                                                                                                   
                                                                                                                                
BRITTANY  SMART, Spokesperson,  Office  of  the Mayor,  Fairbanks                                                               
North  Star  Borough  (FNSB),  declared  that  this  was  a  very                                                               
important  piece of  legislation, especially  with regard  to its                                                               
air quality issues.                                                                                                             
                                                                                                                                
CHAIR  WOOL asked  if there  was concern  for any  administrative                                                               
burden or costs.                                                                                                                
                                                                                                                                
MS. SMART  acknowledged that  there were  questions for  the best                                                               
path  to implementation  of the  program,  although the  proposed                                                               
bill did offer risk protections.                                                                                                
                                                                                                                                
11:55:45 AM                                                                                                                   
                                                                                                                                
JACK  WILBUR,  Vice-Chair,  Board   of  Directors,  Interior  Gas                                                               
Utility  (IGU),  stated  support  of   the  proposed  bill.    He                                                               
explained  that the  Interior  Gas Utility  had  been created  to                                                               
bring low cost energy in the  form of liquefied natural gas (LNG)                                                               
to  the Fairbanks  North Star  Borough,  as it  was important  to                                                               
reduce  the  current air  pollution  issues.   He  reported  that                                                               
Alaska Industrial  Development and  Export Authority  (AIDEA) had                                                               
purchased Pentax  Assets, which included a  liquefaction facility                                                               
in  Southcentral  Alaska,  as  well  as a  fleet  of  trucks  and                                                               
trailers to bring  the LNG to Fairbanks.  He  shared that funding                                                               
appropriated  through the  Alaska State  Legislature had  allowed                                                               
IGU  to  install  a  distribution   system  in  North  Pole  with                                                               
subsequent distribution  in the City  of Fairbanks.   He declared                                                               
that  IGU was  ready  to continue  with additional  improvements,                                                               
including  storage  facilities  and   further  expansion  of  the                                                               
distribution  system.    He  shared  that  a  key  to  additional                                                               
expansion was for  customers to be connected  to the distribution                                                               
system and to  generate revenue to pay off the  loans and finance                                                               
further expansion.   He  acknowledged that  it was  difficult for                                                               
businesses to  come up  with the  capital for  these conversions.                                                               
He pointed  out that  the PACE legislation  allowed for  low cost                                                               
financing for  energy cost saving measures  and would incentivize                                                               
commercial conversions to LNG.                                                                                                  
                                                                                                                                
11:58:41 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL closed  public testimony on HB 80.   He announced that                                                               
HB 80 would be held over.                                                                                                       
                                                                                                                                
11:58:57 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special Committee on Energy meeting was adjourned at 11:58 a.m.                                                                 

Document Name Date/Time Subjects
HB 80 - Sponsor Statement.pdf HENE 1/26/2017 11:00:00 AM
HB 80
HB 80 Letter of Support - FNSB.pdf HENE 1/26/2017 11:00:00 AM
HB 80
HB 80 - Letter of Support - REAP.pdf HENE 1/26/2017 11:00:00 AM
HB 80
HB 80 - Fiscal Note - DCCED.pdf HENE 1/26/2017 11:00:00 AM
HB 80
HB 80 - Sectional Analysis.PDF HENE 1/26/2017 11:00:00 AM
HB 80