Legislature(2017 - 2018)CAPITOL 17
03/06/2018 10:15 AM House ENERGY
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| Audio | Topic |
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| Presentation: Understanding Energy in the Interior | |
| 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
March 6, 2018
10:19 a.m.
MEMBERS PRESENT
Representative Adam Wool, Chair
Representative Matt Claman
Representative John Lincoln
Representative DeLena Johnson
Representative Jennifer Johnston
Representative George Rauscher
MEMBERS ABSENT
Representative Ivy Spohnholz, Vice Chair
COMMITTEE CALENDAR
PRESENTATION: UNDERSTANDING ENERGY IN THE INTERIOR
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JOHN BURNS, Vice President & General Counsel
Golden Valley Electric Association
Fairbanks, Alaska
POSITION STATEMENT: Presented a PowerPoint titled
"Understanding Energy in the Interior."
ACTION NARRATIVE
10:19:41 AM
CHAIR ADAM WOOL called the House Special Committee on Energy
meeting to order at 10:19 a.m. Representatives Wool, Johnson,
Lincoln, Rauscher, and Claman were present at the call to order.
Representative Johnston arrived as the meeting was in progress.
^PRESENTATION: Understanding Energy in the Interior
PRESENTATION: Understanding Energy in the Interior
10:20:01 AM
CHAIR WOOL announced that the only order of business would be a
presentation titled, "Understanding Energy in the Interior."
10:20:55 AM
JOHN BURNS, Vice President & General Counsel, Golden Valley
Electric Association, noted that a color-coded map and a plain
paper map which depicted the Railbelt System, as well as a
decision by the Regulatory Commission of Alaska (RCA) related to
the Delta Wind Farm, had been distributed to all the members
[Included in members' packets]. He introduced the PowerPoint,
titled "Understanding Energy in the Interior." [Included in
members' packets]
MR. BURNS explained that the presentation would be in three
parts: Golden Valley Electric Association (GVEA), today; Golden
Valley Electric Association, tomorrow; and Golden Valley
Electric Association, in perspective. He shared slide 2, "GVEA
at a Glance," which listed a membership of almost 35,000,
serving nearly 100,000 residents over almost 6,000 square miles.
He reported that there were a little more than 3,200 miles of
power lines, from Cantwell to Delta. He shared that the latest
retail sales were 1.24 billion kWh, about $141 million of power
purchases.
10:25:32 AM
MR. BURNS moved on to slide 3, "Where Our Power Comes From," and
reported that the fuel supply in 2016 and 2017 had been
essentially the same. Directing attention to the 2017 pie
chart, he stated that hydro, 5 percent of the total energy, was
from Bradley Lake, that coal was the cheapest source, that
natural gas was the "economy energy" and was purchased from
other utilities, that oil was the dominant source, and that the
wind power was from Alaska Environmental Power and Eva Creek.
CHAIR WOOL asked about the anticipated percentage of coal use
once the Healy 2 coal power plant comes on line.
MR. BURNS replied that coal use would increase, as it was the
cheapest source, with an offset for the use of oil and natural
gas.
REPRESENTATIVE RAUSCHER asked about the effect on the consumer.
MR. BURNS explained that it would have a direct, significant
impact on the cost of power adjustment (COPA).
10:28:26 AM
MR. BURNS introduced slide 4, "GVEA Generation," which depicted
the sources of GVEA power, including Healy Unit 1 & 2,
Fairbanks, Eva Creek Wind, North Pole, Delta, and North Pole
Expansion. He offered a brief description of each source.
REPRESENTATIVE JOHNSTON asked if gas and diesel were combined at
the North Pole Expansion plant.
MR. BURNS explained that the plant was run on diesel although it
was convertible to gas. He said there were two turbines, as the
one was gas and its exhaust was converted to steam.
MR. BURNS returned to slide 4 and reported that the Delta plant
was an emergency back-up, as it was the most expensive plant.
He pointed out that the North Pole plant was oil because that
was all that was available when it was built. He declared that
the Eva Creek wind farm had been a tremendous success, with a 35
percent efficiency.
CHAIR WOOL asked about the cost per MW of the two North Pole
plants.
MR. BURNS replied that he was not sure of the cost. He stated
that Healy was the cheapest, although at Eva Creek the cost of
the power was zero, except for the associated capital costs.
REPRESENTATIVE JOHNSTON asked if battery storage was used in
Fairbanks to retain the power from Eva Creek.
MR. BURNS replied, "not the way it's currently configured." He
shared that, as the battery technology was now vastly improved,
this was being evaluated.
10:34:09 AM
CHAIR WOOL asked if Eva Creek and Delta Power, both wind
sources, could share the same spinning reserves to offset the
fluctuations and avoid extra costs.
MR. BURNS replied that this underscored the components of
renewables: integration cost and regulation cost. He explained
that when Eva Creek was built, it was sized appropriately to
optimally absorb the spinning reserve that was regularly run and
have no impact on the system. He pointed out that putting more
renewables on that pad would have to ensure there was sufficient
spinning reserve to capture the regulation. If this was not
optimized, it became necessary to bring on additional spinning
reserve. He emphasized that utilities were not against
renewables, as utilities had an obligation to bring on
reasonably priced power.
REPRESENTATIVE JOHNSTON pointed out that this brought the
conversation back to the need for storage.
CHAIR WOOL offered his understanding that the battery at Golden
Valley was used to quickly supply a lot of power in the case of
a power outage, as opposed to a fluctuating reserve.
10:37:42 AM
REPRESENTATIVE JOHNSON asked about the base demand to Golden
Valley Electric Association.
MR. BURNS replied that the peak load was 210 [MW], usually in
the coldest part of winter. He stated that 281 [MW] was the
generating capacity, although, as the cost was so expensive,
they did not want to go to full capacity.
REPRESENTATIVE JOHNSON asked if the base load was covered just
by coal.
MR. BURNS said that coal could not be used to regulate, as it
was necessary to have something that was very responsive. He
pointed out that the challenge was to optimally configure a
system with generation sources. He declared that it was Golden
Valley Electric Association's responsibility to keep the lights
on at the lowest cost.
REPRESENTATIVE CLAMAN asked if the peak load was when all the
plants were running at full generation capacity.
MR. BURNS explained that load was different than generation. He
pointed out that load was demand, how many consumers were
drawing on the electricity. He explained that generation was
the ability to produce, and that these were different
components.
10:40:32 AM
MR. BURNS, in response to Chair Wool, stated that it was the 120
MW North Pole plant.
MR. BURNS moved on to slide 5, "Independent Power Producers
(IPP)," and reported that the three largest IPPs were Delta
Wind, Bradley Lake Hydro, and Aurora Energy, which was coal
fired. He pointed out that these IPPs could connect to the GVEA
system, either as a small utility of 2 MW or less through a
simplified streamlined process, or as a larger utility of
greater than 2MW which required use of the Interconnect
Agreements.
MR. BURNS addressed slide 6, "GVEA Supports Renewable Power,"
and declared that GVEA strongly supported renewables, pointing
out that they had the ability to generate up to 20 percent of
their requirement with renewables. He added that there was a
very aggressive SNAP program, Sustainable Natural Alternative
Power. He reported that of the 199 SNAP producers, 96 percent
were producing solar power. He called this "net metering" as
the excess was sold back to the utility. He spoke about the Eva
Creek wind farm, with 12 turbines producing a capacity of almost
25 MW. He added that the wind farm had been running at almost
35 percent efficiency for the past five years. He declared that
"it's been wonderful," and he added that the size had been
optimized for the system. He shared that most utilities had
similar commitments for renewable energy, declaring that "we
have to be stewards of our environment." He reported that the
initial pledge for renewable energy had been 10 percent of the
system peak load, which had been met in 2007, and increased to
20 percent, which had also been met by 2014. He reported that
the board, as part of its strategic planning, was currently
evaluating the next goal.
CHAIR WOOL asked if the 20 percent was capacity of peak demand.
MR. BURNS explained that when all the available renewals are
maximized, that would be 20 percent of the peak. In response to
Chair Wool, he said that this included Bradley Lake.
MR. BURNS addressed slide 7, "GVEA's New Solar Project,"
declaring this to be the newest project and the largest solar
array in Alaska, all on a three-acre footprint. He reported
that the panels had been ordered and the process would begin in
the spring.
10:45:51 AM
REPRESENTATIVE JOHNSTON, noting that the peak was seasonal,
asked if this was tied to industrial use.
MR. BURNS stated that GVEA considered this "somewhat of an
experimental process." He explained that, although solar
worked, it remained to be seen how it would integrate into the
GVEA system. He said that it was not tied to any industrial
use, as they were still trying to determine how it be
integrated. He added that although it was only 0.5 MW, and
covered three acres, it reflected the GVEA commitment to
renewables. He pointed out that the optimal time for solar in
Fairbanks was the spring due to the reflection off the snow and
the angle of the sun.
REPRESENTATIVE JOHNSTON asked if [the solar panels] had
automatic directional.
MR. BURNS offered his belief that these were stationary.
CHAIR WOOL offered his belief that they would need to be brushed
off during the winter.
MR. BURNS reiterated that it would be an experiment.
CHAIR WOOL spoke about a power plant in Colorado which produced
power using wind, solar, and batteries and was cheaper than
coal.
MR. BURNS, in response to Representative Rauscher, said that the
solar project produced half a megawatt at its best. He opined
that it would supply power for about 50 residences year-round.
REPRESENTATIVE RAUSCHER asked if there was any rebate.
MR. BURNS explained that GVEA owned the project, although there
had been a $250,000 grant for this project.
MR. BURNS, in response to Representative Johnson, said that
about 54 residences were served by the half MW, and that he
would confirm. He moved on to slide 8, "Power Purchases," and
shared that the independent power producer (IPP) Aurora Energy
produced 25 MW from coal and the Chugach plant supplied 60 MW
from natural gas through the Intertie.
MR. BURNS shared slide 9, "Residential kWh Rate Comparison*"
which compared the costs of different energy to the billing
amount for 600 kWh. He noted the savings when GVEA could
purchase economy energy, natural gas, to offset the higher cost
of fuel oil.
CHAIR WOOL asked whether Homer Electric used natural gas.
MR. BURNS said that he was not sure, although he pointed out
that Homer Electric had just installed "some additional
facilities" which added to the total cost.
CHAIR WOOL asked where Juneau would fit on the list [on slide
9].
CHAIR WOOL opined that in rural Alaska, after PCE [power cost
equalization] and for usage less than 500 kWh, the cost was
about $0.25.
MR. BURNS explained that the slide clearly illustrated that the
power generation mix correlated to the price.
CHAIR WOOL asked about the cost of transport for power from
Bradley Lake to Fairbanks.
MR. BURNS said that he was not sure of the transmission cost.
He noted that GVEA owned about 18 percent of Bradley Lake and
that it had tremendous potential for regulating variables.
REPRESENTATIVE JOHNSTON explained that there was an issue for
transmission with Bradley Lake, opining that the ML&P (Municipal
Light & Power) ownership would have sold Bradley Lake as it did
not fit into the business plan.
MR. BURNS acknowledged that all the Railbelt utilities were
monitoring the Anchorage ML&P proposed sale with Chugach
Electric Association to better understand the impact. He
declared that the utilities had to take a holistic perspective,
as they could no longer operate as islands. He stated that "the
Intertie has been a very positive thing."
REPRESENTATIVE JOHNSTON shared an anecdote about early power in
Fairbanks.
10:57:56 AM
MR. BURNS moved on to slide 10, "Dispatching Power... by the
minute," and he played a video which explained how to optimize
the energy mix in real time to save money.
MR. BURNS stated that the goal was to optimize generation in
order to minimize costs.
CHAIR WOOL asked whether the Anchorage utilities were calling
Golden Valley Electric Association for cheap power.
MR. BURNS acknowledged that they were not calling, even as there
"were lots of exciting things that are happening on the
Railbelt, and there may be a time when one of our generating
units is part of the power cooling agreement."
REPRESENTATIVE JOHNSTON asked if the military efforts to move
toward renewable power would affect the power structure.
MR. BURNS said that he was not sure if it would affect the power
structure, and he shared that GVEA was also working on
renewables to allow the military the benefit for its use.
REPRESENTATIVE JOHNSTON asked about the increase in demand.
MR. BURNS explained that it was a "trickledown effect, as the
population increases, service demands increase, businesses
multiply, that sort of thing." He said that he was unaware of
an analysis for the long term economic impact for Fairbanks or
the load increase for GVEA. He opined that, if this came to be,
it would be a huge positive. He explained that the next slides
would reflect GVEA tomorrow, which he deemed to be "very
bright." He returned to slide 11, "The Future Looks Bright,"
and shared a number of the proposed projects, including the new
load at the Clear Air Force Station, additional demand at
Eielson Air Force Base, addition of renewable energy sources,
and the $7.2 million capital credits refund.
11:05:52 AM
MR. BURNS moved on to slide 12, "GVEA's Rate Case Successfully
Completed," and reported that this had just been submitted and
approved, contingent upon Healy 2 adding to the base load.
CHAIR WOOL mused that, although the power production cost would
be less as Healy 2 would be burning coal, the capitalization
cost for the power plant would have to be added, and he asked
how that would affect the rates.
MR. BURNS said that there would be a slight impact, although the
cost was spread over 30 years. He said that the reduction in
cost of generation would more than offset the cost of
capitalization, resulting in a significant decrease in the
overall consumer bill. In response to Chair Wool, he expressed
agreement that the goal was for a net reduction.
11:08:14 AM
MR. BURNS moved on to slide 13, "Meter Replacement Project," and
spoke about the advanced metering infrastructure (AMI), which
allowed the consumer tremendous access to data for consumption
and costs in real time. He declared that this would improve the
system reliability and would allow them to pinpoint the outages
and respond more quickly.
REPRESENTATIVE JOHNSON asked if these were smart meters, noting
that these were very controversial.
MR. BURNS acknowledged that these meters could be controversial,
dependent on the perception, as they collected a lot of data.
He pointed out that this was optimum for a utility, as they
monitored peak load demands and time of day usage. This would
allow for a change to rate structure to offer different pricing
at different times. He declared that the intent was to ensure
better service, not to have "big government, somebody looking
over your shoulder and knowing what's going on."
CHAIR WOOL asked if the current rate was across the board, all
the time; whereas , in a more advanced system, there could be a
different rate at different times of day dependent on demand.
MR. BURNS explained that very sophisticated utilities had
notices to customers for load curves and corresponding costs,
and that this was an opportunity to maximize opportunities. He
called this a load balancing process.
CHAIR WOOL reflected on earlier discussions for on-bill
financing to include the purchase of various devices, such as
batteries that could be used to store energy during non-peak
hours.
REPRESENTATIVE JOHNSON asked if there was the potential for an
opt out on the meters.
MR. BURNS replied, "absolutely."
REPRESENTATIVE CLAMAN mused that this was an issue between "big
brother watching them using power" and "saving money."
CHAIR WOOL asked about a communication line from the meter.
MR. BURNS said that it was internet based, although he was
unsure for the set-up to the array. He expressed agreement that
the data had to be collected and communicated.
MR. BURNS reiterated that the reissuance of this refund was very
positive and that it underscores "that as a co-op, members are
the owners," slide 14, "$7.2 Million Refunded in Capital
Credits."
11:16:52 AM
MR. BURNS discussed slide 15, "Alaska Railbelt - 1980s," which
he described as the "holistic overview." He shared the reality
that GVEA was intimately connected to the Railbelt, and how
critically dependent it was to the other Southcentral utilities.
MR. BURNS directed attention to slide 16, "Alaska Railbelt -
1990s" and slide 17, "Alaska Railbelt - 2000s," which showed the
development of the Alaska Railbelt, as prior to this
development, GVEA was an island: "When we were out of power, we
were out of power." He stated that, as this became a health and
welfare issue, Alaska recognized this and created the Alaska
intertie. In the 2000s, the Northern Intertie was added, as
well as the Battery Energy Storage System, the Ground Based
Missile Defense, Alyeska Pump #9, the Pogo Gold Mine, the
expanded transmission line from North Pole to Carney, and Clear
Air Force Base.
CHAIR WOOL asked about the North Pole to Carney reference.
MR. BURNS explained that it was a transmission line, although he
was unclear for its purpose beyond additional power for those
areas. He reiterated how important it was for everyone to
recognize that everyone was interconnected.
11:22:12 AM
MR. BURNS shared another short video which, he stated,
underscored the cooperation among the Railbelt utilities, even
though people did not always agree.
MR. BURNS stated that working together was "the only way that we
can ensure that we all succeed." He concluded with slide 19,
"Alaska Railbelt Update," and offered his belief that the future
looked bright and that decisions could not be made in a vacuum.
REPRESENTATIVE JOHNSON asked about the vision for power pooling
in Southcentral Alaska.
MR. BURNS replied that optimally the utilities would work
together and use the lowest costs, progressively, to configure
all the energy generation. He declared that it would require
some cooperation. He added that the utilities were working
through some challenging issues, including billing and dispatch.
11:31:54 AM
REPRESENTATIVE JOHNSON asked if GVEA was in favor of formation
for the Railbelt Utility board.
MR. BURNS said that he had just read the proposal, and that he
was not in a position to respond.
REPRESENTATIVE JOHNSON stated that it was obvious for what
needed to happen and questioned if it was possible to coordinate
this without an oversight Railbelt utility board.
MR. BURNS offered his belief that the utilities needed to be
working through the issues together and that the proposed bill
was aspirational legislation that should be looked at to better
understand how to internally address the issues. He assured the
committee that the GVEA management would review the proposal,
and that it would be discussed at the Railbelt management
meetings. He said that, although many wanted to pass edicts for
a specific direction, this action could result in a more
troubling solution than what was being sought. He added that,
although the proposed bill provided aspirational aspects for
what the utilities ought to be thinking about, he expressed
concern for another body that forced an issue which should be
accomplished through dialogue.
MR. BURNS, in response to Representative Johnson, reiterated
that he had not "had time to digest it."
11:34:52 AM
CHAIR WOOL relayed that this was an issue that had been around
for a while.
REPRESENTATIVE RAUSCHER asked if the video showed a connection
between Copper Valley and MEA.
MR. BURNS said that he would review the video.
REPRESENTATIVE JOHNSTON stated that it showed it as part of a
northern intertie.
11:37:19 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 11:37 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HouseEnergyCmte 3-6-18 GVEA.pdf |
HENE 3/6/2018 10:15:00 AM |