Legislature(2011 - 2012)BARNES 124

02/24/2012 01:00 PM RESOURCES


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 289 NATURAL GAS STORAGE TAX CREDIT/REGULATION TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+ HB 9 IN-STATE GASLINE DEVELOPMENT CORP TELECONFERENCED
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                       February 24, 2012                                                                                        
                           1:09 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eric Feige, Co-Chair                                                                                             
Representative Paul Seaton, Co-Chair                                                                                            
Representative Peggy Wilson, Vice Chair                                                                                         
Representative Alan Dick                                                                                                        
Representative Neal Foster                                                                                                      
Representative Bob Herron                                                                                                       
Representative Cathy Engstrom Munoz                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Berta Gardner                                                                                                    
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                              
Representative Mike Chenault                                                                                                    
Representative Mike Hawker                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
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."                                                                            
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
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."                                                                                               
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 289                                                                                                                  
SHORT TITLE: NATURAL GAS STORAGE TAX CREDIT/REGULATION                                                                          
SPONSOR(s): REPRESENTATIVE(s) THOMPSON                                                                                          
                                                                                                                                
01/17/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (H)       RES, FIN                                                                                               
02/24/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB   9                                                                                                                  
SHORT TITLE: IN-STATE GASLINE DEVELOPMENT CORP                                                                                  
SPONSOR(s): REPRESENTATIVE(s) CHENAULT                                                                                          
                                                                                                                                
01/18/11       (H)       PREFILE RELEASED 1/7/11                                                                                
01/18/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/18/11       (H)       RES, FIN                                                                                               
02/06/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/06/12       (H)       Heard & Held                                                                                           
02/06/12       (H)       MINUTE(RES)                                                                                            
02/08/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/08/12       (H)       Heard & Held                                                                                           
02/08/12       (H)       MINUTE(RES)                                                                                            
02/10/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/10/12       (H)       Heard & Held                                                                                           
02/10/12       (H)       MINUTE(RES)                                                                                            
02/13/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/13/12       (H)       <Bill Hearing Canceled>                                                                                
02/24/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JANE PIERSON, Staff                                                                                                             
Representative Steve Thompson                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 289 on behalf of the prime                                                                  
sponsor, Representative Thompson.                                                                                               
                                                                                                                                
GENE THERRIAULT, Vice President Resource Development                                                                            
Golden Valley Electric Association (GVEA)                                                                                       
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 289.                                                                          
                                                                                                                                
DAN BRITTON, President/CEO                                                                                                      
Fairbanks Natural Gas (FNG)                                                                                                     
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 289.                                                                          
                                                                                                                                
TOM WRIGHT, Staff                                                                                                               
Representative Mike Chenault                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Reviewed provisions of and proposed                                                                      
amendments to HB 9 on behalf of Representative Chenault, prime                                                                  
sponsor.                                                                                                                        
                                                                                                                                
RENA DELBRIDGE, Staff                                                                                                           
Representative Mike Hawker                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Reviewed proposed amendments to HB 9 on                                                                  
behalf of Representative Hawker, sponsor.                                                                                       
                                                                                                                                
JOE DUBLER, Vice President                                                                                                      
Alaska Gasline Development Corporation (AGDC)                                                                                   
Director of Finance, Alaska Housing Finance Corporation (AHFC)                                                                  
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions regarding HB 9.                                                                       
                                                                                                                                
DARYL KLEPPIN, Commercial Manager                                                                                               
Alaska Gasline Development Corporation (AGDC)                                                                                   
Alaska Housing Finance Corporation (AHFC)                                                                                       
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions regarding HB 9.                                                                       
                                                                                                                                
TINA GROVIER, Attorney, Natural Resources and Energy Law                                                                        
Birch Horton Bittner & Cherot                                                                                                   
Counsel to Alaska Gasline Development Corporation (AGDC)                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions regarding HB 9.                                                                       
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:09:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PAUL   SEATON  called  the  House   Resources  Standing                                                             
Committee meeting to order at  1:09 p.m.  Representatives Herron,                                                               
Dick,  Foster, Feige,  and Seaton  were  present at  the call  to                                                               
order.    Representatives Munoz  and  P.  Wilson arrived  as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
        HB 289-NATURAL GAS STORAGE TAX CREDIT/REGULATION                                                                    
                                                                                                                                
1:09:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON announced that the  first order of business would                                                               
be  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."                                                                                                                
                                                                                                                                
1:10:12 PM                                                                                                                    
                                                                                                                                
JANE PIERSON, Staff, Representative  Steve Thompson, Alaska State                                                               
Legislature, introduced  HB 289 on  behalf of the  prime sponsor,                                                               
Representative  Thompson.    She  said  the  cost  of  energy  is                                                               
crippling  a  good  portion  of Alaska's  residents.    The  ever                                                               
increasing  expense of  heating  homes  and operating  businesses                                                               
during the  long cold winter  is hurting the ability  of Alaskans                                                               
to put food on the table and  plan for the future.  The Fairbanks                                                               
community  alone  spends over  $600  million  per year  on  space                                                               
heating and  is unable to expand  its business district due  to a                                                               
lack of affordable natural gas.   An infusion of gas in Fairbanks                                                               
would reduce the cost to end  users and would restore the ability                                                               
of Fairbanks to grow its economic base.                                                                                         
                                                                                                                                
MS.  PIERSON  said  HB  289 would  incent  the  private  sector's                                                               
delivery  of  lower  cost  natural  gas  to  Interior  Alaska  by                                                               
extending the  tax credits  for a  liquefied natural  gas storage                                                               
facility, which is  necessary for a natural  gas trucking project                                                               
and something  that Fairbanks is  considering.  A new  credit for                                                               
construction of  above-ground liquefied  gas storage  tanks would                                                               
make  this program  flexible  to  fit the  varying  needs of  gas                                                               
delivery in  Fairbanks and  possibly throughout  the state.   The                                                               
bill  would  apply  to  a  liquefied  natural  gas  storage  tank                                                               
facility  with a  minimum volume  of  1 million  gallons and  the                                                               
amount  of the  credit  would be  limited to  50  percent of  the                                                               
construction  costs up  to  $15 million.    Additionally, HB  289                                                               
would allow  eligible above-ground liquefied natural  gas storage                                                               
facilities  sited on  state lands  to request  an exemption  from                                                               
rental payments.   The exemption could extend for up  to 10 years                                                               
following the  commencement of commercial  operations.   The bill                                                               
defines how credits  should be distributed, both as  a tax credit                                                               
and as payments to non-taxable entities.                                                                                        
                                                                                                                                
MS. PIERSON  pointed out that  HB 289  also has safeguards.   The                                                               
liquefied natural gas storage facility  would be regulated by the                                                               
Regulatory Commission  of Alaska  (RCA) to ensure  incentives are                                                               
passed on  to customers.   The  bill would also  set forth  how a                                                               
person receiving  a credit or  a payment shall repay  the credits                                                               
or payment  if the facility  ceases commercial  operations within                                                               
the nine  calendar years immediately following  the calendar year                                                               
in which the facility commenced  commercial operations.  Further,                                                               
HB  289 would  define "liquefied  natural gas  storage facility,"                                                               
"ceases   commercial  operations,"   and  "commences   commercial                                                               
operations" for a liquefied natural gas facility.                                                                               
                                                                                                                                
1:12:48 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  noted for the  record that before  the committee                                                               
was Version I, the proposed  committee substitute (CS) for HB 289                                                               
[labeled 27-LS1216\I,  Bullock, 2/20/12].   He  said this  is the                                                               
first  hearing on  HB 289  and therefore  Version I  is the  bill                                                               
before the committee.                                                                                                           
                                                                                                                                
REPRESENTATIVE  HERRON,  in regard  to  the  $15 million  and  50                                                               
percent credit,  inquired what  the estimated  total construction                                                               
cost would be for a 1 million gallon facility.                                                                                  
                                                                                                                                
MS. PIERSON  replied that the  sponsor has been hearing  it would                                                               
be around $40 million.                                                                                                          
                                                                                                                                
CO-CHAIR SEATON asked  what percentage of daily use,  or how many                                                               
days of  use, would  1 million gallons  of liquefied  natural gas                                                               
(LNG) represent.                                                                                                                
                                                                                                                                
MS. PIERSON  responded that according  to Golden  Valley Electric                                                               
Association (GVEA), 1 million gallons  would be approximately one                                                               
week of use.   For the amount of usage  by Fairbanks Natural Gas,                                                               
another company that would like to  use this, she deferred to the                                                               
company's representative online [Dan Britton].                                                                                  
                                                                                                                                
1:14:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON   inquired  whether  1  million   gallons  would                                                               
constrain  communities [that  are  smaller  than Fairbanks]  from                                                               
being  able  to use  this  proposed  credit.   He  further  asked                                                               
whether  Representative  Thompson would  have  a  problem if  the                                                               
amount was half a million gallons rather than a million gallons.                                                                
                                                                                                                                
MS. PIERSON  did not believe  that that  would be a  problem, but                                                               
said she would  research what other communities  think they might                                                               
need so that there would be a basis for the number.                                                                             
                                                                                                                                
CO-CHAIR SEATON related that in  Norway, small inner-port tankers                                                               
go from  coastal village to  coastal village delivering  LNG into                                                               
tanks.   He said it seems  that this could also  be applicable to                                                               
coastal communities  in Alaska  provided the  quantity is  not so                                                               
large that only the largest communities could use it.                                                                           
                                                                                                                                
[CO-CHAIR SEATON opened public testimony.]                                                                                      
                                                                                                                                
1:16:33 PM                                                                                                                    
                                                                                                                                
GENE  THERRIAULT, Vice  President,  Resource Development,  Golden                                                               
Valley Electric  Association (GVEA),  noted that GVEA  is working                                                               
on  projects  that will  move  the  utility away  from  oil-fired                                                               
electric generation.   He offered appreciation  to Representative                                                               
Thompson for  introducing HB  289 on GVEA's  behalf.   He pointed                                                               
out that the 2010 [Cook Inlet  Recovery Act, House Bill 280,] was                                                               
related  to the  need of  putting  a storage  mechanism into  the                                                               
natural  gas supply  stream  in Cook  Inlet.   In  that bill  the                                                               
legislature decided  to assist with  lowering or  controlling the                                                               
cost of  that storage component  as it  was added to  that supply                                                               
stream.   A  policy  call was  made that  the  state would  offer                                                               
assistance  up  to $15  million  with  the construction  of  that                                                               
infrastructure.                                                                                                                 
                                                                                                                                
1:18:11 PM                                                                                                                    
                                                                                                                                
MR. THERRIAULT explained  that, at the time,  the language talked                                                               
about storage of  gas in a depleted reservoir or  pool as well as                                                               
a tank, a  tank denoting a mechanical storage facility  on top of                                                               
the ground.  Because  the focus at that time was  on the needs of                                                               
Cook Inlet,  the threshold for  what size tank would  qualify was                                                               
geared toward  geologic storage  and storage  in a  gaseous state                                                               
rather  than a  liquid  state.   Because  gas  needs  to come  to                                                               
Interior communities  in a liquid  state, that section  of [House                                                               
Bill 280]  was looked at  for applicability to the  Interior and,                                                               
if  so,  determining any  needed  modifications.   One  potential                                                               
problem is  that threshold for how  big the tank needs  to be for                                                               
storing  liquid  methane;  therefore,  primary  for  HB  289,  is                                                               
defining how big the liquid tank  needs to be.  He explained that                                                               
concern has  been expressed  by the backers  of [House  Bill 280]                                                               
about modifying  that section  of statute.   They  have requested                                                               
that  the problem  be addressed  by creating  a separate,  almost                                                               
identical, section of statute that  is geared towards natural gas                                                               
in a  liquefied state.   The difference  between the two  is that                                                               
when  LNG is  turned into  gas its  volume multiplies  by 600-620                                                               
times, so the difference in quantity  that is being dealt with is                                                               
tremendous.   Expressing  GVEA's thanks  for the  policy call  to                                                               
provide  some state  assistance for  putting a  storage component                                                               
into the  supply stream,  he said  GVEA is  now trying  to ensure                                                               
that it is workable for the anticipated project in the Interior.                                                                
                                                                                                                                
1:20:26 PM                                                                                                                    
                                                                                                                                
MR.  THERRIAULT outlined  the  four major  components  of HB  289                                                               
[Version I].   One  component would provide  a 10-year  waiver of                                                               
lease payments  for qualifying storage facilities  on state land,                                                               
as was done  in the Cook Inlet Recovery Act  and which would help                                                               
reduce the cost to consumers.   A second component would create a                                                               
separate mechanism for providing a  tax credit for the storage of                                                               
methane in a liquefied form.   In response to Co-Chair Seaton, he                                                               
elaborated that  Section 3 of  HB 289 deals with  an above-ground                                                               
natural  gas  storage facility  tax  credit  patterned after  the                                                               
storage  tax  credit that  was  granted  in  the Cook  Inlet  for                                                               
gaseous  methane.   This  part of  the bill  would  create a  new                                                               
section [in statute]  that mirrors the Cook  Inlet mechanism, but                                                               
is for methane in a liquid form.                                                                                                
                                                                                                                                
1:22:24 PM                                                                                                                    
                                                                                                                                
MR.  THERRIAULT  said  a  third  component  would  add  the  word                                                               
payment.   Testimony at  the time  [of House  Bill 280]  said the                                                               
credit  would be  available for  utilities, but  it may  not have                                                               
been  anticipated  that  the  utility  constructing  the  storage                                                               
facility would be a not-for-profit,  and a not-for-profit utility                                                               
does not pay tax.   In regard to the use of  tax credit or refund                                                               
in the  existing language, legislative drafters  pointed out that                                                               
use of the word  refund does not fit for an  entity that does not                                                               
pay  tax and  said that  also  including the  word payment  would                                                               
solve that problem.  This  way, a non-taxpaying entity building a                                                               
storage facility would qualify for  repayment of a portion of the                                                               
expense rather  than a  tax refund.   The fourth  component would                                                               
establish mechanisms for  the state to get back a  portion of the                                                               
refund  or payment  if  the storage  facility  ceases to  operate                                                               
within 10  years.  It would  also provide for a  cessation of the                                                               
waiver of the  lease payments for utilization of  the state land.                                                               
He specified that,  primarily, Version I would  create a separate                                                               
section of  statute that  mimics the structure  put in  place for                                                               
geologic  storage in  the Cook  Inlet, but  that is  workable for                                                               
above-ground storage as is anticipated in Interior Alaska.                                                                      
                                                                                                                                
1:24:20 PM                                                                                                                    
                                                                                                                                
MR. THERRIAULT  stated that GVEA  is partnering with  Flint Hills                                                               
Resources for the  project that it is currently working  on.  The                                                               
preliminary design anticipates a  one million gallon tank located                                                               
on the  North Slope and  a two million  gallon tank in  the North                                                               
Pole area.  A two million  gallon tank would supply about 10 days                                                               
of need for both the Flint  Hills refinery and GVEA's 60 megawatt                                                               
generation plant in North Pole.   While it does not supply a huge                                                               
amount,  it  takes  into  account  any  possible  disruptions  in                                                               
trucking operations.  In working  with the design consultants, it                                                               
may  be possible  to decrease  the size  of the  North Pole  tank                                                               
because both the Flint Hills  and GVEA industrial operations will                                                               
have  the capability  of switching  back to  a liquid,  oil-fired                                                               
generation;  it must  be determined  how quickly  and efficiently                                                               
that could be  done should there be a disruption  in the trucking                                                               
operation.                                                                                                                      
                                                                                                                                
1:25:31 PM                                                                                                                    
                                                                                                                                
MR. THERRIAULT said GVEA believes  that the most immediate way of                                                               
giving some energy  assistance to the largest  number of Interior                                                               
residents  is to  reduce the  cost of  the fuel  that fires  that                                                               
particular generator.   The association serves  residents all the                                                               
way down the  Richardson Highway to Delta  Junction and residents                                                               
all the  way down the  Parks Highways  to Cantwell, and  GVEA has                                                               
notified  other potential  users  in this  service  area that  it                                                               
would like to  sign them up as customers once  the liquid product                                                               
is flowing.   Product would  be delivered to  them at cost  or as                                                               
near to cost as  possible so that it could be put  to use as seen                                                               
fit to  help with energy  costs.  For  example, the LNG  could be                                                               
used for a  power generator that is connected on  the road system                                                               
but  not  part of  the  GVEA  system, or  it  could  be used  for                                                               
industrial  use  or  industrial  space  heat.    If  the  overall                                                               
capacity is  increased, everybody's per  unit cost will  go down,                                                               
but getting  the storage  in place  will be  an integral  part of                                                               
that.                                                                                                                           
                                                                                                                                
1:27:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON asked whether  the North Slope tank will                                                               
be located on state land.                                                                                                       
                                                                                                                                
MR. THERRIAULT  replied that  GVEA has not  yet decided  where to                                                               
site the  tank, but said  it would  likely be state  land because                                                               
most of  the land in that  area that would provide  access to the                                                               
gas  is state  land.   In  further response,  he  said GVEA  owns                                                               
outright the property  in North Pole that is located  next to the                                                               
Flint Hills refinery  and GVEA's generator.  The  North Pole tank                                                               
could also  be sited on  some of the  land owned by  Flint Hills,                                                               
but the choice  has yet to be  made as to which piece  of land is                                                               
the most optimum location.  He  said GVEA is keeping in mind that                                                               
both  its generation  plant and  the refinery  have a  waste heat                                                               
stream that  can be  used for re-gasification  and GVEA  wants to                                                               
use that as efficiently as possible.                                                                                            
                                                                                                                                
REPRESENTATIVE P. WILSON inquired  whether the Cook Inlet project                                                               
is located on state land.                                                                                                       
                                                                                                                                
MR.  THERRIAULT  offered  his  belief   that  the  project  is  a                                                               
combination of  oil and  gas leases  that are  on state  land and                                                               
possibly some private land.                                                                                                     
                                                                                                                                
1:28:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON observed that the  proposed fiscal note                                                               
is zero,  but asked  how much  lease revenue  the state  would be                                                               
foregoing if an exemption in lease payments was granted.                                                                        
                                                                                                                                
MR. THERRIAULT answered that the leases  are let on a fair market                                                               
value  and it  is a  fairly modest  amount, but  deferred to  the                                                               
Department  of  Natural Resources  (DNR)  to  provide an  average                                                               
rental amount  for the North  Slope.   He noted that  GVEA leases                                                               
land  for its  Eva Creek  wind turbines  and pays  about $33,000-                                                               
$40,000 per  year for about  40 acres.   In further  response, he                                                               
said the Eva Creek turbines are  in the Healy area, not the North                                                               
Slope.                                                                                                                          
                                                                                                                                
1:30:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON asked what the  differences are between                                                               
the Cook Inlet  statute and the provisions being  asked for under                                                               
HB 289 [Version I].                                                                                                             
                                                                                                                                
MR. THERRIAULT replied  that, primarily, the total  volume of gas                                                               
is different.   To contain the threshold of gas  that is workable                                                               
for geologic  storage in Cook Inlet,  GVEA would have to  build a                                                               
tank that  holds in excess of  six million gallons of  LNG.  That                                                               
would be  far bigger  than what makes  sense for  GVEA's economic                                                               
activity, so  any benefit to  the consumer would be  lost through                                                               
very inefficient operation.  Also,  the credit for the Cook Inlet                                                               
area is calculated on 25 percent  of the construction cost or $15                                                               
million, whichever  is less.   [Version I]  would provide  for 50                                                               
percent of  the construction  cost or  $15 million,  whichever is                                                               
less.  This takes into  consideration that reservoirs in the Cook                                                               
Inlet can  be used as the  tankage, but in the  Interior a vessel                                                               
must be built and therefore the construction costs are higher.                                                                  
                                                                                                                                
1:32:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE observed  that Version I, page 3,  line 28, states                                                               
that the liquefied  natural gas storage volume must  be "not less                                                               
than 1,000,000 gallons".   He surmised that LNG  trucked from the                                                               
North Slope to  the Interior could be delivered  far cheaper than                                                               
diesel   and  therefore   communities  on   their  own   separate                                                               
electrical grids, such as Tok,  Northway, Valdez, and Glennallen,                                                               
would benefit  from this cheaper energy  in the form of  LNG.  He                                                               
asked why [a  minimum tank size of] 1 million  gallons was chosen                                                               
as the limitation under HB 289.                                                                                                 
                                                                                                                                
MR. THERRIAULT responded that debate  [during House Bill 280] was                                                               
that the storage be of a certain  size to qualify so as to incent                                                               
big enough  storage.   He explained that  for possible  uses down                                                               
the highway  system, a  part of the  actual North  Slope resource                                                               
production requires some  tankage.  If GVEA signed  up a customer                                                               
that was  down the highway  so that  the trucks never  stopped at                                                               
GVEA's North  Pole plant,  those users would  get the  benefit of                                                               
the million gallon  storage tank constructed on  the North Slope.                                                               
He said  he is unsure,  however, whether those  communities would                                                               
think  that  a  million  gallon   tank  would  be  warranted  for                                                               
receiving  and utilizing  the resource  in  their own  situation.                                                               
Therefore, GVEA  would be open  to the  committee's consideration                                                               
of  less storage.   He  said GVEA  designed something  that would                                                               
work for it, keeping in mind  that when the debate took place two                                                               
or three  years ago a  certain threshold was required  before the                                                               
state credit was available.                                                                                                     
                                                                                                                                
1:34:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  inquired how  many thousand  cubic feet  (MCF) of                                                               
gas are in one million gallons of LNG.                                                                                          
                                                                                                                                
MR.  THERRIAULT answered  that it  takes 12.1  gallons of  LNG to                                                               
make 1 MCF of gas.                                                                                                              
                                                                                                                                
REPRESENTATIVE  HERRON  asked what  the  life  expectancy of  the                                                               
infrastructure would be under the business model being used.                                                                    
                                                                                                                                
MR. THERRIAULT replied  that GVEA is going after a  life of 20-30                                                               
years for  the infrastructure and  is hoping that  an alternative                                                               
access to natural gas will come  along before then.  The trucking                                                               
component, which  would not  qualify for this,  would have  to be                                                               
swapped out because the life of  the trucks would be shorter than                                                               
that.                                                                                                                           
                                                                                                                                
REPRESENTATIVE HERRON  inquired how  many trucks would  be needed                                                               
for the 10-day supply at the Flint Hills location.                                                                              
                                                                                                                                
MR. THERRIAULT responded that for  serving Flint Hills' needs and                                                               
GVEA's needs in  North Pole, the expectation is 40  trucks on the                                                               
road  every  day:   20  going  north and  20  coming  south in  a                                                               
continuous cycle.                                                                                                               
                                                                                                                                
1:37:02 PM                                                                                                                    
                                                                                                                                
DAN BRITTON,  President/CEO, Fairbanks  Natural Gas  (FNG), noted                                                               
that FNG  has been  serving the  Fairbanks market  with liquefied                                                               
natural   gas  (LNG)   since  1998   and  currently   operates  a                                                               
liquefaction  facility   in  the  Cook  Inlet   and  two  storage                                                               
facilities  in  Fairbanks,  with  a  total  capacity  of  350,000                                                               
gallons of storage.   He said FNG supports HB  289 and would look                                                               
to install additional storage at  one of its existing facilities,                                                               
which could be  used as quickly as the tank  is built.  Fairbanks                                                               
Natural  Gas  has  excess liquefaction  capacity  in  the  summer                                                               
months that could  be used to fill the larger  storage volume and                                                               
this volume could  be used for peaking in the  winter when higher                                                               
gas volumes  are being sold.   This would  allow FNG to  begin to                                                               
expand its  distribution system as  quickly as the tank  could be                                                               
in service.                                                                                                                     
                                                                                                                                
MR. BRITTON  added that the  tankage would provide for  backup in                                                               
the event  a pipeline is  built.  A  pipeline would be  a single-                                                               
source energy supply,  so if a large earthquake  stopped the flow                                                               
of supply that  tankage could provide a backup source.   Based on                                                               
FNG's current  sales in Fairbanks,  a million gallons  of storage                                                               
would provide 15 days of LNG.   Regarding the limitation that the                                                               
storage be  at least 1 million  gallons, he said FNG  would favor                                                               
making that  a smaller  number for any  of the  other communities                                                               
that might benefit.                                                                                                             
                                                                                                                                
1:39:05 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  requested  Mr.  Britton  to  get  back  to  the                                                               
committee in regard  to the size of tankage that  would be needed                                                               
for smaller communities.                                                                                                        
                                                                                                                                
CO-CHAIR SEATON held  over HB 289 and noted that  the public will                                                               
be able to add further comment when the bill is next brought up.                                                                
                                                                                                                                
            HB   9-IN-STATE GASLINE DEVELOPMENT CORP                                                                        
                                                                                                                                
1:39:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON announced  that the next order  of business would                                                               
be  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."    [Before  the   committee  was  the  proposed                                                               
committee  substitute  (CS),   Version  U,  labeled  27-LS0075\U,                                                               
Bullock, 1/19/12, adopted as the working document on 2/6/12.]                                                                   
                                                                                                                                
1:41:26 PM                                                                                                                    
                                                                                                                                
TOM  WRIGHT, Staff,  Representative Mike  Chenault, Alaska  State                                                               
Legislature,   on  behalf   of  Representative   Chenault,  prime                                                               
sponsor, allowed  that HB  9 is  a complex  and lengthy  bill and                                                               
said he  will review  its provisions.   The  first of  the bill's                                                               
three major  components is  that it would  define the  duties and                                                               
abilities of  the Alaska Gasline Development  Corporation (AGDC),                                                               
which  was  created   under  House  Bill  369   as  a  subsidiary                                                               
corporation  of the  Alaska Housing  Finance Corporation  (AHFC).                                                               
For   maximum  efficiency   of  state   resources,  HB   9  would                                                               
consolidate  under AHFC  the state's  various efforts  to develop                                                               
natural  gas  infrastructure by  making  the  Alaska Natural  Gas                                                               
Development   Authority  (ANGDA)   a  subsidiary   of  AHFC   and                                                               
restructuring ANGDA's  role to  that of  a gas  marketing entity.                                                               
The bill would  also pave the way for an  AGDC gasline to operate                                                               
as a contract carrier rather  than a common carrier, both through                                                               
right-of-way leases and through regulatory oversight.                                                                           
                                                                                                                                
1:42:19 PM                                                                                                                    
                                                                                                                                
MR. WRIGHT first  reviewed the sections of HB 9  related to AGDC.                                                               
He  explained  that Section  1  would  define AGDC's  duties  and                                                               
responsibilities and would allow AGDC  to determine ownership and                                                               
operating structures for  a pipeline and to manage  its assets as                                                               
necessary.   Section  1 would  also allow  AGDC to  issue revenue                                                               
bonds to carry out its mission  and would create a fund for AGDC;                                                               
this  fund  was approved  by  the  House  last  year in  HB  203.                                                               
Section 3  would transition  to AGDC  the Joint  In-State Gasline                                                               
Development Team ability to have  access to pertinent information                                                               
from other  state agencies.   Section 4  would give  direction to                                                               
state agencies  to cooperate  with AGDC in  the same  manner that                                                               
they  did  with  the  Joint In-State  Gasline  Development  Team.                                                               
Section  6  would  transition  to  AGDC  another  Joint  In-State                                                               
Gasline Team  ability to enter into  confidential agreements; the                                                               
basis of the  confidentiality sections was approved  by the House                                                               
last year  in HB  189.  Section  14 would build  on Section  6 to                                                               
specifically  exempt  confidential  information from  the  Alaska                                                               
Public Records  Act; this basis  of confidentiality  sections was                                                               
approved  by the  House last  year in  HB 189.   Section  7 would                                                               
relate to definitions.   Section 29 would exempt  an AGDC project                                                               
from state and local property taxes during construction only.                                                                   
                                                                                                                                
1:44:07 PM                                                                                                                    
                                                                                                                                
MR. WRIGHT next  reviewed the sections of HB 9  related to right-                                                               
of-way leases and regulatory oversight.   He said Section 5 would                                                               
transition to AGDC  a House Bill 369 provision  that directed the                                                               
Department of Natural Resources (DNR) to grant AHFC a right-of-                                                                 
way lease.   Section 5 would  further exempt that lease  from the                                                               
common carrier  covenants; the  basis for  which was  approved by                                                               
the House last  session in HB 215.   Sections 8, 9,  and 10 would                                                               
make conforming changes to other sections of the Alaska Right-                                                                  
of-Way Leasing  Act to reflect  those changes made in  Section 5.                                                               
Section 11  would call on  state agencies  to grant leases  at no                                                               
cost.   Sections 12 and 13  would limit judicial review  on state                                                               
leasing and  permit decisions; the  basis for which can  be found                                                               
in  HB 215  passed by  the House  last session.   Sections  25-28                                                               
would exempt  an AGDC line  from Regulatory Commission  of Alaska                                                               
(RCA)  oversight as  a public  utility  and as  a common  carrier                                                               
under the Pipeline Act.                                                                                                         
                                                                                                                                
MR. WRIGHT then reviewed the  bill's provisions related to ANGDA.                                                               
He noted  that Section  2 would exempt  ANGDA contracts  from the                                                               
state  procurement  code.   Sections  15  and 16  would  redefine                                                               
ANGDA's  role  as   a  gas  marketer  and   would  remove  overly                                                               
prescriptive  language regarding  where  gas will  come from  and                                                               
where it will go to.  Section  17 would allow ANGDA to market the                                                               
state's royalty gas with the commissioner of DNR.  Sections 18-                                                                 
24 would provide  for the transition of ANGDA  to AHFC governance                                                               
and would allow  the flow of confidential  information from ANGDA                                                               
to AGDC.  Sections 30 and  31 would make repeals that are related                                                               
to ANGDA's new role and that are no longer necessary.                                                                           
                                                                                                                                
1:46:05 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON drew  attention to  Version U,  page 3,  line 26                                                               
onward, that would  establish the natural gas pipeline  fund.  He                                                               
understood that AGDC  would be structured such that  it would not                                                               
make and  retain money; rather,  money would flow through  to the                                                               
state  and the  state  would  appropriate money  to  the fund  to                                                               
operate AGDC.                                                                                                                   
                                                                                                                                
MR. WRIGHT replied correct.                                                                                                     
                                                                                                                                
CO-CHAIR SEATON stated that this is a very important point.                                                                     
                                                                                                                                
MR. WRIGHT pointed out that it is subject to appropriation.                                                                     
                                                                                                                                
1:46:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  directed attention to  page 5, lines  24-26, and                                                               
asked about the reasoning for  making the development, financing,                                                               
construction,  and  operation   documents  confidential  and  not                                                               
subject to disclosure.  He  presumed these documents would not be                                                               
available to the legislature.                                                                                                   
                                                                                                                                
RENA DELBRIDGE,  Staff, Representative Mike Hawker,  Alaska State                                                               
Legislature,  on   behalf  of  Representative   Hawker,  sponsor,                                                               
responded that the intent was  not to keep them confidential from                                                               
the  legislature specifically,  but from  the public  in general.                                                               
The technical data developed by AGDC  as it advances a project is                                                               
something that  is essentially proprietary,  she said.   Allowing                                                               
access  by  interested  parties   to  confidential  or  technical                                                               
information  that has  been provided  to AGDC  could put  an AGDC                                                               
gasline at  disadvantage if, for  example, there  is competition.                                                               
The   ability  to   keep  field   studies   and  technical   data                                                               
confidential   relates  more   to  AGDC's   need  to   have  that                                                               
proprietary information as AGDC develops its plan.                                                                              
                                                                                                                                
1:48:27 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  said he understands the  aforementioned, but his                                                               
question runs  to what  the purpose  is for  keeping confidential                                                               
the operation of  an in-state gasline.  He  further asked whether                                                               
it is  necessary to keep  confidential the contract  between AGDC                                                               
and shippers or  suppliers because that would have  nothing to do                                                               
with a competitive  advantage.  In response to  Ms. Delbridge, he                                                               
confirmed that he  is referring to subsection (f)  [of Section 6]                                                               
and said  he is  not referring  specifically to  the development,                                                               
financing, or  construction, but rather  to the operation  of the                                                               
in-state gas pipeline.                                                                                                          
                                                                                                                                
MS. DELBRIDGE deferred to Mr. Joe Dubler of AGDC.                                                                               
                                                                                                                                
JOE   DUBLER,   Vice   President,  Alaska   Gasline   Development                                                               
Corporation (AGDC),  Director of Finance, Alaska  Housing Finance                                                               
Corporation (AHFC), Department of  Revenue (DOR), deferred to Mr.                                                               
Daryl Kleppin of AGDC to provide an answer to the question.                                                                     
                                                                                                                                
1:50:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON moved to another  question while online technical                                                               
difficulties were resolved  to allow Mr. Kleppin to  respond.  He                                                               
read  aloud  Section  17,  page 14,  lines  26-29,  and  inquired                                                               
whether this provision is the  current situation with royalty gas                                                               
and  royalty  oil.   He  further  asked  whether  it is  the  DNR                                                               
commissioner who [currently] determines  the price of royalty gas                                                               
or oil.                                                                                                                         
                                                                                                                                
MR. WRIGHT understood that this is the case.                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
CO-CHAIR  SEATON noted  that public  testimony will  be re-opened                                                               
after the committee  deals with the proposed amendments  to HB 9.                                                               
He then asked Mr. Kleppin to address the previous questions.                                                                    
                                                                                                                                
1:53:06 PM                                                                                                                    
                                                                                                                                
DARYL  KLEPPIN, Commercial  Manager,  Alaska Gasline  Development                                                               
Corporation  (AGDC), Alaska  Housing Finance  Corporation (AHFC),                                                               
Department of  Revenue (DOR), first addressed  the question about                                                               
Section 6,  subsection (f).   He  explained that  this subsection                                                               
specifically  relates  to  field   studies  and  other  technical                                                               
information.   A big issue with  the acquisition of data  is that                                                               
the data  has a value  and could potentially  be sold at  a later                                                               
date, but  that opportunity would  be precluded if that  data was                                                               
made public.                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON asked whether page  5, lines 24-26, "operation of                                                               
an in-state natural  gas pipeline" by AGDC relates  only to field                                                               
studies  and other  technical  information,  not the  operational                                                               
agreements for the operation of the line.                                                                                       
                                                                                                                                
MR.  KLEPPIN  answered  correct,  that  that  particular  section                                                               
relates  specifically to  the field  studies and  other technical                                                               
information.                                                                                                                    
                                                                                                                                
MR.  WRIGHT  added that  DNR  will  also  get  an answer  to  the                                                               
committee in this regard.                                                                                                       
                                                                                                                                
CO-CHAIR  SEATON  proceeded  to   amendments,  noting  that  five                                                               
amendments  to HB  9 were  previously adopted.   He  informed the                                                               
committee  that  additional  written   public  comment  has  been                                                               
received for members to review.                                                                                                 
                                                                                                                                
1:56:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  moved to  adopt the  amendment labeled                                                               
27-LS0075\U.28,   Bullock,   2/23/12,    which   read   [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Page 2, line 9:                                                                                                            
          Delete "In addition"                                                                                                  
          Insert    "The    Alaska    Gasline    Development                                                                    
     Corporation  shall,  to  the fullest  extent  possible,                                                                    
     advance an  in-state natural gas pipeline  as described                                                                    
     in  the  July 1,  2011,  project  plan  prepared  under                                                                    
     AS 38.34.040   by   the  Alaska   Gasline   Development                                                                    
     Corporation and the  Joint In-State Gasline Development                                                                    
     Team,  with  modifications  determined  by  the  Alaska                                                                    
     Gasline  Development  Corporation  to be  necessary  to                                                                    
     construct and operate an  in-state natural gas pipeline                                                                    
     in  a safe  and  economic manner.  In  addition to  the                                                                    
     powers granted to it by the corporation"                                                                                   
                                                                                                                                
     Page 2, following line 26:                                                                                                 
          Insert a new subsection to read:                                                                                      
          "(b)  Upon commencement of construction of an in-                                                                     
     state   natural  gas   pipeline,  the   Alaska  Gasline                                                                    
     Development   Corporation   shall   analyze   potential                                                                    
     natural   gas  pipelines   connecting  to   industrial,                                                                    
     residential, or  utility customers in other  regions of                                                                    
     the   state.   If   the  Alaska   Gasline   Development                                                                    
     Corporation finds that a  natural gas pipeline analyzed                                                                    
     under this  subsection is in  the best interest  of the                                                                    
     state   and  can   meet   the   needs  of   industrial,                                                                    
     residential,  or  utility   customers  at  commercially                                                                    
     reasonable  rates,   the  Alaska   Gasline  Development                                                                    
     Corporation  shall finance,  construct, or  operate the                                                                    
     natural   gas  pipeline   as   necessary,  subject   to                                                                    
     appropriation.  When   developing  or   constructing  a                                                                    
     connecting   line,  the   Alaska  Gasline   Development                                                                    
     Corporation shall, to the  maximum extent feasible, use                                                                    
     existing land,  structures, real or  personal property,                                                                    
     rights-of-way,  easements, or  other interests  in land                                                                    
     acquired by the  Alaska Gasline Development Corporation                                                                    
     or the Alaska Natural Gas Development Authority."                                                                          
                                                                                                                                
     Reletter the following subsections accordingly.                                                                            
                                                                                                                                
CO-CHAIR  SEATON  labeled  the  aforementioned  Amendment  6  and                                                               
objected for purposes of discussion.                                                                                            
                                                                                                                                
1:57:05 PM                                                                                                                    
                                                                                                                                
MR. WRIGHT noted that Amendment 6  is a two-part amendment and he                                                               
will address  the first portion  and Co-Chair Feige  will address                                                               
the  second.    He  explained  that  during  discussions  it  was                                                               
discovered that  there is no  direct link between what  the Joint                                                               
In-State Gasline Development Team was  supposed to be doing under                                                               
House Bill  369 to AGDC,  the project  plan that was  released on                                                               
July 1,  2011, and the core  mission of AGDC.   Amendment 6 would                                                               
provide that link  to carry on the mission that  was presented in                                                               
the project plan.   Amendment 6 would also give  AGDC the ability                                                               
to modify  the plan when necessary  as the various phases  of the                                                               
project are  gone through,  which is important  so that  AGDC can                                                               
maintain  needed  flexibility as  it  continues  its work.    The                                                               
project will  be refined in  increasing degrees as AGDC  tries to                                                               
get down  to that threshold of  plus or minus 10  percent; so the                                                               
project may not be identical to  what is in the July 2011 project                                                               
plan.  Additionally,  an open season will draw  shippers that may                                                               
place bids on capacity on  a similar, but not identical, pipeline                                                               
plan  and AGDC  needs  to be  able  to respond  to  any of  these                                                               
changes.                                                                                                                        
                                                                                                                                
1:58:47 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON pointed out that  Co-Chair Feige is the author of                                                               
Amendment 6.                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  explained  the  intent of  paragraph  2  in  the                                                               
amendment.    He said  the  historical  basis for  the  currently                                                               
envisioned in-state  gasline goes  back to  House Bill  369 where                                                               
AGDC  was tasked  with the  mission of  coming up  with the  most                                                               
economic  pipeline,  not  necessarily   the  one  with  the  most                                                               
economic  benefits to  the  citizens of  Alaska.   Inserting  the                                                               
second  paragraph  would  ensure   that  regardless  of  where  a                                                               
pipeline is  built -  whether it goes  directly to  the Anchorage                                                               
Bowl, or Valdez, or  Bethel - the AGDC is tasked,  as soon as the                                                               
pipeline  is under  construction,  with investigating  additional                                                               
lines that  will distribute  gas to  as much of  the state  as is                                                               
economically feasible.                                                                                                          
                                                                                                                                
2:00:59 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE advised  he would like to make  some small changes                                                               
to the  amendment.  He moved  to adopt Conceptual Amendment  1 to                                                               
Amendment 6 as follows:                                                                                                         
                                                                                                                                
     Page 1, line 14:                                                                                                           
          Delete "potential"                                                                                                    
          Insert "additional"                                                                                                   
                                                                                                                                
CO-CHAIR  SEATON [objected  for purposes  of discussion].   There                                                               
being no  discussion, he removed  his objection.  There  being no                                                               
further  objection, Conceptual  Amendment  1 to  Amendment 6  was                                                               
adopted.                                                                                                                        
                                                                                                                                
2:02:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  moved  to  adopt  [Conceptual]  Amendment  2  to                                                               
Amendment 6 as follows:                                                                                                         
                                                                                                                                
     Page 1, line 21:                                                                                                           
          Delete "a connecting line"                                                                                            
          Insert "an additional natural gas pipeline"                                                                           
                                                                                                                                
CO-CHAIR  SEATON  objected for  purposes  of  discussion.   There                                                               
being no  discussion, he removed  his objection.  There  being no                                                               
further objection,  [Conceptual] Amendment  2 to Amendment  6 was                                                               
adopted.                                                                                                                        
                                                                                                                                
CO-CHAIR  SEATON removed  his objection  to Amendment  6.   There                                                               
being  no  further  objection,   Amendment  6,  as  amended,  was                                                               
adopted.                                                                                                                        
                                                                                                                                
2:04:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON moved to  adopt Amendment 7, labeled 27-                                                               
LS0075\U.12, Bullock,  2/13/12, which read  [original punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 3, following line 25:                                                                                                 
     Insert a new subsection to read:                                                                                           
          "(d)  In the exercise of its powers under (b) and                                                                     
     (c)  of this  section, the  Alaska Gasline  Development                                                                    
     Corporation may not pledge the  faith and credit of the                                                                    
     state  or a  political subdivision  of the  state other                                                                    
     than the Alaska Gasline  Development Corporation to the                                                                    
     repayment of the principal of  or interest on any bonds                                                                    
     issued by the Alaska Gasline Development Corporation."                                                                     
                                                                                                                                
     Reletter the following subsections accordingly.                                                                            
                                                                                                                                
CO-CHAIR SEATON objected for purposes of discussion.                                                                            
                                                                                                                                
MR. WRIGHT  explained that Amendment  7 would put up  side boards                                                               
to clarify that  AGDC does have the responsibility  and credit to                                                               
issue bonds and that AGDC may  not pledge the faith and credit of                                                               
the state  in doing so.   He said this  was a concern  brought to                                                               
the sponsor  by the Department  of Law and the  sponsor concurred                                                               
that it was a good amendment to place into the bill.                                                                            
                                                                                                                                
2:05:05 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  inquired  whether  this would  affect  the  bond                                                               
rating that a project could receive.                                                                                            
                                                                                                                                
MR. WRIGHT deferred to a representative from AGDC.                                                                              
                                                                                                                                
MR. DUBLER replied that Amendment  7 should not impact the rating                                                               
on the  bonds that  AGDC intends  to issue.   There was  never an                                                               
intention to issue  general obligation bonds of the  state.  This                                                               
was  something raised  by the  Department of  Law just  to ensure                                                               
that  AGDC could  not  sell general  obligation  bonds.   Current                                                               
statute  does not  allow AGDC  to sell  general obligation  bonds                                                               
without a  vote of  the people.   Therefore, it  is a  "belts and                                                               
suspenders" kind  of thing that  lawyers like to see  in language                                                               
like this.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  HERRON  commented  that  Amendment  7  would  not                                                               
actually restrict  AGDC because the  state may have  some burdens                                                               
on it; so, it essentially frees AGDC from the state.                                                                            
                                                                                                                                
MR. DUBLER  concurred to the  extent that  the state had  a lower                                                               
rating.   He pointed out  that there  are no ratings  higher than                                                               
the  state's current  AAA rating,  so  AGDC could  not be  higher                                                               
rated than that.  To the  extent the state were downgraded in the                                                               
future before  AGDC came to  this issuance, and this  issuance is                                                               
based on the shippers of the  line, it could be rated higher than                                                               
the state.                                                                                                                      
                                                                                                                                
CO-CHAIR SEATON removed his objection.  There being no further                                                                  
objection, Amendment 7 was adopted.                                                                                             
                                                                                                                                
2:07:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON moved to adopt Amendment 8, labeled 27-                                                                
LS0075\U.21, Bullock, 2/15/12, which read [original punctuation                                                                 
provided]:                                                                                                                      
                                                                                                                                
     Page 2, lines 15 - 16:                                                                                                     
          Delete "to acquire land under AS 09.55.240 -                                                                          
     09.55.460"                                                                                                                 
          Insert "or file a declaration of taking under                                                                         
     AS 09.55.240  -   09.55.460  to  acquire  land   or  an                                                                    
     interest  in land  that is  necessary  for an  in-state                                                                    
     natural  gas pipeline;  the exercise  of powers  by the                                                                    
     Alaska  Gasline  Development   Corporation  under  this                                                                    
     paragraph may  not exceed  the permissible  exercise of                                                                    
     the powers by the state"                                                                                                   
                                                                                                                                
     Page 4, line 8:                                                                                                            
          Delete "has the meaning"                                                                                              
          Insert "and "natural gas pipeline" have the                                                                           
     meanings"                                                                                                                  
                                                                                                                                
     Page 6, line 17, following "a":                                                                                            
          Insert "natural gas"                                                                                                  
                                                                                                                                
     Page 6, line 18, following "state":                                                                                        
          Insert ";                                                                                                             
               (3)  "natural gas pipeline" means all the                                                                        
     facilities   of   a   total    system   of   pipe   for                                                                    
     transportation   of  natural   gas  for   treatment  or                                                                    
     conditioning,    delivery,    storage,    or    further                                                                    
     transportation,  and  including   all  pipe,  pump  and                                                                    
     compressor stations,  station equipment, and  all other                                                                    
     facilities used  or necessary for  an integral  line of                                                                    
     pipe to carry out the transportation of the gas"                                                                           
                                                                                                                                
     Page 11, line 25:                                                                                                          
          Delete "AS 42.06.630"                                                                                                 
          Insert "AS 38.34.099"                                                                                                 
                                                                                                                                
CO-CHAIR SEATON objected for purposes of discussion.                                                                            
                                                                                                                                
2:07:21 PM                                                                                                                    
                                                                                                                                
MS. DELBRIDGE  explained that Amendment  8 is housekeeping.   The                                                               
Department of  Law recommended that  parameters be set  on AGDC's                                                               
ability to exercise eminent domain.   The intent of the amendment                                                               
is  to keep  that  ability to  exercise  eminent domain  directly                                                               
related  to AGDC's  other empowerments  to work  on in-state  gas                                                               
pipeline projects.   It is  similar to language that  other state                                                               
entities enjoy with  their ability to use eminent  domain that is                                                               
in strict relation to their duties.                                                                                             
                                                                                                                                
2:08:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  surmised that  this  means  AGDC would  not  be                                                               
taking eminent domain on buildings in Anchorage.                                                                                
                                                                                                                                
MS. DELBRIDGE  responded that  AGDC certainly  should not  be and                                                               
read the  provision on page  1, lines 3-6,  of Amendment 8.   She                                                               
said another part of Amendment  8 relates to the definitions that                                                               
are used throughout  HB 9; a definition of  "in-state natural gas                                                               
pipeline" is  already in the bill.   Section 13 of  the bill uses                                                               
the term  "natural gas  pipeline" which needed  to be  defined in                                                               
that section.   Where it is  defined in Section 13,  a statute is                                                               
referenced that comes under AS  42.06, the regulatory statute for                                                               
the Pipeline Act, which later in  the bill this kind of a project                                                               
is  exempted from.   The  Department of  Law recommended  that it                                                               
would  be  much  cleaner  to   redefine  "natural  gas  pipeline"                                                               
specifically within  this legislation.   She read  the definition                                                               
included  in  Amendment  8,  page  1,  lines  17-21.    She  said                                                               
Amendment 8 also  has three citations for  conforming the putting                                                               
of  this definition  in  statute instead  of  referencing the  AS                                                               
42.06 natural gas pipeline definition.                                                                                          
                                                                                                                                
CO-CHAIR SEATON  removed his objection.   There being  no further                                                               
objection, Amendment 8 was adopted.                                                                                             
                                                                                                                                
2:11:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON moved to  adopt Amendment 9, labeled 27-                                                               
LS0075\U.20, Bullock,  2/15/12, which read  [original punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 4, following line 7:                                                                                                  
     Insert a new subsection to read:                                                                                           
          "(e)       If   commitments   to    acquire   firm                                                                    
     transportation capacity are received  in an open season                                                                    
     conducted   by    the   Alaska    Gasline   Development                                                                    
     Corporation,    the    Alaska    Gasline    Development                                                                    
     Corporation shall,  within 10 days after  executing the                                                                    
     commitments, report  the results of the  open season to                                                                    
     the  president of  the senate  and the  speaker of  the                                                                    
     house of  representatives and inform the  public of the                                                                    
     results of  the open season through  publication on the                                                                    
     Internet  website  of  the Alaska  Gasline  Development                                                                    
     Corporation   and  in   a   press   release  or   other                                                                    
     announcement  to the  media.  The  results made  public                                                                    
     must include the name of  each prospective shipper, the                                                                    
     amount  of capacity  allocated, and  the period  of the                                                                    
     commitment."                                                                                                               
                                                                                                                                
     Reletter the following subsection accordingly.                                                                             
                                                                                                                                
CO-CHAIR SEATON objected for purposes of discussion.                                                                            
                                                                                                                                
2:11:23 PM                                                                                                                    
                                                                                                                                
MR. WRIGHT stated Amendment 9 is  being offered by the sponsor in                                                               
response to  committee concerns.   It  would place  conditions on                                                               
what  is  to  be  released  10  days  after  firm  transportation                                                               
commitments or  precedent agreements are signed  between shippers                                                               
and  AGDC.    This  is derived  from  Federal  Energy  Regulatory                                                               
Commission  (FERC)  rules  governing  inter-state  pipeline  open                                                               
seasons.  The  information that is to be released  is the name of                                                               
each prospective  shipper, the amount of  capacity allocated, and                                                               
the period of commitment.                                                                                                       
                                                                                                                                
CO-CHAIR SEATON  removed his objection.   There being  no further                                                               
objection, Amendment 9 was adopted.                                                                                             
                                                                                                                                
2:12:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  moved to  adopt Amendment  10, labeled                                                               
27-LS0075\U.16,   Bullock,   2/14/12,    which   read   [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Page 5, line 16:                                                                                                           
          Delete     "information     protected     by     a                                                                    
     confidentiality agreement to that public agency"                                                                           
          Insert "confidential information"                                                                                     
                                                                                                                                
CO-CHAIR SEATON objected for purposes of discussion.                                                                            
                                                                                                                                
2:12:57 PM                                                                                                                    
                                                                                                                                
MR.  WRIGHT explained  that Amendment  10 is  clarifying language                                                               
from the Department  of Law.  The provision  within the amendment                                                               
would apply to  all confidential information; AGDC  would then be                                                               
able  to enter  into confidential  agreements, particularly  with                                                               
public agencies.                                                                                                                
                                                                                                                                
MS. DELBRIDGE read  the current language in Version U  on page 5,                                                               
lines   14-16,   which  states   that   AGDC   "may  enter   into                                                               
confidentiality agreements  with a  public agency, as  defined in                                                               
AS  40.25.220, to  allow release  of information  protected by  a                                                               
confidentiality agreement  to that public agency."   Amendment 10                                                               
would allow  the release of  confidential information  within the                                                               
confidentiality  agreements  that AGDC  can  have  with a  public                                                               
agency, rather than  the current language which  would allow only                                                               
information  protected by  a  confidentiality  agreement to  that                                                               
public agency.                                                                                                                  
                                                                                                                                
2:15:01 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  understood the effect  of Amendment 10  would be                                                               
that AGDC  could enter into  a confidentiality agreement,  but as                                                               
part of  that confidentiality agreement there  could be agreement                                                               
to release that information.                                                                                                    
                                                                                                                                
MS.   DELBRIDGE   responded   that    AGDC   could   enter   into                                                               
confidentiality  agreements  with  a public  agency  and,  within                                                               
that, [AGDC]  could release  confidential information  within the                                                               
agreement to [the agency].                                                                                                      
                                                                                                                                
CO-CHAIR SEATON asked whether this  would mean, for example, that                                                               
AGDC could release confidential information  from a shipper to an                                                               
agency or that it could be publically released.                                                                                 
                                                                                                                                
MS.  DELBRIDGE replied  it would  not be  publicly released.   If                                                               
AGDC had  a confidential  agreement outside of  this part  with a                                                               
shipper,  that agreement  would  have to  allow  for the  further                                                               
release of information by AGDC to  a public agency.  For example,                                                               
if AGDC  has technical  data or field  study information  that it                                                               
holds confidential  but would like  to share with an  agency such                                                               
as  DNR,  Amendment   10  would  allow  AGDC  to   enter  into  a                                                               
confidentiality  agreement  with  DNR  so  it  could  share  that                                                               
confidential information with that agency.                                                                                      
                                                                                                                                
2:16:42 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON understood  it would  be agency  to agency.   It                                                               
would  be confidential  information  that AGDC  would share  with                                                               
another agency, but the information  would remain confidential to                                                               
the secondary agency that AGDC has an agreement with.                                                                           
                                                                                                                                
MS. DELBRIDGE  concurred and said  that Amendment 10  would allow                                                               
the  sharing of  information  that is  held confidential  between                                                               
AGDC and a public agency.                                                                                                       
                                                                                                                                
REPRESENTATIVE  HERRON commented  that the  Department of  Law is                                                               
essentially saying  that there  is currently a  barn door  in the                                                               
bill and the amendment sizes it down to a small window.                                                                         
                                                                                                                                
CO-CHAIR SEATON  removed his objection.   There being  no further                                                               
objection, Amendment 10 was adopted.                                                                                            
                                                                                                                                
2:18:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  moved to  adopt Amendment  11, labeled                                                               
27-LS0075\U.19,   Bullock,   2/14/12,    which   read   [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Page 18, line 30, following "41.41.040,":                                                                                  
          Insert "41.41.050,"                                                                                                   
                                                                                                                                
CO-CHAIR SEATON objected for purposes of discussion.                                                                            
                                                                                                                                
MR. WRIGHT explained  that Amendment 11 would add  to the section                                                               
of repealers and  would repeal AS 41.41.050  because that statute                                                               
would no longer be necessary with  the transition of ANGDA to the                                                               
AHFC board  of directors.   This was an oversight,  he continued,                                                               
because the  repeal should  have been  included in  the sponsor's                                                               
first list of repealers.                                                                                                        
                                                                                                                                
CO-CHAIR SEATON  removed his objection.   There being  no further                                                               
objection, Amendment 11 was adopted.                                                                                            
                                                                                                                                
2:19:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  moved to  adopt Amendment  12, labeled                                                               
27-LS0075\U.15,   Bullock,   2/14/12,    which   read   [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Page 5, line 4:                                                                                                            
          Delete    "except    for    the    covenants    in                                                                
     AS 38.35.120(a)(1), (2), (5), and (7),"                                                                                
                                                                                                                                
     Page 5, line 6, following "AS 38.35.120":                                                                                  
          Insert   ",   except    for   the   covenants   in                                                                
     AS 38.35.120(a)(1), (2), (5), and (7)"                                                                                 
                                                                                                                                
CO-CHAIR SEATON objected for purposes of discussion.                                                                            
                                                                                                                                
MS. DELBRIDGE explained that Amendment  12 is clarifying language                                                               
suggested  by the  Department of  Law.   The amendment  would re-                                                               
order the  sentence by moving  the starting clause in  Section 5,                                                               
paragraph (3), to  the end of the paragraph.   Paragraph (3) says                                                               
that the corporation  that submits this application  for a right-                                                               
of-way  lease  agrees  to  be bound  by  the  right-of-way  lease                                                               
covenants  set  out  in the  general  Right-of-Way  Leasing  Act,                                                               
except  for several  of  those covenants.    Those covenants  are                                                               
covenants  requiring common  carriage  and,  in conjunction  with                                                               
that,  covenants  requiring  a  line to  provide  connections  as                                                               
determined by the RCA under  the Pipeline Act and requiring other                                                               
cooperation  with RCA  orders  that as  a  contract carrier  they                                                               
would not be subject to.                                                                                                        
                                                                                                                                
2:20:47 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON,  regarding interconnections  on a  gas pipeline,                                                               
inquired whether  there is language  somewhere in the bill  or in                                                               
the  general requirements  and purpose  of AGDC  that provides  a                                                               
mechanism  for making  take-off points  available to  communities                                                               
along the pipeline, given that the RCA would not be involved.                                                                   
                                                                                                                                
MS. DELBRIDGE replied that that  would be part of the negotiation                                                               
when there  is a shipper that  has arranged for capacity  for gas                                                               
to  that community.    Within this  bill,  the RCA  is  not in  a                                                               
position to  unilaterally mandate  that off-takes be  arranged at                                                               
places where there are no customers.                                                                                            
                                                                                                                                
2:21:53 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON requested Mr. Dubler to address this question.                                                                  
                                                                                                                                
MR.  DUBLER  directed  attention  to  Amendment  6,  labeled  27-                                                               
LS0075\U.28, Bullock,  2/23/12, and said  that HB 9,  as amended,                                                               
would  direct AGDC,  upon  commencement  of a  line,  to look  at                                                               
additional communities for connection  and where connection would                                                               
make sense.  Therefore, AGDC would  not sit back and wait for the                                                               
communities, AGDC would go out  and find communities that want to                                                               
hook up to the pipeline.                                                                                                        
                                                                                                                                
CO-CHAIR  SEATON  said he  wants  to  ensure  that there  is  not                                                               
testimony that a pipeline will be  built right by a community but                                                               
that that community will not be  getting service.  He offered his                                                               
belief that everybody's goal here is  to get gas for Alaskans and                                                               
he wants it on the  record that the aforementioned will transpire                                                               
and is  part of  AGDC's mission in  constructing the  natural gas                                                               
pipeline.                                                                                                                       
                                                                                                                                
CO-CHAIR SEATON  removed his objection.   There being  no further                                                               
objection, Amendment 12 was adopted.                                                                                            
                                                                                                                                
2:23:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  moved to  adopt Amendment  13, labeled                                                               
27-LS0075\U.27,   Bullock,   2/23/12,    which   read   [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Page 6, lines 21 - 22:                                                                                                     
          Delete "for covenants that do not apply to a                                                                      
     lease entered into under AS 38.34.050(c)"                                                                              
          Insert "that, for a lease entered into under                                                                      
     AS 38.34.050(c), the covenants in AS 38.35.120(a)(1),                                                                  
     (2), (5), and (7) may not be included"                                                                                 
                                                                                                                                
                                                                                                                                
CO-CHAIR SEATON objected for purposes of discussion.                                                                            
                                                                                                                                
MS. DELBRIDGE  explained that Amendment 13  would make conforming                                                               
changes to Section  8 related to the changes that  were just made                                                               
in  Section  5.    This  amendment  for  sentence  structure  was                                                               
suggested by  the Department of Law  to add clarity.   The intent                                                               
is that  the commissioner of  DNR shall include in  a conditional                                                               
lease   each  requirement   and   condition   of  the   covenants                                                               
established under  Alaska's Right-of-Way Leasing Act,  except for                                                               
those  that  are entered  into  already  per  Section 5  an  AGDC                                                               
specific one that exempts a few covenants.                                                                                      
                                                                                                                                
CO-CHAIR SEATON  removed his objection.   There being  no further                                                               
objection, Amendment 13 was adopted.                                                                                            
                                                                                                                                
2:25:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  moved to  adopt Amendment  14, labeled                                                               
27-LS0075\U.24,   Bullock,   2/22/12,    which   read   [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Page 19, following line 1:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "*  Sec. 32.  The  uncodified law  of  the State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          TRANSITION AND LEGISLATIVE INTENT. It is the                                                                          
     intent of  the Alaska  Legislature that  a right-of-way                                                                    
     lease subject to AS 38.34.050(c),  as amended by sec. 5                                                                    
     of this Act,  AS 38.35.100(d), as amended by  sec. 8 of                                                                    
     this  Act, AS 38.35.120(a),  as  amended by  sec. 9  of                                                                    
     this Act,  and AS 38.35.120(b),  as amended by  sec. 10                                                                    
     of  this   Act,  that  is  entered   into  between  the                                                                    
     commissioner  of  natural   resources  and  the  Alaska                                                                    
     Gasline Development  Corporation, a  subsidiary created                                                                    
     under  AS 18.56.086,  before  the  effective  dates  of                                                                    
     secs. 5 and  8 - 10 of  this Act be amended  as soon as                                                                    
     practicable after the effective dates  of secs. 5 and 8                                                                    
     -  10 of  this Act  to conform  to the  requirements of                                                                    
     AS 38.34.050(c),  as amended  by  sec. 5  of this  Act,                                                                    
     AS 38.35.100(d),  as amended  by  sec. 8  of this  Act,                                                                    
     AS 38.35.120(a), as amended by sec.  9 of this Act, and                                                                    
     AS 38.35.120(b), as amended by sec. 10 of this Act."                                                                       
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
CO-CHAIR SEATON objected for purposes of discussion.                                                                            
                                                                                                                                
2:25:42 PM                                                                                                                    
                                                                                                                                
MS. DELBRIDGE  explained that Amendment  14 relates  to right-of-                                                               
way  leasing and  that AGDC  has a  right-of-way lease  from DNR.                                                               
That lease  specifically contemplated  the potential  of statutes                                                               
down the  road that  would make AGDC  exempt from  some covenants                                                               
that are in  the lease today.   What needs to be  done related to                                                               
these Section 5  exemptions for right-of-way leases is  add a new                                                               
Section 32  that calls on the  parties to this existing  lease to                                                               
amend it  upon passage of  HB 9.   The Alaska  State Constitution                                                               
bars the  Alaska State Legislature  from passing laws  that apply                                                               
retroactively  to   contracts  already  in  place.     Therefore,                                                               
exempting  AGDC in  Section 5  would not  necessarily change  the                                                               
lease  without  the  legislature's   direction  to  also  do  so.                                                               
Amendment 14,  then, expresses  that intent  that the  parties to                                                               
the  lease  amend   the  lease.    The   sponsors  have  received                                                               
assurances  from  the  Department  of Law,  which  has  attorneys                                                               
assigned to  DNR, that the  parties will be amenable  to amending                                                               
the lease as requested by the intent of the legislature.                                                                        
                                                                                                                                
2:27:12 PM                                                                                                                    
                                                                                                                                
MS.  DELBRIDGE, in  response to  Co-Chair Seaton,  confirmed that                                                               
the  aforementioned relates  to  right-of-way leases.   She  said                                                               
AGDC  and DNR  entered  into a  right-of-way  lease in  June/July                                                               
2011.    That  lease  was per  the  existing  state  Right-of-Way                                                               
Leasing Act,  so the covenants  related to common  carriage would                                                               
still  apply.   In  the  covenant section  of  the  lease it  was                                                               
foreseen  that a  situation might  arise like  today where  it is                                                               
desired to exempt  AGDC from operating as a  common carrier under                                                               
the Right-of-Way Leasing Act.   Thus, the lease includes language                                                               
with  the covenants  indicating unless  specifically exempted  by                                                               
law, these  covenants apply.   Section 5  would exempt  AGDC from                                                               
the covenants  of the state  Right-of-Way Leasing Act  related to                                                               
common carriage.   However, there  is a  lease in place,  and the                                                               
sponsors  want  to use  the  transitional  language presented  in                                                               
Amendment 14  to express the  intent of the legislature  that the                                                               
exemptions  it   is  now  offering  AGDC   from  common  carriage                                                               
requirements  be immediately  reflected  as an  amendment to  the                                                               
lease  that  AGDC  has  already  entered  into  with  DNR.    She                                                               
reiterated that  the state constitution  disallows passing  a law                                                               
that  retroactively  applies  to  a contract  already  in  place;                                                               
therefore, the transition expressing  the legislature's intent on                                                               
that is important.                                                                                                              
                                                                                                                                
REPRESENTATIVE HERRON surmised  that this is as  close to "shall"                                                               
as possible.                                                                                                                    
                                                                                                                                
MS. DELBRIDGE answered yes.                                                                                                     
                                                                                                                                
2:28:51 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON   pointed  out  that  the   committee  has  been                                                               
considering  this  mainly  in relationship  to  an  in-state  gas                                                               
pipeline servicing mines  and other things.   He inquired whether                                                               
this  would  negate  the Alaska  Gasline  Inducement  Act  (AGIA)                                                               
requirement of rolled-in  rates and other provisions  if AGDC was                                                               
involved with  the large  diameter line from  the North  Slope to                                                               
Valdez as  an export  LNG facility,  or would  this be  simply to                                                               
right-of-way leases and not to  operations and other requirements                                                               
of the AGIA pipeline.                                                                                                           
                                                                                                                                
MS. DELBRIDGE  replied it is  difficult to say  precisely because                                                               
it is unknown whether a  future large-diameter pipeline to Valdez                                                               
will  be built  under AGIA.   However,  under the  aforementioned                                                               
hypothetical circumstance,  if the pipeline is  built under AGIA,                                                               
AGIA is  the law  of the  land and would  pre-empt what  is being                                                               
done  here.   At that  point, AGDC's  most likely  role would  be                                                               
perhaps building  the spur line  to connect other  communities to                                                               
this  main  transportation line  that  is  also an  export  line.                                                               
This,  however, relates  specifically to  right-of-way leases  to                                                               
AGDC.                                                                                                                           
                                                                                                                                
2:30:40 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON said he wants to  ensure that this is clear so it                                                               
cannot be said at a later  date that provisions previously set by                                                               
the  legislature   are  being  circumvented  by   requiring  that                                                               
something be modified.   It is very clear, he  continued, that it                                                               
is  right-of-way leases  that are  being talked  about here,  not                                                               
operations of AGIA.                                                                                                             
                                                                                                                                
MS.  DELBRIDGE  concurred.   She  said  AGIA  is statute,  but  a                                                               
contract  is also  attached.   She offered  her belief  that that                                                               
contract  stands  legally  and  cannot  be  changed  without  the                                                               
parties agreeing to do so.                                                                                                      
                                                                                                                                
CO-CHAIR SEATON  removed his objection.   There being  no further                                                               
objection, Amendment 14 was adopted.                                                                                            
                                                                                                                                
2:32:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  moved to  adopt Amendment  15, labeled                                                               
27-LS0075\U.25,   Bullock,   2/22/12,    which   read   [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Page 16, line 28, through page 18, line 19:                                                                                
          Delete all material and insert:                                                                                       
        "*  Sec. 25.  AS 42.05 is  amended by  adding a  new                                                                
     section to read:                                                                                                           
          Sec. 42.05.433. Review of certain contracts by                                                                      
     the  commission. (a)  A  public  utility negotiating  a                                                                  
     contract   with   the    Alaska   Gasline   Development                                                                    
     Corporation  created under  AS 18.56.086,  or with  any                                                                    
     entity  controlled by  the  Alaska Gasline  Development                                                                    
     Corporation, may submit the  contract to the commission                                                                    
     before the contract takes effect.                                                                                          
          (b)  A public utility negotiating to purchase                                                                         
     natural  gas to  be shipped  on any  pipeline owned  by                                                                    
     either  the Alaska  Gasline Development  Corporation or                                                                    
     an entity controlled by  the Alaska Gasline Development                                                                    
     Corporation may  submit the contract to  the commission                                                                    
     before the contract takes effect.                                                                                          
          (c)  A public utility negotiating a natural gas                                                                       
     storage contract related to (a)  or (b) of this section                                                                    
     may submit  the contract  to the commission  before the                                                                    
     contract takes effect.                                                                                                     
          (d)  The commission may conduct an investigation                                                                      
     and hearing  to determine whether a  contract submitted                                                                    
     under  (a), (b),  or (c)  of this  section is  just and                                                                    
     reasonable.  The commission  shall  either approve  the                                                                    
     contract  as presented,  or,  if  the commission  finds                                                                    
     that the  contract is  unjust, unreasonable,  or unduly                                                                    
     discriminatory  or preferential,  the commission  shall                                                                    
     disapprove  the contract.  If the  commission does  not                                                                    
     act  within  180  days  after  the  submission  of  the                                                                    
     contract,  the contract  shall  be considered  approved                                                                    
     and shall  be implemented. A contract  that is approved                                                                    
     or  considered approved  under this  subsection is  not                                                                    
     subject to further review by the commission.                                                                               
        * Sec. 26.  AS 42.05.711 is amended by  adding a new                                                                  
     subsection to read:                                                                                                        
          (s)  The Alaska Gasline Development Corporation                                                                       
     created   under   AS 18.56.086,    a   joint   venture,                                                                    
     partnership, or  other entity controlled by  the Alaska                                                                    
     Gasline  Development  Corporation,  or  a  natural  gas                                                                    
     pipeline  owned  or  financed  by  the  Alaska  Gasline                                                                    
     Development  Corporation is  exempt  from this  chapter                                                                    
     until  all debt  incurred to  finance or  refinance the                                                                    
     cost  of developing  and constructing  the natural  gas                                                                    
     pipeline is paid in full.   However, the Alaska Gasline                                                                    
     Development   Corporation    or   a    joint   venture,                                                                    
     partnership, or  other entity that includes  the Alaska                                                                    
     Gasline  Development   Corporation  may  elect   to  be                                                                    
     subject to regulation under this  chapter to the extent                                                                    
     and  in  the  manner  the  Alaska  Gasline  Development                                                                    
     Corporation elects and determines is appropriate.                                                                          
        *  Sec. 27.  AS 42.06  is amended  by  adding a  new                                                                  
     section to article 7 to read:                                                                                              
          Sec. 42.06.601. Exemption. The Alaska Gasline                                                                       
     Development Corporation created  under AS 18.56.086, an                                                                    
     entity  controlled by  the  Alaska Gasline  Development                                                                    
     Corporation,   or  a   natural   gas  pipeline   owned,                                                                    
     operated,  financed,  or  controlled, in  whole  or  in                                                                    
     part, by the Alaska  Gasline Development Corporation is                                                                    
     not subject  to this chapter  except to the  extent and                                                                    
     in   the   manner   the  Alaska   Gasline   Development                                                                    
     Corporation elects and determines is appropriate."                                                                         
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
CO-CHAIR SEATON objected for purposes of discussion.                                                                            
                                                                                                                                
2:32:10 PM                                                                                                                    
                                                                                                                                
MS. DELBRIDGE explained that Amendment  15 would replace Sections                                                               
25-28, which deal  with RCA oversight.  Amendment  15 would allow                                                               
RCA  oversight  of  public  utility  contracts  related  to  this                                                               
gasline.   Public utilities  already have  the option  of seeking                                                               
pre-approval from the  RCA when they commit to  large projects or                                                               
purchases that  are a significant financial  investment for them.                                                               
They seek  that pre-approval to ensure  that the RCA is  giving a                                                               
general okay that  the utility will be able to  cover those costs                                                               
later in the  rates that it charges its customers.   Amendment 15                                                               
specifically  states   that  the  public   utilities  negotiating                                                               
contracts with AGDC can submit  these contracts to the commission                                                               
for  pre-approval.   Should  the  RCA  find  the contract  to  be                                                               
unjust, unreasonable,  or unduly discriminatory, it  can disprove                                                               
that contract.   The  amendment would set  some sidebars  on this                                                               
because  a contract  with a  utility  would occur  after an  open                                                               
season  when there  is  a precedent  agreement  or a  conditioned                                                               
agreement for  capacity on this  pipeline.  All  those conditions                                                               
must be  worked out  over a  period of two  years so  that solid,                                                               
firm agreements can  be brought forth to get  financing and build                                                               
the project.  During that two-year  window, the RCA would be able                                                               
to  review a  contract  over  a period  of  180  days and  decide                                                               
whether the contract is acceptable.   If not, the utility and the                                                               
carrier could renegotiate to work out the difference.                                                                           
                                                                                                                                
2:34:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON understood  that a contract with  a utility would                                                               
not be available until after  the precedent agreements.  Once the                                                               
contract was  submitted to the RCA,  the RCA would have  180 days                                                               
to  make  a  final  decision;  otherwise  the  contract  will  be                                                               
presumed  just  and  reasonable.     During  the  time  that  the                                                               
precedent  agreements were  being negotiated  there would  not be                                                               
anything to present  to the RCA.  He therefore  surmised it would                                                               
be when  a utility enters  into a  contract, which has  the rates                                                               
and costs, that it would be submitted to the RCA.                                                                               
                                                                                                                                
MS. DELBRIDGE answered  yes.  With a gasline like  this, a public                                                               
utility  might  actually  go  into the  open  season  itself  and                                                               
subscribe to  capacity itself.   Or, it  could be a  utility that                                                               
has an agreement to purchase  gas that someone else is committing                                                               
to  cover that  line  capacity  for.   Amendment  15 would  allow                                                               
utilities that are  negotiating to purchase to take  the terms to                                                               
the   RCA   for   pre-approval   before  they   sign   the   firm                                                               
transportation commitment or before their  shipper does.  So, the                                                               
utilities would have  a basic agreement that  specifies the terms                                                               
and rates  if the conditions  are worked out,  including, likely,                                                               
this RCA pre-approval.                                                                                                          
                                                                                                                                
2:36:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON requested  Ms. Delbridge  to review  the reasons                                                               
why most utilities would want to submit to the RCA.                                                                             
                                                                                                                                
MS.  DELBRIDGE explained  that when  a utility  undertakes a  big                                                               
financial  investment, whether  it  is committing  to decades  of                                                               
shipping gas  in a pipeline or  building a new power  plant, that                                                               
utility must have  some assurance from the RCA  - which regulates                                                               
the  rates the  utility can  charge  - that  it will  be able  to                                                               
recover the costs of those investments  in the rates that it will                                                               
charge to its customers.                                                                                                        
                                                                                                                                
REPRESENTATIVE HERRON asked whether the  180-day time period is a                                                               
commonly used length of time.                                                                                                   
                                                                                                                                
MS. DELBRIDGE  replied that  180 days  seemed like  a comfortable                                                               
window for AGDC.  The terms  of an agreement with a utility would                                                               
be generally  known at  the point that  a precedent  agreement is                                                               
signed.   Once  precedent agreements  are signed  it will  take a                                                               
period  of  time  to  iron   out  all  the  conditions  in  those                                                               
agreements  to  where the  utility  is  willing  to sign  a  firm                                                               
transportation commitment.   It was  felt by AGDC that  a 180-day                                                               
window would be  appropriate and would also fit  within that time                                                               
slot  so that  RCA approval  of  what a  utility wants  to do  to                                                               
participate  would not  hold up  the project's  financing or  the                                                               
project's  construction,   but  would  still  provide   an  ample                                                               
regulatory window.                                                                                                              
                                                                                                                                
2:38:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  inquired whether  someone could  pause the                                                               
clock on the 180 days.                                                                                                          
                                                                                                                                
MS. DELBRIDGE responded  that a provision to pause  the clock has                                                               
not been included.                                                                                                              
                                                                                                                                
REPRESENTATIVE  HERRON  clarified  that his  concern  is  whether                                                               
others could pause the clock, not necessarily AGDC.                                                                             
                                                                                                                                
MS.  DELBRIDGE  offered  her  understanding  that  unless  it  is                                                               
implicitly provided,  the 180  days after  the submission  of the                                                               
contract is  what stands.   She said she will  double-check this,                                                               
however.                                                                                                                        
                                                                                                                                
CO-CHAIR SEATON  recalled that in previous  committee discussions                                                               
a provision  was talked about for  AGDC to pause the  clock or to                                                               
ask for an extension.   After wrestling with the entire scenario,                                                               
AGDC decided that  if RCA was not making the  decision by the 180                                                               
days then  the request could be  withdrawn; AGDC did not  want to                                                               
get into the  situation where there were pressures to  not make a                                                               
decision or  leverage people to put  in a request for  a pause to                                                               
extend the time period.                                                                                                         
                                                                                                                                
2:40:01 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE noted  that Version  U, as  amended, would  allow                                                               
AGDC to essentially  be a contract carrier.  He  asked whether as                                                               
a  contract  carrier  those   contracts  would  automatically  be                                                               
subject to review by the RCA.                                                                                                   
                                                                                                                                
MS.  DELBRIDGE replied  that as  a contract  carrier there  is no                                                               
clear  RCA oversight  of the  contracts;  therefore, things  have                                                               
been  specifically  structured  so  that  public  utilities  with                                                               
contracts are given that additional layer of comfort.                                                                           
                                                                                                                                
2:40:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE observed that lines 7,  11, and 14 of Amendment 15                                                               
state  that a  public utility  "may" submit  the contract  to the                                                               
RCA.   He  pointed out  that  if, as  part of  the contract,  the                                                               
tariff is made  a significant portion of the cost  of the gas the                                                               
value of  that gas is lowered  at the point of  production, which                                                               
is the point where  the state taxes the gas.   This could be seen                                                               
by a  shipper as a way  to lower the  value of the gas  and hence                                                               
the  tax that  the shipper  pays on  the gas,  while the  shipper                                                               
collects that  revenue as a tariff  instead of as a  cost for the                                                               
gas  itself.   He therefore  inquired why  the language  is "may"                                                               
instead of "shall".                                                                                                             
                                                                                                                                
MS.  DELBRIDGE responded  that the  provisions in  Section 25  on                                                               
page 1  of Amendment 15  relate to  public utilities and  the RCA                                                               
consideration  of  this as  pre-approval  is  something that  the                                                               
utilities can use to protect  themselves from precisely that sort                                                               
of  scenario.   Right  now a  public utility  has  the option  of                                                               
seeking pre-approval from the RCA;  the sponsors did not think it                                                               
appropriate in HB  9 to start requiring public  utilities to seek                                                               
pre-approval of those  contracts.  The sponsors  realize that the                                                               
public utilities in the state vary  in size and in priorities and                                                               
whether to seek RCA pre-approval needs  to be a decision that the                                                               
utilities are left with.   However, the sponsors wanted to ensure                                                               
that it  was clearly and  specifically enabled  as a way  for the                                                               
RCA to  take a look  at the kinds  of terms that  these utilities                                                               
would be signing on for.                                                                                                        
                                                                                                                                
2:43:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  reiterated  that  the  utilities  would  not  be                                                               
required  to  request  a  review  by the  RCA  and  said  that  a                                                               
utility's interest  is the price of  the gas as it  goes into the                                                               
turbine.    Therefore,  he  is  looking at  how  to  protect  the                                                               
interest of the  state and the interest of the  tax revenue going                                                               
to the state.                                                                                                                   
                                                                                                                                
MS. DELBRIDGE replied that her answer  will be in two parts, with                                                               
one part  not meant to dodge  the very legitimate concern  of how                                                               
to protect  the state, its resource,  and its revenue.   She said                                                               
it is unknown exactly how gas off  the North Slope is going to be                                                               
taxed in  the future.   The sponsors have a  conceptual amendment                                                               
to Amendment 15 that would require  the RCA to review the rate of                                                               
return on equity to pipeline owners.   The intent of the sponsors                                                               
to  keep  this  line  unencumbered  by  regulation  as  a  public                                                               
utility, which it would not be,  or as a common carrier, which it                                                               
would  not be.   The  conceptual amendment  would allow  for some                                                               
level of  assurance that the tariffs  and the rate of  return are                                                               
not  something  where  Alaska  is  getting  taken.    The  public                                                               
utilities and  the ratepayers would be  protected through Section                                                               
25 and  through the  conceptual amendment to  Amendment 15.   The                                                               
conceptual  amendment  would  protect that  broader  interest  by                                                               
having  RCA specifically  consider the  rate of  return that  the                                                               
pipeline owners  would get  on this  project.   Conceptually, the                                                               
sponsors  would like  for that  rate of  return on  equity to  be                                                               
within the range  of rate of return that is  normal and customary                                                               
for a  large transportation  gas pipeline  in the  United States.                                                               
While there is nothing in the  U.S. quite comparable to what will                                                               
hopefully be  seen someday in  Alaska, the sponsors  propose that                                                               
the rate of  return for this line be within  the FERC standard of                                                               
acceptable rate  of return.  The  RCA would be given  a window of                                                               
180 days  once an  application is  submitted to  consider whether                                                               
the rate  of return  is within  this range  and then  certify the                                                               
application yes  or no.   She said  she believes that  that would                                                               
help ensure that  whatever the tariff the overall  rate of return                                                               
would not be detrimental to the  state's take on its share of the                                                               
gas resource should producers be the ones owning this line.                                                                     
                                                                                                                                
2:46:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   SEATON  noted   that  the   aforementioned  conceptual                                                               
amendment is  being handed  out to  committee members,  but urged                                                               
that it be dealt with after consideration of Amendment 15.                                                                      
                                                                                                                                
CO-CHAIR SEATON, in regard to  the provision of subsection (d) of                                                               
Section  25  in Amendment  15,  asked  whether subsections  (a-c)                                                               
would  restrict petitioning  for a  review of  a contract  to the                                                               
utility itself;  in other words,  ratepayers would  be disallowed                                                               
from making such a request independent of the utility itself.                                                                   
                                                                                                                                
MS. DELBRIDGE  answered that Amendment 15  specifically refers to                                                               
public utilities,  so it  is specifically  a public  utility that                                                               
can take a  request for pre-approval to the commission.   The RCA                                                               
is, by nature, designed to  regulate and provide oversight of the                                                               
rates  charged   to  ratepayers   when  it  holds   hearings  and                                                               
proceedings on  a pre-approval  or rate  case.   Since ratepayers                                                               
participate in  that process, the  ratepayer would have  some say                                                               
if  a   utility  brings  a   request  for  pre-approval   to  the                                                               
commission.                                                                                                                     
                                                                                                                                
2:48:25 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  understood that the public  and ratepayers could                                                               
not bring  forward an  issue of  a contract  if they  thought the                                                               
contract unreasonable;  it would  have to  be brought  forward by                                                               
the utility itself that is purchasing the gas.                                                                                  
                                                                                                                                
MS.  DELBRIDGE said  that  is her  understanding  and added  that                                                               
Amendment 15 does  not specifically allow that.   She deferred to                                                               
a representative  of AGDC  to provide a  definitive answer  as to                                                               
whether ratepayers  themselves could  present a  case to  the RCA                                                               
for pre-approval.                                                                                                               
                                                                                                                                
TINA GROVIER,  Attorney, Natural Resources and  Energy Law, Birch                                                               
Horton Bittner  & Cherot, Counsel  to Alaska  Gasline Development                                                               
Corporation (AGDC),  understood that the question  being asked is                                                               
whether a  ratepayer would have  recourse if the utility  did not                                                               
take advantage of the language  contained in subsections (a-c) of                                                               
Section 25  in Amendment  15.   She said  she thinks  a ratepayer                                                               
would  because for  a utility  to recover  the expenses  it would                                                               
need to  file a rate case  asking for those costs  to be included                                                               
in its  rate base and  at that time a  ratepayer could go  in and                                                               
argue  for  whatever  reasons  that   the  cost  was  imprudently                                                               
incurred.   It is precisely  to prevent that from  happening that                                                               
utilities would want to go to the RCA ahead of time.                                                                            
                                                                                                                                
2:50:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON surmised  that, in essence, if  a utility decided                                                               
not  to apply  then the  180-day  clock would  go away;  however,                                                               
ratepayers would still  have the ability to petition  not to have                                                               
to pay full compensation of  the tariff that the utility proposes                                                               
to apply  because it  would make  the rate paid  for the  gas and                                                               
tariff unreasonable.                                                                                                            
                                                                                                                                
MS.  GROVIER   replied  correct,  whatever  was   the  particular                                                               
contract at issue.                                                                                                              
                                                                                                                                
2:51:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.  WILSON  observed that  subsections  (a-c)  of                                                               
Section 25 in Amendment 15  would provide that the public utility                                                               
negotiating the  contract "may" submit  the contract to  the RCA,                                                               
"may" meaning  if the utility  wants to.    She  further observed                                                               
that subsection (d)  would provide that the RCA  "may" conduct an                                                               
investigation.   She  asked  whether this  means  that a  utility                                                               
could ask for  an investigation but the RCA  could choose whether                                                               
it will or will not investigate.                                                                                                
                                                                                                                                
MS.  DELBRIDGE responded  that she  does  not know  what the  RCA                                                               
currently  has  in  place,  but she  suspected  that  if  someone                                                               
submits  an  application  for pre-approval  the  commission  does                                                               
absolutely consider  that.  However,  whether it decides  that an                                                               
investigation and a  hearing are warranted in  each specific case                                                               
may be something that is left to the RCA's discretion.                                                                          
                                                                                                                                
REPRESENTATIVE  P. WILSON  said that  is her  concern because  in                                                               
this circumstance the utility would  want to get some assurances,                                                               
but the commission would  not have to deal with it  if it did not                                                               
want to.   She  observed that [subsection  (d), line  18,] states                                                               
that  the  commission  "shall" approve  the  contract  and  asked                                                               
whether the language  [on line 16] should be changed  so that the                                                               
commission "shall" conduct an investigation.                                                                                    
                                                                                                                                
MS. DELBRIDGE answered that the sponsors would be open to that.                                                                 
                                                                                                                                
2:54:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON moved  Amendment 1  to Amendment  15 as                                                               
follows:                                                                                                                        
                                                                                                                                
     Page 1, line 16, after "commission":                                                                                       
          Delete "may"                                                                                                          
          Insert "shall"                                                                                                        
                                                                                                                                
REPRESENTATIVE P. WILSON  stated that this would  give the public                                                               
utility some assurance before it proceeds.                                                                                      
                                                                                                                                
CO-CHAIR SEATON objected for discussion  purposes and offered his                                                               
agreement that public utilities need  the protection that the RCA                                                               
will review the  contracts to provide assurance  to the utilities                                                               
that  the contracts  are just  and reasonable.   Things  would be                                                               
left in limbo if that did not happen.                                                                                           
                                                                                                                                
MR. WRIGHT  countered that  if the  RCA feels  the rates  are not                                                               
just  or  reasonable, it  may  conduct  an investigation  anyway.                                                               
Putting  in  "shall" would  require  the  RCA  to look  at  every                                                               
contract.    Most  contracts  may  be  just  and  reasonable  and                                                               
subsection (d) would provide the authority  to the RCA to look at                                                               
any  contracts  that   it  does  not  believe  to   be  just  and                                                               
reasonable.                                                                                                                     
                                                                                                                                
2:56:10 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  clarified  that  the "may"  for  submission  of                                                               
contracts is not being changed; rather,  it is being said that if                                                               
someone submits a contract the RCA "shall" conduct a hearing.                                                                   
                                                                                                                                
MR. WRIGHT replied that he  understands that, but reiterated that                                                               
if the  RCA does not  feel it is  just and reasonable  it already                                                               
has the right to look into the contract under this provision.                                                                   
                                                                                                                                
MS. DELBRIDGE  added she does not  suppose that there would  be a                                                               
problem with changing  the wording to "shall" so that  the RCA is                                                               
required to  respond to a  utility's submission of a  request for                                                               
review.                                                                                                                         
                                                                                                                                
CO-CHAIR SEATON said what is being  looked for here is to require                                                               
that  if  the  utility  submits,  then the  RCA  must  give  some                                                               
assurance   to  the   utility  by   conducting   a  hearing   and                                                               
investigation within the 180-day time period.                                                                                   
                                                                                                                                
CO-CHAIR SEATON  removed his objection.   There being  no further                                                               
objection, Amendment 1 to Amendment 15 was adopted.                                                                             
                                                                                                                                
2:57:47 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON announced that a  committee substitute (CS) would                                                               
be  drafted after  all  amendments are  considered  and that  the                                                               
committee would take up the CS at its next meeting.                                                                             
                                                                                                                                
MS.  DELBRIDGE  returned  to her  explanation  of  Amendment  15,                                                               
moving to  the amendment's provisions  on page 2.   She explained                                                               
that  currently the  RCA  can  regulate a  pipeline  either as  a                                                               
public  utility  under  AS 42.05,  the  Alaska  Public  Utilities                                                               
Commission  Act,  or  as  a common  carrier  pipeline  under  the                                                               
Pipeline Act.   [Under  Section 26] the  sponsors propose  that a                                                               
pipeline that  AGDC owns, finances,  or is in a  partnership with                                                               
but controls,  would be  exempt from RCA  regulation as  a public                                                               
utility; the sponsors do not believe  that this kind of a gasline                                                               
is a public utility.  The  sponsors also propose in Section 27 to                                                               
exempt  an AGDC  line from  RCA  regulation as  a common  carrier                                                               
under the Pipeline  Act.  The sponsors do not  believe that a gas                                                               
pipeline is  going to  be able  to operate  as a  common carrier.                                                               
The sponsors  believe it is  going to  be required to  sign long-                                                               
term contracts negotiated with  individual shippers and therefore                                                               
the pipeline should not be regulated as a common carrier.                                                                       
                                                                                                                                
CO-CHAIR SEATON  surmised that  if it is  in conjunction  with an                                                               
AGIA pipeline this would not  override the provisions of the AGIA                                                               
pipeline.                                                                                                                       
                                                                                                                                
MS. DELBRIDGE concurred.                                                                                                        
                                                                                                                                
2:59:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  moved  to  adopt   Conceptual  Amendment  2  to                                                               
Amendment   15,   written   as  follows   [original   punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Add a new section after Section 27, Page 2, Line 19:                                                                       
                                                                                                                                
     The RCA  shall review the  rate of return on  equity to                                                                    
     pipeline owners.  The rate  of return on equity must be                                                                    
     within the range of rates  of return on equity commonly                                                                    
     accepted for natural gas  transportation pipelines of a                                                                    
     similar  nature   in  the  United   States.     If  the                                                                    
     commission  does  not act  within  180  days after  the                                                                    
     submission  of an  application  by  equity owners,  the                                                                    
     rate of  return on equity shall  be considered approved                                                                    
     and  shall  be implemented.    An  application that  is                                                                    
     approved or  considered approved under this  section is                                                                    
     not subject to further review by the commission.                                                                           
                                                                                                                                
3:01:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  objected for  purposes of  discussion.                                                               
Regarding  "commonly  accepted  for  natural  gas  transportation                                                               
pipelines of  a similar nature  in the United States",  she asked                                                               
whether there are any similar pipelines in the United States.                                                                   
                                                                                                                                
MS. DELBRIDGE responded that anything  done in Alaska is going to                                                               
be unique.   She said the sponsors' intent with  that language is                                                               
that  this would  be  comparable to  a  large gas  transportation                                                               
pipeline,  and the  sponsors  want to  qualify  that as  similar.                                                               
While there  are lots of  distribution pipelines  that individual                                                               
utilities  might own,  the sponsors  do not  feel that  those are                                                               
comparable.                                                                                                                     
                                                                                                                                
3:01:58 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON inquired  why  the  conceptual amendment  states                                                               
return on "equity"  rather than "tariff".  He  further asked that                                                               
since natural gas pipelines are  defined as all ancillary things,                                                               
such as compressors, conditioning plants,  and so forth, how that                                                               
works into this amendment as opposed to tariff.                                                                                 
                                                                                                                                
MS.  DELBRIDGE answered  that the  sponsors  chose not  to use  a                                                               
tariff.     She  said  the  concern   prompting  this  conceptual                                                               
amendment  was that,  absent regulation  as a  public utility  or                                                               
common carrier,  there would  be little  oversight for  a project                                                               
that may  include state support.   If the  state was going  to be                                                               
supporting  a public  project like  this, then  the state  needed                                                               
some level of assurance from  some independent authority that the                                                               
owners of this line, of which  AGDC might only be one of several,                                                               
are not earning a rate of  return that is exorbitant.  Because of                                                               
that state support there is a  need for some degree of oversight.                                                               
The sponsors have  worked very hard to keep politics  out of what                                                               
happens in the future with this  project, she continued.  To that                                                               
end,  the  sponsors   felt  that  the  RCA,   as  an  independent                                                               
regulatory body, would be very  well suited to evaluate something                                                               
like the  rate of  return that  the pipeline  owners will  get on                                                               
this project.  The rate of  return is something that the pipeline                                                               
owners  will get  for the  entire  project, but  the tariffs  may                                                               
vary.   With  a contract  carrier, tariffs  may be  different for                                                               
different  customers   because  some   customers  will   want  to                                                               
subscribe to only a very small  part of the pipeline while others                                                               
may want  to subscribe to a  larger part.  Therefore,  looking at                                                               
all  those  tariffs  independently  would  not  provide  a  clear                                                               
overall  picture that  the pipeline  owners  as a  whole are  not                                                               
getting an exorbitant rate of return  on a project that the state                                                               
is helping to support.                                                                                                          
                                                                                                                                
3:04:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  reiterated  that  the  definition  of  pipeline                                                               
includes compressor stations, conditioning  plants, and so forth,                                                               
so  the rates  of  return are  going to  be  just and  reasonable                                                               
compared  to  other similar  pipelines  and  operations that  are                                                               
regulated either  by FERC or  an RCA-type entity.   Protection of                                                               
the public is  what is being looked at for  a subsidized pipeline                                                               
where the  state is investing money  to keep the tariff  low.  He                                                               
further noted that  a contract carrier is something  that has not                                                               
been exempt from RCA regulation in the past.                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON removed  her objection to the conceptual                                                               
amendment.     There  being  no  further   objection,  Conceptual                                                               
Amendment 2 to Amendment 15 was adopted.                                                                                        
                                                                                                                                
3:06:14 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  removed his  objection to  Amendment 15.   There                                                               
being  no  further  objection,  Amendment  15,  as  amended,  was                                                               
adopted.                                                                                                                        
                                                                                                                                
Co-Chair  Seaton held  over HB  9, noting  that public  testimony                                                               
would  be  taken  once the  proposed  committee  substitute  (CS)                                                               
incorporating the amendments is before the committee.                                                                           
                                                                                                                                
3:06:57 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 3:07 p.m.                                                                 

Document Name Date/Time Subjects
HB 9 Version U.pdf HRES 2/6/2012 1:00:00 PM
HRES 2/8/2012 1:00:00 PM
HRES 2/10/2012 1:00:00 PM
HRES 2/24/2012 1:00:00 PM
HRES 2/27/2012 1:00:00 PM
HB 9
HB 9 Sectional, version U.pdf HRES 2/6/2012 1:00:00 PM
HRES 2/8/2012 1:00:00 PM
HRES 2/10/2012 1:00:00 PM
HRES 2/24/2012 1:00:00 PM
HRES 2/27/2012 1:00:00 PM
HB 9
HB 9 Sponsor Statement- version U.pdf HRES 2/6/2012 1:00:00 PM
HRES 2/8/2012 1:00:00 PM
HRES 2/10/2012 1:00:00 PM
HRES 2/24/2012 1:00:00 PM
HB 9
HB 9.pdf HRES 2/6/2012 1:00:00 PM
HRES 2/8/2012 1:00:00 PM
HRES 2/10/2012 1:00:00 PM
HRES 2/24/2012 1:00:00 PM
HB 9
HB 9 Fact Sheet.docx HRES 2/6/2012 1:00:00 PM
HRES 2/8/2012 1:00:00 PM
HRES 2/10/2012 1:00:00 PM
HRES 2/24/2012 1:00:00 PM
HB 9
CSHB289 version I 2 21.pdf HRES 2/24/2012 1:00:00 PM
HRES 2/27/2012 1:00:00 PM
HB 289
HB289 version A.pdf HRES 2/24/2012 1:00:00 PM
HRES 2/27/2012 1:00:00 PM
HB 289
Explanation of Changes version A to Version I 2.22.12.docx HRES 2/24/2012 1:00:00 PM
HRES 2/27/2012 1:00:00 PM
HB 289
HB 289 Sponsor Statement.docx HRES 2/24/2012 1:00:00 PM
HRES 2/27/2012 1:00:00 PM
HB 289
Sectional Analysis for HB 289.I 2.21.12.docx HRES 2/24/2012 1:00:00 PM
HB 289
HB289-DOA-AOGCC-2-3-12.pdf HRES 2/24/2012 1:00:00 PM
HB 289
HB289-DOR-TAX-02-20-12.pdf HRES 2/24/2012 1:00:00 PM
HB 289
HB289-DCCED-RCA-02-03-12.pdf HRES 2/24/2012 1:00:00 PM
HB 289
SB 154 - Fuel Price Comparison.pdf HRES 2/24/2012 1:00:00 PM
HB 289
U.12.pdf HRES 2/24/2012 1:00:00 PM
HB 9
U.15.pdf HRES 2/24/2012 1:00:00 PM
HB 9
U.16.pdf HRES 2/24/2012 1:00:00 PM
HB 9
U.19.pdf HRES 2/24/2012 1:00:00 PM
HB 9
U.20.pdf HRES 2/24/2012 1:00:00 PM
HB 9
U.21.pdf HRES 2/24/2012 1:00:00 PM
HB 9
U.24.pdf HRES 2/24/2012 1:00:00 PM
HB 9
U.25.pdf HRES 2/24/2012 1:00:00 PM
HB 9
Shipper vs. Pipeline Builder Conflicts material from ANGDA.pdf HRES 2/24/2012 1:00:00 PM
HB 9
Additional ANGDA - AGDC conflict material.pdf HRES 2/24/2012 1:00:00 PM
HB 9
Southwest Alaska Pilots Assn Navigational Comparison LNG Cook Inlet Valdez.pdf HRES 2/24/2012 1:00:00 PM
HB 9
AGDC response to request for analysis from Pedro van Meurs.pdf HRES 2/24/2012 1:00:00 PM
HB 9
Gov Letter to ANGDA.pdf HRES 2/24/2012 1:00:00 PM
HB 9
HB 9 Adopted Amendments.pdf HRES 2/24/2012 1:00:00 PM
HB 9
ANGTL comment.pdf HRES 2/24/2012 1:00:00 PM
HB 9
HB 9 public comment.pdf HRES 2/24/2012 1:00:00 PM
HB 9
U.27.pdf HRES 2/24/2012 1:00:00 PM
HB 9
HB289-DNR-MLW-02-18-2012.pdf HRES 2/24/2012 1:00:00 PM
HB 289
HB289-DNR-DOG-02-18-2012.pdf HRES 2/24/2012 1:00:00 PM
HB 289
U.28.pdf HRES 2/24/2012 1:00:00 PM
HB 9
HB009CS-DOR-AHFC-02-08-12.pdf HRES 2/24/2012 1:00:00 PM
HB 9