Legislature(1993 - 1994)
03/03/1993 09:10 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 3, 1993
9:10 a.m.
TAPES
SFC-93, #33, Side 1, (363-end)
SFC-93, #33, Side 2, (575-end)
SFC-93, #35, Side 1, (000-428)
CALL TO ORDER
Senator Drue Pearce, Co-chair, convened the meeting at
approximately 9:10 a.m.
PRESENT
Sen. Pearce, Co-chair. Sen. Frank, Co-
chair.
Sen. Jacko Sen. Kelly
Sen. Rieger Sen. Sharp
Senator Kerttula arrived soon after the meeting began.
ALSO ATTENDING: Sen. Lincoln; Sen. Taylor; Rep. Olberg;
Dean J. Guaneli, Chief, Assistant Attorney General, Criminal
Division, Dept. of Law; Ron Garzini, Executive Director,
Alaska Energy Authority; Dave Hutchens, Executive Director,
Alaska Rural Electric Cooperative Association; Jim Kohler,
Southeast Conference; Darsie Beck, Alaska Environmental
Lobby; John L. Shepherd, aide to Senate President Rick
Halford; and aides to committee members and other members of
the legislature.
SUMMARY INFORMATION
SB 19 - Act relating to the crime of conspiracy.
Testimony was presented by Dean Guaneli and
John Shepherd. A letter of intent was
ADOPTED to accompany the bill. The bill was
then HELD in committee for amendment by
Senator Rieger.
SB 46 - Act authorizing moose farming.
Testimony was presented by Darsie Beck. CSSB
46 (Fin) was then REPORTED OUT of committee
with zero fiscal notes from the departments
of Natural Resources, Fish and Game, and
Environmental Conservation.
SB 106 - Act authorizing power transmission interties
between Anchorage and the Kenai Peninsula,
between Healy and Fairbanks, and between
the Swan Lake and Tyee Lake
hydroelectric projects, and approving
the design and construction costs of the
interties; and providing for an
effective date.
Testimony was presented by Sen. Lincoln, Sen.
Taylor, Rep. Olberg, Ron Garzini, Dave
Hutchens, and Jim Kohler. A draft CSSB 106
(Fin) was ADOPTED. The bill was subsequently
HELD in a committee of the whole for
subsequent discussion.
SB 126 - Act making special appropriations for design
and construction of power transmission interties
between Anchorage and the Kenai Peninsula,
between Healy and Fairbanks, and between the
Swan Lake and Tyee Lake hydroelectric
projects; and providing for an effective
date.
Discussion was had in conjunction with SB 106
(above). A draft CSSB 126 (Fin) was ADOPTED.
The bill was subsequently HELD in a committee
of the whole for subsequent discussion.
SENATE BILL NO. 19
An Act relating to the crime of conspiracy.
Upon convening the meeting, Co-chair Pearce directed that SB
19 be again brought on for hearing and announced her intent
to move the bill from committee. She then referenced the
following letter of intent from Senator Halford and advised
of his request that it be adopted:
It is the intent of the Senate Finance Committee
that law enforcement techniques employed in
investigations of criminal conspiracy as defined
in Senate Bill 19 should be consistent with the
protections against police entrapment under AS
11.81.450.
JOHN SHEPHERD, aide to Senator Halford, came before
committee. He explained that the above language is intended
to address concerns raised by Senators Kelly and Kerttula
when the bill was previously before committee. The Dept. of
Law reviewed existing statutes relating to entrapment and
cited the pertinent section in the letter of intent.
Co-chair Pearce directed attention to new fiscal notes for
the legislation and explained that SFC notes reduce numbers
for the Dept. of Corrections, Alaska Court System, Office of
Public Advocacy, and Public Defender Agency to match numbers
provided by the Dept. of Law in terms of anticipated cases
that might be brought under conspiracy law. She referenced
information in the Dept. of Law fiscal note indicating that
conspiracy would be included as an additional count in cases
that would be prosecuted anyway. The major effect of
conspiracy statutes would be to permit introduction of
additional evidence at trial.
Senator Kelly MOVED for adoption of intent language as a
Senate Finance letter of intent. No objection having been
raised, the Senate Finance letter of intent was ADOPTED.
Senator Rieger directed attention to CSSB 19 (Jud), page 2,
lines 2-13, and raised questions regarding application to
juveniles and mentally incompetent individuals. DEAN
GUANELI, Chief, Assistant Attorney General, Criminal
Division, Dept. of Law, came before committee. He explained
that to be convicted of a crime under Alaska law, one must
be "acting with a certain mental state" (acting either
intentionally or recklessly) when the crime is committed.
Certain factors, however, preclude a jury from finding that
a perpetrator so acted. As an example, Mr. Guaneli noted
that if the perpetrator was intoxicated, the jury would be
justified in finding that he or she did not act
intentionally.
Questioned language says that if one conspires with someone
who is intoxicated, and the jury finds that the intoxicated
individual does not fall under legally required intent
provisions, the conspirator can still be convicted of
conspiracy. Intoxication of one of the conspirators does
not excuse a co-conspirator.
Senator Rieger then asked if an individual could be excused
from being charged with a crime because of his or her mental
state but might not be excused from conspiring. Mr. Guaneli
reiterated that an individual may be excused if peculiar
circumstances surround the person's mental state, i.e.
intoxication or incapacity. Co-conspirators, however, would
not be similarly excused. Application of the mental state
test is individually based. One cannot rely upon another's
mental deficiencies to escape a charge.
Senator Rieger next asked how the foregoing examples would
apply to those who are judged "legally incapable in an
individual capacity of committing a crime." Mr. Guaneli
referred to existing statutory defenses based on age.
Language in the proposed bill says that the fact that an
individual conspires with a juvenile who is, by legal
definition, incapable of committing the crime does not
excuse the conspirator. An individual is not excused
because he or she hires a juvenile to commit a crime.
Senator Rieger then asked if the language would work in
reverse. If a juvenile conspires with an older person does
the juvenile lose that defense? Mr. Guaneli responded
negatively. He explained that the defense is personal to
the juvenile. Since the juvenile is of an age that cannot
legally commit the crime, he or she would not be guilty of
conspiracy.
Senator Rieger suggested that language within subsection (c)
(page 2, line 2) states that "It is not a defense that the
defendant belongs to a class of persons who are legally
incapable of committing the crime." Mr. Guaneli
acknowledged need to review the language in relation to
existing law.
Co-chair Pearce asked if Senator Rieger wished to hold the
bill for future amendment. Senator Rieger answered
affirmatively. He advised that his first reading of the
bill highlighted potential for inadvertent inclusion of
juveniles who conspire with adults. The Co-chair directed
that SB 19 be HELD in committee. She further asked that
Senator Rieger prepare his amendment for presentation at the
Friday committee meeting. Senator Rieger said he would do
so. He voiced support for the legislation and said it was
not his intent to hold it. The apparent loophole, however,
should be closed.
SENATE BILL NO. 46
An Act authorizing moose farming.
Co-chair Pearce directed that SB 46 be brought on for
discussion; referenced a draft CSSB 46 (Fin) (8-LS037\J,
Utermohle, 3/1/93); and explained that it incorporates
Amendments Nos. 1 and 2, adopted at a previous meeting. She
also noted a new, zero fiscal note from the Dept. of Fish
and Game.
DARSIE BECK, Alaska Environmental Lobby, came before
committee in opposition to SB 46. He said that the bill
would be both detrimental to Alaska wildlife and a waste of
taxpayers' money. Concerns relating to biological issues
have been well documented. Moose farming will increase the
spread of disease in both domestic and wild populations.
Negative impact on predator populations will occur under
game farmer control.
SB 46 also creates incentive for illegal harvest of wild
moose by poachers.
The fact that fiscal notes accompanying the bill show no
cost to the state is suspect. The Dept. of Environmental
Conservation would incur the cost of monitoring and treating
diseased livestock. The Dept. of Fish and Game would be
responsible for responding to complaints from tourists and
other parties concerning the treatment of captive moose.
The department would also bear the cost of ensuring that
disease is not transmitted by domestic moose to wild stocks.
The Dept. of Public Safety would incur increased costs to
control poaching. While the above-mentioned costs are not
shown on department fiscal notes, they would be incurred by
department budgets. The magnitude of these costs may not be
realized until a tragedy occurs. In Alberta, Canada, $10
million was spent and 2,000 domestic elk were eradicated in
an unsuccessful effort to control tuberculosis. Costs and
the biological risk associated with moose farming far
outweigh possible benefits.
Senator Sharp requested that Mr. Beck present documented
facts associated with the situation in Alberta. Mr. Beck
agreed to do so.
Co-chair Pearce queried members concerning disposition of
the bill. Senator Kelly MOVED for passage of CSSB 46 (Fin)
with individual recommendations and the accompanying zero
fiscal notes. No objection having been raised, CSSB 46
(Fin) was REPORTED OUT of committee with zero fiscal notes
from the departments of Natural Resources, Fish and Game,
and Environmental Conservation. Co-chairs Pearce and Frank
and Senators Kelly, Rieger, and Sharp signed the committee
report with a "do pass" recommendation. Senator Kerttula
signed "Do not pass."
SENATE BILL NO. 106
An Act authorizing power transmission interties between
Anchorage and the Kenai Peninsula, between Healy and
Fairbanks, and between the Swan Lake and Tyee Lake
hydroelectric projects, and approving the design and
construction costs of the interties; and providing for
an effective date.
SENATE BILL NO. 126
An Act making special appropriations for design and
construction of power transmission interties between
Anchorage and the Kenai Peninsula, between Healy and
Fairbanks, and between the Swan Lake and Tyee Lake
hydroelectric projects; and providing for an effective
date.
Co-chair Pearce directed that SB 106 and 126 be
simultaneously brought on for discussion and noted proposed
committee substitutes for both bills. Senator Sharp MOVED
for adoption of draft CSSB 106 (8-LS0594\R, Cramer, 3/2/93)
as a working document. No objection having been raised,
CSSB 106 (Fin) was ADOPTED. Senator Sharp next MOVED for
adoption of CSSB 126 (8-LS0649\K, Cramer, 3/2/93) as a
working document. No objection having been raised, CSSB 126
(Fin) was ADOPTED.
As background information, Senator Sharp told members that
in the early 1980s the state committed major amounts of
general funds to construct four hydroelectric projects: two
in Southeast, one at Kodiak, and one at Valdez. During the
same time period, the legislature set aside $200 million in
the railbelt energy fund to provide similar long-term energy
projects for Southcentral and Interior Alaska. Legislation
proposed in CSSB 106 (Fin) and CSSB 126 (Fin) will carry out
that legislative intent via construction of a power grid
connecting the major population centers of Alaska. That
intertie system will provide long-term benefits to over 70%
of Alaska's population.
Major benefits to be offered by the interties include:
1. Reliability of service.
2. Economy of size.
3. Mix of generating sources including hydroelectric,
natural gas, coal, and petroleum fuel.
4. Unified load dispatching by all utilities along
the
system.
Senator Sharp next provided a brief sectional analysis of
CSSB 106 (Fin):
Sec. 1 - Requires contracts between the Alaska Energy
Authority (AEA) and public utilities involved in the
intertie. Projects can only proceed if utilities have
agreed to pay any cost overruns and future operation
and maintenance costs. This section was modified in
CSSB 106 (Fin) to accommodate comments set forth on a
position paper from the administration.
Sec. 2 - Authorizes construction of a 138 kilovolt
power transmission line between Kenai and Anchorage.
The line will increase ability to deliver major blocks
of energy from the Bradley Lake hydroelectric project
to the Anchorage load center.
Sec. 3 - Authorizes construction of a 138 kilovolt line
from Healy to Fairbanks. Power presently flows into
Healy from the south through a 10-inch, 230 kilovolt
line and continues to Fairbanks through a 6-inch line.
That creates a bottleneck at Healy. The new line will
allow maximum utilization of transmission capacity from
Anchorage. It will also allow Golden Valley Electric
to deliver its share of Bradley Lake Power to the
interior and purchase surplus power from Anchorage
utilities to meet peak demands.
Sec. 4 - Authorizes an intertie between Swan Lake and
Tyee Lake hydroelectric sites.
Sec. 5 - Requires that Anchorage, Kenai, and the
Healy/Fairbanks intertie construction only proceed if
an agreement between AEA and the utilities is in place
stating that the utilities will pay all construction
costs over the $99,250.0 (the state's 50% share) as
well as furture operating and maintenance costs. This
requirement is a "stop loss on cost overruns for state
liability."
Sec. 6 - Provides that the act take immediate effect.
Senator Sharp explained that CSSB 126 (Fin) contains the
$99,250.0 appropriation for the railbelt interties and the
$9 million for the Swan Lake/Tyee Lake intertie.
Senator Kerttula termed the legislation "a flat Christmas
tree." He then questioned the use of funding proposed in
Sec. 2 of CSSB 126 (Fin), advising that railbelt funds
result from an agreement to provide the four dam pool with
its arrangement while reserving funding for the railbelt
energy program from Bradley Lake to Fairbanks and Fairbanks
to Copper Center and Valdez, in a continuing circular grid.
End, SFC-93, #33, Side 1
Begin, SFC-93, #33, Side 2
Senator Kerttula further attested to the approximate $18
million in subsidy for bush energy as part of the foregoing
arrangement.
Use of the funds for Swan Lake/Tyee does not meet the
original intent. If that is to occur, some of the funding
should flow to bush Alaska as well. Senator Kelly voiced
recollection of use of railbelt moneys for interties from
Bradley Lake to Fairbanks but not "back around the highway."
Senator Kerttula noted that the state acquired right of way
from Glennallen to Sheep Mountain as part of the eventual
intertie. In his concluding remarks, Senator Kerttula
attested to need for the Swan Lake/Tyee intertie to stand
with other projects for appropriation from the general fund.
He voiced reluctance to utilize the proposed $9 million for
"something we've already paid for several times in the four-
dam-pool concept." Senator Kelly observed that the $9
million would not flow from the railbelt energy fund but
from the power development revolving fund. Senator Sharp
concurred.
REPRESENTATIVE HARLEY OLBERG came before committee asking
that members consider strengthening the railbelt energy
system through construction of an intertie from Sutton to
Glennallen. The Copper Valley Electric Association, located
in Glennallen, would then become a major purchaser of
electricity from railbelt producers. Purchases would
initially approximate $1 million per year. As growth in the
Copper Valley/Valdez/Glennallen area continues, that figure
could increase to as much as $2 million in annual purchases
of what is now excess electricity.
The 3,000 customers in the Copper Valley System currently
pay the highest non-subsidized rates in the state. Problems
with the existing system reflect the fact that it traverses
difficult terrain, including Thompson Pass. Overall
strengthening of the system is important. Economic
development is stymied in the eastern interior and Valdez
because of power costs. It is critical that the state have
a strong, centralized power grid from which extension can be
made to areas with development potential.
Co-chair Pearce inquired regarding the cost of the extension
from Sutton to Glennallen. Representative Olberg responded
that, while estimates are not precise, the most commonly
used number is $42 million. The present request is for half
of that amount. The Representative added that if the
requested intertie were funded, the cost of power on 20
million kilowatt hours per year to Copper Valley would be
reduced by two thirds. The present cost is approximately 15
cents for diesel generation of a kilowatt hour. Railbelt
producers have offered power in Sutton at 4 to 5 cents.
That would save $2 to $3 million a year, portions of which
could be used for debt service and rate mitigation.
Senator Kerttula voiced support for the concept. He then
inquired regarding Copper Center obligations to the intertie
from Valdez. Representative Olberg advised that he could
not speak to the overall monetary obligation. He
acknowledged the four-dam-pool obligation out of Solomon
Gulch, and noted that Solomon Gulch is producing at 100%
capacity. Senator Kerttula suggested that a $40 to $50
million question would be raised by the Sutton to Glennallen
proposal.
Representative Olberg further advised that Ahtna Corporation
has indicated a willingness to consider no-cost right of
ways within corporation lands for extension of electrical
services. The corporation is very supportive of the
project. Senator Kelly asked if a portion of the estimated
cost of the extension would purchase land for right of way.
Representative Olberg answered negatively. He subsequently
expressed reluctance to make commitments on Ahtna's behalf.
Co-chair Pearce asked that Representative Olberg obtain
written evidence of Ahtna's interest.
SENATOR GEORGIANNA LINCOLN next came before committee. She
concurred in Representative Olberg's request for
consideration of an intertie between Sutton and Glennallen.
She reiterated that residents in the Copper Basin and Valdez
pay the highest unsubsidized electric rates in the state--an
average of 20 cents per kilowatt. Economic development in
the region is directly tied to electrical rates. An
intertie between the region and the railbelt would reduce
power costs and open the area to economic development. The
Copper Basin is currently connected to the state-owned
Solomon Gulch hydroelectric project by a 138 kilowatt
transmission line. The Sutton to Glennallen intertie would
bring a large area of Alaska into the railbelt electrical
system.
Projects such as the Petrostar Refinery in Valdez and
economic development of the Copper River area, through
development of the Wrangell St. Elias National Park, are
directly tied to cheaper electric rates. The intertie would
reduce Copper Valley Electric Association's consumption of
diesel fuel and subsequently reduce exhaust emissions
resulting from the mothballing of two diesel generators used
during the winter. The population to be impacted by the
proposed intertie totals 8,000 residents.
Senator Lincoln next read from correspondence in support of
the project from Ken Johns, Executive Director, Copper River
Native Association:
I have met with members of the board and staff at
CVEA to discuss alternatives to these high rates.
Most alternatives seem to be band-aid type
remedies with no long-term solution. The one
option that almost guarantees a long-term solution
to our high electric rate is the proposed intertie
from Sutton to Glennallen. This intertie would
connect CVEA to a railbelt grid, would provide
reduced-cost power to the CVEA service territory,
and it would eliminate the CEVA's need to operate
the high-cost diesel generation plant.
Senator Lincoln further read the following comments from a
feasibility report on the Sutton/Glennallen line, prepared
for the Copper Valley Electric Association:
The CVEA's member/owners pay some of the highest
unsubsidized retail rates in the United States.
The major part of the rate differential between
CVEA and the railbelt utilities is attributed to
the cost of power generation. It has been
recognized for a number of years that the
interconnection of CVEA's system to the railbelt
transmission grid is the only certain way to open
the door to a long-term power supply and to the
opportunity to initiate a significant and
meaningful rate reduction program.
In addition to concern regarding absence of the
Sutton/Glennallen intertie from the bill, Senator Lincoln
noted omission of rural PCE needs, expressing fear that as
other projects are included within the bill, it may be
impossible to add PCE projects at a later time.
Senator Lincoln observed that SB 124 (Alaska Energy
Authority Powers and Finances), sponsored by the Governor,
relates to interties and includes PCE. That is not part of
the present discussion before committee. She reiterated
concern that should SB 106 and 126 go forward, bush Alaska
will not have an opportunity to discuss rural needs.
The Senator next referenced a recent article in the
Anchorage
Times, relating to Lime Village. That community of
approximately 30 people has no electricity. The article
further states that an informal survey conducted in 1991
found 15 year-round settlements without electrical systems.
Senator Lincoln then read a list of the communities. She
reiterated need to review the statewide picture in terms of
electrification and provision of "as cheap a power as
possible." The legislature is not presently doing that.
She stressed need for Alaska Energy Authority participation
in discussions and noted that Alaska should have an overall
plan for energy throughout the state rather than a hit and
miss approach.
Co-chair Pearce advised that representatives of AEA were
present to testify. She added that while the Governor
introduced a complete restructuring plan for the authority,
and a portion of the plan deals with continuation of power
cost equalization, review of the plan indicates that
additional dollars needed for capitalization (primarily for
power cost equalization) are "just not on the table . . . ."
That bill is somewhere in the system.
Senator Kelly referenced Senator Lincoln's request for
inclusion of a portion of the Sutton to Glennallen project.
He then asked if she would support the bill on the floor of
the Senate if her request is accommodated. Senator Lincoln
reiterated need for a statewide energy plan that ensures
that bush Alaska is not left out of the loop. Senator Kelly
observed that the state has spent considerable amounts on
PCE with the understanding that railbelt moneys remain in
railbelt areas. PCE is a separate issue. Senator Kelly
then said that if Senator Lincoln (who is asking that a
portion of the railbelt moneys go to her district) is not
going to support the bill on the floor of the Senate, he
would not support inclusion of her request.
Senator Kerttula reiterated support for the intertie from
Sutton to Glennallen but again questioned who would be
responsible for the existing line from Valdez to Glennallen.
Electricity generated in Valdez now ends up in Copper
Center. If, following construction of the requested
intertie, Copper Center would no longer utilize the power
and Valdez cannot absorb it, there will be a financial loss
on the existing line. Who is responsible for that? If
residents of Copper Center are expected to pay for that line
no matter what, providing them power from an alternate
source will not decrease the cost of their power.
Senator Kerttula again referred to Sec. 2 of CSSB 126 (Fin)
and suggested that the appropriation from the power
development revolving loan fund for Swan Lake/Tyee would
drain the fund and preclude ongoing reconstruction in bush
areas.
SENATOR ROBIN TAYLOR next came before committee. He
explained that he had little time to review the significant
changes embodied in the newly adopted drafts of both bills.
He said he wished to speak first to utilization of railbelt
energy funds and then to utilization of the income stream
from the four dam pool.
As background information, Senator Taylor said he had fought
for the past four years to maintain the commitment to the
railbelt energy fund. He then voiced his belief that use of
railbelt energy funds was at the discretion of legislators
from the railbelt area. Other areas of the state should not
be tapping into those moneys.
Senator Taylor then explained that his request throughout
the years was that upon final distribution of railbelt
funds, Alaska residents who presently pay a minimum of 5.5
cents per kilowatt, as a result of poorly engineered and
overbuilt AEA projects, would be able to use a portion of
daily payments to pay for "our own interties." In past
years there was no resistance to that request.
Senator Taylor voiced his belief that intertie needs
relating to Solomon Gulch should not be funded from railbelt
moneys. He suggested that they instead be considered "as
part of the overall plan." He further voiced his opinion
that income from four-dam-pool repayments should not accrue
to the general fund or to the support of the Alaska Energy
Authority and its activities. At the least, revolving loan
funds "should be available to us to come back as revenue to
pay off bonds that would finance this construction."
Senator Taylor next voiced his understanding that the
administration has decided that "each of your projects
should have to pay 50%" and that railbelt legislators have
agreed that that is a fair leveraging of the funds. He then
asked where his 50% would begin. Referencing the February
24, 1993, position paper (copy on file in the original SFC
bill file for SB 106) from the Dept. of Commerce and
Economic Development, Senator Taylor noted the following:
AEA would oppose the idea of financing 100 percent
of the Tyee-Swan construction cost from the
existing power sales revenue stream because it
would mean no contribution from the affected
communities toward the payment of intertie
construction costs beyond what they are already
paying on existing debt.
The Senator suggested that the foregoing indicates that
Ketchikan residents would pay an additional 5-cent surcharge
beyond the current 5-cent charge if the requested intertie
was constructed. That would equate to a total of 16 cents.
The Anchorage bowl area pays approximately 6 cents. Four-
dam-pool communities were told when they signed power sales
agreements with the Alaska Energy Authority that the
authority would be responsible for maintaining power lines
and dams owned by the state. AEA is now saying that the
communities should pay this cost. Senator Taylor stressed
that moneys from the $9.2 million paid annually by the
communities should be used for that maintenance rather than
accrue to a revolving loan fund for other projects.
The Alaska Energy Authority study of the intertie between
Swan Lake and Tyee found the project to be feasible.
Increased revenues generated by power sales of Tyee power
that is now being "spilled" would pay for 80% of the line.
Under the worst case scenario, the state would have to "put
in $20 million out of the $55 million to build this line."
Senator Taylor reiterated that what he seeks from the
legislation is authority to use four-dam-pool revenue stream
moneys to pay off the intertie.
Referring to the 15 remote villages mentioned by Senator
Lincoln, Senator Taylor said that 5 are within 50 miles of
the Swan Lake/Tyee intertie.
Senator Kerttula commented on earlier proposals relating to
Susitna as well as return of loan payments to the general
fund. Senator Taylor suggested that the "eventual gridding"
of the state is better done and controlled by the people who
are paying for it rather than by a state agency. He further
commented on future uses of revolving power development
moneys.
RON GARZINI, Executive Director, Alaska Energy Authority,
next came before committee. He advised of his willingness
to work with both Senator Sharp and Senator Taylor on the
legislation and acknowledged that, with amendments, the
bills could become a major step for economic development.
He further acknowledged that the original AEA plan proposed
a Southeast intertie with more favorable terms than those
included within the adopted committee substitutes for the
legislation.
Mr. Garzini directed attention to nine amendments which he
said the authority views as "appropriate for SB 106." He
voiced his belief that the amendments are consistent with
the wishes of the legislature and merit considerations. He
then requested a hearing devoted to energy issues. Mr.
Garzini voiced support for the interties and stressed need
for a statewide energy plan incorporating the interties and
other issues.
Mr. Garzini spoke to need for legislative awareness of
activities beyond the instant bills and Power Cost
Equalization (PCE). As an example, he relayed AEA belief
that Eklutna and Snettisham acquisitions would be included
within President Clinton's energy package. The state must
have the ability to conclude those arrangements.
Speaking to the Glennallen to Valdez line, Mr. Garzini
suggested that AEA first conclude feasibility issues
relating to the Sutton to Glennallen intertie. AEA has
asked that funds be reserved for that purpose. The
construction cost of the Sutton to Glennallen line is
estimated at $40 to $60 million. AEA thus seeks authority
to proceed on the project, subject to certain constraints.
Once Glennallen is reached, AEA anticipates serving the
needs of Valdez on a more economic basis by combining
Solomon Gulch hydroelectricity and low-cost gas and power
from the railgrid. Under that arrangement, Valdez could
perhaps sell power to the grid during the summer when
Solomon has "a lot of water." During the winter months,
Valdez would then be able to "shop for low-cost
electricity."
Addressing needs in Southeast, Mr. Garzini said that "The
standard is the Tyee to Swan." It appears there is a strong
marketable source of power from Tyee. The logical location
to ship to is Swan Lake. AEA has conducted the necessary
studies and has no objection to the project.
Referring to the Tyee line and state obligations to four-
dam-pool communities, Mr. Garzini concurred that the Tyee
line was not well built. Development mistakes were made.
Mr. Garzini agreed that AEA has an obligation to fix it. He
then advised of significant amounts within four-dam-pool
major maintenance accounts to deal with the problem. If
those amounts are not sufficient for the rebuild, other
arrangements will have to be made. Mr. Garzini stressed
that repair is not an obligation of four-dam-pool
communities or the power revolving loan fund.
In his concluding remarks, Mr. Garzini reiterated need for
both a hearing dealing specific with energy issues as well
as a statewide energy plan. He acknowledged discussion of
creation of an energy authority "that's more like a
railroad" and said that he had not proposed that approach.
He stressed that key components of AEA concern are:
1. The four interties
2. Some solution for rural Alaska
Co-chair Pearce referenced concern raised by Senator
Kerttula regarding responsibility for the present Valdez to
Glennallen line should the Sutton/Glennallen intertie be
built. Mr. Garzini explained that the existing line is an
essential piece of the Copper Valley system. The proposed
line from Sutton to Glennallen would bring Cook Inlet gas,
Bradley Lake power and Healy power into the Copper Valley
grid. That would primarily be a fall, winter, and spring
flow. During the summer, AEA expects that Solomon power
will flow from Valdez to Glennallen and on to Sutton for
sale into the grid. Senator Kerttula asked if the summer
flow would pay overhead costs on the line. Mr. Garzini said
that AEA currently has a contract with Copper Valley to look
"at all of those economic issues." Mr. Garzini also noted
issues relating to construction of the coal plant at
Glennallen. AEA is looking at options for providing
affordable power in Valdez.
End, SFC-93, #33, Side 2
Begin, SFC-93, #35, Side 1
Senator Kerttula stressed need for focus on power cost
equalization. He noted that some rural areas now utilizing
fossil fuel have the potential for local generation of
power.
The Senator also voiced need for review of the structure of
the Alaska Energy Authority. Mr. Garzini concurred. AEA
board meetings and meetings with utilities determined that
reorganization should be held in abeyance until after the
session. In the interim, changes will be formulated for
next year. One of the plans under consideration is "a major
elimination of the AEA as a state agency and something
dominated by the utilities." That is not now on the table
because the current focus is the interties and concern
regarding the future of PCE. Senator Kerttula suggested the
legislature be involved in the decision making process
rather than presented with materials for consideration after
the fact.
Senator Kelly noted the above-mentioned focus on PCE and the
interties and asked if that meant other legislation relating
to a business venture by AEA, introduced by the
administration, was no longer viable. Mr. Garzini answered
negatively. He then reiterated his request for a hearing
dealing specifically with statewide energy. In further
response to Senator Kelly, Mr. Garzini presented, as an
example, a request from Kodiak for a hydroelectric work in
conjunction with the Terror Lake project. The total cost
for the small project is $6 to $7 million. AEA has no
ability to go to the market to assist the community without
coming to the legislature, even with total support by four-
dam-pool members and the residents of Kodiak. There is thus
need to strengthen AEA standards in some areas.
Mr. Garzini again referenced ten amendments the
administration would propose to Senator Sharp's legislation.
Co-chair Pearce acknowledged that restructuring legislation
for AEA had been introduced. She further advised that it is
not presently before Senate Finance and voiced her intent
that portions of it not be addressed in the context of
authorizations and appropriations for the interties.
Senator Taylor distributed information from Tom Stevenson,
Ketchikan Public Utility manager. He then stressed that
both the Swan Lake and Tyee projects are owned by the state.
As a consequence, local communities cannot go to the bond
market and borrow money for a power line the communities
will not own. Utilities in the railbelt will own the
interties. They thus have the ability to bond. Mr. Garzini
explained that the utilities would use AEA as a conduit to
borrow money for the interties. The ultimate goal would be
that once the debt is retired, the utilities would own the
lines. For the term of the debt, however, the state would
hold title. The utilities would design and build the
project. AEA would provide oversight.
Mr. Garzini added that if there was a power purchaser in
Southeast willing to enter into the same form of
arrangement, AEA would be agreeable. He concurred that
utilities could build the proposed interties, under AEA
inspection, cheaper than the state. The appropriate role of
AEA is to oversee development, protect the state's interest,
and transfer the project to the utilities to operate when
the debt is retired. When Bradley Lake is completed, AEA is
committed to transfer it to the utilities to operate.
DAVE HUTCHENS, Executive Director, Alaska Rural Electric
Cooperative Association, next came before committee. He
advised that membership in the coop extends from Kotzebue to
Metlakatla and many points in between. Projects proposed
for the railbelt and Copper Valley, all involve utilities
that are consumer-owned members of the cooperative.
As background information, Mr. Hutchens said that when the
Susitna project was cancelled, funds therefrom were placed
in the railbelt energy fund. The railbelt energy council
was then created to determine "how these funds should best
be used to benefit the region." The unanimous conclusion
was completion of the Bradley Lake project and construction
of interties connecting the railbelt. These projects have
been well studied through the years. The conclusion is that
they are feasible, highly desirable, and need to be built.
Mr. Hutchens next spoke to the nature of interties. He
explained that an intertie fills the gap between two
utilities. It does not generally fall within the
jurisdiction of any one utility but serves as a connection
between utilities, much as a highway connects two cities.
Mr. Hutchens voiced support for the Kenai to Anchorage and
Healy to Fairbanks interties. He registered further support
for addition of the Copper Valley line. While it is not as
far along in terms of study as the two railbelt lines, it
nevertheless appears to be "a very attractive line." In
response to concerns raised by Senator Kerttula, Mr.
Hutchens acknowledged that the existing line between
Glennallen and Valdez is part of the Solomon Gulch project.
Wholesale power Copper Valley buys from Solomon Gulch
includes the capital cost of the transmission line. That
cost would not be affected once the utility has an
additional source of power. There would thus be no change
in current contractual and financial arrangements pertaining
to the existing line. Further, although the way the line is
used may change, the amount of use for the line would not.
In fact, usage would, perhaps, increase over time. The
reason is that the transmission line would allow power to be
hauled in either direction. At this time power generally
flows from Solomon Gulch to Glennallen. During the winter,
flow is sometimes reversed, and diesel power from Glennallen
is shipped to Valdez. The proposed line from Sutton to
Glennallen would allow Copper Valley to "shut down the
diesels" and purchase needed power more cheaply from the
Anchorage area. This would greatly increase the
efficiencies of the system.
Mr. Hutchens also voiced support for the proposed Southeast
intertie. He said he was generally familiar with the
project but less knowledgeable about it since active members
of the cooperative would not be served by the line.
Senator Sharp acknowledged that a transmission line between
two load centers might be hard to justify by one or the
other utility. When it is viewed in terms of benefits to
both utilities (or multiple utilities in the case of
railbelt interties), it is easier to amortize. He further
acknowledged that coordination among the utilities is vital.
Senator Sharp further attested to benefits to be derived
from the variety of power sources to be offered, citing
hydroelectricity from Bradley Lake, natural gas from Cook
Inlet, and coal from the coal fields. Future needs can be
manipulated to "the best deal going at that particular
time." This legacy should benefit future generations in the
greatest population centers of the state.
Senator Kerttula asked what obligations Copper Valley
presently has to the Solomon Gulch project. Mr. Hutchens
advised of a long-term contract. Senator Kerttula then
suggested that the line from Sutton to Glennallen would not
result in cheaper power to Glennallen because of the
preexisting obligation to pay for the line from Valdez. Mr.
Hutchens said that the Sutton to Glennallen intertie would
not replace power from Solomon Gulch. The Copper Valley
system is committed to purchase of that power from Valdez.
He reiterated that the requested intertie from Sutton would
replace diesel generated power now provided to both Valdez
and Glennallen. The economic feasibility of the Sutton to
Glennallen line "does not rest, at all, on replacing power
now coming from Solomon Gulch, or shutting down that
transmission line." Senator Kerttula then suggested that
the requested intertie would either have to be 90%
subsidized or of small capacity if it is slated to replace
limited diesel generation. Mr. Hutchens said that economic
development (the refinery) underway in Valdez would provide
for economies of scale.
JIM KOHLER, Director, Southeast Conference, next came before
committee in support of the proposed Swan Lake/Tyee project.
He concurred in comments by Senator Taylor and said the
project would provide one segment of an envisioned connected
electrical system that would eventually connect with British
Columbia.
Mr. Kohler further attested to need for access to a
structure that will allow communities to utilize revenues
they generate.
The Southeast Conference has invited AEA to meet with
conference members in Juneau, Wrangell, Ketchikan, and
Sitka, over the next two weeks, to discuss energy issues.
In his concluding comments, Mr. Kohler reiterated that the
region can build toward "an entire connected electrical grid
system" if given the structure that allows the region to do
so.
In response to a question from Co-chair Pearce regarding the
line mileage between Swan Lake and Tyee, Senator Taylor
advised of 57.5 miles.
Co-chair Pearce asked if Canadian lines were financed by
federal moneys. Senator Taylor explained that British
Columbia Hydro is a separate, chartered, crown corporation
owned by the government. It appears to work in joint
venture with other government agencies, such as the Ministry
of Mines, or with private entities, such as a mining
company, to share the cost of power line construction.
In response to comments by Senator Kerttula, Senator Taylor
remarked that aside from mining, he did not foresee any
large scale industrial development in the near future.
Mineral development requires "huge amounts of power." Had
the molybdenum mine once proposed for Ketchikan become a
reality, it would have required "more power than all of the
power currently being generated and used in Southeast Alaska
just to operate that one mine." Should any of the large
gold mines proposed for Juneau go forward, there would be
good leverage to pay a substantial portion of the cost
required to grid Southeast.
Co-chair Pearce voiced reluctance to place CSSB 106 (Fin)
and CSSB 126 (Fin) into subcommittee because of intense
interest in the bills. She then directed that they be HELD
in a committee of the whole for continued work, and she
advised that they would again be brought on for discussion
at a subsequent meeting.
ANNOUNCEMENT
Co-chair Pearce announced that SB 19, 43, and 111 would be
heard at the Friday meeting.
ADJOURNMENT
The meeting was adjourned at approximately 10:50 a.m.
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