Legislature(2017 - 2018)BARNES 124
04/05/2018 10:15 AM House ENERGY
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| HB382 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
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| + | TELECONFERENCED | ||
| += | HB 382 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
April 5, 2018
1:26 p.m.
MEMBERS PRESENT
Representative Adam Wool, Chair
Representative Ivy Spohnholz, Vice Chair
Representative Matt Claman
Representative John Lincoln
Representative DeLena Johnson
Representative Jennifer Johnston
Representative George Rauscher
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 382
"An Act creating the Railbelt Electrical System Authority; and
relating to the duties of the Regulatory Commission of Alaska."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 382
SHORT TITLE: RAILBELT ELEC. TRANSMISSION AUTHORITY
SPONSOR(s): REPRESENTATIVE(s) WOOL
02/21/18 (H) READ THE FIRST TIME - REFERRALS
02/21/18 (H) ENE, L&C
03/27/18 (H) ENE AT 10:15 AM CAPITOL 17
03/27/18 (H) -- MEETING CANCELED --
03/29/18 (H) ENE AT 10:00 AM BARNES 124
03/29/18 (H) Heard & Held
03/29/18 (H) MINUTE(ENE)
04/05/18 (H) ENE AT 10:15 AM BARNES 124
WITNESS REGISTER
ROBERT PICKETT, Commissioner, Chair
Regulatory Commission of Alaska (RCA)
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Testified during discussion of HB 382.
JULIE ESTEY
Director of External Affairs
Matanuska Electric Association
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 382.
MIKE CRAFT
Alaska Environmental Power, LLC
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 382.
STEVE KONKEL, MD
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 382.
KERRY WILLIAMS
Alaska Climate Action Network
Eagle River, Alaska
POSITION STATEMENT: Testified in support of HB 382.
BECKY LONG
Talkeetna, Alaska
POSITION STATEMENT: Testified in support of HB 382.
ACTION NARRATIVE
1:26:32 PM
CHAIR ADAM WOOL called the House Special Committee on Energy
meeting to order at 1:26 p.m. Representatives Wool, Spohnholz,
Johnston, Johnson, and Lincoln were present at the call to
order. Representatives Rauscher and Claman arrived as the
meeting was in progress.
HB 382-RAILBELT ELEC. TRANSMISSION AUTHORITY
1:27:03 PM
CHAIR WOOL announced that the first order of business would be
HOUSE BILL NO. 382, "An Act creating the Railbelt Electrical
System Authority; and relating to the duties of the Regulatory
Commission of Alaska."
1:27:31 PM
ROBERT PICKETT, Commissioner, Chair, Regulatory Commission of
Alaska (RCA), Department of Commerce, Community & Economic
Development, (via teleconference) stated that he had been a
Commissioner with the RCA since 2008 and had served as the
Chairman on three different occasions, including the timeframe
in which the letter to the Alaska State Legislature had been
issued on June 30, 2015. He offered his belief that this was a
very timely hearing as there were a lot of issues yet to be
resolved. He allowed that there was some criticism of the
process to date, that it was going too slow, and perhaps the
legislature should take a more aggressive stance at this point
and begin to mandate certain structures. He expressed caution
that not everything that had been said was entirely contexted
properly. He expressed his understanding for the frustration,
specifically from the potential sponsors of renewable energy
projects and the transmission system. He pointed out that the
earlier testimony from Janet Reiser identifying the pancaking
transmission rights was entirely correct.
MR. PICKETT pointed out that three of the recommendations from
RCA directly addressed a lot of these issues, noting that RCA
had set timelines for reporting from the impacted utilities. He
opined that there was "a very balkanized system that from the
time I came on the commission in 2008, my overriding impression
was just non-stop fighting." He offered some of the history
among the older utilities with long term power purchase
agreements. He added that the interaction among the utilities
was "not particularly helpful in many occasions." He said that
earlier concerns for the availability of natural gas from 2007 -
2009 brought up issues that shaped the environment. He reported
that the Legislature had invested about $800,000 to find a
rational, unified approach to energy, which had very limited
success. He discussed the following two legislative sessions
which attempted work with the ISO (Independent System Operator),
USO (unified system operator), or Transco functions. He
reported that, since the utilities went off the Chugach system
and created their own system, there had been more than $1.5
billion in new generation investment by the Railbelt utilities.
He explained that per the nature of Alaska statutes, once a
utility made a prudent investment, each utility could make
decisions regarding what was deemed best for their own
ratepayers. He noted that the RCA lacked any decision-making
power over what transmission or generation was built. He
pointed out that this had resulted in over-generation capacity
in the Railbelt. He said that the likelihood of any significant
new generation on an economic basis in the next decade was
probably slim or none. He cited the first of three
recommendations from the RCA: the creation of an independent
transmission company to rationalize transmission assets, and
create a more uniform, system wide tariff. He shared an update
for the likelihood of a filing for a certificate of public
convenience and necessity. He emphasized that merit order
economic dispatch was important, although it was a very
complicated process to get disparate utilities to work on a
tight pooling agreement. He expressed concern for the current
lack of enforceable reliability standards in the Railbelt. He
reported that voluntary standards had been filed with RCA in the
fall of 2013, and within four months, those standards were
ignored. He said that there was a lot of initial controversy
questioning the statutory or regulatory authority of the
commission over reliability standards. He declared that the RCA
had certificate power, and that it was necessary to be fit,
willing, and able to hold the certificates. He added that, by
and large, the utilities had "done an excellent job keeping the
lights on." He noted that the voluntary standards had some
gaping holes, particularly in the area of critical
infrastructure protection, which covered physical and cyber
security issues. He shared that a safeguard review had been
conducted, and that all six of the utilities had voluntarily
participated in the two-and-a-half-day review, even as it was
somewhat disruptive to their operations. He shared that it was
his intention, after the filing of the voluntary standards in
mid-April, to open a rule making docket on what was on file and
to proceed to incorporate that into the regulations on an
enforceable basis. He said that would allow for identifying the
additional physical and cyber security areas needed to be
addressed.
1:36:12 PM
CHAIR WOOL referenced the letter from the Regulatory Commission
of Alaska (RCA) dated June 30, 2015, [Included in members'
packets] in which the RCA requested two reports, one from
September 30, 2015, and another from December 31, 2015.
Representative Wool asked if any other reports been submitted
after these.
MR PICKETT stated that several reports had been voluntarily
submitted throughout 2016 and 2017, and that the latest formal
action had been in August, September, and October of 2017. They
were requested to come to a public meeting and present a formal
update on the three key items [in the June 30, 2015 letter].
1:37:35 PM
CHAIR WOOL asked if the RCA was getting the reports in a timely
manner.
MR PICKETT opined that he didn't believe the utilities were
dragging their feet, and he expressed appreciation that they
were bringing in $1.5 billion dollars in new generation capital
expenditures. In addition, there were several depreciation
studies and rate cases which were very time-consuming. He
pointed out that the utilities were also figuring out their own
operational protocols. He mentioned that the talent pool in
Alaska for technical operating abilities and management of these
assets was "fairly thin." Due to a lack of staffing, when the
utilities were assigned a task that often meant that that they
were delaying other projects. He noted that, although the
process would be too slow for some, these were very complicated
issues. He offered an example of a settlement process for type
power pooling where there were three different entities, trying
to relate that back to their generation stacks, how things were
going to be dispatched, and how the compensation factors were
going to be played in. He pointed out that, with several moving
variables, it was not as easy as it might seem on the surface.
He acknowledged that this gave utilities the incentive to
perhaps move slower than what the commission or outside parties
would like. He stated that the RCA would continue to keep the
pressure on.
CHAIR WOOL asked which of the requirements or standards was the
most difficult, controversial, or hardest to achieve.
1:39:37 PM
MR PICKETT offered his belief that the reliability standard was
difficult; however, if the filing was made in mid-April and the
two sets of basic operating standards were reconciled, that was
a good step forward as it had been controversial with many
disputes for over three years. He pointed out that there were
still gaping holes and that there was not any critical
infrastructure protection. He noted the events of the Net Cap
substation in the Bay Area, the Ukrainian attacks, and the
Industrial Control system attacks, and declared that the attacks
had become more and more pervasive. He added that the State of
Alaska bulk power systems, even as a small system, was in the
crosshairs of various state actors and a whole series of
advanced persistent threats, all of which would be challenging
moving forward. He offered his belief that the Transco issue
was going to be an economically driven issue, as all the
utilities had different concerns and different roles that
transmissions play. He offered an example for AEL&P, which had
very few transmission assets but a fairly heavy load. He said
that this would have a different set of circumstances than that
of Homer Electric, Golden Valley, and Matanuska with these
transmission assets spread over a much larger area. He added
that the economic case for each one of them was going to be
different. He shared that RCA started with the assumption in
the legislative report that there was not going to be any state
appropriations for transmission or other types of activities due
to state budget constraints. The commission does not have the
power to transfer assets from one entity to another, as the
utilities had property rights, and, in statute, they were
guaranteed to be able to collect in rates what it would take to
pay for these assets.
1:41:38 PM
REPRESENTATIVE JOHNSTON stated that one of the driving factors
was the economic dispatch. She noted the many challenges facing
the utilities and the overbuilding of production capabilities.
She said that they had messages from people who had renewable
energy sources who had not been able to participate online with
the Railbelt as Independent Power Producers (IPPs). When the
economic dispatch question was addressed, it was necessary to
have a spin rate; yet, when there was this overproduction of
energy, how would that issue be resolved.
MR. PICKETT asked Representative Johnston if she meant bringing
on more renewable energy.
REPRESENTATIVE JOHNSTON replied that most renewable energy,
except hydro and the others that were not available in the
Railbelt, were intermittent; hence, a spin rate was necessary.
She added that there were various costs of spin rates depending
on the utility, offering as an example, a utility that had a
renewable IPP which must design its spin rate to compensate for
the intermittent power. She asked whether trying to arrive at
one Railbelt system with economic dispatch was one of the most
significant issues as the cost of production had expanded the
cost throughout the Railbelt.
1:43:44 PM
MR. PICKETT explained that the amount of capital investment had
been expanded more than in generations throughout the Railbelt.
He added that, at the same time, more efficient generation had
been created regarding natural gas generation. This reduced the
amount of fuel consumption by 25 to 30 percent. He mused that,
regarding the intermittency and variability issues and bar
support with voltage support at different points in the system,
the renewables had a more difficult time with meeting that as
they were not dispatchable all the time, as was possible with
most fossil fuel generation. He declared that the states with
the most success for use of more renewables had embraced some
form of a renewable portfolio standard or specific goals. He
offered an example of Texas, as it was the leading state for
wind production. He explained that Texas had established a date
for 11,000 megawatts of wind energy. The region-wide
independent system operator, Electric Reliability Council of
Texas (ERCOT), was directed by the Texas legislature to create a
mechanism to put the transmission in the areas of West Texas to
get it to the populated areas of the state. He asked if Alaska
was willing to embrace a renewable portfolio standard.
REPRESENTATIVE JOHNSTON pointed out that Alaska differed in
population from Texas.
MR. PICKETT expressed his agreement.
1:45:36 PM
CHAIR WOOL reflected that Representative Johnston had mentioned
access, which was an issue for the IPPs regarding rates and the
charges to access the system.
MR. PICKETT interjected that a corollary issue was for what the
IPPs would be paid per kilowatt hour.
CHAIR WOOL mused that this tied into spinning reserve and
offered his belief that the State of Alaska had declared a goal
to reach a certain percentage of renewables by a certain year
even though this was not referenced in recent testimony. He
pointed out that, as other states had been able to accomplish
this efficiently and cheaply, Alaska should not be an exception.
He asked if there would be a solution from the current GDS
Associates process.
MR. PICKETT replied that he wouldn't prejudge the final GDS
Associates report, and that he was looking forward to reviewing
it. He opined that it would largely depend on what happened to
the transmission assets and how they were managed going forward.
He reflected on the potential creation of a Transco, and whether
the transmission assets remained in each of the utility service
areas. He added that as, by statue, the utilities could
establish their own transmission rates, there would continue to
be the challenge of pancaking rates.
CHAIR WOOL expressed his desire to see the upcoming reports.
1:48:21 PM
JULIE ESTEY, Director of External Affairs, Matanuska Electric
Association (MEA), Palmer, Alaska, stated that MEA opposed the
proposed bill, as they would prefer to continue with the
regulatory request from the RCA to continue the voluntary
efforts which were working and making progress. She stated that
"we do appreciate the pressure" and that, as the heat was on,
they accepted the challenge. She presented a PowerPoint, slide
1 "What is the Railbelt?" and stated that it was an electric
system of six interconnected utilities, an islanded grid
covering a very large geographic area although it served a
relatively small load. She pointed out that there was a lot of
infrastructure serving very few ratepayers to cover the costs.
She noted that all the utilities were 'public power' and
answered to its members, with no profit motive and no
shareholders asking to share in a profit.
1:51:05 PM
CHAIR WOOL reported that testimony had indicated that millions
had been saved through this loose power pool agreement, and he
asked where had the savings had been realized.
MS. ESTEY replied that there were several categories of rates,
which included the COPA, the cost of power adjustment, and
included the cost of fuel and purchase power. She noted that,
as there were expenditures to cover the costs to serve the
members, any income from the power sales went back into the
balancing account. She offered an example of a drop in the COPA
rate due to sales to other utilities. She pointed out that
those values varied, and that MEA had seen those adjustments
have real value to its members. She pointed out that the RCA
closely reviewed the COPA for accuracy every quarter.
CHAIR WOOL asked for clarification that the portion of an
individual's billing designated to COPA expense would be reduced
if there were sales to another utility.
1:53:04 PM
MS. ESTEY stated that the total balancing account which went
into the revenue requirement around the COPA was reduced and
then it was divided among the members. She returned to slide 1,
and addressed the high reliability for the transmission system,
which dealt with the redundancy through generation and
transmission planning. She explained that this was determined
by how a contingency was handled. She added that fuel was
expensive relative to the Lower 48, in some cases almost triple
the cost. She noted that 40 percent of the cost to the members
was fuel.
1:56:02 PM
REPRESENTATIVE JOHNSTON asked about the term of the most recent
fuel contract.
MS. ESTEY said that it was a five-year contract.
CHAIR WOOL noted that if the Intertie with Fairbanks went down,
that did not really affect the reliability for MEA.
MS. ESTEY replied that it was dependent on the issue, for how
much power was on the system, and where it was coming or going
from. She pointed out that this could result in a frequency
change that impacted everyone, as the frequency threshold was
very narrow for fluctuations.
CHAIR WOOL asked about the disagreements on the reliability
standards. He acknowledged that cybersecurity was an issue.
1:59:13 PM
MS. ESTEY reported that the first reliability standards were
filed when the Intertie was built, and these continue to evolve
as the system grows and adjusts. She stated that reliability
was keeping the lights on and that it depended on a lot of
things, including redundancy. She asked how much was intended
to be built, what was the benefit for building additional
redundancy into a system, and did the membership want to pay for
this. She addressed spinning reserve, through generation, and
how well that could be handled. She pointed out that there was
very little spinning reserve carried in the systems in the Lower
48, whereas in Alaska there was almost 30 percent of spinning
reserve to ensure enough power if the generators stop. She
declared that this was the sticking point for the reliability
standards.
2:01:22 PM
MS. ESTEY advanced to slide 2, titled "Joint efforts have been
discussed in the past. What is different?" She reported that,
in the past, the Railbelt utilities had cooperated well, even as
this was an economic benefit for the members, the state, and the
region. She stated that there was new leadership and that the
economics were different, so that the proactive and voluntary
coordination was now unprecedented in the Railbelt. She
declared that the new generation options had made collaboration
more economic, and that new leadership had been working together
in a new era of cooperation. She stated that they wanted to
take advantage of the natural cohesion in the Railbelt and make
more of these agreements contractual to outlive politics. She
added that a member survey had shown that 70 percent wanted more
renewables on the system, with support for paying more. She
declared that there were many innovations available.
CHAIR WOOL referred to earlier testimony stating that there was
less demand for power in the Railbelt.
MS. ESTEY said that MEA was one of the few not seeing a decline
in demand. She reported that, although MEA had added 1500 new
services during the last year, there was only a slight increase
in load. She acknowledged that this could be a result of
conservation or warmer weather.
CHAIR WOOL mused that the system demand was less.
REPRESENTATIVE RAUSCHER declared that the electrical bill had
been a lot higher at his house in the past year.
2:06:06 PM
MS. ESTEY referenced the letter written by RCA to the
legislature in 2015 voicing concerns and urging the utilities to
take voluntary steps. She stated that the utilities were taking
those steps and it was working. She declared that there were
more proposals to be presented to the RCA in the upcoming year,
and that it would become clear whether statutory changes would
be required to make some of these changes. She declared that
reliability, economic dispatch, and transmission, along with
some other complicating factors with sales of utilities, created
a lot of change. She stated that it was necessary to hear all
the input and ensure there were not any unintended consequences.
2:07:38 PM
Ms. ESTEY moved on to slide 3, titled "The Railbelt utilities
are moving forward with voluntary efforts." She shared that
first there was collaborative modeling to create an economic
model for focused actions. She declared that this had included
full open disclosure for costs and other information. She said
that there had been a loose Power Pool since 2015, which was a
voluntary power market which allowed utilities to buy and sell
power when it was most economic. She said that MEA had
recognized $16 million in benefits in the first year, resulting
in lower costs to its members. She explained that this was
structured into a Tight Power Pool and, instead of voluntary, it
became a contractual obligation for utilities to come together
and share resources. She added that this would reduce the
amount of fossil fuels burned.
2:09:58 PM
CHAIR WOOL asked if the goal of the Tight Power Pool was to
incorporate all the utilities.
MS. ESTEY expressed her agreement that this was the intention,
and that all the utilities had "been invited to that table."
She explained that 80 percent of the benefits were with getting
three of the Railbelt utilities on-line. She added that the
Homer Electric Association and Golden Valley Electric
Association were both involved in these discussions and were
making their decisions for the value to each of them. She noted
that the addition of Golden Valley Electric Association would
achieve the next 20 percent of additional benefit, although the
benefit for the addition of Homer Electric Association was
negligible.
2:12:00 PM
MS. ESTEY directed attention to slide 4, "Potential Economic
Benefits," which reflected the 2016 modeling effort. She said
there was between $15 - $25 million in annual savings, with
merit order dispatch. She reiterated that approximately 80
percent of the value was from MLP, MEA, and Chugach in the tight
pool. She said that the addition of Golden Valley Electric
Association brought an additional 19 percent of savings. She
noted that there were still more savings to be achieved.
2:13:21 PM
MS. ESTEY shared slide 5, "Are the utilities taking too long?"
She shared a timeline that began in 2015 and included the RCA
letter and the loose power pool; in 2016, the model was
developed reflecting the value of transactions; in 2017, there
was an MOU for the tight power pool; and in 2018, there was
further testing of economic dispatch, the RRC (Railbelt
Reliability Council) structure was filed with the RCA, and the
tight power pool filing was made. She stated that the utilities
were developing tools for communication with each other and
their members.
2:16:46 PM
CHAIR WOOL reflected that the timeline on slide 5 could have
begun in 1995, per Robert Pickett, Commissioner of the RCA, and
he listed events including the Railbelt Electrical Grid
Authority, 2008. He expressed his desire to highlight that this
had been going on far longer than since 2015.
MS. ESTEY acknowledged that this was an excellent point and that
this was the source of much frustration. She admitted that the
reputation had been earned. She pointed out that this was now
stakeholder and utility driven, based on economics and what was
right for members, as opposed to the earlier issues driven by
state agencies. She moved on to slide 6, "The Utility Lens,"
and stated that the goals for Railbelt collaboration, which
included: burn the least amount of fuel, as 40 percent of costs
were for fuel, while only 6 percent was for administration;
manage and reinforce reliability, which required an
enforceability mechanism; reduce rate increases, even as the
increases in fuel, materials, labor, and health benefits made
sustained rate decreases doubtful; system-wide focus; open
access and clear path for independent power producers; and stand
up the RRC (Railbelt Reliability Council) and let it make
decisions. She listed the proposed members of the RRC board as
the stakeholder group that should be making the decisions.
CHAIR WOOL asked if all the utilities were comfortable with a
governing body, with the utilities as the minority, that made
policy decisions.
MS. ESTEY stated that the stakeholder driven process was pushing
the proposed GDS Associates model, with the utilities having
three of the nine seats on the RRC. She declared that MEA was
supportive.
2:23:06 PM
MS. ESTEY returned attention to slide 6, and listed the issues
important to MEA, which included a structure and solutions:
free of control from for-profit special interests; free from
instability caused by political cycles; free from conflicts of
interest; inclusive of many voices; transparent, collaborative
and deliberative to fully understand impacts to ratepayers;
firmly rooted in technical excellence and fiscal responsibility;
and with RCA oversight.
2:24:16 PM
MS. ESTEY moved on to slide 7, "Good Things are Happening
Everyday". She shared the 2017 accomplishments at MEA, which
included: safest year on record; rate case with less than 1
percent total bill impact after a new power plant; new gas
contract to save members $2 - $3 million, about $5 each month
for the typical member; outages were cut in half from 2016; net
metering members doubled; many renewable projects in the
pipeline, including solar and waste heat; and, $1 million given
back to the community by members voluntarily rounding up their
bills through Operation Round Up.
REPRESENTATIVE JOHNSTON reflected that this process had gone on
for the last forty years, yet there was still the issue of
winners and losers. She acknowledged that the conversation was
changing along with the changing of CEOs, although she
maintained concerns for generation in the Railbelt, more than
was necessary. She asked if the MEA co-op could be "mothballed"
as profit was still built in to the model.
MS. ESTEY declared that they to be looking at the costs and
benefits, pointing out that all the new efficient generation was
replacing old generation. She stated that, although there was
additional power generation, they preferred to not use the
older, more expensive generation. She shared that they looked
closely at the recovery of costs, including those on the power
plant and the transmission system through the base rate.
CHAIR WOOL asked if a full system integrated with one spinning
reserve that could accommodate the fluctuations of many IPPs
would solve the spinning reserve problems for them.
MS. ESTEY explained that their new power plant was able to help
regulate the wind, and, although it was a bit different than
spinning reserve, it was regulation for variable power. She
said that MEA looked forward to working with the IPPs through
these new structures to better understand the costs and
benefits. She declared that a diversified energy portfolio was
a smart, long term strategy.
CHAIR WOOL asked about a plan if, at the end of the GDS
Associates process, there was a recommendation to ARCTEC to
which MEA did not agree.
MS. ESTEY said that MEA was ready to move forward looking for
solutions and was ready to present a solution to the RCA for its
approval.
2:34:14 PM
MIKE CRAFT, Alaska Environmental Power, LLC, reported that he
was the owner of the Delta Wind Farm, and he offered his belief
that the comments by Commissioner Picket "were right on. It was
a very fair analysis of where we are at." He said that the six
utilities on the Railbelt grid did a good service to the public
and were good at what they did. He said that he had no
complaints for the way electricity was delivered to his house,
and that he appreciated the service. He expressed concerns for
an ISO situation because his experience for the past 12 years
had shown him that there was an inherent self-build bias by the
utilities, even as he conceded that this was their job to "look
out for their shareholders." He opined that, as the
shareholders of one utility had no responsibility to the
shareholders of another utility, it was not realistic to expect
them to average out any impact to the public. He reflected on
the issues which lead to his decision for where to locate his
wind farm. He shared his belief that the three largest
renewable energy projects in Alaska "were dead on arrival less
than a month ago at the RCA, and most of it had to do with
integration and transmission issues." He suggested that it was
unfortunate that $240 million in private capital, as well as
thousands of jobs, was not invested in the State of Alaska. He
declared that this would send a signal that "Alaska's not really
open for business for the private sector to come in here and do
projects that do have public benefit." He declared the need for
a board for the ISO which would mirror the description in the
proposed bill, otherwise, "we will be getting more of what we've
already gotten," which he opined had not gotten the state very
far. He reflected that some of the issues stated by the Alaska
Power Producers Association were for self-direction, voluntary
coordination, no increase to their own ratepayers, free from
political cycles, and no competition. He expressed his concern,
declaring that the ISO had to be independent. He directed
attention to the state energy policy which stated that, by 2025,
the state should have 50 percent renewable [power] and it
encouraged private sector development. He stated that this was
not happening. He declared that the state was in trouble with
the Environmental Protection Agency, as it was necessary to
modify the power plants at a cost of about $163 million. He
reported that the military were concerned for personnel
stationed in Fairbanks. He opined that the larger issues would
not be addressed by a local utility. He directed attention to
his letter dated April 4, 2018 [Included in members' packets].
He stated his support for HB 382.
CHAIR WOOL asked if the proposed board structure was acceptable.
MR CRAFT replied that he liked the board description as
described in the proposed bill.
2:43:48 PM
CHAIR WOOL opened public testimony.
2:44:10 PM
STEVE KONKEL reflected on the history of these issues, pointing
to testimony on another bill on February 2, 2016, with the same
issues. He shared that there were some key concepts, noting
that rate payers had a fundamental interest in energy efficiency
and innovation, in a system which took full adventure of what
Alaska can do. He pointed to the savings from a possible merger
of two utilities in the Anchorage area. He addressed economic
dispatch, and expressed his agreement with Chairman Pickett,
that this was challenging and involved merit order dispatch
which required rules. He reflected on the GDS Associates
testimony which stated that this worked in the Lower 48 because
it was a benefit to the whole system. He reiterated that, as
merit order dispatch was part of economic dispatch, the rules of
the road had to be approved by the RCA. He pointed out that the
scope of the GDS Associates process did not include integrated
resources planning. He noted that, as there was currently more
capacity than necessary, there was not any worry for additional
investment in generation capacity. He stated that there was
concern for pancaking tariffs and investments that need to be
made in transmission. He expressed his hope that the GDS
Associates process resulted in real investment that could help
with a larger area to load balance and accomplish economic
dispatch in a way that would save millions of dollars. He
suggested that this be viewed on a regional basis to better
include cooperation. He asked that there be a focus on
ratepayers, renewables, innovation, and ways to do things in the
Railbelt that might have statewide benefits from investments in
technology.
2:49:26 PM
KERRY WILLIAMS, Alaska Climate Action Network, referenced a
letter to the committee [Included in members' packets]. He
questioned the amount of renewable energy which could be brought
on-line. He pointed out that, even with the savings in cost per
kilowatt hour, the renewables were not accommodated. He pointed
out that, as there was increased efficiency in the use of
electricity, the amount of electricity consumption was
decreasing and there would not be a need for more generation.
He noted that this did not include the issue of electric and
battery-operated vehicles, which were currently 2 percent of the
new vehicle total and doubling every year and a half. He said
that 100 percent of new vehicles would be electric within 10
years, and that this could be a challenge for generation
capacity. He said that this was an opportunity to lower our
rates by taking advantage of electric vehicles and other storage
opportunities, but that, without HB 382, it would not happen.
He declared his support for HB 382.
2:56:01 PM
BECKY LONG reported that she had been following Railbelt
electric and transmission issues since the 1980s and had focused
on these specific issues since January 2011 when the Railbelt
Regional Integrated Resource plan was introduced. She stated
her support for HB 382 and offered her belief that a Railbelt
electrical transmission authority was necessary to bring region
wide merit order economic dispatch, a maximum benefit to the
ratepayers. She added that she supported the independent system
operator (ISO) concept stated in the proposed bill and that she
was comfortable with this authority being a division of the RCA,
noting that she was impressed with their work. She offered her
belief that the utilities would not succeed voluntarily in
getting together economic dispatch and reliability standards on
their own. She declared that this process would benefit the
Railbelt region. She stated that these were fast changing
times, and that the new transmission and distribution
technologies could address the intermittencies of renewables
through the interconnectivity of the electrical systems. She
said that electric management could help to change the nature of
peaks and the need for peaking and stand by capacity. She added
that passive consumption was on the brink for the radical shift
due to the coming on line of information technology and smart
grid technology. She noted that response and demand by the
consumer was an important trend. She stated that it was
possible for a more flexible system without bringing more
capacity on to the system to meet peak demands.
2:58:58 PM
CHAIR WOOL thanked everyone for adjusting their schedules. [HB
382 was held over]
2:59:18 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 2:59 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 382 - Letter of Opposition - Alaska Power Assn..pdf |
HENE 4/5/2018 10:15:00 AM |
HB 382 |
| HB 382 - Letter of Support - AEP 04.05.2018.pdf |
HENE 4/5/2018 10:15:00 AM |
HB 382 |
| HB 382 - MEA Presentation - 4.5.18.pdf |
HENE 4/5/2018 10:15:00 AM |
HB 382 |