Legislature(2017 - 2018)CAPITOL 17

02/21/2017 10:15 AM ENERGY

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10:32:12 AM Start
10:32:46 AM Presentation: Alaska Energy Authority Agency Overview
12:01:29 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: AK Energy Authority by Michael Lamb, TELECONFERENCED
Interim Exec. Dir. & Katie Conway, Government
Relations Manager
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                       February 21, 2017                                                                                        
                           10:32 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Adam Wool, Chair                                                                                                 
Representative Ivy Spohnholz, Vice Chair                                                                                        
Representative Matt Claman                                                                                                      
Representative DeLena Johnson                                                                                                   
Representative Jennifer Johnston                                                                                                
Representative George Rauscher                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Dean Westlake                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION: ALASKA ENERGY AUTHORITY AGENCY OVERVIEW                                                                           
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MICHAEL LAMB, Interim Executive Director and CFO                                                                                
Alaska Energy Authority (AEA)                                                                                                   
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Presented a PowerPoint titled "Alaska                                                                    
Energy Authority Agency Overview."                                                                                              
                                                                                                                                
KATIE CONWAY, Government Relations Manager                                                                                      
Alaska Energy Authority                                                                                                         
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Presented a PowerPoint titled "Alaska                                                                    
Energy Authority Agency Overview."                                                                                              
                                                                                                                                
KRIS NOONAN, Program Manager                                                                                                    
Rural Power Systems                                                                                                             
Alaska Energy Authority                                                                                                         
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the Alaska Energy                                                             
Authority agency overview.                                                                                                      
                                                                                                                                
SEAN SKALING, Assistant Executive Director                                                                                      
Policy & Programs Director                                                                                                      
Alaska Energy Authority                                                                                                         
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the Alaska Energy                                                             
Authority agency overview.                                                                                                      
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:32:12 AM                                                                                                                   
                                                                                                                                
CHAIR  ADAM WOOL  called the  House Special  Committee on  Energy                                                             
meeting to order at 10:32  a.m.  Representatives Wool, Spohnholz,                                                               
Claman, Johnson, Johnston, and Rauscher  were present at the call                                                               
to order.                                                                                                                       
                                                                                                                                
^Presentation: Alaska Energy Authority Agency Overview                                                                        
     Presentation: Alaska Energy Authority Agency Overview                                                                  
                                                                                                                                
10:32:46 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL announced  that the only order of business  would be a                                                               
presentation by the Alaska Energy Authority.                                                                                    
                                                                                                                                
10:33:14 AM                                                                                                                   
                                                                                                                                
MICHAEL LAMB,  Interim Executive Director and  CFO, Alaska Energy                                                               
Authority  (AEA), Department  of Commerce,  Community &  Economic                                                               
Development, read  from slide 2,  stating that AEA's  mission was                                                               
to  reduce energy  in  Alaska.   He reported  that  AEA had  been                                                               
formed in  1976, and then  in 1999, the Alaska  State Legislature                                                               
reasserted that AEA was the state  energy office.  He shared that                                                               
there  was desire  at that  time for  a reuniting  of the  energy                                                               
programs and  the owned assets.   He said  that there had  been a                                                               
renewed focus  of funding  for rural  infrastructure.   He stated                                                               
that in 2007 - 8, when  oil prices "went exceedingly high", there                                                               
was  a renewed  focus  by the  legislature  for renewable  energy                                                               
development and  energy planning.   At this  time, the  AEA board                                                               
changed  its  bylaws  and management  structure,  separated  from                                                               
Alaska Industrial  Development and Export Authority  (AIDEA), and                                                               
AEA focused  on the cost of  energy, while AIDEA focused  on jobs                                                               
and  economic development.   He  pointed out  that, in  1993, the                                                               
Alaska  State  Legislature  had  consolidated  Alaska  Industrial                                                               
Development and  Export Authority and  AEA.  He noted  that these                                                               
organizations had shared services since then.                                                                                   
                                                                                                                                
10:36:52 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL asked if the two organizations still shared services.                                                                
                                                                                                                                
MR.  LAMB noted  that the  agency was  outlined in  AS 44.83.070,                                                               
stating  that AEA  promoted and  developed  economic welfare,  as                                                               
well as providing  a means to finance and  operate power projects                                                               
and facilities.   He referenced  AS 42.45.900 which was  "more on                                                               
point  to the  things that  we're gonna  talk about  today."   He                                                               
relayed  that  the  statute  stated  that  "the  authority  shall                                                               
provide  the technical  assistance to  help with  rural utilities                                                               
and  help with  catastrophic prevention."   He  added that  these                                                               
provided  training  programs  for  utility  projects  to  improve                                                               
efficiency,    safety,    dependability,    affordability,    and                                                               
reliability  of the  power systems.    He relayed  that AS  42.45                                                               
instructed that "at  a minimum, the assistance  and training must                                                               
include" and  be related to  distribution systems,  generators to                                                               
be   more  fuel   efficient,  preventative   maintenance,  safety                                                               
inspections,  and  include  priority  for  contracting  with  the                                                               
private industry.                                                                                                               
                                                                                                                                
10:40:14 AM                                                                                                                   
                                                                                                                                
MR.  LAMB moved  to slide  3, "Alaska  Energy Authority  Activity                                                               
Quadrants," which depicted a four  quadrant system with two rural                                                               
quadrants  and  two  urban quadrants  for  ongoing  programs  and                                                               
infrastructure projects.   He pointed out that  the programs were                                                               
items  in the  operating  budget and  the  projects were  capital                                                               
budget items.                                                                                                                   
                                                                                                                                
10:41:20 AM                                                                                                                   
                                                                                                                                
MR.  LAMB moved  on to  slide 4,  "Presentation Order,"  which he                                                               
deemed  to be  the basics  items the  committee had  requested to                                                               
cover.    He addressed  slide  6,  "Rural Programs/Services"  and                                                               
spoke about  the Power Cost Equalization  (PCE) utility training.                                                               
This was a program for  clerks from rural communities for on-site                                                               
training at the AEA offices.   He added that the utility operator                                                               
training program was  hands on, technical training  in Seward for                                                               
individuals from  the rural communities who  operated the utility                                                               
systems.  He stated that  technical assistance was a phone system                                                               
for the rural  communities to call when necessary.   He explained                                                               
that the  circuit rider  was when central  staff went  on-site to                                                               
the locations.                                                                                                                  
                                                                                                                                
10:43:59 AM                                                                                                                   
                                                                                                                                
KATIE  CONWAY,   Government  Relations  Manager,   Alaska  Energy                                                               
Authority,   Department  of   Commerce,   Community  &   Economic                                                               
Development,    directed   attention    to   slide    7,   "Rural                                                               
Projects/Infrastructure" and relayed that  she would explain this                                                               
list of rural energy programs later in the presentation.                                                                        
                                                                                                                                
MR. LAMB  presented slide 8,  "PCE Clerk Training  (by community)                                                               
(2012-2016)"  and   slide  9,  "Utility  Operator   Training  (by                                                               
community)  2011-2016."   He said  that 37  communities had  sent                                                               
employees to the  AEA offices in Anchorage for  PCE training, and                                                               
92 communities had  sent operators for training.   He pointed out                                                               
that, as  there was  staff turnover, this  often resulted  in the                                                               
same community sending employees for training more often.                                                                       
                                                                                                                                
10:46:45 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHNSTON asked  if there  was any  cross training                                                               
between these two programs.                                                                                                     
                                                                                                                                
MR. LAMB said  that there was a rural outreach  person who talked                                                               
about PCE.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  JOHNSTON suggested  that there  could be  a cross                                                               
fertilization connectivity done through the circuit rider.                                                                      
                                                                                                                                
MR. LAMB  offered his belief  that everyone  in the AEA  shop was                                                               
aware  of  the   PCE  program  and  its  critical   need  to  the                                                               
communities.                                                                                                                    
                                                                                                                                
10:48:53 AM                                                                                                                   
                                                                                                                                
CHAIR  WOOL asked  if there  was a  requirement that  a community                                                               
which received PCE funding had to receive PCE training.                                                                         
                                                                                                                                
MR.  LAMB  replied that,  at  some  point,  someone in  each  PCE                                                               
community  had  received  the  training.   He  relayed  that  the                                                               
difficulty arose when  that trained person left, and  it was then                                                               
necessary to get a new person trained.                                                                                          
                                                                                                                                
MS.  CONWAY  added  that  rural operators  were  brought  in  for                                                               
training during construction of new power house systems.                                                                        
                                                                                                                                
MR.  LAMB  explained  that  everyone  at  AEA  did  whatever  was                                                               
necessary to ensure that the  rural communities had the necessary                                                               
training and help.   He directed attention to  slide 10, "Utility                                                               
Remote  Technical  Assistance   (by  community)  2012-2016,"  and                                                               
reported that  77 communities had  used the service,  noting that                                                               
during  one three-month  period there  had been  more than  1,000                                                               
calls.  He  reiterated how critically important  this program was                                                               
for rural communities.                                                                                                          
                                                                                                                                
10:51:46 AM                                                                                                                   
                                                                                                                                
MR.  LAMB  addressed  slide 11,  "Circuit  Rider  Assistance  (by                                                               
community)  2011-2016,"   and  slide  12,  which   reflected  the                                                               
dispersal for the coverage of the  AEA programs and services.  He                                                               
moved  on  to  slide  13,   and  discussed  electrical  emergency                                                               
assistance  provided  by AEA.    He  opined that  this  emergency                                                               
response  availability  was  linked  to  appropriations,  and  he                                                               
pointed  out  that  "electrical  emergency"  was  defined  as  an                                                               
imminent danger  to life or likelihood  of significant disruption                                                               
of electrical service.   He said that this was  funded out of the                                                               
project budget, which he deemed made  sense.  He pointed out that                                                               
AEA could  respond if  there was an  imminent danger,  whereas in                                                               
the  event that  AEA does  not receive  funding, then  the lights                                                               
have  to be  out  before any  other group  could  respond to  the                                                               
emergency.                                                                                                                      
                                                                                                                                
10:56:21 AM                                                                                                                   
                                                                                                                                
MR.  LAMB  shared  slide  14,  "Emergency  Response  Flow"  which                                                               
depicted the  sequence of  events that happen  when there  was an                                                               
emergency.   He  stated that  it was  especially directed  toward                                                               
funding, what  would happen  in the  future, and  how responsible                                                               
the state was  for a loss of power.   He questioned whether there                                                               
was a  dis-incentive for utilities  to not maintain  equipment in                                                               
the rural  communities, if they  were aware that the  state would                                                               
come and  fix it.   He  shared the sequence  for a  power outage,                                                               
followed by a  phone call to activate the  AEA Emergency Response                                                               
to help diagnose  the problem, and then, depending  on the nature                                                               
of  the  problem,   the  utility  staff,  AEA   personnel,  or  a                                                               
contractor would  be engaged for  the repairs.  Once  the problem                                                               
was  fixed and  power  was restored,  the  "imminent danger"  was                                                               
over.  He declared that this was  the point when the AEA role and                                                               
financial responsibility  was finished.  After  the emergency, it                                                               
became  the responsibility  of the  utility to  do the  necessary                                                               
permanent repairs.                                                                                                              
                                                                                                                                
10:58:37 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHNSTON asked  if the  state liability  was over                                                               
once the imminent danger was passed.                                                                                            
                                                                                                                                
MR. LAMB expressed his agreement.                                                                                               
                                                                                                                                
REPRESENTATIVE  JOHNSTON   asked  if  a  distance   response  for                                                               
utilities was this still available  to manage the generation from                                                               
afar.                                                                                                                           
                                                                                                                                
MR. LAMB replied that the  AEA technicians had ongoing monitoring                                                               
of the utilities.                                                                                                               
                                                                                                                                
REPRESENTATIVE  JOHNSTON mused  that  this  technology was  being                                                               
used.                                                                                                                           
                                                                                                                                
MR. LAMB  said, yes, to  some extent.   He stated that,  prior to                                                               
the  circuit  rider   program,  there  was  an   average  of  one                                                               
catastrophic failure of a generating  facility per year; whereas,                                                               
now  there was  one catastrophic  failure every  five years.   He                                                               
stated  that  the  training  and  the  phone  calls  had  "hugely                                                               
benefited all of the utilities in the state."                                                                                   
                                                                                                                                
CHAIR WOOL asked if AEA billed the community.                                                                                   
                                                                                                                                
MR. LAMB replied, "no."                                                                                                         
                                                                                                                                
CHAIR WOOL  asked whether the  catastrophic failure rate  was per                                                               
year or per community.                                                                                                          
                                                                                                                                
MS. CONWAY replied that the rate was per year.                                                                                  
                                                                                                                                
MR. LAMB reported that there  were about 244 generating utilities                                                               
in Alaska.                                                                                                                      
                                                                                                                                
CHAIR WOOL  mused that  for these 244  utilities there  was about                                                               
one failure every five years.                                                                                                   
                                                                                                                                
MR. LAMB  relayed that the  bad news  was always reported  to the                                                               
board, but not as much of the good news.                                                                                        
                                                                                                                                
11:02:37 AM                                                                                                                   
                                                                                                                                
MR. LAMB  returned to  slide 14, and  shared that  Arctic Village                                                               
and  Diomede had  received funding  for  the necessary  permanent                                                               
repairs.   In response to  Chair Wool,  he said that  Diomede had                                                               
used money  from the CDQ,  Community Development Quota,  which he                                                               
called "fish money."                                                                                                            
                                                                                                                                
11:03:24 AM                                                                                                                   
                                                                                                                                
MR. LAMB moved  on to slide 15, "Electrical  Emergencies FY 06-16                                                               
(by  community)" and  explained  that the  communities were  each                                                               
color  coded  to  reflect  the  amount  of  emergency  assistance                                                               
requested during that  time frame.  He stated that  the amount of                                                               
assistance was "not as bad as  you would think" and that this was                                                               
trending  upward toward  fewer emergencies.   He  addressed slide                                                               
16, "Ten Year Average for  Emergency Response," and said that, on                                                               
average about  $285,000 per year was  paid by the state  for work                                                               
on about  $1 billion  of infrastructure.   He offered  an analogy                                                               
for the cost of roadside assistance per vehicle.                                                                                
                                                                                                                                
CHAIR WOOL  asked about if  all the communities had  some contact                                                               
with AEA either through assistance or training.                                                                                 
                                                                                                                                
MR. LAMB offered  his belief that, outside the  Railbelt, AEA had                                                               
contact with many communities.                                                                                                  
                                                                                                                                
MS.  CONWAY touched  on  slide  17, "Bulk  Fuel  and Rural  Power                                                               
System  Upgrades  2000-2016,"  stating that  these  were  project                                                               
oriented  programs  which worked  in  tandem  with the  technical                                                               
assistance and training in rural  communities.  She reported that                                                               
communities  with  fewer than  2,000  persons  were eligible  for                                                               
these programs.  She shared  slide 18, "Investing in rural energy                                                               
projects" and  stated that Rural  Power System  Upgrades projects                                                               
generally increased the efficiency  for generating electricity by                                                               
10 -  20 percent or  more.  She  declared that it  was imperative                                                               
for these remote  communities to have a facility  for buying fuel                                                               
in  bulk and  thereby lowering  the fuel  cost.   She noted  that                                                               
there had been more than  100 rural power system upgrade projects                                                               
and more than  100 bulk fuel upgrade projects  completed over the                                                               
past 10 years.                                                                                                                  
                                                                                                                                
11:11:15 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE JOHNSTON  asked about soil contamination  from oil                                                               
tank farms.                                                                                                                     
                                                                                                                                
MS.  CONWAY  replied  that  the bulk  fuel  upgrade  program  did                                                               
address contaminated soils and any necessary remediation.                                                                       
                                                                                                                                
REPRESENTATIVE  JOHNSTON asked  if there  was a  fiscal note  for                                                               
this impact.                                                                                                                    
                                                                                                                                
MR. LAMB explained  that AEA did not have  responsibility for the                                                               
individual fuel farms.   He shared that, as the  older fuel farms                                                               
were being rebuilt, then higher standards were put into place.                                                                  
                                                                                                                                
REPRESENTATIVE  JOHNSTON  asked  whether   there  was  any  state                                                               
liability for exposure.                                                                                                         
                                                                                                                                
11:12:56 AM                                                                                                                   
                                                                                                                                
KRIS NOONAN, Program Manager, Rural  Power Systems, Alaska Energy                                                               
Authority,   Department  of   Commerce,   Community  &   Economic                                                               
Development, in  response to  Representative Johnston,  said that                                                               
AEA  worked with  the  Department  of Environmental  Conservation                                                               
(DEC)  if a  contaminated site  was located  in a  community, and                                                               
that DEC  was the entity responsible  for any clean-up work  on a                                                               
contaminated site.  He stated  that AEA would work in conjunction                                                               
with DEC to  mitigate as much damage as possible  when building a                                                               
new tank farm.                                                                                                                  
                                                                                                                                
REPRESENTATIVE JOHNSON asked  who owned the land  occupied by the                                                               
tank farm.                                                                                                                      
                                                                                                                                
MR.  LAMB replied  "whomever it  could be"  and, in  response, he                                                               
said that generally it was not owned by the state.                                                                              
                                                                                                                                
11:14:38 AM                                                                                                                   
                                                                                                                                
MR. LAMB read  an e-mail from Fort Yukon  regarding combined heat                                                               
and power.                                                                                                                      
                                                                                                                                
11:16:32 AM                                                                                                                   
                                                                                                                                
MR.  LAMB  presented slide  20,  "Power  Cost Equalization  (PCE)                                                               
Communities"  which  depicted  a  map   of  Alaska  and  the  PCE                                                               
communities.  He reported that  there were 193 PCE communities as                                                               
of February  2017.  He moved  on to slide 21,  "Stabilizing Power                                                               
Rates"  which  charted  the  PCE base  rate,  determined  by  the                                                               
average rates in  Fairbanks, Juneau, and Anchorage,  and the cost                                                               
per kilowatt  to generate and  distribute electricity in  all the                                                               
PCE communities.  The graph  also depicted the effective net rate                                                               
after payment of the PCE.                                                                                                       
                                                                                                                                
11:19:13 AM                                                                                                                   
                                                                                                                                
SEAN  SKALING, Assistant  Executive Director,  Policy &  Programs                                                               
Director,  Alaska  Energy   Authority,  Department  of  Commerce,                                                               
Community &  Economic Development, in response  to Representative                                                               
Claman, explained that the  least expensive communities portrayed                                                               
on  the graph  were  in  the North  Slope  Borough  and the  most                                                               
expensive  communities  were  [indisc.], those  communities  with                                                               
small loads and high costs for delivery.                                                                                        
                                                                                                                                
CHAIR WOOL  asked if  some of the  communities depicted  were not                                                               
receiving PCE.                                                                                                                  
                                                                                                                                
MR.  LAMB explained  that there  was a  formula, and  that a  low                                                               
effective rate did not always allow for PCE.                                                                                    
                                                                                                                                
11:21:00 AM                                                                                                                   
                                                                                                                                
MR. LAMB addressed  slide 22, "Electric Sales  in PCE Communities                                                               
(kWh),"  a pie  chart which  showed that  71 percent  of all  kWh                                                               
(kilowatt  hours)  were not  PCE  eligible,  this would  increase                                                               
local pressure  to ensure low  rates.  He reminded  the committee                                                               
that each  residential household only  qualified for PCE  for the                                                               
first 500 kWh.                                                                                                                  
                                                                                                                                
MS.  CONWAY, in  response to  Representative Johnston,  said that                                                               
community facilities were determined dependent on use.                                                                          
                                                                                                                                
11:23:16 AM                                                                                                                   
                                                                                                                                
[indisc]                                                                                                                        
                                                                                                                                
11:23:46 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL  offered his belief  that, if  29 percent of  kWh were                                                               
eligible for  PCE, then the rate  referred to on slide  21 should                                                               
not be reduced by more than this amount.                                                                                        
                                                                                                                                
MR. LAMB explained that slide 21  was not a depiction in dollars,                                                               
but rates per kilowatt.                                                                                                         
                                                                                                                                
CHAIR  WOOL reiterated  his  question.   He asked  if  PCE was  a                                                               
disincentive to trying alternative energy.                                                                                      
                                                                                                                                
MR.  LAMB pointed  out that  slide 21  represented the  effective                                                               
kilowatt rate  and did not  represent the actual  dollars charged                                                               
and collected.  He noted  that, although the residential customer                                                               
benefited, the  bill was  paid by the  state and  the residential                                                               
customer.   He  reported that  a  rural household  used far  less                                                               
electricity  than an  urban household,  often less  than the  500                                                               
kWh.                                                                                                                            
                                                                                                                                
CHAIR WOOL  surmised that,  as the  rate went  so high  after 500                                                               
kWh,  the  rural  household  was  more  cognizant  of  use.    He                                                               
suggested that the way PCE worked  was not as obvious to an urban                                                               
dweller.                                                                                                                        
                                                                                                                                
MR. LAMB relayed  that the cost per kWh was  whatever it was, and                                                               
that  rural  residents  would  not  haphazardly  use  electricity                                                               
because they  would have  to pay  full rate beyond  500 kWh.   He                                                               
said that  the cost was a  huge incentive, and that  it was still                                                               
very high,  even with  PCE.  He  moved on to  slide 23,  and said                                                               
that renewable  energy fund (REF)  projects did not  penalize PCE                                                               
recipients.    He  explained  that,  from a  savings  by  an  REF                                                               
project, there  was a savings  to community  PCE-ineligible kWhs,                                                               
to  the PCE  program through  reduced disbursements,  and to  the                                                               
kWhs already subsidized through PCE.                                                                                            
                                                                                                                                
11:31:06 AM                                                                                                                   
                                                                                                                                
MR. LAMB,  in response to  Chair Wool, explained that  95 percent                                                               
of  the utility  cost under  $1, was  used to  calculate the  PCE                                                               
level.                                                                                                                          
                                                                                                                                
CHAIR WOOL said that the higher  the energy cost or the kWh rate,                                                               
the more the subsidy would "kick in."                                                                                           
                                                                                                                                
MR.  LAMB  added "until  you  hit  a dollar.    So  any of  those                                                               
communities that are over a dollar... "                                                                                         
                                                                                                                                
CHAIR WOOL reiterated  that this was not a flat  fee discount, it                                                               
was dependent on the price of the energy.                                                                                       
                                                                                                                                
MR.  LAMB expressed  his agreement,  and  moved on  to slide  24,                                                               
"Alaska   Energy   Authority  Rural   Services/Programs,"   which                                                               
depicted the aforementioned programs on the map of Alaska.                                                                      
                                                                                                                                
11:32:45 AM                                                                                                                   
                                                                                                                                
MS.   CONWAY  presented   slides   26   -  27,   "Urban/Statewide                                                               
Programs/Services"  and mentioned  the  technical assistance  and                                                               
energy technology,  energy policy work, and  programmatic work on                                                               
Railbelt assets.   She addressed slide  28, "Technical Assistance                                                               
-  energy technologies,"  and stated  that this  was a  different                                                               
type of technical assistance than  discussed earlier.  She listed                                                               
the  five most  critical  technology  areas: end-use  efficiency,                                                               
hydro, biomass,  wind, and heat  recovery, and stated  that these                                                               
were of the most critical importance.   She relayed that work had                                                               
been  moving  forward  in  full  recognition  for  the  necessary                                                               
adaptations  to the  changing  fiscal climate.    She listed  the                                                               
"lighter touch"  technology areas,  those without an  AEA program                                                               
manager,  which included  energy storage,  heat pumps,  solar PV,                                                               
transmission,  solar thermal,  and  advanced grid.   She  relayed                                                               
that there was a unique situation  at AEA, as there was expertise                                                               
for the appropriate  and achievable energy solutions  for a whole                                                               
community,  tailored to  the specific  needs  of that  community.                                                               
AEA  funded  on-going technical  support  in  these areas,  which                                                               
included program and  project development, stakeholder engagement                                                               
through  technology   working  groups,  and  grant   writing  for                                                               
competitive federal dollars.                                                                                                    
                                                                                                                                
11:36:03 AM                                                                                                                   
                                                                                                                                
MS.  CONWAY moved  on  to slide  29,  "Village Energy  Efficiency                                                               
Program 2005-2016."   She said  that a commonly heard  mantra was                                                               
"Energy Efficiency  First," as the  necessity for "more  bang for                                                               
our  buck" was  recognized.   She reported  that AEA  had managed                                                               
building  energy efficiency  programs in  almost 150  communities                                                               
for both electric and heat programs.                                                                                            
                                                                                                                                
REPRESENTATIVE JOHNSTON asked  if AEA was the  project manager or                                                               
the technological assistant.                                                                                                    
                                                                                                                                
MS. CONWAY  replied that  AEA served both  roles.   She explained                                                               
that  each of  the iterations  of the  village energy  efficiency                                                               
program was managed a bit differently.                                                                                          
                                                                                                                                
11:37:21 AM                                                                                                                   
                                                                                                                                
CHAIR WOOL asked  about management for each of  the five critical                                                               
technology areas listed on slide 28.                                                                                            
                                                                                                                                
MS. CONWAY  replied that  there was a  program manager  for each,                                                               
with the same program manager for Biomass and Heat Recovery.                                                                    
                                                                                                                                
CHAIR WOOL asked  about the other six  "lighter touch" technology                                                               
areas.                                                                                                                          
                                                                                                                                
MS. CONWAY  replied that  there was  an assortment  of experience                                                               
from the project managers already  on staff who have historically                                                               
worked on  these types of projects.   In response to  Chair Wool,                                                               
she  stated  that  the  five   critical  technologies  were  more                                                               
important  and any  support  with  technical assistance,  project                                                               
development  assistance,  and  appropriate  achievable  financing                                                               
could bring these  projects to fruition.  She noted  that the six                                                               
"lighter touch" technology areas were  not as mature or prevalent                                                               
in Alaska.                                                                                                                      
                                                                                                                                
11:38:57 AM                                                                                                                   
                                                                                                                                
MS. CONWAY  moved on to  slide 30, "Renewable Energy  Fund Grants                                                               
Rounds 1 -  9," which showed all 287  project applications funded                                                               
to date  through the  Renewable Energy Fund  (REF).   She pointed                                                               
out  that some  projects  had multiple  applications.   Directing                                                               
attention to  slide 31, "70  Projects Operational,"  she reported                                                               
that  these were  operational projects  which  resulted from  the                                                               
Renewable  Energy  Fund investments.    She  added that  21  more                                                               
projects had  secured funding through  construction and  would be                                                               
coming  on line.    She explained  that  PCE reimbursed  eligible                                                               
expenses, and,  if an REF  project was funded entirely  through a                                                               
grant, there would  not be any cost.   This did not  hurt the PCE                                                               
and was still a benefit to  the community.  She declared that the                                                               
two programs were synergistic, not oppositional.                                                                                
                                                                                                                                
REPRESENTATIVE JOHNSTON asked about  the two geothermal projects,                                                               
directing attention  to a  geothermal project  east of  Homer and                                                               
another near Juneau.                                                                                                            
                                                                                                                                
MR.  SKALING said  that these  projects were  ground source  heat                                                               
pumps.                                                                                                                          
                                                                                                                                
11:42:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ referred  to slide 31, asking  if the 21                                                               
additional projects were funded but not yet operational.                                                                        
                                                                                                                                
MS. CONWAY  said that was correct,  and pointed out that  not all                                                               
funding, in order to get to  construction, came from the REF, and                                                               
that many projects had supplemental funding.                                                                                    
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ  asked if there would  be 91 operational                                                               
projects.                                                                                                                       
                                                                                                                                
MS. CONWAY replied, "in theory, yes, barring the unexpected."                                                                   
                                                                                                                                
CHAIR WOOL  asked for clarification  to the  relationship between                                                               
electricity  and  heat, that  although  PCE  would subsidize  the                                                               
electrical portion, a utility could produce and sell both.                                                                      
                                                                                                                                
MR. LAMB  offered his belief there  was a benefit for  lower heat                                                               
cost.                                                                                                                           
                                                                                                                                
11:44:55 AM                                                                                                                   
                                                                                                                                
MS. CONWAY returned  attention to slide 32,  "AEA Energy Projects                                                               
are Effective,"  and pointed out  that the Renewable  Energy Fund                                                               
(REF) had  not had money  for the last  year.  She  declared that                                                               
the program served a very  important function, and would continue                                                               
to do so for the Alaska  energy landscape.  She reported that the                                                               
investment of  $257 million had jumpstarted  the renewable energy                                                               
market in  Alaska, had  proven that these  projects do  work, and                                                               
had provided  good case  studies for how,  why, where,  and when.                                                               
She  added that  the REF  had  leverage hundreds  of millions  of                                                               
federal and  private dollars, and  displaced a  tremendous amount                                                               
of  diesel  use annually.    The  31  million gallons  of  diesel                                                               
displaced in  2016 had a  dollar equivalent savings of  about $63                                                               
million.                                                                                                                        
                                                                                                                                
REPRESENTATIVE JOHNSON asked if was  there had been an evaluation                                                               
of towns for which renewable energy could replace diesel.                                                                       
                                                                                                                                
MS. CONWAY replied that the  Alaska Affordable Energy model was a                                                               
planning tool which could be used.                                                                                              
                                                                                                                                
MR. LAMB  opined that  there were  slides which  showed potential                                                               
hydro and  wind power, and  that there  was a lot  of opportunity                                                               
across the state.                                                                                                               
                                                                                                                                
CHAIR WOOL questioned the availability of funding.                                                                              
                                                                                                                                
MS.  CONWAY replied  that this  depended on  what was  considered                                                               
funding, as financing could be a form of funding.                                                                               
                                                                                                                                
REPRESENTATIVE JOHNSON shared that  it was of critical importance                                                               
for  small  villages  to  have the  opportunity  to  move  beyond                                                               
diesel.                                                                                                                         
                                                                                                                                
11:47:49 AM                                                                                                                   
                                                                                                                                
MS. CONWAY pointed to slide  33, "Benefits and costs perspectives                                                               
differ," and  shared that the required  economic analysis carried                                                               
different  perspectives,  dependent  on the  costs  and  benefits                                                               
considered.   As the state  took a universal approach,  all costs                                                               
and  all  benefits  were  counted  regardless  for  who  paid  or                                                               
benefited.   However,  at  the  local community  level  or for  a                                                               
project developer, not everything would  be included, such as the                                                               
value of the  grant funds or the reduction of  PCE payments.  She                                                               
directed attention  to the  chart on slide  33, which  listed the                                                               
state perspective  with a  benefit cost ratio  of 0.8,  which was                                                               
lower than  the community perspective  with a benefit  cost ratio                                                               
of 1.4.  She offered examples  of the benefit cost ratio to other                                                               
REF projects.                                                                                                                   
                                                                                                                                
CHAIR  WOOL addressed  various  line items  of  the benefit  cost                                                               
ratio,  noting  that the  state  may  include some,  whereas  the                                                               
community would not.                                                                                                            
                                                                                                                                
MS.   CONWAY  noted   that  this   resulted   in  the   different                                                               
perspectives, and  could cause some disagreement  for what should                                                               
be funded with state dollars.                                                                                                   
                                                                                                                                
MR. LAMB declared  that, when money was involved,  there could be                                                               
friction.                                                                                                                       
                                                                                                                                
11:51:19 AM                                                                                                                   
                                                                                                                                
MS.  CONWAY  addressed  slide  34,  which  depicted  the  "Energy                                                               
Planning  Regions"  across  Alaska.   She  stated  that  regional                                                               
energy  planning was  a way  to determine  energy priorities  and                                                               
formulate a  concrete, implementable, fundable energy  plan.  She                                                               
shared that electricity, heat, and  transportation plans had been                                                               
completed for every region in the  state.  She said that regional                                                               
energy  plans were,  primarily,  bottom  up planning  initiatives                                                               
which  relied on  extensive stakeholder  engagement to  produce a                                                               
list of projects  to lower energy costs.  Some  of the categories                                                               
for   recommended  actions   included   utility  management   and                                                               
operations,    building    efficiency,   electricity,    heating,                                                               
transportation,  and ongoing  planning.   She  reminded that  the                                                               
Alaska  Affordable  Energy  Strategy  was a  set  of  recommended                                                               
policy, regulatory, and statutory changes  to make it possible to                                                               
reach the  energy project goals  outlined in the  regional energy                                                               
planning process.                                                                                                               
                                                                                                                                
11:52:42 AM                                                                                                                   
                                                                                                                                
MS.  CONWAY   presented  slide  35,  "Alaska   Affordable  Energy                                                               
Strategy"  and  declared that  there  was  a strong  relationship                                                               
between  the  regional  energy  plans  and  the  strategy.    She                                                               
reported  that  a   critical  piece  of  the   strategy  was  the                                                               
stakeholder  engagement  foundation   based,  primarily,  on  the                                                               
regional  energy planning  initiative.   She  said that  regional                                                               
energy plans provided  the basis for policy  research, which were                                                               
the strategy recommendations.  She  pointed out that the chart on                                                               
the  slide showed  the interplay  between community  and regional                                                               
planning, statewide planning and  policy development, and project                                                               
implementation.   As recommended by the  Alaska Affordable Energy                                                               
Strategy,  this  system  relied on  strong  data  collection  and                                                               
continuous  stakeholder  engagement,  as  well  as  an  effective                                                               
project  funding  mechanism,  which  was  not  exclusively  grant                                                               
funding.                                                                                                                        
                                                                                                                                
MS. CONWAY shared an example  of the multi-agency coordination of                                                               
planning and  policy work  with the  leveraging of  resources for                                                               
the feasibility  of development  for a  regional power  pool that                                                               
would  provide  management  and  operational  support  to  small,                                                               
single site electric utilities in Rural Interior Alaska.                                                                        
                                                                                                                                
MS.  CONWAY said  that  a  broad group  of  staff contributed  to                                                               
energy  policy work,  which was  largely dictated  by legislative                                                               
mandates,  as well  as occasional  policy initiatives  from other                                                               
bodies such as the governor's office.                                                                                           
                                                                                                                                
11:55:17 AM                                                                                                                   
                                                                                                                                
MS. CONWAY  pointed to  slide 36,  "AkAES: Targeted  Review," and                                                               
listed the  one-stop-shop Community  Energy Fund for  Alaska, on-                                                               
bill financing, empowering the RCA  to have siting authority, and                                                               
establishing a universal service charge.                                                                                        
                                                                                                                                
CHAIR  WOOL  suggested,  as  time   was  limited,  to  limit  the                                                               
discussion  to  the  One-Stop-shop   and  the  universal  service                                                               
charge.                                                                                                                         
                                                                                                                                
MS. CONWAY  reported that the  Alaska Affordable  Energy Strategy                                                               
research had found that, although  many communities and utilities                                                               
were  in the  position to  take on  more debt,  they needed  more                                                               
flexibility  for funding  opportunities to  better address  their                                                               
needs and  assistance for access  to these  opportunities; hence,                                                               
the Community Energy Fund for  Alaska (CEFA), a one-stop-shop, to                                                               
allow communities to more effectively tap into the resources.                                                                   
                                                                                                                                
11:57:26 AM                                                                                                                   
                                                                                                                                
MS. CONWAY, in response to  Chair Wool, spoke about establishment                                                               
of a universal  service charge, as the statute  which created the                                                               
Alaska Affordable Energy Strategy also  required a way to pay for                                                               
projects.  She said that  a universal service charge would secure                                                               
a  reliable  funding  stream  that did  not  rely  on  government                                                               
appropriations  to   address  industry  specific  issues.     The                                                               
recommendation only specified  for how to collect  the funds, and                                                               
the projects and programs that  could be supported.  She reported                                                               
that,  in many  parts of  the country,  the utility  industry was                                                               
responsible  for  the  administration   of  energy  programs  and                                                               
projects  designed  to  lower  costs  for  the  consumers.    She                                                               
emphasized that the report did  not recommend for any communities                                                               
within the Railbelt.  In response  to Chair Wool, she stated that                                                               
the universal  charge would be  a small percentage  collected per                                                               
kilowatt hour,  or per gallon.   She reported that the  study did                                                               
not suggest  any amount, only  the concept  as a way  to generate                                                               
revenue  to  pay  for  projects  and programs.    She  said  that                                                               
determination for the  best way to implement  this policy concept                                                               
would be part of the public  and deliberative process.  She added                                                               
that this  concept had worked  in other places, often  areas with                                                               
much larger utilities.                                                                                                          
                                                                                                                                
12:00:09 PM                                                                                                                   
                                                                                                                                
MS. CONWAY concluded with slide  48, "AEA is Relevant to Alaska,"                                                               
and declared that there was a  lot of growth potential for energy                                                               
efficiency, hydro,  biomass, and  wind project  development work.                                                               
She  declared that  there was  hardly a  community or  utility in                                                               
Alaska that  was not touched  by an  AEA program or  project, and                                                               
that these efforts were  comprehensively improving energy safety,                                                               
stability,  reliability,  and  affordability  with  the  benefits                                                               
shared  across rural  and urban  Alaska, utilities  and consumers                                                               
alike.  She reiterated that there  was a lot of growth potential,                                                               
as the  resources were abundant  and there were  opportunities to                                                               
find  financing through  the federal  government and  the private                                                               
sector.                                                                                                                         
                                                                                                                                
12:01:29 PM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special Committee on Energy meeting was adjourned at 12:01 p.m.                                                                 

Document Name Date/Time Subjects
AEA One-Page Summary for HENE 2-21-17.pdf HENE 2/21/2017 10:15:00 AM
HENE AEA overview 2-21-17.pdf HENE 2/21/2017 10:15:00 AM
PCE One-Page Summary for AEA HENE 2-21-17.pdf HENE 2/21/2017 10:15:00 AM