Legislature(2023 - 2024)BARNES 124
03/19/2024 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| HB368 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 368 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 19, 2024
10:16 a.m.
MEMBERS PRESENT
Representative George Rauscher, Chair
Representative Tom McKay
Representative Thomas Baker
Representative Stanley Wright
Representative Mike Prax
Representative Calvin Schrage
Representative Jennie Armstrong
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 368
"An Act relating to clean energy standards and a clean energy
transferable tax credit; and providing for an effective date."
- MOVED CSHB 368(ENE) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 368
SHORT TITLE: ELECTRICAL ENERGY & ENERGY PORTFOLIO STDS
SPONSOR(s): ENERGY
02/20/24 (H) READ THE FIRST TIME - REFERRALS
02/20/24 (H) ENE, FIN
02/22/24 (H) ENE AT 11:00 AM BARNES 124
02/22/24 (H) -- MEETING CANCELED --
02/27/24 (H) ENE AT 11:00 AM BARNES 124
02/27/24 (H) Heard & Held
02/27/24 (H) MINUTE(ENE)
02/29/24 (H) ENE AT 10:15 AM BARNES 124
02/29/24 (H) Heard & Held
02/29/24 (H) MINUTE(ENE)
03/05/24 (H) ENE AT 10:15 AM BARNES 124
03/05/24 (H) Scheduled but Not Heard
03/07/24 (H) ENE AT 10:15 AM BARNES 124
03/07/24 (H) Heard & Held
03/07/24 (H) MINUTE(ENE)
03/14/24 (H) ENE AT 10:15 AM DAVIS 106
03/14/24 (H) Heard & Held
03/14/24 (H) MINUTE(ENE)
03/19/24 (H) ENE AT 10:15 AM BARNES 124
WITNESS REGISTER
CURTIS THAYER, Executive Director
Alaska Energy Authority
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
hearing on HB 368.
JULIE ESTEY, Chief Strategy Officer
Matanuska Electric Association
Palmer, Alaska
POSITION STATEMENT: Answered questions regarding proposed
amendments to HB 368.
CRAIG VALDEZ, Staff
Representative George Rauscher
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions about Amendment 10 to HB
368 on behalf of the House Special Committee on Energy, sponsor,
on which Representative Rauscher serves as chair.
KEN HUCKABA, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 368.
KASSIE ANDREWS, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 368.
KEN GRIFFIN, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 368.
TODD LINDLEY, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 368.
ACTION NARRATIVE
10:16:46 AM
CHAIR RAUSCHER called the House Special Committee on Energy
meeting to order at 10:16 a.m. Representatives Prax, Baker
Schrage, Wright, Armstrong, and Rauscher were present at the
call to order. Representative McKay arrived as the meeting was
in progress.
HB 368-ELECTRICAL ENERGY & ENERGY PORTFOLIO STDS
10:18:06 AM
CHAIR RAUSCHER announced that the only order of business would
be HOUSE BILL NO. 368, "An Act relating to clean energy
standards and a clean energy transferable tax credit; and
providing for an effective date."
10:19:03 AM
CURTIS THAYER, Executive Director, Alaska Energy Authority
(AEA), advised that regardless of what technology is used or
whether it is achieved through a clean energy standard (CES) or
a renewable portfolio standard (RPS), the key is that
transmission lines are needed to move that power. Alaska, he
continued, lacks the transmission lines on the Railbelt to move
that power to where the people are. If Alaska were in the Lower
48, he pointed out, it would be required to have two or three
different transmission lines servicing the Railbelt, not just
the one line that Alaska has had for over 40 years. The Grid
Resilience and Innovation Partnership (GRIP) would give Alaska a
redundant line off the Cook Inlet into Southcentral, Alaska, and
a future phase of that would be to connect a High Voltage Direct
Current (HVDC) line going up to Healy, Alaska, to get a
redundancy line out of Fairbanks.
10:20:57 AM
CHAIR RAUSCHER noted that HB 368 doesn't focus much on
transmission lines. He requested Mr. Thayer to explain the
details and differences between the existing and proposed
transmission lines.
MR. THAYER replied that the $206.5 million in federal funding
from GRIP requires a match of $206.5 million [from the State of
Alaska]. The project - the $413 million HVDC line - is
anticipated to be about 65 miles long and would run underneath
the Cook Inlet and tie in near Bernice Lake north of the Homer
system. It would then connect through converters to Chugach
Electric Association's (CEA's) Beluga substation, a gas fired
power plant located across the inlet. Since Beluga has lines
that take power into Anchorage, it would give a redundant
(second) loop off the Kenai [Peninsula]. This summer, the
Alaska Energy Authority (AEA) will look at the routing,
engineering, and cost of this eight-year project. Since there
is no off-the-shelf HVDC line that can be purchased, a
consideration is to look at the different sizes which cost
varying amounts.
10:23:40 AM
CHAIR RAUSCHER asked whether all the land that is needed to
develop the new HVDC line is already acquired so building the
line could commence immediately [upon receipt of the money].
MR. THAYER responded that most of the line would be under the
Cook Inlet and would connect to Bernice Lake, an existing
substation with Homer Electric Association (HEA). Since there
is a trench in the middle of Cook Inlet and the cable will be
buried about six feet under, environmental studies will
determine the route and most cost-effective way to do the line.
The GRIP funding only allows eight years to complete the
project, so [AEA] wants to do the environmental studies this
summer to ensure that once a grant agreement is in place a field
season won't be missed.
CHAIR RAUSCHER asked whether the HVDC line would be run through
a liquid filled casing.
MR. THAYER answered that the cabling is encased and is six to
ten inches round, and right now, AEA doesn't anticipate putting
it into a different encasement across the inlet. He said he
will provide to the committee a cross-section image of the cable
and pictures of the jet drive and how they dig in the mud, blast
the mud, and lay the cable.
CHAIR RAUSHER thanked the committee for indulging his questions
about transmission lines because they are not what HB 368 is
about, rather HB 368 takes place after that cable is built.
10:26:15 AM
REPRESENTATIVE SCHRAGE continued with the topic of transmission.
He said the concern is built into HB 368 that the transmission
isn't there to transmit the electricity throughout the state to
where it is needed. He asked where that constraint is and if
this initial GRIP application addresses that transmission
constraint. He further asked whether it is a constraint today
or becomes a constraint as things are built out.
MR. THAYER replied that the constraint is today and was 32 years
ago when Bradley Lake, a 120-megawatt power plant, was built.
The 50-plus-year-old line servicing Bradley Lake was designed to
serve Homer with power, not take power northward from Homer, and
in essence is a 75-megawatt line. A $90 million upgrade is
currently being done by AEA on the SSQ Line [Sterling Substation
to Quartz Creek], dual lines purchased by AEA four years ago
after the Swan Lake fire. The fire took that line out of
service for four months, costing ratepayers about $12 million
more in burning natural gas. There is a congestion at Bradley
Lake; Kenai couldn't take all the power produced at Bradley
Lake, so water had to be spilled. This last winter an existing
line went down for five days between Whittier and Girdwood due
to a snowstorm. These examples show the vulnerability of not
having a secondary line out of the lower peninsula into
Southcentral Alaska and on to Fairbanks, which receives 17
percent of the power from Bradley Lake; the HVDC line would
provide redundancy.
REPRESENTATIVE SCHRAGE inquired about when it is expected that
the transmission constraint will be alleviated and the
provisions in HB 368 will become enforceable.
MR. THAYER responded that the HVDC is approximately eight years
and upgrades are currently being done on the SSQ Line on the
Kenai Peninsula. Analysis is being done on ways to shorten that
time window, but transmission upgrades take five to eight years
to be fully completed. Supply chain logistics are an issue in
that items have been on order for 18-24 months, something that
was not the case before COVID-19.
10:31:39 AM
REPRESENTATIVE SCHRAGE asked whether there is a high degree of
confidence that these transmission upgrades will be executed.
He further asked about the necessity of the provision in HB 368
that provides an out if the transmission isn't completed and the
bill becomes essentially unenforceable.
MR. THAYER answered that many independent power producers (IPPs)
are coming into the market, so these upgrades are needed to
ensure that power can move. The AEA and utilities are working
together, which is one reason why [AEA] secured $166 million
through bonding to start these upgrades. Part of the package
deal is battery storage in Homer and at the Matanuska Electric
Association/Chugach Electric Association facility and all the
way to Fairbanks. Because things are progressing, upgrades are
being done currently, and there is now the $200 million in GRIP
funding, [AEA and the utilities] are confident they can do both
simultaneously.
10:33:33 AM
REPRESENTATIVE PRAX asked whether the financing plan is true
bond for all these projects, or whether state grants are being
looked for.
MR. THAYER replied that the upgrades to the SSQ Line have
already been bonded. The cost of all three battery energy
storage systems (BESSs) is about $180 million, of which $57
million is already in hand through that bond. In that bonding,
$20 million is paid for by the ratepayer and has been set aside
to do initial work, so a match of $186 million is needed. A
match of $206.5 is needed for the $206.5 million in GRIP
funding. With the governor's budget of $12.7 million, about $33
million of the $206 million needed for the match is already had,
and so the state is being looked at for securing part or all of
the match.
REPRESENTATIVE PRAX stated that things can and do go wrong with
financing and he isn't qualified to look at that, so he is more
comfortable with paying the extra to bond this. For the
legislature to spend money on this, he said he would like to see
an arithmetic evaluation of funding and project viability.
10:37:52 AM
REPRESENTATIVE SCHRAGE cited a study by the [National Renewable
Energy Laboratory (NREL)] which indicated that the lowest cost
option for utilities would be to go towards about 70 percent
renewable energy by 2040. He expressed his concern that rather
than reaching the bill's target threshold of 60 percent by 2051,
the utilities might reach 70 percent by 2040, which would be a
financial impact to the state that is much higher and quicker
than expected. He asked whether AEA has a projection as to how
quickly utilities might begin deploying renewables.
MR. THAYER responded that he doesn't have an idea what plans the
individual utilities are working on for moving forward. New in
Alaska right now, he advised, is work with IPPs rather than
utilities for providing generation, whether that is new wind
farms or solar farms. The NREL study notes that additional
transmission lines are needed, and [the study's] assumption is
that there is transmission in place to move that power in
different directions. He said AEA, through the Rural Energy
Fund (REF), has funded many of the wind and solar studies that
are being done.
10:42:04 AM
REPRESENTATIVE SCHRAGE asked whether Mr. Thayer agrees with the
NREL study that the lowest cost option is to go towards 70
percent renewables by 2040.
MR. THAYER answered that there are points in the NREL study he
agrees with, points he disagrees with, and points on which the
jury is still out. At the time the study was presented, many of
the costs of doing renewables in Alaska were unknown. Also
unknown is how renewables operate in very cold weather. The
NREL study is a step forward in looking at options for the
Railbelt and Alaska in general and looking at what will be a
good mix for Alaska. Whether 70 percent is the right mix he
doesn't know, but firm power is definitely needed. When it is
cold and there is a high pressure, any wind turbines in that
region do not work. A grid would allow power to be moved
around.
10:45:26 AM
REPRESENTATIVE SCHRAGE moved to adopt Amendment 1 to HB 368,
labeled 33-LS1170\H.1, Walsh, 3/4/24, which read:
Page 3, line 9:
Delete "35 percent by December 31, 2036"
Insert "30 percent by December 31, 2030"
Page 3, line 10:
Delete "60 percent by December 31, 2051"
Insert "55 percent by December 31, 2035"
REPRESENTATIVE WRIGHT objected.
The committee took an at-ease from 10:45 a.m. to 10:46 a.m.
10:46:18 AM
REPRESENTATIVE SCHRAGE explained that Amendment 1 would move the
target dates for renewables from 35 percent by 12/31/2036 as
proposed in HB 368, to 30 percent by 12/31/2030; and from 60
percent by 12/31/2051 to 55 percent by 12/31/2035. Significant
progress is already being made towards renewables and there is
broad acknowledgement from the energy community that the state
is going to start rapidly moving towards renewables, especially
given the natural gas shortages in Southcentral. So, given the
state will potentially be providing significant tax credit
incentives to these utilities, the state should be more
ambitious. The bill has no penalties for not meeting these
thresholds, and perhaps this should be called renewable
portfolio targets or aspirations rather than renewable portfolio
standard. [The legislature] should therefore be truly
aspirational and move those dates to ones that acknowledge the
level of immediacy around this issue.
CHAIR RAUSCHER invited Ms. Julie Estey to provide her opinion on
Amendment 1.
10:48:50 AM
JULIE ESTEY, Chief Strategy Officer, Matanuska Electric
Association (MEA), responded that MEA is looking beyond its gas
contract ending and is currently conversing with developers on
wind and solar. Transmission is absolutely one of the
constraints on some of those larger projects, as is how to
integrate variable power into MEA's system with regulation and
having firm power, power that MEA can count on no matter what
and when. She stated that 30 percent by 2030 is within grasp as
an aspirational goal, but she doesn't see a path within the
timeframe of 55 percent by 2035. While aspirational is great,
setting realistic goals ensures that they are motivating to the
utilities, to utility members, and to power producers.
10:51:38 AM
REPRESENTATIVE ARMSTRONG asked whether 2051 is the earliest
realistic year for achieving the proposed renewable energy
goals, or whether 2045 would be more amendable [than 2035].
MS. ESTEY replied that she doesn't have an answer because there
are so many unknowns when looking ahead, one being transmission
and how much power can be moved. Utilities are currently
conducting studies to determine what is possible right now, such
as regulating variable power on the existing system, and when
the upgrades are needed, she said, but there are no answers yet.
She emphasized the need for a realistic goal and reiterated that
she doesn't see a path to 2035.
10:53:30 AM
CHAIR RAUSCHER noted that most of HB 368 takes place after the
transmission line is built. He asked about a timeline for the
new transmission lines to be completed and fully operational.
MR. THAYER responded that the current upgrading of the existing
transmission line is occurring in phases and is at least a six-
year project. He said the HVDC line off the Kenai Peninsula is
currently projected to take six to eight years to complete.
CHAIR RAUSCHER calculated that six to eight years from 2024 is
2030 to 2032, and so 30 percent by 2030 is before completion of
the transmission line. He said he must therefore oppose the
math of Amendment 1.
REPRESENTATIVE PRAX pointed out that the impending shortage of
Cook Inlet natural gas isn't contemplated in HB 368. He opined
that calling it a crisis isn't the right term or way to approach
this. He said he is opposed to Amendment 1 because it is better
to figure this out in an orderly manner.
REPRESENTATIVE WRIGHT maintained his objection to Amendment 1.
10:56:11 AM
REPRESENTATIVE SCHRAGE wrapped up his comments on Amendment 1,
noting that Ms. Estey agreed that 30 percent by 2030 is
achievable even with the current transmission. He emphasized
that the targets are unenforceable and therefore they are simply
aspirational goals. He said he is open to a friendly amendment
to the target date for 60 percent.
10:57:42 AM
REPRESENTATIVE ARMSTRONG moved to adopt Conceptual Amendment 1
to Amendment 1, on line 7 of Amendment 1, to change "2035" to
"2045".
REPRESENTATIVE SCHRAGE said he has no objection to Conceptual
Amendment 1 to Amendment 1.
REPRESENTATIVE PRAX objected to Conceptual Amendment 1 to
Amendment 1.
The committee took a brief at-ease.
10:58:51 AM
A roll call vote was taken. Representatives Armstrong and
Schrage voted in favor of Conceptual Amendment 1 to Amendment 1.
Representatives Baker, Wright, Prax, and Rauscher voted against
it. Therefore, Conceptual Amendment 1 to Amendment 1 failed by
a vote of 2-4.
REPRESENTATIVE WRIGHT maintained his objection to Amendment 1.
11:00:02 AM
A roll call vote was taken. Representatives Schrage and
Armstrong voted in favor of Amendment 1 to HB 368.
Representatives Baker, Wright, Prax, and Rauscher voted against
it. Therefore, Amendment 1 to HB 368 failed to be adopted by a
vote of 2-4.
CHAIR RAUSCHER deferred consideration of Amendment 2 due to the
absence of Representative McKay.
11:00:48 AM
REPRESENTATIVE SCHRAGE moved to adopt Amendment 3 to HB 368,
labeled 33-LS1170\H.3, Walsh, 3/4/24, which read:
Page 4, lines 12 - 20:
Delete all material.
Reletter the following subsection accordingly.
Page 8, line 12:
Delete "(i)"
Insert "(h)"
REPRESENTATIVE WRIGHT objected.
REPRESENTATIVE SCHRAGE explained Amendment 3 would remove the
opt-out provisions of the clean energy standard in Section 5(h)
of HB 368. He said he is introducing this amendment because the
bill doesn't place any requirements on the utilities and so the
opt-out provisions are unnecessary, plus there are opt-out
provisions in other parts of the bill.
CHAIR RAUSCHER stated he supports Amendment 3.
The committee took a brief at-ease.
11:02:38 AM
REPRESENTATIVE WRIGHT removed his objection. There being no
further objection, Amendment 3 to HB 368 was adopted.
11:02:51 AM
REPRESENTATIVE SCHRAGE moved to adopt Amendment 4 to HB 368,
labeled 33-LS1170\H.5, Walsh, 3/4/24, which read:
Page 5, line 21, following "entity":
Insert "or independent power producer"
Page 5, line 23, following "entity":
Insert "or independent power producer"
Page 5, line 25, following "entity":
Insert "or independent power producer"
Page 5, line 29, following "entity":
Insert "or independent power producer"
Page 8, following line 16:
Insert a new paragraph to read:
"(5) "independent power producer" means a
person, other than a load-serving entity, that owns or
operates a facility for the generation of electricity
for use primarily by the public;"
Renumber the following paragraphs accordingly.
Page 10, lines 1 - 2:
Delete "to a load-serving entity, as defined in
AS 42.05.790,"
REPRESENTATIVE WRIGHT objected for purposes of discussion.
REPRESENTATIVE SCHRAGE explained Amendment 4 would allow for
independent power producers, which are playing an increased role
in producing energy in Alaska, to also take advantage of the
clean energy tax credit proposed by HB 368. As currently
structured, he continued, the bill would only provide the tax
credit to utilities that build out renewable energy, and he
believes the tax credit should be offered to any entity that is
producing or building clean energy.
CHAIR RAUSCHER stated he finds Amendment 4 to be friendly.
11:03:52 AM
REPRESENTATIVE WRIGHT removed his objection. There being no
further objection, Amendment 4 to HB 368 was adopted.
11:04:15 AM
REPRESENTATIVE SCHRAGE said he will not offer Amendment 5,
labeled 33-LS1170\H.6, Walsh, 3/5/24.
REPRESENTATIVE SCHRAGE moved to adopt Amendment 6 to HB 368,
labeled 33-LS1170\H.16, Walsh, 314/24, which read:
Page 6, following line 1:
Insert new subsections to read:
"(c) A load-serving entity that is subject to
the clean energy standard is eligible to apply for the
clean energy transferable tax credit under this
section only if the entity is in compliance with the
clean energy standard. For the purpose of this
subsection, compliance with an exemption under
AS 42.05.920 constitutes compliance with the clean
energy standard.
(d) A load-serving entity that fails to comply with
the clean energy standard may not use a subsidiary
corporation, affiliated corporation, partnership,
association, or other person for the purpose of
applying for or remaining eligible for the clean
energy transferable tax credit under this section. The
commission may adopt regulations to implement this
subsection."
REPRESENTATIVE WRIGHT objected.
The committee took a brief at-ease.
11:04:36 AM
REPRESENTATIVE SCHRAGE explained Amendment 6 would provide some
enforceability around the standards outlined in HB 368. To take
advantage of the clean energy standard tax credit, an entity
would have to be in compliance with the clean energy standard,
thereby giving a level of accountability to the bill as opposed
to just being a tax credit for any new or renewables. It
provides some accountability to that tax credit in saying that
an entity must actually be working to meet the standards
outlined in the bill. Utilities should be required to stay on
track if they are going to take advantage of that tax credit.
REPRESENTATIVE PRAX stated he doesn't think Amendment 6 would
add any value because if an entity is applying for a tax credit
the entity must be trying; therefore, he isn't in favor of the
amendment.
CHAIR RAUSCHER stated he opposes Amendment 6 for some of the
same reasons.
REPRESENTATIVE WRIGHT maintained his objection to Amendment 6.
11:09:14 AM
A roll call vote was taken. Representatives Schrage and
Armstrong voted in favor of Amendment 6 to HB 368.
Representatives Wright, Prax, McKay, Baker, and Rauscher voted
against it. Therefore, Amendment 6 to HB 368 failed to be
adopted by a vote of 2-5.
CHAIR RAUSCHER stated he will not offer Amendment 7 to HB 368,
labeled 33-LS1170\H.9, Walsh, 3/13/24.
11:10:06 AM
CHAIR RAUSCHER moved to adopt Amendment 8 to HB 368, labeled 33-
LS1170\H.10, Walsh, 3/12/24, which read:
Page 5, line 22:
Delete "0.2 cents"
Insert "$.02"
REPRESENTATIVE MCKAY objected for purposes of discussion.
CHAIR RAUSCHER explained Amendment 8 would increase the proposed
tax credit from 0.2 cents per kilowatt hour (kWh) [$2 per
megawatt hour (MWh)] to 2.0 cents per kilowatt hour (kWh) ($20
per MWh). He maintained that 0.2 cents is too low to make any
meaningful change and that raising it to 2.0 cents would help
offset the real cost of building the generation that will
alleviate the huge spike in energy cost that is coming soon with
natural gas imports.
REPRESENTATIVE SCHRAGE asked whether the cost of Amendment 8
over the next 20 years would be $655 million cumulatively.
CHAIR RAUSCHER replied yes.
REPRESENTATVE SCHRAGE stated that $655 million is a big price
tag for something that the utilities are already planning to do;
as well, there aren't many protections or accountability around
the bill. While he would like more renewables deployed, he said
he is grappling with how the state would pay for this given the
governor's 10-year fiscal plan shows a $10 billion deficit.
11:12:45 AM
CHAIR RAUSCHER reiterated his belief that [a tax credit of] 0.2
cents isn't going to create any movement, and Amendment 8 would
make the tax credit more enticing. He said the state doesn't
write a check since it is credit.
REPRESENTATIVE PRAX concurred the state doesn't write a check,
but that, semantics aside, a tax credit is effectively a
dedicated tax in that the state is not able to spend other
revenue. He agreed with Representative Schrage that this is an
expensive subsidy and not a good idea.
CHAIR RAUSCHER asked whether Representative Prax has a different
number in mind.
REPRESENTATIVE PRAX replied that he doesn't have a different
number in mind. He said he agrees that 0.2 cents wouldn't
provide much incentive, and 2 cents would be more of an
incentive, but he disagrees with the concept of subsidizing
energy because it isn't a good way to distribute resources.
REPRESENTATIVE MCKAY removed his objection to Amendment 8.
REPRESENTATIVE PRAX objected to Amendment 8.
11:15:35 AM
A roll call vote was taken. Representatives Wright, Baker, and
Rauscher voted in favor of Amendment 8 to HB 368.
Representatives Prax, Armstrong, McKay, and Schrage voted
against it. Therefore, Amendment 8 to HB 368 failed to be
adopted by a vote of 3-4.
11:15:55 AM
CHAIR RAUSCHER moved to adopt Amendment 9 to HB 368, labeled 33-
LS1170\H.11, Walsh, 3/14/24, which read:
Page 6, following line 1:
Insert a new subsection to read:
"(c) If the owner of a facility places a new
generating unit or additional generating capacity into
service that is used to generate clean energy at the
facility after the effective date of this section, the
owner may apply for the clean energy transferable tax
credit for 10 years from the date the new unit or
additional capacity is placed into service, but only
to the extent of the increased amount of clean energy
produced at the facility because of the new unit or
additional capacity."
REPRESENTATIVE SCHRAGE objected for purposes of discussion.
CHAIR RAUSCHER explained that Amendment 9 would create clarity
and set in statute that energy expansion projects would qualify
for the tax credits proposed under HB 368.
REPRESENTATIVE PRAX objected to Amendment 9. He allowed it's a
good business idea for grocery stores to give points to
customers for gasoline in return for purchasing lettuce or for
airlines to give frequent flyer miles that are paid for through
ticket prices. However, he opined, it's not a good idea for
legislators to fall for that ruse.
REPRESENTATIVE SCHRAGE removed his objection to Amendment 9.
REPRESENTATIVE PRAX maintained his objection to Amendment 9.
11:18:28 AM
A roll call vote was taken. Representatives Armstrong, McKay,
Baker, Schrage, Wright, and Rauscher voted in favor of Amendment
9 to HB 368. Representative Prax voted against it. Therefore,
Amendment 9 to HB 368 was adopted by a vote of 6-1.
11:18:40 AM
REPRESENTATIVE WRIGHT moved to adopt Amendment 10 to HB 368,
labeled 33-LS1170\H.12, Walsh, 3/13/24, which read:
Page 6, following line 1:
Insert a new subsection to read:
"(c) A school district may apply for the clean
energy transferable tax credit under AS 43.98.080 for
clean energy produced from a distributed energy system
that is located on property owned by the school
district and that meets the qualifications in (b)(2) -
(4) of this section, regardless of whether the energy
is sold to an unrelated person. A school district is
entitled to the same amount of credit as a load-
serving entity under this section for the number of
kilowatt-hours of clean energy produced by the school
district's distributed energy system. In this
subsection, "school district" means a city or borough
school district or regional educational attendance
area."
Page 10, lines 1 - 2:
Delete "to a load-serving entity, as defined in
AS 42.05.790,"
REPRESENTATIVE SCHRAGE objected.
REPRESENTATIVE WRIGHT explained Amendment 10 would add schools
as qualified producers and receivers of the tax credits proposed
by HB 368. He said it would also allow schools to build and
generate their own energy, which could potentially reduce costs.
REPRESENTATIVE SCHRAGE stated he is supportive of Amendment 10
but is curious whether school districts have asked for this and
have the working capital to take advantage of this.
REPRESENATIVE BAKER responded that the schools in his rural
district would be able to work with the local tribes that have
funding coming for renewable projects. A school could write
some kind of match or training program that would help
incentivize folks to learn how to get into the independent power
producer (IPP) industry. He said he appreciates the amendment.
11:21:06 AM
CHAIR RAUSCHER asked how many years it took to get to the figure
of $650 million cited by Representative Schrage
REPRESENTATIVE SCHRAGE replied [it would take to the year] 2051.
CHAIR RAUSCHER inquired about the base student allocation (BSA)
that the House of Representatives voted to not increase on
[3/18/24].
REPRESENTATIVE SCHRAGE answered that any policy set by the
legislature has both short-term and long-term ramifications, and
the legislature has a duty to look at both. Long term, he is
looking at the borderline insolvency of the State of Alaska and
the lack of a fiscal plan to address the billions in deficits
projected over the next decade and beyond. Short term, as
amendments to HB 368 are considered, he is looking at the
capacity for entities in Alaska to take advantage of this.
REPRESENTATIVE PRAX asked whether Amendment 10 could be seen as
unnecessary. He surmised that another entity could get the tax
credit and then sell the power to the school. He requested an
explanation of why an entity couldn't do that without this
proposed credit for the schools. To clarify his question, he
cited Representative Baker's example of tribes setting up a
power generating system for the schools but proffered that
tribes could set up a clean power generating system for anybody
and be eligible for the tax credit anyway. He said he therefore
questions whether this proposal would make it easier.
REPRESENATIVE BAKER replied that under Amendment 10 as written,
school districts may apply, and tribes may use their funds to
become an IPP and sell energy; it's not a rule that they must.
The example he presented was about potentially using the funds
to go forward in some kind of joint venture where different pots
of money available in the community are used, given that each
school in rural Alaska is the heart and soul of the community.
REPRESENTATIVE ARMSTRONG asked whether specifically calling out
schools as proposed in Amendment 10 is necessary or whether
schools would already be covered elsewhere in the bill.
11:26:42 AM
CRAIG VALDEZ, Staff, Representative George Rauscher, Alaska
State Legislature, on behalf of Representative Rauscher, chair
of the House Special Committee on Energy, sponsor of HB 368,
answered that Amendment 10 is needed according to the IPPs. He
explained that while an IPP would probably cover, that might not
be the case in certain circumstances in the future. For
example, under the federal government right now, schools can
apply for different grant programs not under IPPs but under
their own as a separate school district, so Amendment 10 would
cover them in situations where an IPP would not.
11:27:52 AM
REPRESENTATIVE SCHRAGE expressed his concern that if schools
deploy renewable or clean energy projects, personnel will be
required to work on them and thus the focus on education would
be taken away. He posited that it would be better for these
projects to be deployed by an IPP with the technical expertise
and ability to carry out the project.
MR. VALDEZ answered that under Amendment 10 this would be an
option that school districts could take to ease the cost of
energy, not an option that they must take.
REPRESENTATIVE SCHRAGE stated he is unsure about giving school
districts an option that incentivizes them to pursue something
other than focusing on the classroom.
11:30:57 AM
REPRESENTATIVE WRIGHT commented that Amendment 10 would provide
another option for schools to ease the pressures of energy costs
and would not be required to be utilized.
REPRESENATIVE BAKER pointed out that there already is an entire
department in his home district dedicated to the maintenance and
operation of the school facilities and researching fuel cost is
part of that. Having this option would make it so the schools
in his district don't have to rely on high priced diesel.
11:32:44 AM
REPRESENTATIVE SCHRAGE allowed that his school district also
already has a maintenance department, but it lacks the technical
expertise to construct renewable projects. He asked why IPPs
aren't a better option as compared to in-district departments.
CHAIR RAUSCHER responded that not all businesses fill out a
Schedule C because it is very complicated, and they would just
as soon take the loss. He said he supports Amendment 10 because
an option is better than no option.
REPRESENTATIVE SCHRAGE maintained his objection to Amendment 10.
REPRESENATIVE BAKER replied that his school district, the
Northwest Arctic Borough School District, works with the
Northwest Arctic Borough which has economic development and
other departments with people whose sole job is to provide
energy and to maintain utilities to schools and the people
throughout the communities of the North Slope Borough.
11:35:31 AM
A roll call vote was taken. Representatives Armstrong, McKay,
Baker, Wright, Prax, and Rauscher voted in favor of Amendment 10
to HB 368. Representative Schrage voted against it. Therefore,
Amendment 10 to HB 368 was adopted by a vote of 6-1.
11:36:18 AM
REPRESENATIVE BAKER moved to adopt Amendment 11 to HB 368,
labeled 33-LS1170\H.13, Walsh, 3/13/24, which read:
Page 6, following line 1:
Insert a new subsection to read:
"(c) The owner of a facility that qualifies for a
clean energy transferable tax credit under (b) of this
section and produces clean energy for an electric
utility that receives power cost equalization under
AS 42.45.100 - 42.45.150 is eligible for an increased
clean energy transferable tax credit in the amount of
an additional one cent for each kilowatt-hour of clean
energy that meets the requirements in (a) of this
section and is produced for the electric utility. The
owner of the facility may be the electric utility. In
this subsection, "electric utility" has the meaning
given in AS 42.45.150."
REPRESENTATIVE MCKAY objected for purposes of discussion.
REPRESENATIVE BAKER explained that Amendment 11 would allocate a
1.0 cent per kWh bonus to communities already receiving power
cost equalization (PCE) funds, using PCE as a determining factor
for who is receiving versus who is not. Alaska's rural regions
face some of the highest energy costs in the state and U.S., and
this bonus would move the needle in the adoption of cheap versus
sustainable energy sources that could replace exceptionally
expensive diesel as well as provide cash infusions for those who
are looking to invest in small rural micro-grids.
11:37:12 AM
REPRESENTATIVE MCKAY removed his objection. There being no
further objection, Amendment 11 to HB 368 was adopted.
CHAIR RAUSCHER stated he will not be offering Amendment 12,
labeled 33-LS1170\H.14, Walsh, 3/13/24, to HB 368.
11:37:25 AM
CHAIR RAUSCHER moved to adopt Amendment 13 to HB 368, labeled
33-LS1170\H.15, Walsh, 3/13/24, which read:
Page 6, line 31, through page 7, line 2:
Delete all material.
REPRESENTATIVE SCHRAGE objected for discussion purposes.
REPRESENTATIVE MCKAY objected to Amendment 13.
CHAIR RAUSCHER explained Amendment 13 would remove the clause
that utilities would not receive the credits if they were under
a waiver.
REPRESENTATIVE SCHRAGE removed his objection to Amendment 13.
REPRESENTATIVE MCKAY removed his objection. There being no
further objection, Amendment 13 to HB 368 was adopted.
REPRESENTATIVE MCKAY [stated he will not offer] Amendment 2,
labeled 33-LS1170\H.8, Walsh, 3/12/24.
11:39:37 AM
CHAIR RAUSCHER opened public testimony on HB 368, as amended.
11:40:09 AM
KEN HUCKABA, representing self, testified in opposition to HB
368. He offered his understanding that the bill is not
something the public wants. He maintained that this was
originated 14 years ago through a "left-wing environmentalist
organization." He further maintained that origination for the
transmission line was not for redundancy or efficiency but
rather for enabling a renewable portfolio standard. He argued
that if renewables truly are cheaper, then the IPPs, which are
for-profit, shouldn't need credits and for-profits shouldn't be
part of the mix with non-profit utilities. He further argued
that the people developing renewable energy should pay the costs
of development, not taxpayers through a tax credit system. He
said the electric cooperatives, which are overseen by the
Regulatory Commission of Alaska (RCA), are doing a good job.
Alaska has coal, oil, and gas for doing these things and should
not be adopting a globalist expansion of carbon control, he
opined.
11:43:55 AM
KASSIE ANDREWS, representing self, testified in opposition to HB
368. She said she opposes the concept in the bill but would be
okay with it if it were completely voluntary. She argued that
the idea of the state having to mandate this energy makeup means
there is an inherent risk or problem, and the end user is not
willing to pay for unreliable and unaffordable sources of
energy. The "trifecta to the demise of our grid," she asserted,
is HB 368, the Electric Reliability Organization, and the
mandate to allow for-profit independent power producers on
Alaska's grid. These central planning mechanisms remove the
utility boards from having a say in representing the ratepayers
and will erode the reliability and affordability of Alaska's
energy.
11:46:27 AM
KEN GRIFFIN, representing self, testified in opposition to HB
368. He stated he doesn't get the ideas behind these things
because there are no economics. [The state] cannot help a
community by giving it money or subsidies, rather they must be
helped to stand on their own feet and afford things. Making
energy cheaper for a period of time is just an offset somewhere
else. Legislators' minds have already been made up because
these bills are all crafted around nothing but tax credits and
subsidies, but a country cannot be run on tax credits.
11:48:58 AM
TODD LINDLEY, representing self, testified in opposition to HB
368. He said the bill establishes construction timelines,
potentially violates the privacy of the ratepayers by collecting
personal data, and it relies solely on tax credits to provide
cost effective energy that's not detrimental to the ratepayer.
In the context of clean energy, cost effective energy and not
detrimental to the ratepayer are oxymorons.
11:50:15 AM
CHAIR RAUSCHER, after ascertaining that no one else wished to
testify, closed public testimony on HB 368.
11:50:45 AM
REPRESENTATIVE SCHRAGE stated that he supports working toward
incentivizing and deploying renewables in Alaska but still has
concerns with HB 368. He said he is unsure who the bill
supports and who is asking for it, plus the government
subsidized tax credit could significantly impact the state's
finances over the next 20 years without any accountability to
meet the standards. He said the bill would subsidize status quo
actions in many cases and doesn't do enough to move the ball on
this issue. More work on the bill and on amendments is needed,
he added.
11:53:35 AM
REPRESENTATIVE PRAX stated he is ambivalent and doesn't agree
with HB 368. He said he is opposed to moving out the bill as
well as opposed to spending any more time on the bill.
11:54:20 AM
REPRESENTATIVE MCKAY explained he [did not offer] Amendment 2
because it would have made most everything in the bill optional.
In principle he agrees with the testimony heard today, he said,
but respects the governor and the committee chair in what they
are trying to accomplish. He stated he doesn't like subsidies
and will vote against moving out the bill.
11:55:40 AM
REPRESENTATIVE MCKAY moved to report HB 368, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes and to authorize Legislative Legal Services to make
any needed technical and conforming changes to the bill.
REPRESENTATIVE SCHRAGE objected.
11:57:26 AM
A roll call vote was taken. Representatives Baker, Wright,
Armstrong, and Rauscher voted in favor of reporting HB 368, as
amended, out of committee with individual recommendations and
the accompanying fiscal notes. Representatives Schrage, Prax,
and McKay voted against it. Therefore CSHB 368(ENE) was
reported out of the House Special Committee on Energy by a vote
of 4-3.
11:57:42 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 11:57 a.m.
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