Legislature(2007 - 2008)HOUSE FINANCE 519

07/28/2008 01:00 PM House FINANCE


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01:15:56 PM Start
01:17:37 PM Presentation: Alaska Housing Finance Corporation – Energy-efficiency Programs
04:02:15 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
AHFC Weatherization & Home Energy Rebate
Program Update
Dan Fauske, CEO, AHFC
Bryan Butcher, Director
Governor's Relations/Public Affairs, AHFC
                  HOUSE FINANCE COMMITTEE                                                                                       
                       July 28, 2008                                                                                            
                         1:15 p.m.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Vice-Chair Bill  Stoltze called  the House Finance  Committee                                                                   
meeting to order at 1:15:56 PM.                                                                                               
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Les Gara                                                                                                         
Representative Mike Hawker                                                                                                      
Representative Mike Kelly                                                                                                       
Representative Bill Thomas Jr.                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault, Co-Chair                                                                                          
Representative Harry Crawford                                                                                                   
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Richard Foster                                                                                                   
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Mary Nelson                                                                                                      
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Dan Fauske,  CEO/Executive Director,  Alaska Housing  Finance                                                                   
Corporation,  Department  of Revenue;  Cary  Bolling,  Energy                                                                   
Specialist,  Research  Information   Center,  Alaska  Housing                                                                   
Finance  Corporation;  Bryan  Butcher,  Legislative  Liaison,                                                                   
Alaska   Housing   Finance   Corporation;    John   Anderson,                                                                   
Weatherization Program,  Alaska Housing Finance  Corporation;                                                                   
Sarah  FisherGoad,  Deputy  Director  of  Operations,  Alaska                                                                   
Industrial  Development  and   Export  Authority  and  Alaska                                                                   
Energy  Authority,  Department  of  Commerce,  Community  and                                                                   
Economic Development.                                                                                                           
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Steve   Haagenson,   Executive    Director,   Alaska   Energy                                                                   
Authority.                                                                                                                      
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
^PRESENTATION: Alaska  Housing Finance Corporation  - Energy-                                                                 
Efficiency Programs                                                                                                           
                                                                                                                                
1:17:37 PM                                                                                                                    
                                                                                                                                
DAN FAUSKE,  CEO/EXECUTIVE DIRECTOR,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION,  DEPARTMENT   OF  REVENUE,  reported   that  the                                                                   
program  was  proceeding  well despite  late  funding.  Staff                                                                   
training is underway. The Alaska  Housing Finance Corporation                                                                   
(AHFC) has implemented the program  since 1978 in conjunction                                                                   
with  the United  States  Department  of Energy.  The  budget                                                                   
includes $6 million in corporate  receipts with $2 million in                                                                   
federal receipts,  for a total of $8 million.  He stated that                                                                   
the  message to  the  fifteen  housing authorities  was  that                                                                   
"this  program  exceeds  your ability  under  current  status                                                                   
without subcontracting  and the  formation of  partnerships."                                                                   
He elaborated  that the  slow housing  market left  some home                                                                   
builders time  to take on  other projects. He  explained that                                                                   
the six day certification training is simple.                                                                                   
                                                                                                                                
1:21:06 PM                                                                                                                    
                                                                                                                                
CARY   BOLLING,  ENERGY   SPECIALIST,  RESEARCH   INFORMATION                                                                   
CENTER, ALASKA  HOUSING FINANCE  CORPORATION, commented  that                                                                   
when the  $300 million  was received,  the  plan was to  work                                                                   
with   existing   programs,  including   $200   million   for                                                                   
weatherization  and $100  million  for rebates.  He  realized                                                                   
that additional training  would be required. He  gave a rough                                                                   
breakdown of  the weatherization allocations by  region based                                                                   
on  heating degree  days, number  of  units, population,  and                                                                   
fuel costs.                                                                                                                     
                                                                                                                                
Mr.  Bolling  pointed  out the  complexity  of  the  formula.                                                                   
Consideration  was taken  for areas with  longer winters  and                                                                   
colder days. The previous weatherization  program had been in                                                                   
existence for about thirty years.  The five original agencies                                                                   
covered over  thirty thousand  homes. The new  weatherization                                                                   
funding allowed  AHFC to keep  an income-based  program while                                                                   
raising  the  median income  limit  from  60 percent  to  100                                                                   
percent, which qualified many  more people. The Department of                                                                   
Housing and Urban Development  (HUD) income limits for Alaska                                                                   
vary  by region.  The  limit for  a  three  person family  in                                                                   
Anchorage is $70,800  per year; in the Juneau  area the limit                                                                   
is $78,300. The original five  providers have been increasing                                                                   
weatherization  services because of  the increased  number of                                                                   
people  who   qualify.  Fifteen   state  designated   housing                                                                   
authorities were  added as service providers,  with statewide                                                                   
training included.                                                                                                              
                                                                                                                                
Mr.  Bolling  added that  the  previous  program  weatherized                                                                   
about 600  homes per year;  the expectation is  to weatherize                                                                   
about  4000 homes  next  year and  7500  homes the  following                                                                   
year.                                                                                                                           
                                                                                                                                
Mr. Bolling informed  the committee that allocations  for the                                                                   
rebate  program  were $100  million.  A  formula is  used  to                                                                   
divide  the money.  There are  no  requirements except  year-                                                                   
round owner occupancy, and any  Alaskan resident can qualify.                                                                   
The program has existed since  the mid-1990s, although it has                                                                   
been unfunded.  Energy raters are  a key part of  the program                                                                   
and must be in place before improvements  can be implemented.                                                                   
Currently  AHFC has 83  energy raters  trained, and  more are                                                                   
being trained statewide.                                                                                                        
                                                                                                                                
Mr.  Bolling  described  the process  for  obtaining  a  home                                                                   
energy rating.  The resident must  call an energy  rater, who                                                                   
analyzes the  home and  identifies the eligible  improvements                                                                   
using   energy   rating  software.   The   corporation   then                                                                   
reimburses the  homeowner up to $325. The  homeowner receives                                                                   
An improvement  options  report informs  the homeowner  about                                                                   
the  most cost  effective methods  of  weatherizing, and  the                                                                   
number of points achieved per  item on the list. The resident                                                                   
can  either perform  the improvements  themselves  or hire  a                                                                   
contractor.                                                                                                                     
                                                                                                                                
Mr.  Bolling  presented  a  sample  energy  certificate.  The                                                                   
certificate  lists improvements  for a  home. He pointed  out                                                                   
the importance of the improvement  description as well as the                                                                   
gained rating  points. The resident can view  the certificate                                                                   
and determine how  many points they needed to  reach the next                                                                   
rating level. There are ten levels.                                                                                             
                                                                                                                                
1:27:06 PM                                                                                                                    
                                                                                                                                
Mr. Bolling reviewed an example  of a three-star rating level                                                                   
(Copy  on File).  He explained  the progression  of steps.  A                                                                   
three-step  improvement  translated  to  a rebate  of  up  to                                                                   
$7000,  although only  the actual  cost of  the work will  be                                                                   
rebated.  Once the  work is  completed, the  rater is  called                                                                   
back to the  home to verify the  work and give a  new rating.                                                                   
The follow-up  appointment is  less expensive. The  homeowner                                                                   
can apply for the  rebate. The rebate amount is  based on the                                                                   
improved efficiency.  The maximum  rebate amount  is $10,000.                                                                   
If a person does  not possess the money up front,  AHFC has a                                                                   
program called  the Second  Mortgage for Energy  Conservation                                                                   
including  a  loan of  up  to  $30,000  to help  finance  the                                                                   
improvements. The interest rate  on this loan is fixed with a                                                                   
fifteen-year term.                                                                                                              
                                                                                                                                
Mr.  Fauske  pointed  out that  the  weatherization  is  non-                                                                   
taxable and provided by the government  to remedy a situation                                                                   
affecting  all  residents  in Alaska.  The  Internal  Revenue                                                                   
Service does tax the rebate. He  opined that despite the tax,                                                                   
the  program provided  an  intelligent  option  based on  the                                                                   
savings that can be generated.                                                                                                  
                                                                                                                                
1:30:50 PM                                                                                                                    
                                                                                                                                
Representative  Gara asked  if the rebate  side included  the                                                                   
hiring  of  a  rater. Mr.  Fauske  responded  that  the  main                                                                   
difference  is  income restrictions.  On  the  weatherization                                                                   
side  there  is  an income  restriction  because  of  federal                                                                   
guidelines. With  the rebate, the homeowner  is communicating                                                                   
directly with the rater.                                                                                                        
                                                                                                                                
Representative  Gara observed  that the  entire $100  million                                                                   
program  is  taxable.  He  wanted  to  know  more  about  the                                                                   
weatherization  and rebate  programs. He  had the  impression                                                                   
that  people  qualifying  for  the  rebate  only  received  a                                                                   
portion of  the cost in rebate  money and he wondered  if the                                                                   
state pays the entire amount of the first $10,000.                                                                              
                                                                                                                                
Mr. Fauske  clarified that the  minimum rebate  with invoices                                                                   
is  $4,000 and  the  maximum  is $10,000.  The  qualification                                                                   
includes  improvements to  the  home and  the increased  star                                                                   
rating achieved.  He cited an example of a  resident spending                                                                   
$12,000; the improvements  achieved three steps  for a rebate                                                                   
of $7000  and the  remaining $5000  would be the  homeowner's                                                                   
responsibility.                                                                                                                 
                                                                                                                                
Representative  Gara  asked  about   the  likelihood  that  a                                                                   
resident might  say that the state  will pay $10,000  for the                                                                   
first $10,000 worth  of expenses and continue  to perform the                                                                   
needed  upgrades  that cost  the  resident $10,000  and  then                                                                   
receive the full rebate from the state.                                                                                         
                                                                                                                                
1:33:21 PM                                                                                                                    
                                                                                                                                
JOHN   ANDERSON,  WEATHERIZATION   PROGRAM,  ALASKA   HOUSING                                                                   
FINANCE  CORPORATION, answered  that the  rebate received  is                                                                   
based on  receipts. The  program is not  a dollar  per dollar                                                                   
program. The step  and point systems that are  used are based                                                                   
on ten  different steps  used to achieve  the five  levels of                                                                   
rebate.  He cited  an example  of a  boiler replacement.  The                                                                   
cost is typically eight to ten  thousand dollars depending on                                                                   
location. The  particular improvement would achieve  one step                                                                   
and earn a rebate of $4000.                                                                                                     
                                                                                                                                
BRYAN BUTCHER,  LEGISLATIVE LIAISON,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION,   described  a  potential   situation   where  a                                                                   
homeowner  would pay $10,000  for improvements  and have  the                                                                   
entire $10,000  rebated. In most cases taking  an improvement                                                                   
up  the  five  necessary  steps   would  exceed  $10,000.  He                                                                   
reported  a lack of  information  due to the  infancy of  the                                                                   
program  concerning the  amount  of money  Alaskan  residents                                                                   
involved in  this program receive.  He agreed to  report back                                                                   
to the legislature once more data has been gathered.                                                                            
                                                                                                                                
1:36:06 PM                                                                                                                    
                                                                                                                                
Representative  Gara  agreed with  encouraging  residents  to                                                                   
weatherize their  homes. He proposed  a rule that  homeowners                                                                   
qualify  for   up  to  fifty   percent  of  their   expenses,                                                                   
encouraging  residents to  spend twice  as much  in order  to                                                                   
receive  the entire  potential  rebate.  Mr. Butcher  replied                                                                   
that  AHFC  had  considered that  approach.  He  opined  that                                                                   
within  a few  months  time, the  information  about how  the                                                                   
program works will have been gathered,  including the percent                                                                   
of rebate residents are achieving.                                                                                              
                                                                                                                                
Mr. Fauske  stressed eliminating  the idea of  spending $2000                                                                   
and getting $8000 in return.                                                                                                    
                                                                                                                                
1:37:08 PM                                                                                                                    
                                                                                                                                
Representative  Thomas  hypothesized  that  he was  going  to                                                                   
replace his  boiler. He asked  if the boiler would  be rated.                                                                   
He  wondered if  the boiler  merchants  would be  angry if  a                                                                   
certain  boiler  was  favored  over  another.  He  questioned                                                                   
whether or not this might cause trouble for the state.                                                                          
                                                                                                                                
Mr. Bolling  explained that the  most efficient  appliance or                                                                   
boiler is always favored despite  the cost. The energy rating                                                                   
software  looks at  the annual  fuel utilization  efficiency.                                                                   
This includes  a number verified  by a third  party. Research                                                                   
done by AHFC shows  a number of systems or  boilers that meet                                                                   
the required efficiency. The target  is not a specific brand.                                                                   
                                                                                                                                
1:40:04 PM                                                                                                                    
                                                                                                                                
Mr. Bolling  informed that the  rebate program  has completed                                                                   
887 ratings,  500 applications  have been processed,  and 200                                                                   
are in  progress. Nine  million dollars  has been  committed.                                                                   
The program receives between 50  and 100 applications per day                                                                   
in addition  to three  to five  inquiries per  day about  the                                                                   
program.                                                                                                                        
                                                                                                                                
He spoke  about training. He  explained that training  exists                                                                   
for  weatherization  service   providers,  existing  and  new                                                                   
energy raters,  and contractors.  He described the  effort to                                                                   
inform the  general public about  the training  programs. For                                                                   
weatherization  providers,  144 hours  of  training has  been                                                                   
completed. The expectation is  to double the training efforts                                                                   
in the next  month. He calculated that 100  energy raters are                                                                   
needed. The  program began  with 40  existing raters  who all                                                                   
received new  training. An additional  43 raters  were hired.                                                                   
He  explained   the  prerequisites   for  becoming   a  rater                                                                   
including two  years of construction experience.  The current                                                                   
focus is on communities without raters.                                                                                         
                                                                                                                                
1:42:29 PM                                                                                                                    
                                                                                                                                
Mr.  Fauske stated  that small  communities  in rural  Alaska                                                                   
will  have an  established  rater travel  to  rate homes.  He                                                                   
disclosed  the  memorandum  of   agreement  with  North  Star                                                                   
Fairbanks   Borough   who   contributed    financing   toward                                                                   
expediting the service.                                                                                                         
                                                                                                                                
1:44:46 PM                                                                                                                    
                                                                                                                                
Representative  Gara expressed  concerns  about doubling  the                                                                   
number of  raters but  not keeping  up with applications.  He                                                                   
stated that his constituents have  been complaining about the                                                                   
length  of  time it  takes  to  have  their homes  rated.  He                                                                   
suggested doubling  the number of raters in  order to control                                                                   
the situation.                                                                                                                  
                                                                                                                                
Mr. Fauske  explained  that the scheduled  training  will run                                                                   
through October. He expressed  concern that while the program                                                                   
is "ramping up"  various regional allocations may  run out of                                                                   
money.                                                                                                                          
                                                                                                                                
1:47:22 PM                                                                                                                    
                                                                                                                                
Representative  Gara noted  difficulty  in receiving  ratings                                                                   
and suggested that funding might not be available.                                                                              
                                                                                                                                
Mr.  Butcher anticipated  that money  would remain  available                                                                   
through the end of the calendar  year. He agreed that without                                                                   
additional  funds, the  need for  public announcements  would                                                                   
prove necessary.  He informed  that the  number of  raters in                                                                   
Anchorage and Fairbanks will triple with in the next week.                                                                      
                                                                                                                                
Mr.  Bolling estimated  that the  weatherization money  would                                                                   
exist until  2010. The  rebate program  included fewer  funds                                                                   
and  is  progressing  more  quickly  because  of  the  direct                                                                   
relationship between the resident and the raters.                                                                               
                                                                                                                                
1:51:47 PM                                                                                                                    
                                                                                                                                
Representative   Thomas  clarified   that   the  funds   were                                                                   
allocated by region.                                                                                                            
                                                                                                                                
Mr. Bolling  informed that  AHFC was  very careful  to inform                                                                   
regions that  weatherization money exists. He  explained that                                                                   
the programs would not encompass every need.                                                                                    
                                                                                                                                
Representative  Thomas asked about  the replaced  boilers. He                                                                   
wanted  to know  what  became  of them.  He  supposed that  a                                                                   
person might sell the old furnace for profit.                                                                                   
                                                                                                                                
Mr.  Bolling explained  that under  the  rebate program,  the                                                                   
responsibility  rests with  the homeowner  to dispose  of the                                                                   
old  boiler.  With the  weatherization  program,  AHFC  takes                                                                   
responsibility  for disposing of  the inefficient  boiler. He                                                                   
stated that  the majority  of the  time, the inefficiency  of                                                                   
the boiler negates any resale value.                                                                                            
                                                                                                                                
1:53:23 PM                                                                                                                    
                                                                                                                                
Representative Kelly  clarified that the old  boiler might be                                                                   
placed  in  another home  only  to  be subsidized  again.  He                                                                   
proposed a mechanism insuring  that the inefficient boiler is                                                                   
not reused.                                                                                                                     
                                                                                                                                
He asked  about a quality inspection  with regard to  the new                                                                   
appliance.                                                                                                                      
                                                                                                                                
1:58:04 PM                                                                                                                    
                                                                                                                                
Mr.  Anderson  shared  updates  to the  program  including  a                                                                   
quality control manual for AHFC.  He maintained that the post                                                                   
rating will enable the tools to  determine whether or not the                                                                   
work  was   done  properly.   Regarding  the   weatherization                                                                   
program,  an administrator  performs  a five  to ten  percent                                                                   
oversight.   He  revealed   the   application  for   national                                                                   
contractor certification.  He reported that the  hope is that                                                                   
certification  classes  can begin  as  early  as November  or                                                                   
December.                                                                                                                       
                                                                                                                                
Representative  Kelly  informed that  the  five star  program                                                                   
began 25  years ago. He  asked for a  comparison of  the five                                                                   
star programs.  Mr. Fauske answered that a  manual estimation                                                                   
would be possible for past ratings.                                                                                             
                                                                                                                                
2:01:46 PM                                                                                                                    
                                                                                                                                
Mr. Bolling  continued his training  review. He  stressed the                                                                   
importance  of contractor  training. He  informed that  there                                                                   
were  18 scheduled  training sessions  through October.  Also                                                                   
provided are Home Choice classes  for program orientation. He                                                                   
listed  the  partners  as Alaska  Building  Science  Network,                                                                   
Alaska  Works,  Alaska  Craftsman   Home,  Northern  Building                                                                   
Science,  UAS,  Wisdom  and  Assoc.,   Cold  Climate  Housing                                                                   
Research Center,  and the  Opportunity Council.  The Building                                                                   
Performance Center provides the accreditation.                                                                                  
                                                                                                                                
He  explained   that  the   program  began  operation   under                                                                   
emergency regulations. This included  a public comment period                                                                   
and public  hearing, with final  regulations adopted  on July                                                                   
17, 2008.                                                                                                                       
                                                                                                                                
He displayed slides from the weatherization  program (Copy on                                                                   
File.)  The  initial  presentation   was  done  by  Jim  Lee,                                                                   
director of the Interior Weatherization  Agency in Fairbanks.                                                                   
The  presentation  was  given  before the  inception  of  the                                                                   
program, for  the board  of directors.  He continued  with an                                                                   
"example home" that  had an estimated heating  cost of $7,092                                                                   
per  year (2200  gallons  of heating  oil  plus electric.)  A                                                                   
savings of $2000  per year was seen simply  by insulating the                                                                   
foundation.  He explained  that  a priority  list is  created                                                                   
with  each   home.  Examples   of  possible  priorities   are                                                                   
insulation, furnace upgrade, and reduction of blower doors.                                                                     
                                                                                                                                
He  continued   to  cite  examples  of  homes   with  various                                                                   
weatherization needs and the possible priorities.                                                                               
                                                                                                                                
2:06:02 PM                                                                                                                    
                                                                                                                                
Mr. Bolling  explained  the blower test.  He elaborated  that                                                                   
the test includes  opening an exterior door of  the house and                                                                   
installing a temporary door, which  has a fan and computer at                                                                   
the base. This  blower door simulates a 20 mile  an hour wind                                                                   
blowing on the house. This simulates  air being pulled out of                                                                   
the house.  The process adds up  all the cracks and  leaks in                                                                   
the house  and establishes the  hole that would exist  if you                                                                   
were to combine all of the empty space.                                                                                         
                                                                                                                                
He elaborated  that a smoke pencil  can also be used  to find                                                                   
leaky areas, but  many raters are experienced  and can easily                                                                   
feel leaks.  He noted  that the typical  house in  the United                                                                   
States has an air leakage rate  of about four air changes per                                                                   
hour. That  means that  the air  in the  house is heated  and                                                                   
replaced  four times  in  an hour.  He  explained that  older                                                                   
homes often have even greater air leakages.                                                                                     
                                                                                                                                
2:08:38 PM                                                                                                                    
                                                                                                                                
Representative  Kelly asked  about AHFC's  goal in regard  to                                                                   
air changes.  Mr. Bolling answered  that they are  aiming for                                                                   
maximum efficiency. He pointed  out that the entire home must                                                                   
be  viewed as  a  system versus  analyzing  certain areas  or                                                                   
aspects alone. He  elucidated that this was one  of the newer                                                                   
breakthroughs   in   weatherization  building   science.   He                                                                   
expressed the importance of "building  tight, but ventilating                                                                   
right."                                                                                                                         
                                                                                                                                
Representative  Kelly  asked if  one  air exchange  per  hour                                                                   
would constitute  a "tight house."  Mr. Bolling  replied that                                                                   
yes that would be a very unique  rating. Representative Kelly                                                                   
inquired  about  the  boiler  data.  He  was  concerned  that                                                                   
maintenance of  the boiler was  not taken into  consideration                                                                   
when evaluating  efficiency. He  asked if boilers  were first                                                                   
tuned and  then evaluated, or  were they given an  "as found"                                                                   
evaluation.                                                                                                                     
                                                                                                                                
2:10:38 PM                                                                                                                    
                                                                                                                                
Mr.  Bolling   believed  that   the  weatherization   program                                                                   
performed a combustion  efficiency test. This  would test the                                                                   
efficiency of the heating system  as found. He explained that                                                                   
a data  base of old  furnaces existed  to help determine  the                                                                   
potential efficiency.                                                                                                           
                                                                                                                                
Mr.  Anderson added  that any  boiler  over 20  years old  is                                                                   
automatically replaced.                                                                                                         
                                                                                                                                
2:11:58 PM                                                                                                                    
                                                                                                                                
Representative Crawford  asked about crawl  space ventilation                                                                   
and  the diametric  opposition of  this practice  to that  of                                                                   
insulating  the  crawlspace. He  wondered  about  the use  of                                                                   
polycarbonate  storm windows,  which  apparently tripled  the                                                                   
efficiency.                                                                                                                     
                                                                                                                                
Mr.  Bolling explained  that AHFC  uses  engineering data  to                                                                   
determine  the R  value of  windows. The  information is  put                                                                   
into the energy rating software,  which acquires knowledge of                                                                   
the return  on the  investment for  a potential  improvement.                                                                   
Additionally  the   area  surrounding  the  window   is  also                                                                   
evaluated.                                                                                                                      
                                                                                                                                
Mr. Bolling spoke to the question  regarding the crawl space.                                                                   
He  elucidated that  the idea  behind crawl  spaces was  that                                                                   
moist air could  exit the crawl space during  the summer when                                                                   
in  actuality,  this  practice   increases  moisture  in  the                                                                   
crawlspace.  He informed  about  the current  recommendation,                                                                   
which  is   in  building  code   and  includes   sealing  the                                                                   
crawlspace  while   providing  mechanical   ventilation  when                                                                   
necessary.                                                                                                                      
                                                                                                                                
2:15:19 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer expressed  concern  about  the difficulty  of                                                                   
obtaining a  rating. He himself  made an attempt to  call and                                                                   
place himself  on the  list following  calls from  frustrated                                                                   
constituents. He  recalled phoning every Anchorage  rater and                                                                   
receiving  a recording  encouraging  him  "not  to call  back                                                                   
until October."                                                                                                                 
                                                                                                                                
Mr. Fauske stressed that raters  are instructed to be cordial                                                                   
and to recognize constituent frustration.  He stated that the                                                                   
raters  have been  asked to  refrain from  telling people  to                                                                   
call their legislators.  He admitted to receiving  many calls                                                                   
of the  same nature. He  anticipated some improvement  due to                                                                   
public service announcements asking  people to have patience.                                                                   
He appreciated that the program  instilled hope in people who                                                                   
were in need of help.                                                                                                           
                                                                                                                                
Mr. Fauske pointed out that this  program also supplies jobs.                                                                   
His conservative  estimate was  that 1500-2000 new  jobs were                                                                   
the result  of this program. He  stated that this was  also a                                                                   
plus  in  the colder  communities  because  these  jobs  help                                                                   
families get through the tougher  months. He encouraged local                                                                   
hiring  practices.  He  appreciated any  comments,  help,  or                                                                   
criticism because the program is a "work in progress."                                                                          
                                                                                                                                
2:19:38 PM                                                                                                                    
                                                                                                                                
Mr. Butcher observed that the  training only became available                                                                   
                     rd                                                                                                         
last month  on June 3.  There  were six raters in  Matsu when                                                                   
the money  became  available and  now there  are 17 in  South                                                                   
Central.  Training  for raters  is  ongoing.  There is  clear                                                                   
communication  regarding  the raters  who  are booked  versus                                                                   
those who are newly trained.                                                                                                    
                                                                                                                                
2:20:17 PM                                                                                                                    
                                                                                                                                
Representative  Hawker expressed  gratitude for the  program.                                                                   
He stated  that the feedback  from his constituents  was that                                                                   
the service was courteous and  responsive. He understood that                                                                   
the situation was  not easy, yet the implementation  was good                                                                   
in his opinion.                                                                                                                 
                                                                                                                                
Representative  Buch  reported  a  recent  complaint  from  a                                                                   
constituent  regarding capacity.  The  constituent was  under                                                                   
the impression that  the program was already  at capacity. He                                                                   
echoed   the   thankful   sentiments   and   understood   the                                                                   
complexity.   He   encouraged   better  efforts   at   public                                                                   
relations. He  admitted that  the legislators operate  mostly                                                                   
through complaints.  He hoped instead to help  accomplish the                                                                   
goal for the residents of the state.                                                                                            
                                                                                                                                
Mr.   Fauske   explained   that    raters   are   independent                                                                   
contractors, as  opposed to employees of the  corporation. He                                                                   
stated that this  sometimes leads to difficulty  in sending a                                                                   
common message to  the public. He asked for  more information                                                                   
regarding  the   comment  about  the  program   operating  at                                                                   
capacity.                                                                                                                       
                                                                                                                                
Representative  Stoltze expressed  gratitude  to Mr.  Butcher                                                                   
for assembling a  primer that in his opinion  staved off many                                                                   
questions.   He  opined   that   the  distribution   of   the                                                                   
information helped considerably in his area.                                                                                    
                                                                                                                                
2:2-4:34 PM                                                                                                                   
                                                                                                                                
Representative Gara  questioned what legislators  should tell                                                                   
their  constituents.  Mr.  Fauske  noted that  AHFC  had  not                                                                   
created a  public announcement  proposing a corporate  policy                                                                   
communicating to residents  that they may be on  a list for a                                                                   
while. He  stressed that it was  unsound to tell  people that                                                                   
the program is  out of money. He continued  to anticipate the                                                                   
availability  of weatherization money  through 2010,  but the                                                                   
rebate program was different.  He stated that AHFC would take                                                                   
responsibility  for notifying  the public  when the  money is                                                                   
gone.  He hoped  that  a solution  would  arrive before  that                                                                   
happens.                                                                                                                        
                                                                                                                                
He  encouraged constituent  communication  stating that  this                                                                   
meeting  had   occurred  and   that  a  better   message  and                                                                   
scheduling apparatus were in progress.                                                                                          
                                                                                                                                
2:27:12 PM                                                                                                                    
                                                                                                                                
Mr.  Butcher acknowledged  that  some raters  had  encouraged                                                                   
constituents to  lobby their legislators. He  maintained that                                                                   
AHFC   contacted  these   raters   informing   them  not   to                                                                   
communicate this as it might cause  fear in the constituents.                                                                   
He explained that he communicated  to the contractors that if                                                                   
there is a lack of money, they  will be the first to know. He                                                                   
stressed  that it  is not  in the  best interest  of AHFC  to                                                                   
advertise a program  that is without funding.  He stated that                                                                   
the  rebate money  may  indeed  be used  by  the  end of  the                                                                   
calendar year.                                                                                                                  
                                                                                                                                
He  thought that  the best  message for  constituents was  to                                                                   
have patience  and not  refrain from  placing their  names on                                                                   
the list due to long wait times.                                                                                                
                                                                                                                                
Representative  Gara  asked  about   the  popularity  of  the                                                                   
program in regard  to the legislators. He wanted  to see some                                                                   
long term  energy solutions come  out of special  session. He                                                                   
opined that weatherizing homes  this year versus next is best                                                                   
because it saves everyone money.  He requested an estimate to                                                                   
bring the rebate program in operation through June.                                                                             
                                                                                                                                
Mr. Fauske  estimated that the  program will go  through $100                                                                   
million  each year,  based on  demand  and the  speed of  the                                                                   
ratings. He supposed  that $50 million would  last until June                                                                   
2009. He  estimated that by January  of this year  the entire                                                                   
$100 million will have been spent.                                                                                              
                                                                                                                                
2:32:25 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer clarified  that $50 million are  needed to get                                                                   
through June 2009.                                                                                                              
                                                                                                                                
Representative Gara  encouraged more discussion  and possibly                                                                   
agreement  to fund  the $50  million to  prevent the  program                                                                   
from running out of money in January.                                                                                           
                                                                                                                                
2:34:51 PM                                                                                                                    
                                                                                                                                
Mr.  Fauske  pointed  out  that  properties  without  certain                                                                   
energy   standards  are   not  financed.   In  reference   to                                                                   
retrofitting   homes,   much  can   be   done  with   today's                                                                   
technology.                                                                                                                     
                                                                                                                                
2:37:53 PM                                                                                                                    
                                                                                                                                
Representative  Thomas   questioned  if  his   furnace  would                                                                   
qualify  and how  the process  would work.  He was  concerned                                                                   
that the  extra time it  took to have  the rating  done would                                                                   
mean that  winter will come and  it might be too late  to see                                                                   
any of the anticipated efficiency.                                                                                              
                                                                                                                                
Mr. Anderson explained  that while the wait  is inconvenient,                                                                   
it  is  important to  have  the  before  and after  view  and                                                                   
opinion for both the public and the legislature.                                                                                
                                                                                                                                
Representative Thomas  asked if the furnace  could be ordered                                                                   
prior to the rating  if there was clear cause  to replace it.                                                                   
He explained  that with the new  furnace, he could  save $300                                                                   
per month.                                                                                                                      
                                                                                                                                
Mr. Anderson  explained that  the first step  is to  call the                                                                   
energy  rater  and  have  the   rating  done  as  opposed  to                                                                   
completing the online application.                                                                                              
                                                                                                                                
2:40:48 PM                                                                                                                    
                                                                                                                                
Mr. Anderson  informed  that the program  was established  to                                                                   
run  year   round.  Replacing   boilers  in  the   winter  is                                                                   
difficult, yet possible. He observed  that a new energy rater                                                                   
exists in Haines.                                                                                                               
                                                                                                                                
Representative  Kelly spoke  to  the complexity  of the  task                                                                   
given to AHFC. He opined that  it is difficult to make all of                                                                   
the  residents happy.  He  indicated that  it  was better  to                                                                   
truthfully  inform people that  there might  be a long  wait,                                                                   
than  to mislead  them into  believing that  the process  was                                                                   
smooth and easy.                                                                                                                
                                                                                                                                
Representative Thomas opined that  it might be better to take                                                                   
a second mortgage than to wait  for the rater's availability.                                                                   
                                                                                                                                
2:46:04 PM                                                                                                                    
                                                                                                                                
In  response to  the comment  by  Representative Thomas,  Mr.                                                                   
Fauske observed  that the home  energy loan program  has been                                                                   
available for a long time.                                                                                                      
                                                                                                                                
Vice-Chair Stoltze asked if a  faith based organization might                                                                   
be allowed to perform some of  the necessary tasks as long as                                                                   
the rating was done.                                                                                                            
                                                                                                                                
Mr.  Fauske  answered   yes;  the  volunteer   work  was  not                                                                   
different than  the sweat equity  of owners performing  their                                                                   
own tasks.                                                                                                                      
                                                                                                                                
2:47:56 PM                                                                                                                    
                                                                                                                                
Representative Kelly  noted that there may be  an opportunity                                                                   
for individuals that are not trained  raters to make a "first                                                                   
pass."                                                                                                                          
                                                                                                                                
Mr. Anderson  stated that  this was possible  as long  as the                                                                   
"as is" rating and the "post rating"  supports the data, then                                                                   
those receipts will be accepted as part of the rebate.                                                                          
                                                                                                                                
The presentation from AHFC was concluded.                                                                                       
                                                                                                                                
2:51:50 PM                                                                                                                    
                                                                                                                                
Representative Hawker  spoke about prior  testimony regarding                                                                   
the bulk  fuel revolving loan  fund. The prospect  was raised                                                                   
that the  amount of equity  in that fund  is not  adequate to                                                                   
deal with  inflated prices.  He questioned  if the  amount of                                                                   
equity needed to be increased.                                                                                                  
                                                                                                                                
SARAH  FISHERGOAD,  DEPUTY  DIRECTOR  OF  OPERATIONS,  ALASKA                                                                   
INDUSTRIAL  DEVELOPMENT  AND   EXPORT  AUTHORITY  AND  ALASKA                                                                   
ENERGY  AUTHORITY,  DEPARTMENT  OF  COMMERCE,  COMMUNITY  AND                                                                   
ECONOMIC DEVELOPMENT, provided  information to the committee.                                                                   
She  felt  that there  were  sufficient  funds to  cover  the                                                                   
current applications with the  allowance to borrow money from                                                                   
the   power  project   fund.   There  have   not  been   many                                                                   
applications for  the full $500 thousand. She  noted that the                                                                   
Alaska  Village  Electric Cooperative's  (AVEC)  request  was                                                                   
close  to  $20 million.  She  did  not  know of  an  existing                                                                   
program that would provide a loan  of that size. In the past,                                                                   
the  larger  utilities had  a  private  line of  credit.  She                                                                   
anticipated a possible cash flow  issue, although so far that                                                                   
had not been the case.                                                                                                          
                                                                                                                                
She  continued that  the bulk  fuel revolving  loan fund  has                                                                   
been a source of  credit for short term loans  for the annual                                                                   
purchase  of  fuel to  entities  without  a private  line  of                                                                   
credit. She  explained that they  were meeting the need  of a                                                                   
niche. She  elaborated that the  Bridge Loan Program  was run                                                                   
through the Department of Commerce,  as opposed to the Alaska                                                                   
Energy Authority.                                                                                                               
                                                                                                                                
Representative   Hawker  revealed   that  Ms.   Fisher-Goad's                                                                   
testimony was in direct conflict  with the testimony of AVEC.                                                                   
He remembered  that AVEC had stated  that the equity  for the                                                                   
Bulk Fuel Revolving Loan Fund was $35 million short.                                                                            
                                                                                                                                
Ms.  Goad further  explained that  AVEC needs  a $20  million                                                                   
line of credit. She stated that  the Bulk Fuel Revolving Loan                                                                   
Fund was  not capable  of addressing  a $20  million line  of                                                                   
credit. She admitted hearing from  AVEC regarding the line of                                                                   
credit  issue, but  even a  capitalization of  the Bulk  Fuel                                                                   
Revolving Loan Fund would not address their need.                                                                               
                                                                                                                                
2:56:52 PM                                                                                                                    
                                                                                                                                
Representative Hawker wished for clarification from AVEC.                                                                       
                                                                                                                                
Representative Crawford noted  that the use of a pellet stove                                                                   
can cut a  fuel bill in half.  He asked if AEA had  looked at                                                                   
the  possibility  of  converting  to  this  type  of  heating                                                                   
method, which  used fuel  that has  been produced locally  as                                                                   
opposed to diesel.                                                                                                              
                                                                                                                                
3:00:04 PM                                                                                                                    
                                                                                                                                
Steve   Haagenson,   Executive    Director,   Alaska   Energy                                                                   
Authority,  testified via teleconference.  He explained  that                                                                   
pellet stoves  were indeed a focus  of research for  the AEA.                                                                   
He stated  that the benefit of  pellets was that  they reduce                                                                   
the use of heating oil.                                                                                                         
                                                                                                                                
Representative Crawford requested  the potential savings that                                                                   
the  switch to  pellet stoves  might  provide, as  well as  a                                                                   
timeframe for the implementation of such a program.                                                                             
                                                                                                                                
Representative  Kelly responded  to the  issue with  AVEC. He                                                                   
stated that there is a $500 thousand  per community limit and                                                                   
a  $1.5  million  ceiling  for  any  particular  utility.  He                                                                   
mentioned meeting with Meera Kohler  and stating that she did                                                                   
understand  that a  change in  the current  program would  be                                                                   
necessary  to meet  the  needs of  AVEC.  He understood  that                                                                   
AVEC's problem was with the cap.                                                                                                
                                                                                                                                
Ms. Sarah Fisher-Goad  agreed that the cap was  the issue for                                                                   
AVEC  although  it  had  been raised  to  $1.8  million.  She                                                                   
supposed that  AVEC's need  would be  a "one time"  situation                                                                   
due to the rising cost of fuel.                                                                                                 
                                                                                                                                
3:03:41 PM                                                                                                                    
                                                                                                                                
Representative  Kelly observed that  the current  program was                                                                   
not  meant  to  address  AVEC. He  supposed  that  if  AVEC's                                                                   
problem  was  accommodated,  it  would not  happen  with  the                                                                   
existing  program.  He  understood that  AVEC  was  concerned                                                                   
about the  interest rate for the  current price of  the fuel.                                                                   
He  proposed that  the committee  devise a  method of  aiding                                                                   
AVEC with a  special program. He thought it  a simple problem                                                                   
to fix  if AVEC cannot find  alternative financing  for their                                                                   
fuel.                                                                                                                           
                                                                                                                                
Representative  Hawker addressed  AVEC's  need for  financial                                                                   
funding.  He   stated  that   fuel  inventories   make  great                                                                   
collateral.  He  asked  for  information   concerning  AVEC's                                                                   
lending institution and constraints.  He did not believe that                                                                   
there would  be time in  the next few  days to address  these                                                                   
questions.                                                                                                                      
                                                                                                                                
3:06:57 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer spoke to alternative  energy in the Rail Belt.                                                                   
He understood  that a  study was in  progress with  input and                                                                   
feedback collected.  He requested updates on  studies for the                                                                   
Susitna Damn,  the wind  farm at fire  island, and  the Healy                                                                   
Clean Burning Coal plant in Fairbanks.                                                                                          
                                                                                                                                
Mr. Haagenson responded that money  had been appropriated for                                                                   
Susitna. Another  study identified the amount of  need in the                                                                   
Railbelt called the integrated  resource plan. He stated that                                                                   
Fire  Island was  also appropriated  $25  million, which  was                                                                   
managed by  AEA. The  money cannot be  spent until  there are                                                                   
power sales  agreements in place  with utilities  to purchase                                                                   
that power. Regarding  Healy Clean Coal, he  admitted that he                                                                   
was  limited in  his ability  to discuss  them. He  expressed                                                                   
these limits were  due to Healy Clean Coal's  litigation with                                                                   
Golden Valley.                                                                                                                  
                                                                                                                                
He  explained  that  the  issue  with  the  railbelt  was  in                                                                   
providing   fuel  that   could  be  used   in  the   existing                                                                   
infrastructure. He elaborated  that for Anchorage, this would                                                                   
mean bringing gas or synthetic  gas into a pipeline, enabling                                                                   
Anchorage  to  continue  to  operate.  Fairbanks  requires  a                                                                   
liquid fuel solution.                                                                                                           
                                                                                                                                
Representative  Meyer  requested the  cost  per  kWh for  the                                                                   
Healy Clean Burning  Coal Plant. Mr. Haagenson  was not aware                                                                   
of  an estimate  for  fuel  cost.  He clarified  that  Golden                                                                   
Valley Electric Company would be purchasing the energy.                                                                         
                                                                                                                                
3:12:08 PM                                                                                                                    
                                                                                                                                
Representative  Gara reported  questions about the  Renewable                                                                   
Energy  Fund.  The  proposal  was $50  million  per  year  of                                                                   
renewable energy  grant funds made available for  each of the                                                                   
next five  years. He understood  the rules for  reviewing the                                                                   
applications have yet to be adopted.  He requested the status                                                                   
of the advisory committee.                                                                                                      
                                                                                                                                
Mr. Haagenson  responded that HB 152 contained  two portions.                                                                   
One portion  for this  year and another  for next.  He stated                                                                   
that a  request for  proposal (RFP)  would be available  from                                                                   
AEA by the  end of August.  He stated that a  committee would                                                                   
be advisory to the RFP. The next  step is for AEA to evaluate                                                                   
the projects.                                                                                                                   
                                                                                                                                
3:15:46 PM                                                                                                                    
                                                                                                                                
Representative  Gara noted  that  additional  staff would  be                                                                   
needed to  properly evaluate  projects. He requested  comment                                                                   
regarding staffing.                                                                                                             
                                                                                                                                
Mr.  Haagenson  stated  that the  AEA  had  begun  evaluating                                                                   
staff. He stated  that following the RFP, the  evaluation can                                                                   
occur quite  quickly. He stated  that there also  existed the                                                                   
option of seeking supplemental budget if required.                                                                              
                                                                                                                                
Representative  Gara asked if  Mr. Haagenson had  the ability                                                                   
to   hire   people  without   an   appropriation   from   the                                                                   
legislature.  He  questioned  whether  more  money  from  the                                                                   
legislature  was  necessary  to hire  additional  staff.  Mr.                                                                   
Haagenson  responded  that  he  did believe  that  there  was                                                                   
adequate funding for staff.                                                                                                     
                                                                                                                                
Representative  Gara replied  that he  had received  comments                                                                   
stating  that  the "folks  within  AEA  do not  believe  that                                                                   
evaluations can  be conducted without additional  staff." Mr.                                                                   
Haagenson understood  that those comments were  being cycled.                                                                   
His goal  was to streamline the  process. He felt  that there                                                                   
were options and opportunities to make this happen.                                                                             
                                                                                                                                
3:19:01 PM                                                                                                                    
                                                                                                                                
Representative Gara  stressed his concern that  too much time                                                                   
was  taken  to evaluate  $5  million  worth of  projects.  He                                                                   
worried  that the  first $50  million would  not be  reviewed                                                                   
effectively.  He supposed  that  some of  the projects  could                                                                   
have been evaluated with the time given.                                                                                        
                                                                                                                                
Mr. Haagenson  repeated that the  delay is for the  RFP which                                                                   
includes  necessary  information  for  rapid  evaluation.  He                                                                   
disagreed with sacrificing quality,  but he explained that he                                                                   
was working hard on the "front  end." He expressed his intent                                                                   
to  provide good  quality  results in  a  timely manner.  His                                                                   
concern  was that  adequate  staff  was present  to  actively                                                                   
manage awarded grants.                                                                                                          
                                                                                                                                
Representative  Nelson referenced  a letter  that she  passed                                                                   
out  from  the city  of  Napaskiak.  She explained  that  the                                                                   
village was  advocating for prepaid  power meters.  She asked                                                                   
for  AEA's position  on the  investment of  public funds  for                                                                   
communities that  are struggling.  The community  stated that                                                                   
the prepaid meters  contribute to energy conservation  and to                                                                   
the sustainability of electric utilities.                                                                                       
                                                                                                                                
Mr.  Haagenson stated  that he  had  read the  letter, but  a                                                                   
decision  of support  had  not been  made.  He supposed  that                                                                   
eligibility would  exist. He was  aware of several  utilities                                                                   
in Alaska using the system successfully.                                                                                        
                                                                                                                                
3:24:01 PM                                                                                                                    
                                                                                                                                
Representative  Nelson  requested  an  immediate  forthcoming                                                                   
opinion because the committee  would soon present a Committee                                                                   
Substitute  (CS).  She wished  for  support  to be  expressed                                                                   
immediately. Mr.  Haagenson stated  that he would  attempt to                                                                   
have a  letter written  and sent  to Representative  Nelson's                                                                   
office.                                                                                                                         
                                                                                                                                
Representative  Stoltze  referred  to Mr.  Haagenson  as  the                                                                   
energy czar. He expressed concern  about his city's inability                                                                   
to address immediate  concerns. He requested  the interfacing                                                                   
of Mr. Haagenson with the largest local government.                                                                             
                                                                                                                                
Mr. Haagenson expressed a commitment  to work with any entity                                                                   
in Alaska to "turn that around."                                                                                                
                                                                                                                                
3:27:23 PM                                                                                                                    
                                                                                                                                
Representative  Thomas  clarified  that  AEA would  make  the                                                                   
recommendation to the Office of  Management and Budget (OMB).                                                                   
He   opined   that   allowing   OMB  to   manage   would   be                                                                   
"micromanaging." He asked who  had made the decision to allow                                                                   
OMB to manage.                                                                                                                  
                                                                                                                                
Mr. Haagenson  explained that  he was told  that it  would be                                                                   
proper to have  OMB manage. He did not think  that the change                                                                   
would present any delays.                                                                                                       
                                                                                                                                
Ms.  Goad  explained   that  it  is  standard   to  have  OMB                                                                   
coordinate meeting times. This  would not include evaluations                                                                   
of the lists.                                                                                                                   
                                                                                                                                
3:31:39 PM                                                                                                                    
                                                                                                                                
Representative Thomas  asked if Mr. Haagenson  had viewed the                                                                   
Power Cost Equalization (PCE)  bill reviewed in committee. He                                                                   
asked for  a view or opinion  of the bill. He  requested that                                                                   
time  be  spent   reviewing  the  bill  versus   "piecing  it                                                                   
together."                                                                                                                      
                                                                                                                                
Mr. Haagenson  denied having any  opinion about the  bill. He                                                                   
stated  that  Ms.  Fisher  Goad  was doing  a  great  job  in                                                                   
providing  the  necessary  data  regarding the  cost  of  the                                                                   
different alternatives.                                                                                                         
                                                                                                                                
3:34:56 PM                                                                                                                    
                                                                                                                                
Representative   Crawford  requested  information   regarding                                                                   
conservation. He  realized that many people  would appreciate                                                                   
the  ability  to  carpool  via  a  "park  and  ride"  in  the                                                                   
confluence of  the Parks and  Glen Highway. This  would allow                                                                   
public  transportation from  Anchorage to  enable drivers  to                                                                   
conserve.  He  also  discussed   expanding  the  share-a-ride                                                                   
program.  He   stated  that  he  was  receiving   calls  from                                                                   
constituents  concerned  about  the  loss of  bus  routes  in                                                                   
Anchorage.  He   was  also  curious  about  the   process  of                                                                   
evaluating the larger Railbelt projects.                                                                                        
                                                                                                                                
Mr.  Haagenson  responded  that  he was  not  sure  about  an                                                                   
available bus service  for the park and ride  idea. He opined                                                                   
that it would be a city function.  With regards to evaluating                                                                   
Railbelt  methods, he  stated that fuel  costs, debt  service                                                                   
and the  cost of  delivery data  will be  made available.  He                                                                   
stated that the  data will be available in  the December time                                                                   
frame.                                                                                                                          
                                                                                                                                
3:38:15 PM                                                                                                                    
                                                                                                                                
Mr. Haagenson acknowledged that  a solution must be found and                                                                   
then  deployed  to address  the  needs  of the  Railbelt.  He                                                                   
stressed that the projects were  long term and he was looking                                                                   
for the best answer.                                                                                                            
                                                                                                                                
Co-Chair Meyer requested knowledge  of any immediate projects                                                                   
that the  legislature might help  with. He realized  that the                                                                   
gas  pipeline was  the long  term  solution for  most of  the                                                                   
state, but  certainly the other  energy relief  projects will                                                                   
help for the short term.                                                                                                        
                                                                                                                                
Mr. Haagenson  understood  the pressure  and realized  that a                                                                   
solution must  come within a one  to two year time  frame. He                                                                   
felt concern  about the  winter. He  was interested  in short                                                                   
term solutions  such as wood  pellet stoves because  benefits                                                                   
would be apparent immediately.                                                                                                  
                                                                                                                                
3:40:11 PM                                                                                                                    
                                                                                                                                
Representative Gara  discussed prior testimony  from AVEC. He                                                                   
recalled  that   the  Renewable   Energy  Fund  could   reach                                                                   
economies  of scale  with  larger power  generation  projects                                                                   
connecting  communities through  tie-ins. He remembered  that                                                                   
AVEC  had  $50  million  worth   of  projects.  He  expressed                                                                   
pleasure regarding  the $50 million  in the renewable  energy                                                                   
fund, but  he felt that  addressing the projects  earlier was                                                                   
best.                                                                                                                           
                                                                                                                                
Representative   Gara  stated  that   he  did  not   see  AEA                                                                   
administering more than $50 million  this year. He questioned                                                                   
the  potential  of administering  additional  money  for  the                                                                   
Renewable Energy Fund  if it could be secured  in the fourth,                                                                   
fifth,  and  sixth  year. He  suggested  an  additional  $100                                                                   
million  dollars each  for  three years,  with  appropriation                                                                   
pending legislative approval.                                                                                                   
                                                                                                                                
Mr. Haagenson  answered  that he  would like  to "see how  it                                                                   
goes  with the  first $50  million before  he volunteers  for                                                                   
more." He  explained that the  issue of staffing  the program                                                                   
was  the first  goal.  Representative  Gara  stated that  the                                                                   
moment was historic in that the  state had ample funds, which                                                                   
might not exist  in the same capacity in two  or three years.                                                                   
He stressed that this was an opportunity.                                                                                       
                                                                                                                                
Mr. Haagenson asserted that the  Alaska Energy Plan must also                                                                   
be discussed.  He believed that  was another area in  need of                                                                   
additional funding.                                                                                                             
                                                                                                                                
3:44:35 PM                                                                                                                    
                                                                                                                                
Representative   Hawker   asked  about   internal   resources                                                                   
available for  management and allocation of the  HB152 money.                                                                   
He remembered  Mr. Haagenson  stating  that he could  receive                                                                   
extra  funds if  needed  through the  OMB  process. He  asked                                                                   
about  the  OMB  process  and   how  it  might  make  funding                                                                   
available to AEA. Mr. Haagenson  deferred to Ms. Fisher-Goad.                                                                   
                                                                                                                                
Ms. Fisher-Goad responded that  one aspect addressed with OMB                                                                   
was the project  management cost. She stated that  as a state                                                                   
corporation, AEA  works with OMB  to address staffing  needs.                                                                   
She explained that there are available  positions that she is                                                                   
attempting to fill.  Many of these positions  ensure that the                                                                   
process can move forward.                                                                                                       
                                                                                                                                
Representative Hawker  asked if she  was planning to  tap the                                                                   
appropriation for  HB152 through an  RPL for the  purposes of                                                                   
administrative costs. She answered yes.                                                                                         
                                                                                                                                
3:48:47 PM                                                                                                                    
                                                                                                                                
Representative  Kelly presented a  situation of ramping  from                                                                   
$5 million  to $50 million.  He asked  what the ratio  on the                                                                   
increase will  be for state employees versus  consultants. He                                                                   
asked about how "deep the consultant pool was."                                                                                 
                                                                                                                                
Mr.  Haagenson  preferred  in-house   expertise,  unless  the                                                                   
quality would suffer. He stated  that the consulting pool was                                                                   
fairly large  and could extend  nationally. He  expressed the                                                                   
importance of quality work.                                                                                                     
                                                                                                                                
Representative  Kelly  asked  about  the  ratio  of  in-house                                                                   
versus consultants. Mr. Haagenson  answered that he could not                                                                   
easily identify  that number.  He stated  that he would  look                                                                   
for the  person with the  expertise beginning in  state first                                                                   
and  proceed to  a  national pool  if  needed.  He wished  to                                                                   
achieve good quality in a timely manner.                                                                                        
                                                                                                                                
3:53:04 PM                                                                                                                    
                                                                                                                                
Representative Gara  suggested that insufficient  thought has                                                                   
gone into  staffing. He  said that he  had been asking  about                                                                   
staffing issues  for weeks  now. He  indicated that  the work                                                                   
had not  been done  regarding the  Renewable Energy  Fund. He                                                                   
asked if  he was wrong  to expect that  some of  the projects                                                                   
might have been reviewed allowing  construction to begin this                                                                   
summer.                                                                                                                         
                                                                                                                                
Mr. Haagenson disagreed that Representative  Gara's statement                                                                   
was  accurate. He  felt that  Ms. Goad  provided an  accurate                                                                   
answer regarding  staffing and funding.   Representative Gara                                                                   
expressed concern because the  money was not appropriated for                                                                   
staff, but instead for grants.                                                                                                  
                                                                                                                                
Ms.  Goad stated  that  the opportunity  has  not existed  to                                                                   
discuss  AEA's internal  processes  regarding  the manner  in                                                                   
which projects  are performed.  She stated that  the building                                                                   
of energy  infrastructure projects  in rural Alaska  occurred                                                                   
with  Denali Commission  Funds.  She stated  that many  small                                                                   
projects were  deficient in required  staffing and  have thus                                                                   
been managed by AEA. She stated  that there are two different                                                                   
project models in existence. There  is the grant portion, and                                                                   
also the portion that gets the project finished.                                                                                
                                                                                                                                
3:58:24 PM                                                                                                                    
                                                                                                                                
Representative Gara  misunderstood the method  for charging a                                                                   
project  when  it  was  undergoing  evaluation.  He  did  not                                                                   
understand where the funding would come from.                                                                                   
                                                                                                                                
Ms. Goad explained that the second  RFP ensures that there is                                                                   
funding available  whether with contract or  state employees.                                                                   
She stated that  HB152 has a five year $250  million promise.                                                                   
She acknowledged that $50 million  had been appropriated. The                                                                   
legislature can  either increase or decrease  this money. She                                                                   
reported that  the goal was to  have good processes  in place                                                                   
for  the  evaluation  of projects  and  to  provide  managing                                                                   
staff.                                                                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:02:15 PM.                                                                                      
                                                                                                                                
                                                                                                                                

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