Legislature(2013 - 2014)SENATE FINANCE 532
02/12/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB119 | |
| Presentation by Alaska Energy Authority: Aea Renewable Energy Grant Program | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | SB 119 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
February 12, 2014
9:05 a.m.
9:05:15 AM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 9:05 a.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
Sarah Fisher-Goad, Executive Director, Alaska Energy
Authority, Department of Commerce, Community and Economic
Development; Sean Skaling, Deputy Director, Alternative
Energy and Energy Efficiency, Alaska Energy Authority,
Department of Commerce, Community and Economic Development.
SUMMARY
SB 119 BUDGET: CAPITAL
SB 119 was HEARD and HELD in committee for
further consideration.
PRESENTATION by ALASKA ENERGY AUTHORITY: AEA RENEWABLE
ENERGY GRANT PROGRAM
SENATE BILL NO. 119
"An Act making appropriations, including capital
appropriations and other appropriations; making
appropriations to capitalize funds."
9:06:42 AM
^PRESENTATION by ALASKA ENERGY AUTHORITY: AEA RENEWABLE
ENERGY GRANT PROGRAM
9:07:00 AM
SARAH FISHER-GOAD, EXECUTIVE DIRECTOR, ALASKA ENERGY
AUTHORITY, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT, introduced herself.
SEAN SKALING, DEPUTY DIRECTOR, ALTERNATIVE ENERGY AND
ENERGY EFFICIENCY, ALASKA ENERGY AUTHORITY, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, introduced
himself.
Ms. Fisher-Goad remarked that there was a presentation from
the previous legislative session, which was an overview of
a variety of Alaska Energy Authority (AEA) issues, but did
not include the Renewable Energy Fund programs. She
explained that the Renewable Energy Fund program recently
completed its seventh round. She stated that the Renewable
Energy Fund program was a challenging program for AEA to
manage, but was a great legislative initiative to provide
funding to diversify the energy portfolio. She stated that
there was a Renewable Energy Fund program advisory
committee that consisted of public members and four
legislators. She explained that the makeup of the board had
recently changed after the board was extended for another
ten years. She stated that the legislator representation on
the board increased by two senators.
Senator Hoffman requested a brief synopsis of the funding
history for the first seven years of the program. Ms.
Fisher-Goad responded that the presentation would include
that information. She announced that round 1 was a $100
million appropriation; round 2 was $25.013 million; round 3
was $25 million; round 4 was a $36.6 million, but included
some prior projects, so only $26 million was used; round 5
was $25.8 million; and round 6 was $25 million. She stated
that the current governor's request for round 7 was for $20
million.
Co-Chair Meyer surmised that the total funding for
Renewable Energy Fund program was $237 million. Ms. Fisher-
Goad responded in the affirmative.
Co-Chair Meyer wondered if the goal of the fund was to have
a total of $250 million in the fund. Senator Hoffman
responded that it was the guideline, but the governor had
chosen to not fund it at that level.
9:11:22 AM
Co-Chair Meyer felt that if there was a reappropriation of
the money, then AEA was not able to use the money for its
intention. He wondered if that summation was accurate. Ms.
Fisher-Goad responded that the first couple of rounds faced
circumstances where a grantee may decide that the project
should not be pursued. She pointed the committee to a
document titled, "Renewable Energy Fund, Status Report and
Round VII Recommendations" (copy on file). She stated that
the report outlined, by region, the amount of money that
was made available for a grant; the amount that was
expended; and the amount that remained available.
Co-Chair Meyer wondered if the $10 million appropriation
only occurred once. Ms. Fisher-Goad replied in the
affirmative.
Vice-Chair Fairclough looked at page 4, under Grants
Unissued to Date, and she wondered if there was a math
error. Mr. Skaling replied that he was aware of that error,
and stated that the proper number of Grants Issued to Date
was $19 million and not $29 million.
Mr. Skaling discussed the PowerPoint presentation;
"Renewable Energy Fund, Status Report and Recommendations"
(copy on file). He felt that the program was achieving its
goals and helping Alaskans.
Mr. Skaling looked at slide 2, "Renewable Energy Grant
Fund."
Diversifies Alaska's energy portfolio and supports
State renewable goals
Displaces volatile-priced fossil fuels
Provides a vetting mechanism for energy projects
Capitalizes on local energy resources
Expands Alaska's renewable energy knowledge base
Provides local employment
Benefits businesses not eligible for PCE
9:16:26 AM
Mr. Skaling highlighted slide 3, "Grant and Funding Summary
as of 02/06/14." He stated that the chart was an assessment
of rounds 1 through 6; how many applications were received;
how many of those applications were funded and their
status; and the dollar amounts. He remarked that there were
approximately 250 applications that had been funded. He
remarked that the chart could also be found in the status
report.
Mr. Skaling discussed slide 4, "Renewable Energy Fund
Projects, Rounds I-VI." He explained that the slide
displayed a map of all the projects across the state. He
pointed out the diversity of the projects. The map
represented projects that were both in reconnaissance and
feasibility phases; and design and construction. He felt
the slide showcased a good statewide balance of projects.
He noted that Alaska had great renewable energy resources.
Mr. Skaling highlighted slide 5, "Renewable Energy Fund:
Annual Fuel Savings." He explained that the chart referred
to the 36 projects that were operational and saving fuel.
The chart showed the fuel savings converted into millions
of gallons of diesel saved. He remarked that the first few
years of the program required work related to feasibility,
design, construction, and operation. The chart required a
year of data in order to make the determinations. He
pointed out that there was a current savings of 12.4
billion gallons of diesel per year. He stressed that it was
an exponential increase in savings.
Mr. Skaling discussed slide 6, "Renewable Energy Fund:
Project Performance." He stated that the chart could also
be found in the status report. The chart outlined the
operational projects with the coordinating data project by
project: how much heat it generated; how much electricity
it generated; the equivalent fuel and diesel; and the
dollars equivalent. He explained that the blue section
referred to electric-only projects and the green section
was electric and heat projects. Both of those projects were
considered "wind projects." The bottom section referred to
heat-only projects.
Mr. Skaling displayed slide 7, "Renewable Energy Fund:
Value Generated." He explained that the slide looked at the
net present value capital costs and benefits of all of
those 36 current projects.
For first 36 projects in operation
Fund Investment of $82 million
Total NPV cost of $290 million
NPV Benefits: $840 million
Mr. Skaling looked at slide 8, "Appropriated Renewable
Energy Fund Grants Rounds I - VI." He stated that the slide
outlines all appropriations split up by region and resource
type. He pointed out that hydro and wind take up most of
the pie chart.
Mr. Skaling discussed slide 9, "Grant Completion Schedule."
Grants issued in phases to ensure quality projects
This year, completed construction grants will exceed
completed feasibility grants
Large increases in completed construction
9:21:57 AM
Mr. Skaling highlighted slide 10, "Project Highlight:
Pelican Hydro."
REF Funding: $1.95 million
Total Cost: $5.8 million
948,522 kWh/year
70,000 gallons of diesel saved
$312,000 savings first year
Mr. Skaling looked at slide 11, "Pelican Hydro, Before,
During and After." He explained that the top left photo was
of the wood stave and blue tarp penstock before the
project. The bottom left photo was an aerial view of the
site during construction. The bottom right photo was the
AEA project manager with the new surge tank.
Mr. Skaling discussed slide 12, "Community Highlight: Delta
Junction."
Delta Junction School Biomass
Completed in September 2011
High-efficiency, low-emissions wood chip biomass
heating system
Wood chips come from Dry Creek Saw Mill waste
product
Funding $2 million grant/$2.8 million total
Simple Pay Back: 13 years for Renewable Energy
funds, 19 years on total cost
Successes:
During the first winter, saved $153,000 and
53,000 gallons in heating
Allowed the school to save 2 teacher
positions, reopen music program and remodel
the school kitchen
Potential to add additional facilities
Easy maintenance
Vice-Chair Fairclough wondered how much more cost remained
for the completion of the projects that were currently in
the queue. Mr. Skaling responded that he was not able to
answer that question. He furthered that the costs were
split up by feasibility and design. He stressed that not
every proposed project will advance to actual development
and construction. He stressed that it was difficult to
determine the overall cost, without the feasibility
studies.
Co-Chair Meyer noted that the renewable energy projects in
rural Alaska had reduced their electrical cost. He queried
the impact of the renewable energy projects on the Power
Cost Equalization (PCE) fund. Mr. Skaling responded that
the projects provided significant savings to the PCE fund
and the schools. He stressed that the communities and the
benefits were also benefitting. He agreed to provide
further information.
9:26:38 AM
Mr. Skaling discussed slide 14, "Renewable Energy Fund:
Round VII."
Technical and economic analysis
Priority given to regions with high energy costs
Capital Budget request includes $20 million
Can fund 26 projects: 17 heating and 9 electric or
other projects
Advisory committee recommended partial funding for 2
large hydro projects to fund 5 additional heating
projects and 1 regional priority
Requested fully fund hydro if additional funds
available
Mr. Skaling highlighted slide 15, "Round VII Heat
Applications." He stated that the map depicted the
recommended proposed projects that were outlined in the
status report.
Mr. Skaling discussed slide 16, "Round VII Standard
Applications." He explained that the map pinpointed all of
the recommended heat applications. He stated that the dark
points with dark numbering were the projects that were in
the top $20 million. The other points were recommended, but
were not in the top $20 million.
Mr. Skaling looked at slide 17, "Renewable Energy Fund
Round VII: Recommended Heat Applications." He stated that
the graphs referred to the standard electric projects.
Mr. Skaling displayed slide 18, "Renewable Energy Fund
Found VII: Electrical Applications Recommended." He stated
that the charts displayed the recommended funding by type,
which could be seen by top tier versus all other projects.
9:31:20 AM
Vice-Chair Fairclough looked at slide 17, and noticed that
two projects fell below for additional request. She
announced that she was the dissenting vote at the Renewable
Energy Meeting for not taking the staff's recommendations.
She asked for more detail regarding that process. She
stressed that it was the first time that the committee did
not adopt the staff's recommendation. Mr. Skaling responded
that the Renewable Energy Fund Advisory Committee's
significant role at that meeting was typically to do the
"regional spreading." He explained that the staff typically
presented a list of projects, in a ranked order, and
identified through the regional spreading formula. Those
projects were then for consideration of the committee to
possibly advance into the funding level. He stated that the
committee also recommended partially funding two hydro
projects, which were listed on lines 15 and 16 in order to
fund one of the regional funding priorities within the $20
million; and an additional 5 heat projects.
Vice-Chair Fairclough remarked that the committee reviewed
priorities for Alaska. She felt that there was an issue
with the difficulty of financing in the current market. She
remarked that there was a process to determination of
fairness for everyone, and stressed that electrical cost
was much different than heating cost. She felt that heat
should have a priority over electricity. She wondered how
much the state was committing in Round VII. Mr. Skaling
replied that the top project always ended in construction.
He explained that there was one feasibility study.
9:36:41 AM
Vice-Chair Fairclough stressed that she wanted to support
all the projects, but the issue was whether or not those
projects could be finished based on the state's current
cash flow. She stated that she had pointed out at the
advisory board meeting that they should examine whether the
design of the projects should be currently funded.
Senator Hoffman looked at slide 7, and felt that the slide
represented what the state had invested and the net present
value benefits. He stressed that Alaska should not be
cutting back, but rather focus on the intention of the law.
He felt that the funding needed to go beyond the governor's
recommendations.
Co-Chair Meyer wondered if the goal was $50 million or 50
percent of electricity should be renewable energy. Mr.
Skaling responded that the goal was 50 percent renewable
electricity by 2025.
Co-Chair Meyer felt that the goal was probably going
slowly, because of the work on the proposed gas line.
9:42:28 AM
Senator Olson wondered how often the committee rejected the
recommendations of the staff, and how the projects were
ranked. Ms. Fisher-Goad responded that there were two
separate lists presented for the current year: heating and
electricity. She explained that there had been a long
discussion with AEA and the committee to focus on heat, and
provide technical assistance to applicants. She stated
that, in order for staff to fulfill the recommendation for
regional spreading, there were recommended projects to
promote the regional spreading. She stressed that there was
recent difficulty in the recent year, because of the two
separate lists. She stated that the committee recommended a
bigger heating list, by taking a portion from electric
projects.
Senator Olson remarked that the governor had advocated for
various accessibility to resources. He noted that the
Kosmos Hydroelectric Dam project was not funded. Mr.
Skaling replied that there was a technical and economic
viability study of the project, and it was not determined
to be technically or economically viable.
Senator Olson wondered if the project should not be funded.
Mr. Skaling replied that AEA was focused on the projects
that could achieve the goal of affordable energy, so that
project did not fall into that feasibility goal.
9:47:08 AM
Senator Bishop wondered if AEA had a plan to analyze the
high electric costs in the various communities. Ms. Fisher-
Goad replied that the application process was remaining
open for all electric and heat projects. She stressed that
round 7 separated the projects between heat and electric.
She remarked that an electric project could still file the
application to be ranked through the vetting projects. She
stressed that there was no discounting of electric
projects, but it was an opportunity to look at heating
through a more isolated ranking process.
Senator Bishop looked at statewide recommendation project
funding, and looked at line 22. He surmised that Minto was
in the queue for the current year. Mr. Skaling replied in
the affirmative.
Senator Bishop announced that the project would be fully
funded. Mr. Skaling agreed.
Senator Dunleavy wondered if coal was a viable possibility
for state projects. Ms. Fisher-Goad responded that UAF was
working to replace its coal-powered combined heat and power
plant with another coal plant. She stressed that there was
still a use for coal, and the Renewable Energy Fund program
did not have an issue with coal. She understood that it was
a viable and reliable resource for electricity. She pointed
out that the Renewable Energy Fund program was not on the
eligible fuel source for the Renewable Energy Fund program.
Senator Dunleavy wondered if AEA had a mechanism for
discussions regarding coal use. Ms. Fisher-Goad replied
that she would be happy to discuss with a community about
the possibility of a coal plant. She remarked that there
was a technical analysis that was required.
9:52:28 AM
Senator Dunleavy wondered if there was a mechanism for a
community to discuss with AEA about the possibility of gas
exploration. Ms. Fisher-Goad replied that there was a
provision in the Renewable Energy Fund that provided small
gas to be used in the community.
Co-Chair Meyer queried the status of the Healy Coal Plant.
Ms. Fisher-Goad responded that AIDEA and Golden Valley had
completed the sale, but deferred to AIDEA for more
information.
Co-Chair Kelly stated that the Healy Coal Plant was
currently undergoing testing.
Co-Chair Meyer wondered if hydro was considered "renewable
energy." Ms. Fisher-Goad replied in the affirmative.
Co-Chair Meyer asked if hydro was considered renewable at
the federal level. Ms. Fisher-Goad replied that the federal
Department of Energy did not consider hydro a renewable
resource.
Co-Chair Kelly felt that the non-renewable energy was just
as important to Alaskans, if not more important, than
renewable energy. He did not care what kind of energy was
used to provide heat and electricity to the state.
9:57:37 AM
Senator Hoffman stressed that the people of rural Alaska
want affordable energy. He remarked that there was
potential in the Kuskokwim for heat through using peat.
Co-Chair Meyer wondered if there was a focus on building a
gas line in Donlin Creek. Senator Hoffman replied that the
gasline was their primary interest. He remarked that the
cost was several billion dollars.
Vice-Chair Fairclough stressed that prioritizing heat was
not consistent with policy. She felt that there needed to
be a policy change, in order for the Renewable Energy Fund
program to prioritize heat.
Senator Dunleavy remarked that there should be a focus on
getting the cheapest energy to communities.
10:03:13 AM
Co-Chair Meyer wondered if there could be a spreadsheet
that shows funding with each round. Mr. Skaling agreed to
provide that information.
Co-Chair Meyer asked if $4 million for a project was for
each phase of a project. Ms. Fisher-Goad replied that there
were two tiers of maximum amount, which was cumulative per
project through the entire phases. She stated that it was
originally $4 million in high cost areas, and $2 million in
low cost areas.
Co-Chair Meyer wondered if there was a possibility to pay
$32 million for a project. Ms. Fisher-Goad replied that the
$8 million as a cumulative cost. Mr. Skaling furthered that
it was $8 million or $4 million for the design and
construction phase; and the reconnaissance or feasibility
could be up to 20 percent of the total anticipated project
cost.
Ms. Fisher-Goad stressed that the focus of the day's agenda
was the Renewable Energy Fund program. She remarked that
AEA had various programs that did not relate directly to
Renewable Energy Fund program. She stressed that AEA was
focused on affordable energy.
Co-Chair Meyer wondered were the Renewable Energy Fund
program applications received their matching grants. Ms.
Fisher-Goad responded that there was a waiting system, but
a match was not necessarily required.
10:08:34 AM
Senator Bishop wondered if there were assets in AEA to do
her job. He also asked what she would do differently, if
she were "king for a day."
Co-Chair Meyer wondered if the relationship between AEA and
AIDEA was effective. Ms. Fisher-Goad responded that AIDEA
and AEA had many shared resources. She felt that the two
programs worked very well together.
Co-Chair Meyer asked for an update on Susitna Watana dam
project. Ms. Fisher-Goad replied that there is a meeting
in the future where she will discuss the progress of that
project. She stated that the dam was a significant part of
the goal of the Renewable Energy Fund program.
10:14:30 AM
Senator Olson queried how often a project like the Susitna
Watana dam would be proposed. Ms. Fisher-Goad responded
that the former Alaska Power Authority had the funding for
the project in the 1980s. She stated that the current
project was different than what was outlined in the 1980s.
She stated that the current project had a different
portfolio, and stressed that it was a project that could
have a significant benefit to the population.
Senator Olson shared that some news outlets had expressed
that the project will never be completed. He stressed that
there were many issues related to land use regarding the
development of the project. Ms. Fisher-Goad responded that
conversations with the village corporations had been very
positive.
Senator Olson shared that some Native Corporations feared
that the state would enact imminent domain to obtain the
lands and less-than-market value. Ms. Fisher-Goad replied
that AEA had participated in conversations with the Native
Corporations with respect to the use of the lands. She
stressed that she was very anxious to discuss the longer
term issues, in order to begin development on the project.
SB 119 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:20:15 AM
The meeting was adjourned at 10:20 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 021214 AEA Capital Request REF PerformanceTable_11x17.pdf |
SFIN 2/12/2014 9:00:00 AM |
SB 119 |
| 021214 AEA REFStatusReport2014Final_forprinting11x17.pdf |
SFIN 2/12/2014 9:00:00 AM |
SB 119 |
| 021214 AEA REFundR7StatewideRanked11x17.pdf |
SFIN 2/12/2014 9:00:00 AM |
SB 119 |
| 021214 AEA Senate Finance REF 2 12 14.pdf |
SFIN 2/12/2014 9:00:00 AM |
SB 119 |
| 021214 AEA REFStatusReport2014Final_forprinting11x17.pdf |
SFIN 2/12/2014 9:00:00 AM |
SB 119 |