Legislature(2017 - 2018)CAPITOL 17

02/02/2017 11:00 AM ENERGY

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Audio Topic
11:10:36 AM Start
11:10:56 AM HB80
11:32:33 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
Moved CSHB 80(ENE) Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                        February 2, 2017                                                                                        
                           11:10 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Adam Wool, Chair                                                                                                 
Representative Ivy Spohnholz, Vice Chair                                                                                        
Representative Matt Claman                                                                                                      
Representative Dean Westlake                                                                                                    
Representative DeLena Johnson                                                                                                   
Representative Jennifer Johnston                                                                                                
Representative George Rauscher                                                                                                  
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
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                                                               
     - MOVED CSHB 80(ENE) OUT OF COMMITTEE                                                                                      
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                                                                             
01/26/17       (H)       Heard & Held                                                                                           
01/26/17       (H)       MINUTE(ENE)                                                                                            
02/02/17       (H)       ENE AT 11:00 AM CAPITOL 17                                                                             
WITNESS REGISTER                                                                                                              
SEAN SKALING, Assistant Executive Director                                                                                      
Energy Policy Director                                                                                                          
Alaska Energy Authority                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Answered questions during  discussion of HB                                                             
ROB EARL, Staff                                                                                                                 
Representative Adam Wool                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Answered  questions on HB  80 on  behalf of                                                             
the bill sponsor, Representative Wool.                                                                                          
GENE THERRIAULT, Energy Policy Assistant                                                                                        
Alaska Energy Authority                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Answered questions during  discussion of HB                                                             
BRITTANY SMART                                                                                                                  
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of the amendment.                                                                   
ACTION NARRATIVE                                                                                                              
11:10:36 AM                                                                                                                   
CHAIR  ADAM WOOL  called the  House Special  Committee on  Energy                                                             
meeting to order at 11:10  a.m.  Representatives Wool, Spohnholz,                                                               
Rauscher,  Westlake, Johnson,  and Johnston  were present  at the                                                               
call to order.  Representative  Claman arrived as the meeting was                                                               
in progress.                                                                                                                    
         HB 80-MUNI ENERGY IMPROVEMNT:ASSESSMNTS/BONDS                                                                      
11:10:56 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."                                                                                               
CHAIR  WOOL   clarified  that  the  proposed   bill  would  allow                                                               
municipalities  and boroughs  to pay  for the  program using  the                                                               
existing  property tax  system to  incentivize energy  efficiency                                                               
improvements to commercial buildings.                                                                                           
11:11:19 AM                                                                                                                   
REPRESENTATIVE JOHNSTON  asked if  the proposed bill  allowed for                                                               
any power generation,  and, if so, were there any  caveats to the                                                               
size of power generation.                                                                                                       
11:11:50 AM                                                                                                                   
SEAN  SKALING,   Assistant  Executive  Director,   Energy  Policy                                                               
Director, Alaska  Energy Authority,  in response,  explained that                                                               
the proposed  bill did allow  for alternative energy  being added                                                               
to  a building,  as  long as  it  was a  permanent  fixture.   He                                                               
offered an example of heat pumps and solar.                                                                                     
REPRESENTATIVE JOHNSTON  expressed her  concern for  the addition                                                               
of a gas generator.                                                                                                             
MR.  SKALING  offered  his  belief that  the  language  would  be                                                               
specific  to   the  municipality   which  adopted  this   in  the                                                               
community.  He pointed out  that the proposed legislation allowed                                                               
for  alternative energy  to happen,  whereas sideboards  could be                                                               
added at the municipal level.                                                                                                   
REPRESENTATIVE JOHNSTON  stated that, as the  program was already                                                               
in place, public buildings could have their own gas turbines.                                                                   
MR. SKALING replied, yes.                                                                                                       
11:13:50 AM                                                                                                                   
CHAIR WOOL opened public testimony.                                                                                             
11:14:19 AM                                                                                                                   
REPRESENTATIVE SPOHNHOLZ  moved to  adopt Amendment  J.1, labeled                                                               
30-LS0337\J.1, Shutts, 2/1/17, which read:                                                                                      
     Page 7, lines 25 - 30:                                                                                                     
          Delete all material and insert:                                                                                       
          "Sec. 29.55.120. Review required. The record                                                                        
        owner of eligible property shall obtain from an                                                                         
     independent third party the following:                                                                                     
               (1)  for each proposed qualified project,                                                                        
               (A)  a review of the energy or emissions                                                                         
     baseline conditions, as appropriate; and                                                                                   
               (B)  the projected reduction in energy                                                                           
       costs, energy consumption or demand, or emissions                                                                        
     affecting local air quality, as appropriate; and                                                                           
               (2)  for each completed qualified project,                                                                       
      verification that the qualified project was properly                                                                      
     completed and is operating as intended."                                                                                   
     Page 9, following line 22:                                                                                                 
     Insert a new paragraph to read:                                                                                            
               "(4)  reduction of emissions affecting local                                                                     
     air quality;"                                                                                                              
     Renumber the following paragraphs accordingly.                                                                             
     Page 10, line 16:                                                                                                          
          Delete "decrease energy consumption or demand,                                                                        
          Insert "reduce energy consumption or demand,                                                                          
         energy costs, or emissions affecting local air                                                                         
     quality, and includes"                                                                                                     
CHAIR WOOL objected for the purpose of discussion.                                                                              
11:14:46 AM                                                                                                                   
ROB  EARL,   Staff,  Representative   Adam  Wool,   Alaska  State                                                               
Legislature, explained that the  proposed amendment addressed the                                                               
concerns that a  property owner could not retrofit  to a cleaner,                                                               
though not  cheaper, energy source  and utilize the  program, and                                                               
would  now  allow a  municipality  or  borough  to use  the  PACE                                                               
(Property Assessed  Clean Energy) program to  finance projects to                                                               
improve air quality, even if  the project did not decrease energy                                                               
costs.   He directed  attention to  the Explanation  of Amendment                                                               
[Included in members'  packets] and referred to page  7, lines 25                                                               
-  31 of  the proposed  bill.   The proposed  amendment clarified                                                               
that  the commercial  property owner  was responsible  for hiring                                                               
the pre  and post  PACE project  reviews, and  it added  that the                                                               
criteria  for the  initial assessment  could include  a projected                                                               
reduction in emissions.   He moved on to page 9,  line 22, of the                                                               
proposed  bill, and  noted that  the proposed  amendment added  a                                                               
criteria for  meeting the public  purpose for the issue  of bonds                                                               
and notes that it can  include a reduction of emissions affecting                                                               
local  air quality.    He referenced  page 10,  line  16, of  the                                                               
proposed bill,  and stated that  the proposed amendment  added to                                                               
the  definition  of  "qualified improvement"  as  an  improvement                                                               
intended to reduce emissions affecting local air quality.                                                                       
CHAIR   WOOL  clarified   that   this   amendment  allowed   that                                                               
application for  a PACE  loan could include  an improvement  to a                                                               
structure for either efficiency or  improvement to the quality of                                                               
the exhaust.                                                                                                                    
11:17:17 AM                                                                                                                   
CHAIR  WOOL  removed  his  objection.   There  being  no  further                                                               
objection to the proposed Amendment J.1, it was so ordered.                                                                     
REPRESENTATIVE JOHNSTON opined that  the amendment seemed to take                                                               
away  from the  argument  that the  loan was  being  paid for  by                                                               
savings from energy efficiency.                                                                                                 
11:17:47 AM                                                                                                                   
GENE   THERRIAULT,  Energy   Policy   Assistant,  Alaska   Energy                                                               
Authority,  said that  the  remainder of  the  bill still  sought                                                               
enough energy savings  to cover the costs of  the improvement and                                                               
that the  addition of the  amendment did not short  circuit this.                                                               
He  directed  attention  to  a   graph  from  the  House  Special                                                               
Committee on  Energy meeting  on January  26, 2017,  which showed                                                               
that the  improvements offered enough  savings for  the amortized                                                               
payment,  and was  either cash  positive  or cash  neutral.   The                                                               
amendment acknowledged  that the  achievement for a  reduction of                                                               
emissions  was also  a  desirable  goal of  the  enterprise.   He                                                               
offered an  example of multiple  projects to save  money, stating                                                               
that there  was not encouragement  for anything  that "ultimately                                                               
drives their cost up."                                                                                                          
11:19:26 AM                                                                                                                   
CHAIR WOOL stated  that an auditor could be hired  for a study to                                                               
ensure that costs would not increase.                                                                                           
MR. THERRIAULT  expressed his agreement,  and reported  that part                                                               
of the required review was  for a recommendation on "the sensible                                                               
things  to  do"  with  an  estimation  for  whether  it  was  the                                                               
economically smart  thing to  do, and a  follow-up to  ensure the                                                               
application was done correctly.                                                                                                 
11:20:07 AM                                                                                                                   
REPRESENTATIVE  SPOHNHOLZ   asked  to  clarify  that   this  gave                                                               
potential  borrowers the  opportunity to  make the  improvements,                                                               
but it  did not require anyone  to do anything that  was not cost                                                               
MR.  THERRIAULT  offered  his  agreement,  and  stated  that  the                                                               
proposed  legislation offered  a  mechanism which  allowed for  a                                                               
local  government to  voluntarily  decide whether  it made  sense                                                               
within its  jurisdiction, and then,  it was up to  the individual                                                               
property owner.                                                                                                                 
REPRESENTATIVE  SPOHNHOLZ asked  if  there were  any federal  tax                                                               
savings which  a business could  realize by making  this decision                                                               
to reduce emissions.                                                                                                            
MR. THERRIAULT replied  that although there could be,  he was not                                                               
aware if  there were still any  incentives.  He allowed  that any                                                               
incentives could be taken into consideration for savings.                                                                       
11:21:53 AM                                                                                                                   
REPRESENTATIVE JOHNSON  asked how this  program would work  in an                                                               
unorganized area or borough.                                                                                                    
MR. THERRIAULT explained that the  mechanism gave permission to a                                                               
local  government which  exercised  its  property tax  authority.                                                               
Therefore,  this could  be  used  as a  collection  tool for  any                                                               
REPRESENTATIVE  JOHNSON asked  how  much area  of  the state  was                                                               
MR.  THERRIAULT  replied  that,  although he  did  not  know  the                                                               
acreage,  the majority  of the  state population  lived in  areas                                                               
where property taxes were levied.                                                                                               
REPRESENTATIVE RAUSCHER  asked for  clarification that  people in                                                               
unorganized  areas  of  the  state  would not  be  able  to  take                                                               
advantage of this program.                                                                                                      
MR. THERRIAULT expressed  his agreement, as the  program was only                                                               
available in areas with a  local government which issued property                                                               
REPRESENTATIVE RAUSCHER  asked whether  property owners  were the                                                               
only ones making payments.                                                                                                      
MR.   THERRIAULT  explained   that,   unlike   water  and   sewer                                                               
assessments  that  applied to  an  entire  geographic area,  this                                                               
mechanism only applied to individual  property, so the individual                                                               
property owner decided for his property only.                                                                                   
11:24:38 AM                                                                                                                   
REPRESENTATIVE  WESTLAKE   asked  for  clarification   that  [in]                                                               
organized   boroughs,  rather   than   paying   a  borough   tax,                                                               
improvements could  be made for  efficiencies or air  quality and                                                               
payments were made for these improvements.                                                                                      
MR.  THERRIAULT reiterated  that  the  proposed legislation  only                                                               
applied  to  commercial  properties,  or  multi-unit  residential                                                               
properties of four  or more.  The property  owner decided whether                                                               
the improvements would make sense  and save enough, and this loan                                                               
would be re-paid through an  assessment which was included on the                                                               
property tax  bill.  He explained  that this was not  part of the                                                               
property tax, but was a flat  amount per year for a stated number                                                               
of years that was contractually  agreed upon between the property                                                               
owner and the local government.                                                                                                 
CHAIR WOOL stated  that the billing mechanism was a  line item on                                                               
the property tax, in addition to  the property tax, and if either                                                               
item was not paid, this would be a default of the property tax.                                                                 
MR. THERRIAULT expressed  his agreement, and said  that the local                                                               
government had the  ability to collect the  obligation along with                                                               
the  property  tax  and  any  other assessment.    As  the  local                                                               
government collected  this, the PACE obligation  default rate was                                                               
less than 1 percent.                                                                                                            
11:27:48 AM                                                                                                                   
BRITTANY SMART testified  in support of the  amendment and stated                                                               
that it was an energy saving [indisc].                                                                                          
[Public testimony was closed]                                                                                                   
11:28:35 AM                                                                                                                   
REPRESENTATIVE  SPOHNHOLZ  moved to  report  HB  80, Version  30-                                                               
LS0337\J,   as  amended,   out  of   committee  with   individual                                                               
recommendations  and the  accompanying zero  fiscal note.   There                                                               
being no objection, CSHB 80(ENE) was moved from the House                                                                       
Special Committee on Energy.                                                                                                    
11:29:07 AM                                                                                                                   
The committee took a brief at-ease.                                                                                             
11:32:33 AM                                                                                                                   
CHAIR WOOL brought the committee back to order.                                                                                 
There being no further business before the committee, the House                                                                 
Special Committee on Energy meeting was adjourned at 11:32 a.m.                                                                 

Document Name Date/Time Subjects
HB 80 - Amendment J.1.pdf HENE 2/2/2017 11:00:00 AM
HB 80