Legislature(2005 - 2006)HOUSE FINANCE 519
08/04/2006 10:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB3006 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB3006 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
August 4, 2006
10:19 A.M.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 10:19:04 AM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Richard Foster
Representative Beth Kerttula
Representative Mike Hawker
Representative Jim Holm
Representative Reggie Joule
Representative Mike Kelly
Representative Carl Moses
MEMBERS ABSENT
Representative Bruce Weyhrauch
ALSO PRESENT
Representative Berta Gardner; Kevin Jardell, Assistant
Commissioner, Department of Administration; Mike Menge,
Commissioner, Department of Natural Resources
PRESENT VIA TELECONFERENCE
Ron Miller, Executive Director, Alaska Industrial
Development and Export Authority (AIDEA), ANCHORAGE
SUMMARY
HB 3006 An Act making an appropriation to study the
feasibility of a spur line from a gas pipeline in
this state; and providing for an effective date.
HB 3006 was HEARD & HELD in Committee.
10:19:40 AM
HOUSE BILL NO. 3006
An Act making an appropriation to study the feasibility
of a spur line from a gas pipeline in this state; and
providing for an effective date.
10:20:16 AM
KEVIN JARDELL, ASSISTANT COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, addressed the Administration's concern and
the need to expand the call for legislation. (Copies on
File).
10:22:04 AM
Mr. Jardell explained that the Governor vetoed the Railbelt
Energy distribution due to concerns regarding planning for
electrical needs in the Railbelt. He noted that amendment
#1, 24G-2, 8/3/06, was chosen as the vehicle to request an
appropriation rather than introduce a separate appropriation
bill.
REPRESENTATIVE JOULE pointed out that, in rural Alaska,
there has been a huge increase in the cost of energy. He
asked if there had been consideration given to expanding the
call to look at alternative energy for rural Alaska.
Mr. Jardell commented that high cost of energy is an Alaskan
issue, not just a rural issue. He stated that other
projects had been considered; the Railbelt Energy Fund has
been considered for a number of years. The Governor
believed that there was not enough effort among all the
Railbelt utilities to meet the electrical needs of the
Railbelt. That is the reason for the appropriation from
that fund.
Mr. Jardell continued, noting that there has been and
currently is planning in place to address all rural energy
needs.
10:26:42 AM
Representative Joule encouraged the Committee to pass a bill
out of the Special Session toward Power Cost Equalization
(PCE) and encouraged further exploration of alternative
energy.
10:28:05 AM
Co-Chair Meyer clarified that HB 3006 was before the
Committee with an amendment to include Railbelt Energy
Funds.
10:28:51 AM
MIKE MENGE, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,
addressed the gas pipeline, spur line study. He
acknowledged that it is an issue affecting all of Alaska.
He outlined the various concerns that could be addressed by
the proposed appropriation. He noted that the Department of
Energy has been working on spur line issues for a number of
years. He proposed using the funding to coordinate efforts
under a single management tool enabling the Department of
Natural Resources (DNR), Department of Revenue (DOR) and the
Legislature to access information the on issue. He went on
to say that the most visible effort regarding energy needs
is the work of Harold Heinz, Chief Executive Officer,
Natural Gas Development Authority (ANGDA) and ANGDA. A
portion of the $4 million dollar appropriation would be used
to advance the efforts of the Authority for the Glennellen
to Palmer spur line. He emphasized that no funding would be
used for duplicative efforts. Currently, a work plan is
being developed to identify the next steps.
10:34:01 AM
Commissioner Menge noted that the Department of Energy (DOE)
has completed a feasibility study for a Fairbanks to Wasilla
spur line. Both spur lines are designed to serve the same
market and the state is not in a position to decide which is
most feasible and cost effective. Part of the appropriation
would be used to create a new contract to pick up where DOE
left off. The final efforts of DOE would be to put together
a work plan as how to best advance the evaluation of that
project.
Commissioner Menge recommended that the issuing and awarding
of the contract come out of the Department of Natural
Resources pipeline office. He observed that the engineering
group works primarily out of contract and also coordinates
with state and federal agencies.
10:36:37 AM
Commissioner Menge further identified the challenges of the
Delta Junction - GlennAllen extension. He explained that
this would be needed if the line from Glennallen to Palmer
were chosen. He added that there are issues that need to be
addressed regarding the compatibility of the hot oil
pipeline and the natural gas pipeline. He requested that a
small sum be set aside to initiate a formal process with the
Bureau of Land Management (BLM) to determine procedure,
practices and process.
He recommended that the work would be useful in construction
of the pipeline from Prudhoe down to Delta.
10:38:29 AM
Commissioner Menge outlined specific concerns regarding the
feasibility study of an offtake at the Yukon crossing and a
method for conveying energy up and down the Yukon River:
· First the technology and costs associated with a
stradleplant;
· Secondly it would take the work that ANGDA had done
and add it to a new contract, specifically looking at
the feasibility of the Ketchikan ship yard to provide
pressure vessels: CNG, LNG. The decisions made
regarding that will prompt further discussion and
decision making as each has a different engineering
and economic profile; and
· Funding for feasibility of the Yukon River Offtake.
10:39:55 AM
Commissioner Menge discussed the advantages of getting
energy to Cook Inlet, Bristol Bay and Prince William Sound
with the spur line. He acknowledged differences due to this
line being sea-born. He further noted advantages to the
fishing industry of providing low cost ice as well as the
economic advantages for value added product.
10:41:18 AM
Commissioner Menge explained that the infrastructure for the
Palmer & Wasilla Line is insufficient for current needs.
Some of the funds requested would be used to put together a
technical team to address the engineering challenges. He
emphasized the importance of establishing both the
infrastructure and regulatory component.
10:43:26 AM
Commissioner Menge went on to say that funds would be used
for an evaluation of a storage area to store large volumes
of gas.
10:45:35 AM
Representative Holm asked if consideration had been given to
transferring energy via electrical lines. Commissioner
Menge responded that gas by wire is an emerging concept.
Phase 1 of the project is practical applications. He
asserted that a portion of that could be transported by
wire.
10:48:29 AM
Representative Stoltze questioned why the appropriation was
not going to the Alaska Natural Gas Pipeline Development
Authority (ANGDA), noting that this organization already has
public confidence. Commissioner Menge agreed that the work
of ANGDA regarding the Glenallen to Palmer infrastructure
should be supported. The Department of Energy did not
choose to pursue the Fairbanks to Wasilla portion.
10:50:56 AM
Co-Chair Chenault asked what the impact would be on ANGDA,
and the employees at the Department of Natural Resources. He
also asked for clarification regarding the Ketchikan
shipyard. He noted that there are other areas of the state
that could build pressure vessels. Co-Chair Chenault
referenced gas storage and the areas chosen to do that as
well as the infrastructure needed.
10:54:59 AM
Commissioner Menge explained that the purpose of the
appropriation is to explore these and other issues. The
details of how to implement the gas line would be the next
phase after understanding what all the variables are.
10:56:50 AM
Representative Hawker expressed concern with the timing of
the request. He felt it was important dialogue, but
emphasized that it might have been better to deal with it on
the front end of the issue. He asked what the anticipated
time frame for spending the money would be. Commissioner
Menge proposed providing a specific summary of progress to
the legislature in the early spring of 2007. He agreed with
Representative Hawker's concerns and explained that there
had never been a unified approach to accomplish this task.
The appropriation is an attempt to unify resources and
information.
11:00:00 AM
Representative Hawker agreed that there needs to be a
unified coordination of the diverse interests. He
questioned if it were possible to establish a uniform
coordinator in the State of Alaska within the current
operating budget.
11:02:52 AM
Commissioner Menge stated that the funding authorized
already had specific functions. The Pipeline Office is an
organization to answer questions of the legislature[L1]. He
recommended that the coordination be handled through
contract rather than by adding another state employee. He
reiterated his commitment to itemize expenses for the
legislature and to not have duplicative expenditures.
11:05:21 AM
Representative Hawker suggested using discretionary funds of
the Office of the Governor, the Department of Revenue and
the Department of Natural Resources.
Commissioner Menge stated that they will be using existing
employees and existing resources.
11:06:56 AM
REPRESENTATIVE KELLY referenced ANGDA; he asked if the
reason that ANGDA was not doing the work was due to a
conflict regarding the Wasilla portion. Commissioner Menge
could not specifically answer the question. He explained
that ANGDA has chosen a course of action that is more spread
out.
11:09:32 AM
Representative Kelly stated that it was not uncommon to have
a consultant that could suggest different courses of
actions. He worried about excluding ANGDA and the political
component involved. Commissioner Menge maintained that he
did not want to create any disharmony in the system or do a
disservice to the Legislature[L2] regarding the funding. He
felt it important for all entities to pursue current work
and move towards drawing all the information together.
11:12:08 AM
Representative Kelly requested a hearing from Harold Heinz
and the Alaska Natural Gas Pipeline Development Authority.
Co Chair Meyer agreed and noted that it was not his
intention to take any action on the request before other
parties are heard from.
Commissioner Menge reported that he has spent time with Mr.
Heinz discussing the same information presented to the
Committee[L3]. He noted that Mr. Heinz is supportive.
Representative Stoltze reiterated that [L4]ANGDA process is
working and would like to see their work sustained and
continued.
11:14:48 AM
Co-Chair Meyer noted that the Governor'[L5]s original call
was supplemented to include the appropriation from the
Railbelt Energy Fund. The Administration's intent is to
amend HB 3006 to incorporate the Railbelt Energy Fund.
11:15:40 AM
Representative Hawker questioned whether the amendment needs
to be moved or if it can just be discussed.
Co-Chair Meyer said that the discussion could take place.
11:17:30 AM
RON MILLER, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY (AIDEA), addressed the
questions raised regarding energy issues. He related that
the Alaska Energy Authority has been working to implement
the rural energy plan to fully fund the Department of
Community and Economic Development Program. It has been
active in the alternative energy fields. He related that an
alternative energy report would be distributed soon. Mr.
Miller reported on the use of in-state gas, as well as
monitoring efforts.
Mr. Miller reported that the intent of the amendment is to
appropriate money from the Railbelt Energy Fund to the
Alaska Energy Authority.
Co-Chair Meyer asked for clarification. Mr. Miller replied
that the purpose is to bring more efficiency to and increase
reliability of power generation in the rail belt through the
list of grants. He explained that the grants had come
before the legislature and passed,[L6] but had then been
vetoed by the Governor due to a lack of confidence in the
cooperation on the Railbelt utilities.
Mr. Miller further noted that the A[L7]dministration worked
with some of the Railbelt utilities in crafting the language
in Section 4. He added that some of the Railbelt
utilities[L8] are working together and that if this bill is
to pass with amendments AEA is committed to meeting with the
Railbelt utilities to move forward with plans.
11:23:25 AM
Representative Stoltze asked for information about the
written advice to the Governor regarding his vetoes. Mr.
Miller replied that there is no written analysis from the
Department. He explained,[L9] he had been asked by the
Office of Management and Budget (OMB) what the grants were
for and provided details to them. He offered to provide
that documentation to the Committee. Representative Stoltze
asked about the Juneau OMB advisors and questioned the veto.
Mr. Miller responded that the only role he had in the
process was to gather information from the utilities and
provide that to the Governor's office. Representative
Stoltze said that explains some of the lack of logic in the
matter.
11:25:38 AM
Representative Hawker was reluctant to pursue the issue. He
expressed frustration with the bill and felt it was a
distraction from the oil and gas tax bill. He related the
history of the issue emphasizing the passage of the
appropriation and then the veto by the Governor. He
questioned the purpose of the bill.
Co-Chair Meyer said the intent of the meeting was to discuss
this information.
11:28:20 AM
Co-Chair Chenault asked if the $12 million to ANGDA for the
Healy coal project was in the original proposal that was
vetoed. Mr. Miller affirmed. [L10]Co-Chair Chenault
considered the veto an end to the project. He further
questioned how the project would be financed if it [L11]moves
forward. Mr. Miller replied that they are moving forward
with money from AIDEA. Co-Chair Chenault expressed
frustration regarding the communication with the Governor's
office regarding Healy. He felt a disservice was done to
his area. He maintained that this issue is not being
offered at a good time.
Representative Stoltze stated that he made the motion for
the veto override and feels strongly about the matter. He
implied that it is a political matter. He expressed
frustration and lack of confidence in the issue.
11:33:11 AM
Representative Kelly said the Governor was right when he
vetoed the bill and suggested that he "should have left well
enough alone". He observed that the plan did not include
the three major generators in the Railbelt and asserted that
it was fatally flawed. He maintained that changes needed to
be made to the distribution of funds. Representative Kelly
echoed Representative Hawker's comments that it was not the
right time to deal with the matter.
Co-Chair Meyer noted that the discussion was good. He said
he would hold onto the bill.
ADJOURNMENT
The meeting was adjourned at 11:35 AM.
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