Legislature(2019 - 2020)SENATE FINANCE 532

04/30/2019 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 91 NUYAKUK RIVER: HYDROELECTRIC SITE TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SB 103 PFD APPROPRIATIONS TELECONFERENCED
Moved CSSB 103(FIN) Out of Committee
+= SB 104 APPROPRIATION LIMIT TELECONFERENCED
Heard & Held
                 SENATE FINANCE COMMITTEE                                                                                       
                      April 30, 2019                                                                                            
                         9:36 a.m.                                                                                              
                                                                                                                                
9:36:51 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  von  Imhof  called the  Senate  Finance  Committee                                                                    
meeting to order at 9:36 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Natasha von Imhof, Co-Chair                                                                                             
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Click Bishop                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Mike Shower                                                                                                             
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator Cathy Giessel; Senator  Mia Costello; Bob Armstrong,                                                                    
Electric   Operations   Manager,   Nushagak   Electric   and                                                                    
Telephone  Cooperative;  Tim   Grussendorf,  Staff,  Senator                                                                    
Lyman  Hoffman;  Juli  Lucky,  Staff,  Senator  Natasha  von                                                                    
Imhof; Caroline Schultz, Staff, Senator Natasha von Imhof.                                                                      
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Corey  Warnock,  McMillen  Jacobs  Association,  Washington;                                                                    
Robert   Himschoot,  CEO   and  General   Manager,  Nushagak                                                                    
Electric  Corporation;  Peter  Andrew,  President,  Nushagak                                                                    
Corporation;  Mark Lisac,  Self, Dillingham;  Paul Liedberg,                                                                    
Self, Dillingham.                                                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 91     NUYAKUK RIVER: HYDROELECTRIC SITE                                                                                     
                                                                                                                                
          SB 91 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
SB 103    PFD APPROPRIATIONS                                                                                                    
                                                                                                                                
          CSSB 103(FIN)  was REPORTED out of  committee with                                                                    
          one  "do pass"  recommendation,  and four  "amend"                                                                    
          recommendations  and  with one  new  indeterminate                                                                    
          fiscal note from the  Senate Finance Committee for                                                                    
          the Department of Revenue.                                                                                            
                                                                                                                                
SB 104    APPROPRIATION LIMIT                                                                                                   
                                                                                                                                
          SB 104 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
Co-Chair von Imhof relayed that the committee would                                                                             
consider                                                                                                                        
                                                                                                                                
SENATE BILL NO. 91                                                                                                            
                                                                                                                                
     "An Act relating to the  development and operation of a                                                                    
     hydroelectric   site  at   the  Nuyakuk   River  Falls;                                                                    
     providing for the amendment of  the management plan for                                                                    
     the  Wood-Tikchik  State  Park; and  providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
9:37:41 AM                                                                                                                    
                                                                                                                                
SENATOR  LYMAN HOFFMAN,  SPONSOR, relayed  that he  had been                                                                    
trying to address  the issue of rural energy  costs for some                                                                    
time.  He thought  SB  91 offered  an  opportunity to  lower                                                                    
energy  costs  in the  Bristol  Bay  Region. He  provided  a                                                                    
Sponsor Statement:                                                                                                              
                                                                                                                                
     SB 91  adds the  operation of  a hydroelectric  site at                                                                    
     Nuyakuk  River  to  the  Wood-Tikchik  Management  plan                                                                    
     stating that it "is  not considered an incompatible use                                                                    
     in the Wood-Tikchik State Park".                                                                                           
                                                                                                                                
     Nushagak  Electric &  Telephone Cooperative  (NETC) has                                                                    
     advanced this project  through public outreach, desktop                                                                    
     feasibility  research using  existing data,  and onsite                                                                    
     work that  is permissible  under the  current statutory                                                                    
     and management plan restrictions.  SB 91 allows further                                                                    
     onsite  studies  to   advance  the  project  evaluation                                                                    
     process.                                                                                                                   
                                                                                                                                
     There are  two potential hydroelectric  sites currently                                                                    
     in  the Park  enabling  statutes, Grant  Lake and  Elva                                                                    
     Lake. SB 91 adds Nuyakuk to that list.                                                                                     
                                                                                                                                
    The Nuyakuk site is preferable for several reasons;                                                                         
                                                                                                                                
               Low impact, this is a diversion project with                                                                     
          no dam and no significant change in the natural                                                                       
          course of the river                                                                                                   
               Production, the project has the potential to                                                                     
          provide 100% of the current electric needs for                                                                        
          several communities                                                                                                   
               Location, this site is close to the Park                                                                         
          boundaries and would have a very small footprint                                                                      
          in the Park                                                                                                           
                                                                                                                                
     The  Nuyakuk   Hydroelectric  Project  is   a  regional                                                                    
     infrastructure  development that  will  bring both  low                                                                    
     cost,      renewable      energy     and      broadband                                                                    
     telecommunications   to   at  least   six   communities                                                                    
     throughout  northern  Bristol  Bay. This  design  would                                                                    
     divert water  from above the falls,  flow the diversion                                                                    
     through an  underground 1500' penstock  (pipe), through                                                                    
     a powerhouse  and back  into the river  in a  tale race                                                                    
     below the falls.  The powerhouse would have  a very low                                                                    
     visual impact.                                                                                                             
                                                                                                                                
     The   overall  cost   of   this  30-megawatt   regional                                                                    
     hydroelectric    project,     including    transmission                                                                    
     facilities  and communications  fiber, is  estimated at                                                                    
     $140  million.   This  would  be   first  hydroelectric                                                                    
     project  in   SW  Alaska  with  regional   service.  In                                                                    
     addition to Dillingham,  the communities served include                                                                    
     Aleknagik,   Koliganek,   New   Stuyahok,   Ekwok   and                                                                    
     Levelock.  The potential  also  exists  for service  to                                                                    
     additional communities.                                                                                                    
                                                                                                                                
     This  project   has  enjoyed   the  support   of  local                                                                    
     stakeholders,    public    administration   and    park                                                                    
     management in the  efforts to date. SB  91 is necessary                                                                    
     to further project evaluation and permitting.                                                                              
                                                                                                                                
Senator Hoffman addressed the Sectional Analysis for the                                                                        
bill (copy on file):                                                                                                            
     Section  1: Adds  "or the  Nuyakuk River  Falls" to  AS                                                                  
     41.21.167(c) to include it on  a list of sites that are                                                                    
     not considered an incompatible use  of the Wood Tikchik                                                                    
     State Park.                                                                                                                
                                                                                                                                
     Section 2: Instructs  the Wood-Tikchik State Management                                                                  
     Council along with the  Department of Natural Resources                                                                    
     to amend  the Wood  Tikchik Management Plan  to conform                                                                    
     with the change made in Section 1.                                                                                         
                                                                                                                                
9:41:48 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  wanted to  engage  in  discussion on  the                                                                    
river system  in the area.  He asked about volumes  of water                                                                    
during winter.                                                                                                                  
                                                                                                                                
Co-Chair von Imhof  noted that the demand  for freezer space                                                                    
in the summer could also be an issue to consider.                                                                               
                                                                                                                                
9:43:34 AM                                                                                                                    
                                                                                                                                
BOB   ARMSTRONG,  ELECTRIC   OPERATIONS  MANAGER,   NUSHAGAK                                                                    
ELECTRIC   AND   TELEPHONE    COOPERATIVE,   discussed   the                                                                    
presentation   "Nuyakuk  Hydroelectric   -  Hydropower   for                                                                    
Bristol Bay," (copy  on file). He relayed he  had arrived in                                                                    
Dillingham three years previously at  which time he too over                                                                    
operations for the cooperative.                                                                                                 
                                                                                                                                
9:44:22 AM                                                                                                                    
                                                                                                                                
Mr.   Armstrong  looked   at  Slide   2,  "Logical   Natural                                                                    
Location":                                                                                                                      
                                                                                                                                
    ? Glacial moraine defines Wood Tikchik lake system                                                                          
       Creates natural dam                                                                                                      
       Lake acts as a natural Sediment deposition site                                                                          
       Nuyakuk Falls acts as a natural spillway                                                                                 
                                                                                                                                
Mr. Armstrong  directed attention to  the map on  the slide.                                                                    
He pointed  out the line  of mountains  and the top  part of                                                                    
the lake  system that came  out the Nuyakuk River  and broke                                                                    
over  the ridge.  He explained  that  the lakes  acted as  a                                                                    
sediment  pond   and  the  falls   were  like   a  spillway;                                                                    
altogether the land was like a natural dam.                                                                                     
                                                                                                                                
9:45:08 AM                                                                                                                    
                                                                                                                                
Mr. Armstrong spoke to Slide 3, "Tikchik Lake":                                                                                 
                                                                                                                                
        The lake system feeding the falls is 1544 square                                                                        
     miles                                                                                                                      
     ? This slide compares Tikchik Lakes and Lake Mead                                                                          
     ? Each red line is 35 miles                                                                                                
                                                                                                                                
Mr. Armstrong  said that the  hope was  to tap the  river at                                                                    
the upper side of the falls.  He noted the size of the water                                                                    
reservoir,  pointing out  Lake Meade  of the  right and  the                                                                    
Tikchik Lake System on the left.                                                                                                
                                                                                                                                
9:45:21 AM                                                                                                                    
                                                                                                                                
Mr.   Armstrong  referenced   Slide  4,   "Power  Production                                                                    
Location and Potential":                                                                                                        
                                                                                                                                
     ? Nuyakuk Falls                                                                                                            
     ? 2.5 miles inside WTSP                                                                                                    
     ? Flow monitored by USGS since 1953                                                                                        
     ? Initial evaluation is diverting <25% flow  4.5 to                                                                        
     >10 MW                                                                                                                     
     ? Enough production for regional distribution                                                                              
     ? Production potential matches seasonal demand                                                                             
                                                                                                                                
Mr.  Armstrong stated  that he  had visited  the USGS  site,                                                                    
which contained  over 60 years  of daily flow data,  and had                                                                    
used Google Earth  Pro to determine a  desktop prediction of                                                                    
the drop  at the falls.  He clarified that the  power demand                                                                    
in Dillingham  was higher in  the summer than in  the winter                                                                    
due to fish processing. He  added that summer was when river                                                                    
flows were  at their height.  He shared that the  demand for                                                                    
power  was  lowest  in  the winter  when  river  flows  were                                                                    
slowest.                                                                                                                        
                                                                                                                                
9:46:42 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski  asked  about the  required  mega-watt                                                                    
usage for the area.                                                                                                             
                                                                                                                                
Mr.  Armstrong informed  that  the area  peaked  at 4.8  MW,                                                                    
which  was the  highest  ever. He  added  that the  up-river                                                                    
villages were about 600 kilowatt (KW).                                                                                          
                                                                                                                                
Senator  Wielechowski  asked  about  a  potential  plan  for                                                                    
transmission lines.                                                                                                             
                                                                                                                                
Mr.  Armstrong  specified  that the  information  was  in  a                                                                    
future slide.                                                                                                                   
                                                                                                                                
9:47:18 AM                                                                                                                    
                                                                                                                                
Senator Bishop  asked about potential ice  facilities in the                                                                    
region.                                                                                                                         
                                                                                                                                
Mr.  Armstrong  stated that  no  entity  had approached  the                                                                    
company  about an  ice  facility. He  was  certain that  the                                                                    
issue would  be explored.  He noted  that lower  energy cost                                                                    
savings would be passed on to fishermen.                                                                                        
                                                                                                                                
Senator Bishop thought it was  interesting the USGS has been                                                                    
monitoring  the  flow of  the  river  since 1953.  He  asked                                                                    
whether hydropotential  had been considered for  the area in                                                                    
the past.                                                                                                                       
                                                                                                                                
Mr. Armstrong answered in the negative.                                                                                         
                                                                                                                                
9:48:40 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  asked about the  KW rate  that communities                                                                    
could expect.                                                                                                                   
                                                                                                                                
Mr. Armstrong  stated that upcoming studies  would determine                                                                    
the KW amount. The amount of  water that could be used would                                                                    
determine the  price. The electric company  was cooperative,                                                                    
and  therefore not  for  profit, so  the  more wattage  that                                                                    
could be sold, the less it would cost.                                                                                          
                                                                                                                                
Co-Chair Stedman  thought that using current  consumption it                                                                    
could be  expected that consumption  would increase.  He was                                                                    
pleased   to  see   there  was   a   proposed  increase   in                                                                    
generational capacity.  He expected  that the rates  were in                                                                    
the  region of  $.50  to  $.60 per  KW  and  hoped that  the                                                                    
project would cut those costs in half.                                                                                          
                                                                                                                                
Mr. Armstrong  thought a fuel  surcharge would come  off the                                                                    
cost at the  top, $.17 out of the $.42  currently charged to                                                                    
residents.                                                                                                                      
                                                                                                                                
9:50:55 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski  revealed  that  he  had  a  potential                                                                    
conflict as he worked for the Electrical Workers Union.                                                                         
                                                                                                                                
9:51:16 AM                                                                                                                    
                                                                                                                                
Co-Chair  von Imhof  noted  the windmills  she  had seen  in                                                                    
Dillingham.   She  asked   whether  there   was  a   planned                                                                    
comparison between hydro  and wind power. She  asked how the                                                                    
transmission line would compare to wind power.                                                                                  
                                                                                                                                
Mr. Armstrong  responded that the  hydropower would  be less                                                                    
expensive  than wind.  He explained  that  the problem  with                                                                    
wind in Dillingham was that  the mountains were set back off                                                                    
the   road  system,   so  there   were  no   roads  to   the                                                                    
mountaintops, where the wind would  be optimal. He said that                                                                    
there were  smaller windmills that  did okay and  added that                                                                    
the state  had conducted  a wind study  that had  shown that                                                                    
all  the  sites that  would  provide  enough power  for  the                                                                    
community were inaccessible.                                                                                                    
                                                                                                                                
Co-Chair von Imhof referenced the  price of the project, and                                                                    
asked Mr. Armstrong how the funds were to be secured.                                                                           
                                                                                                                                
Mr. Armstrong  stated that the  cooperative would go  to the                                                                    
Rural Utility  Service (RUS), which was  a government agency                                                                    
that  loaned money  to cooperatives  across the  country. He                                                                    
said that  a meeting had  occurred in Washington  D.C. where                                                                    
it had  been established  that the  service would  cover the                                                                    
financing.                                                                                                                      
                                                                                                                                
Co-Chair von  Imhof asked if  the $20,000 fiscal  note would                                                                    
be used to  cover a business analysis of  loan and financing                                                                    
costs. She  understood that the  question would  be answered                                                                    
later in the presentation.                                                                                                      
                                                                                                                                
9:53:27 AM                                                                                                                    
                                                                                                                                
Mr. Armstrong turned to Slide 5, "Power Plant":                                                                                 
                                                                                                                                
     ? The falls occur at an oxbow in the river                                                                                 
     ? An intake above the falls                                                                                                
     ? Short (approx. 2500 ft. forebay)                                                                                         
     ? Short power channel (1500')                                                                                              
     ? Powerhouse with two 5MW bulb-type turbines                                                                               
     ? Affected water flow 3000 feet from the top of the                                                                        
     falls to the bottom                                                                                                        
                                                                                                                                
Mr. Armstrong  directed attention  to the  blue line  on the                                                                    
map  on the  slide, which  showed where  the falls  would be                                                                    
tapped.  He said  that the  process would  result in  little                                                                    
water  temperature  change  and the  nitrogen  levels  would                                                                    
remain like the natural levels found in the falls.                                                                              
                                                                                                                                
9:54:35 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski  asked  whether  there  were  concerns                                                                    
about impacts on fish.                                                                                                          
                                                                                                                                
Mr. Armstrong  stated that there were  strong concerns about                                                                    
fish,  which  had  prompted  the  urgency  to  complete  the                                                                    
studies. He  said that the  board had passed a   fish first                                                                     
policy and would  abandon the project if  the studies proved                                                                    
that  the  project would  be  damaging  to the  fishery.  He                                                                    
mentioned  the Federal  Energy Regulatory  Commission (FERC)                                                                    
process,  and  which  was   rigorous  in  its  environmental                                                                    
protections.                                                                                                                    
                                                                                                                                
Senator Wielechowski  asked whether  there was a  salmon run                                                                    
in the area.                                                                                                                    
                                                                                                                                
Mr.  Armstrong responded  in the  positive. The  cooperative                                                                    
thought the project would leave  the fish free to ascend and                                                                    
descend  the river.  The project  was  designed to  co-exist                                                                    
with the environment.                                                                                                           
                                                                                                                                
9:56:16 AM                                                                                                                    
                                                                                                                                
Senator Wilson asked about the  current stage of the permits                                                                    
for the project.                                                                                                                
                                                                                                                                
Mr.  Armstrong stated  that June  2019 would  be the  1-year                                                                    
anniversary on  the FERC  permit; the  permit gave  a three-                                                                    
year maximum  to complete  the studies.  There had  been two                                                                    
studies done the previous year.  Further studies required by                                                                    
the FERC process required the passage of the legislation.                                                                       
                                                                                                                                
9:56:57 AM                                                                                                                    
                                                                                                                                
Co-Chair  von  Imhof asked  which  bills  Mr. Armstrong  was                                                                    
speaking of.                                                                                                                    
                                                                                                                                
Mr. Armstrong replied SB 91  and the house companion bill HB                                                                    
99.                                                                                                                             
                                                                                                                                
9:57:09 AM                                                                                                                    
                                                                                                                                
Mr. Armstrong  considered Slide 6, "Extent  of the watershed                                                                    
that  is upstream  of  the Project."  The  slide showed  the                                                                    
location of the site according to the overall fishery.                                                                          
                                                                                                                                
9:57:28 AM                                                                                                                    
                                                                                                                                
Mr.  Armstrong  displayed  Slide 7,  "Transmission  System,"                                                                    
which  showed a  map  depicting the  transmission lines.  He                                                                    
noted  that  the  yellow lines  indicated  already  existing                                                                    
lines, the red showed the lines that would be constructed.                                                                      
                                                                                                                                
9:57:56 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski asked  whether there  was any  plan to                                                                    
have transmission lines go to mines in the region.                                                                              
                                                                                                                                
Mr. Armstrong  answered in  the negative.  He said  that the                                                                    
closest mine was 9 miles away  and there would not be enough                                                                    
power to support a mining operation.                                                                                            
                                                                                                                                
9:58:32 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman   referenced  past  energy   projects  and                                                                    
cautioned that it  was prudent to expect the  project to run                                                                    
over schedule. He recalled one  intertie section to Wrangell                                                                    
that came in on budget, but  all other projects had been far                                                                    
off  original   projections.  He  recommended   adding  cost                                                                    
overruns to any analysis.                                                                                                       
                                                                                                                                
10:00:03 AM                                                                                                                   
                                                                                                                                
Co-Chair  von Imhof  added that  a  lot of  the projects  in                                                                    
Southeast  Alaska  had been  funded  by  grants rather  than                                                                    
loans.  She   thought  it   was  important   to  incentivize                                                                    
consumers to pay rates.                                                                                                         
                                                                                                                                
Co-Chair von  Imhof looked at  Slide 7 and assumed  that the                                                                    
transmission lines were  aerial. She noted that  there was a                                                                    
great  deal of  plane  activity in  the  area. She  wondered                                                                    
whether part  of the study  would consider air  traffic, and                                                                    
overall environmental, safety.                                                                                                  
                                                                                                                                
Mr. Armstrong confirmed  that the area would  be studied for                                                                    
safety. The line to Aleknagik was  at the top of the glacier                                                                    
moraine  and  was  a  good  route. He  added  that  all  the                                                                    
geographic challenges  would be included in  the studies. He                                                                    
added  that the  cooperative  had been  investigating a  new                                                                    
kind of  pole that  vibrated into  the ground,  negating the                                                                    
need to  dig or pour  concrete. He offered that  there would                                                                    
not be a huge tower system.                                                                                                     
                                                                                                                                
10:03:00 AM                                                                                                                   
                                                                                                                                
Mr. Armstrong highlighted Slide 8, "Considerations":                                                                            
                                                                                                                                
     ? Project would displace 1.5M gallons of fuel oil                                                                          
     annually at current consumption of 25,000 MWHs                                                                             
     ? Estimated yearly average power production for this                                                                       
     project is                                                                                                                 
    72,800MWHs this would displace 3+M gallons of fuel                                                                          
     ? Estimated cost to build $120M                                                                                            
                                                                                                                                
     ? Estimated cost avoidance (NETC ONLY) over 40-year                                                                        
     license period:                                                                                                            
       Fuel at current cost ($2.10/gallon) $126M                                                                                
       Scheduled genset maintenance $9M                                                                                         
     Regulatory compliance for diesel generation $12M                                                                           
       Total $147M                                                                                                              
     THIS TOTAL IS ASSUMEING ALL THE COST STAY THE SAME FOR                                                                     
     THE NEXT 40 YEARS!                                                                                                         
                                                                                                                                
     ? Transmission system would provide a route for                                                                            
     Broadband middle mile expansion                                                                                            
                                                                                                                                
Mr.  Armstrong thought  there might  be grant  opportunities                                                                    
for  some of  the proposed  project. He  explicated that  an                                                                    
additional  feature   would  be  the  hard-line   fiber  for                                                                    
broadband to upriver villages and to Dillingham.                                                                                
                                                                                                                                
10:04:27 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman  thought as long  as the consumer  rate was                                                                    
lower  than  the  target  of  $.60,  he  expected  that  the                                                                    
economic  activity in  Dillingham was  more competitive  and                                                                    
there would be economic activity generated by the project.                                                                      
                                                                                                                                
Mr. Armstrong agreed. He had  been working with cooperatives                                                                    
for 30  years. He said  that energy costs were  the baseline                                                                    
of any community economy.                                                                                                       
                                                                                                                                
10:06:06 AM                                                                                                                   
                                                                                                                                
Senator  Bishop looked  at the  proposal and  considered the                                                                    
issue  of  global  warming  and  wondered  what  affect  the                                                                    
project would have on the state's carbon footprint.                                                                             
                                                                                                                                
Mr.  Armstrong replied  that he  did not  have a  number. He                                                                    
stated  that  emissions  tests   had  been  performed  under                                                                    
permit. He stated  that the carbon footprint  of the project                                                                    
was not part  of any study. He offered the  numbers from the                                                                    
emissions testing.                                                                                                              
                                                                                                                                
Senator  Bishop pondered  whether the  completed FERC  study                                                                    
would include the carbon footprint.                                                                                             
                                                                                                                                
Mr. Armstrong  said that  it would be  included in  the FERC                                                                    
study.                                                                                                                          
                                                                                                                                
10:07:53 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman  commented that  he  had  villages in  his                                                                    
district that  used hydropower as  well as diesel.  He mused                                                                    
that  the cost  of  power prevented  villages from  enjoying                                                                    
Christmas  lights. He  thought that  bringing lower  cost of                                                                    
power  to  the  communities   in  the  area  would  improves                                                                    
peoples   lives  in small  ways  like  being able  to  enjoy                                                                    
Christmas  lights during  the holidays.  He reiterated  that                                                                    
the time  and money budget  for the project should  plan for                                                                    
additional time and expense.                                                                                                    
                                                                                                                                
10:09:32 AM                                                                                                                   
                                                                                                                                
Co-Chair von Imhof OPENED public testimony.                                                                                     
                                                                                                                                
COREY WARNOCK, MCMILLEN  JACOBS ASSOCIATION, WASHINGTON (via                                                                    
teleconference),  spoke  in  favor of  the  legislation.  He                                                                    
thought he was invited to testify  in order to shed light on                                                                    
the FERC regulatory process. He  asserted that the intent of                                                                    
the bill was  to allow the study to go  forward to determine                                                                    
the viability  of the  project. He stated  that there  was a                                                                    
rigorous process that  needed to take place over  the next 3                                                                    
to 4  years that would  determine whether the  project could                                                                    
move forward.                                                                                                                   
                                                                                                                                
10:12:12 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman  thought  rural  Alaskans  deserved  equal                                                                    
access to energy as those in urban areas.                                                                                       
                                                                                                                                
10:13:06 AM                                                                                                                   
                                                                                                                                
ROBERT   HIMSCHOOT,  CEO   AND  GENERAL   MANAGER,  NUSHAGAK                                                                    
ELECTRIC CORPORATION (via  teleconference), relayed that the                                                                    
corporation had looked  at the project and  believed that it                                                                    
would  get communities  off diesel;  the overall  savings of                                                                    
1.5  million gallons  of diesel  per year  was considerable.                                                                    
He believed  that there was  solid regional support  for the                                                                    
project and that  there had been due  diligence to determine                                                                    
the viability  of the project.  He thought the  project held                                                                    
huge potential for the regional economy.                                                                                        
                                                                                                                                
10:15:12 AM                                                                                                                   
                                                                                                                                
PETER   ANDREW,   PRESIDENT,   NUSHAGAK   CORPORATION   (via                                                                    
teleconference),  said he  had served  on the  board for  20                                                                    
years. He  offered his availability for  questions. He noted                                                                    
strong community support for the project.                                                                                       
                                                                                                                                
10:16:35 AM                                                                                                                   
                                                                                                                                
MARK LISAC, SELF, DILLINGHAM  (via teleconference), spoke in                                                                    
support of SB  91. He was a Nushagak  Cooperative member and                                                                    
a renewable  energy advocate.  He had  been opposed  to past                                                                    
proposed  projects,  which  had been  found  unfeasible.  He                                                                    
supported  the bill  because  it  was the  only  way to  get                                                                    
permission to  determine the feasibility of  the project. He                                                                    
thought  the  potential  energy security  and  reduction  of                                                                    
diesel usage was important to consider.                                                                                         
                                                                                                                                
10:18:37 AM                                                                                                                   
                                                                                                                                
PAUL  LIEDBERG,   SELF,  DILLINGHAM   (via  teleconference),                                                                    
supported the  bill.  He had  been a resident of  Alaska for                                                                    
40 years. He  had worked in resource  management. He thought                                                                    
it  was important  to consider  the original  intent of  the                                                                    
management plan  for the Wood-Tikchik  State Part.  He noted                                                                    
that  considerable   debate  went   into  the   decision  to                                                                    
establish the park. He thought  it was important to consider                                                                    
whether the  impact of the  project was a fair  exchange for                                                                    
the impacts to  the park, the environment,  and the regional                                                                    
communities.  He  supported  the   project  if  it  did  not                                                                    
materially conflict  with the original  intent of  the park.                                                                    
He  could  not comment  on  whether  he supported  the  full                                                                    
development  of the  project but  believed that  the studies                                                                    
should  move forward.  He  thought it  was  important to  be                                                                    
watchful that  potential impacts  be minimized as  the state                                                                    
worked for greater energy access.                                                                                               
                                                                                                                                
10:21:35 AM                                                                                                                   
                                                                                                                                
Co-Chair von Imhof CLOSED public testimony.                                                                                     
                                                                                                                                
10:21:53 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman  reminded that  in  the  early 1900's  the                                                                    
community  of  Petersburg  had  built  a  hydro  plant.  The                                                                    
venture  had been  costly  and  was built  to  make ice  for                                                                    
fishing.  The  change  enabled the  fishing  fleet  to  stay                                                                    
longer and have larger catches.  The hydro project was still                                                                    
functional. He  recalled that the  Gold Creek  hydro project                                                                    
                                  th                                                                                            
had  been built  in  the early  20   century  and was  still                                                                    
functional.  He  noted  that neither  of  the  projects  had                                                                    
adversely affected the communities they were build in.                                                                          
                                                                                                                                
Co-Chair   Stedman  addressed   environmental  impacts.   He                                                                    
asserted that  the worldwide projection of  fuel consumption                                                                    
was on  the rise and  that there  were not enough  people in                                                                    
Western Alaska to affect the  carbon footprint. He discussed                                                                    
population  disparities  between  Western Alaska  and  other                                                                    
parts  of the  world. He  thought most  of the  state was  a                                                                    
park, and  that there  was a very  small human  footprint on                                                                    
the  land  in the  state.  He  supported moving  forward  to                                                                    
complete  an   analysis  and   electrify  the   region  with                                                                    
hydropower.                                                                                                                     
                                                                                                                                
10:25:38 AM                                                                                                                   
                                                                                                                                
TIM GRUSSENDORF, STAFF, SENATOR  LYMAN HOFFMAN, addressed FN                                                                    
1,  OMB  Component  3001, from  the  Department  of  Natural                                                                    
Resources. The note  was for $20,000 to  revise the existing                                                                    
state  park  management  plan and  to  match  the  statutory                                                                    
changes required in the bill.                                                                                                   
                                                                                                                                
SB  91  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 103                                                                                                           
                                                                                                                                
     "An Act relating to deposits into the dividend fund                                                                        
     and appropriations from the earnings reserve account;                                                                      
     and providing for an effective date."                                                                                      
10:26:25 AM                                                                                                                   
                                                                                                                                
Co-Chair   Stedman  MOVED   to   ADOPT  proposed   committee                                                                    
substitute  for  SB  103, Work  Draft  31-LS0654\G  (Nauman,                                                                    
4/29/19).                                                                                                                       
                                                                                                                                
Co-Chair von Imhof OBJECTED for discussion.                                                                                     
                                                                                                                                
10:27:44 AM                                                                                                                   
                                                                                                                                
JULI LUCKY, STAFF, SENATOR NATASHA  VON IMHOF, discussed the                                                                    
proposed  CS and  read from  a summary  of changes  document                                                                    
(copy on file):                                                                                                                 
                                                                                                                                
     Rewords  the  appropriation   language  to  conform  to                                                                    
     current practice.  The POMV  draw is  appropriated from                                                                    
     the ERA to  the general fund. The  amount available for                                                                    
     appropriation  from the  general fund  to the  dividend                                                                    
     fund is  calculated as  50% of the  POMV draw  [Page 2,                                                                    
     lines  25-27; conforming  changes on  p2, line  31; and                                                                    
     p3, lines 24- 25].                                                                                                         
                                                                                                                                
     Clarifies  the restriction  on appropriating  more from                                                                    
     the ERA than the  allowable POMV draw (currently 5.25%,                                                                    
     reduced  to   5%  for  FY22)  [Page   3,  lines  29-31;                                                                    
     conforming changes on p4, line 27].                                                                                        
                                                                                                                                
     Adds a July 1, 2020 effective date.                                                                                        
                                                                                                                                
     Technical   corrections   recommended  by   Legislative                                                                    
     Legal:                                                                                                                     
                                                                                                                                
     Removes an  inapplicable reference  [Page 3,  lines 25-                                                                    
     26].                                                                                                                       
     Removes the  sections that  made conforming  changes to                                                                    
     the  Mental  Health  Trust Fund  statutes.  These  were                                                                    
     deemed  unnecessary  by  legal  since  the  net  income                                                                    
     determination is remaining in  statute [Previous sec. 6                                                                    
     & 7].                                                                                                                      
                                                                                                                                
Ms. Lucky  noted that  in the previous  version of  the bill                                                                    
Sections  37.13.145(e)and (f)  had been  repealed. She  said                                                                    
that  it had  been determined  that  only (f)  needed to  be                                                                    
repealed,  (e)  needed  to  be   rewritten.  She  said  that                                                                    
37.13.145(e) made  the statement that the  legislature could                                                                    
not  appropriate  more  from the  earnings  reserve  account                                                                    
(ERA)than was allowed under the POMV draw.                                                                                      
10:30:12 AM                                                                                                                   
                                                                                                                                
Co-Chair von Imhof WITHDREW her objection.                                                                                      
                                                                                                                                
Co-Chair von Imhof reminded that  the bill was a 50-50 split                                                                    
and  a financial  review of  the impacts  of that  split had                                                                    
been  previously discussed.  The bill  replaced the  current                                                                    
statute  for calculating  the Permanent  Fund Dividend.  The                                                                    
bill had an  effective date of July 1, 2020.  She noted that                                                                    
the financial  implications of  the bill  were a  deficit of                                                                    
approximately $800 million.                                                                                                     
                                                                                                                                
10:31:51 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:33:48 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair von Imhof asked whether  members had any amendments                                                                    
to offer.                                                                                                                       
                                                                                                                                
10:34:20 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:35:03 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Stedman  reviewed  a  new  fiscal  note  from  the                                                                    
Permanent Fund,  OMB Component  2616. He  directed attention                                                                    
to  the analysis  on  the  second page  and  noted that  one                                                                    
column was in millions, while the other was in dollars.                                                                         
                                                                                                                                
10:36:10 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:36:29 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Stedman clarified  that the  fiscal note  had been                                                                    
updated.                                                                                                                        
                                                                                                                                
Co-Chair  Stedman  MOVED  to report  CSSB  103(FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
Senator Wielechowski OBJECTED for discussion.                                                                                   
                                                                                                                                
10:37:22 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski he  thought if there was  a change made                                                                    
to the  way that the  permanent fund was calculated,  and if                                                                    
the  statutory  requirement  that the  corporation  transfer                                                                    
funds  from the  ERA to  the dividend  fund were  removed, a                                                                    
change should be made to the state constitution.                                                                                
                                                                                                                                
10:37:57 AM                                                                                                                   
                                                                                                                                
Senator Wilson agreed with Senator Wielechowski.                                                                                
                                                                                                                                
10:38:23 AM                                                                                                                   
                                                                                                                                
Senator Wielechowski MAINTAINED his objection.                                                                                  
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Wilson, Bishop, Hoffman, Stedman, von Imhof                                                                           
OPPOSED: Wielechowski                                                                                                           
                                                                                                                                
The motion carried (5/1).                                                                                                       
                                                                                                                                
CSSB 103(FIN)  was REPORTED  out of  committee with  one "do                                                                    
pass" recommendation,  and four "amend"  recommendations and                                                                    
with  one  new indeterminate  fiscal  note  from the  Senate                                                                    
Finance Committee for the Department of Revenue.                                                                                
                                                                                                                                
10:38:59 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:42:00 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  von  Imhof  explained   that  the  bill  had  been                                                                    
                            thth                                                                                                
previously heard on April 10 and 29.                                                                                            
                                                                                                                                
SENATE BILL NO. 104                                                                                                           
                                                                                                                                
     "An Act relating to an appropriation limit; relating                                                                       
     to the budget responsibilities of the governor; and                                                                        
     providing for an effective date."                                                                                          
                                                                                                                                
10:42:12 AM                                                                                                                   
Co-Chair Stedman MOVED to ADOPT proposed committee                                                                              
substitute for SB 104, Work Draft 31-LS0804 (Wallace,                                                                           
4/29/19).                                                                                                                       
                                                                                                                                
Co-Chair von Imhof OBJECTED for discussion.                                                                                     
                                                                                                                                
10:43:18 AM                                                                                                                   
                                                                                                                                
JULI LUCKY, STAFF, SENATOR NATASHA VON IMHOF, noted that                                                                        
there was one substantive change and one technical change                                                                       
in the CS. The changes would not impact the fiscal note.                                                                        
                                                                                                                                
Ms. Lucky read from an Explanation of changes document                                                                          
(copy on file):                                                                                                                 
                                                                                                                                
                       version: 31-LS0804\K                                                                                     
                                                                                                                                
     Changes appropriation  limit to $6.0 billion  from $5.0                                                                    
     billion [Page 1, line 13;                                                                                                  
     conforming change page 3, line 11].                                                                                        
                                                                                                                                
     Technical  correction   deleting  unnecessary  language                                                                    
     referencing the use of capital                                                                                             
     appropriations exceeding the cap  in the calculation of                                                                    
     the spending limit in subsequent years [Sec. 2].                                                                           
                                                                                                                                
                       version: 31-LS0804\U                                                                                     
                                                                                                                                
     An exception  for capital spending is  added. An amount                                                                    
     equal  to up  to five  percent of  the total  allowable                                                                    
     spending  under  the  cap  can   be  spent  on  capital                                                                    
     improvements                                                                                                               
     outside the cap.                                                                                                           
                                                                                                                                
     Technical corrections to two  sections of the bill that                                                                    
     do not change the intent:                                                                                                  
                                                                                                                                
               Spending cap is increased by the cumulative                                                                    
          change in inflation [Page 1, line 13 through page                                                                     
          2, line 2].                                                                                                           
               Debt exceptions are clarified [page 2 lines                                                                      
          5-7 and 19-20].                                                                                                       
                                                                                                                                
10:44:35 AM                                                                                                                   
                                                                                                                                
Senator Micciche  asked whether the bill  allowed additional                                                                    
spending on  capital in years  where there were  extra funds                                                                    
and there was additional need for spending.                                                                                     
                                                                                                                                
Ms.  Lucky  clarified   that  the  bill  put   in  place  an                                                                    
appropriation   limit    of   $6   billion.    The   capital                                                                    
appropriations  language would  allow  an  exception for  an                                                                    
amount up  to 5 percent of  the $ 6 billion.  It would allow                                                                    
an additional  expenditure, not  included in  the cap,  of 5                                                                    
percent  of the  cap for  the given  year. Capital  spending                                                                    
could be done under  the cap as well and would  be up to the                                                                    
legislature to decide.                                                                                                          
                                                                                                                                
10:46:15 AM                                                                                                                   
                                                                                                                                
Senator  Micciche  asked  why  the cap  went  so  far  above                                                                    
current UGF spend.                                                                                                              
                                                                                                                                
CAROLINE SCHULTZ,  STAFF, SENATOR NATASHA VON  IMHOF, stated                                                                    
that after  discussions on  SB 103 and  SB 104  the previous                                                                    
day  in committee,  it was  considered that  the $5  billion                                                                    
appropriation limit  was inadequate. She  referenced updated                                                                    
spreadsheets entitled "Unrestricted  General Fund short-term                                                                    
budget  expectation  (1.5   percent  inflation),"  (copy  on                                                                    
file). She clarified that  the spreadsheets considered three                                                                    
scenarios:  PFD: Surplus  to dividend,  PFD:  50 percent  of                                                                    
POMV, and PFD: Current statutory PFD.                                                                                           
                                                                                                                                
10:48:06 AM                                                                                                                   
                                                                                                                                
Senator Micciche  summarized that because the  bill chose to                                                                    
have   the  dividend   inside  of   the  cap,   a  realistic                                                                    
probability was that the 5  billion cap would be impossible.                                                                    
He  added  that  even  $6   billion  would  require  prudent                                                                    
spending in the future to remain within the cap.                                                                                
                                                                                                                                
Ms. Schultz  agreed. She added  that the  second spreadsheet                                                                    
reflected a  50 percent  POMV split. Under  that calculation                                                                    
for  the dividend  the cap  only allowed  an additional  $56                                                                    
million.                                                                                                                        
                                                                                                                                
10:48:59 AM                                                                                                                   
                                                                                                                                
Co-Chair von Imhof  added that the cap would  come into play                                                                    
when  the state's  cash  flow  increased significantly.  She                                                                    
thought that  the cap  would put  pressure to  keep spending                                                                    
down. She  emphasized that the  state did not have  to spend                                                                    
to the  cap and could  put money into savings.  She pondered                                                                    
the  purpose of  a  cap  and thought  that  it  was to  keep                                                                    
spending down when cashflow was high.                                                                                           
                                                                                                                                
10:50:30 AM                                                                                                                   
                                                                                                                                
Senator Micciche appreciated  Co-Chair von Imhof's comments.                                                                    
He thought it was unfortunate  that the spending cap did not                                                                    
help in the present but would  in the future. He asked about                                                                    
the  cumulative change  in inflation.  He asked  whether the                                                                    
calculation used the 5-year lagging CPI average.                                                                                
                                                                                                                                
Ms. Schultz  replied in the affirmative.  She explained that                                                                    
the clarifying  language was intended to  emphasize that the                                                                    
5-year  moving  average  for inflation  would  be  added  in                                                                    
subsequent years.                                                                                                               
                                                                                                                                
10:51:58 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman looked  at  row  'T' on  page  two of  the                                                                    
spreadsheet document. He thought  that the numeric needed to                                                                    
be changed from 5 to 6.                                                                                                         
                                                                                                                                
Ms. Schultz  affirmed that  the change  should be  made. She                                                                    
said  she  would  make  the  change  and  redistribute.  She                                                                    
clarified that the math was still correct.                                                                                      
                                                                                                                                
10:52:52 AM                                                                                                                   
                                                                                                                                
Co-Chair von Imhof WITHDREW her objection.                                                                                      
                                                                                                                                
10:53:10 AM                                                                                                                   
                                                                                                                                
Senator  Wilson OBJECTED  for discussion.  He  spoke to  his                                                                    
objection. He  shared that he  was in favor of  removing the                                                                    
dividend from the cap altogether.                                                                                               
                                                                                                                                
10:54:21 AM                                                                                                                   
                                                                                                                                
Senator Micciche  thought the  PFD being  inside of  the cap                                                                    
signified taking no position on  the PFD but highlighted the                                                                    
total amount that would need  to be accounted for at payout.                                                                    
He relayed  that he did not  have a problem with  having the                                                                    
PFD inside the cap.                                                                                                             
                                                                                                                                
Ms. Schultz agreed with Senator Micciche.                                                                                       
                                                                                                                                
10:55:43 AM                                                                                                                   
                                                                                                                                
Senator Hoffman  agreed with Senator Wilson.  He thought the                                                                    
amount of  the PFD and  the attention the  dividend received                                                                    
ensured that it  would be a subject of  attention for future                                                                    
years.  He believed  that  for the  legislature  to put  the                                                                    
dividend  within  a  spending limit  weakened  the  spending                                                                    
limit because the  limit would be ignored. He  said that the                                                                    
number  one reason  that  the spending  limit  would not  be                                                                    
adhered  to  would be  because  it  would be  restricted  by                                                                    
whatever level the dividend was set.                                                                                            
                                                                                                                                
10:57:51 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:59:28 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  von  Imhof  reminded the  committee  that  Senator                                                                    
Wilson had objected to adopting the CS.                                                                                         
                                                                                                                                
Senator  Wilson  WITHDREW  his  OBJECTION.  There  being  NO                                                                    
further OBJECTION, it was so ordered.                                                                                           
                                                                                                                                
Co-Chair von Imhof set the bill aside.                                                                                          
                                                                                                                                
SB  104  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair von  Imhof discussed  housekeeping. She  noted that                                                                    
the 1:30  PM meeting  would be  Delayed to  the Call  of the                                                                    
Chair following floor session.                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
11:00:31 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 11:00 a.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB 91 Concerns.pdf SFIN 4/30/2019 9:00:00 AM
SB 91
SB 91 Sponsor Statement, Sectional and project update.pdf SFIN 4/30/2019 9:00:00 AM
SB 91
SB 91 letters of support.pdf SFIN 4/30/2019 9:00:00 AM
SB 91
Hydro presentation 3-18_cw_3_25_18.pdf SFIN 4/30/2019 9:00:00 AM
SB 91
SB 103 Work Draft Version G.pdf SFIN 4/30/2019 9:00:00 AM
SB 103
SB 103 Explanation of Changes SB 103 (FIN).pdf SFIN 4/30/2019 9:00:00 AM
SB 103
SB 104 Work Draft Version K.pdf SFIN 4/30/2019 9:00:00 AM
SFIN 2/4/2020 9:00:00 AM
SB 104
SB 104 Explaination of Changes version K.pdf SFIN 4/30/2019 9:00:00 AM
SFIN 2/4/2020 9:00:00 AM
SB 104
SB 104 Unrestricted General Fund Spreadsheet.pdf SFIN 4/30/2019 9:00:00 AM
SB 104
SB 103 Support Letters.pdf SFIN 4/30/2019 9:00:00 AM
SB 103
SB 104 Support Letter.pdf SFIN 4/30/2019 9:00:00 AM
SB 104