Legislature(2009 - 2010)Fairbanks
10/22/2010 09:00 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Overview(s): Update on Energy Projects and Appropriations | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
Fairbanks, Alaska
October 22, 2010
9:13 a.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Charisse Millett, Co-Chair
Representative Kyle Johansen
Representative Pete Petersen
Representative Chris Tuck
MEMBERS ABSENT
Representative Nancy Dahlstrom (Resigned 5/31/10)
Representative Jay Ramras
OTHER LEGISLATORS PRESENT
Representative Paul Seaton
Representative Tammy Wilson
Representative Mike Kelly
COMMITTEE CALENDAR
OVERVIEW(S): UPDATE ON ENERGY PROJECTS AND APPROPRIATIONS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
LUKE HOPKINS, Mayor
Fairbanks North Star Borough
Fairbanks, Alaska
POSITION STATEMENT: Testified during the overview regarding the
update on energy projects and appropriations.
STEVE HAAGENSON, Executive Director
Alaska Energy Authority (AEA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the overview regarding the
update on energy projects and appropriations.
SARA FISHER-GOAD, Deputy Director
Operations
Alaska Energy Authority (AEA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the overview regarding the
update on energy projects and appropriations.
BOB BREAN, Director
Research and Rural Development
Alaska Housing Finance Corporation (AHFC)
Anchorage, Alaska
POSITION STATEMENT: Testified during the overview regarding the
update on energy projects and appropriations.
CARY BOLLING, Energy Specialist
Alaska Housing Finance Corporation (AHFC)
Anchorage, Alaska
POSITION STATEMENT: Testified during the overview regarding the
update on energy projects and appropriations.
JACK HÉBERT, President/Chief Executive Officer (CEO)
Cold Climate Housing Research Center (CCHRC)
Fairbanks, Alaska
POSITION STATEMENT: Testified during the update on energy
projects and appropriations.
JULIE ESTEY, Business Director
Alaska Center for Energy and Power (ACEP)
Fairbanks, Alaska
POSITION STATEMENT: Testified during the update on energy
projects and appropriations.
ACTION NARRATIVE
9:13:06 AM
CO-CHAIR BRYCE EDGMON called the House Special Committee on
Energy meeting to order at 9:13 a.m. Representatives Johansen,
Petersen (via teleconference), Millett, and Edgmon were present
at the call to order. Representative Tuck arrived as the
meeting was in progress. Representatives Chenault, Guttenberg,
Wilson, Seaton, Kelly, Stoltze, P. Wilson (via teleconference),
and Olson (via teleconference) were also in attendance.
^Overview(s): Update on Energy Projects and Appropriations
Overview(s): Update on Energy Projects and Appropriations
9:13:14 AM
CO-CHAIR EDGMON announced that the only order of business would
be an update on energy projects and appropriations.
9:15:33 AM
LUKE HOPKINS, Mayor, Fairbanks North Star Borough, relayed
Fairbanks is the northern most metropolis in the state using
natural gas that is the highest priced in the country. He
indicated that numerous plans to supply natural gas as a major
energy solution for the state would be presented to the
legislature. He further indicated that energy plans, industrial
opportunity, and growth in the state's economy are directly
related. He stated that the high cost of energy has had a
detrimental effect on the level of investment occurring in the
northern part of the state. Currently, the lowest cost energy
source for many Fairbanks residents is wood heat or coal, which
he indicated is bad for air quality. He offered his hope that
an energy plan for the state would include a reasonable natural
gas solution. He noted that HB 305 brought about discussion on
nuclear power. He said that might be the solution, but many of
those projects are still years away. He stated that the current
high cost of energy is not only hampering the community of
Fairbanks from developing, but also hampering residents in the
area from being able to afford to remain in the community. He
asked the committee to keep Fairbanks' situation in mind when
discussing energy options.
9:24:29 AM
STEVE HAAGENSON, Executive Director, Alaska Energy Authority
(AEA), reminded the committee that about a year ago, AEA
produced a document called, "Alaska Energy: First Step Toward
Energy Independence," and the goal was to reach 50 percent
renewable resource use by 2025 and a 20 percent increase in
efficiency by 2020. He said HB 306 took the state in a good
direction regarding energy policy. He explained that
conservation and efficiency are two different choices. He
indicated that last April AEA produced a rough draft of "Alaska
Energy Pathway," the final copy of which was given to the
committee.
MR. HAAGENSON talked about the Railbelt. He said, "The 50
percent renewable target was forced on this thing." He
mentioned an analysis of a carbon tax that was doubling the cost
of fuel, which he indicated was a driving influence toward the
use of renewable energy. He indicated that the analysis
recommended a large hydroelectric facility at Chakachamna Lake,
Susitna, Glacier Fork, and Fire Island, and the plan would be 50
percent hydro and 50 percent natural gas. Currently, he said,
Anchorage uses about 95 percent natural gas and 5 percent
hydroelectric, while the entire Railbelt uses approximately 95
percent fossil fuel and 5 percent hydro. He said the Railbelt
Integrated Resource Plan (IRP) recommended building in
Chakachamna, but he said AEA feels more comfortable with "the
estimate on Susitna."
9:29:34 AM
MR. HAAGENSON directed attention to page 6 of the aforementioned
publication, which addresses the subject of gas and shows a line
graph detailing capital expenditures and high debt capacity. He
talked about a funding gap and said a combination of three
things would reduce it: reduce the state's [capital spending],
increase debt capacity by building the economy, and obtain grant
funding from the state.
9:31:49 AM
MR. HAAGENSON next talked about the 228 communities outside the
Railbelt. He said AEA figured out the needs of each community
for heat, electricity, and transportation and the capital cost
and deployment cost of those resources, and it queried as to
which resources each community may have nearby. Mr. Haagenson
directed attention to pages 27 through 31 of the handout, which,
using Kipnuk as an example, show a breakdown of current to long-
term and projected goals for electric and heat, "demand-side"
efficiency and conservation for electric usage and heating,
upgrade potential of Kipnuk's current power plant, information
related to heat recovery, and short to long-term options of
wind/diesel energy use. He noted that most upgrades in the
state are done through grants, but Kipnuk's upgrade would be
done through a loan. He highlighted some cost figures on page
31.
9:36:24 AM
MR. HAAGENSON said a byproduct of generating electricity is
heat. He talked about numbers, including a 30 percent
deployment, a capital cost of $1.4 million for a new wind
turbine, an approximate annual capital cost of $132,000, about
$0.282/kilowatt hour (kWh) to pay the debt, zero fuel cost, and
an approximate cost of $0.047/kWh [as shown on page 31 under
short-term deployment for a wind/diesel technology]. He said
subtracting the 28 cents from the 45 cents would show what the
cost would be for that power. He indicated that when there is
30 percent wind/diesel, there is 70 percent diesel, and that
diesel fuel is priced at $107.50 per barrel. He mentioned
having used the Energy Information Administration's (EIA's)
"number." He returned to page 27, to the following figures:
$0.51, $0.49, $0.41, and $0.40. He explained those figures are
"the resulting cost of community power before [power cost
equalization] (PCE) in Kipnuk."
MR. HAAGENSON drew attention to the compact disc (CD) that is
included at the back of the handout. He then turned attention
to page 25, which shows regional capital cost rollup for every
Native corporation and for the Railbelt. He indicated that the
cost of advancing this plan would be approximately $10 million.
He noted that the far right column on that page shows the
capital cost per capita. Mr. Haagenson spoke about results. He
said 63 percent of the energy in rural Alaska is renewable,
"mainly driven by Southeast hydro." He indicated that if a
strategy were adopted for rural Alaska, that number could go up
to 94 percent. As shown on page 14, Mr. Haagenson pointed out
that through following a plan for 50 percent renewable energy by
2025, non-Railbelt diesel use for electric could drop from
approximately 35 million gallons per year to around 5 million,
and non-Railbelt diesel use for heat could drop from nearly 60
million gallons per year to about 30 million. He said heat
costs twice as much as electricity, and while there is help to
rural Alaska from PCE for electricity, there is no help for the
cost of heat. He opined, "The sooner we can deploy more heat
source, the better off we are."
9:41:00 AM
MR. HAAGENSON next discussed financing options. He said HB 306
includes a section that says that the Power Project fund will be
used as a vehicle for energy projects in Alaska. He said that
is the first time the venue has changed from a grant to a loan,
which he said is a "long-term, healthy thing" that will "help us
close the gap." He talked about a "rain barrel model," and he
explained that basically money comes in and out of a community.
He directed attention to page 17, and he highlighted the five
strategies for economic development: import reduction,
infrastructure development, highest and best use of a resource,
public/private partnerships, and the state as an economic
facilitator. He offered further details regarding each of those
strategies.
9:47:27 AM
MR. HAAGENSON talked about the term "pathway." He said ideas
have failed in the past because outsiders have come in with
advice on what to do, but no one has had the passion to take on
the projects. He said the pathway is the beginning and it is
necessary to find people with the passion to carry out visions
and develop projects according to the wishes of the community.
He offered an example of a project taking place in Cordova,
Alaska.
9:49:46 AM
MR. HAAGENSON said the mix of loan and grant funding will be a
challenge for the legislature, because that is not the normal
process for the legislature. He spoke of grants as incentives.
9:50:55 AM
MR. HAAGENSON, in response to Representative Johansen, said AEA
has "a scope of work" to put before IRP and all utilities. In
response to another question, he said, "Whenever you get away
from a volatile fuel it will stabilize, and since wind and hydro
are typically free fuel, it stabilizes them very well." He
mentioned biomass, "using stick wood," and growing willow, and
said that would be "tied more to labor," which means more
volatility, but still less volatility than fuel.
9:53:09 AM
MR. HAAGENSON, in response to Representative Kelly, said carbon
tax looks bad to those on the receiving end of it; however, he
suggested the state come up with a strategy that helped it make
money from the carbon tax. He said there may be an opportunity
that has yet to be considered - a resource that could be
deployed - that would allow the state to earn revenue from a
carbon tax. He agreed with Representative Kelly that carbon tax
would not be good for the state unless a way is found to make it
benefit the state. In response to a question from
Representative Kelly regarding carbon tax, he said it is
"addressed," but it is "not the base model." He offered further
details.
9:56:35 AM
MR. HAAGENSON, in response to a question from Representative T.
Wilson regarding biomass, indicated that AEA considered many
biomass recommendations, but focused on stick wood "as opposed
to looking at willow." He said there is a lot of biomass
available in Alaska, such as in Tok, Gulkana, and Kenny Lake.
He said biomass comes in many forms, including chipped wood,
shredded wood, stick wood, and pellets. He said one
consideration when using biomass sources is how long it will
take those sources to grow back. He said researchers are
considering that question. He stated that the document includes
only known, proven technology - no risk. He said currently Cold
Climate Housing is putting in a heat pump at a school, and solar
panels will heat the ground in the summer and then the heat will
be pumped back out in the winter. He noted that Alaska has 90
percent of the nation's tidal zones, but does not use any of
that energy source, and he questioned why that is the case. He
mentioned geothermal energy. He then mentioned an "action
drill." He offered various examples of energy renewal ideas,
and he said if the state can put the deals together, it can use
the resources to its advantage.
10:00:40 AM
MR. HAAGENSON, in response to Representative Seaton, said
currently most wind turbines are designed to create electricity,
and the best way to deliver the electricity "to site" is through
electric line. He said the reason there is limited penetration
is that at approximately 30 percent penetration, problems with
the running the system occur. He mentioned having a dump load,
and he said when that dump load energy is used for heat, more
heat is used. In response to another question from
Representative Seaton regarding off-grid heat supplies through
wind, said that typically the smaller the turbine, the worse the
economics. He concluded, "So, we tend to look at the utility-
scale solutions, not necessarily the home-scale solutions,
trying to get the economy to scale."
10:03:47 AM
SARA FISHER-GOAD, Deputy Director, Operations, Alaska Energy
Authority (AEA), directed attention to a two-page handout in the
committee packet from AEA, page one of which shows rounds one
through four of grants and funding. She relayed that the fourth
round ended in September, 2010, and AEA is in the process of
reviewing the 104 applications it received during that period.
She reported that in the prior rounds, AEA issued 116 grants and
almost $40 million in funds for projects. The second page of
the handout, she noted, shows a pie chart depicting the funding
allocation by development phase for rounds one through three.
She explained that there had been some concern when the program
was developed that perhaps too much money was going to studies
and reconnaissance work rather than to construction; however,
she said of the $150 million, $118 million is designated for
construction projects. She also noted that the rest of the
second page shows the scheduled project completion. The
corresponding bar chart only shows rounds one and two, she
noted, but most of the projects are expected to be completed
during calendar year 2012. She pointed to another bar chart
further down the page, which shows projected cumulative annual
fuel savings, which also reflects just rounds one and two;
however, she said AEA is anticipating nearly $8 million in fuel
savings or the equivalent per year for the projects that are
constructed. Other information on the page, she related,
includes: the expected completion date, the renewable funding
energy grant, and the total project cost.
10:07:37 AM
MR. HAAGENSON, in response to Co-Chair Edgmon, indicated that
the reason the state has not pursued renewable energy in the
past is because the price of oil and diesel was low and it was
convenient. Now, he said, it is just convenient. He
recommended studying the market and the economics of delivering
a product that really can be delivered.
10:12:20 AM
CO-CHAIR MILLETT expressed concern about the aging
infrastructure of transmission and how that factors into the
cost of bringing big scale renewable energy projects on line.
MR. HAAGENSON said the IRP was all-inclusive; there are
generation projects and transmission projects listed in the plan
as means to deliver power across the Railbelt. In response to a
follow-up remark, he said Susitna does not compete with the
gasline, and he explained why. He opined that it should be
determined how one could strengthen the other. Regarding the
rail belt, he said utilities have been working together to find
a common base, because a large presence must be present to
support any large project. In response to a request for
clarification, he confirmed that he believes that the state can
have both a successful gasline and projects like Susitna. He
said the state just needs to spend its money wisely.
10:18:32 AM
MR. HAAGENSON, in response to a request from Co-Chair Millett,
stated that AEA is very healthy at this point, and it is working
hard on the issue of renewable energy. However, he said AEA has
experienced loss through attrition and expects more loss to
occur in the next year. He noted that attrition is a national
problem, because all the Baby Boomers are entering retirement
age. He said last year SB 220 asked for an evaluation of Alaska
Industrial Development and Export Authority (AIDEA) and AEA, and
for opportunities to be sought to build an energy department,
and for an outline of the structure of what AEA should be. That
undertaking is happening currently and AEA is a significant part
of that process. He said some states have good models, but
Alaska is different. He said not many states have the capital
to build power plants, for example. He recommended looking at
the options and going with the smart plan.
10:23:46 AM
MR. HAAGENSON returned to his presentation. He indicated that
because of a moving of assets involving AEA's sister agency,
AIDEA, AEA now has $21 million more in its power project fund.
He mentioned contracting with Alaska Center for Energy and Power
(ACEP) to do an analysis for nuclear power. He said there is a
Village Energy Efficiency Program (VEEP) that has been active,
saving about 25,000 kWh per village annually and investing about
$105 per capita, with a return of $300 per capita over the
length of the project. There has been a reduction of
approximately 4.5 percent in energy use in rural Alaska among
participants. He further reported that AEA managed
approximately $1.5 million of federal stimulus money, which was
utilized in 97 communities. He mentioned change outs for energy
efficiency and indicated that a $5.7 million grant from the
federal government will return about $10 million over a ten-year
period. He reported that AEA is also getting ready for a
commercial audit program, and with about $600,000 of federal
stimulus money and approximately $2.6 million from private
sources will yield an approximate $4.3 million savings over ten
years. He said on the regional level, AEA will be doing a side-
by-side comparison of Chakachamna and Susitna, publish its
results in November, listen to public feedback, and submit the
superior choice as the primary project listed in an application
to FERC, with the secondary one listed as an alternative.
10:28:09 AM
MR. HAAGENSON said AEA is working on Reynolds Peak hydro and is
expecting a cost estimate and schedule. He offered further
details. He said AEA is also working with Southeast Conference,
Southeast Power Authority (SEPA), and with all the Southeast
utilities companies on an innovative research plant for
Southeast Alaska. He indicated that the load and the best way
to deliver energy will be identified, and that for Southeast
Alaska, hydro is available to supply demand. He said AEA is
also considering transition lines for connections. He mentioned
a contraption that works like "a backwards refrigerator." He
said Southeast Alaska is facing a problem because it is using up
all its capacity on resisted heat, and it needs the technology
to drop "the demand on peak down."
MR. HAAGENSON indicated that AEA is considering possible
hydroelectric sites in the entire Bethel region. He said there
are some hills and lakes nearby that can be used, but people are
concerned about the fish. He explained that AEA is just trying
to find out where it is possible to deliver power long
distances.
MR. HAAGENSON, regarding Fire Island, said it costs about 10
cents to make the power and another 10 cents to regulate it. He
indicated that utilities focus on cost and reliability. He
further indicated that in this scenario the focus is on cost and
an attempt is being made to "take a variable resource in wind
and fit it into a gas supply that they are ... almost ...
[demanding be held] steady." He said this causes problems. He
said the utility has "taken that impact and they've put it back
onto ... theory," thereby taking almost as much power to
regulate as it would cost the utility to "get out of the
investment." He said he requested this utility to talk with
Golden Valley Electric Association ("Golden Valley"), which is
not on a gas supply, but gets fuel out of a tank at no penalty.
Further, Golden Valley has the largest battery in the world,
which can be modified to take care of "short-term swings." He
surmised that Golden Valley would be willing to come together
with Fire Island to make some kind of deal. He offered his
understanding that there is a deadline in mid-December, so "a
lot of these things have to come together fast."
10:34:20 AM
MR. HAAGENSON talked about Mount Spur as another geothermal
resource. He indicated that this entity is planning to drill
holes to identify the resource in 2011. He mentioned an initial
citing of 50 megawatts (mWs), and he indicated that Mount Spur
is considering a cost of 10-12 cents to make the power, and is
looking at ways to structure that cost. The big issue with
Mount Spur is deliverability, he said, because a 50-mile
transition line must be built into the site.
MR. HAAGENSON said the Alaska Intertie Agreement is scheduled to
terminate on October 16, [2010], but AEA has signed a three-
month extension that would allow utilities with an original
intertie agreement to come together with a plan in which the
operating rules would be separate and "floating those to the
RCA," and then there will be "a very easy governance model to
take care of the assets." He indicated that other entities that
are interested in using that intertie are being allowed to
participate.
MR. HAAGENSON said Bradley Lake is probably the biggest success
story; when it was built people did not know how they were going
to pay for the 5 cent power, but that rate, which is actually
less than 5 cents, looks good today. The Bradley model is being
applied to other projects, including Susitna, Allison Lake in
Copper Valley, and in the Southeast Alaska region. He said the
state put out half the money for the Bradley Lake project, with
a 30-year, zero interest/zero payment loan, which is then paid,
based on bonds during the following 30 years. He indicated that
AEA is also working on Battle Creek diversion, which would give
a lot more energy to the project.
MR. HAAGENSON said AEA also does bulk fuel tank upgrades, and he
offered an example relating to the U.S. Coast Guard. He said 70
out of 90,000 tanks farms in Alaska have already been replaced
by the Denali Commission since 2000 at a cost of about $400,000.
He mentioned another program called Rural Power System Upgrades
(RPSU), and he offered further details. He said AEA also
manages the Bulk Fuel Revolving Loan Fund, which is a cash flow
mechanism system for communities that get their fuel delivered
once a year. He offered further details. He said AEA manages
the PCE program, a $31 million program that assists Alaskans in
getting the cost of energy down. He said AEA has an emergency
response program to keep the lights on and guard the system, and
a circuit rider program to provide technical assistance. He
related an example by way of an anecdote. He mentioned training
and a 54-person operating hub of people who operate wind
turbines and hydro plants in the state. He reiterated that just
36 people run about 20 programs.
CO-CHAIR EDGMON thanked those who testified for their work.
The committee took an at-ease from 10:42:01 AM to 11:03:14 AM.
11:03:16 AM
CO-CHAIR EDGMON announced that the committee would now hear from
the Alaska Housing Finance Corporation (AHFC)
11:03:42 AM
BOB BREAN, Director, Research and Rural Development, Alaska
Housing Finance Corporation (AHFC), announced that his
colleague, Cary Bolling, would present a PowerPoint
presentation, which would give the committee an update on AHFC's
Home Weatherization Program, which is largely appropriated by
the legislature, the Home Rebate Program, and the Revolving Loan
Fund.
11:05:02 AM
CARY BOLLING, Energy Specialist, Alaska Housing Finance
Corporation (AHFC), turned to a slide in the PowerPoint
entitled, "Overview," and he reviewed that the legislature
appropriated $200 million for an income-based, no-cost
weatherization program, which had been in existence for about 25
years, but previously with $6 million appropriated. He further
reviewed that the legislature appropriated $100 million for a
rebate program for those individuals who do not qualify for the
weatherization program. There was an additional $60 million
appropriated during a special session in September 2008 to carry
the program into 2009. Mr. Bolling relayed that there was a
major training effort to ready the programs in about a month's
time after the legislation was passed.
MR. BOLLING directed attention to the next slide of the
PowerPoint, entitled, "Allocations," which shows the regions to
which allocations were made. He explained that each of the
region's allocation amounts were determined based upon
population, fuel cost, and climate. Regarding the next slide of
the PowerPoint, entitled, "Weatherization Program," he said out
of the $200 million, $70 million were encumbered between 2008
and 2009, and $60 million were encumbered by 2010. As depicted
on the next slide of the PowerPoint, Mr. Bolling relayed that
during programs prior to 2008, about 600 homes were weatherized;
in fiscal year 2009 (FY 09), 1,864 homes were weatherized; in FY
10, 3,139 homes were weatherized; and a projected 4,000 homes
will be weatherized in FY 11. Regarding the following
PowerPoint slide, Mr. Bolling related that the number of
communities in which the programs are effecting change has
increased; the total for FY 10 is 111.
MR. BOLLING directed attention to the slide of the PowerPoint
entitled, "Home Energy Rebate Program," and said the $160
million in funds are fully encumbered, and $72.8 million has
been expended. He explained that AHFC reimburses the homeowner
for the cost of having an energy rating done, and then AHFC puts
money aside for 18 months for the homeowner to finish the rebate
program, and that is how the funds are encumbered.
11:09:00 AM
MR. BOLLING directed attention to the PowerPoint slide showing
"As-Is Ratings Paid: 24,292*," which shows, along with a graph,
that since September 16, 2008, AHFC has paid 9,142 rebates at an
average of $6,258 each, and with a participation rate of 63.5
percent. He said when someone does not complete the program,
the money that was set aside for them is rolled back into the
program to be used by someone else. Mr. Bolling relayed that
there is a rebate program for "5 star plus homes" that pays out
a $7,500 rebate to the buyer of a new home, and AHFC has paid
out 822 of those rebates.
MR. BOLLING turned to the PowerPoint slide regarding "Raters
Available," and he said that AHFC had to ramp up training to get
more raters trained, because at the start of the program there
were only 38 raters available. At the peak of the program,
there were 123 raters, and currently there are approximately 97,
he reported. He said AHFC will reimburse the travel expenses of
raters who go to communities without raters, if there are at
least three to five people in the community interested in
signing up for the rebate program. He said there is a
centralized sign-up/wait list and a toll-free number.
MR. BOLLING, in response to Representative Tuck, said whether
the aforementioned minimum requirement of interested parties has
to be three or five depends on the size of the community.
MR. BREAN added that often, through word of mouth, by the time a
rater arrives in a town, more people have signed up to have a
rating done.
MR. BOLLING, as shown on the next slide, pointed out that there
are 3,575 on the wait list. At the beginning of the program
there were almost 2,000 people waiting to get energy ratings.
The chart shows how people have been taken off the wait list.
Currently, AHFC dispatches about 100 ratings per week or 400 a
month, which is down from the approximately 1,500 that were done
in a month at the peak of the program.
11:15:27 AM
REPRESENTATIVE SEATON asked about "other programs" related to
weatherization.
MR. BREAN agreed to provide those statistics to the committee
after the meeting. He noted that the other programs are income
driven, and AHFC requires all the contractors to do all their
assessments and have their waiting list together almost a year
in advance. He said the 4,000 homes that are slated for FY 10
are probably already in the system, and there may be another
3,500 in FY 12. He said the weatherization program is different
from the rebate program because the assessments are done well in
advance and the consumer has to meet income criteria in order to
qualify for the program.
REPRESENTATIVE SEATON discussed the need to have feedback on
procedures for low income individuals to actually access the
program.
11:17:34 AM
REPRESENTATIVE T. WILSON asked if AHFC has considered allowing
people on the waiting list to choose to pay for the
weatherization and keep the receipts, with the understanding
that the receipts may or may not be reimbursed, just so they can
get their homes weatherized sooner rather than later.
MR. BREAN explained that he has not considered that possibility,
because he thinks AHFC wants to be sure that it has the funds
available before people get to that part of the process. He
said that is something that AHFC could consider; however, he
emphasized that those who choose to go ahead with expenses while
still on the waiting list would be taking a big risk that they
may not be reimbursed. He directed attention to the next slide
of the PowerPoint, which illustrates that the average homeowner
paid costs are almost $11,000, and the average rebate is
approximately $6,200. He said the homeowner would need to have
an initial energy rating done in order to set a standard by
which the improvements could be measured.
REPRESENTATIVE T. WILSON said she thinks people's interest in
this idea stems from the Internal Revenue Service (IRS) rebate
that was issued; people want to take advantage of that while
they have it. She asked Mr. Brean to think about the idea,
because she has had several calls from constituents willing to
sign a waiver to start their improvements at their own risk.
11:20:57 AM
MR. BREAN said that typically when a consumer follows the
recommendations of a rating, he/she will save money even if
there is no rebate program in existence. He said the "frosting
on the cake" is the benefits that are reaped by having those
improvements done. In many cases, he said, there is a 29
percent savings on energy/utility bills, which is a quick return
on investment.
11:21:48 AM
MR. BOLLING returned to the slide showing costs to homeowners,
which he said averages $4,600, and annual energy savings are
about $1,580, which he said is approximately "a three-year
payback." He directed attention to the next slide, which shows
energy and carbon dioxide emissions saved, based on about 7,000
homes that have completed the program. He said on average
people move up about 3 steps in rating stars, saving 97 million
British thermal units (Btus) per year. The average energy use
is reduced about 30 percent, conservatively. He pointed out
that at the bottom of the slide are listed equivalent energy
savings, including barrels of crude oil, gallons of fuel oil,
and gallons of fuel oil per home. He said the next slide shows
the average saved for those using electric, natural gas, oil,
propane, and wood.
11:23:37 AM
MR. BOLLING directed attention to the next slide, which is
labeled, "Second Mortgage for Energy Conservation," and he
explained that this is a program for people who might not have
the money up front. The second mortgage can be up to $30,000,
and is a 15-year loan at a fixed taxable rate. He said
approximately 84 of those loans have been paid off, and about 34
are still active. When this is done in conjunction with the
rebate program, he said, the rebate can be used to pay down the
loan. Mr. Bolling highlighted the next slide, which shows
before and after statistics, before being between 1996 and March
2008, and after being between April 2008 and October 15, 2010.
The before ratings numbered 25,557, whereas the after ratings
numbered 34,283; the rebates were not an option before, but
number 9,142; there were 2,345 five-star plus homes built in the
before period, and there have been 822 built in the after
periods so far; and the total weatherizations done before
numbered 10,704, while in the past two years 5003 have been
done.
MR. BOLLING, in response to a question, said AHFC has reached 40
percent of its original projections.
MR. BREAN added that a year prior to the legislative
appropriation being made, AHFC had commissioned a statewide
housing need assessment, which resulted in a determination that
10-12 percent of homes were in need of the program.
11:27:36 AM
MR. BOLLING moved on to the next slide, entitled, "Alaska Energy
Efficiency, Revolving Loan Fund (AEERLF)," which is a $250
million revolving loan fund presently being developed. He
explained that the loan fund would be used for energy efficiency
improvements for the following: regional educational attendance
areas (REAAs), the University of Alaska, state facilities, and
municipal facilities. He said guaranteed savings from energy
efficiency improvements would be used to pay off the loan, and
an energy assessment would be required before the loan would
actually be made. Mr. Bolling said the next slide shows the
process called, "Retrofit Energy Assessment for Loan (REAL))."
He said prior to applying for the loan, there would be an
initial evaluation, which would include an energy benchmark.
Following that would be audits by certified energy managers, and
energy performance contracts would be used. Finally, energy
performance contracts (EPCs) by energy service companies (ESCos)
would be used; DOT/PF would publish a list of approved qualified
ESCos from which to choose. He noted that for projects under
$250,000, retrofits could be managed by qualified ESCs or by
facility owners themselves.
11:29:58 AM
MR. BOLLING turned to the next slide of the PowerPoint, which
shows the process of a retrofit energy assessment for "Loan
(REAL) application": a REAL application and benchmark is given
to AHFC; AHFC reviews the application for eligibility; and
initial assessment is performed by a qualified energy auditor,
which allows AHFC to prioritize projects; an investment grade
audit (IGA) is conducted; and then the loan application will be
forwarded to AHFC for approval.
MR. BOLLING directed attention to the next slide, which shows
the process of an energy efficiency revolving loan (EERL)
application: the loan is approved by AHFC; upgrades are
accomplished by the ESCo or facility owner; the loan is repaid
within a term up to 15 years and according to projected energy
savings; technical assistance is available; and long-term energy
savings should be realized.
11:31:22 AM
MR. BOLLING directed attention to a slide, which shows two ways
to get the work done. The first path, he explained, is to have
the ESCo do the IGA. In this method, the ESCo manages the
project and performs the work through EPC. The second path, he
said, is one by which a certified energy auditor or certified
energy manager does the IGA, and the facility owner would manage
the project if it is less than $250,000.
11:31:56 AM
MR. BREAN opined that the critical piece of this process is "the
performance contracting element," because it puts the onus on
the performance contractors to "get their numbers right" to
begin with, which allows AHFC to more accurately predict energy
savings.
11:33:29 AM
MR. BREAN, in response to a question, said Department of
Transportation & Public Facilities (DOT&PF) will be handling
"the breakout of all public facilities," but AHFC will be
working with schools, the university, and municipalities. He
recollected that SB 220 required DOT&PF to retrofit a percent of
all public facilities. He indicated that AHFC does not want
deferred maintenance to [increase]. He said the fund is a
revolving loan fund, and AHFC anticipates that if it does not
hold everybody to the same performance standards and principles,
then the revolving loan fund would quickly have no money. He
said AHFC wants energy savings to enable people to make their
loan payments, which in turn will help make loans available for
more facilities.
11:37:21 AM
JACK HÉBERT, President/Chief Executive Officer (CEO), Cold
Climate Housing Research Center (CCHRC), stated that CCHRC was
recently awarded $.9 million for an expansion of the Sustainable
Northern Community facility. The purpose of the expansion, he
explained, is to grow CCHRC's partnerships, so that many
agencies can work together to meet challenges in both rural and
urban Alaska. Mr. Hébert expressed his hope that this would not
only include both federal and state agencies, but also would
include representation from housing authorities in rural Alaska,
the Alaska State Homebuilders, and AHFC. He reported that
construction is planned for next spring. He said there is a
private match, but the grant from the Economic Development
Administration (EDA) was "nice." In expanding partnerships, he
said, CCHRC is expanding its relationship with the U.S.
Department of Housing and Urban Development (HUD) and USDA
Rural, and it is continuing to develop relationships in the
private sector. For example, he noted, CCHRC is about to sign a
memorandum of understanding (MOU) with the Alaska Native Tribal
Health Consortium (ANTHC). He said probably the most important
recent partnership is the one with AHFC, which is focused on
energy efficiency, affordability of rural housing, and the
general stimulus that housing can create for rural communities.
In response to Co-Chair Edgmon, he said he would be happy to
give a tour of CCHRC's facility. He indicated that he had
information to provide the committee via flash drives.
11:41:15 AM
JULIE ESTEY, Business Director, Alaska Center for Energy and
Power (ACEP), explained that ACEP is an applied energy research
group at the University of Alaska that is looking for seeks
practical solutions for today and the near future. She said
ACEP provides independent verification of technology and can
help the state make decisions regarding in which technology to
invest. She said ACEP looks at the following on a community
scale: power generation, heat, and transportation. She said
there is a lot of expertise at the university, and ACEP operates
by bringing together geologists, social scientists, economists,
and engineers to find solutions, because energy is multi-
disciplinary.
MS. ESTEY listed examples of ACEP's current energy projects,
including: diesel engine efficiency, battery storage and
integration, wind/diesel hybridization, hydrokinetic energy,
geothermal technology, and biomass. She noted that she had
provided a handout [entitled, "ACEP Current Projects List,"
included in the committee packet]. She said ACEP is a new
program that can operate at the interception of need, capacity,
and funding.
MS. ESTEY said that in addition to helping the state make
decisions, ACEP also produces an educated work force of people
qualified to determine not only what is technologically
feasible, but also what is socially and economically feasible.
She noted that further information had been provided [entitled,
"How ACEP Uses Its General Fund Allocation," included in the
committee packet], and she thanked the legislature for its
support in providing that allocation. She said ACEP has used
that money to provide outreach to rural areas. She said one
graph on the handout shows the funding that ACEP receives from
various sources, while the larger graph shows the number of
projects and how they are funded. She said ACEP has developed a
strong portfolio and has been able to double its revenue and
triple the number of projects because of the initial investment
by the state.
11:47:42 AM
MS. ESTEY expressed gratitude for the work the legislature did
regarding energy legislation. Especially pivotal, she posited,
was the new state-run Emerging Energy Technology Grant Fund.
She said ACEP has been working with the Denali Commission on its
management of that pilot program, and she said it is amazing to
see the 11 related projects get going. She said a critical
aspect of the program is the independent data analysis and
collection, which will show how the projects work and whether or
not they make economic sense. She said this is an area in which
the state has typically not been strong. She explained that
typically the state doles out money for projects and then relies
on people with vested interest in those projects to tell the
state how the projects are doing. She said this often results
in money being spent on projects that are not viable for the
state.
MS. ESTEY reported that ACEP has also started a "Wind for
Schools" program, which is federally funded, but a grassroots
program through which a school can erect a wind turbine or
access information electronically. She indicated there is
technical support at the schools and at the university level to
support that program. She noted that these programs are taking
place or scheduled to take place in Juneau, Sitka, and Kodiak,
and are supported by the U.S. Coast Guard.
MS. ESTEY concluded by announcing that a conference is held
every 18 months; this year's will be held in Juneau. She said
ACEP looks forward to everyone's participation and attendance.
She expressed her hope that the legislature will consider ACEP a
resource for figuring out the best way to move forward.
11:51:05 AM
CO-CHAIR EDGMON expressed appreciation for all the presentations
and updates. He said he read that Alaska is one of four states
most improved in energy efficiency, and it now ranks thirty-
seventh in the nation. He related that at the 2008 Energy
Conference, AEA claimed that 2 million gallons of diesel is
being replaced by the money being poured into renewable energy
sources.
11:52:42 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 11:52 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Energy Committee Agenda Akosofu Building.pdf |
HENE 10/22/2010 9:00:00 AM |
|
| AHFC Energy Programs 10222010.pdf |
HENE 10/22/2010 9:00:00 AM |