03/31/2015 10:15 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| HB78 | |
| Presentation: American Transmission Company | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 78 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 31, 2015
10:21 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
PRESENTATION: THE AMERICAN TRANSMISSION COMPANY
- HEARD
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
03/03/15 (H) Heard & Held
03/03/15 (H) MINUTE(ENE)
03/05/15 (H) ENE AT 10:15 AM CAPITOL 106
03/05/15 (H) Heard & Held
03/05/15 (H) MINUTE(ENE)
03/31/15 (H) ENE AT 10:15 AM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE TAMMIE WILSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Speaking as the sponsor, provided a
sectional analysis of the proposed committee substitute for HB
78, and answered questions.
ERIC MYERS, Manager - Business Development
American Transmission Company
Waukesha, Wisconsin
POSITION STATEMENT: Provided a PowerPoint presentation entitled
"Forming a Railbelt Transmission Company," and dated 3/31/15.
ACTION NARRATIVE
10:21:17 AM
CO-CHAIR JIM COLVER called the House Special Committee on Energy
meeting to order at 10:21 a.m. Representatives Talerico,
Tilton, Vazquez, and Colver were present at the call to order.
Representatives Claman and Wool arrived as the meeting was in
progress.
HB 78-REGULATORY COMMISSION OF ALASKA
10:21:54 AM
CO-CHAIR COLVER announced that the first 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."
10:22:09 AM
REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, sponsor,
informed the committee the proposed committee substitute (CS)
for HB 78 was a much leaner bill, and comments on the CS have
been solicited from affected parties. The first part of the CS
allows independent power producers (IPPs) to know what the costs
are to generate electricity, and to request from the Regulatory
Commission of Alaska (RCA) how those costs were calculated by
the utility. The second part relates to transmission and the
costs to transmit power through transmission lines.
Representative Wilson reminded the committee of the situation
regarding [Fire Island Wind Phase 2], which was discussed at a
previous hearing, and that IPPs need to know these costs before
financing can be obtained. Further, if a utility refuses to
provide this information, as a last resort, RCA would
adjudicate. She expressed her hope that during the hearing
process there will be positive progress regarding discussions
between utilities and IPPs.
CO-CHAIR COLVER requested a sectional analysis.
REPRESENTATIVE WILSON began a sectional analysis: section 2
creates a new section to implement requirements applicable to
electric utilities with respect to qualifying facilities (QFs),
small renewable energy, and cogeneration facilities as required
under federal statutes and regulations. Subsection (a) requires
electric utilities to comply with Federal Energy Regulatory
Commission (FERC) rules related to purchasing power from QFs and
other related obligations. Subsection (b) exempts QFs from
certain state laws and regulations as required under federal
law. Subsection (c) authorizes RCA to issue orders requiring
electric utilities to comply with obligations under this
section. Subsection (d) limits the applicability of this
section to electric utilities that are subject to the RCA
ratemaking authority - this language was drawn directly from the
federal statute. Subsection (e)( 1) defines avoided cost
according to federal law. Subsection (e)(2) defines qualifying
facility by referring to definitions specified in federal law.
Representative Wilson pointed out that the aforementioned
reduces the number of costly requirements of the utilities, and
thus is "a much friendlier version to the utilities." Section
3, new subsections (d)-(f), assure open access to electric
transmission facilities as provided on a fair, reasonable, and
nondiscriminatory basis. Subsection (d) requires electric
utilities to establish joint use interconnection and
transmission service within a reasonable time and for reasonable
compensation. Subsection (e) confirms the electric utility may
recover from connecting entities costs incurred in providing for
joint use, interconnection, and transmission service, while at
the same time ensuring that the charges imposed are fair,
reasonable, and nondiscriminatory. Subsection (f)(1) defines
reasonable compensation, subsection (f)(2)-(3) define the terms
transmission and distribution. She advised this change "puts
the studies on the backs of the IPP, versus the utility."
Lastly, section 4 amends AS 42.05.321 to improve consistency and
to make clear that RCA oversight authority encompasses joint
use, interconnection, and transmission service. Representative
Wilson noted that the sponsors worked closely with RCA to align
the bill with federal law, and to make it possible for Alaska to
produce its own electricity at low cost and with less dependence
on oil.
10:29:50 AM
CO-CHAIR COLVER asked whether the legislation uses the Public
Utility Regulatory Policies Act (PURPA) as a model for
implementing joint use and provisions for buying power from
IPPs.
REPRESENTATIVE WILSON said correct. In further response to Co-
Chair Colver, she explained the avoided cost issue was addressed
by requiring that the current averages provided by utilities are
broken down into the cost of each source of energy; for example,
Golden Valley Electric Association (GVEA) generates power in
many ways, and an IPP needs to know the cost of each source in
order to compete. Secondly, IPPs need to know the cost of
transmitting power, so they can add that cost to their total
cost, and enter negotiations with a utility.
CO-CHAIR VAZQUEZ referred to RCA Dockets I-15-001 and R-13-002,
and asked how they would affect the proposed legislation.
REPRESENTATIVE WILSON responded that pending RCA rulings may
resolve the transmission issue in the bill.
CO-CHAIR VAZQUEZ said RCA has been charged with completing a
related study due 6/15.
REPRESENTATIVE WILSON said yes.
CO-CHAIR COLVER surmised the bill is not just an access to
transmission issue in regards to a transmission cooperative
(Transco) or an independent system operator (ISO), but also a
framework for RCA to provide oversight for joint use of
transmission facilities and power purchase agreements in areas
that are not on the Railbelt grid, or that are not overseen by
an ISO or a transmission cooperative.
REPRESENTATIVE WILSON agreed, and added that the bill would also
allow power to be sold in Canada should there be excess after
first serving Alaskans.
CO-CHAIR VAZQUEZ asked whether the Alaska Independent Power
Producers Association (AIPPA) is submitting comments on the
related active RCA dockets.
10:35:14 AM
REPRESENTATIVE WILSON said yes.
CO-CHAIR VAZQUEZ observed that the Alaska Power Association is
reviewing the CS.
CO-CHAIR COLVER inquired as to how the approach in the CS
differs from RCA Docket I-15-001.
REPRESENTATIVE WILSON acknowledged the approach is similar, but
until the RCA docket is adopted, the sponsors' intent remains to
ensure that there are opportunities for IPPs to invest in
Alaska.
CO-CHAIR VAZQUEZ appreciated the work accomplished by the
sponsors, RCA, and IPPs. She stated there is value in waiting
for RCA to finish its work, as there are many changes to come
for the Railbelt transmission system.
REPRESENTATIVE WILSON reminded the committee that the bill will
be vetted in the House Labor and Commerce Standing Committee for
RCA issues, and then in the House Finance Committee.
10:38:43 AM
REPRESENTATIVE TALERICO moved to adopt the proposed committee
substitute for HB 78, labeled 29-LS0259\N, Nauman, 3/18/15, as
the working draft.
10:39:09 AM
CO-CHAIR COLVER objected for the purposes of discussion.
REPRESENTATIVE TALERICO urged the committee to adopt the
proposed CS.
10:39:36 AM
CO-CHAIR COLVER removed his objection. There being no further
objection, Version N was before the committee.
HB 78 was held over.
[CO-CHAIR COLVER passed the gavel to Co-Chair Vazquez.]
^PRESENTATION: AMERICAN TRANSMISSION COMPANY
PRESENTATION: AMERICAN TRANSMISSION COMPANY
10:40:20 AM
CO-CHAIR VAZQUEZ announced that the final order of business
would be a presentation by the American Transmission Company.
10:40:41 AM
ERIC MYERS, Manager Business Development, American Transmission
Company, recalled that the committee has heard extensive
testimony on the changes that are needed to the Railbelt
transmission system, and he offered a business model for
organizing the utilities in the Railbelt to make operational
decisions and future investments in transmission. The American
Transmission Company (ATC) is the first multi-state stand-alone
transmission utility in the U.S., and its customer/owners
include 28 investor-owned utilities, municipal utilities, and
cooperatives. The company grew from $550 million in assets in
2001, to $3.3 billion today held in 9,500 miles of transmission
lines and more than 500 substations (slide 2). The company does
not own generation, and serves the companies that serve the end-
customers (slide 3). Mr. Myers provided a short history of ATC,
noting that at its inception, the price of electricity in
Wisconsin was higher than that of neighboring states, and the
cost within the state varied regionally in a manner similar to
the situation in the Railbelt. He said transmission can be part
of the solution to leveling prices. Since 2005, ATC's customers
have seen a reduction in the regional price differential (slide
4). Integrating transmission under a single operating company
(a Transco) allows the operating company to maintain and improve
reliability, facilitate economic dispatch, interconnect new
generators on an open system, and to respond to new public
policies. Further, a Transco allows the transmission planning
process to evaluate and communicate the benefits of new
infrastructure and to operate and maintain a reliable integrated
transmission network (slide 5). In Alaska, ATC has learned from
stakeholders how the Railbelt network works, and of its history
of collaboration and conflict that arose as utilities built
transmission to meet their local needs. Also, as transmission
assets are used, the impact on the utility that built the line
can change, further creating conflict. A Transco provides
substantial opportunities for improvements to reliability and
economic dispatch.
10:45:53 AM
MR. MYERS said a successful solution would combine an integrated
operation of existing assets, access to capital, a tariff for
network transmission service, and effective governance (slide
6). To date, ATC has worked with Railbelt utilities to adopt a
common set of guiding principles, has established a working
group to refine financial analysis and benefits, has
communicated with other Railbelt stakeholders and interested
parties, and is building understanding and trust (slide 7). In
ATC's experience, a singular focus on transmission allows a
Transco to: plan effectively; build the network; operate
efficiently; respond to changing conditions; serve its customers
(slide 8). At the request of Co-Chair Vazquez, Mr. Myers
presented a Venn diagram that illustrated each party and its
tasks [document not provided in the committee packet]: The
Transco is responsible for owning, operating, planning, and
constructing the existing and future transmission assets. In
addition, the Transco is regulated by RCA and charges a tariff.
The unified system operator (USO), or independent system
operator (ISO), is responsible for establishing and maintaining
reliability standards and interconnection and planning
standards; therefore, the Transco follows the rules set by the
ISO or USO, ensuring recovery under its tariff. He remarked:
It's an RCA tariff that references the standards set
by the ISO or USO, and the Transco is the executor,
the Transco is the business that does the work.
CO-CHAIR VAZQUEZ pointed out RCA affects the Transco and the
ISO, and is a major stakeholder. She asked what composes an
ISO.
MR. MYERS explained the scope of an ISO or USO is part of the
active informational RCA docket; in fact, a series of workshops
will be held by RCA to set standards. At a minimum, from the
standpoint of a transmission-only utility, it is important that
the standards of reliability and economic dispatch are set
separately from the operating company, and provide an
opportunity for comment by stakeholders. Once the transmission
company starts building a line, the question of whether or not
the project benefits stakeholders needs to have already been
answered.
CO-CHAIR COLVER asked whether there was model legislation of
regulatory framework in the Lower 48 to adopt.
MR. MYERS expressed his belief that RCA's informational docket
will define any deficiencies in its existing regulatory scope
that would prevent the foregoing business model from receiving a
Certificate of Public Convenience and Necessity (CPCN) in
Alaska. Without any deficiency in RCA's existing regulatory
authority, no further legislation is needed.
CO-CHAIR COLVER inquired as to how competing entities would be
vetted.
MR. MYERS stated the CPCN process allows for the evaluation of
competing models through the regulatory process and a selection
by RCA. He pointed out that any alternative with the support of
the Railbelt utilities would have an advantage.
CO-CHAIR VAZQUEZ asked how an ISO and USO differ.
MR. MYERS said a USO - a uniform system operator - is another
statement of the same idea. In further response to Co-Chair
Vazquez, he said the purpose of an ISO or USO is to ensure that
stakeholders understand the principles applied by the Transco
when it develops new transmission infrastructure. A Transco
must balance the needs of all of the users of the network thus
it is important to have rules set and maintained by a separate
organization.
10:56:03 AM
CO-CHAIR VAZQUEZ surmised the system provides "cover" to the
Transco.
MR. MYERS said the ISO becomes the aggregator of a community's
interest; in further response to Co-Chair Vazquez, he said ATC
formed a Transco in Wisconsin and neighboring states through
asset contributions, and the participating companies became the
owner/customers of the Transco, in a manner similar to
cooperatives. The board consists of a mixture representing
owner and independent interests.
REPRESENTATIVE CLAMAN questioned how to populate the board of
directors of an ISO or a USO in terms of the number of seats
held by utility interests, versus seats of nonutility members,
such as consumers. He asked if this is the major distinction
between an ISO and a USO.
MR. MYERS answered that the constitution of the ISO or USO board
being proposed for Alaska is intended to be a stakeholder-driven
board. The interests of an ISO or USO are the effective use of
transmission and generation assets in the Railbelt. It is most
important that the board of directors of the Transco have the
ability to pursue transmission independent of decisions made
about distribution or generation assets. As such, ATC composed
its board of directors of a mix of owners and independent
members.
REPRESENTATIVE CLAMAN remarked:
So the question is: On that board, who has, does the,
do those that contribute assets have the majority or
are they a minority in the total numbers on the board?
That to me is kind of the operative question. ... Who
has the majority in the board and that was my question
for your company.
MR. MYERS responded that in ATC's business model, as an
operating company, the Transco's board majority is asset-owners.
As for the shares they vote, currently the owners of ATC vote:
one company, one vote. There are also balancing numbers of
independent directors on the board. He opined the governing
body for the ISO or USO is being fleshed out, and is intended to
be stakeholder-driven.
11:02:00 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 11:02 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Proposed CS for HB 78 Ver N.pdf |
HENE 3/31/2015 10:15:00 AM |
HB 78 |