Legislature(1993 - 1994)

03/03/1993 09:10 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    SENATE FINANCE COMMITTEE                                   
                          March 3, 1993                                        
                            9:10 a.m.                                          
  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.                                                      
            Sen. Pearce, Co-chair.        Sen.    Frank,   Co-                 
            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                 
                 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                      
  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                 
  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                 
  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                 
  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                 
  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                 
       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                 
  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                 
  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                 
  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                 
  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                 
  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                 
  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                 
  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                 
  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                 
  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                 
  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                 
  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                 
  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.                                                     
  Co-chair Pearce announced that  SB 19, 43, and 111  would be                 
  heard at the Friday meeting.                                                 
  The meeting was adjourned at approximately 10:50 a.m.                        

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