03/03/2015 10:15 AM House ENERGY
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| HB78 | |
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| += | HB 78 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 3, 2015
10:31 a.m.
MEMBERS PRESENT
Representative Jim Colver, Co-Chair
Representative Liz Vazquez, Co-Chair
Representative David Talerico
Representative Cathy Tilton
Representative Matt Claman
Representative Adam Wool
MEMBERS ABSENT
Representative Benjamin Nageak
COMMITTEE CALENDAR
HOUSE BILL NO. 78
"An Act bearing the short title of the 'Alaska Competitive
Energy Act of 2015'; and relating to the Regulatory Commission
of Alaska."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 78
SHORT TITLE: REGULATORY COMMISSION OF ALASKA
SPONSOR(s): REPRESENTATIVE(s) WILSON
01/23/15 (H) READ THE FIRST TIME - REFERRALS
01/23/15 (H) ENE, L&C
02/24/15 (H) ENE AT 10:15 AM CAPITOL 17
02/24/15 (H) Heard & Held
02/24/15 (H) MINUTE(ENE)
02/26/15 (H) ENE AT 10:15 AM CAPITOL 17
02/26/15 (H) Heard & Held
02/26/15 (H) MINUTE(ENE)
03/03/15 (H) ENE AT 10:15 AM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE TAMMIE WILSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Speaking as the sponsor, presented opening
remarks and a sectional analysis for HB 78.
TERESA CLEMMER, Attorney
Bessenyey & Van Tuyn
Anchorage, Alaska
POSITION STATEMENT: Speaking on behalf of the Alaska
Independent Power Producers Association, testified in support of
HB 78 and answered questions.
DAVID GILLESPIE, Chief Executive Officer
Alaska Railbelt Cooperative Transmission & Electric Company
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 78.
JAMES BERTRAND, Partner
Stinson Leonard Street Law Firm
Minneapolis, Minnesota
POSITION STATEMENT: Speaking on behalf of Chugach Electric
Association, testified in opposition to HB 78.
ACTION NARRATIVE
10:31:19 AM
CO-CHAIR LIZ VAZQUEZ called the House Special Committee on
Energy meeting to order at 10:31 a.m. Representatives Tilton,
Claman, Wool, and Vazquez were present at the call to order.
Representatives Talerico and Colver arrived as the meeting was
in progress.
HB 78-REGULATORY COMMISSION OF ALASKA
CO-CHAIR VAZQUEZ announced that the only order of business would
be HOUSE BILL NO. 78, "An Act bearing the short title of the
'Alaska Competitive Energy Act of 2015'; and relating to the
Regulatory Commission of Alaska."
10:32:03 AM
REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, informed
the committee HB 78 is all about Alaska being open for business
so that private industry can invest and bring Alaskans more
affordable energy. She read from the state energy policy
[passed in the 26th Alaska State Legislature] as follows:
Encourage economic development by promoting the
development of renewable and alternative energy
resources including geothermal, wind, solar,
hydroelectric, hydrokinetic, tidal, and biomass energy
for the use by all Alaskans.
REPRESENTATIVE WILSON observed that over the last three years
the state has invested over $212 million of public funds into
electrical generation in Alaska. She explained that the bill is
very confusing because many changes affect the Regulatory
Commission of Alaska (RCA). She remarked:
Everybody gets an electric bill ... and the first part
of it is ... called the base ... if our kilowatt hour
is 20 cents a kilowatt hour, and our base is 10 cents,
these are your buildings, the people, everything it
takes to generate that electricity whether or not
anybody uses any of that. And that is regulated by
the RCA, so we're not going to talk about that portion
of it. We're going to talk about the other 10 cents
that makes that up. And that's what you're hearing
about, the avoided cost, the cost for generation, what
does it take to be able to make that electricity and
also transmit it up the line .... So on that 10 cents
what we'd like to know, in the bill, is exactly: What
does it take to make up that portion? Because what
you do right now is, we get an average. So, for
instance ... in Fairbanks ... they generate it from
coal, we have diesel, we also get gas, we use wind,
and others, so we'll have a different amount, what it
takes to produce that kilowatt per hour from all those
different areas. ... That's the area that our
independent power producers look at to see whether or
not the project they want to bring forward is
competitive or not. ... The bill would then make
utilities break that down so you could see what the
high portion of the energy is and the low, that makes
up that 10 cents. ... An independent power producer,
and they're going to build a project, and in that
project, to generate that one kilowatt hour, it's
going to be 4 cents a kilowatt hour, much lower than
that 10 cents ... therefore they're competitive, well
... now they have to get it on the lines and know how
much it's going to cost to go per line, depending upon
whose line that they're crossing, kind of like when
you go on a toll road. ... Another part that this bill
will do is it will set those rates, so everybody knows
what the rates are and it's equal for everybody else.
So let's say that that's 2 cents, now and that's 6
cents versus the 10 cents that I'm already paying. ...
I can save 4 cents a kilowatt hour if I were to build
my plant. ... Now it's time that I can go to the bank
... I can go look for investors, I can start
conversations with a utility. ... One of the things
we've heard ... is this is going to cost us more ...
We want private investment dollars, we want private
companies to come in, invest in Alaskans, so that we
can have more affordable energy, and they've already
done that ... there are a lot of projects out there, a
lot of money invested and this is private monies that
are competing ... with the $213 million of state
funding, for other projects. ... We're competing with
private business, using state funds as well, in a
marketplace, where, the rules, nobody knows what they
are ... and that's primarily what this bill does.
10:37:57 AM
REPRESENTATIVE WILSON continued to the sectional analysis:
Section 3 calls upon RCA to apply competitive and
nondiscrimination principles with respect to all energy
producers including qualifying facilities (QFs), independent
power producers (IPPs) and public utilities. Section 4
authorizes and requires RCA to have regulatory decisions
consistent with the state energy policy. [Section 4],
subsection (f) requires RCA to ensure that transmission assets
within the state are open and accessible to QFs, IPPs, and
public utilities on a fair and nondiscriminatory basis.
10:39:04 AM
CO-CHAIR COLVER observed that other legislation could create
transmission cooperatives and a unified rate for access to
transmission infrastructure. In that case, if the state has a
framework for a tariff for any entity on the grid, he surmised
subsection (f) would not be necessary.
REPRESENTATIVE WILSON said absolutely correct; there are issues
that can be taken out of the bill.
10:40:13 AM
The committee took an at ease from 10:40 a.m. to 10:47 a.m.
10:47:13 AM
REPRESENTATIVE WILSON continued to section 5 which strengthens
the language so that RCA has authority and duty to adopt
regulations in order to carry out its responsibilities. Section
6 streamlines rulemaking proceedings. Section 7 provides
transparency for market costs, and encourages competitive
independent power production to meet and beat established
generation costs to reduce the cost of power for Alaskans.
Section 8 helps improve compliance with U.S. laws relating to
QFs and competitive power, to lower electrical costs for end
users. Section 9 differentiates end user from wholesale,
industrial, or bulk buyers of electricity. Section 10 expands
RCA authority such that upon a disagreement between a public
utility and another requesting party on terms and reasonable
compensation, RCA may require a public utility to comply with
terms and reasonable compensation for temporary use. Section 11
eliminates barriers for QFs and IPPs in obtaining access to
transmission facilities. [Section 11] subsection (d) requires
public utilities and other transmission service providers to
proceed with interconnection in a timely manner; subsection (e)
specifies who shall bear the cost of an interconnection study;
subsection (f) requires public utilities to provide open access
to transmission assets on a fair and nondiscriminatory basis;
subsection (g) confirms the ability of utilities and other
transmission service providers to impose interconnection and
integration charges; subsection (h) requires any system benefits
from interconnection to be credited to the party seeking
connection and used to offset any fees charged by the public
utility or other transmission service provider; subsection (i)
provides that when requested by RCA or a party seeking
connection, the public utility or other transmission service
provider must disclose the basis for its proposed
interconnection and integration charges, and must demonstrate
that such charges are fair, reasonable, nondiscriminatory and
otherwise in compliance with this chapter. Section 12 directs
RCA to take action to ensure QFs and IPPs shall obtain access to
transmission facilities. Section 13 requires that fees charged
by transmission asset owners for interconnection constitute
reasonable compensation. Section 14 limits the types of costs
that public utilities can pass on to [rate]payers. Section 15
authorizes and requires RCA to review new or revised tariffs for
consistency with the state energy policy. Section 16 adds that
any agreement under this paragraph is not exempt from the open
access and anti-discriminatory sections. Section 17 requires
RCA to allow utilities to pass on to [rate]payers certain
validated costs. Section 18 expands RCA oversight and
investigatory authority. Section 20 eliminates conditions
related to power being generated entirely from renewable
resources and a plant or facility not having been funded with
state grants or tax credits. Section 22 exempts from regulation
under this chapter all QFs smaller than 80 megawatts. Section
23 defines public utilities and section 24 is a list of
definitions.
10:51:50 AM
CO-CHAIR COLVER returned attention to section 22 and asked for a
comparison on how regulations would be applied to QFs over 80
megawatts.
CO-CHAIR VAZQUEZ said questions would be answered at the end of
Representative Wilson's testimony.
REPRESENTATIVE WILSON directed attention to a written response
to a question from the previous hearing and letters of support
found in the committee packet. She concluded that the bill is
really about using private dollars to bring lower energy costs.
She acknowledged that the state needed a monopoly at one time,
but the state has grown, and now needs to stop competing with
private industry and give private industry access.
10:55:03 AM
TERESA CLEMMER, Attorney, Bessenyey & Van Tuyn, informed the
committee she has been working with independent power producers
in the development of HB 78, and has also been involved in
rulemaking under consideration by RCA. She offered to provide a
brief overview on what the bill does and how it relates to the
rulemaking process. Ms. Clemmer said the first goal of HB 78 is
to ensure that fair nondiscriminatory access is available to
Alaska's transmission infrastructure. The second goal is to
strengthen RCA's oversight authority related to utilities. The
third goal is to reduce regulatory burdens on small IPPs. The
fourth goal is to implement Alaska's energy policy, and the
fifth goal is to provide guidance to RCA related to its
oversight of power purchase agreements (PPAs) between utilities
and small renewable energy producers. She stressed that the
fifth goal is where HB 78 most directly relates to the
regulatory process and RCA; the first four goals are related to
transmission. Directing attention to the first goal, she said
that most transmission facilities in Alaska were state funded or
subsidized, and future upgrades will be state subsidized as
well, thus they are public infrastructure facilities, similar to
highways, to which everyone should have access. But small IPPs
must negotiate multiple transmission agreements with a series of
utilities along a transmission route, leading to excessive and
duplicative wheeling fees and other charges.
10:58:41 AM
CO-CHAIR VAZQUEZ asked for an explanation of wheeling fees.
MS. CLEMMER responded that wheeling fees are similar to a toll
on a highway; a utility imposes a charge for an entity to
transmit its power on the utility's transmission line. In
Alaska, because the system is fragmented, many utilities are
imposing "toll, upon toll, upon toll," which is known as
pancaking. In fact, HB 78 is designed to ensure that
transmission facilities are accessible to everyone, including
utilities and IPPs, in order to support competition in the power
industry; this can be seen in section 4, subsection (f) and in
section 11, subsection (f). She pointed out that fair and
nondiscriminatory access does not mean that utilities will be
burdened with extra cost; HB 78 provides that transmission
owners are entitled to "reasonable compensation" for the shared
use of transmission facilities. Further, reasonable
compensation is defined as including the cost of maintenance,
and a return of private equity of the owning public utility, or
joint action agency, as further clarified in section 13,
subsection (c) and in section 24, [paragraph] 20. Section 10,
subsection (a) also confirms that the parties seeking access
will bear the cost of modifications or additions necessary to
accommodate the joint use of the transmission facilities. Ms.
Clemmer noted that HB 78 anticipates the integration of the
transmission system by providing that joint action agencies are
to be treated in the same manner as other regulated utilities;
joint action agencies have previously been exempt from many
regulations, and this change will require joint action agencies
to be regulated, as indicated in section 2(a), section 20(l),
section 23(6), section 24(18), section 25, and section 26, and
section 11(d) requires entities to proceed with interconnection
in a timely manner. She returned to HB 78's second goal, which
is to strengthen RCA's oversight ability by authorizing RCA to
intervene when utilities and small power generators cannot reach
agreement on terms for access to transmission. Section 10(a)
and section 13(d) provide short-term action, and section 12(a)
and section 13(e) provide long-term action. The third goal, to
reduce regulatory burdens on small IPPs, relates to
Representative Colver's earlier question. One facet of the bill
allows an exemption from attaining a Certificate of Public
Convenience and Necessity, to not being subject to rate
regulations, or a tariff; she advised the foregoing requirements
are not appropriate to wholesale power providers. The first
category of exemption is for all QFs which are defined under
federal law as renewable power producers under 80 megawatts, and
which are exempted under section 22(u). Another aspect of the
bill exempts IPPs that do not qualify as QFs under federal law
but that meet criteria in the bill in section 21(r). The fourth
goal, implementing Alaska's state energy policy, gives RCA tools
to ensure that Alaska makes progress to the goals of its energy
policy; for example, HB 78, section 4(e) and section 5(a)
require RCA regulations to be consistent with the energy policy,
and in section 15(d), requires utilities' tariffs to be
consistent with the state energy policy. The fifth goal,
providing guidance to RCA related to oversight of PPAs between
utilities and IPPs, is in the beginning process. On 2/25/15,
RCA opened a public comment period on a "draft rule;" however,
public notice has not be issued, thus it is appropriate for the
legislature to encourage RCA to move forward during its
decision-making process; in fact, there are provisions in HB 78
that provide guidance on the draft rule, one is on avoided cost.
Avoided cost is a term that is used throughout the country and
is well understood: avoided cost operates as a ceiling to
ensure that PPAs are cost neutral to utilities and ratepayers.
In practice, there is usually a cost savings for utilities and
ratepayers under PPAs. She opined that cost neutral or cost
savings are good for Alaska. Section 16 (c)(3) of HB 78
clarifies that RCA has the authority to approve a PPA at, or
below, a utilities' avoided cost. In addition, section 24
[paragraph] 15 defines the term avoided cost to mean incremental
avoided cost, which brings Alaska in line with its standard
meaning in the U.S. Also related to rulemaking, HB 78 ensures
fair and nondiscriminatory charges are the only aspects of a PPA
imposed by a utility.
11:08:40 AM
CO-CHAIR COLVER pointed out that the section 22, subsection
[(u)] exemption for IPPs was for renewable energy only, and does
not apply to coal, gas, or co-generation.
MS. CLEMMER explained that in section 22, subsection u, QF
refers to renewable energy projects; section 21 creates an
exemption for other small IPPs that do not qualify as a QF.
CO-CHAIR COLVER asked for further comment on where the proposed
law would apply.
MS. CLEMMER said in section 21 (r) of the bill, the criteria for
getting an exemption for an IPP other than a QF, requires
beginning operation between 2010 and 2025, that the IPP is
smaller than 80 megawatts, and that the IPP sells all of its
power to a regulated public utility or, if the purchaser is
located in an area outside the public utility's service area,
there is no need for regulatory protection for the public.
Also, there is an exemption for a plant or facility that sells
more than half of its power to purchasers outside of Alaska.
REPRESENTATIVE WOOL recalled testimony from various sources
supports a system dispatched by an independent entity with a
single rate to move electricity. He asked if Ms. Clemmer
agreed.
MS. CLEMMER agreed that is generally true. She added that HB 78
would not prevent or establish a [transmission company
(TRANSCO)]; in the case of multiple utilities or a TRANSCO, the
bill directs that access has to be provided on a fair and
nondiscriminatory basis, and charges must be reasonable. The
provision lays the groundwork for a TRANSCO and, in the
meantime, would provide protection to small entities that are
trying to access the grid.
11:14:51 AM
REPRESENTATIVE WOOL surmised cost neutral would apply to all
parties.
MS. CLEMMER said yes. The avoided cost term means that the cost
to the utility is the same, in the worst case, and most likely
would be less. In further response to Representative Wool, she
said avoided cost includes the price for the power, the fees for
interconnection and integration, and system benefits as
determined by a formula.
REPRESENTATIVE CLAMAN asked whether there is a difference
between the rulemaking in HB 78 and the rulemaking process
underway by RCA; further, whether RCA has the authority to adopt
everything in the bill through its rulemaking process.
MS. CLEMMER responded that the bill has a broader scope than
RCA's process; in the realm of PPAs between utilities and IPPs,
there is overlap, but HB 78 does more, such as requiring
nondiscriminatory access to transmission.
REPRESENTATIVE CLAMAN surmised that RCA rulemaking does not
address the pancaking of transmission rates.
MS. CLEMMER said right; the rulemaking establishes specifics for
PPAs between utilities and wholesale providers, but is not a
transmission-oriented negotiation. In further response to
Representative Claman, she said HB 78 is the first step to a
single transmission entity by creating a nondiscrimination
requirement and a requirement for reasonable fees for IPPs;
however, in order to create a TRANSCO separate legislation would
be required.
11:19:31 AM
REPRESENTATIVE CLAMAN concluded that IPPs are willing to pay a
set postage stamp rate.
MS. CLEMMER cautioned that the bill does not specify whether
there could be a series of charges, but just that the charge or
charges are fair and nondiscriminatory.
CO-CHAIR VAZQUEZ asked how HB 78 addresses the treatment of
avoided costs.
MS. CLEMMER explained that the bill inserts the word incremental
into the definition of avoided cost, which makes a big
difference in the way utilities and IPPs negotiate. Utilities
generally have a portfolio of different power sources. Current
regulations say that IPPs must compete with the average cost of
all of a utility's power sources, even if the projects were
built years ago with state subsidies, and even if the source is
not the first power that would be displaced. For example,
[Golden Valley Electric Association (GVEA)] usually burns diesel
during peak periods in winter at a high cost, and if an IPP
offered power at a lower cost, GVEA would be obligated to buy
power from the IPP. Currently, however, the IPP would have to
compete with the average rate and not the cost of the power
source it would have displaced. She provided the additional
example of Fire Island Wind Phase 2.
REPRESENTATIVE WOOL advised that GVEA does not want to burn
diesel at a high price, or pay the same price as diesel for
wind. Furthermore, GVEA cannot rely on wind during periods of
high demand so spinning reserves must be maintained. He asked
whether the cost of spinning reserves is included in avoided
incremental cost.
11:24:46 AM
MS. CLEMMER observed that diesel can cost up to $1 per kilowatt
hour compared to wind power that can cost as low as $0.12 per
kilowatt hour. In further response, she assured Representative
Wool that the IPP would not negotiate for the diesel price but
would offer a flat rate of about $0.12; however, GVEA compares
the offered rate to its average rate which incorporates all of
its cheapest sources of power, and is not the actual cost for
displacement of diesel. She opined that IPPs have been offering
reasonable rates that would save consumers money, but the
utilities "are very reluctant to agree ...." In addition,
spinning reserve in many instances is a modest cost; in fact,
utilities provide spinning reserve for their own power sources
and for each other. She said, "There's a lot of spinning
reserve already built into the system ...."
CO-CHAIR VAZQUEZ asked how HB 78 affects integration and
integration fees.
MS. CLEMMER said spinning reserve is the primary component of
integration costs for renewable sources such as wind. In
further response, she said HB 78 defines the terms and requires
IPPs to be responsible to pay for integration costs that can be
attributed to the IPP facility. Section 24, [paragraph] 21 of
the bill defines reasonable integration charges and establishes
criteria.
CO-CHAIR VAZQUEZ asked for clarification between integration and
interconnection.
MS. CLEMMER stated that integration refers to spinning reserve;
interconnection refers to the hardware needed to get an IPP
connected to the power system, such as transmission lines and
transformers. Interconnection costs are tangible and without
disagreement. In further response to Co-Chair Vazquez, she said
interconnection is not addressed in HB 78.
11:31:45 AM
DAVID GILLESPIE, Chief Executive Officer, Alaska Railbelt
Cooperative Transmission & Electric Company (ARCTEC), returned
attention to the subject of avoided cost. Mr. Gillespie pointed
out that avoided cost, incremental or otherwise, varies minute-
to-minute, day-to-day, and year-to-year; a utility's avoided
cost on the coldest day differs from that of another time.
Therefore, a unit of last resort could set the avoided cost for
a certain time, but during other times it is less. Also, he
urged that the committee recognize that avoided cost for an IPP
typically is estimated for 20 years because that often is the
term of a contract. Utilities are required to make an estimate
into the future, therefore, utility customers assume significant
risk when signing a contract based on current avoided cost. Mr.
Gillespie informed the committee that ARCTEC was formed by the
following four Railbelt utilities to address industry issues of
mutual concern: GVEA, Chugach Electric Association (CEA),
Matanuska Electric Association (MEA), and the City of Seward.
Each member exists to provide low-cost, reliable, and
sustainable electric service to customers and residents. He
provided a brief background of his personal experience. Mr.
Gillespie spoke in opposition to HB 78, even though ARCTEC
supports the principles of competition and open access.
However, in the best interest to create a regulatory environment
that is fair, HB 78 is not the appropriate vehicle to achieve
the goals of low-cost, reliable, sustainable energy and economic
development opportunities. He said there are four topics to
consider. First, detailed implementation outlined in the bill
should be left to RCA. Because electrical regulation is
complex, legislation should focus on a purpose and leave details
to regulators, as is currently underway in RCA open dockets.
Second, the bill contains ambiguities and potential unintended
consequences; for example, section 9 proposes to replace
"customer" with "end user" and to exclude industrial use and
bulk buyers of electricity. This would create a new distinction
between industrial customers and other classes. Section 14
proposes changes that may prevent a utility from recovering
costs due to a dispute between utilities and a QF or an IPP,
regardless of circumstances. Third, most of the bill's
provisions are already covered by federal law or in RCA's
recently proposed rules. At best, the bill is redundant, and at
worst, it is in conflict with existing statute or regulations.
Although it has been said HB 78 intends to "harmonize" state law
with the Public Utilities Regulatory Policies Act of 1978
(PURPA), PURPA applies in Alaska as elsewhere in the U.S., thus
Alaska should live by existing law. Furthermore, HB 78 may
ultimately conflict with the guidance that will be issued by
RCA. Finally, ARCTEC's stance is that HB 78 does not address
the real problem in the Railbelt, which is the lack of
infrastructure and a regulatory framework for economic dispatch.
Mr. Gillespie urged the legislature to focus on enabling law
that sends a clear direction to RCA to implement a stakeholder
governed, independent or unified system operator model that is
based on guiding principles. The aforementioned USO would
provide regulatory stability needed to create opportunity for
IPPs, allow the state to attract capital, enable economic
activity, and allow the utilities to provide energy to
residents, members, and [rate] payers.
11:39:14 AM
CO-CHAIR COLVER asked why ARCTEC has an interest in IPPs that
may be off-grid or in closed grids, if ARCTEC is supportive of
free and open competition on the distribution system.
MR. GILLESPIE affirmed that ARCTEC's focus is on the Railbelt
specifically.
11:41:44 AM
The committee took an at ease from 11:41 a.m. to 11:44 a.m.
11:44:20 AM
JAMES BERTRAND, Partner, Stinson Leonard Street Law Firm,
disclosed his testimony is on behalf of Chugach Electric
Association (CEA). Mr. Bertrand referred to his letter, found
in the committee packet, in response to questions raised at the
previous hearing on 2/26/15. The first question asked how
Alaska is different from other states when considering PURPA.
He said his comments are limited to the Railbelt utilities, and
pointed out that they are all public power utilities. In other
states with similar systems that are dominated by public power,
they also have a low percentage of IPP generation both in
capacity and in megawatt hours produced. Using the criteria of
percentages of IPP generation, Alaska was 45 of 50 in 2012.
This ranking shows that states have a low percentage of IPP
capacity because of their high public power dominance of their
electric system, such as the Tennessee Valley Power Authority.
In a similar manner, the percentage of IPP megawatt hours ranks
Alaska 44 out of 50. Another difference relates to the RCA's
recently opened docket in response to the legislative directive
found in Chapter 18 SLA 14, section 31(b) directing RCA to
evaluate whether creating an independent system operator in the
Railbelt is the best option for electric transmission. The
commission is seeking input from Railbelt utilities, the Alaska
Attorney General, the Alaska Power Association, the Alaska
Energy Authority, Department of Commerce, Community & Economic
Development, IPPs, and other parties. On 2/26/15, testimony
before the committee was that independent system operators in
the Lower 48 garner a high percentage of IPP involvement, and he
opined the RCA docket is likely to support a system of a single
system operator, which is also supported by CEA.
11:50:29 AM
MR. BERTRAND said the next question was how PURPA applies in
Alaska. He restated that PURPA does apply in Alaska and there
are efforts by RCA to harmonize some of Alaska's regulation to
reflect updates; significantly, the changes would require the
same level of transparency and reporting obligations as the
Federal Energy Regulatory Commission (FERC) for about 20 Alaska
utilities on the issue of avoided cost. Changes would also
address interconnection cost and integration fees in a
reasonable, nondiscriminatory way, and update the definition of
avoided cost to include incremental cost as FERC does. Mr.
Bertrand pointed out it is clear that federal law would preempt
any statute or policy "going beyond" PURPA. The third question
was whether HB 78 would increase the potential for lawsuits. He
responded that lawsuits are available under PURPA and there is
no need to create additional opportunities; in fact, complaints
can be filed with FERC or RCA. Mr. Bertrand directed attention
to several attachments to his letter, also found in the
committee packet. The final question was whether HB 78
addresses transparency for avoided cost, interconnection fees,
and integration costs, and he noted that regulations proposed by
RCA staff considered these matters. A copy of the proposed
regulations are included the committee packet.
11:53:52 AM
REPRESENTATIVE CLAMAN asked what electric rates are to consumers
in Tennessee, which has the lowest percentage of IPP generation.
MR. BERTRAND expressed his understanding that rates in Tennessee
are fairly low because of the infrastructure and cost advantages
associated with public power; public power generally has a lower
cost of borrowing, and has access to other government-related
costs which may not be passed to ratepayers. Public power is
cheaper than investor-owned power, thus IPPs have a "better
chance" in communities served by investor-owned utilities.
REPRESENTATIVE WOOL summarized previous testimony that RCA is
working on many of the aforementioned issues, and there were
recommendations that the legislature should instead act to
create a USO. He asked whether Mr. Bertrand agreed.
MR. BERTRAND agreed with the first statement. However, he
questioned whether the legislature needs to do more; in fact,
the RCA docket will allow interested parties to comment on
whether there is sufficient current legislative framework. In
some states, the creation of a USO has occurred through
cooperation among utilities, thus there is the possibility that
special legislation is unnecessary, as long as RCA has
regulatory authority over the USO, and all of the utilities
agreed.
11:57:51 AM
REPRESENTATIVE WOOL concluded that all of the utilities would
have to agree, not four or five out of six.
MR. BERTRAND said that would be the typical scenario.
CO-CHAIR VAZQUEZ advised RCA opened the related docket on
2/27/15. Public testimony on HB 78 remained open.
11:59:15 AM
HB 78 was held over.
11:59:32 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 11:59 a.m.