Legislature(2021 - 2022)SENATE FINANCE 532
03/10/2021 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Energy Authority - Update on Assets, Projects, Grants & Loans | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
March 10, 2021
9:00 a.m.
9:00:46 AM
CALL TO ORDER
Co-Chair Bishop called the Senate Finance Committee meeting
to order at 9:00 a.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson
Senator Natasha von Imhof
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
None
PRESENT VIA TELECONFERENCE
Curtis Thayer, Executive Director, Alaska Energy Authority,
Department of Commerce, Community and Economic Development.
SUMMARY
^PRESENTATION: ALASKA ENERGY AUTHORITY - UPDATE ON ASSETS,
PROJECTS, GRANTS & LOANS
9:01:34 AM
CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT
(via teleconference), discussed the presentation "ALASKA
ENERGY AUTHORITY - Senate Finance Committee - February 25,
2021."
9:02:26 AM
Mr. Thayer showed slide 2, "WHO WE ARE":
Created in 1976 by the Alaska Legislature, the Alaska
Energy Authority (AEA) is a public corporation of the
State of Alaska governed by a board of directors with
the mission to "reduce the cost of energy in Alaska."
AEA is the state's energy office and lead agency for
statewide energy policy and program development.
9:02:48 AM
Mr. Thayer looked at slide 3, "WHAT WE DO":
Railbelt Energy - AEA owns the Bradley Lake
Hydroelectric Project and the Alaska Intertie. These
assets benefit Railbelt consumers by reducing the cost
of power.
Power Cost Equalization - The Power Cost Equalization
Program reduces the cost of electricity in rural
Alaska for residential customers and community
facilities.
Rural Energy - AEA constructs bulk fuel tank farms,
diesel powerhouses, and electrical distribution grids
in rural villages. AEA supports the operation of these
facilities through circuit rider and emergency
response programs
Renewable Energy - AEA provides renewable energy and
energy efficiency grants, analysis, and expertise to
benefit Alaskans. These include hydro, biomass, wind,
solar, and others. Grants and Loans AEA provides loans
to local utilities, local governments, and independent
power producers for the construction or upgrade of
power generation and other energy facilities
Energy Planning - In collaboration with local and
regional partners, AEA provide critical economic and
engineering analysis to plan the development of cost
effective energy infrastructure.
Mr. Thayer specified that the Alaska Energy Authority was
requesting a reappropriation of existing RPF funding from
cancelled projects.
9:04:34 AM
Mr. Thayer referenced slide 4, "OUR PROJECTS," which showed
a map of the state depicting projects across the state.
9:05:02 AM
Senator Hoffman referenced slide 3. He asked about the
weatherization program and whether it fell under renewable
energy efforts. He wondered how much would be spent on the
program to reduce energy costs for Alaskans.
Mr. Thayer explained that the weatherization program was
handled through the Alaska Housing Finance Corporation
(AHFC). He continued that AEA worked with local communities
in dealing with powerhouses and looking at waste heat.
Co-Chair Bishop asked whether the AEA circuit riders were
direct employees.
Mr. Thayer affirmed that circuit riders were employees of
AEA and the state. He furthered that funding for the
positions were a partnership with the Denali Commission as
well as federal receipt authority. There were four circuit
riders that worked in rural Alaska.
9:06:49 AM
Mr. Thayer reviewed slide 5, "PROGRAMS AND PROJECTS":
• Bradley Lake Hydroelectric
• West Fork Upper Battle Creek Diversion
• SSQ Transmission Line
• Alaska Intertie
• Power Cost Equalization
• Rural Power System Upgrades
• Bulk Fuel Upgrades
• Alternative Energy + Energy Efficiency
• Renewable Energy Fund
• Power Project Fund
Mr. Bradley briefly detailed the projects and programs
listed on the slide.
Mr. Thayer showed slide 6, "OWNED ASSETS." He turned to
slide 7, "BRADLEY LAKE HYDROELECTRIC PROJECT":
• Benefits 500,000+ members of Chugach Electric
Association, City of Seward, Golden Valley Electric
Association, Homer Electric Association, and
Matanuska Electric Association
• Produces ~10% of Railbelt electricity at 4.5
cents/kWh
• Over $20 million in savings per year to Railbelt
utilities Bradley Lake versus natural gas
Mr. Thayer addressed slide 8, "WEST FORK UPPER BATTLE CREEK
DIVERSION":
• Project cost $47 million, will add ~10% energy
• Substantial completion on July 22, 2020
• Project diverts runoff from Battle Creek into
Bradley Lake expanding the state's largest
hydroelectric facility
• Includes three miles of road, concrete diversion
dam, and a five-foot diameter pipeline under the
road to carry water from its source to Bradley Lake
• More energy at lower cost can be produced and
delivered to ratepayers
9:09:28 AM
Mr. Thayer stated that the pipe had been orange on purpose.
9:10:12 AM
Mr. Thayer moved to slide 9, "SSQ TRANSMISSION LINE":
• 39.3 miles of 115-kV transmission line delivers
Bradley Lake hydroelectric generated power
• AEA's recent purchase allows for better cost
alignment, increased reliability, and future
prospect for upgrades to the line, which would
decrease line losses and allow for increased power
transmission north, and unconstraining Bradley power
• Schedule begins with preliminary design with 6
months, 24 to 36 month estimate to finalize
construction
Mr. Thayer detailed that the project resulted in better
line development and had ended a lawsuit among utilities.
9:11:54 AM
Senator Hoffman referenced the additional costs of $12
million when the power line had been down and asked how
much the increase raised the cost per kilowatt hour.
Mr. Thayer agreed to provide the individual numbers per
utility at a later time. He said that each utility had
billed differently depending on the rate structure of what
was expected from Bradley.
Senator Hoffman commented that the dollar amounts were
important but thought it was useful for the committee to
see the comparison in price for those that were serviced in
the area.
9:13:07 AM
Senator Wilson understood the line originally owned by
Homer Electric and asked whether the damage costs were
reimbursable with federal funds to the utility or to AIDEA.
Mr. Thayer stated that the matter was being discussed with
FEMA. He said that Homer Electric had repaired the line and
brought the line back to service, for which it should be
reimbursed. He said that the state had yet to be reimbursed
by the federal government.
Senator Wilson understood that some utilities had wanted to
repair the line quickly and that Homer Electric had denied
them access to the line. He wondered who would maintain the
line and make repairs.
Mr. Thayer stated that a lawsuit had revolved around an
anti-trust matter and that there had been no lawsuits when
the line was down. He stated it was a Homer Electric line
and it was their responsibility to bring it back online. He
said that there was a current agreement with Homer Electric
to maintain the line, but in the event that they could not,
any other utility could bring the line back up.
9:15:57 AM
Mr. Thayer reviewed slide 10, "ALASKA INTERTIE":
• 170 mile-long transmission line from Willow to Healy
• Allows Golden Valley Electric Association (GVEA) to
connect to and benefit from lower cost power
• Improves reliability within Railbelt system
• Operated by AEA and Railbelt utilities
• Between 2008 and 2018, the Intertie provided an
average annual cost savings of $40 million to GVEA
customers
Mr. Thayer thought it was important to note that on an
average, Golden Valley received a $40 million benefit from
being able to buy power in the Anchorage market cheaper
than it could be produced in the Fairbanks market. He
thought it was an important comparison when considering the
Power Cost Equalization Fund.
9:16:56 AM
Senator Hoffman asked about the $40 million in annual cost
savings and asked how the amount worked out to per kilowatt
cost.
Mr. Thayer replied that he could provide the numbers to the
committee.
Senator Hoffman thought it would be helpful to have future
presentations include the per kilowatt numbers so they
could understand the reduction in costs to Alaskans as a
result of the projects.
Co-Chair Bishop added that when the Fairbanks area was able
to utilize Bradley Lake the savings was approximately $.02
per kilowatt hour.
9:18:24 AM
Co-Chair Stedman thought AEA had put together a summary
page with comparative analysis of different energy sources
a couple of years previously to compare cost per kilowatt.
He requested an updated summary as costs across the state
varied substantially.
Co-Chair Bishop asked whether Mr. Thayer could provide the
information to the committee.
Mr. Thayer replied in the affirmative.
9:19:21 AM
Co-Chair Bishop asked about the existing estimate to fully
upgrade the existing intertie to realize the full potential
of power generated by the Bradley Lake Hydroelectric plant.
Mr. Thayer said that it was approximately $1 billion in
different segments. He noted a future slide would provide a
breakdown. He said that many constraining issues were in
the Kenai Peninsula.
Co-Chair Bishop asked for an approximate cost estimate for
building the Road Belt Intertie.
Mr. Thayer stated that the cost was an estimated $1 million
per mile, or $315 million.
9:21:25 AM
Senator Wielechowski was curious about what Mr. Thayer knew
about federal support for a natural gas pipeline. He
acknowledged that the project would not be under AEA.
Mr. Thayer replied that he did not know the thoughts on the
federal level concerning the natural gas pipeline.
9:22:04 AM
Senator Olson asked why Bradley Lake, being a renewable
resource, was half the cost of natural gas a non-
renewable resource.
Mr. Thayer relayed that hydropower was generally the
cheapest form of power. He continued that AEA was working
on various ways to divert water and add generators to
increase energy capacity and maximize the most power out of
Bradley Lake.
Senator Olson referenced the recent natural disaster in the
State of Texas in which many areas of the state lost power.
He asked whether there were power redundancies that could
ensure power loss during a natural or man-made disaster.
Mr. Thayer answered in the negative. He mentioned there was
power generation in Homer, Mat-Su, and Fairbanks. He
relayed that the transmission line was not a redundant
system and a second lines were being considered.
9:24:42 AM
Co-Chair Stedman recalled that it had been the AIDEA rather
than AEA that had presented the committee with the
information regarding different energy source comparisons.
He apologized and said that he would provide the
information to the committee and AEA.
9:25:37 AM
Mr. Thayer spoke to slide 11, "MAXIMIZING CLEAN ENERGY FOR
RAILBELT":
• Soldotna Quartz Creek (and Substation) $70 Million
• Bernice Lake Beluga HVDC $185.3 Million
• Grid Stabilization HVDC $115 Million
• University Dave's Creek 230kV $57.5 Million
• Bradley Lake Expansion (Spillway Raise) $4 Million
Mr. Thayer spoke to each project and mentioned AEA was
looking at grid stabilization using batteries.
9:27:30 AM
Co-Chair Stedman wanted a brief synopsis of the Healy Clean
Coal Project. He asked about potential integration of the
coal plant at the University of Alaska Fairbanks.
Mr. Thayer noted that the projects were within the Golden
Valley service territory. He said he would reach out to the
utility for the information.
Senator Hoffman asked about a timeline for the projects
listed on the slide. He asked for a synopsis to include how
much customers would save on a kilowatt per hour basis. He
thought it would be interesting to compare power cost
reductions between projects. He emphasized that reducing
the cost of energy for Alaskans was one of his highest
priorities. He pointed out that the governor had mentioned
reducing energy costs in his State of the State address. He
highlighted AEAs mission to lower costs and wished that
the information was reflected in the presentation.
Mr. Thayer responded that the following year the Bradley
bonds would be entirely paid off, and there would be $12
million available to benefit the state. He said that
looking at bonding $12 million over the next 29 years
provided $250 to $300 million worth of work that could be
done on the lines without affecting the state budget or
rate payers.
9:31:50 AM
Mr. Thayer continued to address Senator Hoffman's remarks.
He summarized that the AEA was working with utilities on
each project and would provide more information.
Senator Hoffman thought what Mr. Thayer described fell
under AEA's mission statement. He reiterated that he was
looking forward to seeing how AEA planned to lower energy
costs in the areas of the state that paid the highest
rates, namely the rural areas of Western and Northern
Alaska.
9:33:19 AM
Co-Chair Stedman asked whether AEA was involved in support
of the Kake Gunnuk Creek Hydroelectric Project.
Mr. Thayer believed that AEA was involved in the Kake
project, but that the authority was in involved in over 30
projects. He relayed that he would provide the information.
Co-Chair Stedman expressed concern that after putting in
the hydroelectric plant, the rates for residents had
increased.
Mr. Thayer agreed to look into the matter.
9:34:35 AM
Senator von Imhof surmised that providing affordable energy
to every part of the state had always been a challenge.
She mentioned environmental concerns, cultural concerns,
and the fact that often the projects crossed over private
and public land. She added that the projects took time,
effort, and negotiation. She noticed that slide 11 did not
include tidal energy.
Mr. Thayer stated that AEA had looked at the topic of tidal
energy. He shared that there were challenges with the tide
and potential damage to tidal projects from silt. He said
that there were no active tidal projects under review at
the current time.
9:36:48 AM
Mr. Thayer showed slide 12, "ALASKA CARGO AND COLD
STORAGE":
• AEA was awarded $21 million USDOT BUILD grant to
participate in the construction of a ~715,000-
square-foot $220 million state-of-the-art air cargo
and cold storage facility at the Ted Stevens
Anchorage International Airport (ANC)
• AEA will deliver its expertise in renewable energy
design and operation to make the building a
showpiece in energy-efficiency
• The project will enhance ANC's shipping
infrastructure, improve Alaska's supply chain
security, and create jobs for Alaskans 2,075
construction jobs and 120 full-time jobs
Mr. Thayer noted that the $21 million grant was the largest
awarded on the West Coast.
9:38:04 AM
Mr. Thayer showed slide 13, "POWER COST EQUALIZATION."
Mr. Thayer addressed slide 14, "POWER COST EQUALIZATION":
• Power Cost Equalization (PCE) provides electric
power to rural residential customers and community
facilities at costs similar those in Anchorage,
Fairbanks, and Juneau
• 194-eligible communities see the benefits of PCE
credits
• In Fiscal Year 2020, $29.6 million was disbursed
• PCE Endowment Fund created capitalized in Fiscal
Year 2001; the now ~$1.1 billion
Mr. Thayer stated that the disbursement number for 2021 was
expected to be higher due to the rising cost of energy.
9:39:58 AM
Senator von Imhof understood that PCE Fund was used to pay
for lowering the cost of energy in rural parts of the
state. She asked whether there was a way to use some of the
PCE funds to invest in capital projects that would lower
the costs of energy for a community in perpetuity.
Mr. Thayer thought the matter signified policy call for the
legislature and the governor. He added that in the area of
bulk fuel, federal dollars could be used if a funding
mechanism was provided.
Senator von Imhof thought Mr. Thayer was correct and
leveraging federal dollars was an area to explore. She
added that battery storage and alternative energy should
also be expanded.
9:42:11 AM
Senator Hoffman thanked Mr. Thayer for his answer. He
reminded that the legislature sets policy. He restated that
he represented the communities in the state with the
highest cost for energy. He stressed that the PCE program
reduced energy costs to rural areas, but that those
residents still paid significantly higher costs for energy
than in urban areas of the state.
Co-Chair Bishop referenced an amendment to a gas line bill
a few years previously that would lower costs for energy in
rural Alaska. He said that if a gas line ever materialized
it would benefit rural Alaska.
9:44:27 AM
Mr. Thayer reviewed slide 15, "PCE ENDOWMENT HISTORY
(THOUSANDS)," which showed a table that with data on the
beginning balance and inflows and outflows of the endowment
from FY 16 through FY 20.
9:44:52 AM
Mr. Thayer showed slide 16, "RURAL ENERGY."
Mr. Thayer discussed slide 17, "RURAL POWER SYSTEM
UPGRADES":
• ~197 communities eligible for Rural Power System
Upgrade (RPSU)
• Goal improve power system efficiency, safety, and
reliability
• Aging infrastructure and Operation and Maintenance
• Active projects 7 full and 16 Maintenance and
Improvement/Diesel Emissions Reduction Act
• Deferred maintenance $327 million
Mr. Thayer drew attention to the photo showing a green
generator and shared that it was from the village of
Tuluksak, which was currently operating with two new
generators. He said that the private sector was used to
build new powerhouse in the community. He lamented the $327
million of deferred maintenance and noted that the previous
year the legislature had appropriated $5 million for
deferred maintenance.
9:46:38 AM
Senator Wilson asked whether AEA ensured maintenance and
ongoing operation of powerhouses and generation systems for
rural energy upgrades.
Mr. Thayer described that AEA looked at communities' needs
for power generation and assessed the needs of the
powerhouses using 3-D modeling to identify problems within
the structure. He said that in the approximately 200 rural
communities served by AEA, 150 had a relationship with the
utility, which helped with maintenance. He cited that about
50 small communities in rural Alaska (with less than 250
people) were dependent on AEA for maintenance. He thought
AEA had assumed the moral obligation to take care of the
communities.
9:49:00 AM
Co-Chair Bishop asked whether Mr. Thayer could turn back to
slide 15.
Senator Hoffman asked about transfers and appropriations to
Other Funds, in FY 19 and FY 20, as listed on slide 15. He
stated that the administration had proposed, and the
legislature had agreed, on those transfers, but he believed
that the legislature should reevaluate the spending. He
lamented that dollars were taken from PCE and used to
subsidize the administration and thought the dollars could
be better spent to lower energy costs in rural Alaska. He
thought that money should not be diverted from a program
that was assisting the highest energy costs in the state,
which were communities on PCE.
9:51:00 AM
Senator Olson discussed upgrades and asked whether there
was a difference in eligibility for Alaska Village Electric
Cooperative (AVEC) versus a community powerhouse.
Mr. Thayer answered in the negative and stated that AEA
looked at the individual needs of each community. He
continued that that AVEC provided maintenance to villages
it was responsible for which meant the generational units
had a longer lifespan.
Senator Olson asked about solar power upgrades being
marketed in communities such as Unalakleet for individual
homeowners. He wondered whether those residents could
benefit from the AEA monies.
Mr. Thayer responded that AEA was responsible for
powerhouses but not for upgrades on a house-by-house basis.
Senator Olson asked whether Mr. Thayer supported net back
metering.
Mr. Thayer thought that there was a lot to the issue and
that he should refrain from speculating on the matter.
9:53:04 AM
Mr. Thayer addressed slide 18, "RPSU PROJECTS REQUIRING
FUNDING":
FY2022 RPSU Capital Requests
• Napaskiak
• Nelson Lagoon
• Nikolai
• Rampart
Next RPSU Priorities
• Beaver
• Buckland
• Chefornak
• Chenega Bay
• Chuathbaluk
• Crooked Creek
• Elfin Cove
• Golovin
Mr. Thayer announced that if the state were to receive $5
million in funding it could be parlayed into $12.5 million
federal dollars, which would be used for the first four
projects on the slide. The slide contained a picture of a
new powerhouse and an older powerhouse.
9:53:50 AM
Senator Olson asked whether there was a timeline associated
with the next rural power system upgrades.
Mr. Thayer said that if the capital appropriation of $5
million were received, the top four projects would be
funded.
9:54:44 AM
Senator Olson asked whether the timeline was 3 to 5 years
for the current date.
Mr. Thayer responded in the affirmative provided the
funding was received.
9:54:50 AM
Senator Hoffman asked why the $5 million was not included
in a request by the administration to lower energy costs in
rural areas. He stressed that the AEA should be focusing
their energy on the areas of the state that had the highest
energy costs. He contended that if AEA was following its
mission, there would be something in the presentation that
reflected lowing the cost of energy to Alaskans who
currently paid the highest rates.
Co-Chair Bishop asked about AEA's absorption rate for
projects.
Mr. Thayer replied that AEA currently had capacity, with
federal funds, to increase staff and double the number of
powerhouses. He reminded that the powerhouses were built by
the private sector to AEA's specifications and project
management. He announced that there was capacity to build
additional powerhouses.
Co-Chair Bishop appreciated the information.
9:57:30 AM
Mr. Thayer moved to slide 19, "BULK FUEL UPGRADE":
• ~400 rural bulk fuel facilities
• Goal code compliant fuel storage facilities and
prevention of spills and contamination
• Aging infrastructure, erosion, and catastrophic
failure
• Active projects 8 full and 18 Maintenance and
Improvement No funding for two years
• Leveraging Coast Guard regulatory efforts to capture
BFU assessments to prioritize projects
• Deferred maintenance $800 million
Mr. Thayer said some bulk fuel stations were built in the
1960s and 1970s. He stated that the bulk fuel program had
not been funded for the previous two years. He revealed
that between the bulk fuel and powerhouse maintenance,
deferred maintenance totaled $1.1 billion.
9:59:01 AM
Mr. Thayer reviewed slide 20, "BFU PROJECTS REQUIRING
FUNDING":
FY2022 BFU Capital Requests
• Ekwok
• Marshall
• Shageluk
Next BFU Priorities
• Minto
• Noatak
• Nondalton
• Shungnak
• Togiak
• Tuluksak
Mr. Thayer explained that the fuel containers did not have
containment barriers or had rotted. He said that the
capital request could be parlayed into a grant to tackle
the projects.
9:59:49 AM
Co-Chair Bishop asked whether AEA had a standard for
containment. He thought slide 19 and slide 20 showed
different standards for containment.
Mr. Thayer answered that it would depend on the needs of
the individual community. He related that large containment
was preferred but it would depend on the community and
where the location of the bulk fuel tank.
Co-Chair Bishop asked whether there was some regulation
driving the containment choices since the United States
Coast Guard was involved.
Mr. Thayer replied in the affirmative.
10:00:49 AM
Senator Olson looked at slide 20 and asked whether the
picture depicted primary containment or secondary
containment.
Mr. Thayer affirmed that the picture showed primary
containment only.
10:01:17 AM
Mr. Thayer spoke to slide 21, "OPERATOR TRAINING":
• Cooperatively AEA and AVTEC train community
operators
• Skills acquired include routine maintenance,
troubleshooting, and supply management
• In Calendar Year 2020, 24 Power Plant Operators and
21 Bulk Fuel Operators successfully completed
training from 21 communities
Mr. Thayer noted that much of these practices have been
augmented due to Covid-19.
10:01:50 AM
Mr. Thayer discussed slide 22, " TRAINING AND TECHNICAL
SUPPORT - January 1 through December 31, 2020":
Circuit Rider and Itinerant Bulk Fuel Operator Onsite
Training
Number after the community indicates number of
staff trips; 30 communities visited with 64 total
staff trips.
Akhiok(2)
Akiachak(3)
Akiak(1)
Atmautluak(2)
Central(2)
Chefornak(2)
Chignik Bay(2)
Chignik Lake(4)
Chitina(1)
Circle(4)
Clarks Point(1)
Elfin Cove(2)
False Pass(2)
Fort Yukon(2)
Iliamna(3)
King Cove(2)
Kwethluk(2)
Larsen Bay(2)
Napaskiak(2)
Ouzinkie(1)
Pedro Bay(2)
Pelican(2)
Perryville(1)
Port Heiden(1)
Seward AVTEC(3)
Takotna(1)
Tenakee Springs(2)
Tuluksak(7)
Twin Hills(1)
Venetie(2)
Mr. Thayer showed slide 23, "TRAINING AND TECHNICAL SUPPORT
- January 1 through December 31, 2020":
Power Plant and Bulk Fuel Operator AVTEC Training
Number after the community indicates number of
operators from community trained; 21 communities 32
operators.
Anchorage(4)
Alakanuk(1)
Ambler(1)
Atmautluak(1)
Auke Bay(1)
Birch Creek(4)
Chenega Bay(1)
Chignik Lake(1)
Diomede(1)
Edna Bay(2)
Golovin(1)
Iliamna(1)
Kalskag(1)
Kipnuk(1)
Nikolai(2)
Nunapitchuk(3)
Ouzinkie(1)
Pedro Bay(1)
Pilot Station(1)
Ruby(1)
Unalakleet (2)
Mr. Thayer referenced slide 24, "TRAINING AND TECHNICAL
SUPPORT - January 1 through December 31, 2020":
Circuit Rider Real-Time Remote Assistance
Number after the community indicates number of
distinct responses for assistance; 85 communities 452
total responses":
Adak(1)
Akhiok(2)
Akiachak(8)
Akiak(16)
AncANTHC(4)
AncDCRA(1)
AncFEMA(2)
AncPMC(1)
AncSEOC(2)
Angoon(5)
Arctic Village(1)
Atmautluak(11)
Atka(3)
Beaver (4)
Bethel Calista(2)
Birch Creek(1)
Buckland(4)
Central(5)
ChenegaBay(5)
ChignikBay(7)
ChignikLagoon(5)
ChignikLake(5)
Chitina(9)
Chefornak(3)
Circle(6)
Clarks Point(42)
Crooked Creek(4)
Deering(1)
Diomede(10)
Egegik(7)
Elfin Cove(6)
Emmonak(1)
Fairbanks UAF(1)
Fairbanks TCC(2)
False Pass(3)
Fort Yukon(3)
Galena(1)
Gambell(1)
Hoonah(4)
Hughes(4)
Igiugig(6)
Juneau IPEC(1)
Kake(10)
Karluk(2)
King Cove(2)
Kipnuk(8)
Kobuk(1)
Kokhanok(3)
Kongiganak(3)
Koyuk(1)
Koyukuk(1)
Kwethluk(17)
Kwigillingok(9)
Larsen Bay(5)
Levelock(7)
Manokotak(1)
McGrath(5)
McGrath MKEC(1)
Mertarvik(11)
Napakiak(5)
Napaskiak(1)
Newhalen(1)
Newtok(3)
Nikolia(5)
NunamIqua(2)
Ouzinkie(18)
Pedro Bay(7)
Pelican(22)
Perryville(1)
Pilot Point(1)
Platinum(1)
Point Hope(1)
Port Heiden(10)
Rampart(1)
Ruby(7)
Saint George(3)
Stevens Village(5)
Takotna(3)
Tatitlek(8)
Tazimina(3)
TenakeeSprings(3)
Tuluksak(28)
TuluksakSchool(1)
Tuntutuliak(1)
Ugashik(1)
Venetie(1)
Wales(1)
10:02:38 AM
Mr. Thayer reviewed slide 25, "DENALI COMMISSION":
• Partners since inception and continuing over the
last 23 years
• Active awards $33.3 million (as of 2/7/21)
• Anticipated additional federal funding this year
$6 million
10:03:17 AM
Mr. Thayer showed slide 26, "GRANTS and LOANS."
Mr. Thayer discussed slide 27, "RENEWABLE ENERGY FUND":
• Renewable Energy Fund (REF) helps Alaskans reduce
and stabilize the cost of energy
• $268 million invested in REF by the State
• 99 operational projects, 27 in development
• Round 13 recommendation submitted to Legislature
January 2021
• REF program will sunset on June 20, 2023
• Approximately $6.5 million available for Round 13
10:04:02 AM
Mr. Thayer addressed slide 28, "POWER PROJECT FUND":
• Dedicated to power projects, the Project Power Fund
(PPF) is available to for qualified borrowers
• PPF is critical as grant funding is eliminated
• Requires review for technical and fiscal viability
• $31 million in outstanding loans
• $10.7 million uncommitted cash balance available for
lending
• 8 applications pending for a total of $10.4 million
• Low interest rates to encourage innovative power
project applications
Mr. Thayer thought it was important to note that in
addition to the funding one of the largest hydroelectric
projects in Southeast Alaska, AEA had also financed a solar
farm in Willow and a wind farm in Fairbanks. He noted that
AEA's current interest rate was 2.85 percent.
10:05:16 AM
Co-Chair Stedman asked Mr. Thayer to review his mention of
a project in Southeast.
Mr. Thayer discussed a Hiilangaay hydroelectric project
near Ketchikan on Prince of Wales Island. He said the
project was run by Haida Electric.
Co-Chair Stedman asked whether there had been any
restructuring of loan terms or whether there were any
borrowers in arrears.
Mr. Thayer relayed that no one was in default or arrears.
He shared that some borrowers had refinanced as rates had
dropped.
10:06:53 AM
Senator von Imhof referenced the company with good cash
flow to pay down loans. She asked whether Mr. Thayer was
confirming that customers were buying into energy sources
and lowering the costs for users.
Mr. Thayer answered in the affirmative. He explained that
AEA had two types of loans. He shared that one loan had no
interest for the first seven years. He relayed that most of
AEA's loans went to residents of local communities or local
governments.
10:08:31 AM
Co-Chair Stedman asked whether Mr. Thayer had mentioned no-
interest payments for the first seven years, or no interest
only.
Mr. Thayer replied that the loan structure had been deemed
to be interest free for the first seven years. He said that
principal only was currently being paid on PPF loans, and
interest payments would not begin for another 5.5 years.
10:09:21 AM
Mr. Thayer showed slide 29, "OPERATING and CAPITAL
BUDGETS."
Mr. Thayer reviewed slide 30, "FY2022 OPERATING BUDGET
(THOUSANDS)," which showed a table illustrating the AEA
budget. He described that AEA's personal services were paid
to AIDEA. He anticipated that PCE would increase with
higher fuel costs. He discussed funding sources. He noted
that the Office of Management and Budget had re-designated
UGF funds to come from the PCE endowment. He stated that
with the exception of PCE, the budget remained unchanged
from FY 21.
10:10:53 AM
Senator Hoffman requested a breakdown of the three funding
categories and how much AEA was proposing to take from the
PCE Fund that was not authorized by statute for
administration. He requested information on how much in
state resources, in UGF, had been committed to lowering
energy costs for Alaskans over the last ten years. He
believed the state was completely eliminating support for
energy relief to those who needed it most.
Mr. Thayer agreed to provide a response to Senator
Hoffmans concerns.
10:12:43 AM
Mr. Thayer spoke to slide 31, "FY2022 CAPITAL BUDGET
(THOUSANDS)," which showed a table with the capital budget
request for FY 22. He detailed that AEA was asking for
federal receipt authority on alternative energy and energy
efficiency programs. He mentioned that with AEA's
partnership with the Denali Commission and noted that the
authority needed legislative approval for acceptance of
federal funds. He reiterated the importance for the funding
for bulk fuel upgrades. He hoped that the state investment
could be parlayed into a federal receipt authority of over
$30 million. He spoke to supplemental capital requests.
10:14:57 AM
Senator Hoffman recalled that the previous truncated
legislative session that was cut short due to Covid-19. He
asked about capital funds that had not been approved and
queried how much had been foregone in federal dollars
during the past two years.
Mr. Thayer replied that rural powerhouse funding had been
received for last year but not for the two preceding years,
which left $25 million in federal funds on the table. He
added that approximately $15 million had been left on the
table for bulk fuel due to a non-match. Combined, nearly
$40 million federal match had been left uncapitalized.
Senator Hoffman queried the match ratio.
Mr. Thayer said that the ratio was 2:1.
Senator Hoffman thought the committee should take a
stronger look at the matter and ensure that federal dollars
were maximized to reduce energy costs for residents of the
state.
10:16:51 AM
Co-Chair Stedman suggested that the committee staff, with
the assistance of AEA, put together a 5-year synopsis,
including FY 22, to explore potential loss of opportunity
because of unrealized federal funds. He believed that the
state should be working to maximize the use of federal
dollars.
10:17:33 AM
Senator Wielechowski was curious whether there were other
federal funding opportunities the state might be eligible
that were not listed on the slide.
Mr. Thayer shared that the federal Covid bill package that
passed in December of 2020 provided several opportunities
for the state to take advantage for federal match. He
continued that AEA was working through the bill.
Senator Wielechowski asked whether the committee could
expect a supplemental request if AEA found opportunities
before the FY 22 budget process was complete.
Mr. Thayer thought it was possible but noted that
regulations had yet to be completed for the various funding
opportunities for state agencies.
10:19:17 AM
Co-Chair Bishop referenced slide 31. He asked about the
$17.5 thousand for Rural Power Systems Upgrades. He spoke
to Slide 18 and mentioned the $5 million for the first four
power stations in the slide. He wondered how far AEA would
get in meeting the list of priorities if the budget was
approved.
Mr. Thayer replied that he would get back to the committee
with the information.
10:20:17 AM
Mr. Thayer turned to slide 32, "UNAUDITED FINANCIAL
HIGHLIGHTS (THOUSANDS)," which showed a table listing and
unaudited balance sheet of assets and deferred outflows of
resources and liabilities and net position. He reiterated
that there were no surprises listed on the slide.
10:21:06 AM
Mr. Thayer advanced to slide 33, "UNAUDITED FINANCIAL
HIGHLIGHTS (THOUSANDS)," which showed a table detailing
revenue, expenses, and changes in net position. He noted
that there was a decrease in the net position of $1 billion
due to PCE having been swept on June 30, 2021. He relayed
that on the next set of financials it would be reflected
that the $1 billion was back as of July 1, 2021.
10:21:46 AM
Mr. Thayer showed slide 34, "SUSITNA-WATANA HYDROELECTRIC
PROJECT."
Mr. Thayer reviewed slide 35, "SUSITNA-WATANA HYDROELECTRIC
PROJECT":
• Dam Height 705 feet
• Dam Elevation 2,065 Feet MSL
• Reservoir Length ~42 miles
• Reservoir Width ~1.25 miles
• Installed Capacity 459-619 MW
• Annual Energy 2,800,000 MWh
• Cost ~$5.655 billion (2014$)
Mr. Thayer said that there were a lot of additional
interest from companies looking to invest in the project.
He noted that the project would take the Railbelt to 60
percent renewable once complete. He shared that the numbers
reflected on the slide were 2014 numbers and would be
revisited to reflect current numerics.
10:23:55 AM
Mr. Thayer addressed slide 36, "SUSITNA-WATANA ECONOMICS":
• Benefit-Cost and Economic Impact Analyses
completed in 2015
o Based on 2014 projection of natural gas
prices:
square4 Benefit-cost ratio of 2.39 from energy
savings alone
square4 $11.2 billion (2014$) in energy savings
over first 50 years
square4 $4.7 billion (2014$) in capital and O&M
costs over first 50 years
Mr. Thayer looked at slide 37, "SUSITNA-WATANA STATUS":
• Integrated Licensing Process
• 2/3 of the way done; $193 Million invested
• Cost to complete ~$100 million for license
• 58 FERC-approved studies:
o Implemented 2012-2017
o 19 studies completed
o 39 significant progress made
• Initial Study Report filed with FERC
•
10:24:28 AM
Co-Chair Stedman thought it would be helpful to examine the
spin rate and distribution costs in comparison to the rate
paid by customers.
10:25:23 AM
Co-Chair Bishop understood that $193 million had been
invested in the project and another $100 million would be
needed to complete the FERC license.
Mr. Thayer answered in the affirmative.
10:26:01 AM
Senator Wilson commented that it seemed that the current
administration had put the project on pause and that it
would be good for the FERC license to be completed.
Co-Chair Bishop thanked Senator Wilson for his comment.
Co-Chair Bishop commented that the project was a good one
and be a priority.
10:27:22 AM
Mr. Thayer turned to slide 38:
AEA provides energy solutions to meet the unique needs
and opportunities of Alaska's rural and urban
communities.
Senator Hoffman thought slide 38 was exciting. He queried
what in the AEA budget met the energy solutions in rural
Alaska.
Mr. Thayer replied that working with powerhouses and bulk
fuel in communities and understanding the individual needs
of communities was critical. He related that the purchase
of the SSQ line in urban areas was resolving many issues.
He thought that AEA was trying to turn the corner in rural
Alaska and working to tackle the deferred maintenance
issues in that area of the state.
Co-Chair Bishop discussed the agenda for the following day.
ADJOURNMENT
10:30:28 AM
The meeting was adjourned at 10:30 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 022521 AEA Presentation for Senate Finance Committee.pdf |
SFIN 3/10/2021 9:00:00 AM |
AEA |
| 031021 2021.04.02 Question 3 - Alaska Heating Energy Comparison (Final).pdf |
SFIN 3/10/2021 9:00:00 AM |
AEA |
| 031021 2021.04.02 Question 9 - PCE 10-Year Breakdown (Final).pdf |
SFIN 3/10/2021 9:00:00 AM |
AEA |
| 031021 2021.04.06 Response to Senate Finance Committee Questions ( Final).pdf |
SFIN 3/10/2021 9:00:00 AM |
AEA |
| 031021 2021.04.02 Question 10 & 11 - Five-Year Capital Budget History (Revised ....pdf |
SFIN 3/10/2021 9:00:00 AM |
AEA |