Legislature(2023 - 2024)BARNES 124
03/13/2024 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HJR22 | |
| HB387 | |
| Presentation(s): Alaska Energy Authority Update by Curtis Thayer | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 22 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 387 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 13, 2024
1:01 p.m.
MEMBERS PRESENT
Representative Tom McKay, Chair
Representative George Rauscher, Vice Chair
Representative Thomas Baker
Representative Kevin McCabe
Representative Dan Saddler
Representative Stanley Wright
Representative Jennie Armstrong
Representative Donna Mears
Representative Maxine Dibert
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 22
Proposing an amendment to the Constitution of the State of
Alaska relating to subsistence use of replenishable natural
resources by state residents; and providing for an effective
date for the amendment.
- HEARD & HELD
HOUSE BILL NO. 387
"An Act relating to a tax credit for certain oil and gas
equipment in the Cook Inlet sedimentary basin; and providing for
an effective date."
- HEARD & HELD
PRESENTATION(S): ALASKA ENERGY AUTHORITY UPDATE
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: HJR 22
SHORT TITLE: RESIDENT SUBSISTENCE USE OF FISH/GAME
SPONSOR(s): REPRESENTATIVE(s) BAKER
02/20/24 (H) READ THE FIRST TIME - REFERRALS
02/20/24 (H) RES, JUD
03/13/24 (H) RES AT 1:00 PM BARNES 124
BILL: HB 387
SHORT TITLE: OIL & GAS TAX CREDIT: JACK-UP RIG
SPONSOR(s): RESOURCES
02/26/24 (H) READ THE FIRST TIME - REFERRALS
02/26/24 (H) RES, FIN
03/06/24 (H) RES AT 1:00 PM BARNES 124
03/06/24 (H) Heard & Held
03/06/24 (H) MINUTE(RES)
03/08/24 (H) RES AT 1:00 PM BARNES 124
03/08/24 (H) Heard & Held
03/08/24 (H) MINUTE(RES)
03/13/24 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
STEVE ST. CLAIR, Staff
Representative Thomas Baker
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HJR 22 on behalf of
Representative Baker, prime sponsor.
JOHN STURGEON, President
Safari Club International Alaska Chapter (AK SCI)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HJR 22.
DOUG VINCENT-LANG, Commissioner
Alaska Department of Fish and Game (ADF&G)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HJR 22.
TREVOR JEPSEN, Staff
Representative Tom McKay
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 387, reviewed the
changes made in Version S, the committee's proposed CS for the
bill.
CURTIS THAYER, Executive Director
Alaska Energy Authority (AEA)
State of Alaska
Anchorage, Alaska
POSITION STATEMENT: Gave the Alaska Energy Authority Update
presentation.
ACTION NARRATIVE
1:01:35 PM
CHAIR TOM MCKAY called the House Resources Standing Committee
meeting to order at 1:01 p.m. Representatives Saddler, Wright,
Baker, Rauscher, McCabe, Mears, and McKay were present at the
call to order. Representatives Armstrong and Dibert arrived as
the meeting was in progress.
HJR 22-RESIDENT SUBSISTENCE USE OF FISH/GAME
1:03:08 PM
CHAIR MCKAY announced that the first order of business would be
HOUSE JOINT RESOLUTION NO. 22, Proposing an amendment to the
Constitution of the State of Alaska relating to subsistence use
of replenishable natural resources by state residents; and
providing for an effective date for the amendment.
1:03:33 PM
The committee took an at-ease from 1:03 p.m. to 1:04 p.m.
1:04:01 PM
REPRESENTATIVE BAKER, as the prime sponsor, introduced HJR 22.
He explained that the goal behind the HJR 22 is to amend the
Constitution of the State of Alaska to effectively establish a
rural subsistence priority that in times of low yield would
allow for state management of natural resources for those who
depend on them most.
1:04:57 PM
STEVE ST. CLAIR, Staff, Representative Thomas Baker, Alaska
State Legislature, paraphrased from the sponsor statement [in
the committee packet], which read as follows [original
punctuation provided]:
The Alaskan National Interest Lands Conservation Act
(ANILCA) set aside more than 100 million acres to be
federally owned & managed. These conservation units
include national parks and preserves, national
wildlife refuges, designated wilderness areas, wild
and scenic rivers, the Iditarod National Historic
Trail, as well as the Steese National Conservation
Area and the White Mountains National Recreation Area.
Among other provisions, ANILCA specifically recognized
and protected subsistence use on the newly designated
lands.
The federal government allowed the Alaska state
government to enforce subsistence priority on federal
public lands until 1989. Prior to that, the Alaska
Ninth Circuit Court of Appeals decided that the
state's definition of "rural" was not in accordance
with ANILCA in McDowell v. State of Alaska. The state
was not in compliance with ANILCA; therefore, the
federal government took over management of fish and
wildlife on federal public lands in Alaska once again
in 1990. They created several federal agencies to
uphold their responsibility to provide rural resident
subsistence priority.
The Alaska Supreme Court ruled that ANILCA violates
[sections 3, 15,] and 17 of the Alaska State
Constitution by violating the "equal access rule".
Currently this creates special privileges, for certain
groups, to take fish and game, which is prohibited by
the constitution. This amendment brings Alaska in
compliance with rules and regulations stipulated in
ANILCA.
With Alaska in compliance, the State can manage fish
and wildlife on both State and Federal lands, which
will best benefit Alaskans using the sustainable yield
model. Additionally, this amendment would allow those
closest and most dependent on the resource to have
access in times of low yield, as opposed to a complete
closure.
1:08:16 PM
MR. ST. CLAIR pointed out that this would only be applicable in
low yield years. As well, it would do away with dual management
[of fish and game], bringing all [fish and game] management
under the umbrella of the State of Alaska.
1:08:34 PM
MR. ST. CLAIR reviewed five PowerPoint slides [to provide a
background for HJR 22]. He displayed the second slide,
"History," and said Alaska was purchased from Russia in 1867 and
th
became the 49 state in 1959. The Alaska constitution, he
noted, made no differentiation between Native and non-Native and
did not specifically reference subsistence use, but convention
delegates did recognize that Native and rural residents needed
to continue to earn their livelihoods through hunting and
fishing. The 1971 Alaska Native Claims Settlement Act (ANCSA)
set aside land and extinguished aboriginal hunting and fishing
rights for those people in Alaska prior to the settling of the
state by Russia and the U.S. In return, Alaska Natives received
44 million acres and nearly $1 billion. The report of the joint
session and House conference committee in Washington DC,
Congress expected that the U.S. Secretary of the Interior and
the State of Alaska would take actions necessary to protect the
subsistence needs of Natives, but this didn't happen due to the
focus on establishing an oil pipeline right-of-way rather than
subsistence. The 1980 Alaska National Interest Lands Act
(ANILCA) established a preference for subsistence hunting and
fishing by rural residents on federal lands and envisioned that
the State of Alaska would oversee [fish and game] management on
both state and federal lands using the ANILA's subsistence
stipulations. In 1989 the Alaska Supreme Court decision in
McDowell v. State of Alaska found that the [legislature's] 1986
rural subsistence preference law, which excluded urban residents
from subsistence hunting, violated Article 8 of the Alaska
constitution. In 1990 the federal government assumed
responsibility for wildlife management on federal lands [within
the state of Alaska].
1:11:27 PM
MR. ST. CLAIR proceeded to the third slide, "Conflicts," and
said ANILCA currently violates [three sections in Article 8] of
the Alaska constitution: Section 3, Common Use; Section [15, No
Exclusive Right of Fishery]; and Section 17, [Uniform
Application]. The Alaska Supreme Court said that broadly
defining subsistence user by geography of residence is
unacceptable. Given there are urban Alaskans who could
legitimately claim subsistence user and rural residents who
could not, the court suggested that a classification scheme
using individual characteristics would be more likely to pass
muster. The rest of the subsistence statute giving preference
to subsistence users or other users remained intact. The result
is that Alaska isn't in compliance with ANILCA because ANILCA
defines subsistence users as those closest to the resource and
most dependent on the resource.
MR. ST. CLAIR explained that the statute defines federally
qualified subsistence users as permanent residents of a rural
area or community that has a federally recognized customary and
traditional use determination for that resource, but that not
everyone who is a federal subsistence user has access or is
qualified. For example, under current statute and policy,
friends of his in Chickaloon are considered federal subsistence
users, so they could participate in federal subsistence hunts on
the North Slope. The sponsor is trying to close it down so it's
more reflective of those in the area that need the resource or
are most dependent on it.
MR. ST. CLAIR continued speaking to the third slide. He said
there is disagreement between state and federal land managers on
the need for closure. There is a lack of transparency and in
some cases the science isn't clear, or the information is
erroneous. Wildlife does not adhere to federal and state
boundaries. The case of Sturgeon v. Frost has to do with dual
management and the resulting conflicts.
MR. ST. CLAIR moved to the fourth slide, "Solution," and stated
that HJR 22 would bring Alaska into compliance with ANILCA. He
pointed out that opinions differ on additional legislation that
would be required. At the state level, Alaska would need to
accept responsibility for [fish and game] management on federal
lands. At the national level, Congress would need to give those
management rights or commissions to the State of Alaska. In
times of low fish and game resources, he continued, HJR 22 would
give preference to those closest to the resource. For example,
while some people in Chickaloon might be qualified to
subsistence hunt on the North Slope, they are not necessarily
the ones closes to the resource. The resolution would eliminate
dual management and the subsequent conflicts of dual management.
The state's fish and wildlife resources would be managed by
Alaskans and those making decisions would be held accountable by
Alaskans. If HJR 22 is passed by both legislative bodies, the
resolution would go before the voters in the 2026 general
election because it is a constitutional amendment.
MR. ST. CLAIR ended his presentation with the fifth slide,
"Conclusion." He explained that HJR 22 is a constitutional
amendment because it would give a preference, and the current
Alaska constitution says there cannot be preferences.
1:16:34 PM
REPRESENTATIVE MCCABE offered his understanding that HJR 22
would make the Alaska constitution compliant with ANILCA.
REPRESENATIVE BAKER replied yes.
REPRESENTATIVE MCCABE offered his understanding that the Alaska
State Legislature would need to change some laws. He asked
whether any bills are in play to change those statutes.
REPRESENATIVE BAKER confirmed that some laws would need to be
changed, but said the biggest lift is the constitutional
amendment. This is twofold, HJR 22 starts that conversation of
the laws and things within the state that need to be addressed
outside of HJR 22.
MR. ST. CLAIR added that this has been ongoing for a long time.
He related that [Alaska's U.S. Senator Ted] Stevens had
introduced contingency language on the federal side that would
have brought Alaska in compliance and given appropriate
commissions had Alaska adjusted its constitution with a
constitutional amendment. If HJR 22 passes both bodies, prior
to going before the people [the sponsor] will initiate the
required secondary or tertiary legislation.
CHAIR MCKAY invited Mr. John Sturgeon to provide testimony on
HJR 22.
1:19:47 PM
JOHN STURGEON, President, Safari Club International Alaska
Chapter (AK SCI), testified that AK SCI opposes dual management
of Alaska's fish and wildlife, supports the efforts of HJR 22,
and supports changes to ANILCA Title 8 so if Alaska's
constitution is changed the federal government would no longer
manage Alaska's fish and game. He said Alaska should be the
sole manager of fish and wildlife like every other state since
wildlife don't recognize political boundaries. Alaska has
managed subsistence since its territorial days, he continued,
and after it first became a state and had subsistence
priorities. Alaska's system of the Board of Fisheries and the
Board of Game cannot be beat. Any Alaskan can submit a proposal
to the boards that will be considered, unlike the federal
system. Almost always the federal system has ignored scientific
information from the Alaska Department of Fish and Game (ADF&G).
In times of low game populations, the federal system is opposed
to intensive management like predator control. The state can be
much more flexible in providing subsistence opportunities
because it has a better management system that can target rural
areas and can respond quickly. The state manages for maximum
sustained yield while the federal government manages for maximum
biodiversity.
CHAIR MCKAY invited Mr. Doug Vincent-Lang to provide testimony
on HJR 22.
1:23:37 PM
DOUG VINCENT-LANG, Commissioner, Alaska Department of Fish and
Game, testified in support of HJR 22. He said the resolution
addresses some long standing issues that have progressively
eroded the state's authority to manage its fish and wildlife
resources. Subsistence, he emphasized, is a priority in Alaska
with subsistence being in the state's statutes, regulations, and
constitution. A primary reason Alaska pushed for statehood was
to become the manager of its fish and wildlife resources and
their uses because outside interests were threatening their
sustainability. The concepts of sustainability and sustained
yield were built into the Alaska constitution and laws were
passed to establish a foundation for management. With this
framework in place, Executive Order [10857] by President
Eisenhower granted Alaska the authority to manage its fish and
game resources.
COMMISSIONER VINCENT-LANG related that Section 1314 of the 1980
Alaska National Interest Conservation Act (ANILCA] directs that
nothing in the Act is intended to enlarge or diminish the State
of Alaska's responsibility and authority for the management of
fish and wildlife resources on public lands. As well, ANILCA
requires the State of Alaska to provide preference to rural
Alaskans for subsistence on public lands. Public lands are
defined as lands, waters, and interests therein the title to
which is in the United States. It also grants the Secretary of
Agriculture and Secretary of Interior the ability to restrict
the taking of populations of fish and wildlife from public lands
when necessary to protect the viability of the said populations
or their continued uses; the keywords being "to restrict" "when
necessary". After ANILCA became law the secretaries of
agriculture and interior transferred subsistence regulation on
public lands to Alaska, as Congress intended.
COMMISSIONER VINCENT-LANG further related that in its McDowell
decision, the Alaska Supreme Court ruled that a rural preference
was against the equal access provisions of the Alaska
constitution and that all Alaskans are entitled to subsistence
preference regardless of where they live. This brought Alaska
out of compliance and began the era of what is commonly referred
to as "dual management." At first the federal government and
the state worked cooperatively under dual management to ensure
the subsistence priority was met, with Alaska continuing to be
the primary manager of the fish and wildlife resources. But
slowly changed as the Federal Subsistence Board and federal land
agencies began to supplant state management with their own.
Rather than restricting when necessary to ensure a rural
subsistence priority, they have built their own regulatory
structure that supplants state management with theirs. They
open and close seasons, adjust methods and means, and employ in-
season management.
COMMISSIONER VINCENT-LANG cited several examples of the federal
management he is referring to. In the area of Kake the federal
government opened a moose hunt after the state season closed
that took the season's entire harvestable surplus, which
jeopardized future sustained yields. As well, non-tribal, but
otherwise federally qualified users, were excluded from
participating in the hunt. Neither ANILCA nor state law make
this sort of distinction amongst Native and non-Native rural
Alaskans. In Northwest Alaska the federal government closed
state hunts for caribou despite sufficient resources to meet the
subsistence needs of all Alaskans, but they were left open to a
small number of Alaskans and prevented people who had grown up
in the region from traveling home to practice their traditions.
In the Kuskokwim River, a navigable waterway owned by the state,
the federal government sued the state and replaced state
management strategy, saying Alaska has no authority to manage
within in the boundaries of the Yukon Delta National Wildlife
Refuge. This has resulted in closures that only allow federally
qualified users to participate. The federal management strategy
is also impacting the state's ability to provide for subsistence
uses upriver within the area of federal jurisdiction about 10
King Salmon are harvested per household and above the area of
federal jurisdiction only 1.7 King Salmon are harvested per
household.
COMMISSIONER VINCENT-LANG stated that proper management and
consideration of the subsistence needs of all rural Alaskans
should be taken into consideration, regardless of whether they
live within the boundaries of federal land. He said ANILCA is
not working as envisioned when passed by Congress and is not
fulfilling the promises made to the state under the Alaska
Statehood Compact, and something needs to change.
1:31:27 PM
CHAIR MCKAY commented that HJR 22 is a very deep topic that will
be discussed in future meetings. He inquired about the outcome
of the 1990 debate [on this same topic] and whether a resolution
made it to the ballot.
MR. ST. CLAIR replied that it came up one vote shy of passing
the Senate for going to the ballot.
1:32:59 PM
CHAIR MCKAY asked why it has taken 34 years to come back to
this. He further asked what [management] would look like if HJR
22 is passed since about 60 percent of Alaska is federal land.
REPRESENATIVE BAKER responded to Chair McKay's first question.
Based on his personal experience growing up as a subsistence
hunter in a rural region dependent on subsistence hunting and
fishing, he said part of the reason for it taking so long to
come back around is that there have been resounding attempts
both for and against a rural preference for a subsistence
resident, and people got beaten down. He explained that his
reason for bringing it forward now is to see where the culture
of the state is today and to reinvigorate this conversation.
1:34:50 PM
COMMISSIONER VINCENT-LANG responded to Chair McKay's questions.
He said three things have changed. The first change is that
state management has been completely replaced with federal
management on the landscape rather than to just restrict when
necessary. The Department of Justice sued the state in federal
court saying the state has no management authority in the
Kuskokwim River, including no ability to open a salmon season
based on the state's data and being prohibited from issuing any
emergency order. A patchwork management across the landscape is
the result, especially with salmon as he outlined on the
Kuskokwim earlier. Second, the demographics in Alaska have
changed. Many people who have cultural dependencies now live in
urban areas. For example, 20 percent of Anchorage's population
is Alaska Native, and those people are now prohibited from
participating in their cultural tradition simply based on where
they now live. To the extent possible, [the state] should have
the opportunity to provide for the subsistence needs for those
people in addition to the people who are living in rural Alaska.
The third change is that federal land management desires have
crept into the federal process; for instance, predator control
cannot be done on federal land to try to build [game]
populations. Commissioner Vincent-Lang further pointed out that
even if [HJR 22] is put into place, Alaska will remain in the
same position it is now if federal changes aren't also made,
such as the language that was proposed by U.S. Senator Ted
Stevens that said if the state came into compliance then certain
sections of ANILCA would go away.
1:36:54 PM
COMMISSIONER VINCENT-LANG, in response to Chair McKay, agreed to
provide his testimony in writing to the committee.
1:37:19 PM
REPRESENTATIVE MEARS stated that this is a very big issue with
lots of potential legal discussions. She recognized that dual
management is an issue. She said the definition of subsistence
user is important and asked whether definitions would be
established with this constitutional amendment.
MR. ST. CLAIR answered that the [Alaska] constitution's Common
Use Clause currently states that every Alaskan resident is a
subsistence user. By adopting the proposed amendment, all
Alaskans would still be defined as subsistence users, but a
priority would be given to those geographically closest to the
resource when the resource is scarce.
1:39:05 PM
[CHAIR MCKAY announced that HJR 22 was held over.]
1:39:21 PM
The committee took an at-ease from 1:39 p.m. to 1:41 p.m.
HB 387-OIL & GAS TAX CREDIT: JACK-UP RIG
1:41:48 PM
CHAIR MCKAY announced that the next order of business would be
HOUSE BILL NO. 387, "An Act relating to a tax credit for certain
oil and gas equipment in the Cook Inlet sedimentary basin; and
providing for an effective date."
CHAIR MCKAY noted that a committee substitute (CS) for HB 387
has been drafted.
1:42:09 PM
REPRESENTATIVE RAUSCHER moved to adopt the committee's proposed
CS for HB 387, labeled 33-LS1282\S, Nauman, 3/11/24, [Version
S], as the working document.
1:42:33 PM
REPRESENTATIVE SADDLER objected and then removed his objection
to adopting Version S. There being no further objection,
Version S was before the committee.
1:42:54 PM
TREVOR JEPSEN, Staff, Representative Tom McKay, Alaska State
Legislature, Juneau, Alaska, reviewed the changes made in
Version S, the committee's proposed CS for HB 387. He
paraphrased from the summary of changes [included in the
committee packet], which read as follows [original punctuation
included with some formatting changes]:
Section 1: Extends date which jack-up rig must be
installed in Cook Inlet from July 1, 2026, to July
1[,] 2030. Requires jack-up rig must be used or
contracted to be used for at least 3 years to qualify
for the credit. Sets limitation on credit at
$75,000,000.00.
Section 2: No changes.
MR. JEPSEN explained that the first change of extending the date
to mid-year 2030 would allow more flexibility for getting the
rig into the inlet and would allow for adequately addressing the
Cook Inlet gas shortage. He said the second change would
require that a company purchasing and bringing a rig to the
inlet wouldn't receive the credit unless the company used the
rig in-state for three years, or a company contracting a rig
wouldn't receive the credit unless the company contracted the
rig for in-state use for three years. He stated that the third
change would set a limitation on the credit at $75 million to
protect the state, rather than there being an open-ended credit.
1:44:08 PM
CHAIR MCKAY announced that HB 387 was held over.
1:44:26 PM
The committee took an at-ease from 1:44 p.m. to 1:45 p.m.
^PRESENTATION(S): ALASKA ENERGY AUTHORITY UPDATE BY CURTIS
THAYER
PRESENTATION(S): ALASKA ENERGY AUTHORITY UPDATE BY CURTIS
THAYER
1:45:21 PM
CHAIR MCKAY announced that the final order of business would be
the Alaska Energy Authority Update presentation.
1:45:42 PM
CURTIS THAYER, Executive Director, Alaska Energy Authority
(AEA), State of Alaska, provided a PowerPoint presentation
titled "MODERNIZING THE RAILBELT GRID," dated 3/13/24. He
turned to slide 2, "About AEA," and explained that AEA's work is
comprised of six areas. The first area is Railbelt Energy AEA
owns the Bradley Lake Hydroelectric Project, the Alaska Intertie
which connects Willow to Healy, and the Sterling to Quartz Creek
Transmission Line, all of which benefit Railbelt consumers by
reducing the cost of power. The second area is Power Cost
Equalization (PCE) AEA operates this program which has a $1
billion endowment and is about a $45 million project. Under the
PCE formula established 30-plus years ago, the rate between
Anchorage, Fairbanks, and Juneau is looked at on a weighted
average, which is about 20 cents, and which is the PCE floor,
and the PCE cap is about 75 cents. If Railbelt energy costs
were to go down, there would be more money in rural Alaska for
PCE; but if Cook Inlet or Railbelt energy costs were to go up,
then it would adversely affect rural Alaska for PCE. The third
area is Rural Energy AEA constructs bulk fuel tank farms and
diesel powerhouses in about 197 communities, as well electrical
distribution grids in rural villages. The operation of these
facilities is supported through AEA's circuit rider and
emergency response programs. The fourth area is Renewable
Energy and Energy Efficiency AEA [provides funding, technical
assistance, and analysis] to both rural and urban communities on
alternative energy technologies, including biomass, hydro,
solar, wind, and other technologies. The fifth area is Grants
and Loans AEA provides grants through the Renewable Energy
Fund where the legislature has funded over $300 million worth of
projects, with about 80 percent of that money going into rural
Alaska. Seed money for projects was provided by AEA and now the
federal government is taking those projects to the next level,
which was the whole purpose of the Renewable Energy Fund. Over
100 active projects have displaced to date over 85 million
gallons of diesel. Loans into both rural and urban Alaska are
provided by AEA, including loans for renewable energy on Prince
of Wales Island and solar farms in Willow and Houston. The
sixth area is Energy Planning AEA collaborates with local and
regional partners, one example being the "governor's energy task
force."
1:49:36 PM
MR. THAYER moved to slide 3, "AEA Active Projects and Services,"
and explained that the map shows where AEA has active projects,
such as PCE, power system upgrades, bulk fuel, renewable
projects, transmission lines, hydropower facilities. He noted
that AEA's four circuit rider team members spend a lot of time
in rural Alaska providing help.
1:50:23 PM
MR. THAYER proceeded to slide 4, "Alaska Energy Security Task
Force," and related that last year there were 11 task force
meetings and 60-plus subcommittee meetings, and 150-plus hours
of public testimony was taken. The task force worked with the
university for an energy symposium and came up with 60
preliminary recommendations. He recognized Representative
Rauscher for serving on the task force and noted that [both
volumes of the task force's report] were sent electronically to
all legislators.
1:51:04 PM
MR. THAYER next discussed modernizing the Railbelt grid. He
drew attention to slide 6, "Bradley Lake Hydroelectric Project,"
and stated that Bradley Lake produces 120 megawatts (MWh) and
generates 10 percent of the power on the Railbelt at a
[generation cost] of 4 cents per kilowatt (kWh), which is the
lowest cost on the Railbelt. Bradley Lake provides energy for
550,000 Alaskans, electrifies about 54,400 homes, and 17 percent
of the power produced at Bradley Lake goes to Fairbanks. Each
utility receives a share; it is truly a statewide project. In
partnership, AEA and the Railbelt utilities are studying the
Dixon Diversion Project, which would increase Bradley Lake's
annual energy production by about 50 percent. This expansion
would displace 1.5 billion cubic feet of gas needed in Cook
Inlet by 2030, which is 7.5 percent of the unmet needs.
MR. THAYER displayed slide 7, "Alaska Intertie," which read as
follows [original punctuation provided with some formatting
changes]:
Constructed in the mid-1980s with $124 million in
State of Alaska appropriations, there is no debt
associated with the Alaska Intertie.
square4 AEA owns the 170-mile Alaska Intertie transmission
line that runs between Willow and Healy. The line
operates at 138 kV [kilovolts] (it was designed to
operate at 345 kV) and includes 850 structures.
square4 A vital section of the Railbelt transmission system,
the Intertie is the only link for transferring power
between northern and southern utilities.
square4 The Intertie transmits power north into the Golden
Valley Electric Association (GVEA) system and
provides Interior customers with low-cost, reliable
power between 2006 and 2023, the Intertie saved
GVEA customers an average of $36 million annually.
square4 The Intertie provides benefits to Southcentral
customers as well through cost savings and
resilience to unexpected events.
MR. THAYER, in response to Representative Rauscher, confirmed
that 17 percent of the energy from Bradley Lake goes to
Fairbanks.
REPRESENTATIVE RAUSCHER asked how much more energy could be
pushed through the lines to Fairbanks without overloading them.
MR. THAYER replied that it is at capacity. He pointed out that
while Bradley Lake can generate 120 megawatts, it isn't run at
120 megawatts every day. The lines serving Bradley Lake are 75
megawatts in essence, so there is a limit in size and there is
lots of congestion on the transmission lines. A redundant line
is needed to move renewables north and south and the current
lines need to be upgraded to remove the congestion. The 39-mile
Sterling Substation to Quartz Creek (SSQ) line owned by AEA was
built in 1969 and is the same line in 2024; AEA is spending $90
million to upgrade that line to connect it to Chugach Electric
Association's current system that Chugach is upgrading from 115
kilovolts to 230, which by voltage is four times, not two times,
the equivalent.
REPRESENTATIVE RAUSCHER surmised that the lower end of the
Railbelt could not send Fairbanks any more power should
Fairbanks experience a rolling brownout.
MR. THAYER responded that Fairbanks purchases some economy
energy sales on Southcentral, ships it up the Intertie, and uses
that power. He said the AEA/state ownership of the Willow to
Healy line saves the Fairbanks community about $36 million
compared to producing it on their own. During the [recent] cold
snap, sending power north to Fairbanks was ceased and Fairbanks
turned everything on and started shipping power south to
Anchorage. One line between Alaska's two largest cities is one
of the biggest challenges. If Alaska was regulated by the
Federal Energy Regulatory Commission (FERC) like other U.S.
states, two lines would be required at a minimum and possibly
three. Mr. Thayer recounted that the Swan Lake line burned
during the fire about four years ago and was out of service for
four months. The northern utilities subsequently incurred $12
million more in natural gas costs to produce power to keep
lights on in the summertime. Along with that, Homer couldn't
use all the water that was available, so water had to be spilled
over [the Bradley Lake dam]. All the utilities recognize the
problem and are working with each other to solve the problem
rather than have the silos of individual service territories.
1:56:33 PM
MR. THAYER resumed his presentation. He addressed slide 8,
"Railbelt Transmission System Urgently Needs Modernization." He
explained that upgrading the system involves looking at grid
forming, fuel savings, and energy security. Much of the system
has not been upgraded in over 40 years.
MR. THAYER continued to the upgrade on slide 9, "Grid Resilience
and Innovation Partnerships (GRIP): HDVC Line." He related that
AEA and the Railbelt utilities received a federal grant of
$206.5 million that requires [a cost share of 100 percent] from
the State of Alaska for a total of $413 million. This
[proposed] high-voltage direct current (HDVC) line would be an
eight-year project and would run under Cook Inlet from the Kenai
portion to Beluga where it would connect to three lines owned by
Chugach Electric Association, bringing that power into
Anchorage. This would be the redundant line off the Kenai
Peninsula. Also being looked at is the battery energy storage
system (BESS) for Anchorage into Fairbanks if funding is
available.
1:58:44 PM
REPRESENTATIVE SADDLER noted that often federal money comes with
the requirement that the money be spent on domestically sourced
products or services. He asked whether this GRIP money has the
requirement that it be spent on a powerline produced in America
and, if so, whether this would cause a delay.
MR. THAYER confirmed that there is a buy America provision. He
advised that the five companies which produce HDVC line are all
based outside of the U.S. He further advised that all other
U.S. states wishing to install HDVC lines are also facing this
challenge. Most of the companies that produce this line are in
Japan, which is considered a friendly ally of the U.S., so AEA
is working with the Department of Energy as are the other
states. This HDVC line cannot be bought off the shelf, it must
be made specific for a project, and the lead time is another
concern. By year three, a large deposit must be made on this
line to even get in line for it to be produced in the next three
to four years.
MR. THAYER returned to his presentation. He moved to slide 10,
"Dixon Diversion Project," and explained that the Dixon Glacier
is receding and is producing a lake and a river that would be
diverted and sent five miles over to Bradley Lake. The Bradley
Lake dam would be raised by 14 feet and the lake size increased
by 50 percent, which would electrify another 25,000-30,000 homes
and would displace 1.5 billion cubic feet of natural gas [per
year] by 2030. To feed Bradley Lake the project would include a
directional drill 14 feet in diameter through rock. Equipment
is available and the technology is there 32 years ago a
borehole was drilled for bringing the water from Bradley Dam to
the powerhouse. A federal grant of $342 million that doesn't
require a state match is being looked at by AEA. Given Bradley
Lake would be increased by 50 percent, utilities and others
would be interested in purchasing a revenue bond to get it built
because it would be backed by the power sales agreement of the
power it would produce. The study phase started two years ago
for this 50-year to 100-year project and since it is on the
Bradley Lake footprint it is an amendment to a FERC license, not
a new FERC license.
2:03:19 PM
MR. THAYER, in response to Representative Rauscher, confirmed
that the state match to the federal grant doesn't have to happen
all at once; all the money from the state doesn't have to be
available in the first year. The Department of Energy would
like the state to have a line of sight on where that funding
would be coming from in the future, but the grant money would be
tied to the exact amount that [the state makes] available. So,
if the state puts forth $20 million, the federal government will
put forth $20 million. However, he pointed out, the project is
supposed to be completed in eight years, and the cash flow
modeling is a bell curve in that it will ramp up to a high and
then ramp down quickly after construction is over. In further
response to Representative Rauscher, he confirmed that it is as
the money is spent.
2:04:41 PM
REPRESENTATIVE MCCABE, regarding the Dixon Diversion Project,
asked whether anything must be done to the Bradley Lake dam
itself.
MR. THAYER replied that the dam would need to be raised 14 feet.
In further response, he confirmed that that is included in the
cost estimate.
2:05:03 PM
REPRESENTATIVE MEARS returned to slide 9 and offered her
understanding that this is just round one of several in the
competitive process related to GRIP. She surmised that being
aggressive about getting Round One done might be beneficial to
the state in the future.
MR. THAYER confirmed Representative Mears is correct and that
the success was with GRIP 3, Round One. He drew attention to
the dotted red line going north on the map and explained it
would parallel an existing HDVC line to get to Healy where there
are two lines going to Fairbanks. A concept paper for this
project from Beluga to Healy was submitted and [AEA and the
Railbelt utilities] were asked to advance an application that is
due by 4/17/[2024]. Whether GRIP 3, Round Two, is successful
won't be known until July or August [2024] at the earliest.
There are other opportunities that would require a similar match
to the federal grant. However, different ways of financing that
match, rather than from the state, are being looked at.
2:07:25 PM
REPRESENTATIVE SADDLER asked whether [AEA and the utilities] are
on track for getting the application for Round Two submitted on
time.
MR. THAYER answered that the AEA team has hit every deadline.
He added that, to date, over $700 million is already in the
pipeline assigned to AEA or the state, with another $100 million
that AEA should know about next month.
2:08:22 PM
MR. THAYER resumed his presentation. He proceeded to the next
upgrade depicted on slide 11, "Sterling to Quartz (SSQ) and
Soldotna to Sterling Transmission Lines." He said AEA purchased
the SSQ line from Homer Electric Association about four years
ago to ensure that upgrades were done to it. Two years ago, AEA
bonded $166 million, and the upgrade is under construction with
engineering and procurement already done. The bonding was done
before there was any conversation about GRIP, but AEA had always
hoped to have a secondary line off the Cook Inlet and then the
GRIP money came.
2:09:51 PM
MR. THAYER spoke to slide 12, "Battery Energy Storage Systems
for Grid Stabilization." He related that Homer has a battery
currently in place on the Kenai Peninsula, and that a battery is
slated for October 2024 between Matanuska Electric Association
(MEA) and Chugach Electric. Ownership of that battery is being
discussed because available tax credits may be more advantageous
if they come through AEA, which may allow AEA to help with up to
50 percent of the battery cost. A battery system in Fairbanks
is to be determined the federal grant allows for GRIP to be
done in Anchorage and Fairbanks, so if $10 million is available
to put forth then Fairbanks would get $20 million towards its
battery. The batteries in Homer and Anchorage cost about $42
million and $45 million, respectively, and both are Tesla
batteries that allow for adding more battery packs. A natural
gas generator must be kept spinning in case a problem occurs;
the batteries are currently 40 megawatts for two hours and can
be used for that, thereby saving on the costs of natural gas.
As well, since the time it was built Bradley Lake has had an
oscillation problem which causes harmonics on the system that
sometimes cause it to shut down, and a battery system has helped
stabilize this.
2:12:20 PM
REPRESENTATIVE RAUSCHER asked what the central [Anchorage] and
northern [Fairbanks] batteries would achieve.
MR. THAYER replied that he knows Anchorage is 40 megawatts but
needs to confirm whether it is a two- or four-hour battery.
Fairbanks wants to upgrade its current battery that only lasts
seven minutes, which was state of the art at the time, and is
presently doing an initial analysis of what that upgrade would
look like. Anchorage was able to acquire a 40-megawatt battery,
but the goal is to expand to 70 megawatts, which is easily done.
2:13:23 PM
REPRESENTATIVE MCCABE asked if he is correct in understanding
that 70 megawatts would give four hours. He further asked how
many hours would be given by 140 megawatts.
MR. THAYER responded that he would confirm whether the Anchorage
battery is a two- or a four-hour battery but explained that the
two hours or four hours would be it depending on whether all 40
megawatts are being used at the same time.
REPRESENTATIVE MCCABE asked how much Anchorage uses on a normal
day.
MR. THAYER answered that Chugach Electric and Matanuska Electric
share part of the Anchorage territory, so he will have to get
back to the committee with an answer pertaining to Anchorage.
REPRESENTATIVE MCCABE explained that his interest in asking this
question is because if the whole city uses 50 megawatts, but the
battery is for 40, then a decision would need to be made on
which areas will go without power.
MR. THAYER replied he understands the question but clarified
that the battery is to help stabilize the system. He said
losing the whole system and not having any of the backup natural
gas or diesel generators would be highly unlikely. It's for an
immediate instant [to offset a blackout]. Bradley and Eklutna
power would still be coming in, plus the Anchorage service area
has three gas fired turbines and two that can run on diesel. If
there is a major issue, Anchorage would not be depending just on
the batteries.
2:15:49 PM
REPRESENTATIVE MCCABE related he has heard that if the natural
gas had to be shut off at the Cook Inlet Natural Gas Storage
(CINGSA) facility, it could take up to a month to repressurize
the natural gas system. He surmised that batteries, Bradley
Lake, and Eklutna by themselves wouldn't "cut it," and asked
whether any plans are in place for resolving this kind of
emergency that was close to happening a couple months ago.
MR. THAYER responded that CINGSA is one storage facility, with
Hilcorp having other storage facilities and producers being able
to bypass CINGSA by producing natural gas right into the
pipeline. While not a huge fix, MEA's natural gas generator can
also run on diesel and three days of fuel are available on site.
Chugach Electric also has a small power plant that can run on
diesel. During the recent cold snap everybody worked together
and kept the lights on even without batteries as the Anchorage
batteries have not been installed. As a whole, the utilities
have contingencies and are working on how to do this.
2:18:16 PM
MR. THAYER returned to his presentation. He displayed slide 13,
"Grid Resilience Formula Grant Program, IIJA 40101(d)," and said
AEA is in the process of forming this grant program with money
from the [Infrastructure Investment and Jobs Act (IIGA), Section
40101(d)]. He noted that the state has provided $1.8 million
the last several years and AEA was able to match a federal grant
opportunity at $12 million. Last month AEA closed on $22
million available to utilities to upgrade transmission lines
across the state, not just the Railbelt. Another $17 million
will be available at the end of [2024]. The program is set up,
but AEA needs the Department of Energy to bless its selection.
2:19:24 PM
MR. THAYER reviewed other federal funding opportunities. He
proceeded to slide 15, "State of Alaska Electric Vehicle (EV)
Infrastructure Implementation Plan," and shared that $52 million
is available for State of Alaska electrical vehicle (EV)
infrastructure. When this funding became available AEA took the
lead in a partnership with the Department of Transportation and
Public Facilities (DOT&PF). A corridor is being built from
Anchorage to Fairbanks with the $30 million that has been
unlocked, which must be part of the alternative fuel corridor.
These funds will also be dispersed from Anchorage to Homer as
well as Tok, Glennallen, and the Alaska Marine Highway System.
Electric charging stations will be looked at in 30 communities
throughout Southeast Alaska. Because this was formula funded,
the money will be dispersed to other states if Alaska doesn't
utilize it.
2:20:24 PM
MR. THAYER addressed slide 16, "Home Energy and High Efficiency
Rebate Allocations." He explained that AEA is distributing two
[federal grant] awards of roughly $37 million each, totaling $74
million, for home efficiency rebates and home electrification
and appliance rebates. The funding will be available in fall
2024 and in 2025. The funding came to AEA, but rather than
creating its own program AEA has partnered with the Alaska
Housing Financing Corporation (AHFC), which already has programs
to stand up this money.
2:21:08 PM
MR. THAYER moved to slide 17, "Black Rapids Training Site (BRTS)
Defense Community Infrastructure Pilot Program," and noted that
[this federal money] was for Fairbanks. He related that the
training site needed to replace its diesel fuel generators and
that its life was extended by bringing 34 miles of transmission
line to it rather than using diesel. Because the $12.7 million
(for which no state match was required) was received by AEA, AEA
partnered with Golden Valley Electric Association (GVEA). A $3
million supplemental budget request has been submitted by AEA.
2:21:56 PM
MR. THAYER turned to slide 18, "Other Federal Funding
Opportunities," and outlined several other programs. He said
AEA is administering the Energy Efficiency Revolving Loan Fund
of $4.5 million for which no state match is required, and AHFC
is deploying the program. Under the State Energy Program, AEA
used $3.6 million, which did not require a state match, to
develop the Statewide Energy Security Profile and worked with
the AHFC to update the Warm Energy modeling software and to do
retrofit information. An Electric Vehicle Charging Equipment
Competitive Grant of $1.6 million was received, most of which
will go to rural Alaska not for charging cars but for looking at
four-wheelers, outboards, and other similar equipment. As well,
the $1.3 million in funding for the State-Based Home Energy
Efficiency Contractor Training Grant Program provides auditor
training for home and commercial building energy contractors.
MR. THAYER displayed slide 19, "Solar For All Competition." He
explained that in this collaboration AEA is focusing on
development of community solar projects in disadvantaged
communities using a Renewable Energy Fund-style grant program
and AHFC is focusing on residential rooftop solar for low-income
households. Between these two it would be $100 million, it is
competitive, no match is required, and AEA hopes to know by
early next month whether the grant application was successful.
2:23:35 PM
REPRESENTATIVE RAUSCHER inquired about the number of cars that
can be serviced by one charging station in a day and how is that
paid for by the users.
MR. THAYER answered that the alternative fuel corridor is
required to have four charging stations that can be used at one
time at 150 kilovolts each. These stations take roughly 15-20
minutes to charge cars from 20 percent to 80 percent, and then
the charging slows quite a bit between 80 and 100. From
Anchorage to Homer and on the Alaska Marine Highway System there
will be level three chargers, which take 30-40 minutes each. We
look for a site host. The private sector will host these
charging stations and must put in a match of 20 percent and be
responsible for maintaining the stations within the standards of
the grant period. [Customers] will pay for their charging usage
via credit card.
2:25:28 PM
REPRESENTATIVE MCCABE stated that the charging station in Healy
is currently powered by Healy "clean coal." He asked whether
the money could be used to fund the transmission from the end of
the GRIP line to Healy to power that charging station.
MR. THAYER replied no, it's two different buckets of money and
if the money isn't used it will go to another state.
2:26:05 PM
REPRESENTATIVE WRIGHT asked whether it is harmful to charge the
batteries so quickly, thereby creating the problem of batteries
needing to be replaced sooner than they otherwise would.
MR. THAYER responded that the battery and charging technologies
are moving so fast that vehicles will likely be able to be
recharged within five minutes. To charge a higher end car at
home, a 200-amp service must be installed just for the car, so
the technology is changing.
2:27:02 PM
CHAIR MCKAY asked whether electric vehicles can be charged while
on an Alaska ferry.
MR. THAYER answered no, the look is being taken at charging an
electric vehicle in the community in which the ferry arrives at.
CHAIR MCKAY expressed his concern about lithium batteries self-
igniting while the EV is on a state ferry. Such fires, he
noted, cannot be put out with conventional firefighting
techniques. He proffered that Alaska's ferries will need to be
equipped and personnel trained to handle lithium battery fires.
MR. THAYER replied he hasn't heard any discussion about this but
pointed out that all the electric vehicles in Juneau came by
state ferry. He suggested that DOT&PF be asked this question.
2:29:13 PM
MR. THAYER resumed his presentation and began his wrap-up about
AEA's programs and projects. He moved to slide 20, "Power Cost
Equalization (PCE)," and said that last year AEA dispersed $42
million to 80,000 Alaskans in 82 rural communities. Turning to
slide 22, "Rural Power Systems Upgrades and Bulk Fuel
Upgrades*," he stated that there are 197 communities eligible
for rural power system upgrades and AEA has 35 active projects.
However, he continued, the deferred maintenance is over $300
million just in the powerhouses. Regarding bulk fuel upgrades,
he pointed out that there are [over 400 rural bulk fuel
facilities] and 35 active projects, and the deferred maintenance
is $800 million. This is an ongoing issue and despite the
legislature funding it during regular intervals and getting
federal match, AEA is always behind the curve with the next
electrical emergency.
2:31:29 PM
MR. THAYER continued to slide 23, "Electric Emergency Response,"
and noted that AEA has a standing request of $200,000, which the
legislature has funded. Generally electrical emergencies cost
about $45,000 each. But, he added, if maintenance and
replacement is up to date, then not as much money will be needed
for electrical emergencies.
MR. THAYER proceeded to slide 24, "Renewable Energy Fund (REF),"
and related that last year the legislature funded $17 million
for 18 projects, and this year AEA in concert with the REF
Advisory Committee recommended 24 projects totaling $32 million.
He recognized that it is a tough budget year and that the
governor has put $5 million in the budget to continue funding
these projects, so not all 24 projects can be funded.
2:32:51 PM
MR. THAYER spoke to slide 25, "Power Project Fund (PPF) Loan
Program." He said there is $31 million in outstanding loans
with no delinquencies and there is one pending application. He
said the patient capital is at 4.3 percent, but currently for
the uncommitted cash balance the program has been put in
abeyance until additional capital is secured and the loan
portfolio recapitalized.
MR. THAYER displayed a photograph of AEA staff on slide 26. He
noted that despite being a small agency, AEA currently has over
a billion dollars' worth of projects. He reported that AEA's
capital budget has gone up 1004 percent in four years, not
counting this year, primarily due to federal dollars. He
predicted that it would go up to 2500 percent in five years once
the GRIP money is included.
2:34:21 PM
REPRESENTATIVE MCCABE referred to the $1 billion endowment fund
for the PCE program. He inquired about the interest that has
been earned and how much is waiting in the account to be used
for rural electrical.
MR. THAYER replied that the PCE endowment is managed by the
permanent fund. There can be earnings or a deficit depending on
the market, and it is an averaging cost. The first, say, $45
million is for the power cost equalization program and the
second $30 million goes to community assistance, primarily
revenue to smaller communities. If there is additional funding
it can be used for powerhouse upgrades, the Renewable Energy
Fund, or for bulk fuel, but this has happened only two or three
times in the endowment's history. Two years ago, the
legislature changed the formula for PCE from paying up to 500
kilowatts per home to paying up to 750, thereby increasing the
power reimbursement by 50 percent. So, instead of costing $32
million to run the program it now costs $45 million. The
endowment has not increased to keep up and no additional funds
have been added to the endowment, so right now the endowment's
earnings are just keeping up with PCE and a little bit over into
community assistance.
2:36:33 PM
REPRESENTATIVE MCCABE stated that the legislature is struggling
with education funding and a major problem for schools in the
Bush the $1 per kilowatt hour for electricity. He said he has a
bill to put schools back on PCE like they were before. He asked
whether this would drain the PCE funding such that villagers
wouldn't get PCE funding for their homes.
MR. THAYER responded that the PCE program pays for residential
and for community facilities. A school is not considered a
community facility. He said it is a policy call by the
legislature and the governor on whether to use the PCE endowment
for more items, but two years ago $15 million more began coming
out for residential cost. The endowment has not been able to
keep up as generously as it was before. Right now, the
endowment is at a loss for this year, which means the averaging
will have to be from previous years to make sure there is enough
cost. In the past before the endowment, the PCE was paid from
the general fund (GF).
2:39:25 PM
MR. THAYER returned to his presentation. He said the Susitna-
Watana Hydroelectric Project is included in the appendix section
because it is of interest to people. Turning to slide 29,
"Susitna-Watana At-A-Glance," he stated that the project would
result in approximately 70 percent of the power generated in the
Railbelt originating from renewable sources. The dam height
would be 700 feet, the reservoir would be 42 miles long and 1.25
miles wide, the installed capacity would be 618 megawatts, the
annual energy would be 2.8 million megawatt hours, and the cost
in 2014 dollars when the last cost estimate was done was $5.6
billion.
2:40:52 PM
MR. THAYER addressed slide 30, "Why Susitna-Watana?" He related
it would be 50 percent of the estimated power supply of current
Railbelt energy demand, would have a life of 100 years, and
would have a cost savings of $11 billion [in 2014 dollars] in
the first 50 years.
2:40:57 PM
MR. THAYER displayed slide 31, "Susitna-Watana History," and
related that the first studies were done by the U.S. Bureau of
Reclamation in the 1950s. He pointed out that this was before
natural gas was discovered in Cook Inlet, so it was thought that
hydroelectric projects would make the Railbelt successful. In
the 1980s studies were done by the state. In 2010 the goal was
to have 50 percent renewable energy by 2025, but today's number
is about 34 percent. In 2011 the legislature authorized AEA to
pursue the Susitna-Watana hydro facility, and studies began in
2012. In 2017, primarily due to oil prices, it was put into
abeyance by Governor Walker's administration. In 2019 the
abeyance was rescinded but AEA hasn't done any work or invested
any money on the project.
2:41:51 PM
MR. THAYER proceeded to slide 32, "Susitna-Watana Employment
Opportunities." He related that [pre-construction] employment
would be 5,000 direct jobs, construction employment would be
12,000 direct jobs and 11,000 indirect jobs, and during the life
of the project there would be about 28 direct jobs and 105
indirect jobs.
2:42:15 PM
MR. THAYER concluded his presentation with slide 33, "Susitna-
Watana Timeline." He said the pre-application phase of
preparation, planning collaboration, and environmental studies
would take 2-3 years. Regarding the FERC review phase, he noted
that the state has already invested $200 million in FERC studies
and between $80 million and $100 million would be needed to
complete those FERC studies. Once a FERC study is in hand and
granted, it de-risks the project and investors will line up for
a 6 percent return over a period of 100 years. There would then
be the project execution phase and a constriction phase of 9-11
years, after which there is the operational phase. So, this is
a 15- to 20-year project. Once operational, the project would
displace half the amount of natural gas, 22 billion cubic feet,
that is used today, and there would not be a natural gas
shortage in Cook Inlet. Regarding comparisons made to the
Iceland Model, he pointed out that that project lowered their
cost and brought in new industry, but it was done 40 years ago
while the Susitna-Watana Project is still being talked about.
2:44:00 PM
REPRESENTATIVE RAUSCHER stated he is a big fan of the Susitna-
Watana Project. He asked whether today's estimated cost would
be tempered somewhat from the 2014 estimated cost given
technological advancements.
MR. THAYER replied that he doesn't know what the costs would be
to build it, but technology has changed. For example, it is
being found for the Dixon Diversion that costs are dropping
instead of increasing, although he isn't saying that that would
be the case for Susitna-Watana. He advised that before the
state invests any more money, there must be talks with FERC to
find out what FERC permits are current or need to be upgraded
and then the financial modeling must be updated to find out
whether the cost estimates of 2014 hold true or have changed
with inflation.
2:45:33 PM
REPRESENTATIVE SADDLER stated he is a big fan of the Susitna-
Watana Project. He inquired about what the potential financial
models would be for the project.
MR. THAYER responded that the project has looked at several
financing models. In his experience at AEA, there are pension
funds, private equity, and companies sitting on cash, plus
renewables are a hotter topic today than they were 10 years ago.
Another issue to look at is what types of tax credits could be
available that weren't available 10 years ago. The market has
changed, but probably about six or more people a year want to
talk about Susitna-Watana.
2:47:18 PM
REPRESENTATIVE MCCABE asked where the biological and geological
research results can be found from all those years of studies.
MR. THAYER answered that over the last two years AEA has
digitized most of its records and put them in a data library.
When the project was put into abeyance, the documents were sent
to the university as well as kept in AEA's system.
2:49:07 PM
REPRESENTATIVE MCCABE opined that if hydroelectric hadn't been
shut down 30 years ago, the windmills on Mt. Susitna that some
of his constituents are complaining about as being ugly wouldn't
have been needed.
MR. THAYER responded that even though some projects weren't
built, Alaska is in the unique position of having options, such
as hydroelectric, wind, solar. However, he advised, it all goes
back to building the backbone things are stuck if there aren't
transmission systems that can flow this power to the north and
south and to different projects. So, this transmission upgrade
is key to unlocking the potential of whatever that potential
happens to be. He said he has been told that Fairbanks has
better wind regimes than other spots in Southcentral Alaska and
explained that it takes a combination of projects throughout
different areas to provide a steady power supply. However, he
reiterated, it all starts with transmission upgrades.
2:51:29 PM
REPRESENTATIVE MCCABE related that he has heard discussion of
the state, probably AEA, taking over all the transmission lines
and then buying power from the various power companies, which
would eliminate the price differential, competition, tariffs,
and so forth. He asked whether there is a plan through AEA to
do that.
MR. THAYER answered that SB 217 from the governor addresses the
wheeling rate and trying to remove tariffs, and the Senate
Resources Standing Committee has another bill, SB 257. The
utilities and AEA have discussed what it would take to unify the
transmission system because currently power from Bradley Lake
goes from AEA's system to Homer's system back to AEA's system to
Chugach's system to MEA's system back to AEA and then it goes to
Fairbanks. A complicating factor is that those are owned assets
by those utilities and there are bond convenances on those. So,
there are the two Senate bills as well as the conversations for
what things might look like. As well, models around the world
show that this does work.
2:54:09 PM
CHAIR MCKAY thanked the testifiers.
2:54:54 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:55 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HJR 22 Sponsor Statement.pdf |
HRES 3/13/2024 1:00:00 PM |
HJR 22 |
| HJR 22 ver. A.pdf |
HRES 3/13/2024 1:00:00 PM |
HJR 22 |
| HJR 22 Presentation.pdf |
HRES 3/13/2024 1:00:00 PM |
HJR 22 |
| CSHB 387(RES) LS-1282S.pdf |
HRES 3/13/2024 1:00:00 PM |
HB 387 |
| CSHB 387(RES) LS-1282S Summary of Changes.pdf |
HRES 3/13/2024 1:00:00 PM |
HB 387 |
| Presentation - Alaska Energy Authority Updates.pdf |
HRES 3/13/2024 1:00:00 PM |