Legislature(2023 - 2024)ADAMS 519
04/15/2024 01:30 PM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB154 | |
| HB223 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 154 | TELECONFERENCED | |
| += | HB 223 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 15, 2024
1:35 p.m.
1:35:17 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:35 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair**
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Akis Gialopsos, Deputy Executive Director, Alaska Housing
Finance Corporation; Eric DeMoulin, Admin Services
Director, Department of Revenue; Sommers Cole, Alaska
Government Affairs Manager, The Nature Conservancy, Juneau;
Sarah Nabinye, Alaska Venture Fund, Juneau; Derek
Nottingham, Director, Division of Oil and Gas, Juneau; John
Crowther, Deputy Commissioner, Department of Natural
Resources, Juneau.
PRESENT VIA TELECONFERENCE
Curtis Thayer, Executive Director, Alaska Energy Authority,
Anchorage; Dan Stickel, Chief Economist, Department of
Revenue, Tax Division, Juneau.
SUMMARY
HB 154 AK HOUSING FINANCE CORP: SUSTAIN ENERGY
HB 154 was HEARD and HELD in committee for
further consideration.
HB 223 TAX and ROYALTY FOR CERTAIN GAS
HB 223 was HEARD and HELD in committee for
further consideration.
Co-Chair Foster reviewed the meeting agenda.
HOUSE BILL NO. 154
"An Act relating to subsidiary corporations of the
Alaska Housing Finance Corporation; and establishing
the Alaska energy independence fund."
1:37:15 PM
AKIS GIALOPSOS, DEPUTY EXECUTIVE DIRECTOR, ALASKA HOUSING
FINANCE CORPORATION, introduced himself and the PowerPoint
presentation "House Bill 154: Alaska's Energy Subsidiary"
dated April 15, 2024 (copy on file). He began on slide 4,
which outlined the policy objectives of the bill.
1:40:50 PM
Mr. Gialopsos continued on slide 5. He stated that the U.S.
Environmental Protection Agency's Greenhouse Gas Reduction
Fund (GGRF) announced $14 billion in National Clean
Investment Fund grants and a $6 billion Clean Communities
Investment Accelerator.
Mr. Gialopsos advanced to slide 6 and noted that one of the
funds that had gone under the radar.
1:46:37 PM
Mr. Gialopsos continued to slide 8, which showed the
renovation loan option which allowed for improvements to
increase a home's value, its energy efficiency, and
incorporated universal design principles to age-in-place
thereby while improving Alaska's aging housing stock.
Representative Galvin asked about the timeline, and
wondered whether the number meant homes or other types of
properties. She wondered whether someone could get a loan
with the presumption that the energy savings would be so
high so they would see a net positive after the funding.
Mr. Gialopsos responded that the new home construction
program which existed between 2008 to 2016 operated in that
manner. He stated that an individual could receive a
certificate of a five-star energy rating to receive a
rebate. He remarked that the legislature funded that
program. He furthered that the home buyer would receive the
rebate instead of the home builder, in order to delay
gratification and make a strategic investment.
Representative Galvin asked about the renovation loans.
Mr. Gialopsos replied that the renovation loan would use,
because their current mortgage may have a lower interest
rate.
1:53:29 PM
Representative Galvin understood that the idea was to grow
more than 434 renovation loans with an extension of longer
than 15 years.
Mr. Gialopsos agreed.
Mr. Gialopsos continued on slide 9. He stressed that the
policy required to adhere to building management code.
1:57:38 PM
Mr. Gialopsos moved to slide 10. He commented that the
slide showed the issue of the labor shortage, which had an
impact on new homes being built currently.
Mr. Gialopsos continued to slide 11. He was cautiously
optimistic about the program.
2:02:31 PM
Mr. Gialopsos advanced to slide 12. He stated that an
entity that collaborated with federal, state, local, non-
profit, and private sector organizations could have access
to the program.
Mr. Gialopsos continued to slide 13. He remarked on the
tradition of working collaborate with sister agencies and
organizations, stepping up, and meetings the needs of
Alaskans.
2:05:14 PM
Representative Stapp asked if the units in Fairbanks were
referring to the large complex off of Hamilton Acres.
Mr. Gialopsos responded that he wanted to confirm the
information in writing.
Representative Hannan noticed in standing up the
subsidiary, it did not appear that the board of directors
was altered in any way. she thought the board should change
and asked if it was talked about in the legislation
development.
Mr. Gialopsos responded thanked Representative Hannan for
asking the same question in the prior year. He believed
that the board was properly constituted.
2:09:17 PM
Representative Coulombe asked about the regional
aggregators.
Mr. Gialopsos returned to slide 5 to answer the question.
He stated that one of the regional aggregators was the
Coalition For Green Capital, which was an established
national organizations.
Representative Coulombe surmised that the coalition was
based in Washington DC.
Mr. Gialopsos responded agreed, and stated that he would
follow up.
Representative Coulombe queried the role of the Alaska
Municipal League.
Mr. Gialopsos replied that they understood the capacity of
the state in understanding the tax code.
Representative Coulombe asked who was deciding where the
grants were going.
Mr. Gialopsos replied that the Environmental Protection
Agency (EPA) made those decisions
2:13:58 PM
Representative Coulombe asked what would happen to the
federal money without the green bank.
Mr. Gialopsos responded that in some cases it was unclear.
Representative Galvin wondered whether the "middleman" had
a take on the money.
Mr. Gialopsos replied that EPA would finalize their award
negotiations with the aggregators, which would conclude
near the end of June.
Representative Galvin stated that her biggest concern was
how each entity was receiving what was needed to ensure
that Alaska was getting as much funding as possible.
Mr. Gialopsos responded that he could not quantify what it
looked like until the passage of the bill.
2:20:12 PM
Co-Chair Johnson wondered whether there were any missing
pieces in the presentation.
Mr. Gialopsos replied that there were suggestions at the
end of the presentation.
Representative Josephson queried the original purpose of
the $20 million fiscal note.
Mr. Gialopsos responded that feedback showed that there was
a risk of the parent's corporate veil to be lifted, and
could jeopardize the mortgages.
2:24:56 PM
Representative Josephson felt that there should at some
future date be some state cooperations in the investments.
Mr. Gialopsos responded that it was up to the
administration and legislature to determine those
requirements.
2:25:50 PM
CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY,
ANCHORAGE (via teleconference), continued the presentation
on slide 14.
Mr. Thayer continued on slide 15.
Mr. Thayer advanced to slide 16.
2:29:35 PM
Mr. Gialopsos moved to slide 17. Hs stated that should HB
154 pass, the corporation anticipated that the parent board
would create a nonprofit subsidiary government procedure.
Mr. Gialopsos reviewed the fiscal note from Department of
Revenue (DOR).
2:33:34 PM
Mr. Thayer went through the fiscal notes from the
Department of Commerce, Community and Economic Development
(DCCED) for AEA.
2:35:51 PM
ERIC DEMOULIN, ADMIN SERVICES DIRECTOR, DEPARTMENT OF
REVENUE, went through the zero fiscal note for the
Department of Administration (DOA).
Co-Chair Foster OPENED public testimony.
2:37:13 PM
SOMMERS COLE, ALASKA GOVERNMENT AFFAIRS MANAGER, THE NATURE
CONSERVANCY, JUNEAU, supported Governor Dunleavy's efforts,
and spoke in support of the bill.
2:39:21 PM
SARAH NABINYE, ALASKA VENTURE FUND, JUNEAU, testified in
support of the legislation.
2:41:58 PM
Co-Chair Foster CLOSED public testimony.
Representative Hannan returned to fiscal notes AHFC, and
asked whether there were two additional positions. She
wondered whether there would be three positions created in
the bill.
Mr. Gialopsos responded in the affirmative.
2:44:15 PM
Mr. Thayer responded that the planning department was three
people and would require another full time position.
Representative Hannan wondered whether there needed to be
an amendment in the bill for those positions.
Mr. Gialopsos responded that section 4 of the bill was
something that was extricated from the draft by the other
body.
Co-Chair Edgmon stressed that it was a "sleeper" bill and
was more significant than it seemed, and he asked if the
state was limiting its ability to attract.
Mr. Gialopsos responded in the negative.
2:51:20 PM
Representative Josephson //
2:52:01 PM
AT EASE
2:53:59 PM
RECONVENED
HB 154 was HEARD and HELD for further consideration.
HOUSE BILL NO. 223
"An Act relating to the production tax and royalty
rates on certain gas; and providing for an effective
date."
2:55:33 PM
DEREK NOTTINGHAM, DIRECTOR, DIVISION OF OIL AND GAS,
JUNEAU, introduced the PowerPoint presentation "HB 223 Tax
and Royalty for Certain Gas" dated April 15, 2024 (copy on
file). He began on slide 2, and stated that the goal was to
The goal of HB 223 was to increase available gas supply in
the Cook Inlet to meet expected shortfalls.
Mr. Nottingham continued to slide 3:
o Benefits accumulations that have been discovered but
have not been brought into production
o Promotes exploration for undiscovered resources
also touched on Fields or pools that have produced in
the past but were offline during 2024
o Fields currently shut-in receive the royalty benefit
if brought back into production also addressed Wells
drilled into fields or pools that are currently
producing when production from the existing wells is
not feasible
o Incentivizes drilling outside of the current
"drainage area" of wells currently producing Wells
drilled into fields or pools that are currently
producing when production from the existing wells is
not feasible
o Incentivizes drilling outside of the current
"drainage area" of wells currently producing
Mr. Nottingham continued on slide 4:
Barriers to equity investment in these projects are
high up-front capital costs, federal
permitting challenges, gas market uncertainty, and oil
service industry challenges. Major accumulations with
financing obstacles:
1. BlueCrest's Cosmopolitan Project 250 BCF
2. Hex/Furie's Kitchen Lights Development 300 BCF
• Projects are competing for equity capital with Lower
48 investments which have lower up-front costs,
shorter payback, and a more certain environment
• Reducing the royalty for these projects prior to
investment
2:59:48 PM
Mr. Nottingham continued on slide 5:
Although there are known, but undeveloped gas
resources, these have not been sanctioned by operators
under the current fiscal system and royalty rates.
• Under the current royalty rates, expected revenues
to the State from current and expected development are
$648 million for the period 20252035
• If the royalty reduction leads to new investments in
gas projects, then future gas production will likely
meet the demand by Railbelt consumers for at least the
next ten yearsultimately leading to estimated total
revenues to the State of $659 million for the period
20252035.
• If the royalty reduction is not successful in adding
significant new gas production (i.e., no new gas in
addition to the PD and PUD gas forecast), then the
State would lose $40 million over the period 2025
2035.
Mr. Nottingham advanced to slide 6, which showed what was
happening in graph form. He shared that the darker dash
line was revenue under HB 233 in a failure case and the
lighter dash line was revenue under HB 233 if the projects
were successful.
Mr. Nottingham advanced to slide 7.
3:04:48 PM
Representative Josephson asked whether the 1987 of Trustees
vs. the State of Alaska, which showed that the state was
not allowed to take a zero percent royalty. He wondered
whether the state was legally allowed to take a zero
percent royalty.
3:05:36 PM
JOHN CROWTHER, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, JUNEAU, replied that the legislation would not
have a royalty.
Representative Josephson asked if the state had considered
a deferred royalty.
Mr. Crowther responded that the department did not view
that it was needed for the bill.
Representative Josephson asked if the administration
considered an option where the state was the purchaser.
Mr. Crowther responded that there had been some discussion
and consideration, and he would be happy to follow up.
3:09:55 PM
Representative Josephson surmised that the forgone revenue
was the 40 million per year.
Mr. Crowther responded that it was an aggregate based on
the assumptions and approximations of less roads into the
state in that ten-year period.
Representative Stapp asked why would the department choose
to extend the royalty for a decade.
Mr. Crowther responded that tone of the things he had heard
from the market was that the payback times were limiting.
3:18:12 PM
Representative Stapp queried the reason for the royalty
relief conclusion.
Mr. Crowther responded that action on the royalty was the
action that the state could do to incentivize development.
Representative Stapp queried the reason that there was not
a rebate of the royalty to the end user.
Mr. Crowther responded that how the legislature determined
to allocate the royalty was a policy question.
Co-Chair Foster noted that there was already a reduction in
tax on natural gas. He queried the current Cook Inlet
production tax.
Mr. Crowther deferred to Mr. Stickel.
3:24:52 PM
DAN STICKEL, CHIEF ECONOMIST, DEPARTMENT OF REVENUE, TAX
DIVISION, JUNEAU (via teleconference), responded he current
gas production tax was 15 percent of gross value.
3:27:53 PM
Representative Galvin wondered how DNR would feel about
limiting the length of royalty relief.
Mr. Crowther was happy to work with policy amendments.
Representative Galvin thought it seemed uncomplicated to
adjust the length of the royalty relief.
3:32:26 PM
Representative Hannan queried an opinion from Legislative
Legal as related to the 1987 lawsuit.
Co-Chair Foster agreed.
3:34:36 PM
Representative Tomaszewski asked whether the bill impacted
Fairbanks.
Mr. Crowther responded that the bill directly influenced
the energy market in Fairbanks.
HB 223 was HEARD and HELD for further consideration.
ADJOURNMENT
3:44:04 PM
The meeting was adjourned at 3:44 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 154 HFIN AHFC Presentation 041524.pdf |
HFIN 4/15/2024 1:30:00 PM |
HB 154 |
| HB 154 Public Testimony Rec'd by 040424.pdf |
HFIN 4/15/2024 1:30:00 PM |
HB 154 |
| HB 154 Public Testimony Rec'd by 041224.pdf |
HFIN 4/15/2024 1:30:00 PM |
HB 154 |
| HB 223 DNR DOG Presentation to HFIN 04.15.2024.pdf |
HFIN 4/15/2024 1:30:00 PM |
HB 223 |
| HB 223 Public Testimony Rec'd by 041524.pdf |
HFIN 4/15/2024 1:30:00 PM |
HB 223 |
| HB154 Public Testimony Rec'd by 051524.pdf |
HFIN 4/15/2024 1:30:00 PM |
HB 154 |
| HB 154 AHFC Response to HFIN 041724.pdf |
HFIN 4/15/2024 1:30:00 PM |
HB 154 |