02/01/2008 03:00 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB288 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 288 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 1, 2008
3:03 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mark Neuman, Vice Chair
Representative Carl Gatto
Representative Jay Ramras
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
Representative Gabrielle LeDoux
COMMITTEE CALENDAR
HOUSE BILL NO. 288
"An Act relating to net energy metering for retail electricity
suppliers and customers."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 288
SHORT TITLE: NET ENERGY METERING
SPONSOR(s): REPRESENTATIVE(s) SEATON
01/04/08 (H) PREFILE RELEASED 1/4/08
01/15/08 (H) READ THE FIRST TIME - REFERRALS
01/15/08 (H) L&C, FIN
02/01/08 (H) L&C AT 3:00 PM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE PAUL SEATON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented and answered questions as the
prime sponsor of HB 288.
MARILYN LELAND, Executive Director
Alaska Power Association (APA)
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of HB 288.
ANDY LEMAN, Legal Counsel
Alaska Power Association (APA)
Anchorage, Alaska
POSITION STATEMENT: Responded to questions during the
discussion of HB 288.
ROBERT REAGAN, Rates and Tariffs Supervisor
Anchorage Municipal Light & Power
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during
discussion of HB 288.
TRISH ROLFE, Alaska Regional Representative
Sierra Club
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 288.
ANDY BAKER, Clean Energy Consultant
Your Clean Energy Design, LLC
Berkley, California
POSITION STATEMENT: Testified on HB 288.
PAT LAVIN, Staff
National Wildlife Federation (NWF)
Anchorage, Alaska
POSITION STATEMENT: Testified on HB 288.
KYRA WAGNER
Homer, Alaska
POSITION STATEMENT: Testified during the discussion of HB 288.
ALAN PARKS
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 288.
JOEL COOPER
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 288.
MARLA MCPHERSON
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 288.
TERRY HOEFFERLY
Dillingham, Alaska
POSITION STATEMENT: Testified on HB 288.
PHIL STEYER, Director
Government Relations/Corporate Communications
Chugach Electric Association (CEA)
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during
discussion of HB 288.
ANTHONY PRICE, Chair
Regulatory Commission of Alaska (RCA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 288.
JASON KEYES, Attorney
Wilson, Sonsini, Goodrich, and Rosati, PC
Interstate Renewable Energy Council (IREC)
Seattle, Washington
POSITION STATEMENT: Testified during the discussion of HB 288.
BRAD FLEUTSCH
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 288.
TIM MCCLEOD, President; General Manager
Alaska Electric Light & Power
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions during
discussion of HB 288.
FLOYD KOOKESH, Tribal Administrator
Douglas Indian Association
Angoon, Alaska.
POSITION STATEMENT: Testified during the discussion of HB 288.
PETER NAOROZ, President
Kootznoowoo, Inc.
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 288.
DEBORAH WILLIAMS, President
Alaska Conservation Solutions
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 288.
REBECCA SHAFFER, Board Member
U.S. Green Building Council Chapter
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 288.
NICK MOE
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 288.
GARRISON COLLETE
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 288.
BILL MACFARLANE
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 288.
MARTHA LEVENSALER, Climate Change Project Director
Alaska Marine Conservation Council
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 288.
ADAM BROWNING, Executive Director
Vote Fuller Initiative
Address unknown
POSITION STATEMENT: Testified in support of HB 288.
PETER BRIGGS, Steering Committee Member
Anchorage Sustainable Building Initiative
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 288.
ACTION NARRATIVE
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:03:59 PM Representatives Buch,
Gardner, Neuman, and Olson were present at the call to order.
Representatives Gatto and Ramras arrived as the meeting was in
progress.
HB 288-NET ENERGY METERING
3:04:30 PM
CHAIR OLSON announced that the only order of business would be
HOUSE BILL NO. 288,"An Act relating to net energy metering for
retail electricity suppliers and customers." He noted his
intention to take public testimony and keep public testimony
open.
REPRESENTATIVE PAUL SEATON, Alaska State Legislature, speaking
as prime sponsor of HB 288, explained that he is working on
public policy to encourage alternative energy and HB 288 is one
of several measures that address some aspect of renewable energy
projects. The purpose of HB 288 is to encourage alternative
energy use by individuals throughout the state. This bill
authorizes net metering, which is the excess energy accumulated
when electricity produced from a customer's private generating
equipment exceeds the amount of electricity purchased from a
utility. This bill allows customers to obtain kilowatt hour
credits (kWh) for any energy generated beyond the consumer's
usage. The energy credit can be carried forward so when a
customer generates more energy than used during the month, the
customer can receive a monthly credit referred to as "roll
over", which is allowed to accumulate over a period of time not
to exceed 24 months under the bill, he noted. Customers can
either sell or roll over energy back to the utility in the form
of a credit in kW hours, based on wholesale power price or "non-
firm" power purchase price or apply it to their future utility
bills. The credit is returned in kW instead of cash. Since
there is just one meter, the problem encountered with a dual
meter system, in which a meter runs one way in kilowatts(kW),
but runs backward at a different rate is avoided. HB 288 also
limits the capacity to 25 kW to avoid the issue of electrifying
a transmission line and concern about electrocution, which can
occur when a line is recharged [after a power outage]. The
process is cheap, simple, and does not require sophisticated
equipment, and 42 other states currently allow net metering in
some form.
3:08:14 PM
REPRESENTATIVE SEATON specified that HB 288 requires that
generating equipment must be on the customer's premises, limits
generator capacity to 25 kW, and restricts the generation source
to solar, wind, tidal, geothermal, or hydropower. He opined HB
288 encourages the offset of carbon dioxide output since it
allows consumers to reduce their commercial energy consumption
and helps reduce energy consumption. He recalled an article
that relates that Alaska has one of highest per capita carbon
dioxide output in the nation. Therefore, HB 288 would allow
individual Alaskans the flexibility to reduce their carbon
footprint by using alternative power generation and choose to
make a difference, he opined. He noted an additional benefit is
there is less line loss with a distributive generation process
under net metering since power is comprised of smaller customer
units producing energy instead of one major power plant. He
acknowledged that there has been some confusion or
misinterpretation on the buy back rate of the excess energy,
since some states require a utility to buy back excess power at
the retail rate.
3:11:21 PM
REPRESENTATIVE SEATON recalled conversations held with Alaskans
statewide and highlighted concerns some small power plants and
utilities have had because they provide service to fewer
customers, and thus may be adversely affected by net metering.
He noted consumers replace light bulbs, better insulate their
homes, and install energy efficient freezers or other energy
efficient appliances in order to reduce their overall energy
consumption. Net metering is simply another measure consumers
can take [in an effort to reduce overall energy consumption], he
opined. Under HB 288, customers can make a capital investment
to install net metering and if they generate more energy than
used, utilities can obtain the energy not consumed at wholesale
cost. Thus utilities avoid having to make a capital investment
such as expanding to a larger plant. He noted that most of the
energy generated in Alaska is currently based on carbon fuel
sources and with the increase in fuel costs [net metering offers
a way to reduce costs]. This bill allows an exemption for a
retail supplier of electricity whose power is generated by an
alternative energy system. The intent of the bill is not to
provide incentives for major power plants or for major utility
generated plants, just to allow small producers to offset their
energy costs. Representative Seaton clarified that is not a
dual metering bill, in which one meter is for input and the
second for output, which allows for tracking the different
rates. This bill also does not require a utility to install
meters or expensive switches.
REPRESENTATIVE SEATON related that Connecticut has offered net
metering to consumers as a subsidy to promote renewable
resources for over 20 years. Minnesota has the oldest net
metering law, finds the interconnection process simple, and
reports that no safety issues have arisen. The committee packet
contains a 2007 report called, "Freeing the Grid", which is a
summary that may answer questions that committee members may
have, he offered.
3:20:30 PM
REPRESENTATIVE GATTO inquired as to whether the generator
capacity specified in HB 288 should be expanded to accommodate
consumers with generators larger than the 25kW.
REPRESENTATIVE SEATON offered explained that one reason that the
breaking point for meters and switches is set at 25 kW is
because meter costs are more expensive above that amount.
Another reason for the limited size is because the utility must
be able to absorb wind generation caused by gusts, which is
easier with known loads. A further reason is to address a
concern by some utilities about re-electrifying the grid
backwards during an outage in larger systems such as those in
the 100 - 500 kW range.
3:23:37 PM
REPRESENTATIVE GATTO expressed concern that a windmill producing
30kW [of wind energy] on a gusty day would be disqualified from
using net metering.
REPRESENTATIVE SEATON noted his agreement that the limit for net
metering is set at 25 kW, but offered his belief that a windmill
that can produce 25 kW, or 25,000 watts, is a big windmill.
3:25:14 PM
REPRESENTATIVE RAMRAS expressed his eagerness to cosponsor HB
288, and explained that he currently has a solar panel system.
He offered that it is one of the first private-sector commercial
systems in the state, can produce up to 21 kW of electricity,
and uses a dual-meter system. He shared with members that his
local utility, Golden Valley Electric, has a green committee and
modeled its program, Sustainable Natural Alternative Power
(SNAP), after the first of its type in Chelan County,
Washington. He said that the SNAP program is a progressive
program, he opined. Overall, he is quite pleased with his
system and he offered to give his full and passionate support
for HB 288. He suggested consumers participate in programs such
as net metering because they are passionate, since [alternate
renewable energy] is not yet cost effective due to lack of
participation. He predicted there will be cost savings in 10-15
years similar to those that are beginning to occur in the Lower
48.
3:27:26 PM
REPRESENTATIVE SEATON, in response to Representative Neuman,
answered that Mr. Ramras's power generation would not be
considered a commercial entity under the bill.
REPRESENTATIVE NEUMAN asked whether the cost of transmission or
any other costs would also need to be paid by the net metering
customer.
REPRESENTATIVE SEATON explained the process. Electricity
generated and used over a month's time would be tracked. The
customer would pay the residential rate on the amount used and
when the energy generated by the customer exceeds the energy the
customer uses, the roll over is carried forward. When a
customer routinely generates excess energy, the customer can
elect to sell it to the utility at wholesale cost, calculated in
kW. However, if the customer chooses not to sell the
accumulated roll over, the excess energy credit would zero out
after two years.
3:31:13 PM
REPRESENTATIVE NEUMAN referred to language under proposed AS
42.45.045, which read: "is intended primarily to offset part or
all of the customer's requirements for electricity" and asked
whether this refers to the energy produced by the customer.
REPRESENTATIVE SEATON noted his agreement that the customer is
the one who produces the energy that is carried forward.
3:31:34 PM
REPRESENTATIVE GARDNER inquired as to whether there is any
benefit to holding action on HB 288 since the Regulatory
Commission of Alaska (RCA) [is scheduled] to complete its review
of net metering standards by August 8, 2008.
REPRESENTATIVE SEATON answered he did not believe so, but
acknowledged that the RCA is reviewing net metering and
interconnection standards. He also mentioned plans to bring
forth an amendment specifying that non-regulated utilities would
pay an avoided cost rate.
REPRESENTATIVE GARDNER asked for clarification on the "purchase"
and the "sales" price in HB 288. She posed an example, in which
a utility purchases or generates energy it must use and maintain
transmission lines to deliver the electricity to residences.
The utility charges a price to reflect the transmission costs.
In the event that a customer stores energy credits over an 18-
month period, increased energy costs could result in the utility
paying more for energy at the end of the 18-month period. Thus,
the customer would have an energy credit valued at more than the
customer paid. She expressed concern that the potential two-
year lag time could result in costs, especially for small
utilities.
REPRESENTATIVE SEATON explained that the "avoided cost" is the
utility's cost to produce energy [at the wholesale rate], but
electricity is sold at retail cost or the utility's cost plus
its mark-up. While he noted his agreement that huge
fluctuations could be a problem, he pointed out that customer
credits are based on the wholesale rate. He further pointed out
that HB 288 allows for seasonal fluctuations in energy use,
while limiting the length of time energy credits can accrue to
two years.
3:36:20 PM
REPRESENTATIVE GARDNER offered that a consumer could cash in the
energy credits in 23 months in order to take advantage of the
system. She then inquired as to whether there is a definition
for the "non-firm" purchase power rate.
REPRESENTATIVE SEATON related his understanding that the RCA
calculates the "avoided cost" which is basically the wholesale
price, he opined. He said it's "non-firm" because it's like a
spot market.
REPRESENTATIVE RAMRAS suggested that the committee might
consider whether to require the utility to determine its most
expensive kW production and use that rate rather than the
wholesale rate since the wholesale rate is the utility's blended
cost of the hydroelectric, natural gas, and diesel costs.
Alternative energy consumer benefits should be based on how to
displace the most expensive or dirtiest kW cost, he opined. He
noted that it takes time for new technology to develop and while
25 kW system doesn't [necessarily make economic sense, it is a
starting point].
3:40:22 PM
REPRESENTATIVE SEATON stated his belief that HB 288 reflects a
balance that stems from discussions he held with utilities,
consumers, and producers. He offered that the non-firm rate set
by the RCA is a known quantity. This bill represents a
compromise, and therefore he cautioned that altering the energy
credits from the non-firm rate could create resistance. He
specified it is also not his intention to disregard [the impact
of HB 288] on rural Alaskans, and thus it may be necessary to
consider an exemption for utilities with fewer users or to
adjust the total kW power in some instances. However, it would
be unfortunate to preclude rural Alaskans from the benefits of
net metering, he opined.
3:43:58 PM
MARILYN LELAND, Executive Director, Alaska Power Association
(APA), noted that Andy Leman, APA legal counsel was also present
to answer questions. She offered that APA shares some of the
concerns already mentioned. Net metering makes electricity more
expensive because almost all Alaskan electric utilities are
owned by their customers or local governments that represent
them. She opined that there is no "deep pocket" to pay the real
cost of net metering, instead a cost savings for one customer
will come at the expense of another customer. Secondly, net
metering does not reduce costs for utilities since small
"avoided costs" accrued because Alaska's utilities have made
tremendous investments in generators, power lines, trained
personnel, and facilities to ensure "that when Alaskans turn on
a light switch, the lights come on." None of these costs are
lowered by net metering and at best net metering would only help
a utility offset some costs such as fuel costs, she said.
However, net metering ignores the high unfavorable fixed costs
that form the basis of a substantial part of retail electric
rates. Renewable energy is unlikely to help utilities to meet
peak demand since low water flow and frozen lakes make
generating hydroelectric difficult or impossible during the
winter months when peak demands occur, she opined. Although
wind could be available at peak demand, its variability or
unpredictability makes it an unreliable power source too, she
alleged. Therefore, renewable net metering power sources are
most likely to be generated when they are not needed so
utilities will still need to pay for generation and transmission
facilities to meet peak demand, she concluded.
MS. LELAND opined that electricity can't be stored at any
reasonable cost. Net meters will run backwards when customers
have the least need for electricity, thus net metering is likely
to result in allowing customers to sell low-value electricity to
the utility for the same price that customers pay for high-value
peak electricity. Thus, the cost for net metering is paid by
other consumers, she opined. The RCA has until August 2008 to
consider whether to require some form of net metering and has
already begun to take initial comments from interested parties.
Therefore, HB 288 short circuits that process, she opined. She
stressed that since the RCA is charged with the oversight of
Alaska's electric utilities, it should be the first one to look
at whether net metering makes sense for Alaska. She noted that
many of Alaska's cooperatives regulate their rates for
electricity since cooperatives are owned by its customers.
Since local board members have a better sense of their utility's
needs than regulators in Anchorage do, HB 288 would override
local control by giving RCA jurisdiction over rates paid for net
metering sales, she opined. Finally, the APA believes that
there are better ways to encourage renewable energy such as the
state providing funds to utilities to help offset the high
upfront cost of alternative energy projects. She expressed
concern that small utilities would not currently qualify for the
exemption under HB 288, since smaller utilities producing
hydroelectric or wind power use diesel fuel sources to produce
it.
3:47:38 PM
REPRESENTATIVE GARDNER inquired as to whether there is any way
for a utility to also measure the flow on a meter that runs
backwards in order to adjust the consumer's energy costs.
ANDY LEMAN, Legal Counsel, Alaska Power Association (APA),
replied that the short answer is that typical residential meters
do not have the ability to measure power transmitted in both
directions and that it would require additional equipment to do
so.
3:48:41 PM
ROBERT REAGAN, Rates and Tariffs Supervisor, Anchorage Municipal
Light and Power (ML&P), said that the Alaska Public Utilities
Act that is widely vested in the Alaska Public Utilities
Commission (APUC), succeeded by the RCA, has the power and
obligation to set just and reasonable rates for regulated
utilities and to impose reasonable standards of service on those
utilities. Presumably, he opined, the legislature recognizes
that appropriate business practices, standards, and rates are
complex matters that are too dynamic to be set by statute.
Therefore, the legislature established an administrative body,
the APUC, what later became the RCA, to develop the body of
knowledge and understanding necessary to set appropriate
regulations that define the conditions under which utilities
provide service and appropriate rates. This legislation would
depart from that policy by requiring utilities to allow
customers to generate power, and for utilities to purchase
random output from customer generators as though it were worth
as much as retail electric service.
MR. REAGAN opined that if the legislature believes that it
should mandate net metering, the threshold question it needs to
ask is whether net metering is a reasonable means to achieve any
purpose. If the purpose of HB 288 is to promote alternative
renewable energy, ML&P questions limiting net metering only to
micro-scale alternative energy use, he said. Net metering, as
proposed in HB 288, would create a very large subsidy for
generators of 25 kW or less located on the premises of utility
customers, he opined. He inquired as to why the bill allows
renewable generation to be constructed in such tiny increments
when there is every reason to believe that the minimum efficient
scale would be much larger than that. "Anyone who has stood
next to a functioning wind generator knows even renewable power
producing machinery almost always produces undesirable
environmental effects," he said. Therefore, ML&P questions why
HB 288 would require the new generation on customer's premises
thereby concentrating the undesirable environmental effects
where people live. One reason might be that large-scale net
metering is considered harmful so the limitations in HB 288 are
designed to limit the harm, he opined. He said, "If that is
true, and ML&P thinks it is, ML&P hopes the legislature will ask
why small scale net metering would not also be harmful, just on
a smaller scale." He also opined that net metering would not be
a small subsidy.
3:52:34 PM
TRISH ROLFE, Alaska Regional Representative, Sierra Club
testified in support of HB 288. This bill addresses most of the
concerns people have about net metering, she offered. Net
metering will enable the consumer to personally do something to
lower his/her own carbon footprint. Furthermore, HB 288 will
allow consumers the ability to recoup a portion of the cost to
switch to alternative energy sources, she offered. She agreed
with Representative Ramras that some people feel passionate
about net metering and recognize they will never recoup all
their costs. This bill also helps produce jobs because as more
people install net metering systems in their homes, the demand
for trained professionals to assist them will also increase, she
opined.
3:54:14 PM
ANDY BAKER, Clean Energy Consultant, Your Clean Energy Design,
LLC, said that his job as an energy consultant is to help people
design small systems such as the ones being discussed today. He
offered that the renewable energy economy has three tiers, which
include the utility scale, community scale, and residential
scale. Of those, net metering speaks to the third tier, he
said. The installed cost for some systems is currently pretty
high so even if HB 288 were to pass tomorrow, the people who
will install systems will slowly evolve and the quantity of
electricity they can produce will be small. So the cost to
utility companies is exaggerated because the impact is relative
to the number of customers who participate in the proposed
program, he opined. He acknowledged that the process to develop
alternative energy has been slow in the Lower 48 and he
predicted that Alaska would likely follow suit. While it is
slow growing, it is growing. Nationwide the renewable economy
is about $40 billion a year, he opined. However, the small
residential and commercial sector is part of that. People use
solar or wind as an alternative energy source at home because
renewable resources are often located on private land and not on
public land or utility company land, he offered. Some people
who produce wind power live on large parcels of land in remote
areas so they can produce power without impacting others, he
opined. This bill would allow those types of sources to be
developed, he offered. He stated that Alaska can generally look
to the Lower 48 for specific programs in order to examine the
process, the cost, and the benefits derived by other states.
Some people overreact to the cost and impact of net metering so
he suggested that utility companies should support allegations
of hardship with specific facts.
3:57:42 PM
PAT LAVIN, National Wildlife Federation (NWF), related that NWF
has over 3 million members, of which 5,000 reside in Alaska. He
said that global warming is NWF's top priority. As part of its
program, Alaska Youth for Environmental Action (YEA), NWF sends
some youth to Juneau each year to meet with legislators.
Nationwide energy costs are a national concern so HB 288 helps
provide a means for reducing residential energy costs.
Initially only the people with passion will be the ones to sign
up for the proposed net metering program, but it is policy
changes like the ones contained in HB 288 that will help
transition Alaskans into a more efficient and clean economy, he
opined. Besides the individual benefits for homeowners, net
metering also represents a societal transition and is one reason
why NWF supports HB 288. The legislature should continue to
move forward with HB 288 in concert with the RCA because the
legislative discussions will help inform and improve the quality
of the outcome. He offered that the RCA's role could focus on
implementation.
4:00:28 PM
KYRA WAGNER said she is representing herself and offered that
she works with a group called Sustainable Homer that is
currently working through the Homer Chamber of Commerce. She
noted that she primarily supports the bill because of the green
economy factors. While she said she agreed that sustainable
energy will grow slowly, if not many people participate in large
scale production, the impact will be minimal, she opined. As
alternative energy catches on it will become more affordable and
the benefits for utility companies will also increase as energy
costs will continue to rise, she opined. She said that she
would like to see the state "step up to the plate" and make it
happen at the state level.
4:01:58 PM
ALAN PARKS noted that he has served as the Chair of the City of
Homer's Global Warming Task Force. He offered his support for
HB 288. He gave an overview of the Homer Global Warming Task
Force, which was created in January 2007 to advise the City of
Homer on methods to plan for and mitigate global climate change.
The task force met over 30 times in 2007 to discuss the subject
of net metering in detail. The outcome resulted in a
comprehensive climate action plan adopted by the Homer City
Council, which recommended that the City of Homer support net
metering. He related his understanding that the City of Homer
will soon consider net metering. He said he anticipates
approval of a resolution and letters of support for legislators.
He said he strongly believes that net metering will create an
economic opportunity at the community level through sales,
service, and support of small-scale renewable energy systems,
said. This bill could maximize the economic viability of small-
scale renewable resources and would give all Alaskans an
opportunity to reduce their energy costs and carbon dioxide
emissions. While he acknowledged the concerns of small
utilities, he said he believes that the benefits of HB 288
outweigh any perceived adverse impacts. He referred to the
committee packet, which includes documentation illustrating that
other state's programs are effective with minimal effects to
utilities. He suggested that the state amend the Power Cost
Equalization Program (PCE) to reward small utilities that reduce
energy generation. If the potential for small renewable energy
generation systems exists to severely impact utilities, then
there must be potential for utility-scale renewable energy
generation. He urged utilities to work toward the energy
generation. In closing, he summarized that HB 288 will offer
individuals an opportunity to reduce reliance on fossil fuels
used in energy generation and in a small way, will assist
Alaskans to lower energy costs, emissions, and ultimately
achieve energy independence. He urged the committee to support
HB 288.
4:05:37 PM
JOEL COOPER said that he supports HB 288. He related that he
built his own home with "an eye to energy conservation" and
hopes to use active and passive solar to meet his future energy
needs. He appreciates that HB 288 allows a citizen to benefit
from net metering. He opined he does not see any problems
created for local or Railbelt utilities. He offered that solar
energy can generate significant energy from March through
October and some years it spans an even longer period. As an
environmental scientist, he opined that technology currently
exists for the entire Railbelt to run on renewable energy. He
recalled that when he attended a wind forum sponsored by Homer
Electric Association, Inc., he asked whether the Railbelt could
be 100 percent renewable. The response given was that the
technology currently exists, but that to do so utilities must
support and implement it.
4:09:09 PM
REPRESENTATIVE GARDNER acknowledged that while it is true that
one can do anything, the question is whether renewable energy is
cost effective and whether people will pay more for their
energy.
MR. COOPER responded that the Homer Electric Association (HEA)
conducted a survey and 75 percent of its members responded that
they are willing to pay more for renewable energy costs. He
offered that consideration of renewable energy goes beyond
economics to environment and health issues. He opined that the
cost of air pollution from burning combustible fuels such as
natural gas and coal far outweighs projected costs for
geothermal, hydroelectric, wind or solar alternative energy.
4:09:59 PM
MARLA MCPHERSON said that she supports HB 288 and, as a
landowner, would like to set up a system to generate her own
electricity. She opined many Alaskans will support HB 288
because it embodies the Alaskan spirit of independence. What
stops Alaskans from using renewable energy generation is the up-
front cost to invest in a generation system, she opined. This
bill would provide incentives to landowners and enable them to
afford to install a system to pursue alternative energy
generation. She said she thinks HB 288 is good for the
independent consumer, the landowner, and the do-it-yourself
spirited person. This bill also offers community benefits
because it would put more energy into the grid, could help
utility companies diversify energy, and could mitigate climate
change. Because net metering is a process that will slowly
happen, HB 288 would also allow utilities the opportunity to
adapt to it without dramatic change, she opined. This bill
would essentially allow utilities to pass savings on to
consumers by avoiding the greater cost of finite resources such
as coal and natural gas and the potential costs that utilities
may incur with potential carbon taxes, she said. She said, HB
288 is "good all around for Alaskans", and urged committee
members to support the bill.
4:12:06 PM
TERRY HOEFFERLY said that HB 288 is excellent in its intent and
purpose because it addresses the issues of reducing the carbon
footprint, global warming, and dependence on petrochemicals. He
noted two separate cost structures for utilities across the
state and opined that the [difference] between large and small
utilities is fundamentally rooted in issues related to scale.
It is important for small utilities throughout Alaska to find
renewable sources of energy because rural areas have the highest
energy costs in the state, he said. Since small utilities are
the least able to adapt to net metering, he urged the committee
to consider either amending HB 288 or power cost equalization
statutes to subsidize small utilities and mitigate the cost of
net metering. He agreed with previous speakers that net
metering will happen slowly so the overall cost to utilities
should be relatively small.
4:15:10 PM
PHIL STEYER, Director, Government Relations/Corporate
Communications, Chugach Electric Association (CEA), said that
CEA is not opposed to buying power from customers under the
appropriate conditions and agreements. In fact, CEA has already
approved tariffs as well as interconnection standards for that
purpose. However, CEA is opposed to net metering in HB 288 for
several reasons since it overprices generation of electricity,
it causes the customer to under contribute distribution costs,
and it puts the wrong organization in the business of setting
rates. He explained that net metering overprices generation
because when overall customer demand causes power to flow from
the utility through a meter the energy consumption is measured
in kW hours. And that forms the basis for the utility to
recover much of its costs to provide services to the customer.
The retail rate charged per kW hour recovers the cost of
providing not only generation and transmission, but the
distribution of power, as well. He noted that CEA customers
currently pay approximately 12 cents per kW hour, with half to
cover generation and transmission costs and the other half to
cover distribution costs. However, under net metering CEA would
pay the full 12 cents per kW hour for generation. Under net
metering not only would the customer be overpaid for generation,
the distribution costs would be unfairly shifted to other
utility customers, he said. He offered that the key principle
of rate-making involves cost, cost-causer, and cost-payers and
net metering violates this principle. He opined that it puts
the wrong organization in the business of setting rates. He
offered that CEA and many other utilities are regulated by the
RCA, who set the rates that CEA charges. When CEA files post-
tariff sheets to support proposed rates, CEA believes those
rates are fair and reasonable. He reviewed the rate change
process, which consists of the RCA's staff review of CEA's
justification, taking testimony from any intervenors, taking
testimony from CEA, examination and testimony of experts engaged
by any of the parties, replying to comments and testimony, and
finally deliberation and decisions by the RCA commissioners. He
noted that the RCA commissioners have observed the process and
reviewed the documentation for the rate change. The rate-making
process is a deliberative process. This bill would allow the
legislature to determine the appropriate rate for generation
instead, he opined. He said that CEA believes rate-making
decisions are best made by the RCA since it is the organization
the state has created and charged with that duty. He noted that
the RCA currently has a proceeding underway to consider whether
net metering is appropriate for Alaska. He summarized that CEA
is not opposed to buying power from the customer, but there
needs be a proper interconnection and CEA needs to pay the
appropriate price for power generation.
4:19:27 PM
REPRESENTATIVE BUCH inquired as to the timeframe for net
metering review by the RCA.
MR. STEYER offered his understanding that the RCA is to have
completed its net metering activity by August 2008.
4:19:56 PM
REPRESENTATIVE GATTO inquired as to whether costs for the lack
of carbon emissions due to net metering would be refunded to
customers if a utility was required to pay for carbon emissions.
MR. STEYER answered that he was not sure if refunds have been
considered although that is the type of question that would be
covered in the complex rate-making proceedings.
4:20:51 PM
ANTHONY PRICE, Chair, Regulatory Commission of Alaska (RCA), in
response to Chair Olson, said that the statutory deadline will
run out on the regulation docket by August 2008, the date the
RCA must issue a decision on net metering. He noted that
although the RCA has an opportunity to extend the matter for 90
days for good cause, that it is the RCA's intention to complete
the matter by August 2008. He offered that the RCA is subject
to statutory deadlines and opined that the RCA does not miss its
deadlines.
4:21:53 PM
REPRESENTATIVE BUCH asked for an analysis and opinion of the
provisions included in HB 288.
MR. PRICE answered that the RCA is a deliberative body that
takes testimony from all sides, considers the matter, and makes
a decision at the end of the process. He opined that HB 288
would short circuit the needs of the RCA to deliberate on net
metering, although there would no doubt be more issues that
would come before the RCA as a result of the bill and [ensuing]
litigation. He said he would refrain from making any comments
on HB 288 because the RCA has not gone through its deliberative
process, has not collected all the testimony, and it would be
highly improper for him to do so.
4:23:12 PM
CHAIR OLSON asked Mr. Price if he would be able to stand by in
case there were questions.
MR. PRICE said he would do so, and offered that also standing by
are RCA staff: James Keen, Chief/Engineering, Rich Gazaway,
Chief Administrative Law Judge, Ann Wilde, RCA Section Manager,
and Mary Vittone, Chief, Utility Tariff Analyst, Tariffs.
4:23:42 PM
JASON KEYES, Attorney, Wilson, Sonsini, Goodrich, and Rosati,
PC, explained that for the past eight months, he has spent about
half of his time of IREC in various state proceedings on net
metering and interconnection standards. He noted that prior to
law school he worked for a solar firm for eight years. He gave
a brief background of IREC, which is a nonprofit organization
funded by the U.S. Department of Energy (DOE). It is not an
advocacy group for solar industry, but is funded by the DOE to
give states a perspective on energy, and an analysis of what has
worked and what has not worked very well in other states. He
offered that he is available for questions, but would like to
make a few comments. He opined that the 25 kW limit in HB 288
would be one of lowest limits in the nation, which he opined is
alright, but as was pointed out by Mr. Reagan from the ML&P, the
natural size for a cost-effective system is probably going to be
something higher than that. For example, in California the vast
majority of the systems are residential systems that produce 5
kW, or less, however, 80 to 85 percent of the total capacity is
provided by commercial systems with a minimum of 50 kW, but some
systems are as large as half a megawatt. He encouraged the
committee to consider raising the minimum limit above 25 kW. He
noted several people testified on the appropriate rate to pay
customers for power generated, but suggested that rather than
pay customers, the most effective systems rollover excess
generation from one month to the next, in the form of a credit
to offset kW hours that will be consumed in the next month. He
offered that when a customer retrofits his home with insulation
and lighting, it reduces the customer's energy consumption, and
that small amount of conserved energy is then available for use
by other customers, so the effect is that the conserved energy
cost is borne by the other customers in a static system. The
same thing happens with net metering, he opined, although most
utilities grow which means that eventually utilities need new
facilities. Alternative energy use such as solar panels will
conserve energy and could help delay or defer the need to build
new facilities to accommodate utility growth. He noted his
experience has been with about 10 other states and has focused
on interconnection standards, although he has some experience
with net metering.
4:28:42 PM
BRAD FLEUTSCH, representing himself, noted that he also serves
as Investment Counsel for Fluetsch Financial Services, LLC. He
said that he is very pleased to see HB 288 introduced. He
offered that net metering creates a product not currently
available, one that is produced by individual Alaskans. He
noted there are a few things that he would like to see changed
in HB 288, although he noted he did not know how many homes 25
kW could serve. He offered that his electrician advised that
the tiny creek by his home could generate enough electricity to
serve six homes in Brazil. He suggested that proposed AS
42.45.045(a)(3), which reads, "uses solar, wind, tidal,
geothermal or hydropower as its fuel" be deleted and instead
refer to renewable resources because there are other types of
renewable resources that could be used. For example, the Juneau
landfill emits methane gas that could be collected and municipal
sewage plants could also be used. He offered his belief that
the 2.5 cent kW production cost does not consider pollution
costs so he suggested that the committee consider adding a
carbon tax to the bill to offset the costs for energy
alternatives. He also suggested that the committee add a
provision for a "20-20 type policy" to require that 20 percent
of production come from renewable energy sources by a time
certain, as many other states do. This legislation could be
funded by the governor's proposed $250 million as part of a
renewable energy package, he suggested. He pointed out that
currently a community's growth is capped by the willingness of
the utility to produce power, therefore, net metering can help
free rural Alaskan villages by allowing individuals to generate
alternate energy.
4:31:45 PM
TIM MCCLEOD, President; General Manager, Alaska Electric Light &
Power, noted that he generally agrees with the comments made by
CEA. However, he said that the customer's rate for surplus
energy is unclear, whether it would be paid at the retail rate,
an avoided cost rate, or a non-firm rate. He said he did not
know the definition of non-firm rate. Regardless of the
purchase rate paid, that rate should be decided by the RCA
through its rate-making process, he opined.
REPRESENTATIVE GARDNER noted her agreement that the non-firm
rate is not clear. She inquired as to whether it would be
easier to require one meter since it was her understanding that
the installation of meters to measure energy going both
directions is costly.
MR. MCCLEOD opined if the customer gets full retail rate, it
would inflate the cost to other customers. He said the avoided
cost rate varies, for example, when AEL&P has surplus
hydroelectric energy the avoided cost is zero, but when AEL&P
uses diesel fuel the avoided cost could be as much as 20 cents
per kW hour, although those costs still would not include the
retail rate of the distribution and transmission costs.
REPRESENTATIVE SEATON clarified the RCA's definition for avoided
cost is the rate that a utility would pay to a qualifying
facility for supplying electric power in unpredictable
quantities and at unscheduled times in intervals. The rate is
determined using avoided energy related costs, he said, which is
a rate that RCA determines for each utility it regulates, he
noted. He offered that smaller utilities have an avoided cost
rate schedule, too. The avoided cost rate is basically the
wholesale avoided cost rate, or the amount that a utility would
purchase power from another producer or generator.
4:35:26 PM
FLOYD KOOKESH, Tribal Administrator, Douglas Indian Association,
noted that he is also a charter boat operator in Angoon. He
opined that net metering is just a start and suggested there
should be more incentives for the net metering program and other
renewable resource programs. He offered that Angoon has been
struggling to develop hydroelectric power for Angoon for over 20
years and offered that he would like to see net metering "take
off." He suggested that if incentive programs are a long way
out that perhaps the state should consider if it should adopt
one rate for all its electricity to create a better cost balance
across the state. He offered that he is familiar with
Representative Ramras's advertising for his energy efficient
hotel in Fairbanks and commended him for doing something that is
good for the environment. He said he would like to see more
programs like net metering developed.
REPRESENTATIVE RAMRAS described the energy program in Fairbanks,
which he said is modeled after one in Chelan, Washington. He
opined that Washington is the only place in the country with an
innovative program designed to eliminate the cost to rate
payers. He explained details about the green program that his
local utility Golden Valley Electric Association adopted, and
offered its goal which is to be 20 percent green by the year
2014. Currently, GVEA offers enthusiasts who don't want to
invest in a system, a method to participate by checking a box on
his/her utility bill to agree to pay a super premium for green
kW. That rate will continue to go down with increased
participation, he opined. He described the method to determine
the overall cost based on the number of producers and
subscribers, who currently pay up to a maximum of $1.50 per kW.
He noted that anyone interested should check out the GVEA web
site.
4:44:10 PM
PETER NAOROZ, President, Kootznoowoo, Inc., which is the Angoon
village corporation established under the Alaska Native Claims
Settlement Act (ANCSA). He noted that his corporation is
currently in the process of developing a hydroelectric project,
and noted that Kootznoowoo, Inc supports HB 288. He said his
corporation is also a member of the Inside Passage Electric
Cooperative (IPEC). He said net metering is a way for small
investors to participate and for the state to move towards
energy independence. The legislature is the appropriate arena
to address net metering, and not RCA, he opined. He said that
net metering provides a fundamental piece of the energy policy
of the 42 other states that are served by utilities who
understand the benefits of the program. Alaskans should view
net metering as positive even though the program will impact
small rural utilities given the lack of economy of scale. He
encouraged legislators to listen carefully to utility managers.
Overall, his corporation supports HB 288 because net metering
will increase private investment, reduce dependence on diesel
fuel, and more fully develop Alaska's resources and economy. He
opined that the highest use for diesel fuel is as fuel for
planes and fishing boats, not to heat homes. The more diesel
fuel Alaska can eliminate, the healthier and more economically
viable the state will be. He suggested members consider
adopting a higher non-residential rate than residential rate, as
some other states have done. In doing so, the bill will address
the interests of entities, such as Kootznoowoo, Inc., that have
large land holdings to develop. As the renewable energy grows,
the legislature can consider whether energy credits could be
used to offset municipal and school district costs or property
taxes, he opined.
4:48:36 PM
DEBORAH WILLIAMS, President, Alaska Conservation Solutions said
that she strongly supports HB 288. For the last several years,
her company has received numerous calls from people who say they
are not interested in coming to Alaska because the state does
not have a net metering program. She opined that net metering
should be a legislative policy decision. She said she supports
net metering because it is consistent with Alaska's frontier
spirit, it empowers individuals, it fosters innovation, and it
makes Alaska competitive with other states. She added that net
metering promotes businesses such as tourism since tourists are
interested in visiting places with a zero or small carbon
footprint. Businesses compete to lower the carbon footprint, so
Alaska needs to create an environment that attracts businesses
to come and to flourish. This bill helps with distributive
power issues and helps promote energy independence. She offered
she has worked extensively in Washington D.C. and Congress is
currently assessing which states have net metering programs in
order to determine which states will qualify for federal funding
to be used for their adaptation needs. With respect to the RCA,
she cautioned that when she said she worked on a similar issue
for an in-state competition for telephone service, that the
Alaska Public Utilities Commission (APUC)[predecessor of the
RCA] could not make a policy decision on telephone competition.
She opined that the legislature needs to make the policy
decision on net metering. She offered her belief that the RCA
has probably received very few comments on its net metering
docket because most Alaskans are not aware of the RCA's role in
net metering yet. She concluded with the slogan, "North to the
Future" and opined that Alaska needs this net metering bill
passed.
4:52:43 PM
REBECCA SHAFFER, Board Member, U.S. Green Building Council
Chapter said that she is a strong advocate for net metering.
She noted that the council has a green rating system for rating
green buildings. This bill would positively impact two program
points awarded on buildings that use on-site energy that
demonstrate energy efficiency. She stressed that 100 cities
around the country have adopted policies requiring their
buildings to be lead rated. Acquiring the green rating can
reduce residential taxes, she mentioned. She noted she is the
owner of a triplex in Anchorage and to the extent she can reduce
her utility costs, it allows her to reduce rent to help provide
affordable housing. She expressed hope that utility companies
can find strategies to work with the bill so residential
customers can take advantage of net metering.
4:55:29 PM
NICK MOE, staff, Renewable Resources Department, Municipality of
Anchorage, said that he receives numerous calls from
constituents interested in alternative energy resources, but the
MOA often can't help because of its code issues. He said he is
happy the state is addressing net metering. Looking to the
future, HB 288 is a great first step to assist with residential
renewable energy, he opined. He noted HB 288 allows the state
to join the 42 other states that already have laws allowing
some form of net metering. He noted his disagreement with the
utilities that net metering be an immediate hardship because the
majority of states allowing net metering would not do so if net
metering caused hardships for utilities. He urged the
legislature to do more to provide a renewable energy reserve to
fund micro and macro projects such as wind power on Fire Island.
He said he fully supports HB 288.
4:57:49 PM
GARRISON COLLETE said he is representing himself but that he
works in Fairbanks in a lead accredited building with 11 kW
solar panels outside. As one of two statewide energy
specialists, Mr. Collete says he is familiar with many of these
issues first hand. He related that he doe not get many queries
about net metering from interior Alaskans, but he does receive
inquiries from Southcentral Alaska since there is no widespread
program for purchasing back green power. This bill could
encourage companies like ML&P to introduce a program similar to
the SNAP program. He further noted that participation in net
metering is optional to customers. He noted that energy
efficiency is the most cost effective solution because it reaps
rewards for consumers each year. He offered that HB 288 could
bring Alaska "out of the stone age" as it creates the basis for
a renewable energy policy in Alaska. He urged the committee to
pass HB 288. He opined that although consumers could use dual
metering to prevent waste and avoid extra expense, it is not
currently allowed by [in-state] utilities.
5:02:53 PM
BILL MACFARLANE stated that as an Anchorage homeowner he fully
supports HB 288 and looks forward to the day when he can produce
all of his own energy needs at home from solar and wind power.
Net metering is what can make this possible, he said. He
offered that Alaska has incredible wind and solar resources,
which, he opined, should be taken advantage of at all scales,
including at the local level. He related his belief that net
metering is the right thing to do for the present and for the
future, and he thanked the Chair for the opportunity to testify.
5:03:42 PM
MARTHA LEVENSALER, Climate Change Project Director, Alaska
Marine Conservation Council, said that she fully supports HB
288. She said she looks at how carbon dioxide pollution impacts
our oceans, both in terms of warming and making them more acidic
on a daily basis as part of her job. Therefore, she noted her
support of more innovative programs such as this one.
5:04:55 PM
ADAM BROWNING, Staff, Vote Fuller Initiative, related his
support for HB 288. He said that he has testified before 10
regulatory commissions, and state legislatures and offered his
belief that this discussion has been the most cogent and
sophisticated yet. He opined that net metering is a fundamental
part of the regulatory infrastructure that will allow clean
distributive generation to exist. He further opined that across
all 50 states a net metering program is part of the bedrock and
he has yet to find a functional Fuller market that doesn't have
a robust net metering program. He offered, with respect to
costs to utilities, that impacts are not any different from an
energy efficient or conservation effort and that net metering is
fairly universally accepted as being beneficial to the utility
and other ratepayers. He characterized HB 288 as a good bill.
5:06:54 PM
PETER BRIGGS, Member, Steering Committee Member, Anchorage
Sustainable Building Initiative, explained that the focus of the
initiative is to work towards a sustainable building ordinance
through the Municipality of Anchorage, to encourage incentives
and flexibility that will help develop a sustainable
environment. He pointed out the concept of growing a green
economy. He offered that he is beginning to see some offshoots
from his work that encourage economies, such as demolition and
salvage of materials, the Habitat for Humanity restore, that are
spinoffs that create jobs in the community. This is the age of
unintended consequences and thus the cost of doing business
includes the costs of carbon air pollution. While diesel and
fuel oil is inexpensive, the costs to clean up spills are
expensive. He offered that Kotzebue is moving toward wind
energy to offset its reliance on diesel. He stated that he uses
the three-legged stool approach in green design, which is
health, environment, and the economy working together. He
acknowledged that although details need to be worked out, HB 288
contributes to all three aspects of the three-legged stool. If
Alaska looks at one aspect without looking at the other two, it
will result in unintended consequences, he opined. He said that
Alaskans need to look forward and make plans to make Alaska a
better place to live.
5:10:28 PM
CHAIR OLSON asked if there was anyone else who wished to testify
and there were none.
[HB 288 was held over.]
5:10:52 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:10 p.m.
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