Legislature(2017 - 2018)CAPITOL 17

02/07/2017 10:15 AM ENERGY

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Audio Topic
10:21:30 AM Start
10:21:53 AM HB81
11:00:48 AM Presentation: Alaska Affordable Energy Strategy
12:00:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 81 AK ENERGY EFFICIENCY LOANS: ELIGIBILITY TELECONFERENCED
Heard & Held
+ Presentation: AK Affordable Energy Strategy TELECONFERENCED
Findings & Recommendations by Katie Conway &
Cady Lister, AK Energy Authority
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                        February 7, 2017                                                                                        
                           10:21 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. 81                                                                                                               
"An Act  making an  entity that is  exempt from  federal taxation                                                               
under  26 U.S.C.  501(c)(3), (4),  (6), (12),  or (19)  (Internal                                                               
Revenue Code)  and a  federally recognized  tribe eligible  for a                                                               
loan  from  the Alaska  energy  efficiency  revolving loan  fund;                                                               
relating  to loans  from the  Alaska energy  efficiency revolving                                                               
loan fund;  and relating  to the annual  report published  by the                                                               
Alaska Housing Finance Corporation."                                                                                            
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PRESENTATION: ALASKA AFFORDABLE ENERGY STRATEGY                                                                                 
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 81                                                                                                                   
SHORT TITLE: AK ENERGY EFFICIENCY LOANS: ELIGIBILITY                                                                            
SPONSOR(s): REPRESENTATIVE(s) KREISS-TOMKINS                                                                                    
                                                                                                                                
01/25/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/25/17       (H)       ENE, FIN                                                                                               
01/31/17       (H)       ENE AT 10:15 AM CAPITOL 17                                                                             
01/31/17       (H)       Heard & Held                                                                                           
01/31/17       (H)       MINUTE(ENE)                                                                                            
02/07/17       (H)       ENE AT 10:15 AM CAPITOL 17                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
BERRETT WILBER, Staff                                                                                                           
Representative Jonathan Kreiss-Tomkins                                                                                          
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Presented the proposed Amendment  A.4 to HB                                                             
81  on  behalf  of  the   bill  sponsor,  Representative  Kreiss-                                                               
Tompkins.                                                                                                                       
                                                                                                                                
CADY LISTER, Chief Economist                                                                                                    
Alaska Energy Authority (AEA)                                                                                                   
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Presented  a  PowerPoint  titled  "Alaska                                                             
Affordable  Energy   Strategy"  and  answered   questions  during                                                               
discussion of HB 81.                                                                                                            
                                                                                                                                
STACY SCHUBERT, Director                                                                                                        
Governmental Affairs & Public Relations                                                                                         
Alaska Housing Finance Corporation                                                                                              
Department of Revenue                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Answered questions during  discussion of HB                                                             
81.                                                                                                                             
                                                                                                                                
KATIE CONWAY, Government Relations Manager                                                                                      
Alaska Energy Authority (AEA)                                                                                                   
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Presented  a  PowerPoint  titled  "Alaska                                                             
Affordable Energy Strategy."                                                                                                    
                                                                                                                                
CADY LISTER, Chief Economist                                                                                                    
Alaska Energy Authority (AEA)                                                                                                   
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Presented  a  PowerPoint  titled  "Alaska                                                             
Affordable  Energy   Strategy"  and  answered   questions  during                                                               
discussion of HB 81.                                                                                                            
                                                                                                                                
NEIL MCMAHON, Planning Manager                                                                                                  
Alaska Energy Authority (AEA)                                                                                                   
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Answered questions  during the  PowerPoint                                                             
presentation.                                                                                                                   
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:21:30 AM                                                                                                                   
                                                                                                                                
CHAIR  ADAM WOOL  called the  House Special  Committee on  Energy                                                             
meeting   to  order   at  10:21   a.m.     Representatives  Wool,                                                               
Spohnholtz,  Rauscher,   Claman,  Johnston,  and   Westlake  were                                                               
present at the call to  order.  Representative Johnson arrived as                                                               
the meeting was in progress.                                                                                                    
                                                                                                                                
         HB 81-AK ENERGY EFFICIENCY LOANS: ELIGIBILITY                                                                      
                                                                                                                                
10:21:53 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL  announced that the  first order of business  would be                                                               
HOUSE BILL NO.  81, "An Act making an entity  that is exempt from                                                               
federal taxation  under 26 U.S.C.  501(c)(3), (4), (6),  (12), or                                                               
(19)  (Internal Revenue  Code) and  a federally  recognized tribe                                                               
eligible for a  loan from the Alaska  energy efficiency revolving                                                               
loan fund;  relating to loans  from the Alaska  energy efficiency                                                               
revolving loan fund; and relating  to the annual report published                                                               
by the Alaska Housing Finance Corporation."                                                                                     
                                                                                                                                
10:22:20 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ  moved to  adopt Amendment  A.4, labeled                                                               
30-LS0353\A.4, Nauman, 2/6/17, which read:                                                                                      
                                                                                                                                
     Page 1, line 1:                                                                                                            
          Delete "an entity that is"                                                                                          
          Insert "certain entities that are"                                                                                  
                                                                                                                                
     Page 1, line 2:                                                                                                            
          Delete "a federally recognized tribe"                                                                               
          Insert "federally recognized tribes"                                                                                
                                                                                                                                
     Page 5, line 8, following "Code)":                                                                                     
          Insert ", but does not include an entity                                                                          
     organized with the primary purpose of owning,                                                                          
     operating, managing, or controlling a plant or system                                                                  
     for furnishing electric service by generation,                                                                         
     transmission, or distribution"                                                                                         
                                                                                                                                
CHAIR WOOL objected for discussion.                                                                                             
                                                                                                                                
10:22:57 AM                                                                                                                   
                                                                                                                                
BERRETT  WILBER, Staff,  Representative Jonathan  Kreiss-Tomkins,                                                               
Alaska State  Legislature, explained that the  proposed Amendment                                                               
A.4  resulted from  discussions with  the Alaska  Housing Finance                                                               
Corporation (AHFC)  and the Alaska  Energy Authority (AEA).   She                                                               
pointed  out that  501(c)(12)  non-profit organizations  included                                                               
electric cooperatives.   She reported  that AHFC had  expressed a                                                               
lack of  expertise in  its loan vetting  process to  offer energy                                                               
efficiency loans  to power  generators for  the purpose  of power                                                               
generation  and distribution.    She offered  her  belief that  a                                                               
conceptual  amendment   could  allow  electric   cooperatives  to                                                               
receive efficiency loans for  building envelope efficiencies, but                                                               
not allow for distribution to the power grid.                                                                                   
                                                                                                                                
REPRESENTATIVE  WESTLAKE asked  for clarification  that this  was                                                               
specific to the efficiencies to each individual building.                                                                       
                                                                                                                                
MS. WILBER replied, "yes, that's correct in my estimation."                                                                     
                                                                                                                                
10:25:22 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  WESTLAKE offered  a conceptual  amendment to  the                                                               
proposed Amendment A.4, at the end of line 12, which read:                                                                      
                                                                                                                                
     except   when   used   for  building   end-use   energy                                                                    
     efficiency  improvements unrelated  to the  generation,                                                                    
     distribution  or  transmission  of power  or  recovered                                                                    
     heat.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  WOOL  reiterated  that  the  proposed  conceptual                                                               
amendment to  proposed Amendment  A.4 would make  funds available                                                               
for  building envelope  energy efficiencies,  but  not for  power                                                               
generation.                                                                                                                     
                                                                                                                                
REPRESENTATIVE WESTLAKE  expressed his  agreement and  asked that                                                               
AEA further address the issue.                                                                                                  
                                                                                                                                
10:27:32 AM                                                                                                                   
                                                                                                                                
CADY  LISTER, Chief  Economist,  Alaska  Energy Authority  (AEA),                                                               
Department of Commerce, Community  & Economic Development, stated                                                               
that  AEA  supported  the proposed  conceptual  amendment.    She                                                               
explained that AEA had the  Power Project Loan Fund program which                                                               
offered  financing  for  generation and  transmission  of  energy                                                               
systems  projects, as  well  as some  efficiency  measures.   She                                                               
offered the belief  that it was important to  maintain lending to                                                               
the power generators,  especially in Rural Alaska.   She reported                                                               
that AEA staff had the  technical capacity to assess and evaluate                                                               
the appropriateness  and legality  of a  project.   She explained                                                               
that there were many  Environmental Protection Agency regulations                                                               
regarding  the use  of diesel  fuel  as prime  power, that  these                                                               
regulations  changed often,  and  that the  State  of Alaska  had                                                               
special waivers and exemptions.                                                                                                 
                                                                                                                                
CHAIR  WOOL asked  if  AEA offered  loans  for building  envelope                                                               
energy efficiency  or simply for power  distribution, generation,                                                               
and transmission.   He opined that augmenting the  AHFC loans for                                                               
efficiency would dovetail with the AEA program.                                                                                 
                                                                                                                                
MS. LISTER offered her belief that it would dovetail.                                                                           
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ  asked  for  an  at-ease  for  language                                                               
clarification to  the proposed conceptual  amendment in  order to                                                               
avoid any unintended consequences.                                                                                              
                                                                                                                                
10:30:39 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 10:30 a.m. to 10:33 a.m.                                                                     
                                                                                                                                
10:33:01 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL  explained that the  proposed conceptual  amendment to                                                               
proposed Amendment  A.4 stated that  the loans could be  used for                                                               
energy, building envelope, or consumption  efficiency but not for                                                               
any power distribution, transmission, or generation.                                                                            
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ  reiterated   the  proposed  conceptual                                                               
amendment, stating that it "does  not include an entity organized                                                               
for the purpose of owning,  operating, managing, or controlling a                                                               
plant or  system for furnishing  electric service  by generation,                                                               
transmission,  or  service, except  for  the  purposes of  energy                                                               
efficiency of the building."                                                                                                    
                                                                                                                                
CHAIR WOOL added "or buildings that they may own."                                                                              
                                                                                                                                
10:34:19 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS,  in  response  to  Representative                                                               
Westlake,  expressed  his  support for  the  proposed  conceptual                                                               
amendment and declared that it  was consistent with the intent to                                                               
improve energy efficiency.                                                                                                      
                                                                                                                                
[There being  no objection, the proposed  conceptual amendment to                                                               
proposed Amendment A.4 was adopted.]                                                                                            
                                                                                                                                
10:34:42 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL removed  his objection to Amendment A.4.   There being                                                               
no further objection, Amendment A.4, as amended, was adopted.                                                                   
                                                                                                                                
10:35:24 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAUSCHER moved  to adopt  Amendment A.2,  labeled                                                               
30-LS0353\A.2, Nauman, 2/1/17, which read:                                                                                      
                                                                                                                                
     Page 5, line 14, following "section,":                                                                                     
          Insert "(1)"                                                                                                          
                                                                                                                                
     Page 5, line 15, following "enterprise":                                                                                   
          Insert ";                                                                                                             
               (2)  the corporation may not make a loan                                                                         
     under this  section to a  tax exempt  entity, federally                                                                    
     recognized tribe, or regional  housing authority if, at                                                                    
     the  time  of making  the  loan,  the total  amount  of                                                                    
     outstanding  loans under  this  section  to tax  exempt                                                                    
     entities,  federally  recognized tribes,  and  regional                                                                    
     housing  authorities exceeds  10 percent  of the  total                                                                    
     amount of bonds the  corporation is authorized to issue                                                                    
     to secure loans under this section."                                                                                       
                                                                                                                                
CHAIR WOOL objected for discussion.                                                                                             
                                                                                                                                
REPRESENTATIVE  RAUSCHER explained  that  proposed Amendment  A.2                                                               
would  add language  to limit  the loan  funds available  to tax-                                                               
exempt  entities,   federally  recognized  tribes,   or  regional                                                               
housing  authorities.   He  allowed  that  although the  proposed                                                               
amendment stated  a limit of 10  percent of the total  amount, he                                                               
acknowledged  that there  had been  discussion  to increase  this                                                               
amount to  30 percent.  He  stated that the limit  would preserve                                                               
the loan  funds available  for use  by municipal  governments, as                                                               
intended by the original legislation in 2010.                                                                                   
                                                                                                                                
10:37:19 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  CLAMAN  questioned  the intent  of  the  proposed                                                               
amendment,  as testimony  indicated  that the  existing fund  had                                                               
only issued  one loan in four  years.  He asked  why there should                                                               
be a restriction  on loan amounts when there was  not an existing                                                               
demand.                                                                                                                         
                                                                                                                                
REPRESENTATIVE RAUSCHER  explained that, although the  purpose of                                                               
proposed  HB 81  was to  generate a  source for  newer loans,  it                                                               
should allow  funds for the original  intent of the program.   He                                                               
stated that  "just because they  weren't used, doesn't  mean they                                                               
won't be."   He  suggested that  opening up  use could  drain and                                                               
deplete  the  fund,  so  that  there would  no  longer  be  money                                                               
available for its original intent.                                                                                              
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ opined  that  the original  legislation                                                               
still  allowed   for  a  priority  to   the  originally  intended                                                               
beneficiaries.  She  stated that the proposed  bill was "widening                                                               
the  net"  and   not  putting  non-profits  in   a  position  "of                                                               
essentially  trumping pubic  agencies  for the  benefit of  these                                                               
services."   She  declared that  this  was an  attempt to  reduce                                                               
energy  costs across  the state  and be  more efficient  with our                                                               
resources,  especially as  many  of the  non-profits were  funded                                                               
through state government.  She  suggested that proposed Amendment                                                               
A.2 was "a solution in search of a problem."                                                                                    
                                                                                                                                
CHAIR WOOL asked for AHFC to address the issue.                                                                                 
                                                                                                                                
10:40:27 AM                                                                                                                   
                                                                                                                                
STACY   SCHUBERT,  Director,   Governmental   Affairs  &   Public                                                               
Relations,  Alaska  Housing  Finance Corporation,  Department  of                                                               
Revenue, stated  that AHFC  would be  able to  implement proposed                                                               
Amendment A.2, but that AHFC was neutral and had no preference.                                                                 
                                                                                                                                
CHAIR WOOL reflected  that, in the history of  the program, there                                                               
had only been two applicants resulting  in one loan, and asked if                                                               
it  was foreseeable  for  an increase  in  applications by  those                                                               
tribal  entities and  non-profits addressed  through proposed  HB                                                               
81, or  an increase in  applications from public entities  as the                                                               
availability of grants had decreased.                                                                                           
                                                                                                                                
MS. SCHUBERT  relayed that the  original legislation  allowed for                                                               
$250  million  in funding,  and  that,  should there  be  greater                                                               
necessity for funds, AHFC could  ask the Alaska State Legislature                                                               
for an increase to the availability of loan funds.                                                                              
                                                                                                                                
REPRESENTATIVE CLAMAN asked if  any municipalities had complained                                                               
about a lack of ability to apply for these funds.                                                                               
                                                                                                                                
REPRESENTATIVE RAUSCHER replied, no.                                                                                            
                                                                                                                                
REPRESENTATIVE  CLAMAN asked  if any  municipality had  contacted                                                               
Representative  Rauscher with  concerns for  the availability  of                                                               
loan funds.                                                                                                                     
                                                                                                                                
REPRESENTATIVE RAUSCHER replied, no.                                                                                            
                                                                                                                                
10:42:54 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHNSON,  reflecting  on   her  time  working  in                                                               
municipal government  as a mayor,  acknowledged that she  was not                                                               
aware of this  loan fund.  She offered her  belief that this lack                                                               
of  awareness  could   be  wide  spread,  and,   as  a  municipal                                                               
representative, she  would want "a  chance at the pot  of money."                                                               
She suggested that most people were not aware of this loan fund.                                                                
                                                                                                                                
CHAIR  WOOL  offered his  belief  that  $250 million  of  bonding                                                               
ability  was  a   large  amount  of  money   that  was  currently                                                               
underutilized.   He reminded the  committee that AHFC  had stated                                                               
that more  money could be requested  if all of the  loan fund was                                                               
committed.    He opined  that  loans  to all  the  aforementioned                                                               
entities would  be a  good thing, as  energy efficiency  and less                                                               
fuel consumption  was a goal.   He  acknowledged that use  of the                                                               
entire  fund could  be  a  problem, but  "maybe  not  such a  bad                                                               
problem."                                                                                                                       
                                                                                                                                
10:45:03 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE CLAMAN  stated that he opposed  proposed Amendment                                                               
A.2.   He expressed his  agreement with  Representative Spohnholz                                                               
that this  was "a solution  in search of  a problem."   He opined                                                               
that  the  original intent  of  the  legislation was  to  resolve                                                               
energy  efficiency issues  with funding,  and limiting  access to                                                               
the funds was a disservice to the communities.                                                                                  
                                                                                                                                
10:46:50 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   JOHNSTON   asked   about  negotiation   to   the                                                               
percentage  of the  total amount  of the  bonds available  to the                                                               
aforementioned entities.                                                                                                        
                                                                                                                                
REPRESENTATIVE RAUSCHER  in response,  explained that  his intent                                                               
was to  ensure there  was money  for the  original intent  of the                                                               
fund, and  "not to limit  anybody's ability  to make any  kind of                                                               
efficiency loans."                                                                                                              
                                                                                                                                
REPRESENTATIVE   JOHNSTON  offered   her  support   for  proposed                                                               
Amendment  A.2, as  there was  a changing  environment, and  that                                                               
many  public buildings  would require  greater  efforts and  more                                                               
money.   She  suggested that  an increase  to 30  percent of  the                                                               
total amount  of bonds was  "a rather  large number" and  that it                                                               
was a  good compromise to  allow for  the intent of  the original                                                               
language.                                                                                                                       
                                                                                                                                
REPRESENTATIVE RAUSCHER offered to renegotiate the percentage.                                                                  
                                                                                                                                
CHAIR WOOL allowed that there  could also be renegotiation if all                                                               
the funds were depleted.                                                                                                        
                                                                                                                                
REPRESENTATIVE   JOHNSON  offered   her   support  for   proposed                                                               
Amendment A.2,  stating that these  were public buildings  in the                                                               
public trust, paid for with public  monies, and the fund had been                                                               
originally intended  for public  monies to  be borrowed  and paid                                                               
back.   She stated  that the original  intent was  fulfilling the                                                               
public  trust,  and  that the  proposed  changes  were  enhancing                                                               
buildings in the private, non-profit sector.                                                                                    
                                                                                                                                
CHAIR WOOL  offered his  belief that  the proposed  amendment did                                                               
not address  privately owned buildings, only  tribal entities and                                                               
non-profits.                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS,   in   response,   stated   that                                                               
technically non-profit organizations  were private, although they                                                               
had to satisfy public benefit and a public good.                                                                                
                                                                                                                                
REPRESENTATIVE JOHNSON  clarified that a  non-profit organization                                                               
was a private entity.                                                                                                           
                                                                                                                                
10:50:36 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
10:52:50 AM                                                                                                                   
                                                                                                                                
CHAIR  WOOL brought  the committee  back to  order.   He declared                                                               
that   the  objection   to  proposed   Amendment  A.2   had  been                                                               
maintained.                                                                                                                     
                                                                                                                                
10:53:00 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAUSCHER   offered  a  conceptual   amendment  to                                                               
proposed Amendment A.2  which would change the  percentage of the                                                               
total amount of bonds on line 10 from 10 percent to 30 percent.                                                                 
                                                                                                                                
10:53:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  CLAMAN stated  that, although  he did  not oppose                                                               
the proposed  conceptual amendment,  he maintained  his objection                                                               
to proposed Amendment A.2.                                                                                                      
                                                                                                                                
10:54:09 AM                                                                                                                   
                                                                                                                                
A roll call  vote was taken.   Representatives Rauscher, Johnson,                                                               
and Johnston  voted in favor  of Amendment A.2.   Representatives                                                               
Claman,  Spohnholz,  and  Wool  voted  against  it.    Therefore,                                                               
Amendment A.2 failed  the House Special Committee on  Energy by a                                                               
vote of 3 yeas - 3 nays.                                                                                                        
                                                                                                                                
10:55:02 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
10:55:41 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL stated that proposed Amendment A.2 did not pass.                                                                     
                                                                                                                                
10:55:52 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL asked  if there was consensus for  passage of proposed                                                               
HB 81, as amended, out of committee.                                                                                            
                                                                                                                                
REPRESENTATIVE CLAMAN reiterated that  the original intent of the                                                               
proposed  bill  was  to  get  energy  efficient  loans  into  the                                                               
community,  and it  was  never  intended to  be  specific to  any                                                               
particular group.   He  pointed out  that the  municipalities had                                                               
not applied for  the loans.  He offered his  belief that proposed                                                               
HB 81, as amended, was  "100 percent consistent with the original                                                               
goal  and intent  of the  original  legislation which  is to  get                                                               
funds available  for energy efficiencies throughout  Alaska."  He                                                               
declared his support of the bill.                                                                                               
                                                                                                                                
REPRESENTATIVE  JOHNSON  stated that  she  was  not in  favor  of                                                               
passing the bill out of committee.   She reiterated that the fund                                                               
was  a large  amount of  public funds  for the  public trust  and                                                               
administered by  a public  entity.  She  offered her  belief that                                                               
the intent of the bill was  to further allow public buildings and                                                               
municipalities  to upgrade  facilities, so  it would  save public                                                               
money.                                                                                                                          
                                                                                                                                
REPRESENTATIVE    RAUSCHER   expressed    his   agreement    with                                                               
Representative Johnson.                                                                                                         
                                                                                                                                
10:57:51 AM                                                                                                                   
                                                                                                                                
CHAIR  WOOL stated  that AHFC  was  a state  entity which  loaned                                                               
money to  private individuals  to buy homes  and that  this money                                                               
was also bonded for public buildings.   He said that the proposed                                                               
bill opened  the funding  up to  other entities  as the  fund had                                                               
been barely  used although, he acknowledged,  many municipalities                                                               
may not  have been aware  of the fund.   Chair Wool said  that he                                                               
would hold over HB 81.                                                                                                          
                                                                                                                                
10:58:44 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
^Presentation: Alaska Affordable Energy Strategy                                                                              
        Presentation: Alaska Affordable Energy Strategy                                                                     
                                                                                                                                
11:00:48 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL announced  that the next order of business  would be a                                                               
presentation on the Alaska Affordable Energy Strategy.                                                                          
                                                                                                                                
11:01:05 AM                                                                                                                   
                                                                                                                                
KATIE  CONWAY,   Government  Relations  Manager,   Alaska  Energy                                                               
Authority  (AEA), Department  of Commerce,  Community &  Economic                                                               
Development,  introduced a  PowerPoint titled  "Alaska Affordable                                                               
Energy  Strategy," and  noted that  the  presentation would  only                                                               
focus on  this strategy and not  on any other AEA  programs.  She                                                               
shared that,  although power  generation in  the state  was often                                                               
taken  for  granted, the  reality  was  that the  energy  systems                                                               
generating and distributing the  power were complicated, required                                                               
a lot of work to sustain and,  for those not connected to a grid,                                                               
lacked back-up.   She  reminded that  communities relied  on heat                                                               
and power,  and that  affordable energy  was a  fundamental need.                                                               
She  directed  attention  to slide  3,  "Bulk  Fuel,  Generation,                                                               
Distribution"   which    she   characterized   as    the   energy                                                               
infrastructure.   She discussed  slide 4,  "Energy infrastructure                                                               
is  critical  infrastructure,"  and  spoke  about  the  need  for                                                               
continuous improvement  and replacement.   She reported  that the                                                               
yearly capital  cost to  replace existing  electricity generation                                                               
and  bulk fuel  storage in  rural communities  was more  than $30                                                               
million.  She stated that more  than $1 billion federal and state                                                               
dollars  had been  invested during  the past  15 years  in energy                                                               
projects outside the Railbelt.   Pointing to slide 5, "The future                                                               
points to more dynamic funding,"  she declared that, although the                                                               
need to  continually invest  remained constant,  the availability                                                               
of public  funding was decreasing  and communities  and utilities                                                               
had to  find other  ways to deliver  safe, reliable,  stable, and                                                               
affordable  energy services.   She  stated that  state government                                                               
needed to ensure  the framework was in place  to maximize federal                                                               
dollars,   encourage    private   sector    investment,   prepare                                                               
communities  and utilities  for  debt-financing solutions  rather                                                               
than  relying   exclusively  on   public  funding   to  implement                                                               
projects,  ensure  proper  project  selection  given  the  unique                                                               
circumstances of any individual  community, and provide technical                                                               
assistance  and  consumer  protection.   She  declared  that  the                                                               
Alaska Affordable  Energy strategy offered these  solutions.  She                                                               
suggested that  this strategy  was a  framework for  choosing the                                                               
way  critical energy  programs and  cost-effective services  were                                                               
provided  to the  non-Railbelt communities  and  utilities.   She                                                               
addressed  slide 7,  "In 2014,  Senate  Bill 138  tasked AEA  to"                                                               
develop an  infrastructure to deliver  more affordable  energy to                                                               
areas of  the state which did  not have direct access  to a North                                                               
Slope natural gas  pipeline.  She emphasized  that the Affordable                                                               
Energy strategy applied only to  non-Railbelt areas.  She pointed                                                               
out that  AEA had also  been directed to consider  existing state                                                               
energy  policy, which  included  the 15  percent  by 2020  energy                                                               
efficiency, and 50  percent by 2025 renewable  energy goals which                                                               
had been established in 2010.   She listed some key points, which                                                               
included:  only non-Railbelt regions  made up the study area; the                                                               
project was a data and  research based project conducted over two                                                               
years; there is not a list  of capital projects; and, AEA focused                                                               
on improvement to  the decision making process  and expansion for                                                               
the availability  of financing  tools for  energy projects.   She                                                               
pointed out  that although the  presentation would be  linear for                                                               
ease   of   explanation,   it  should   be   considered   as   an                                                               
interconnected  web.   She  stated  that  the benefits  of  these                                                               
recommendations  could  be  statewide,   as  every  dollar  saved                                                               
allowed  for more  to be  done  with less,  which was  especially                                                               
relevant given the current fiscal crisis in Alaska, slide 8.                                                                    
                                                                                                                                
11:09:02 AM                                                                                                                   
                                                                                                                                
MS. CONWAY  moved on  to slide 9,  "Study area  communities," and                                                               
stated  that there  was a  wildly variable  set of  circumstances                                                               
influencing energy costs in the study  area.  She shared that the                                                               
median community size  within the study area was  300 people, and                                                               
that 76 percent of the  study area communities were not connected                                                               
by  road  or  marine  highway.   She  reported  that  the  median                                                               
electric  rate within  the  study area,  before  PCE (Power  Cost                                                               
Equalization), was $0.62  per kilowatt hour, and  the median cost                                                               
of  heating oil  was $4.55  per gallon.   She  reminded that  the                                                               
gallon  equivalent of  natural gas  in  Southcentral Alaska  cost                                                               
less than $1 per gallon.                                                                                                        
                                                                                                                                
CHAIR  WOOL  asked  what  year  the price  of  heating  oil  data                                                               
reflected.                                                                                                                      
                                                                                                                                
MS. CONWAY replied that it was 2016.                                                                                            
                                                                                                                                
MS. CONWAY  returned to slide  10 and stated  that implementation                                                               
of  the   Affordable  Energy   Strategy  would   improve  project                                                               
selection and ensure that the  most cost effective projects would                                                               
be  done first;  would  diversify financing  options; and,  would                                                               
strengthen  accountability  through requirements  and  incentives                                                               
which  encouraged  best   financial,  managerial,  and  technical                                                               
practices.   She relayed  that AEA had  considered more  than 150                                                               
reports and studies over the past  two years, as well as recently                                                               
completed regional energy plans  and community vetted priorities.                                                               
She concluded  by saying that  the project  commissioned specific                                                               
studies  to  fill  in  gaps  and knowledge  related  to  end  use                                                               
efficiency,  liquefied natural  gas, fuel  delivery and  storage,                                                               
utility   management   structures,   and  barriers   to   private                                                               
investment  in Rural  Alaska.   She noted  that the  strategy had                                                               
reviewed the entire energy system  within the study area, and not                                                               
just  AEA   programs  and  services,   and  had  built   all  the                                                               
information into the  Alaska Affordable Energy model.   She added                                                               
that   this  model   allowed  comparison   of  different   energy                                                               
infrastructure options to be used  to help communities and policy                                                               
makers better  identify the  most cost  effective projects.   She                                                               
noted  that  the use  of  "affordable"  was interchangeable  with                                                               
"cost  effective" as  the  lowest cost  option  given the  unique                                                               
circumstances of a  specific place at a specific  moment in time.                                                               
She  declared that,  although it  was  difficult to  dramatically                                                               
lower  costs, there  were many  opportunities for  improving cost                                                               
effectiveness, especially  for energy  efficiencies.   She stated                                                               
that  many of  the  strongest opportunities  for more  affordable                                                               
energy were  difficult to  capture within  the current  system of                                                               
energy  programs and  services.   She  concluded  with slide  13,                                                               
"There are no one-size-fits-all solutions."                                                                                     
                                                                                                                                
11:13:24 AM                                                                                                                   
                                                                                                                                
CADY  LISTER, Chief  Economist,  Alaska  Energy Authority  (AEA),                                                               
Department of Commerce, Community  & Economic Development, stated                                                               
that the  Affordable Energy  Strategy proposed  an evidence-based                                                               
management framework to guide decision  making which was based on                                                               
a foundation  of collaboration and  research.  She  reported that                                                               
the  recommendations  were  organized into  four  categories,  or                                                               
pillars, slide 14.   The first pillar was  identification of cost                                                               
effective  projects,   followed  by  financing   those  projects,                                                               
creating  systems  of   accountability  and  sustainability,  and                                                               
funding  state energy  programs.   She  shared that  the goal  of                                                               
these  pillars  was  to  support   safe,  reliable,  stable,  and                                                               
affordable   energy,   and    that   the   recommendations   were                                                               
interconnected  and could  influence  multiple  categories.   She                                                               
declared that these built off the  successes of the many past and                                                               
current  energy programs  while  recognizing that  the levels  of                                                               
influence  to local  government decision  making and  action were                                                               
limited.    She  stated  that  each  of  the  proposed  solutions                                                               
employed  at  least one  of  the  following mechanisms:    direct                                                               
financing  through   grants,  loans,  or   incentives;  technical                                                               
assistance   through  the   collection  and   sharing  of   data,                                                               
information   analysis,   evaluation,   and   consultation;   and                                                               
requirements, such as mandates,  regulations, and standards.  She                                                               
addressed  slide  15, "Research  identified  pain  points in  the                                                               
system  and  offers solutions  to  address  them" and  said  that                                                               
barriers  and risks  were leading  to  higher cost  energy.   She                                                               
relayed that  an expectation  of grants  in some  communities had                                                               
led  to the  delayed  implementation of  beneficial projects,  as                                                               
well  as underdevelopment  of  the  administrative and  financial                                                               
structures necessary  to access the  financing.  She  shared that                                                               
the method of  state and federal funding had also  led to project                                                               
development based on funding availability  rather than the actual                                                               
need.    She  pointed  out  that  the  expected  performance  and                                                               
economic life of  energy projects was sometimes  not realized, as                                                               
maintenance and  operations of energy systems  required a certain                                                               
level  of   technical,  business,  and  financial   capacity  and                                                               
expertise  which was  not always  available at  the local  level.                                                               
She moved on  to slide 16, and  shared that there were  a menu of                                                               
options   to   be  considered,   but,   although   not  all   the                                                               
recommendations  were applicable  in all  situations, taken  as a                                                               
whole   the  Affordable   Energy  strategy   offered  meaningful,                                                               
realistic, and achievable solutions.                                                                                            
                                                                                                                                
11:16:46 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE CLAMAN  asked about the  costs of heating  oil and                                                               
kilowatt hours in rural communities compared to urban Alaska.                                                                   
                                                                                                                                
MS. LISTER  replied that she did  not have the cost  per kilowatt                                                               
hour for all  the urban communities, adding that there  was a lot                                                               
of variability.   She relayed  that areas with access  to natural                                                               
gas for heating had the lowest  heating costs.  She said that the                                                               
energy equivalent  in Anchorage was  less than $1 per  gallon for                                                               
heating oil, and  that Fairbanks was about 26  cents per kilowatt                                                               
hour.                                                                                                                           
                                                                                                                                
CHAIR WOOL shared  that his cost in Fairbanks was  about 17 cents                                                               
per kilowatt hour.                                                                                                              
                                                                                                                                
MS. LISTER  said that  the population  weighted average  cost for                                                               
Fairbanks, Anchorage, and Juneau was  about 16 cents per kilowatt                                                               
hour.                                                                                                                           
                                                                                                                                
CHAIR WOOL  asked about the aforementioned  3000 capital projects                                                               
reviewed.                                                                                                                       
                                                                                                                                
MS.  LISTER  explained  that  the  model  developed  to  evaluate                                                               
potential  projects in  each  community had  relied  on the  best                                                               
available data from  studies done over the years.   She said this                                                               
data, along with socio-economic and  population data, was used to                                                               
evaluate the  opportunities to lower  the cost of power  for each                                                               
community.                                                                                                                      
                                                                                                                                
11:20:51 AM                                                                                                                   
                                                                                                                                
MS.  LISTER  said that  AEA  recommended  that the  state  energy                                                               
policy  be  amended  to  include   a  goal  that  formalizes  the                                                               
commitment for  delivering critical energy programs  and services                                                               
to ensure  safety, stability,  reliability, and  affordability in                                                               
communities  by  2030,  slide  17.   She  pointed  to  slide  19,                                                               
"Recommendation A-1", which was  identification of cost effective                                                               
projects.   She  said  that the  three  recommendations for  this                                                               
pillar were  access to better  community level data  necessary to                                                               
make well informed decisions about  energy projects and programs.                                                               
She  reported   that,  although  there  was   data  available  to                                                               
understand community  goals, consumer  needs, utility  needs, and                                                               
environmental  needs,  there were  still  gaps  to be  filled  to                                                               
better allow for  decisions at the local level.   She recommended                                                               
formalizing   responsibility  to   collect   and  have   publicly                                                               
accessible community  level energy data  as well as data  for all                                                               
state  energy  programs,  and  to  regularly  update  the  Alaska                                                               
Affordable Energy  model in order  to provide  guidance regarding                                                               
the  cost effectiveness  of energy  infrastructure opportunities,                                                               
slide 20, "Recommendation A-2."                                                                                                 
                                                                                                                                
11:22:57 AM                                                                                                                   
                                                                                                                                
MS.  LISTER  said that  the  strategy  recommended codifying  and                                                               
clarifying  the  work  already  done  to  ensure  that  the  most                                                               
efficient   and  cost   effective  energy   systems  were   being                                                               
identified and  built.  She  said that  the state will  work with                                                               
communities  seeking   assistance  to  reduce  energy   costs  to                                                               
identify,  plan,  and assist  in  financing  energy projects  and                                                               
programs,  while  first targeting  PCE  communities  in order  to                                                               
provide savings  in these  high cost areas.   She  produced slide                                                               
21,  "Recommendation  A-3,"  and  stated that  the  goal  was  to                                                               
establish  building energy  codes  for new  residential and  non-                                                               
residential construction  and major renovation.   She pointed out                                                               
that building to an efficient  standard was cost effective, as it                                                               
saved energy  throughout the  life of the  building and  was less                                                               
expensive than  retrofitting later.   She  declared that  it made                                                               
sense  for  new buildings  to  be  built with  lower  operational                                                               
costs, so as not to be a future financial burden.                                                                               
                                                                                                                                
11:24:51 AM                                                                                                                   
                                                                                                                                
MS.   LISTER  addressed   slide  22,   "Financing  cost-effective                                                               
projects" which  included the five recommendations  for improving                                                               
access to  and expanding the  types of financing  tools available                                                               
to  communities  to  better leverage  non-state  dollars  and  to                                                               
connect potential  investors or  lenders with  bankable projects.                                                               
Slide  23, "Recommendation  B-1"  clarified  a recommendation  to                                                               
allow bulk  fuel loan participants to  purchase non-diesel fuels.                                                               
This  program  offered  communities  an easy  to  use,  low  cost                                                               
financing tool  to purchase large quantities  of petroleum fuels,                                                               
thereby reducing the per unit cost and reducing the risk of non-                                                                
payment to distributors.  She  added that this same program would                                                               
be a benefit to many communities with bio mass projects.                                                                        
                                                                                                                                
11:25:50 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL asked if bulk fuel purchases could only be diesel.                                                                   
                                                                                                                                
MS.  LISTER  replied  that  was   correct,  moved  to  slide  24,                                                               
"Recommendation B-2" and said  that communities needed assistance                                                               
for accessing the funding  opportunities, as often administrative                                                               
capacity was the limiting factor  for securing existing financing                                                               
options for both  grants and loans.  She declared  that access to                                                               
a one-stop-shop for financing could  play an important role.  She                                                               
referred to this  one-stop-shop as the Community  Energy Fund for                                                               
Alaska  (CEFA).   She  explained  that CEFA  could  be a  funding                                                               
source  and  a matchmaker  with  other  financers, and  would  be                                                               
accessible  to municipalities,  boroughs, utilities,  and tribes,                                                               
among  others.     CEFA  would   be  available   for  generation,                                                               
distribution, transmission, and  demand side efficiency projects.                                                               
The use of these funds would  require the State of Alaska to make                                                               
a determination  that the project  was a  cost-effective strategy                                                               
for meeting the community's energy needs.                                                                                       
                                                                                                                                
11:28:03 AM                                                                                                                   
                                                                                                                                
MS. LISTER,  in response  to Representative  Spohnholz, explained                                                               
that CEFA was  Community Energy Fund for Alaska.   She continued,                                                               
and  said  that  access  to financing  assistance  was  important                                                               
because  it  maximized  the   leveraging  of  non-state  dollars,                                                               
provided   financing   flexibility   to  serve   the   needs   of                                                               
communities,  and reduced  transaction costs  for both  borrowers                                                               
and lenders.  It would also  help with the transition from grants                                                               
to loans.                                                                                                                       
                                                                                                                                
MS.  LISTER continued  with slide  25, "Recommendation  B-3," and                                                               
said  that  this   would  create  a  loan   program  with  refund                                                               
provisions that  rewarded project  performance.  Portions  of the                                                               
loan for energy infrastructure would  be refunded if the borrower                                                               
met objective standards for performance  and reporting that would                                                               
help maintain the economic life  of the infrastructure, and would                                                               
be  an  alternative  to  straight   grant  funding,  would  be  a                                                               
mechanism to  stretch State  of Alaska dollars,  and would  be an                                                               
incentive  for communities  to  maintain  infrastructure for  its                                                               
entire economic life.                                                                                                           
                                                                                                                                
MS. LISTER moved on to  slide 26, "Recommendation B-4," and spoke                                                               
about on-bill  financing, which she  described as similar  to the                                                               
commercial PACE  program, except  that repayment was  through the                                                               
utility  bill.   She reported  that both  mechanisms allowed  for                                                               
less  risk  to the  lender,  and  more  attractive terms  to  the                                                               
borrower, while  saving energy and  money, and  creating business                                                               
opportunity for  local economies  in both the  financing industry                                                               
and the construction trade.                                                                                                     
                                                                                                                                
MS.  LISTER  addressed  slide  27,  "Recommendation  B-5,"  which                                                               
recommended  to   stabilize  the  funding  for   loans  from  the                                                               
residential weatherization  assistance programs, as this  had the                                                               
best  return  of government  energy  programs  for investment  in                                                               
energy savings.   She recommended to maintain  a baseline funding                                                               
of $10 million  per year, which would enable  the continuation of                                                               
this program  and would capitalize  on the existing  trained work                                                               
force.   She suggested  to modify  the rules  of the  home energy                                                               
rebate program to  create a sliding scale of  income based match,                                                               
so as  to better serve Rural  Alaska and home owners  without the                                                               
cash  on  hand  to  participate.     She  moved  on  to  the  six                                                               
recommendations  under  the   next  pillar,  "Accountability  and                                                               
Sustainability,"  slide 28.   These  requirements and  incentives                                                               
would maximize  the operational life of  infrastructure and would                                                               
provide  for  financial  and   management  standards  that  would                                                               
increase  the ability  to access  that financing.   She  directed                                                               
attention  to   slide  29,  "Recommendation  C-1,"   which  would                                                               
strengthen business  and financial management assistance  for PCE                                                               
eligible  utilities.    Reducing  the  non-fuel  costs  of  power                                                               
through  efficient business  operations  could  save millions  of                                                               
dollars each year.  She shared  that in PCE communities, the non-                                                               
fuel  costs were  almost half  of the  total electric  costs, and                                                               
more  efficient business  and  management  practices could  bring                                                               
direct savings  to the consumers  and the state with  reduced PCE                                                               
payments.  She recommended to codify the commitment.                                                                            
                                                                                                                                
11:33:12 AM                                                                                                                   
                                                                                                                                
MS. LISTER  declared that "Recommendation  C-2," slide  30, would                                                               
build  off successful  regional  activity,  recognizing that  the                                                               
state cannot and  should not do everything,  as regional entities                                                               
often  better knew  the community  needs and  could more  quickly                                                               
respond.   She  offered some  examples of  assistance to  include                                                               
management  of  utility  finances and  accounting,  expansion  of                                                               
regional utility cooperatives,  fuel purchasing cooperatives, and                                                               
management  of building  efficiency programs.   Presenting  slide                                                               
31,  "Recommendation C-3,"  she  reported that  a cost  effective                                                               
regulatory system  would ensure  PCE eligible  electric utilities                                                               
were fit,  willing, and  able to  provide the  required services,                                                               
and would ensure  that assets were maintained  for their economic                                                               
life  and that  the financial  and managerial  leadership of  the                                                               
utilities would minimize non fuel costs.                                                                                        
                                                                                                                                
11:35:07 AM                                                                                                                   
                                                                                                                                
MS.  LISTER  turned  to  slide   32,  "Recommendation  C-4:"  and                                                               
explained  that  AEA  recommended that  all  community  buildings                                                               
receiving PCE, and  larger than 5000 square feet,  be required to                                                               
have an energy  audit and implement the  recommendations of those                                                               
audits, should  they provide  net savings within  10 years.   She                                                               
stated  that   having  efficient  community   facilities  allowed                                                               
communities to  spread the community facility  subsidy allocation                                                               
over  a larger  number  of  buildings, as  well  as lowering  the                                                               
community facility  operating costs.   It  also ensured  that PCE                                                               
was  not subsidizing  more kilowatt  hours than  necessary.   She                                                               
directed  attention  to  slide   33,  "Recommendation  C-5:"  and                                                               
explained  that   the  RCA  (Regulatory  Commission   of  Alaska)                                                               
currently made  determinations on  the eligibility of  new energy                                                               
infrastructure developments  after they  were built.   She stated                                                               
that  research had  found  that  this was  a  barrier to  private                                                               
investment as it  was a source of uncertainty.   She relayed that                                                               
citing authority  could reduce  this uncertainty  and also  add a                                                               
layer  of  consumer  protection.    She  reported  on  slide  34,                                                               
"Recommendation  C-6:" and  explained that  this was  designed to                                                               
provide  a requirement  for utilities  to  do continuous  quality                                                               
improvement,   seeking  out   and  implementing   cost  effective                                                               
opportunities  to reduce  fuel consumption.    She declared  that                                                               
having  a fuel  reduction target  allowed  for a  wider range  of                                                               
project or program possibilities  than an efficiency or renewable                                                               
target.   She added  that the  recommendation supported  the 2010                                                               
state  energy  policy  goals  for 50  percent  renewable  and  15                                                               
percent improvement  in energy efficiency, as  well as supporting                                                               
statute  pertaining  to  cost  minimization  which  required  PCE                                                               
eligible utilities to "cooperate  with appropriate state agencies                                                               
to implement  cost effective energy conservation  measures and to                                                               
plan   for  and   implement  feasible   alternatives  to   diesel                                                               
generation."  She  emphasized that the cost  effective aspect was                                                               
very important  and that  programs should  not be  advanced which                                                               
increased  the cost  to  consumers.   She  directed attention  to                                                               
slide  35, "Funding  programs:"  and explained  that the  statute                                                               
which created  the "Affordable Energy Strategy"  had two distinct                                                               
requirements  for program  funding recommendations:   to  suggest                                                               
potential revenue  sources for funding state  energy programs and                                                               
projects recommended  by the  study, and  to recommend  the means                                                               
for directly  underwriting the energy  costs.  She  offered slide                                                               
36,  "Recommendation  D-1:" and  stated  that  the first  funding                                                               
option  was to  use the  Alaska  Affordable Energy  Fund, as  the                                                               
statute  also included  creation of  a fund  which would  take 20                                                               
percent of  revenue from royalties off  a future gas line  to pay                                                               
for energy projects and programs in  the study area, a fund which                                                               
was  estimated to  generate $80  -  $150 million  annually.   She                                                               
pointed out  that, as this revenue  source was still more  than a                                                               
decade  away and  there was  a need  for continued  investment in                                                               
energy infrastructure,  it was necessary to  identify alternative                                                               
revenue  sources  for  different  projects  and  programs.    She                                                               
declared  that   one  potential   revenue  source  for   a  small                                                               
subsection of energy programs and  services was the PCE fund, and                                                               
while   acknowledging  the   importance   for  maintaining   this                                                               
endowment in  perpetuity, she suggested  a small increase  in the                                                               
allocation  from  earnings  to  administer the  PCE  program  and                                                               
directly   related   critical   support   services,   slide   38,                                                               
"Recommendation D-2:".   She shared that  the full administrative                                                               
cost of  the PCE  program had been  subsidized with  general fund                                                               
dollars,  and  recommended  instead  to  use  existing  statutory                                                               
authority to fully cover the PCE administrative costs.                                                                          
                                                                                                                                
11:39:57 AM                                                                                                                   
                                                                                                                                
MS. LISTER moved on to  slide 39, "Recommendation D-3:" and spoke                                                               
about a per unit energy surcharge,  also referred to as a systems                                                               
benefit charge or universal service  charge.  These charges would                                                               
help create revenue  streams to fund cost  effective programs and                                                               
projects,  specifically  electric  and heating  projects  in  the                                                               
study  area.   She  shared slide  40,  "Recommendation D-4:"  and                                                               
stated  that   AEA  recommended   to  continue  the   Power  Cost                                                               
Equalization  (PCE)  program and  to  revive  the Alaska  Heating                                                               
Assistance program  in order to  directly underwrite the  cost of                                                               
energy  in  communities  without cost  effective  infrastructure.                                                               
She reported that the PCE program  was the largest and most broad                                                               
based  consistent source  of energy  funding in  the study  area.                                                               
She  emphasized that  opportunities presented  in the  Affordable                                                               
Energy  Strategy were  expected  to reduce  the  cost of  energy,                                                               
although not enough to eliminate a  need for the PCE program, and                                                               
that it was extremely important  to maintain the integrity of the                                                               
PCE  endowment  fund to  ensure  the  sustainability of  the  PCE                                                               
benefit.                                                                                                                        
                                                                                                                                
11:41:41 AM                                                                                                                   
                                                                                                                                
MS. LISTER  shared one additional  idea for  consideration, slide                                                               
41,  "For Consideration:".   She  suggested  consideration for  a                                                               
state  entity  with  the  authority  to  consolidate  and  manage                                                               
consumer energy to  the extent which was  reasonable, which would                                                               
increase  efficiency  for  delivering state  energy  programs  to                                                               
communities.  She  acknowledged that although this was  not a new                                                               
idea,  it was  an idea  which merited  renewed consideration,  as                                                               
consumer energy was such an important  issue in Alaska and it was                                                               
imperative to address  and coordinate these challenges  at a high                                                               
level to be  both efficient and effective.  She  pointed out that                                                               
implementation  of   the  aforementioned   recommendations  could                                                               
spread  state energy  programs over  half a  dozen agencies,  and                                                               
could be further complicated by  institutional gaps and competing                                                               
agency mandates.   She opined  that development of  a coordinated                                                               
and  strategic  plan  to best  assist  communities  could  become                                                               
problematic without consolidated authority.                                                                                     
                                                                                                                                
11:42:49 AM                                                                                                                   
                                                                                                                                
MS. LISTER  closed the PowerPoint  with slide  42, "Conclusions,"                                                               
stating that keeping the lights  on and buildings heated required                                                               
investments  in energy  infrastructure  and  insuring that  those                                                               
investments  were protected  over the  long term.   She  declared                                                               
that the state  could take action to encourage  stronger and more                                                               
affordable community energy systems,  regardless of the budgetary                                                               
challenges,  through policy,  regulatory, and  statutory changes.                                                               
She  emphasized  that  the Affordable  Energy  Strategy  provided                                                               
guidance for these changes.                                                                                                     
                                                                                                                                
11:43:19 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE JOHNSTON  asked if Recommendation A-3  suggested a                                                               
statewide building code beyond what was already written.                                                                        
                                                                                                                                
MS. LISTER replied  that all the recommendations  only applied to                                                               
the study area, and were not statewide.                                                                                         
                                                                                                                                
REPRESENTATIVE JOHNSTON asked if  this recommendation would merge                                                               
with those  regulations already in  place for Alaska  and federal                                                               
housing programs.                                                                                                               
                                                                                                                                
MS.  CONWAY clarified  that the  recommendation was  for building                                                               
energy  codes, which  had  been  ratified by  both  AHFC and  the                                                               
government housing summit.                                                                                                      
                                                                                                                                
REPRESENTATIVE JOHNSTON  replied that financing  required certain                                                               
building  standards,  which  were often  different  in  different                                                               
service areas.  She asked if AEA had considered this.                                                                           
                                                                                                                                
MS. LISTER replied  that AHFC had the  building energy efficiency                                                               
standard.    She added  that  housing  funds through  the  Native                                                               
American Housing  and Self Determination Act  to regional housing                                                               
authorities also had specific code and energy requirements.                                                                     
                                                                                                                                
REPRESENTATIVE   JOHNSTON   expressed  her   understanding   that                                                               
codified codes  could become antiquated  very quickly  as science                                                               
and  technology  changed,  suggesting caution  as  this  approach                                                               
could  be   detrimental  instead  of  helpful.     She  expressed                                                               
confusion for the  one-stop shop financing and asked if  it was a                                                               
source  of information  and  coordination, or  a  source for  all                                                               
funds.                                                                                                                          
                                                                                                                                
MS. LISTER replied that conceptually  it was all of those things,                                                               
although  there  was  a  lot   to  be  clarified  before  it  was                                                               
established.  She  explained that it was addressing  a barrier to                                                               
small  communities that  lacked  the  administrative capacity  to                                                               
"jump through  the sometimes  really substantial  hurdles related                                                               
to federal funding  opportunities for both grants  and loans" and                                                               
how to access appropriate financing.   She expressed anticipation                                                               
for acceptance of certain funding  to be made available with less                                                               
paperwork for the borrower.                                                                                                     
                                                                                                                                
REPRESENTATIVE JOHNSTON  asked if this could  be negotiated among                                                               
the other state entities.                                                                                                       
                                                                                                                                
MS.  LISTER opined  that  this  was a  matter  of connecting  and                                                               
coordinating,  a lot  of which  already existed  between AEA  and                                                               
AHFC.                                                                                                                           
                                                                                                                                
MS.  CONWAY, in  response  to  Representative Johnston  explained                                                               
that  there was  a presentation  to the  Alaska Municipal  League                                                               
(AML) in a few weeks.                                                                                                           
                                                                                                                                
11:52:02 AM                                                                                                                   
                                                                                                                                
NEIL MCMAHON,  Planning Manager,  Alaska Energy  Authority (AEA),                                                               
Department  of Commerce,  Community  &  Economic Development,  in                                                               
response, said that he had not reached out specifically to AML.                                                                 
                                                                                                                                
REPRESENTATIVE JOHNSTON suggested AML as a resource.                                                                            
                                                                                                                                
CHAIR  WOOL asked  whether the  state funding  for weatherization                                                               
was a grant or a loan.                                                                                                          
                                                                                                                                
MS. LISTER replied that it was grant money.                                                                                     
                                                                                                                                
CHAIR WOOL  asked about the  money for administration of  the PCE                                                               
fund.                                                                                                                           
                                                                                                                                
MS. CONWAY explained that there was  some funding to AEA for part                                                               
of the administrative  cost, but the recommendation  was to fully                                                               
cover those costs, about $600,000 annually.                                                                                     
                                                                                                                                
CHAIR  WOOL  asked  if  the universal  service  charge  would  be                                                               
applied to non-Railbelt utilities for use in non-Railbelt areas.                                                                
                                                                                                                                
MS. LISTER  replied that all  the recommendations from  the study                                                               
were for non-Railbelt  utilities.  She explained  that there were                                                               
various  ways to  implement universal  service charges,  although                                                               
charges collected  within a service  area usually stayed  in that                                                               
service area.                                                                                                                   
                                                                                                                                
CHAIR  WOOL shared  his belief  that most  utilities in  the non-                                                               
Railbelt were  already expensive, and that  any additional charge                                                               
would be  tough for  the community.   He  asked if  the universal                                                               
service charges would stay in those specific communities.                                                                       
                                                                                                                                
MS. LISTER  replied that this was  still to be determined  in the                                                               
deliberative process.                                                                                                           
                                                                                                                                
CHAIR WOOL  asked how  the aforementioned  state entity  would be                                                               
different than AEA.                                                                                                             
                                                                                                                                
MS.  LISTER  replied that  the  recommendation  was to  create  a                                                               
single state entity with authority  for consumer energy programs,                                                               
with no  specific recommendation  that AEA be  that entity.   She                                                               
explained that  the AEA programs  covered a wide range  of energy                                                               
programs, while AHFC focused more  on housing and the demand side                                                               
of the energy  equation.  She pointed out that  the Department of                                                               
Transportation   &  Public   Facilities   provided  many   energy                                                               
retrofits  on  public  facilities.     She  reiterated  that  the                                                               
recommendation was for  one authority to create  a strategic plan                                                               
and be more effective and efficient in the implementation.                                                                      
                                                                                                                                
11:58:19 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ  noted  that  there were  quite  a  few                                                               
recommendations  in the  Affordable  Energy  Strategy which  were                                                               
expected  to  produce cost  savings.    She  asked if  there  was                                                               
modeling for any of these to better offer an understanding.                                                                     
                                                                                                                                
MS. LISTER  acknowledged that  there were  models which  would be                                                               
provided.  She  reported that the Affordable Energy  model was an                                                               
interactive tool,  which had documentation  for what  was driving                                                               
the model.                                                                                                                      
                                                                                                                                
12:00:22 PM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special Committee on Energy meeting was adjourned at 12:00 p.m.                                                                 

Document Name Date/Time Subjects
AEA Presentation for HENE - 2.7.17.pdf HENE 2/7/2017 10:15:00 AM
A.2.pdf HENE 2/7/2017 10:15:00 AM
HB 81
A.4.pdf HENE 2/7/2017 10:15:00 AM
HB 81