Legislature(2011 - 2012)HOUSE FINANCE 519

03/13/2012 08:30 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ HB 9 IN-STATE GASLINE DEVELOPMENT CORP TELECONFERENCED
Heard & Held
+ HB 289 NATURAL GAS STORAGE TAX CREDIT/REGULATION TELECONFERENCED
Heard & Held
+= HB 170 MUNI TAX EXEMPTION FOR CERTAIN VOLUNTEERS TELECONFERENCED
Scheduled But Not Heard
+= HB 252 INCOME TAX EXEMPTION TELECONFERENCED
Moved CSHB 252(FIN) Out of Committee
+= HCR 24 STATE FOOD RESOURCE DEVELOPMENT GROUP TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 13, 2012                                                                                            
                         8:34 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
8:34:11 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 8:34 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Co-Chair                                                                                        
Representative Anna Fairclough, Vice-Chair                                                                                      
Representative Mia Costello                                                                                                     
Representative Mike Doogan                                                                                                      
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Reggie Joule                                                                                                     
Representative Mark Neuman                                                                                                      
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Mia Costello,  Sponsor; Representative  Mike                                                                    
Chenault, Sponsor;  Representative Mike  Hawker, Co-Sponsor;                                                                    
Tom  Wright,  Staff,   Representative  Mike  Chenault;  Josh                                                                    
Walton,  Staff,  Representative  Mia Costello;  Joe  Dubler,                                                                    
Vice President  and Chief Financial Officer,  Alaska Gasline                                                                    
Development  Corporation  and  Director of  Finance,  Alaska                                                                    
Housing  Finance Corporation,  Department  of Revenue;  Rena                                                                    
Delbridge, Staff, Representative  Mike Hawker; Jane Pearson,                                                                    
Staff, Representative Steve  Johnson; Barbara Huff Tuckness,                                                                    
Director,  Legislative and  Governmental Affairs,  Teamsters                                                                    
Local  959;   Gene  Therriault,  Vice   President,  Resource                                                                    
Development, Golden Valley Electric Association.                                                                                
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jerry Cleworth, Mayor, Fairbanks.                                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 9      IN-STATE GASLINE DEVELOPMENT CORP                                                                                     
                                                                                                                                
          HB 9 was HEARD and HELD in Committee for further                                                                      
          consideration.                                                                                                        
                                                                                                                                
HCR 24    STATE FOOD RESOURCE DEVELOPMENT GROUP                                                                                 
                                                                                                                                
          HCR 24 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
HB 170    MUNI TAX EXEMPTION FOR CERTAIN VOLUNTEERS                                                                             
                                                                                                                                
          HB 170 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
HB 252    INCOME TAX EXEMPTION                                                                                                  
                                                                                                                                
          CS HB 252(FIN) was  REPORTED out of committee with                                                                    
          a  "do   pass"  recommendation  and  with   a  new                                                                    
          indeterminate fiscal  note from the  Department of                                                                    
          Revenue.                                                                                                              
                                                                                                                                
HB 289    NATURAL GAS STORAGE TAX CREDIT/REGULATION                                                                             
                                                                                                                                
          HB 289 was HEARD and HELD in Committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HOUSE BILL NO. 252                                                                                                            
                                                                                                                                
     "An Act exempting certain small businesses from the                                                                        
     corporate income tax; and providing for an effective                                                                       
     date."                                                                                                                     
                                                                                                                                
8:34:51 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MIA COSTELLO, SPONSOR, introduced the                                                                            
legislation.                                                                                                                    
                                                                                                                                
Representative Gara expressed  concern that small businesses                                                                    
could  retain the  exemption after  making large  amounts of                                                                    
money. He  proposed that only  the first $10  million remain                                                                    
tax  free on  profits, and  he queried  the duration  of the                                                                    
tax-free status.                                                                                                                
Representative  Costello  replied  that  the  tax  would  be                                                                    
applicable  until a  business reached  $50 million  in gross                                                                    
aggregate assets.                                                                                                               
                                                                                                                                
Representative Gara wondered whether a  tax break, but not a                                                                    
full tax  break should  be offered  as business  became more                                                                    
successful. He  wondered about limiting  the full  tax break                                                                    
to the first $10 million tax in profits.                                                                                        
                                                                                                                                
JOSH WALTON,  STAFF, REPRESENTATIVE MIA  COSTELLO, responded                                                                    
that the $50 million cap  was written into the federal code.                                                                    
He noted that other requirements  were written into the code                                                                    
as well, such  as how the assets would be  used in expansion                                                                    
into other businesses  or areas not included  in the federal                                                                    
definition. He  stated that  the change was  not out  of the                                                                    
question;  however, the  legislation  was  intended to  make                                                                    
Alaska as  competitive as possible for  small businesses. He                                                                    
thought that the idea could  be revisited in the future once                                                                    
the effect of the bill could be gauged.                                                                                         
                                                                                                                                
Representative Wilson  asked if the intention  was to remain                                                                    
consistent with the federal government.                                                                                         
                                                                                                                                
Representative Costello responded in the affirmative.                                                                           
                                                                                                                                
8:39:22 AM                                                                                                                    
                                                                                                                                
Representative  Doogan  pointed  to  page  2,  line  10.  He                                                                    
requested  an explanation  for the  words "authorized  to do                                                                    
business in  the state."  He wondered  how the  language was                                                                    
distinct from "incorporated in the state."                                                                                      
                                                                                                                                
Mr.  Walton  responded   that  there  was  not   much  of  a                                                                    
distinction. He elaborated that  originally the term "Alaska                                                                    
Corporation,"  had been  defined explicitly  because of  the                                                                    
requirement  that the  businesses  be  headquartered in  the                                                                    
state,  but that  The Department  of Law  had believed  that                                                                    
that  would  be a  violation  on  inter-state commerce.  The                                                                    
Alaska Corporation  was then defined  as a  corporation that                                                                    
was authorized to do business within the state.                                                                                 
                                                                                                                                
Representative Doogan  surmised that the  language indicated                                                                    
Alaska   Airlines  or   other   companies   that  were   not                                                                    
headquartered here, but that did business in the state                                                                          
                                                                                                                                
Mr.  Walton  replied that  that  was  generally correct.  He                                                                    
noted that Alaska Airlines was  a transportation company and                                                                    
would  not  qualify for  the  tax  breaks discussed  in  the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Representative Neuman referred to  the sponsor statement. He                                                                    
read that  the types  of businesses  that would  be affected                                                                    
were  highly mobile  and had  many  options regarding  where                                                                    
they   could   locate   their   business.   Such   companies                                                                    
consequently tended  to locate elsewhere, even  when founded                                                                    
by  Alaskan's. He  asked if  the  bill contained  sideboards                                                                    
that stipulated that if the  companies were going to receive                                                                    
credits from  the state  that they must  also be  located in                                                                    
the state.                                                                                                                      
                                                                                                                                
8:42:16 AM                                                                                                                    
                                                                                                                                
Mr.  Walton explained  that the  bill provided  an exemption                                                                    
from state corporate income tax  and only incurred corporate                                                                    
income  tax liabilities  for the  activities carried  out in                                                                    
the state.  Out-of-state activities  would be  subject under                                                                    
the laws of the respective states.                                                                                              
                                                                                                                                
Representative Neuman  understood that  in order  to receive                                                                    
the credits the work had to be done in Alaska.                                                                                  
                                                                                                                                
Mr. Walton responded in the affirmative.                                                                                        
                                                                                                                                
Vice-chair  Fairclough discussed  the new  fiscal note  from                                                                    
the Department of Revenue.                                                                                                      
                                                                                                                                
Co-Chair Stoltze solicited amendments.                                                                                          
                                                                                                                                
Representative Doogan wondered whether  fiscal note number 1                                                                    
was still applicable.                                                                                                           
                                                                                                                                
Co-Chair  Stoltze  replied  that  fiscal  note  1  had  been                                                                    
attached to a previous version of the bill.                                                                                     
                                                                                                                                
Co-Chair  Thomas  MOVED to  report  CS  HB 252(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CS  HB 252(FIN)  was REPORTED  out of  committee with  a "do                                                                    
pass"  recommendation and  with a  new indeterminate  fiscal                                                                    
note from the Department of Revenue.                                                                                            
                                                                                                                                
8:45:26 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
8:47:19 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 9                                                                                                              
                                                                                                                                
     "An   Act   requiring   the  Joint   In-State   Gasline                                                                    
     Development   Team  to   report   to  the   legislature                                                                    
     recommended changes  to state law that  are required to                                                                    
     enable  or   facilitate  the  design,   financing,  and                                                                    
     construction  of an  in-state natural  gas pipeline  so                                                                    
     that the in- state  natural gas pipeline is operational                                                                    
    before 2016; and providing for an effective date."                                                                          
                                                                                                                                
8:47:24 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MIKE  CHENAULT, SPONSOR, introduced HB  9. He                                                                    
stated two  years ago the  legislature passed HB  369, which                                                                    
dealt  with  advancing  an in-state  gas  pipeline  project.                                                                    
Since that time, the  Alaska Gasline Development Corporation                                                                    
(AGDC) had  made progress developing  a project  along solid                                                                    
timelines  and the  bill had  been crafted  to maintain  the                                                                    
momentum. He shared that the  bill was more detailed than he                                                                    
had  originally  intended.  He  relayed  that  the  original                                                                    
intention of the  legislation had been to  provide AGDC with                                                                    
the tools that would allow the  project to be refined to the                                                                    
point of  advancement. He qualified that  advancement of the                                                                    
project  would be  dependent on  a  successful open  season.                                                                    
The state  had invested hundreds  of millions of  dollars in                                                                    
pursuit of a gas pipeline,  but it had been perpetually held                                                                    
back  due  to  a  variety   of  reasons.  The  sponsors  had                                                                    
attempted  to  answer  a  number   of  concerns  from  other                                                                    
members. He  did not want  the project to be  in competition                                                                    
with  another gasline  project. He  admitted that  he wasn't                                                                    
sure of the logistics of  the project. He believed the issue                                                                    
was about policy and trying to get gas to Alaskans.                                                                             
                                                                                                                                
8:51:10 AM                                                                                                                    
                                                                                                                                
Representative   Chenault    continued   to    discuss   the                                                                    
legislation.  He  understood that  more  gas  could be  sent                                                                    
through a larger,  rather than a smaller line.  He said that                                                                    
the  state's   hands  were  tied   by  the   Alaska  Gasline                                                                    
Inducement  Act  (AGIA). He  stated  that  the bill  was  an                                                                    
attempt  to address  concerns to  move the  pipeline project                                                                    
forward to an open season.                                                                                                      
                                                                                                                                
REPRESENTATIVE   MIKE  HAWKER,   CO-SPONSOR,  endorsed   the                                                                    
background  and   description  of   the  bill   sponsor.  He                                                                    
explained  that HB  369,  which had  been  passed two  years                                                                    
earlier, had  been the inspiration  for the  legislation. He                                                                    
shared that HB  369 had directed certain  state employees at                                                                    
Alaska Housing  Finance Corporation  (AHFC) to  move forward                                                                    
and begin  developing a project  plan for delivering  gas to                                                                    
Alaskans. He cited the specific objectives in the plan:                                                                         
                                                                                                                                
     (c)  The project  plan must  include specific  plans to                                                                    
     coordinate  and   facilitate  construction,  ownership,                                                                    
     operation,  and management  of a  natural gas  pipeline                                                                    
     serving  Fairbanks,  the  south-central region  of  the                                                                    
     state,  and  other  communities  whenever  practicable,                                                                    
     connecting with or enhancing  the existing gas pipeline                                                                    
     system, and reaching to  tidewater in the south-central                                                                    
     region of the state.                                                                                                       
                                                                                                                                
Representative Hawker  shared that  a project plan  had been                                                                    
delivered  in  accordance  with HB  369  that  embodied  the                                                                    
mission.  He said  that  HB 9  would  provide the  statutory                                                                    
language to implement the vision  that had been passed in HB                                                                    
369. The technical  language in HB 9 would  take the project                                                                    
to the  next step  of going  to the  market and  finding out                                                                    
what  the  market would  bear  in  getting Alaska's  gas  to                                                                    
Alaska's people.  He reiterated  that the open  season would                                                                    
inform the state as to how the project should proceed.                                                                          
                                                                                                                                
8:56:10 AM                                                                                                                    
                                                                                                                                
Representative Hawker  continued to address HB  9. He stated                                                                    
that sections  of the bill  defined, refined,  and clarified                                                                    
the  duties of  AGDC. He  referred to  the sections  as "the                                                                    
Empowerments." He relayed that other  parts of the bill made                                                                    
technical   amendments  to   the   Alaska  Natural   Gasline                                                                    
Development  Authority  (ANGDA)  statutes by  bringing  them                                                                    
into  conformity  as a  sister  company  with AGDC  for  the                                                                    
purpose  of  delivering  gas to  Alaskans.  He  stated  that                                                                    
sections in  the bill allowed  the pipeline to operate  as a                                                                    
contract  carrier in  lieu of  the  existing common  carrier                                                                    
statutes. He  furthered that sections of  the bill protected                                                                    
projects   moving   forward    from   unnecessary   judicial                                                                    
interference.  He   said  that  some  sections   related  to                                                                    
empowering  AGDC to  enter  into confidentiality  agreements                                                                    
and  manage  confidential   information  that  was  "mission                                                                    
critical" to  moving a project forward.  Sections related to                                                                    
the Regulatory  Commission of Alaska  (Regulatory Commission                                                                    
of Alaska)  exempted the project  from provisions  that were                                                                    
not  appropriate,  and  worked  to  define  a  framework  of                                                                    
appropriate  regulations.   Another  section   exempted  the                                                                    
project from property taxes  during the construction period.                                                                    
He  revisited   the  "Empowerments."  He  shared   that  the                                                                    
empowerments  were necessary  to  enable the  project to  go                                                                    
forward  according to  the original  intent. He  stated that                                                                    
the project was  "stand alone," and that  AGDC should evolve                                                                    
into partnership  or ownership with other  pipeline projects                                                                    
or  developers. He  stressed that  every  day of  hesitation                                                                    
represented a day that the market was passing the state by.                                                                     
                                                                                                                                
Co-Chair Stoltze solicited further expert testimony.                                                                            
                                                                                                                                
Representative Mike Chenault noted  that staff was available                                                                    
to answer questions.                                                                                                            
                                                                                                                                
9:00:23 AM                                                                                                                    
                                                                                                                                
TOM WRIGHT,  STAFF, REPRESENTATIVE MIKE  CHENAULT, discussed                                                                    
the  sectional  analysis  (copy on  file).  He  stated  that                                                                    
Section 1  related to the  duties and abilities of  ADGC. He                                                                    
highlighted the duties and abilities:                                                                                           
                                                                                                                                
   Section 1 relates to Alaska Gasline Development                                                                            
   Corporation's (AGDC) duties and abilities as a subsidiary                                                                    
   under the Alaska Housing Finance Authority (AHFC).                                                                           
                                                                                                                                
     AGDC shall:                                                                                                                
                                                                                                                                
        · Advance an instate gas pipeline as described in                                                                       
          the July 2011 project plan, with modifications as                                                                     
          necessary.                                                                                                            
        · Once construction on that line starts, analyze                                                                        
          additional pipelines to connect other regions of                                                                      
          the state, broadening the reach of gas beyond a                                                                       
          main line.                                                                                                            
        · Manage and invest a newly created pipeline fund                                                                       
          to yield competitive market rates.                                                                                    
        · Following   an   open   season,   once   precedent                                                                    
          agreements are signed, make public for each                                                                           
          shipper the name, capacity contracted for, and                                                                        
          length of contract.                                                                                                   
                                                                                                                                
Mr. Wright continued:                                                                                                           
                                                                                                                                
     AGDC may:                                                                                                                  
                                                                                                                                
        · Decide how a pipeline will be owned and operated,                                                                     
          including joint ownership/operatorship.                                                                               
        · Use eminent domain to acquire land required for a                                                                     
          pipeline.                                                                                                             
        · Acquire property and interests in pipelines as                                                                        
          needed.                                                                                                               
        · Transfer or dispose of a pipeline project that is                                                                     
          an AGDC asset.                                                                                                        
        · Issue revenue bonds limited to AGDC's backing.                                                                        
                                                                                                                                
Mr. Wright read from the sectional analysis for CSHB 9                                                                          
(RES):                                                                                                                          
                                                                                                                                
     Section  2 exempts  ANGDA  from  the state  procurement                                                                  
     code  when   contracting  for   professional  services;                                                                    
    conforming to Section 19 (AGDC is already exempt).                                                                          
                                                                                                                                
     Adds   a  new   paragraph  to   AS  36.30.850,   Public                                                                    
     Contracts, State Procurement  Code, Application of this                                                                    
     chapter                                                                                                                    
                                                                                                                                
     Section 3 provides AGDC access  to information of state                                                                  
     agencies related  to a gas  pipeline. As the  Joint In-                                                                    
     State Gasline  Development Team  (JIGDT) created  in HB                                                                    
     369  in 2010  is repealed  in  section 28,  HB 9,  this                                                                    
     section  also changes  "JIGDT" to  "AGDC." (Section  28                                                                    
     repeals JIGDT.)                                                                                                            
                                                                                                                                
     Amends AS  38.34.050, Public Land, Instate  Natural Gas                                                                    
     Pipeline, Cooperation and Access to information                                                                            
                                                                                                                              
     Section 4 directs state agencies  to cooperate with and                                                                  
     give  priority  AGDC requests,  and  calls  on AGDC  to                                                                    
     avoid duplicating other  state-supported work. As JIGDT                                                                    
     is  repealed in  section 28,  HB 9,  this section  also                                                                    
     changes "JIGDT" to "AGDC."                                                                                                 
                                                                                                                                
     Amends AS  38.34.050, Public Land, Instate  Natural Gas                                                                    
     Pipeline, Cooperation and Access to information                                                                            
                                                                                                                                
     Section 5  requires DNR to  grant a  state right-of-way                                                                  
     lease to  AGDC at  no cost or  rental fee,  and exempts                                                                    
     those leases from the common  carriage covenants in the                                                                    
     state  Right of  Way  Leasing Act.  Exemption from  the                                                                    
     covenants has  the effect of  allowing an AGDC  line to                                                                    
     operate as a contract carrier.                                                                                             
                                                                                                                                
     Amends AS  38.34.050, Public Land, Instate  Natural Gas                                                                    
     Pipeline, Cooperation and Access to information                                                                            
                                                                                                                                
     Section  6 allows  AGDC to  enter into  confidentiality                                                                  
     agreements,  including with  state agencies,  and deems                                                                    
     confidential information  related to field  studies and                                                                    
     technical  data. Calls  on municipalities  and agencies                                                                    
     to provide  non-hydrocarbon natural resources,  such as                                                                    
     water, sand  and gravel, at usual  and customary rates.                                                                    
     Requires AGDC  to bear those  costs but does  not allow                                                                    
     those costs in a rate base.                                                                                                
                                                                                                                                
     Adds  new subsections  to  AS  38.34.050, Public  Land,                                                                    
     Instate  Natural Gas  Pipeline, Cooperation  and Access                                                                    
     to information                                                                                                             
                                                                                                                                
     Section  7  revises  definitions of  "AGDC,"  "in-state                                                                  
    natural gas pipeline," and "natural gas pipeline."                                                                          
                                                                                                                                
     Repeals  and reenacts  38.34.099, Public  Land, Instate                                                                    
     Natural Gas Pipeline, Definitions                                                                                          
                                                                                                                                
9:05:11 AM                                                                                                                    
                                                                                                                                
     Section 8 conforms to Section 5, right-of-way leasing.                                                                   
                                                                                                                                
     Amends AS 38.35.100,  Public Land, Right-of-Way Leasing                                                                    
     Act, Decision on Application                                                                                               
                                                                                                                                
     Section 9 Conforms to Section 5, Right-of Way Leasing                                                                    
                                                                                                                                
     Amends AS 38.35.100,  Public Land, Right-of-Way Leasing                                                                    
     Act, Covenants required to be included in lease                                                                            
                                                                                                                                
     Section 10 Conforms to Section 5, Right-of Way Leasing                                                                   
                                                                                                                                
     Amends AS 38.35.100,  Public Land, Right-of-Way Leasing                                                                    
     Act, Covenants required to be included in lease                                                                            
                                                                                                                                
     Section 11 Conforms to Section 5, Right-of Way Leasing                                                                   
     Adds  new  subsection  to AS  38.35.120,  Public  Land,                                                                    
     Right-of-Way Leasing Act, Payment of rental and costs                                                                      
                                                                                                                              
     Section  12  limits  judicial review  of  state  lease,                                                                  
     permit  or other  authorization  decisions to  superior                                                                    
     court and prohibits the  court from granting injunctive                                                                    
     relief. Claims  must be  brought within  60 days  of an                                                                    
     action for which relief is sought.                                                                                         
                                                                                                                                
     Adds  new subsections  to  AS  38.35.200, Public  Land,                                                                    
     Right-of-Way Leasing Act,  Judicial review of decisions                                                                    
     of commissioners on application                                                                                          
                                                                                                                                
     Section  13  exempts  information covered  by  an  AGDC                                                                  
     confidentiality   agreement  from   the  state   Public                                                                    
     Records Act. (This section  exempts from public records                                                                    
     disclosure the  information allowed under Section  6 to                                                                    
     be kept confidential)                                                                                                      
                                                                                                                                
     Amends  AS  40.25.120  Public  Records  and  Recorders,                                                                    
     Public Record Disclosures,  Public Records; exemptions;                                                                    
     certified copies                                                                                                           
                                                                                                                                
     Section 14  amends ANGDA's  purpose, enabling  ANGDA to                                                                  
     act  as  a gas  marketer  instead  of transporter,  and                                                                    
     eliminating proscriptive language  regarding gas supply                                                                    
     and gas market locations.                                                                                                  
                                                                                                                                
     Amends AS  41.41.010, Public Resources,  Alaska Natural                                                                    
     Gas   Development  Authority,   Establishment  of   the                                                                    
     authority                                                                                                                  
                                                                                                                                
     Section 15  broadens ANGDA's purpose  as a  natural gas                                                                  
     marketer.                                                                                                                  
                                                                                                                                
     Amends AS  41.41.010, Public Resources,  Alaska Natural                                                                    
     Gas   Development  Authority,   Establishment  of   the                                                                    
     authority                                                                                                                  
                                                                                                                                
Mr. Wright stated  that ANGDA would remain  intact to follow                                                                    
the  voter's  initiative  in 2002,  but  instead  of  having                                                                    
competing purposes,  ANGDA would continue as  a marketer and                                                                    
allow  AGDC   to  focus  on  the   building,  operating  and                                                                    
ownership of a gasline.                                                                                                         
                                                                                                                                
     Section  16  adds  to ANGDA's  statutory  abilities  by                                                                  
     allowing  ANGDA with  the  DNR  commissioner to  pledge                                                                    
     state royalty gas for contracts entered into by ANGDA.                                                                     
                                                                                                                                
     Adds new subsection to  AS 41.41.010, Public Resources,                                                                    
     Alaska     Natural    Gas     Development    Authority,                                                                    
     Establishment of the authority                                                                                             
                                                                                                                                
     Section 17  states that ANGDA,  as an  AHFC subsidiary,                                                                  
     shall be governed by the AHFC board of directors.                                                                          
                                                                                                                                
     Repeals  and reenacts  AS 41.41.020,  Public Resources,                                                                    
     Alaska  Natural  Gas Development  Authority,  Authority                                                                    
     governing body                                                                                                             
                                                                                                                              
     Section  18  amends  ANGDA  statues  related  to  board                                                                  
     compensation, to conform to Section 17.                                                                                    
                                                                                                                                
     Amends AS  41.41.060, Public Resources,  Alaska natural                                                                    
     Gas  Development   Authority,  Compensation   of  board                                                                    
     members; per diem and travel expenses                                                                                      
                                                                                                                                
     Section  19  amends  ANGDA statutes  to  include  legal                                                                  
     counsel  in the  services ANGDA  may contract  for, and                                                                    
     exempts  procurement of  contracted  services from  the                                                                    
     state procurement code.                                                                                                    
                                                                                                                                
     Amends AS  41.41.070, Public Resources,  Alaska Natural                                                                    
     Gas Development Authority, Authority staff                                                                                 
                                                                                                                                
     Section  20  amends  ANGDA board  member  and  employee                                                                  
     conflict of interest  disclosures, removing involvement                                                                    
     with  a  "project"  from  the  circumstances  requiring                                                                    
     disclosure. {Conforms to  Section 14 redefining ANGDA's                                                                    
     role}                                                                                                                      
                                                                                                                                
     Amends AS  41.41.150, Public Resources,  Alaska Natural                                                                    
     Gas Development Authority, Conflicts of interest                                                                           
                                                                                                                                
Mr. Wright interjected that many of the changes in the                                                                          
ANGDA statutes were conforming to ANGDA's position as a                                                                         
marketer.                                                                                                                       
                                                                                                                                
     Section  21  amends   ANGDA's  statutory  authority  to                                                                  
     include  as confidential  and  exempt  from the  public                                                                    
     records  act   information  within   a  confidentiality                                                                    
     agreement between ANGDA and AGDC.                                                                                          
     Section   22   amends  ANGDA's   statutory   authority,                                                                  
     removing  the  authority  to exercise  eminent  domain.                                                                    
     (Conforms to Section 14 redefining ANGDA's role)                                                                           
                                                                                                                                
     Amends AS  41.41.200, Public Resources,  Alaska Natural                                                                    
    Gas Development Authority, Powers of the authority                                                                          
                                                                                                                                
     Section 23  conforms to Section 17  by defining "board"                                                                  
     in ANGDA's statutes as the AHFC board.                                                                                     
                                                                                                                                
     Amends AS  41.41.990, Public Resources,  Alaska Natural                                                                    
     Gasline Development Authority, Definitions                                                                                 
                                                                                                                                
     Section   24  requires   public  utilities   to  submit                                                                  
     contracts  with AGDC  to the  Regulatory Commission  of                                                                    
     Alaska; gives  the Regulatory Commission of  Alaska 180                                                                    
     days to  approve or disapprove the  contracts. Requires                                                                    
     AGDC or  an entity  controlled by  AGDC to  submit non-                                                                    
     utility  contracts,  under   seal,  to  the  Regulatory                                                                    
     Commission   of   Alaska;   provides   the   Regulatory                                                                    
     Commission  of Alaska  30 days  to approve  non-utility                                                                    
     contracts  if  the  tariffs  are  no  higher  than  the                                                                    
     weighted   average  of   tariffs   in  public   utility                                                                    
     contracts.                                                                                                                 
                                                                                                                                
     Adds  new section  to AS  42.05,  Public Utilities  and                                                                    
     Carriers and  Energy Programs, Alaska  Public Utilities                                                                    
     Regulatory Act                                                                                                             
                                                                                                                                
Mr. Wright stated that Section 24 was the result of an                                                                          
amendment from House Resources Committee to assure that the                                                                     
state's interests were protected.                                                                                               
                                                                                                                                
     Section 25 exempts an  AGDC-controlled project from the                                                                  
     Regulatory  Commission of  Alaska  under 42.05,  Public                                                                    
     Utilities Act.                                                                                                             
                                                                                                                                
     Adds new  subsection to AS 42.05.711,  Public Utilities                                                                    
     and  Carriers   and  Energy  Programs,   Alaska  Public                                                                    
     Utilities Regulatory Act, Exemptions                                                                                       
                                                                                                                                
     Section  26 exempts  a pipeline  in which  AGDC has  an                                                                  
     interest   from   Regulatory   Commission   of   Alaska                                                                    
     regulation under 42.06, the Pipeline Act.                                                                                  
                                                                                                                                
                                                                                                                                
     Adds  new section  to AS  42.06,  Public Utilities  and                                                                    
     Carriers and Energy Programs,  Pipeline Act, Article 7,                                                                    
     General Provisions                                                                                                         
                                                                                                                                
     Section  27  exempts an  AGDC  project  from state  and                                                                  
     local property taxes during construction.                                                                                  
                                                                                                                                
     Adds  new  subsection  to  AS  43.56.020,  Revenue  and                                                                    
     Taxation,  Oil  and  Gas  Exploration,  Production  and                                                                    
     Pipeline Transportation Property Tax, Exemptions                                                                           
                                                                                                                                
     Section 28 repeals seven statutes.                                                                                       
                                                                                                                                
     Repeals  AS 38.34.030,  Public  Land, In-State  Natural                                                                    
     Gas Pipeline, Joint  In-State Gasline Development Team;                                                                    
     38.34.040,   Duties  of   the  Development   Team;  and                                                                    
     38.34.060,   Conflicts   of    interest.   Repeals   AS                                                                    
     41.41.030,   Public  Resources,   Alaska  Natural   Gas                                                                    
     Development  Authority,  Term   of  office;  41.41.040,                                                                    
     Removal  and vacancies;  41.41.050, Quorum  and voting;                                                                    
     and 41.41.080, Legal counsel.                                                                                              
                                                                                                                                
                                                                                                                                
     Section  29  repeals  Section  1  of  the  2002  Ballot                                                                  
     Measure  No.3,  the findings  of  which  are no  longer                                                                    
     applicable   or   necessary    with   ANGDA's   revised                                                                    
     authority.                                                                                                                 
                                                                                                                                
     Section  30  is   transition  language  expressing  the                                                                  
     legislative  intent that  existing tight-of-way  leases                                                                    
     between AGDC and  DNR are to be amended  to reflect the                                                                    
     exemption from  common carriage covenants  contained in                                                                    
     Section 5  of HB 9.  (The Alaska Constitution  bars the                                                                    
     Legislature from passing  laws that apply retroactively                                                                    
     to contracts in place)                                                                                                     
                                                                                                                                
     Section 31 is reviser's instructions.                                                                                    
                                                                                                                                
     Section 32 sets and immediate effective date.                                                                            
                                                                                                                                
9:10:27 AM                                                                                                                    
                                                                                                                                
JOE  DUBLER, VICE  PRESIDENT  AND  CHIEF FINANCIAL  OFFICER,                                                                    
ALASKA  GASLINE  DEVELOPMENT  CORPORATION  AND  DIRECTOR  OF                                                                    
FINANCE, ALASKA  HOUSING FINANCE CORPORATION,  DEPARTMENT OF                                                                    
REVENUE, testified that he was available for questions.                                                                         
                                                                                                                                
Vice-chair Fairclough asked if a reclamation clause for a                                                                       
gas pipeline had been written in to the bill.                                                                                   
                                                                                                                                
RENA   DELBRIDGE,   STAFF,   REPRESENTATIVE   MIKE   HAWKER,                                                                    
responded that there was no  reclamation clause in the bill.                                                                    
She  stated that  the  state  pipeline coordinator's  office                                                                    
currently  had  standards  in  place  regarding  abandonment                                                                    
should a  line become  no longer operational.  She explained                                                                    
that  gas  pipelines differed  from  oil  pipelines in  that                                                                    
gaslines were  generally beneath  the ground. She  said that                                                                    
rather than  being dug  up, gaslines  tended to  get flushed                                                                    
clean and then sealed off.                                                                                                      
                                                                                                                                
Vice-chair   Fairclough   stressed   the   importance   that                                                                    
reclamation  language   should  exist  for   anything  above                                                                    
ground. She  directed attention to Section  23. She wondered                                                                    
how one governing  board could be in  multiple layers; would                                                                    
the  courts view  the  board as  one  corporation with  full                                                                    
liability.                                                                                                                      
                                                                                                                                
Mr. Wright  replied that  Page 4,  subsection (d),  spoke to                                                                    
the issue of debt obligation:                                                                                                 
                                                                                                                                
     (d)  No  debt, obligation,  or liability of  the Alaska                                                                  
     Gasline  Development Corporation  shall become  a debt,                                                                  
     obligation, or  liability of the  state or any  part or                                                                  
     subdivision of  the state  or of  the corporation  or a                                                                  
     subsidiary  corporation of  the corporation  other than                                                                  
     the Alaska  Gasline Development Corporation,  except as                                                                  
     provided in this subsection.                                                                                               
                                                                                                                                
9:14:19 AM                                                                                                                    
                                                                                                                                
Vice-chair  Fairclough thought  that the  answer could  come                                                                    
best  from  legislative  legal. She  asked  if  one  project                                                                    
management   board   residing  under   multiple   subsidiary                                                                    
corporations would be a liability for the state of Alaska.                                                                      
                                                                                                                                
Mr.  Wright   responded  that  both  ANGDA   and  AGDC  were                                                                    
subsidiaries  of AHFC,  which  was why  there  was only  one                                                                    
board of directors.                                                                                                             
                                                                                                                                
Mr. Dubler elaborated  that the courts looked  at the common                                                                    
control  of entities.  He added  that similar  relationships                                                                    
existed  in  other  companies. For  example,  oil  companies                                                                    
could have  separate shipping  and marketing  companies that                                                                    
had similar  control over  certain projects.  The department                                                                    
believed that  there was enough  segregation that  the issue                                                                    
would not be a problem for the corporation.                                                                                     
                                                                                                                                
Vice-chair Fairclough requested a  legal memo that clarified                                                                    
the liability issue.                                                                                                            
                                                                                                                                
Mr.  Dubler  stated  that general  legal  counsel  could  be                                                                    
present at the next hearing.                                                                                                    
                                                                                                                                
Representative  Doogan  did  not   believe  that  there  was                                                                    
anything to be done about  the obligations of the state with                                                                    
regard  to the  corporation.  He expressed  concern that  if                                                                    
things went poorly for the  corporation the obligation would                                                                    
fall directly  to the state.  He furthered that  the section                                                                    
that exempted  the Public Records and  Procurement Acts from                                                                    
legislative oversight was troublesome.                                                                                          
                                                                                                                                
9:19:02 AM                                                                                                                    
                                                                                                                                
Ms. Delbridge  replied that assurances of  the state's legal                                                                    
and financial protection could be  supplied at a later date.                                                                    
She explained that  the Public Records Act  had a multi-page                                                                    
exemption  list; or  information that,  in other  context in                                                                    
the state, was kept confidential.  She stated that when AGDC                                                                    
was  allowed to  enter into  confidential agreements  it was                                                                    
agreed  that  the information  was  not  subject to  release                                                                    
under  the  Public  Records  Act. She  said  that  AGDC  was                                                                    
currently unable  to fully  participate in  discussions with                                                                    
other  commercial parties;  for  example, Trans-Canada,  who                                                                    
was  working on  the  Alaska Pipeline  Project. She  relayed                                                                    
that  corporate attorneys  from Trans-Canada  were reluctant                                                                    
to allow  their company to  engage in discussions  with AGDC                                                                    
because there was no way  of knowing that shared information                                                                    
would  be held  completely confidential.  She said  that the                                                                    
kind of information she was  referring to related to another                                                                    
section of  the bill that  instructed AGDC not  to duplicate                                                                    
work  already being  performed by  other state  agencies, or                                                                    
with support  from the  state buy  others. For  example, the                                                                    
state was  reimbursing a portion  of Trans-Canada's  work on                                                                    
the  Alaska Pipeline  Project  and AGDC  should  be able  to                                                                    
share in the data collected.                                                                                                    
                                                                                                                                
Representative Doogan  understood that  the exemption  was a                                                                    
complete exemption.                                                                                                             
                                                                                                                                
Ms.  Delbridge  referred the  committee  to  Section 6.  She                                                                    
stated that  the section  allowed the  AGDC to  hold certain                                                                    
information confidential, and allowed  for the AGDC to enter                                                                    
into  confidential agreements  with other  private interests                                                                    
or state  agencies. She said  that this would allow  for the                                                                    
flow  of   information  that  was  already   proprietary  or                                                                    
commercially privileged.  She highlighted Section  13, which                                                                    
exempted from  disclosure under the  Public Records  Act the                                                                    
information that was covered  by a confidentiality agreement                                                                    
between  AGDC   and  the  provider   or  recipient   of  the                                                                    
information.                                                                                                                    
                                                                                                                                
Representative Doogan understood  that the exemption covered                                                                    
information  that  would  expectedly be  confidential  in  a                                                                    
business environment.                                                                                                           
                                                                                                                                
Ms. Delbridge replied in the affirmative.                                                                                       
                                                                                                                                
Mr. Dubler added  that the intent of the  exclusion from the                                                                    
Public Records  Act was  to allow  the corporation  to enter                                                                    
into discussions  with other companies  that wanted  to ship                                                                    
gas on  the line. He  said that companies would  never share                                                                    
their  information if  they though  it would  be subject  to                                                                    
request under  the Freedom of  Information Act.  He stressed                                                                    
that corporations  did not like to  share information unless                                                                    
absolutely necessary. He said that  the language in the bill                                                                    
allowed  for  the  confidentiality  agreement,  which  would                                                                    
allow for real project progression.                                                                                             
                                                                                                                                
9:25:40 AM                                                                                                                    
                                                                                                                                
Representative  Gara expressed  concern that  exploration in                                                                    
Cook Inlet  would be deterred  if prospectors  realized that                                                                    
the  state planned  to subsidize  a gasline  from the  North                                                                    
Slope.                                                                                                                          
                                                                                                                                
Mr. Dubler replied  that the state would  not be subsidizing                                                                    
the line, the state would  only be providing the seed money.                                                                    
He said  that the line  would eventually pay for  itself and                                                                    
there would be no ongoing  state subsidy. He shared that the                                                                    
current  price  of gas  out  of  Cook  Inlet was  below  the                                                                    
projected delivered  price for North  Slope gas to  the Cook                                                                    
Inlet  and   Fairbanks  areas.   He  believed   that  future                                                                    
utilities contracts would  raise the value of  the gas found                                                                    
on the North Slope.                                                                                                             
                                                                                                                                
Representative  Gara remained  concerned about  the possible                                                                    
detrimental  effect on  Cook  Inlet  exploration. He  feared                                                                    
that  building  the  pipeline  could   result  in  the  most                                                                    
expensive gas  ever experienced in  the state. He  felt that                                                                    
the idea of  reducing the price by getting  an anchor tenant                                                                    
that would  take on an  extra quarter billion cubic  feet of                                                                    
gas  was a  flawed plan.  He  doubted that  a company  would                                                                    
approach the state  saying, "That is the  most expensive gas                                                                    
in the country. Let me double  the size of the pipeline." He                                                                    
said  that  the  pipeline  had  to have  a  20  to  30  year                                                                    
commitment  from consumers  to buy  the gas  from the  line,                                                                    
before it  could be  built. He said  that if  consumers were                                                                    
bound by  the AGDC July 2010  estimate of $17 gas,  and then                                                                    
they would  not be able to  take advantage of a  larger line                                                                    
that produced cheaper gas sometime in the future.                                                                               
                                                                                                                                
Mr. Dubler shared that the July  2010 report could not be an                                                                    
AGDC  report, as  ADGC  was  created in  2011.  In 2011  the                                                                    
corporation  put  out a  report  showing  $9.65 gas  to  the                                                                    
Anchorage  area. The  project  would not  be complete  until                                                                    
2019;  the   governor  had  vocalized  there   would  be  an                                                                    
alignment on any other projects  going forward. He said that                                                                    
if a  larger gasline,  planned for  south-central was  to go                                                                    
ahead, the  project under  discussion in  the bill  would be                                                                    
dropped.                                                                                                                        
                                                                                                                                
9:30:18 AM                                                                                                                    
                                                                                                                                
Mr. Wright queried what would  quell public outcry if no gas                                                                    
was found in Cook Inlet,  and the state remained hesitant on                                                                    
building a large line.                                                                                                          
                                                                                                                                
Representative  Gara surmised  that  if it  turned out  that                                                                    
there were not  large stores of gas in Cook  Inlet the state                                                                    
would have  to move more  quickly on the matter.  He pointed                                                                    
attention  to the  ADGC  study estimate  of  a 250  thousand                                                                    
cubic foot (Mcf)  line at $17. He was concerned  that if the                                                                    
state was  trying to  tide itself over  while waiting  for a                                                                    
large gasline, he thought that the  way to do it would be to                                                                    
spend less money to subsidize  the Fairbanks area. He shared                                                                    
that Fairbanks  had proposed trucking  gas to the  area, and                                                                    
had estimated that  gas could be delivered at as  low as $11                                                                    
Mcf. He  thought exploring the  cheapest options to  get gas                                                                    
to  people,  while  planning for  an  eventual  large  line,                                                                    
should be considered in the bill.                                                                                               
                                                                                                                                
Mr. Dubler  replied that it would  be a policy call  for the                                                                    
legislature  and the  governor.  He stated  that  a 250  Mcf                                                                    
pipeline   would  never   be  built   because  it   was  not                                                                    
economical. He  spoke to the report  cited by Representative                                                                    
Gara. He said it was projected  in the report that for $14 -                                                                    
$16,  liquefied natural  gas (LNG)  could  be imported  from                                                                    
Sakhalin,  Russia.  He  stated  that  in  May  of  2011  the                                                                    
corporation had  not received interest at  full capacity for                                                                    
a 500  Mcf line for  a commercial  and an anchor  tenant. He                                                                    
said that it was expected  that the pipeline would be filled                                                                    
at 500  Mcf, which was why  it was believed that  the tariff                                                                    
of $9.65 was attainable.                                                                                                        
                                                                                                                                
Representative Gara  countered that  the cost  of gas  for a                                                                    
250  Mcf line  was  higher  than a  500  Mcf  line. He  said                                                                    
currently  the state  used less  than 250  Mcf, in  terms of                                                                    
natural gas.  He queried why  an anchor tenant was  going to                                                                    
more than double the use of  gas in Alaska, when the gas was                                                                    
going  to  be  more  expensive than  anywhere  else  in  the                                                                    
country. He stressed  that no company was  going to relocate                                                                    
to Alaska for more expensive gas.                                                                                               
                                                                                                                                
Mr.  Dubler replied  that  projections  anticipated that  in                                                                    
south-central, Fairbanks,  and the  bases in  Fairbanks, 240                                                                    
Mcf would  be used per day.  He said that the  expression of                                                                    
interest that the corporation had  received, although not as                                                                    
binding as  an open season, was  from a viable entity.   The                                                                    
entity had offered  a commitment to ship on the  line 250 to                                                                    
260 Mcf,  and that would fill  the line at 500  Mcf per day.                                                                    
He  furthered that  the demand  was anticipated,  but if  an                                                                    
anchor tenant  did not  appear upon  a binding  open season,                                                                    
the project would be abandoned and LNG would be imported.                                                                       
                                                                                                                                
9:35:33 AM                                                                                                                    
                                                                                                                                
Ms. Delbridge interjected that it  was the sponsor's intent,                                                                    
and AGDC's original mission, to  examine and compare various                                                                    
line sizes in order to come  up with a gasline with a tariff                                                                    
that works  for Alaska.  She acknowledged  that there  was a                                                                    
question  of how  much  demand from  the  line the  Railbelt                                                                    
could  currently use,  the  lack of  available  gas in  Cook                                                                    
Inlet already  had prohibited the  expansion of  natural gas                                                                    
distribution  utilities in  south-central.  She stated  that                                                                    
one of the  reasons that the state did  not have continuing,                                                                    
large-scale  LNG  exports out  of  Nikiski  was due  to  the                                                                    
inability  to secure  long-term gas  contracts. She  relayed                                                                    
that bringing  down the additional  gas would help  with the                                                                    
security  of supply  that would  enable greater  options and                                                                    
greater  expansion. She  predicted  that home-grown  Alaskan                                                                    
businesses might  create propane  or compressed  natural gas                                                                    
distribution  projects. She  added that  the 20  to 30  year                                                                    
contracts could  be as short  as 10  to 15 years,  and could                                                                    
vary  in time  length between  different utilities  and end-                                                                    
users, this  would allow for  the accommodation  of changing                                                                    
conditions.  She suggested  that having  a secure  supply of                                                                    
gas in  the south-central region would  facilitate a greater                                                                    
desire to  explore in Cook  Inlet because there would  be an                                                                    
outlet for the gas through  existing LNG exports. She stated                                                                    
that  depending on  what happened  with AGIA,  HB 9  allowed                                                                    
AGDC to  shift gears  to become  the builder,  designer, and                                                                    
operator of a spur-line off of a large diameter pipeline.                                                                       
                                                                                                                                
9:38:37 AM                                                                                                                    
                                                                                                                                
Representative Wilson  reminded the  committee that  gas was                                                                    
needed in Fairbanks  sooner than later. She  asked about the                                                                    
definition of  "serving Fairbanks" as  it was written  in HB                                                                    
369. She queried the responsibilities  of her district under                                                                    
the legislation.                                                                                                                
                                                                                                                                
Ms. Delbridge answered that the  project included a 35 to 40                                                                    
mile line to connect  the Dunbar Region into Fairbanks/North                                                                    
Pole proper. She said that  the precise locations and buyers                                                                    
would  be  identified  the  point of  an  open  season.  She                                                                    
explained that  a straddle plant  would be necessary  at any                                                                    
point  in the  line where  gas was  extracted. She  detailed                                                                    
that a straddle plant was  a facility that would extract the                                                                    
liquids  from the  gas, let  the dry  gas flow  through, and                                                                    
then reintroduce  the wet gas  into the line. She  said that                                                                    
the  tariffs paid  on the  line would  depend on  whether it                                                                    
carried wet or dry gas.                                                                                                         
                                                                                                                                
Representative Wilson  stressed that her community  wanted a                                                                    
pipeline  but  had reservations  about  who  would bear  the                                                                    
cost.                                                                                                                           
                                                                                                                                
Co-Chair Stoltze  noted that a  gasline should not  be built                                                                    
without firm commitments and contracts in place.                                                                                
                                                                                                                                
9:41:44 AM                                                                                                                    
                                                                                                                                
Representative   Neuman   referenced  the   Rocky   Mountain                                                                    
Express, which  was the last  built major pipeline.  He said                                                                    
that the  42 inch  line that traveled  through 8  states was                                                                    
1679 miles long  and had cost $6.8 billion.  He thought that                                                                    
$7.4 billion for a 24 inch  line that was 700 miles long did                                                                    
not make  sense. He  wondered what  the differences  were in                                                                    
the  two   projects  that  resulted  in   the  extreme  cost                                                                    
differences.                                                                                                                    
                                                                                                                                
Mr.  Dubler  replied  that   there  were  more  difficulties                                                                    
attached to  building in an arctic  environment, rather than                                                                    
the  Continental  United   States.  He  highlighted  several                                                                    
issues including  permafrost and bogs.  He felt that  it was                                                                    
comforting that  costs had  been overestimated,  rather than                                                                    
the alternative.  He stated that  an analysis  conducted for                                                                    
the legislature  that had  found that the     cost estimates                                                                    
were  conservative. He  said that  the $7.52  billion figure                                                                    
was intentionally conservative.                                                                                                 
                                                                                                                                
Representative  Neuman thought  that  the  project would  be                                                                    
"fairly simple to do," regardless  of the arctic conditions.                                                                    
He  said  that the  construction  would  occur on  what  was                                                                    
essentially   a   road    already.   He   appreciated   that                                                                    
conservative estimate,  but requested further  analysis that                                                                    
would reflect actual cost.                                                                                                      
                                                                                                                                
Mr.  Dubler   replied  that   the  analysis   was  currently                                                                    
underway. He said that the  estimates form July 2011 were at                                                                    
plus or minus 30 percent  confidence level. He said that the                                                                    
number  would  be  somewhere  between  $5  billion  and  $10                                                                    
billion.  He added  that the  tariff would  be based  on the                                                                    
actual cost of the project.                                                                                                     
                                                                                                                                
9:46:12 AM                                                                                                                    
                                                                                                                                
Representative  Neuman discussed  deliverables. He  wondered                                                                    
what  the  economic impact  on  Alaska  would  be if  a  gas                                                                    
pipeline were to drive more  energy for gold development and                                                                    
other  electrical  generation.  He probed  what  the  impact                                                                    
would  be for  Alaska  economically. He  thought that  there                                                                    
would  be  huge economic  impact  involved,  in addition  to                                                                    
deliverables, which could be calculated.                                                                                        
                                                                                                                                
Ms. Delbridge  believed that  the legislature's  approval of                                                                    
HB 369  had been in  recognition of  the work that  had been                                                                    
done while  examining the question  of economic  impact. She                                                                    
said that  identifying an instate  gasline would  bring down                                                                    
energy  costs for  consumers and  help large  mine contracts                                                                    
and  industrial developments  to  pencil  out. She  stressed                                                                    
that the economic  benefits were broad, which  was the basis                                                                    
for encouraging AGDC to move forward with the line.                                                                             
                                                                                                                                
9:48:48 AM                                                                                                                    
Mr. Dubler added that it  was estimated that 8000 jobs would                                                                    
be  created in  the  2  to 3  year  construction period.  He                                                                    
pointed to  page 3, line  8 that  directed AGDC to  look for                                                                    
other areas  in the  state that could  utilize the  gas from                                                                    
the  pipeline. He  added  that the  pipeline  could help  in                                                                    
encouraging future mining projects in the state.                                                                                
                                                                                                                                
Representative  Neuman  asked  about enabling  language.  He                                                                    
expressed frustration  that information concerning  the AGDC                                                                    
entering into  negotiations with  pipeline options  had been                                                                    
slow to reach  the legislature. He clarified  that the state                                                                    
was putting up a considerable  amount of money, yet received                                                                    
very little information back. He  recognized that there were                                                                    
confidentiality issues surrounding some information.                                                                            
                                                                                                                                
Ms. Delbridge  replied that the  enabling language  could be                                                                    
found in Section 1 of the  bill; the "shall and "may" bullet                                                                    
points of  the AGDC.  She said that  AGDC shall  continue on                                                                    
the   project   presented   in   the   project   plan   with                                                                    
"modifications   as   necessary."   She  stated   that   the                                                                    
"modifications  as  necessary"  was  important  because  the                                                                    
project could be altered the  results of an open season. She                                                                    
relayed that the  project plan did not specify  where on the                                                                    
North  Slope gas  would  be coming  from;  that could  shift                                                                    
depending on  who had  the gas to  sell. She  furthered that                                                                    
while AGDC  was required to  proceed with the  project plan,                                                                    
with  modifications,  it  was   also  empowered  to  broadly                                                                    
examine  gasline  opportunities.  She  qualified  that  AGDC                                                                    
would be expected to pursue  the project plan until a better                                                                    
plan presented itself.                                                                                                          
                                                                                                                                
9:52:43 AM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  wondered   what  unique  set  of                                                                    
skills  AHFC had  that justified  the  project being  housed                                                                    
under the corporation's umbrella.                                                                                               
                                                                                                                                
Ms. Delbridge replied  that AHFC had an  excellent record in                                                                    
managing  and   investing  Alaska's   assets  in   a  highly                                                                    
responsible way.  She relayed that  in HB 369 AHFC  had been                                                                    
tasked as  the lead agency  on the project. She  shared that                                                                    
the  corporation  had  brought  together  a  solid  team  to                                                                    
advance the  state's interests.  She furthered  that through                                                                    
AGDC,  AHFC had  employed experts  with decades  of pipeline                                                                    
experience  within   the  state.  She  stated   that  the  3                                                                    
commissioners  currently sitting  on  the  AHFC board  would                                                                    
protect the state's  interests moving forward; additionally,                                                                    
there  was   a  balance  throughout  the   entire  board  of                                                                    
representation from  various regions of the  state. She said                                                                    
that  AGDC  retained  the ability  to  select  the  pipeline                                                                    
operator and builder.                                                                                                           
                                                                                                                                
Mr. Dubler clarified  that the AHFC board was  composed of 7                                                                    
people; the three commissioners  were from the Department of                                                                    
Revenue, Department  of Health  and Social  Services (DHSS),                                                                    
and  the Department  of  Commerce,  Community, and  Economic                                                                    
Development  (DCCED).  He  acknowledged that  DHSS  may  not                                                                    
apply  to the  pipeline, but  that certainly  DOR and  DCCED                                                                    
would be  involved. He  added that the  4 public  members of                                                                    
the  board  were  required to  demonstrate  a  specialty  in                                                                    
energy, finance, or senior housing.                                                                                             
                                                                                                                                
Co-Chair Stoltze  interjected that  the four  public members                                                                    
had to be confirmed by the legislature.                                                                                         
                                                                                                                                
Mr.   Dubler   responded   that   including   the   separate                                                                    
confirmation required for  commissioners upon taking office,                                                                    
all 7 members were confirmed by the legislature.                                                                                
                                                                                                                                
Representative Guttenberg understood that  the AHFC had done                                                                    
a good  job in  the realm of  housing; however,  the project                                                                    
under  discussion was  a very  different  venture. He  asked                                                                    
about the nature  of the contract carrier  versus the common                                                                    
carrier. He  queried the  restrictions on  contract carriers                                                                    
in future development.                                                                                                          
                                                                                                                                
9:57:44 AM                                                                                                                    
                                                                                                                                
Ms.  Delbridge  believed  that a  natural  gas  pipeline  in                                                                    
Alaska would  need to  operate as  a contract  carrier, much                                                                    
like the  other gaslines  in the Lower  48. She  stated that                                                                    
with an  oil pipeline  there was a  greater ability  to ship                                                                    
the  capacity allocated  to various  customers in  a day  to                                                                    
make  room for  other involved  parties at  given points  in                                                                    
time. She  countered that a  gas pipeline would  need firmer                                                                    
contracts; if  a shift  were suddenly  required in  order to                                                                    
make room  for another  buyer, power could  be inadvertently                                                                    
cut from  another electric utilities gas.  She addressed the                                                                    
benefits  of   common  carriage.  She  shared   that  common                                                                    
carriers benefited  exploration, but  that being  a contract                                                                    
line would not limit Alaska's  potential for expansion.  She                                                                    
explained that the terms of  expansion would be written into                                                                    
the  contracts  AGDC foraged  with  customers.  She said  if                                                                    
newcomers  arrived   with  a   volume  that   supported  the                                                                    
investment  required to  install additional  compression, or                                                                    
to   loop  the   pipeline,   terms  would   be  worked   out                                                                    
contractually with  AGDC. She declared  that the  fuller the                                                                    
pipeline, the better off those  using the pipeline. She said                                                                    
if  there  was  room,  it   was  likely  that  the  pipeline                                                                    
operating  company would  have  great  interest in  allowing                                                                    
entry  to  newcomers. She  noted  the  caveat was  that  the                                                                    
instate pipeline  was limited  in size  because of  the AGIA                                                                    
requirement  that  the  state   refrain  from  supporting  a                                                                    
competing  line. She  said that  as long  as the  AGIA terms                                                                    
were in place the expansion  was not an immediate issue. She                                                                    
relayed  that if  the provision  capping the  available flow                                                                    
and space on the pipeline  were removed then the possibility                                                                    
of  adding additional  compression and  increasing side  was                                                                    
more likely. She  added that there was  the possibility that                                                                    
if additional  transport capacity  could be added  below the                                                                    
68th parallel without violating  the competing line terms of                                                                    
AGIA.                                                                                                                           
                                                                                                                                
Representative Guttenberg  noted that  the project  had been                                                                    
locked in to  advance as described in the  July 2011 report.                                                                    
He wondered how  much leeway would be necessary  in order to                                                                    
respond to changing economics.                                                                                                  
                                                                                                                                
Ms. Delbridge  believed there was  a considerable  amount of                                                                    
leeway given  in the language  of the bill. She  stated that                                                                    
allowing  for modifications  was intended  to give  AGDC the                                                                    
flexibility during  an open season  to see: who had  the gas                                                                    
to ship,  who wanted to  buy the  gas, and to  connect those                                                                    
sellers  and buyers  with transportation.  She relayed  that                                                                    
the concept was  that the project produce  a main, mid-sized                                                                    
natural gas transportation pipeline.                                                                                            
                                                                                                                                
10:03:08 AM                                                                                                                   
                                                                                                                                
Representative  Guttenberg  stressed   that  given  all  the                                                                    
modification  possibilities,  it  would impossible  for  the                                                                    
state to  know the details of  what it could expect  for the                                                                    
investment.                                                                                                                     
                                                                                                                                
Ms. Delbridge countered that what  the bill did was to allow                                                                    
AGDC to  take the project  to an open season.  She furthered                                                                    
that at that point the  project would be defined absolutely,                                                                    
based on who  had gas, and who needed gas.   She stated that                                                                    
the  legislature would  receive routine  updates from  AGDC,                                                                    
and  would retain  "the  power of  the  purse strings."  She                                                                    
clarified  that the  bill did  not implicitly  tell AGDC  to                                                                    
build the  pipeline, but  to solidify  a project  plan after                                                                    
the  open season.  She said  that the  expectation was  that                                                                    
AGDC would  come back before the  legislature for additional                                                                    
operating money,  and for  the eventual  equity contribution                                                                    
of  the state,  should  the state  choose  to issue  revenue                                                                    
bonds to fund  a large pipeline. She stressed  that that was                                                                    
a decision that was expected several years into the future.                                                                     
                                                                                                                                
Mr.  Dubler   added  that  the  bill   contained  sideboards                                                                    
intended to inform any modification  of the plan. He relayed                                                                    
that  the   sideboard  instructed   that  the   pipeline  be                                                                    
constructed in a safe and economical manner.                                                                                    
                                                                                                                                
Ms. Delbridge  reiterated that the  AGDC would  remain bound                                                                    
to the  essential mission detailed  in HB 369, which  was to                                                                    
build a  gasline that connected  people in Alaska  with gas,                                                                    
and at the lowest possible cost.                                                                                                
                                                                                                                                
Representative   Edgmon   believed   the   legislation   was                                                                    
important  despite the  ever-changing  economics related  to                                                                    
providing  affordable  energy.  He stated  that  the  anchor                                                                    
tenant issue  could prove problematic for  rural Alaska, and                                                                    
hoped that the issue could be addressed more in-depth.                                                                          
                                                                                                                                
10:07:16 AM                                                                                                                   
                                                                                                                                
Representative Doogan  asked why the agency  was exempt from                                                                    
the procurement code.                                                                                                           
                                                                                                                                
Mr.  Dubler replied  that there  had only  been one  year to                                                                    
prepare  the report  and the  department had  not wanted  to                                                                    
bind  the entity  with public  notice requirements.  He said                                                                    
that being exempt from the  procurement code planed a bigger                                                                    
burden on the agency because  there were no rules to operate                                                                    
under, and instead  the agency had adopted  rules similar to                                                                    
the state  procurement rules.  He explained  that day-to-day                                                                    
procurement   operations    were   initiated    under   AHFC                                                                    
procurement rule, which were based  on the state's rules. He                                                                    
shared that  an internal  audit had recently  been performed                                                                    
and could be made available to the committee.                                                                                   
                                                                                                                                
Representative Doogan  maintained that the  procurement code                                                                    
exemption was a discomforting aspect of the legislation.                                                                        
                                                                                                                                
Representative Doogan  asked about  an anchor tenant  at 250                                                                    
Mcf that Mr. Dubler had mentioned.                                                                                              
                                                                                                                                
Mr.  Dubler  replied  that  there  had  been  a  preliminary                                                                    
showing  of interest;  knowing that  there  was 240  million                                                                    
cubic feet of usage currently  in the south-central area. He                                                                    
said that  it made sense  that if  there was half  a billion                                                                    
cubic feet  of interest,  that there  was another  entity in                                                                    
place to bid for the remainder.                                                                                                 
                                                                                                                                
Representative Doogan asked who the bidding company was.                                                                        
                                                                                                                                
Mr. Dubler replied that the information was confidential.                                                                       
                                                                                                                                
Representative  Doogan cited  Page  12, line  28 related  to                                                                    
judicial  review. He  believed that  the language  bound the                                                                    
hands  of the  court in  relation to  how it  would normally                                                                    
handle complaints.                                                                                                              
                                                                                                                                
Mr. Wright explained that the  language dealt with right-of-                                                                    
ways. He shared  that similar legislation had  been found in                                                                    
the  Federal Trans-Alaska  Pipeline  System  (TAPS) act,  as                                                                    
well  as  in  state  law.  He said  that  the  language  did                                                                    
prohibit  the   court  from  issuing   temporary  injunctive                                                                    
relief, but  relief could be  issued through a  final order.                                                                    
He stated that the language  had been modeled after the TAPS                                                                    
legislation  in order  to make  sure  that special  interest                                                                    
groups  would  be  deterred   from  filing  complaints  that                                                                    
jeopardized progress on the project.                                                                                            
                                                                                                                                
10:13:35 AM                                                                                                                   
                                                                                                                                
Representative  Doogan recognized  the difficulty  in making                                                                    
accurate  cost  estimates  for  the  project.  He  expressed                                                                    
concern that the  project was going to cost a  lot more than                                                                    
estimated. He  hoped that the  possibility that  the project                                                                    
could  cost  more  than  estimated   was  being  taken  into                                                                    
consideration.                                                                                                                  
                                                                                                                                
Mr.  Wright   referred  to  small  changes   that  had  been                                                                    
recommended  by   various  agencies.  He  shared   that  the                                                                    
sponsors  would be  working with  co-chair staff  to address                                                                    
any alterations of the bill.                                                                                                    
                                                                                                                                
HB  9   was  HEARD  and   HELD  in  committee   for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
10:16:34 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:22:21 AM                                                                                                                   
RECONVENED                                                                                                                      
HOUSE BILL NO. 289                                                                                                            
                                                                                                                                
     "An Act  relating to a  gas storage  facility; relating                                                                    
     to the tax credit for  a gas storage facility; relating                                                                    
     to  the powers  and duties  of the  Alaska Oil  and Gas                                                                    
     Conservation Commission; relating  to the regulation of                                                                    
     natural  gas  storage as  a  utility;  relating to  the                                                                    
     powers and  duties of the  director of the  division of                                                                    
     lands and to  lease fees for a gas  storage facility on                                                                    
     state land; and providing for an effective date."                                                                          
                                                                                                                                
Vice-chair  Fairclough  MOVED  to ADOPT  proposed  committee                                                                    
substitute  for HB  289,  Work  Draft 27-LS1216\X  (Bullock,                                                                    
3/12/12).                                                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
There  being NO  further OBJECTION,  Work Draft  27-LS1216\X                                                                    
was ADOPTED.                                                                                                                    
                                                                                                                                
JANE PEARSON, STAFF,  REPRESENTATIVE STEVE JOHNSON, referred                                                                    
to the sponsor statement (copy on file):                                                                                        
                                                                                                                                
     The  cost of  energy  is crippling  a  good portion  of                                                                    
     Interior Alaska's economy.  The ever increasing expense                                                                    
     of heating  homes and  operating businesses  during the                                                                    
     long, cold,  dark winter hurts the  ability of Interior                                                                    
     Alaskans to  put food on  the table today and  plan for                                                                    
     the future.  The Fairbanks  community spends  over $600                                                                    
     million  per year  on space  heating, pays  the highest                                                                    
     natural  gas  process  in  the  country  and  does  not                                                                    
     receive  the  state   energy  incentives  of  subsidies                                                                    
     available  to   residents  and  communities   in  other                                                                    
     regions of our state.                                                                                                      
                                                                                                                                
Ms.  Pearson  opined  that  she   would  spend  all  of  her                                                                    
disposable cash for the year  on energy bills. She suspected                                                                    
that buy end  of the year she will have  spent $8000 on home                                                                    
energy  bills.  She  stated  that and  infusion  of  gas  to                                                                    
Fairbanks  would  reduce  energy  costs  to  end  users  and                                                                    
restore Fairbank's  ability to  grow its economic  base. She                                                                    
said that HB 289 would  incent the private sector's delivery                                                                    
of lower  cost natural gas  to Interior Alaska  by extending                                                                    
tax credits  for liquid natural gas  storage facilities that                                                                    
were necessary for  natural gas projects. She  stated that a                                                                    
new  credit for  construction of  an above  ground liquefied                                                                    
gas storage  tanks, with a  volume of 25,000  gallons, would                                                                    
make the  program flexible enough  to fit the  varying needs                                                                    
of  gas delivery  throughout the  state. She  furthered that                                                                    
the   legislation  would   allow  eligible,   above  ground,                                                                    
liquefied  gas natural  storage  facilities  cited on  state                                                                    
lands  to request  an exemption  from  rental payments.  She                                                                    
said that  the exemption  could extend for  up to  ten years                                                                    
following  the commencement  of  commercial operations.  She                                                                    
stated  that  the bill  defined  how  the credits  would  be                                                                    
distributed,  both  as  tax credits  and  payments  to  non-                                                                    
taxable entities. She described  the safeguards in the bill;                                                                    
the  liquefied   natural  gas   storage  facility   must  be                                                                    
regulated by the Regulatory Commission  of Alaska (RCA), and                                                                    
the incentives must be passed  onto customers. She explained                                                                    
that the bill  set forth how a person who  received a credit                                                                    
or  payment  should repay  the  credit  or payments  if  the                                                                    
facility ceased  commercial operation within the  9 calendar                                                                    
years immediately  following the calendar year  in which the                                                                    
facility  commenced commercial  operations.  She noted  that                                                                    
the bill  defined liquefied  natural gas  storage facilities                                                                    
under the RCA.                                                                                                                  
                                                                                                                                
10:26:04 AM                                                                                                                   
                                                                                                                                
Ms.  Pearson  walked  the committee  through  the  sectional                                                                    
analysis (copy on file):                                                                                                        
                                                                                                                              
     Section 1.  AS 38.05.096 Creates a new section under AS                                                                
     38.05  that  allows  eligible  above  ground  liquefied                                                                    
     natural  gas tank  storage facilities,  sited on  state                                                                    
     lands, to  request an  exemption from  rental payments.                                                                    
     The  exemption  could  extend   for  up  to  ten  years                                                                    
     following the commencement  of commercial operations as                                                                    
     long as the facility continues to operate.  Information                                                                    
     regarding the rental exemption is deemed to be "public"                                                                    
     and is  available to  the RCA upon  request.   A person                                                                    
     receiving a  rental exemption  must adjust  the storage                                                                    
     charge downward to reflect  this state benefit and pass                                                                    
     it through to the storage customers.                                                                                       
                                                                                                                              
     Section 2. AS 42.05.381(k)  Amends the statute to state                                                                  
     that payments  or tax  credits granted under  this bill                                                                    
     shall be reflected in the utility's rates.                                                                                 
                                                                                                                                
     Section  3.   AS  42.05.990(5)  Amends the  definitions                                                                  
     "public  utility" or  "utility"  to include  furnishing                                                                    
     liquefied natural gas to the public.                                                                                       
                                                                                                                                
     Section 4.  AS 42.05.990(11)-(13) Adds  the definitions                                                                
     of  "liquefied   natural  gas  storage   facility"  and                                                                    
     "reservoir"  and  "service  of  liquefied  natural  gas                                                                    
     storage" to apply to liquefied natural gas.                                                                                
                                                                                                                              
     Section 5.  Adds a new section to AS 43.20                                                                               
                                                                                                                                
          AS 43.20.047.  Creates a new credit for a                                                                           
     liquefied  natural  gas   storage  facility  of  25,000                                                                    
     gallons or more or an expansion of an existing facility                                                                    
     of 25,000  gallons or  more.  The  credit is  capped at                                                                    
     fifteen   million  dollars   or  50   percent  of   the                                                                    
     development cost whichever is less.   This credit is in                                                                    
     addition  to any  other credits  for which  the storage                                                                    
     facility is  eligible under this chapter.   States that                                                                    
     the  liquefied natural  gas  storage  facility must  be                                                                    
     regulated by  the Regulatory  Commission of  Alaska and                                                                    
     establishes  how   the  credit  or  payment   shall  be                                                                    
     disbursed.  Sets forth how  a person who has received a                                                                    
     credit shall  repay the  credit if the  facility ceases                                                                    
     commercial  operations within  the nine  calendar years                                                                    
     immediately following  the calendar  year in  which the                                                                    
     facility commenced commercial operations.  This section                                                                    
     also defines "liquefied  natural gas storage facility",                                                                    
     "ceases commercial operation" and "commences commercial                                                                    
     operation".                                                                                                                
                                                                                                                              
     Sections  6  &  7.     Make  conforming  amendments  to                                                                  
    accommodate the new tax credits under AS 43.20.047.                                                                         
                                                                                                                              
     Section 8.  Establishes an immediate effective date for                                                                  
     the legislation.                                                                                                           
                                                                                                                                
Co-Chair Stoltze OPENED public testimony.                                                                                       
                                                                                                                                
10:32:35 AM                                                                                                                   
                                                                                                                                
BARBARA   HUFF    TUCKNESS,   DIRECTOR,    LEGISLATIVE   AND                                                                    
GOVERNMENTAL AFFAIRS,  TEAMSTERS LOCAL  959, spoke  in favor                                                                    
of HB  289. She stated  that the  high cost of  home heating                                                                    
was  driving young  people to  the Lower  48. She  said that                                                                    
those that have  stayed, and who were attempting  to build a                                                                    
life in  Alaska, were  paying high fuel  costs that  made it                                                                    
difficult  to   save  money.  She   urged  passage   of  the                                                                    
legislation.                                                                                                                    
                                                                                                                                
GENE  THERRIAULT,  VICE   PRESIDENT,  RESOURCE  DEVELOPMENT,                                                                    
GOLDEN VALLEY ELECTRIC ASSOCIATION,  testified in support of                                                                    
the HB  289. He  stated that the  legislation would  help to                                                                    
achieve  parity with  the credit  that was  allowed for  the                                                                    
addition of  storage in the natural  gas distribution supply                                                                    
chain,  which  had  been  established   by  the  Cook  Inlet                                                                    
Recovery  Act. He  relayed that  methane expanded  600 times                                                                    
when  going  from  a  liquid  to  a  gas,  illustrating  the                                                                    
dynamics of  storing the same  resource in  different forms.                                                                    
He hoped that  a threshold could be created  in statute that                                                                    
applied  for the  storage of  the methane  in liquid  state,                                                                    
under a  sensible threshold.  He stated  that in  a previous                                                                    
committee the threshold had been  reduced to 25,000 with the                                                                    
idea that the resource would  be available to communities on                                                                    
the highway system.  He shared that the  Golden Valley Board                                                                    
of Directors was  focused on building an  initial plant that                                                                    
would aggregate  the largest possible  demand and  drive the                                                                    
per unit  costs down as  far as possible.  Additionally, the                                                                    
association  was requesting  parity  on  the forgiveness  of                                                                    
state land lease  payments. He shared that when  the act was                                                                    
passed there  had been little  thought given  concerning the                                                                    
different  routes that  could be  taken  when leasing  state                                                                    
lands. He said  that the association was asking  to be given                                                                    
the same terms as the  recovery act concerning the wavier of                                                                    
state land lease payments.                                                                                                      
                                                                                                                                
10:38:53 AM                                                                                                                   
                                                                                                                                
Mr. Therriault  relayed the importance that  the legislation                                                                    
reflect  that Golden  Valley  was a  tax  exempt entity.  He                                                                    
stated that  the legislation suggested a  window opportunity                                                                    
that  would be  open  until  2020 for  the  addition of  the                                                                    
storage. He informed the committee  that the association was                                                                    
moving forward with the trucking  operation, working out the                                                                    
details,  and working  with the  large  industrial users  in                                                                    
Fairbanks  to make  trucking gas  an economic  reality.   He                                                                    
said  that  knowing this  year  whether  the storage  credit                                                                    
would be available for the project would be helpful.                                                                            
                                                                                                                                
Co-Chair  Stoltze  hoped  Mr. Therriault  would  return  for                                                                    
further discussion of the legislation.                                                                                          
                                                                                                                                
Mr. Terriault informed  the committee that a  2009 review of                                                                    
the  trucking concept  written by  AIDEA was  available upon                                                                    
request.  He said  that the  report indicated  that trucking                                                                    
would make economic sense as long  as it served the needs of                                                                    
the two identified industrial users:  Flint Hills and Golden                                                                    
Valley.                                                                                                                         
                                                                                                                                
JERRY  CLEWORTH,  MAYOR,   FAIRBANKS  (via  teleconference),                                                                    
explained that  energy problems were abundant  in Fairbanks.                                                                    
He  stressed that  the amount  of money  residents paid  for                                                                    
heat in the interior was at  crisis level. He stated that it                                                                    
cost $8,000  to $10,000 per  year to heat his  small, energy                                                                    
efficient home;  that cost  was double  in rural  Alaska. He                                                                    
urged passage of the legislation.                                                                                               
                                                                                                                                
10:44:17 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
Vice-chair  Fairclough  pointed  to  Page  6,  line  6.  She                                                                    
understood  that the  term "person's  corporate returns"  in                                                                    
the  bill   referred  businesses,  corporations,   and  non-                                                                    
profits.                                                                                                                        
                                                                                                                                
Ms. Pearson responded in the affirmative.                                                                                       
                                                                                                                                
Vice-chair  Fairclough  requested   further  explanation  of                                                                    
refund requests.  She expressed concern that  a refund could                                                                    
be requested that might exceed  the requester tax liability.                                                                    
She  noted that  qualifying  costs were  not  listed in  the                                                                    
legislation. She directed attention to Line 25:                                                                                 
                                                                                                                                
     "A person may not receive a credit under this section                                                                      
     for the acquisition of a liquefied natural gas storage                                                                     
     facility for which a credit has been taken already."                                                                       
                                                                                                                                
Vice-chair Fairclough  asked if the language  meant that the                                                                    
person  could receive  a credit  for purchasing  a facility.                                                                    
She wondered  whether Golden Valley  had an  asset available                                                                    
for purchase.  She requested further  explanation concerning                                                                    
the interest applied to refunds mentioned on Page 8.                                                                            
                                                                                                                                
Co-Chair Stoltze handed the gavel to Vice-chair Fairclough.                                                                     
                                                                                                                                
                                                                                                                                
Ms. Pearson  replied that  interest would  be accruing  if a                                                                    
credit or payment were to be given in error.                                                                                    
                                                                                                                                
Vice-chair Fairclough stated that  it was important that the                                                                    
state protect  itself from lawsuits pertaining  to incurring                                                                    
interest on refund payments.                                                                                                    
                                                                                                                                
10:48:11 AM                                                                                                                   
                                                                                                                                
Representative Wilson  asked whether  the bill  would extend                                                                    
credits to enlarge  the natural gas storage  facility in her                                                                    
area.                                                                                                                           
                                                                                                                                
Ms. Pearson replied in the affirmative.                                                                                         
                                                                                                                                
Representative Wilson reiterated the  need for a natural gas                                                                    
pipeline.                                                                                                                       
                                                                                                                                
Representative  Neuman pointed  to Page  5 of  the bill.  He                                                                    
understood that the  credits were for tax  liability owed to                                                                    
the  state. He  wondered  if the  credits  would be  applied                                                                    
against corporate taxes owed to the state.                                                                                      
                                                                                                                                
Ms.  Pearson  answered that  the  credits  could be  applied                                                                    
against corporate taxes if corporate taxes were not due.                                                                        
                                                                                                                                
Representative Neuman  discussed the  taxable year  in which                                                                    
the  liquefied   natural  gas  storage   facility  commenced                                                                    
commercial operations.  He understood that the  refunding of                                                                    
the costs incurred could be applied for only once.                                                                              
                                                                                                                                
Ms.  Pearson responded  that an  additional expansion,  over                                                                    
25,000 gallons, would also allow for an application.                                                                            
                                                                                                                                
Vice-chair Fairclough  thought that  it was  imperative that                                                                    
"qualified expenses" be clearly defined in the bill.                                                                            
                                                                                                                                
Representative Costello requested  further explanation about                                                                    
the money for  the credits being under the  oversight of the                                                                    
RCA.  She queried  weather the  naturally occurring  storage                                                                    
fell under the oversight of the RCA as well.                                                                                    
                                                                                                                                
10:51:50 AM                                                                                                                   
                                                                                                                                
Ms. Pearson  explained that any  credits taken,  or payments                                                                    
made,  would be  passed on  to  the consumer,  and would  be                                                                    
overseen by the RCA.                                                                                                            
                                                                                                                                
Representative  Costello  asked  if the  bill  achieved  the                                                                    
parity voiced  by Mr.  Terriault, or  were there  areas that                                                                    
needed more work.                                                                                                               
                                                                                                                                
Ms. Pearson  replied that the  bill worked to  achieve equal                                                                    
parity.                                                                                                                         
                                                                                                                                
Representative  Neuman  wondered  whether the  facility  was                                                                    
meant to be above ground.                                                                                                       
                                                                                                                                
Ms. Pearson responded in the affirmative.                                                                                       
                                                                                                                                
Representative  Neuman  wondered   about  opportunities  for                                                                    
subsurface  storage.   He  said  that  there   were  various                                                                    
opportunities for  subsurface storage facilities  around the                                                                    
state that should be recognized.                                                                                                
                                                                                                                                
Ms.  Pearson replied  that  she did  not  know enough  about                                                                    
below ground storage to answer.                                                                                                 
                                                                                                                                
Representative Neuman  believed it was important  because it                                                                    
could open up a variety of opportunities statewide.                                                                             
                                                                                                                                
10:55:01 AM                                                                                                                   
                                                                                                                                
Representative Doogan  highlighted the  indeterminate fiscal                                                                    
note.  He  suggested that  the  committee  was receiving  an                                                                    
increasing  amount of  indeterminate notes.  He opined  that                                                                    
the finance  committee could not  craft good  policy without                                                                    
knowing what  the cost  would be to  the state.  He believed                                                                    
that DNR  and DOR  should be able  to provide  educated cost                                                                    
estimates to the committee.                                                                                                     
                                                                                                                                
Vice-chair  Fairclough agreed.  She  expressed concern  that                                                                    
the committee passed legislation  without knowing the actual                                                                    
fiscal implications to the state.                                                                                               
                                                                                                                                
Vice-chair  Fairclough explained  that, for  reasons related                                                                    
to safety,  Anchorage had  done everything  it could  to get                                                                    
rid of  above ground gas  storage. She wondered if  the same                                                                    
safety issues could be applied to Fairbanks.                                                                                    
                                                                                                                                
Ms. Pearson would get back to the committee with responses.                                                                     
                                                                                                                                
Representative Neuman  directed attention  to Page  6, which                                                                    
spoke to  refunds on the  unused portion of the  tax credit.                                                                    
He  worried about  credits being  incurred that  were beyond                                                                    
the corporation's tax liability to the state.                                                                                   
                                                                                                                                
Ms. Pearson replied that some  of the corporations were non-                                                                    
profits,  or had  become LLC  corporations, which  were non-                                                                    
taxable  entities.   She believed  that the  savings to  the                                                                    
state would be passed onto the consumers.                                                                                       
                                                                                                                                
Representative Neuman  understood that  the $15  million tax                                                                    
credit could be given to anyone who applied.                                                                                    
                                                                                                                                
Vice-chair  Fairclough agreed  that the  bill could  be made                                                                    
clearer. She  clarified that the  number was $15  million or                                                                    
less, up  to 50 percent  of qualified costs. She  noted that                                                                    
the  sponsor  had  been  careful to  assure  that  with  RCA                                                                    
oversight and auditing, the savings  would be reflected in a                                                                    
rate reduction to consumers in the Fairbanks area.                                                                              
                                                                                                                                
HB 289 was HEARD and HELD in Committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 170                                                                                                            
                                                                                                                                
     "An Act  relating to municipal property  tax exemptions                                                                    
     on residences  of certain volunteer  emergency services                                                                    
     personnel  and the  widows  and  widowers of  volunteer                                                                    
     emergency  services  personnel;  and providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
HB 170 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
HOUSE CONCURRENT RESOLUTION NO. 24                                                                                            
                                                                                                                                
     Relating to the establishment and operation of a state                                                                     
     food resource development working group.                                                                                   
                                                                                                                                
HCR 24 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
11:01:50 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 11:01 AM.                                                                                          

Document Name Date/Time Subjects
HB9 Taxable Property.pdf HFIN 3/13/2012 8:30:00 AM
HB 9
HB9 Sponsor Statement-HRES.pdf HFIN 3/13/2012 8:30:00 AM
HB 9
HB9 Sectional Analysis-HRES.pdf HFIN 3/13/2012 8:30:00 AM
HB 9
HB9 Mat-Su Resolution.pdf HFIN 3/13/2012 8:30:00 AM
HB 9
HB9 HB 369.pdf HFIN 3/13/2012 8:30:00 AM
HB 9
HB 369
HB9 ARDOR Support.pdf HFIN 3/13/2012 8:30:00 AM
HB 9
HB9 ANGDA Initiative.pdf HFIN 3/13/2012 8:30:00 AM
HB 9
HB9 AGDC Legislative Recommendations.pdf HFIN 3/13/2012 8:30:00 AM
HB 9
Supporting HB 289 storage tanks 030212.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
Small Scale LNG.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
Sectional Analysis for HB 289.D 2.29.12.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
Reso 4516 Support HB 289 SB 153 Extending Tax Credits for NG Storage.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
SB 153
HB289LNG Svgs UAF FMH 2011 3 2.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
HB289 Support Letter.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
HB289 - Fuel Price Comparison.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
HB 289 Sponsor Statement ver D.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
HB 170 Mil Rates for Municipalities.pdf HFIN 3/13/2012 8:30:00 AM
HB 170
HB 170 AS 29.45.050. Optional exemptions and exclusions..pdf HFIN 3/13/2012 8:30:00 AM
HB 170
HB 170 AS 29.45.030 Required exemptions..pdf HFIN 3/13/2012 8:30:00 AM
HB 170
HB 170 AS 29.35.450 Service Areas.pdf HFIN 3/13/2012 8:30:00 AM
HB 170
HB 170 AS 18.15.250 Vaccination program for volunteer emergency personnel..pdf HFIN 3/13/2012 8:30:00 AM
HB 170
HB 170 CS WORKDRAFT 27-LS0562-T.pdf HFIN 3/13/2012 8:30:00 AM
HB 170
HB 170 CS Ver 27-LS0562T Sectional with Changes .pdf HFIN 3/13/2012 8:30:00 AM
HB 170
HCR 24 Sponsor Statement2pdf.pdf HFIN 3/13/2012 8:30:00 AM
HCR 24
Explanation of Changes HB289 Version A to Version X 3.12.12.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
HB 289 Sponsor Statement ver X 3.12.12.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
HB289 CS WORKDRAFT 27-LS1216-X.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
Sectional Analysis for HB 289.X 3.12.12.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
HCR 24 CS WORKDRAFT-B version.pdf HFIN 3/13/2012 8:30:00 AM
HCR 24
HCR 24 Summary of changes.pdf HFIN 3/13/2012 8:30:00 AM
HCR 24
AHA HCR24.pdf HFIN 3/13/2012 8:30:00 AM
HCR 24
HB9 Leg Research Memo Neuman.pdf HFIN 3/13/2012 8:30:00 AM
HB 9
HB 170 Exemptions- Mandated and Optional- 2012.pdf HFIN 3/13/2012 8:30:00 AM
HB 170
HB 170 Exemptions- Mandated and Optional- 2012.pdf HFIN 3/13/2012 8:30:00 AM
HB 170
HB289 Answers to HFIN questions.docx HFIN 3/13/2012 8:30:00 AM
HB 289
SUPPORTLETTER AP&T HB289.pdf HFIN 3/13/2012 8:30:00 AM
HB 289
HB 289 CVEA Support ltr 3 27 2012.pdf HFIN 3/13/2012 8:30:00 AM
HB 289