Legislature(2017 - 2018)CAPITOL 17

03/08/2018 10:15 AM House ENERGY

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Audio Topic
10:23:30 AM Start
10:23:50 AM HB374
10:40:48 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 374(ENE) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                         March 8, 2018                                                                                          
                           10:23 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Adam Wool, Chair                                                                                                 
Representative Matt Claman                                                                                                      
Representative DeLena Johnson                                                                                                   
Representative Jennifer Johnston                                                                                                
Representative George Rauscher                                                                                                  
MEMBERS ABSENT                                                                                                                
Representative Ivy Spohnholz, Vice Chair                                                                                        
Representative John Lincoln                                                                                                     
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 374                                                                                                              
"An Act relating to on-bill financing by an electric or gas                                                                     
distribution utility for certain energy efficiency and                                                                          
conservation improvements."                                                                                                     
     - MOVED CSHB 374(ENE) OUT OF COMMITTEE                                                                                     
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 374                                                                                                                  
SHORT TITLE: ON-BILL FINANCING OF ENERGY IMPROVEMENTS                                                                           
SPONSOR(s): REPRESENTATIVE(s) WOOL                                                                                              
02/21/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/21/18       (H)       ENE, L&C                                                                                               
03/01/18       (H)       ENE AT 10:15 AM CAPITOL 17                                                                             
03/01/18       (H)       Heard & Held                                                                                           
03/01/18       (H)       MINUTE(ENE)                                                                                            
03/08/18       (H)       ENE AT 10:15 AM CAPITOL 17                                                                             
WITNESS REGISTER                                                                                                              
ROB EARL, Staff                                                                                                                 
Representative Adam Wool                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented  the proposed Committee Substitute                                                             
on behalf of the sponsor, Representative Wool.                                                                                  
GENE THERRIAULT                                                                                                                 
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:   Answered questions during  discussion of HB
ACTION NARRATIVE                                                                                                              
10:23:30 AM                                                                                                                   
CHAIR  ADAM WOOL  called the  House Special  Committee on  Energy                                                             
meeting to order  at 10:23 a.m.   Representatives Wool, Rauscher,                                                               
Claman, Johnston, and Johnson were present at the call to order.                                                                
        HB 374-ON-BILL FINANCING OF ENERGY IMPROVEMENTS                                                                     
10:23:50 AM                                                                                                                   
CHAIR WOOL  announced that  the only order  of business  would be                                                               
HOUSE BILL NO.  374, "An Act relating to on-bill  financing by an                                                               
electric  or   gas  distribution   utility  for   certain  energy                                                               
efficiency and conservation improvements."                                                                                      
10:24:13 AM                                                                                                                   
REPRESENTATIVE  RAUSCHER moved  to adopt  the proposed  committee                                                               
substitute (CS) for HB 374,  labeled 30-LS1333\R, Laffen, 3/7/18,                                                               
as the working draft.                                                                                                           
CHAIR WOOL objected for discussion.                                                                                             
10:24:51 AM                                                                                                                   
ROB  EARL,   Staff,  Representative   Adam  Wool,   Alaska  State                                                               
Legislature,  paraphrased the  changes in  Version R,  which read                                                               
[original punctuation provided]:                                                                                                
   · P. 1, lines 11-13                                                                                                          
     This is  reworded language  recommended by  the drafter                                                                    
     to make it clear that  if the utility enters an on-bill                                                                    
     financing  agreement,  they  will   be  using  a  meter                                                                  
     conservation charge and the charge may only be used to                                                                   
     recover the costs listed.                                                                                                  
   · P. 1, line 10: "energy Storage device" is inserted                                                                         
     after "energy efficiency device". This insertion is                                                                        
     also added to the other 14 times the list of eligible                                                                      
     devices appears in the bill.                                                                                               
   · P.2, lines 6-9                                                                                                             
       Subsection (b) has been replaced. The new language                                                                       
         makes it clear that any building that is fully                                                                         
     constructed and in use will qualify.                                                                                       
10:26:28 AM                                                                                                                   
REPRESENTATIVE  RAUSCHER directed  attention to  [page 2]  line 9                                                               
and  offered anecdotes  regarding the  various phases  of initial                                                               
construction within  his nearby community, which  included Tyvek,                                                               
tar paper,  blue tarps, and  siding without the  window cut-outs.                                                               
He asked how the financing would view this.                                                                                     
MR. EARL,  in response, explained  that initial  construction was                                                               
not defined in statute, and  offered his belief that common usage                                                               
of  the phrase  would mean  that people  were living  in a  fully                                                               
enclosed structure with electricity.   He opined that a blue tarp                                                               
for a roof would most likely not qualify for financing.                                                                         
REPRESENTATIVE RAUSCHER pointed out  that this would negate about                                                               
70 percent of the homes in his community.                                                                                       
REPRESENTATIVE  JOHNSTON  said  that   many  homes  in  Fairbanks                                                               
started with  the basement and worked  up.  She suggested  to tie                                                               
this initial  construction to  construction financing,  and leave                                                               
it open to those who did  not require financing.  She opined that                                                               
this might offer better clarity.                                                                                                
CHAIR WOOL offered his belief  that many of the building projects                                                               
which  slowly   morphed  were   "probably  self-financed"   as  a                                                               
construction loan would be on a  timetable with a contractor.  He                                                               
allowed that, as  this was at the discretion of  the utility, the                                                               
utility could say whether the home was not quite ready.                                                                         
REPRESENTATIVE   JOHNSTON   suggested    that   not   under   new                                                               
construction financing could be a line of demarcation.                                                                          
REPRESENTATIVE RAUSCHER  asked if Representative  Johnston wanted                                                               
to offer this as an amendment.                                                                                                  
CHAIR WOOL said that he would  prefer not to re-write the bill at                                                               
this juncture in committee.   He acknowledged that someone living                                                               
in a  house would  qualify as  "not under  initial construction."                                                               
He  suggested that  an energy  saving device  might be  installed                                                               
during  the  initial construction  phase  and  that some  of  the                                                               
determinations might be left to the discretion of the utility.                                                                  
REPRESENTATIVE  RAUSCHER suggested  that  this be  vetted in  the                                                               
next  committee  of  referral,   the  House  Labor  and  Commerce                                                               
Standing Committee.                                                                                                             
10:32:03 AM                                                                                                                   
GENE  THERRIAULT,   Alaska  Industrial  Development   and  Export                                                               
Authority (AIDEA),  in response to  Chair Wool, explained  that a                                                               
building  with  utility  service   that  someone  was  using  was                                                               
obviously  being  lived  in.    [indisc]   He  suggested  that  a                                                               
definition  could   be  determined  between  now   and  the  next                                                               
committee [indisc]                                                                                                              
CHAIR WOOL  offered his  belief that a  certain amount  should be                                                               
left  to  the discretion  of  the  utility to  determine  whether                                                               
construction was initial or more complete.                                                                                      
REPRESENTATIVE  JOHNSON   shared  that  the   Matanuska  Electric                                                               
Association, Inc. (MEA) already had  experience with this type of                                                               
program.  She read from a  prepared statement, which stated:  "it                                                               
generally  costs  more  for  a  utility  to  properly  spool  up,                                                               
provide, and  administer a  lending function."   MEA  pointed out                                                               
that they were  not a professional lending  institution, and that                                                               
customers  financed  by MEA  were  required  to incur  all  costs                                                               
associated with  closing a  commercial loan.   In  comparing with                                                               
the Lower  48, the larger  the customer base, the  less expensive                                                               
the  program.   She  pointed  out that  this  program could  take                                                               
business from professional  lending institutions for construction                                                               
and improvement loans.                                                                                                          
REPRESENTATIVE JOHNSON added  that MEA had addressed  the need to                                                               
analyze  debt, even  as  that was  not a  primary  function of  a                                                               
utility.   She added that,  as a  public utility, taking  risk on                                                               
utility funding to do improvement loans was questionable.                                                                       
10:36:43 AM                                                                                                                   
CHAIR  WOOL pointed  out that  the  participation was  completely                                                               
voluntary,  and   that  no   utility  had   to  enter   into  the                                                               
transaction.   He noted that  the proposed bill just  allowed the                                                               
debt  to be  placed  on  the utility  bill,  which increased  the                                                               
tendency to  pay it back  as a  person could lose  their utility.                                                               
He added that  it was intended to lower the  utility bill and the                                                               
savings would  at least partially  offset the incurred debt.   He                                                               
shared that  some utilities would  support the program,  and some                                                               
would not.                                                                                                                      
REPRESENTATIVE  JOHNSON  offered  her  belief  that  MEA  was  in                                                               
support of the  proposed bill, as long as it  was voluntary, even                                                               
though they had reasonable concerns.                                                                                            
CHAIR  WOOL reminded  the committee  that this  was a  completely                                                               
voluntary program.                                                                                                              
REPRESENTATIVE JOHNSON stated that it  was not her intent to kill                                                               
the bill or make  it harder.  She surmised that  there had been a                                                               
similar program in the past.                                                                                                    
10:39:08 AM                                                                                                                   
CHAIR  WOOL  removed  his  objection.   There  being  no  further                                                               
objection, Version R was adopted as the working draft.                                                                          
10:39:25 AM                                                                                                                   
REPRESENTATIVE  RAUSCHER moved  to report  CSHB 374,  Version 30-                                                               
LS1333\R,  Laffen,  3/7/18,  out  of  committee  with  individual                                                               
recommendations and  the accompanying  zero fiscal notes.   There                                                               
being  no  objection, CSHB  374(ENE)  was  moved from  the  House                                                               
Special Committee on Energy.                                                                                                    
10:40:48 AM                                                                                                                   
There being no  further business before the  committee, the House                                                               
Special Committee on Energy meeting was adjourned at 10:40 a.m.                                                                 

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