Legislature(2007 - 2008)BUTROVICH 205
04/13/2007 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB109 | |
| SB96 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 96 | TELECONFERENCED | |
| += | SB 109 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
April 13, 2007
3:36 p.m.
MEMBERS PRESENT
Senator Charlie Huggins, Chair
Senator Bert Stedman, Vice Chair
Senator Lyda Green
Senator Gary Stevens
Senator Bill Wielechowski
Senator Thomas Wagoner, via teleconference
MEMBERS ABSENT
Senator Lesil McGuire
COMMITTEE CALENDAR
SENATE BILL NO. 109
"An Act relating to the regulation and permitting of drilling
and other operations by the Alaska Oil and Gas Conservation
Commission, to civil penalties assessed by the commission, to
reconsideration and appeal of decisions and the allocation of
costs in investigations and hearings before the commission, and
to information filed with and fees of the commission; and
providing for an effective date."
MOVED CSSB 109(RES) OUT OF COMMITTEE
SENATE BILL NO. 96
"An Act establishing a renewable energy fund and describing its
uses and purposes."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 109
SHORT TITLE: OIL & GAS CONSERVATION COMMISSION
SPONSOR(s): RULES BY REQUEST OF LEG BUDGET & AUDIT BY REQUEST
03/07/07 (S) READ THE FIRST TIME - REFERRALS
03/07/07 (S) RES
03/12/07 (S) RES AT 3:30 PM BUTROVICH 205
03/12/07 (S) Scheduled But Not Heard
04/13/07 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 96
SHORT TITLE: ESTABLISHING A RENEWABLE ENERGY FUND
SPONSOR(s): SENATOR(s) ELLIS
02/26/07 (S) READ THE FIRST TIME - REFERRALS
02/26/07 (S) RES, FIN
04/13/07 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
CHERYL SUTTON
Staff to the Legislative Budget & Audit Committee
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Presented SB 109.
JOHN NORMAN, Chair
Alaska Oil and Gas Conservation Commission (AOGCC)
Anchorage AK
POSITION STATEMENT: Supported CSSB 109(RES).
KARA MORIARTY, External Affairs Manager
Alaska Oil and Gas Association (AOGA)
POSITION STATEMENT: Supported CSSB 109(RES).
ALAN BIRNBAUM, Assistant Attorney General
Oil and Gas Section
Department of Law
Anchorage AK
POSITION STATEMENT: Commented on SB 109.
MARK WORCESTER, Senior Counsel
ConocoPhillips
Anchorage AK
POSITION STATEMENT: Supported SB 109.
SENATOR ELLIS
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 96.
PETER CRIMP, Program Manager
Alternative Energy and Energy Efficiency
Alaska Energy Authority
POSITION STATEMENT: Supported SB 96.
SARAH FISHER-GOAD, Deputy Director
Alaska Energy Authority (AEA)
Anchorage AK
POSITION STATEMENT: Supported SB 96.
MITCH ERICKSON, Executive Director
Nome Chamber of Commerce
POSITION STATEMENT: Supported SB 96.
NELS ANDERSON, Jr., Chair
Southwest Municipal Conference Energy Committee
Dillingham AK
POSITION STATEMENT: Supported SB 96.
MERRA KOHLER, President and CEO
Alaska Village Electric Cooperative (AVEC)
Anchorage AK
POSITION STATEMENT: Supported SB 96.
ACTION NARRATIVE
CHAIR CHARLIE HUGGINS called the Senate Resources Standing
Committee meeting to order at 3:36:04 PM. Present at the call to
order were Senators Green, Wielechowski, Stevens and Huggins.
Senator Wagoner attended via teleconference.
3:36:41 PM
SB 109-OIL & GAS CONSERVATION COMMISSION
3:37:14 PM
CHAIR HUGGINS announced SB 109 to be up for consideration.
CHERYL SUTTON, Staff to the Legislative Budget & Audit Committee
(LB&A), testified that SB 109 was introduced through the Rules
Committee by request of LB&A and the Alaska Oil and Gas
Conservation Commission (AOGCC). She said the House has a
companion bill that is exactly like the CS before them and it
was moved from the House Oil and Gas Committee yesterday without
objection. The CS reflects changes resulting from interactions
between the Alaska Oil and Gas Association (AOGA) and other
industry members.
3:38:24 PM
MS. SUTTON went through the changes in the CS saying that
sections 1, 2, 3, 5, 6, 9, 10 and 13 remain unchanged. Sections
4, 7, 8 and 11 are reworded for clarity, but have no substantive
changes. Section 12 is reworded for clarity and adds "an
underground interjection well for the purpose of gas storage" to
the Commission's list for permitted wells. Section 14 combines
the material contained in sections 14 - 17 from the original
bill and clarifies the language.
MS. SUTTON said the substantive change in the CS is on page 8,
lines 18 - 19 and it deals with the civil penalty the Commission
may impose and says "not more than $100,000 for the initial
violation and not more than $10,000 for each day thereafter on
which the violation continues." The remainder of the section
consolidates the language from the original bill's sections 14 -
17. She said the remaining sections remain unchanged, but are
renumbered to reflect the consolidation.
3:40:31 PM
CHAIR HUGGINS asked Commissioner Norman to address section 14
and asked if that was the most substantive piece.
JOHN NORMAN, Chair, Alaska Oil and Gas Conservation Commission
(AOGCC), said that section 14 is the updated penalty section and
it is one of the substantive changes. The civil penalty had not
been updated for almost 20 years. It proposes an amendment to AS
31.05.150(a) that would establish a $100,000 penalty as a
maximum that could be assessed by the Commission for a single
violation. Should that violation continue unabated for a number
of days, it could asses an additional accumulating penalty of
$10,000 a day. The reason for this change is because there are
situations where the worst part of an offense could occur within
a 24-hour period and the offender escapes a proper penalty
simply by the violation's short duration. Secondly, the $10,000
per day brings Alaska into line with penalties other oil and gas
producing states use.
CHAIR HUGGINS asked if anyone vehemently contested those
numbers.
MR. NORMAN replied that he hasn't heard anything, but others
should speak on that.
3:43:46 PM
SENATOR STEVENS asked for the reasoning behind the $100,000
penalty.
MR. NORMAN clarified that the current penalty is up to $5,000
per day. If a violation continued for five days, the Commission
would have the ability to assess a maximum of $25,000. This
change would allow the state to capture serious violations that
might otherwise escape the continuing penalty because they occur
in a short time period. For the most egregious violations, the
Commission could assess up to a $100,000 penalty. If it
continued after that, the Commission could assess as a maximum a
$10,000-per-day penalty.
3:45:36 PM
MR. NORMAN continued saying that existing statutes also have
criminal penalties that are levied by the court under the
Criminal Justice system and those would not be assessed by the
Commission. However, the old penalty amount was a lower amount
and it made no sense not to bring it up to $10,000 at the same
time they are doing this housekeeping amendment.
He explained that subsection 15(d), which is on page 8 of the
CS, increases the penalty for the waste of valuable natural gas
in Alaska. Currently, if the Commission finds waste, either
intentional or from operator negligence, it can assess a penalty
against that operator equal to the value of the gas. The
Commission believes that an adequate penalty for wasting the gas
should not be just the value of the gas, so that they suggest
doubling that value.
Subsection (g) is another important subsection under section 14,
which sets forth a number of specific criteria that give the
Commission guidelines when assessing a penalty and is intended
to put sideboards on the assessments so the Commission doesn't
use "unbridled discretion." Both parties can refer to this check
list.
3:47:49 PM
SENATOR WAGONER asked how easy it is to determine how much gas
has been illegally flared under subsection (d).
MR. NORMAN replied that operators file a disposition report
every month through an engineer that has to be signed off by
Commissioner Foerster. Every disposition has to be reported, but
it is fairly easy to do. Falsifying a report is at the very
highest end of the spectrum of violations, so it is not a good
idea to do that.
3:50:00 PM
SENATOR STEVENS asked why language in the waste section says
"may" instead of "shall".
MR. NORMAN replied that "may" addresses situations where it
could be a very close call - for instance, once a pipeline
experienced harmonic vibration and broke, but the operator
notified the Commission immediately. If that incident happened
again to the same operator, it might be a different call.
Sometimes there is a fine line between acts of God and
accidents.
3:51:56 PM
MR. NORMAN hit the rest of the high spots in the CS. There is
reference to granting the Commission the statutory authority to
regulate the underground storage of natural gas. He said the
Railbelt and the Cook Inlet Basin are no longer stranded gas
provinces and operators no longer have the ability guaranteed
during peak periods of demand to be able to open the valves and
deliver all the gas that's needed. They are taking the necessary
steps to try to identify spent-out reservoirs that can be used
for storage so that during the summer, for example, they can
continue to produce and put gas into storage and then in periods
of peak demand they can draw not only upon the reservoirs, but
upon the storage. This is a common practice elsewhere in the
United States, but while the Commission presumes to have this
authority and already exercises it, it has not been granted in
black-letter law. They want to have it in law to eliminate any
future arguments.
3:53:46 PM
SENATOR WAGONER asked if he was talking about the Swanson River
and Kenai gas fields.
MR. NORMAN replied yes; and they may see more of that in the
future.
SENATOR WAGONER asked if Pretty Creek (Kenai gas field) supplies
Beluga.
MR. NORMAN replied that he would have to get that answer for
him. He said another change in the statute is to include among
the recitals of authority and responsibility of the Commission a
responsibility to oversee not just conservation, waste, fresh
water et cetera, but "safety and public health". This is
consistent with the 2004 version of the Model Oil and Gas
Conservation Act promulgated by the Interstate Oil and Gas
Compact Commission. It is being proposed to keep Alaska in the
forefront of having one of the best regulatory structures for
oil and gas in the United States.
3:56:08 PM
SENATOR STEDMAN joined the committee.
Another change he described as a slight course correction in
Section 5. He said currently the AOGCC has oversight of a
program that requires well testing and development of baseline
information for the exploration and development of coalbed
methane wells. This change fine-tunes the wording that now says
"when a well is drilled for production or production testing of
coalbed methane" that would trigger the requirement for this
program by making "or production testing" at the Commission's
discretion. Production testing presents minimal risk to any
fresh water supplies because risk occurs almost without
exception in the exploration phase. If, however, the well then
progresses to where it goes on to what is defined in regulations
as "regular production" then that requirement would be there.
3:58:13 PM
SENATOR WIELECHOWSKI asked if they are eliminating the
Commission's ability to require design and implementation of a
well testing program if they are doing production testing.
MR. NORMAN replied that he would say:
We don't really have the ability to require it. I
believe the statue mandates that this be done and a
triggering event is the drilling and then if an
operator wishes to test and see if they've made a
discovery, that triggers this program which is
expensive. And it isn't because of the expense that
we're recommending it. But if it is very low, low
yield - next to nothing - there's no risk at all -
that I would represent to you - to any fresh water as
a result of production testing. If, however, the
operator moves into regular production from that well,
then all of the protections that are now in statute
would remain. So, it's just this one small change.
3:59:27 PM
SENATOR WIELECHOWSKI said it is a very controversial issue. He
asked Mr. Norman if there was absolutely no risk of well
contamination in production testing for coalbed methane.
3:59:47 PM
MR. NORMAN replied that it's not often that he would say there
is absolutely no risk and he didn't know if he should now, but
all of life is a matter of cost benefit analysis. In the things
the Commission regulates and of the things that can go wrong
every day in the drilling that's going on right now, there is
"minimal, minimal, minimal risk from just testing a well." The
well has already been drilled; the operator just wants to test
it. Once it goes to regular production, careful monitoring would
be instituted.
CHAIR HUGGINS asked if the change didn't prevent them from
testing a well once it is in production.
SENATOR WIELECHOWSKI said if there was no risk, he didn't have a
problem with not requiring well testing, but if there was risk,
he didn't want to delete that requirement.
MR. NORMAN replied among all the things the Commission regulates
this is way down at the total bottom of the scale of presenting
any threat to fresh water. The risk is involved once a well
begins to produce and the pressure changes between the water and
gas.
4:03:36 PM
CHAIR HUGGINS said this doesn't eliminate the Commission's
ability to do testing at a time when production and the real
risk potentially might come to fruition.
MR. NORMAN agreed emphatically and added that the Commission
still has the ability to impose conditions before issuing a
drilling permit if it sees the need. This just mandates it for
coalbed methane.
CHAIR HUGGINS asked if this change was lobbied for by industry.
4:06:07 PM
MR. NORMAN replied, "No, sir. This change was brought about and
identified by the Commission." It became apparent to them that
this requirement didn't serve a useful purpose.
He said the AOGCC is one of the oldest regulatory agencies in
Alaska. It was enacted pursuant to Chapter 4, SLA 1955. This is
remarkable because that is before oil was discovered in
commercial quantities here and predates statehood. The framework
has served them remarkable well over these many years and
demonstrates remarkable foresight on the part of those
legislators.
He said this act contains its own provisions about appeals for
decisions of the AOGCC in Section 10 that seem to grant an
automatic trial de novo. These provisions are outmoded and were
superseded by general rules that were applicable to appeals from
all administrative agencies. This has been the Commission's
position. Occasionally people have contested this and in each
case the Commission has prevailed and most recently in a Supreme
rd
Court decision, Allen v AOGCC 147 Pacific 3 664. This language
cleans up that issue and brings alignment to statute.
4:11:04 PM
MR. NORMAN went to Section 12 that proposes to eliminate the
statutory fee of $100 for a permit to drill. This fee
contributes a total of $25,000 per year toward the agency's $4
million-year-plus budget. It has not been changed for at least
37 years and started out in 1955 at $50 going to $100 in 1970.
The Commission considered a range of options for the fee
including increasing it - some states charge a fairly hefty fee;
others don't charge at all. They considered the effect upon new
companies coming in to Alaska as well as consulting with the
current regulatory industry that pays the regulated well
regulatory cost charge that funds the operations of the agency.
And now the Commission recommends deleting the $100-penalty. It
doesn't serve much of a purpose simply because many of the
companies that pay the regulatory cost charge also wind up
paying this $100 fee which is then deducted from what they would
otherwise pay. But it causes a fair amount of accounting at the
end of the year with a true up and an adjusted bill. The
administration supports this bill.
SENATOR WIELECHOWSKI asked if it costs $25,000 to do the
accounting for the fee.
MR. NORMAN replied no, but it comes out as a deduction and there
is no net gain to the state in keeping it.
4:14:45 PM
MR. NORMAN went to Section 7, which makes more well data and
applications to drill information public and makes that
information public sooner than is the case now in two ways.
First, it narrows the field of wells that would receive
protection of confidentiality only to exploratory or
strategraphic wells, because the Commission believes industry
has a legitimate reason to want to retain its proprietary
information. It cost them a lot of money to drill the wells. But
most of the wells are development wells and the greater good
will be served by getting the information on those out to the
public. So the bill proposes to eliminate what is now the 24-
month period of confidentiality for those wells making that
information public immediately upon delivery to the AOGCC.
A second part addresses applications for permits to drill.
Historically an application for a permit to drill has been
treated as confidential and except for certain information
listed in the statute, can not be released for 2 months. Again,
that cloak of confidentiality is limited to only exploratory and
strategraphic test well information and then only to the
information the Commission determines is proprietary and
deserving of protection. The main thrust of this again is to get
more information out to the public and to avoid putting the
Commission in the position of saying no to a citizen who wants
to see an application. They want to strike a balance between the
legitimate needs of the industry for proprietary protection.
CHAIR HUGGINS summarized that this enhances public knowledge,
rather than reducing it.
MR. NORMAN replied that is correct.
4:17:32 PM
MR. NORMAN continued on saying another provision in Section 8
provides that information voluntarily provided to the Commission
makes it clear that by receiving it in that fashion they are not
guaranteeing that protection will carry over in a future hearing
or to another application. Currently and for a long time a
company has been able to provide information voluntarily but can
ask to have it remain confidential. That proceeding will now
have to stand on its own legs. They are eliminating any
potential that a company might argue that it voluntarily
provided information to the Commission in 2007 and it is
confidential; so now in 2010 when they are filing this petition,
this information is already confidential. The Commission is
saying that it won't work that way because it has to develop a
public record that will support its decisions. This does not
reduce public awareness and he said that all the commissioners
recommend this legislation for favorable consideration and
action.
4:20:52 PM
SENATOR STEVENS asked on page 9 subsection (e) if a knowing
violation penalty is used very often.
MR. NORMAN replied that subsection (e) is not something the
Commission would use; it is about something that would be
prosecuted criminally. The Commission can introduce civil
penalties and those are addressed in subsection (a) that says if
an action is so willful that it rises to the level of a criminal
violation, that it can also be prosecuted criminally and would
constitute a misdemeanor.
SENATOR STEVENS asked if that penalty is being left at $10,000.
MR. NORMAN replied yes because he thinks it would be
presumptuous of the Commission to begin to delve too far into a
criminal issue. It's up to the Criminal Division of the
Department of Law to decide if that number should be increased.
4:23:20 PM
KARA MORIARTY, External Affairs Manager, Alaska Oil and Gas
Association (AOGA), supported SB 96 and Mr. Norman's suggested
changes and supported the changes in the CS. She hoped to
continue working with them on clarifying questions.
ALAN BIRNBAUM, Assistant Attorney General, Oil, Gas and Mining
Section, Alaska Department of Law, said he is representing the
AOGCC and that Mr. Norman did an excellent job of summarizing
the CS. He wanted to clarify that the last reference to Section
14(e) on the top of page 9 changes the penalty from what it is
in statute today at $5,000 a day to $10,000 a day.
4:27:34 PM
MARK WORCESTER, Senior Council, ConocoPhillips, said it is the
largest producer in Alaska and the most active explorer. He
supported Mr. Norman's explanation of the CS and congratulated
him on being so diligent in updating its statutes, making sure
that ConocoPhillips understands what he is trying to do and
listening to their concerns. His responses are thoughtful and
thorough. He said ConocoPhillips supported this bill and urged
its passage.
SENATOR STEDMAN moved to adopt CSSB 109(RES), version M. There
were no objections and it was so ordered.
4:29:59 PM
SENATOR STEVENS asked if the Commission was celebrating its 50th
anniversary.
MR. NORMAN replied that they are preparing a history right now,
which is somewhat of a history of all of Alaska for the 50th
anniversary. He anticipated being able to widely distribute it
showing the evolution of the industry that is so important to
the State of Alaska.
SENATOR STEDMAN moved to pass CSSB 109(RES) from committee with
individual recommendations and zero fiscal note. There were no
objections and it was so ordered.
4:32:57 PM at ease 4:36:21 PM
SB 96-ESTABLISHING A RENEWABLE ENERGY FUND
4:36:34 PM
CHAIR HUGGINS announced SB 96 to be up for consideration.
SENATOR ELLIS, sponsor of SB 96, said renewable energy is a very
mainstream issue and Alaska can be a leader in the country by
moving forward on it now. All our congressional leaders have
mentioned it as a priority and there is recognition across the
political spectrum about the value and wisdom of developing
renewable energy resources in the State of Alaska so it is
timely. There is money to be saved and money to be made by
selling the power and the technology. Alaska has excellent
sources for renewable energy - such as wind, geothermal, solar,
biomass and hydropower to name a few - and the intelligence to
develop them.
He said SB 96 would establish a renewable energy fund to be
administered by the Alaska Energy Authority (AEA) that would
offer both grants and loans to communities to develop renewable
and cost-effective sources of energy around the state. AEA would
take advice from an advisory committee with members appointed by
the governor from various stakeholder groups.
SENATOR ELLIS said SB 96 is a logical progression toward
developing Alaska's inexhaustible energy resources and it means
looking ahead to the next 100 years. He said there is amazing
support for this building across the state and the list grows
daily. To name a few - Mat-Su Borough, Southeast Alaska
Municipal Conference, Alaska Municipal League, Chugach Electric,
Golden Valley Electric Association, Alaska State Chamber, Alaska
Federation of Natives and Municipal Light and Power.
4:40:30 PM
PETER CRIMP, Program Manager, Alternative Energy and Energy
Efficiency, Alaska Energy Authority, said AEA supported efforts
to further develop the state's renewable energy resources. He
said the market for renewable energy is increasing due to the
increase in oil and gas prices. Hydropower has been providing 25
percent of the state's energy for a long time and there are many
potential hydro projects throughout Southeast, Railbelt and
rural Alaska that look promising. They range in size from 200
kilo watt project in Chignik Lagoon to a 430 mega watt project
in the Chakachamna project. He said wind energy has been shown
to be cost effective in 30 to 45 locations in rural Alaska.
Kodiak is developing an 8 mega watt wind facility, Golden Valley
has been working toward developing a large wind farm near Healy,
and CIRI with a number of Railbelt utilities is moving forward
on Fire Island.
As for geothermal, Chena Hot Springs in Fairbanks has shown that
it is looking pretty good. That project is displacing over
100,000 gallons of diesel per year. The Valley is looking at a
potential project at Mt. Spur of 25 to 100 mega watts.
4:42:53 PM
MR. CRIMP said that wood is abundant throughout the Interior and
areas where there isn't wind and is being used for small-scale
thermal applications like heating schools and community
facilities. Small-scale modular bio-power technology and
innovative harvesting techniques are being looking at also as
well as cellulosic ethanol development in Southeast Alaska by
Sealaska. The economics of that are still questionable, but the
technology is under development.
He said that AEA and its utility partners are continuing to work
in other areas such as fish oil bio-diesel and tidal industry
using the flow of the rivers in the Interior and elsewhere to
generate power.
4:47:35 PM
CHAIR HUGGINS asked if there was a market for birch bark
pellets.
MR. CRIMP replied that AEA and AIDEA have considered financing
pellet manufacturing facilities both as an industrial-grade
pellet that could be used to produce power in a conventional
power plant as well as a feeding a residential market. Just
about all pellets from all species burn quite cleanly and have
been widely used throughout the Lower 48.
CHAIR HUGGINS asked why he thought the Chakachamna project would
be any different than the Susitna hydro project.
MR. CRIMP replied both projects are large with potential impacts
that would need to be studied before they move forward. He
didn't want to portray the Chakachamna project as a go. It has
many hurdles in terms of power market, fish migration, and
economics that would have to be leapt over and the Susitna
project has many of the same hurdles.
4:48:34 PM
CHAIR HUGGINS asked how he got into this business.
MR. CRIMP said he had worked with the AEA for 14 years and has
moved up through the ranks. He is a forester and a planner by
background and got hired to manage the state's biomass energy
program. His duties have expanded onto the economic analysis
side and overall project planning.
4:49:22 PM
SARAH FISHER-GOAD, Deputy Director, Alaska Energy Authority,
said that Mr. Crimp did a good job on an overview of renewable
energy projects. She said the companion bill is HB 152 and she
pointed out that based on AEA's recommendation the House changed
the bill from being a combination grants and loan fund to just a
grant fund. This is because the loan provision was actually a
duplication of an existing program in the Power Projects Fund.
4:51:21 PM
SENATOR STEVENS asked her to explain language on page 4 of SB 96
where it says "must link a renewable energy project or natural
gas project to the electric grid."
MS. FISHER replied that language had changed in the House
version to "transmission or distribution infrastructure" and
doesn't refer to the electric grid at all.
4:52:47 PM
MITCH ERICKSON, Executive Director, Nome Chamber of Commerce,
supported SB 96. He said the Nome Chamber held a two-day energy
summit to look for alternatives to diesel in both community
power generation and home heating. It was spurred by the 20
percent annual increases in diesel fuel prices over the past
several years. Very few people receive pay raises to match this
cost of living and some locals see their winter heating and
utility bill is higher than their mortgage payment. Their goal
is to wean their community from diesel as a primary source of
energy. Experts addressed wind, hydrogen, solar, geothermal, and
nuclear as well as the funding and financing available. He said
members of AEA participated and that the City of Nome is now
conducting an energy study along with the Department of Energy
and the AEA to see what individuals and businesses can do to
lower their energy costs. It included better insulation and
using wind and solar as a secondary source of energy. One point
that came out of the energy summit was the need for a fund such
as SB 96.
He said the Chamber has not been able to find an expert to work
with them on these issues and it is trying to develop a
relationship with the University of Minnesota solar energy lab
for its technical expertise.
4:55:52 PM
NELS ANDERSON, Jr., Chair, Southwest Municipal Conference Energy
Committee, Dillingham, said he is also a member of the Bristol
Bay Alternative Energy Task Force. He said SB 96 is needed
because their villages are almost totally dependent on diesel
for their electricity. Many pay 50 to 75 cents per kilo watt
hour for their electricity; most individuals spend any available
money on lighting and heating their homes. He said "SB 96 needs
to pass as soon as possible" and they believe the AEA can do an
excellent job in implementing the renewable energy fund. SB 96
is the key to unlocking all of Alaska's remarkable renewable
energy resources.
MERRA KOHLER, President and CEO, Alaska Village Electric
Cooperative (AVEC), supported SB 96. She said AVEC is a non-
profit electric utility that serves 52 villages primarily in
northwest and western Alaska. Their 21,000 residents represent
almost half of Alaska's village population. They operate 47
power plants, almost all of them are exclusively diesel. Since
2000 they have made tentative efforts to add a few renewables -
all wind. They now have supplemental wind generation in four
villages and the benefits of those four flow to another two
communities through interties. One more intertie is being built.
Two more wind projects are being planned for this year and
another two for next year.
She said these projects have been almost exclusively funded with
federal and local dollars; very little or no state dollars are
involved in any of those projects. Utility generation in Alaska
is very expensive. They can only use small wind turbines and
their construction costs are staggering due to the arctic and
sub-arctic conditions and that is why development of these
projects is very slow. Other technologies are only just
emerging. Alaska needs a renewable energy bill to support the
development of renewable power sources in its communities. AVEC
supported both versions of this bill.
5:00:26 PM
SENATOR WAGONER asked if she could relate any reduction in
diesel electric generation because of using wind generation.
MS. KOHLER answered that their two most recent projects that
became functional last year in Kasigluk and Toksook Bay are both
excellent wind regimes and expectations have been exceeded
during the high wind months of this last winter. In January they
displaced more than 30 percent of their diesel fuel in both
communities. The cost of fuel in those communities is about
$2.50/gallon.
CHAIR HUGGINS said members had other meetings to attend and
adjourned the meeting at 5:02:48 PM.
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