Legislature(2017 - 2018)BUTROVICH 205

03/31/2017 03:30 PM RESOURCES

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Audio Topic
03:32:04 PM Start
03:32:47 PM Update on Interior Energy Project
04:47:36 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Update on the Interior Energy Project: TELECONFERENCED
Interior Gas Utility, Alaska Industrial
Development & Export Authority
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SB 92 VESSELS: REGISTRATION/TITLES; DERELICTS TELECONFERENCED
Heard & Held
-- Public Testimony --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         March 31, 2017                                                                                         
                           3:32 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator Natasha von Imhof                                                                                                       
Senator Bert Stedman                                                                                                            
Senator Shelley Hughes                                                                                                          
Senator Kevin Meyer                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator John Coghill, Vice Chair                                                                                                
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
Update on Interior Energy Project                                                                                               
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
SENATE BILL NO. 92                                                                                                              
"An Act relating  to abandoned and derelict  vessels; relating to                                                               
the registration  of vessels; relating  to certificates  of title                                                               
for  vessels;  relating  to  the  duties  of  the  Department  of                                                               
Administration;  relating  to the  duties  of  the Department  of                                                               
Natural  Resources; establishing  the derelict  vessel prevention                                                               
program;  establishing  the  derelict vessel  prevention  program                                                               
fund; and providing for an effective date."                                                                                     
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB  92                                                                                                                  
SHORT TITLE: VESSELS: REGISTRATION/TITLES; DERELICTS                                                                            
SPONSOR(s): SENATOR(s) MICCICHE                                                                                                 
                                                                                                                                
03/10/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/10/17       (S)       RES, FIN                                                                                               
03/27/17       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/27/17       (S)       Heard & Held                                                                                           
03/27/17       (S)       MINUTE(RES)                                                                                            
03/31/17       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOMO STEWART, General Manager                                                                                                   
Interior Gas Utility (IGU)                                                                                                      
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Provided update on the Interior Energy                                                                    
Project (IEP).                                                                                                                  
                                                                                                                              
GENE THERRIAULT, Team Leader                                                                                                    
Interior Energy Project (IEP)                                                                                                   
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Provided update on Interior Energy Project.                                                             
                                                                                                                                
BRYAN HAWKINS, Vice President                                                                                                   
Alaska Association of Harbormasters and Port Administrators                                                                     
Homer, Alaska                                                                                                                   
POSITION STATEMENT: Supported SB 92.                                                                                          
                                                                                                                                
RACHEL LORD, representing herself                                                                                               
Homer, Alaska                                                                                                                   
POSITION STATEMENT: Supported SB 92.                                                                                          
                                                                                                                                
GREG ROCZICKA                                                                                                                   
Kuskokwim River Salmon Management Working Group (KRSMWG)                                                                        
Bethel, Alaska                                                                                                                  
POSITION STATEMENT: Supported SB 92.                                                                                          
                                                                                                                                
ALISSA ROGERS                                                                                                                   
Orutsararmiut Native Council                                                                                                    
Bethel, Alaska                                                                                                                  
POSITION STATEMENT: Supported SB 92.                                                                                          
                                                                                                                                
STEVEN RUSSELL                                                                                                                  
152 Degrees West Environmental                                                                                                  
Nikiski, Alaska                                                                                                                 
POSITION STATEMENT: Supported SB 92.                                                                                          
                                                                                                                                
JOHN ERICKSON, City Manager                                                                                                     
Yakutat, Alaska                                                                                                                 
POSITION STATEMENT: Supported SB 92.                                                                                          
                                                                                                                                
BETTY SVENSON, Deputy Director                                                                                                  
Alaska Municipal League (AML)                                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Supported SB 92.                                                                                          
                                                                                                                                
SENATOR MICCICHE                                                                                                                
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided comments as sponsor of SB 92.                                                                    
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:32:04 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:32  p.m. Present at the  call to                                                               
order were  Senators Meyer, Stedman,  Hugh, Von Imhof,  and Chair                                                               
Giessel.                                                                                                                        
                                                                                                                                
^Update on Interior Energy Project                                                                                              
               Update on Interior Energy Project                                                                            
                                                                                                                              
3:32:47 PM                                                                                                                  
CHAIR  GIESSEL  announced  an  update   of  the  Interior  Energy                                                               
Project.                                                                                                                        
                                                                                                                                
3:33:57 PM                                                                                                                    
JOMO  STEWART,  General  Manager,  Interior  Gas  Utility  (IGU),                                                               
Fairbanks, noted that  IGU is the municipal utility,  and he said                                                               
that  the purpose  of the  Interior  Energy Project  (IEP) is  to                                                               
bring  low cost  energy to  as many  residents and  businesses of                                                               
Interior Alaska  as possible,  as quickly  as possible.  The goal                                                               
was formulated  when the  price of oil,  the predominant  fuel in                                                               
Fairbanks, reached  $4.00-plus per  gallon, a  catastrophic level                                                               
for the  Fairbanks economy. The  goal was  to reduce the  cost of                                                               
energy and  stabilize it while  also addressing air  pollution in                                                               
Fairbanks that increased during the run-up  in the cost of oil as                                                               
people switched  to wood. Burning  wood has a negative  impact on                                                               
air quality  due to the  area's geography and  weather. Providing                                                               
natural  gas at  a good  price could  encourage people  to switch                                                               
from oil  and let wood go  back to a lifestyle  choice instead of                                                               
an economic necessity.                                                                                                          
                                                                                                                                
3:35:57 PM                                                                                                                    
MR. STEWART said  the project proponents also  had some statewide                                                               
goals, and  they recognized that the  state might not be  able to                                                               
offer  large-scale  grants  for infrastructure  and  development.                                                               
Those needs  were not going to  go way, but the  state's capacity                                                               
to  fund things  with grants  was expected  to be  more and  more                                                               
limited, he explained. So, the  project sponsors came up with the                                                               
"Bradley Lake  model," using a  blend of  grants and debt  with a                                                               
revolving  loan system  that  might allow  the  state to  provide                                                               
financing, but also have that  financing be available to projects                                                               
in other  communities. He  noted that about  half of  the state's                                                               
population is in the same kind of boat when it comes to oil.                                                                    
                                                                                                                                
3:37:22 PM                                                                                                                    
MR. STEWART  noted that  the project's  mission is  to transition                                                               
Fairbanks to  cleaner, less-expensive  natural gas  by increasing                                                               
LNG capacity  to make it  more available  and to help  folks with                                                               
the conversion process.                                                                                                         
                                                                                                                                
3:38:00 PM                                                                                                                    
MR. STEWART  said the  original funding for  what became  the IEP                                                               
came from this body  in 2011 in the form of  a $500,000 grant for                                                               
a  gas distribution  study.  At the  time, there  were  a lot  of                                                               
discussions about transportation methods  for North Slope gas and                                                               
even bringing  gas up  from Cook Inlet.  What was  recognized was                                                               
that all roads led to and  through Fairbanks, but Fairbanks had a                                                               
very limited capacity to move the  gas around, and if the gas had                                                               
just  showed up  in 2011,  it would  have gone  right past  town,                                                               
because only about 1,000 customers could use it.                                                                                
                                                                                                                                
MR. STEWART said that research was  needed to figure out how that                                                               
gas  could be  brought to  the  residents, and  so, the  $500,000                                                               
became the  Fairbanks North Star Borough  (FNSB) Gas Distribution                                                               
System Analysis. It was completed  through the Fairbanks Economic                                                               
Development Corporation, and it showed  a high-level look at what                                                               
a gas distribution system would look like and the cost.                                                                         
                                                                                                                                
MR. STEWART  explained that the  community had to figure  out how                                                               
to "operationalize" that  concept, and one way is  to establish a                                                               
municipal  utility to  provide gas  to areas  not covered  by the                                                               
private  utility's certificate  to serve.  Fairbanks Natural  Gas                                                               
(FNG) services  Fairbanks' core. The municipal  utility, IGU, has                                                               
a  CPCN [Certificate  of Public  Convenience and  Necessity] that                                                               
runs from North  Pole to the east, up around  the ridges, "making                                                               
gas available to  the remainder of those  high and medium-density                                                               
areas within the community."                                                                                                    
                                                                                                                                
MR. STEWART  said he  spoke with  the governor  in 2012  and 2013                                                               
about ways  to "effectuate that financing  package," and Governor                                                               
Parnell  "bit  and the  legislature  did  also." The  legislature                                                               
provided funding  to kick-start the project.  The funding package                                                               
consisted  of $57.5  million  in grants,  $125  million in  "SETS                                                               
[Sustainable Energy  Transmission & Supply Fund]  loans" with the                                                               
allowance to offer  favorable terms, and $150  million of bonding                                                               
authority.  Later that  year, the  gas  utility went  to the  RCA                                                               
(Regulatory Commission  of Alaska) and  acquired a CPCN  for that                                                               
service area encompassing the more far flung areas of Fairbanks.                                                                
                                                                                                                                
SENATOR  HUGHES  asked  about  the  term  "kick-start,"  if  more                                                               
funding will be needed, and the cost of conversions.                                                                            
                                                                                                                                
MR. STEWART  answered that Governor Parnell  used "kick-start" as                                                               
well. The  total project cost  to fully plumb the  community from                                                               
main lines down  to service lines would cost  about $600 million.                                                               
The funding was never expected to do the whole project.                                                                         
                                                                                                                                
3:42:16 PM                                                                                                                    
MR. STEWART said the package  includes $3 million in programmatic                                                               
funds for  conversion assistance, but  he does not know  how that                                                               
will operate. It is still  under discussion, he explained. One of                                                               
his engineers is  mapping out an "on-bill  repayment program." It                                                               
is like the PACE [Property  Assessed Clean Energy] Program, which                                                               
attaches to  a property  tax bill,  but this  would consist  of a                                                               
citizen going  to a bank, getting  a loan, and paying  it back by                                                               
increments on their gas bill.                                                                                                   
                                                                                                                                
3:42:59 PM                                                                                                                    
GENE  THERRIAULT,  Interior  Energy Project  (IEP)  team  leader,                                                               
Alaska  Industrial  Development  and  Export  Authority  (AIDEA),                                                               
Fairbanks,  said he  was  working for  Governor  Parnell at  that                                                               
time,  and  the  intent  was   for  enough  support  to  get  the                                                               
enterprise up  and on its feet  financially, so it would  be able                                                               
to perform  as a utility  going forward by accessing  capital and                                                               
markets to build out the complete system over time.                                                                             
                                                                                                                                
MR.  STEWART  said  that  in  2014,  FNG  began  its  own  system                                                               
expansion  to put  pipes  in  the ground  beyond  just its  1,000                                                               
customers.  There are  over 22,000  structures within  the entire                                                               
community. It  was a two-year  infill build, he said.  "If you'll                                                               
recall, the original  configuration for the project  was going to                                                               
be off the  North Slope." In 2015, FNG completed  its second year                                                               
with only a few  areas to go. The IGU did  its first build during                                                               
that  time as  well  with 70  miles of  pipe,  which covered  the                                                               
southern  half  of North  Pole.  The  legislature allowed  for  a                                                               
"broader pursuit of  the project" by letting IGU  look beyond the                                                               
North Slope. It had originally  mandated that the LNG facility be                                                               
on the North Slope, but that was  amended to allow IGU to look at                                                               
Cook Inlet, "and we began pursuing that option," he stated.                                                                     
                                                                                                                                
MR. THERRIAULT  said that with  two utilities, FNG  for Fairbanks                                                               
and IGU  for outlying  areas, the  demand for the  gas had  to be                                                               
aggregated. The overall  demand is relatively small  for the cost                                                               
of  the infrastructure,  he stated.  That is  when AIDEA  stepped                                                               
forward and  purchased the  Pentex assets  to align  the business                                                               
structures of two utilities and prepare to integrate them.                                                                      
                                                                                                                                
3:46:15 PM                                                                                                                    
MR. STEWART  said, in  pursuit of  the Cook  Inlet configuration,                                                               
AIDEA went through  a robust reassessment process.  "We threw the                                                               
doors wide open"  and assessed a whole range  of energy solutions                                                               
for  Fairbanks.  It ended  up  with  gas  from Cook  Inlet,  and,                                                               
through  an RFP  [Request for  Proposal] process,  AIDEA selected                                                               
Salix  to  be   the  development  partner  for   the  Cook  Inlet                                                               
configuration.  However,  in  2016,  they  realized  the  project                                                               
couldn't support much  extra cost for the goal  of delivering $15                                                               
per  mcf [million  cubic feet]  of  gas to  consumers. A  private                                                               
facility would be subject to  taxation, but not a nonprofit. That                                                               
was discussed with  Salix, and there was  an amicable dissolution                                                               
for a  relatively low cost, he  said. The project was  allowed to                                                               
retain the pre-FEED  work that Salix had done, as  well as access                                                               
to  the contractors  who had  done  the work,  which allowed  the                                                               
project  to   stay  on   its  timeline.   In  2016,   there  were                                                               
negotiations between the IGU and  AIDEA regarding the purchase of                                                               
Pentex  and financing  the IEP  using the  funds provided  by the                                                               
legislature.  It  culminated  this  year with  the  drafting  and                                                               
signing of  a memorandum  of understanding  (MOU) to  command the                                                               
more detailed work of the transaction documents.                                                                                
                                                                                                                                
3:48:35 PM                                                                                                                    
MR. STEWART  said the MOU, a  public document, tells a  lot about                                                               
the  project plans  and  how  it will  be  funded. The  quarterly                                                               
update to the  legislature will be available in  a fortnight, and                                                               
it will have a link to  the MOU. He explained that "Titan" refers                                                               
to the LNG facility that is in  Big Lake and owned by Pentex, and                                                               
it also refers to the expansion  of that facility. Titan 1 is the                                                               
existing  facility and,  as  part  of this  process,  it will  be                                                               
upgraded to a slightly larger  capacity of 1.5 bcf [billion cubic                                                               
feet] per  year. "Titan 2 and  Titan 3 are three  bcf tranches of                                                               
additional  capacity,"  he  added.  He  explained  that  the  IGU                                                               
distribution system  has a six-phase  build-out process  to plumb                                                               
the areas within its CPCN. Phase  1 is the southern half of North                                                               
Pole, "and  for FNG, it's  their infill  and their little  bit of                                                               
extra  expansion." Storage  consists  of one  very large  storage                                                               
facility  and  one satellite  facility  in  North Pole,  "because                                                               
right  now  the  systems  are disconnected."  The  large  storage                                                               
facility is 5.2 million gallons of LNG in Fairbanks.                                                                            
                                                                                                                                
3:50:24 PM                                                                                                                    
CHAIR  GIESSEL  asked how  many  people  will  IGU need  for  the                                                               
project to be economic.                                                                                                         
                                                                                                                                
MR.  STEWART  answered,  "Per  this  discussion,  it's  built  on                                                               
essentially 9,000 customers." There are 1,000 customers now.                                                                    
                                                                                                                                
MR. THERRIAULT  added that  it looks  like fuel  oil will  be low                                                               
priced for  a while. Surveys  and focus groups with  customers to                                                               
see at  what price  they would transfer  to natural  gas indicate                                                               
that conversion  to natural gas  will take a little  longer. They                                                               
are building that into the economics.  So, IGU is not counting on                                                               
a huge  and rapid customer conversion  to gas, he stated,  and it                                                               
is building that assumption into  the economics to make sure that                                                               
the utility can pay its bills.                                                                                                  
                                                                                                                                
CHAIR GIESSEL asked what it costs for resident conversion.                                                                      
                                                                                                                                
MR. THERRIAULT said it depends  on the age of existing equipment.                                                               
Converting a  boiler that is  less than  10 years old  might only                                                               
require "changing  out the gun"  in a safe manner.  Older boilers                                                               
can cost  $10,000 to $12,000  to convert.  He spoke of  his house                                                               
built in  1985. He couldn't link  his boiler, "so we  had to swap                                                               
ours  out  … by  putting  in  a fuel  oil  burner  that can  more                                                               
economically be  changed when  gas is  available," and  that cost                                                               
$12,000. Swapping out the entire system is not insignificant.                                                                   
                                                                                                                                
3:53:13 PM                                                                                                                    
SENATOR STEDMAN said  he would like to address  the delivery cost                                                               
of the  burner tip, the  competition with  oil as a  fuel source,                                                               
and  efficiency and  "benchmark  that again  with Anchorage."  He                                                               
recalled Fairbanks was at about  $.23 per kilowatt, "and you were                                                               
looking  at  somewhere around  double  the  cost of  natural  gas                                                               
relative  to the  Anchorage bowl."  He asked  to be  refreshed on                                                               
some of the numbers.                                                                                                            
                                                                                                                                
MR.  THERRIAULT said  the target  was to  deliver natural  gas to                                                               
residents at  $15, which is equivalent  to $2 fuel oil.  It would                                                               
still be  substantially more expensive  than Anchorage,  but that                                                               
was the target, he explained.                                                                                                   
                                                                                                                                
SENATOR STEDMAN asked  for the cost of fuel oil  in Fairbanks and                                                               
where this project stacks up relative to that $2 oil target.                                                                    
                                                                                                                                
MR. THERRIAULT  said that  FNG polls  fuel distributors,  and the                                                               
last number he  heard was $2.40 for  residential deliveries. "So,                                                               
still a  little bit of  a delta between  what we hope  to deliver                                                               
for; it definitely is suppressed."                                                                                              
                                                                                                                                
SENATOR VON IMHOF said they  are talking about 9,000 customers to                                                               
make this $333-million  project viable and only  $4.75 million is                                                               
commercial  financing. It  appears the  rest is  state financing.                                                               
Granted,  all of  this was  passed several  years ago,  but there                                                               
really  doesn't  seem  to  be  a  viable  private  partner-it  is                                                               
completely  state funded  to  provide energy  to  8,000 to  9,000                                                               
people, she said.  "It's a lot of money." She  asked if the state                                                               
can afford it and why there  is no commercial partner. Also, loan                                                               
terms of  a quarter percent  with a 50-year payoff  and deferment                                                               
of any  interest for 15 years,  that is worrisome and  out of the                                                               
norm  of financing  terms, which  leads her  to believe  that the                                                               
state won't ever get paid back.                                                                                                 
                                                                                                                                
MR. THERRIAULT replied that the  AIDEA board required a supply of                                                               
gas to be  available for the project before  pulling the trigger.                                                               
It also requires an economic  enterprise coming forward that will                                                               
make the  project be  successful. As all  the agreements  are put                                                               
together, that is  a specific requirement, he said.  Of the $300-                                                               
plus financing  package, there  are the loans  out of  the "SETS"                                                               
fund with very  attractive terms and access to  the bond markets,                                                               
which have to be paid back by the project.                                                                                      
                                                                                                                                
SENATOR  VON  IMHOF  asked  what  Mr.  Therriault  means  by  "an                                                               
enterprise coming forward to make it viable."                                                                                   
                                                                                                                                
MR.  THERRIAULT  said,  "Combined   utility  to  aggregate  total                                                               
demand, to blend  the industrial and light industrial  use in the                                                               
core  of Fairbanks  with the  outlying  residential area,  assure                                                               
that a  postage stamp  rate is  achievable to  the customers-both                                                               
business and  residential-that would actually  incentivize people                                                               
to  utilize  the  product."  He noted  that  the  enterprise  was                                                               
started due  to the  cost of  energy, but there  is also  the air                                                               
quality problem that is becoming as much of a driver.                                                                           
                                                                                                                                
SENATOR VON IMHOF asked if AIDEA  has a hurdle rate for a project                                                               
to  go forward.  How  does  this project  compare  to other  $300                                                               
million projects  that AIDEA has?  This project seems to  have an                                                               
extremely high hurdle,  and it is almost like cost  is no factor;                                                               
"we're just going  to make this happen for  Fairbanks, because of                                                               
all the good  things that it does, and it  doesn't matter that it                                                               
costs $334 million."                                                                                                            
                                                                                                                                
4:00:00 PM                                                                                                                    
MR.  THERRIAULT   said  there  are  specific   instructions  that                                                               
interest  was to  be capped  at 3  percent, and  the cost  of the                                                               
bonds "were to  be utilizing the strength of the  state to access                                                               
the  bond market  and  make  them available;  try  and pass  that                                                               
benefit on to  the project." This set of financing  tools was set                                                               
up  specifically for  this project,  so it  can't be  compared to                                                               
other projects, he said.                                                                                                        
                                                                                                                                
SENATOR MEYER  said the  project requires  an adequate  supply of                                                               
gas and there appears to be a lot  in Cook Inlet, and he asked if                                                               
the gas is trucked or transported by railroad.                                                                                  
                                                                                                                                
MR. THERRIAULT  replied that  the gas  is currently  liquefied in                                                               
the Mat-Su  area and  trucked up to  Fairbanks. The  railroad did                                                               
the first  shipments of LNG  by rail  in North America,  he said,                                                               
testing the use of ISOs on  trains. Right now, the extra handling                                                               
of   putting  it   in   ISO   [Intermodal  Shipping   Containers]                                                               
containers, driving it to Anchorage  from Big Lake, putting it on                                                               
the train, and then transferring  it to another flatbed truck was                                                               
found to be uneconomic at  low volumes. However, IGU continues to                                                               
work with  the railroad, and  as the  volume goes up,  that might                                                               
lend the  project more  to rail  transportation. In  addition, to                                                               
lower  the  existing trucking  costs,  IGU  bought and  tested  a                                                               
larger-capacity trailer, and  that worked out very  well, so they                                                               
ordered two more.                                                                                                               
                                                                                                                                
SENATOR  MEYER  said that  trucking  provides  jobs for  drivers,                                                               
obviously, but  the Alaska Railroad  is hurting for  business, so                                                               
using the  railroad would be a  win/win for the whole  state. The                                                               
trucks are going up to the North  Slope all the time, so they are                                                               
probably busy enough,  but the railroad could  use more business.                                                               
He  added that  back  in that  timeframe the  state  still had  a                                                               
capital budget "and still had  some money," and the University of                                                               
Alaska Fairbanks  was insisting on  $150 million for a  new coal-                                                               
fired power  plant. Legislators questioned  whether it  should be                                                               
gas or oil  instead of coal but  were told that coal  was the way                                                               
to go. He said he wonders if that was a mistake.                                                                                
                                                                                                                                
4:03:48 PM                                                                                                                    
MR. THERRIAULT  replied that  the project  would have  loved that                                                               
bulk demand, but  the university power plant  is an interruptible                                                               
customer of  the existing distribution system.  Certainly, having                                                               
the bulk to  meet all their energy and electric  needs would have                                                               
been nice;  however, IGU could  not compete  on a per  BTU basis,                                                               
especially having a heat plant with an electric component.                                                                      
                                                                                                                                
4:04:23 PM                                                                                                                    
SENATOR HUGHES  said she has  a family member involved  with "the                                                               
company" and that she has talked  to an ethics advisor. She asked                                                               
if Mr.  Therriault had checked  out evolving  technology, because                                                               
"there  actually are  units that  can burn  coal, emission-free."                                                               
For two-thirds of  the cost of the kick-start,  these units could                                                               
be installed  in Fairbanks,  use coal,  improve air  quality, and                                                               
avoid the  $600-million conversion.  She asked if  Mr. Therriault                                                               
pursued that idea, which she had suggested to him earlier.                                                                      
                                                                                                                                
MR.  THERRIAULT answered  yes, and  he has  passed it  on to  Mr.                                                               
Stewart  and  Mr. [Dan]  Britton.  He  did  a little  web  search                                                               
himself, he said, but could not find a lot of information.                                                                      
                                                                                                                                
SENATOR HUGHES said a lot of  state dollars are at stake, and she                                                               
hoped Fairbanks  would pursue  her idea, because  it could  be in                                                               
place in  two years  at a  very low cost.  It could  also produce                                                               
syngas for  villages much  cheaper than the  cost of  diesel, she                                                               
explained, so the state should  review it. "When you're going one                                                               
direction,  I know  sometimes  it's hard  to  change gears,"  she                                                               
said, but this  gas project is not penciling out.  When she spoke                                                               
with an  ethics administrator,  he told  her, "Just  always state                                                               
that you talked to me before  you mention it," and he said, "It's                                                               
too good of a bit of information to withhold."                                                                                  
                                                                                                                                
4:07:33 PM                                                                                                                    
MR. THERRIAULT  noted that technology  is always  advancing. Back                                                               
when  the price  of  energy went  up so  high,  FedCo, where  Mr.                                                               
Stewart used to work, looked  at coal gasification in conjunction                                                               
with the  combined heat and  power plants on Fort  Wainwright and                                                               
Eielson, and they determined the technology didn't work.                                                                        
                                                                                                                                
4:08:21 PM                                                                                                                    
SENATOR STEDMAN  said he thought  the train had already  left the                                                               
station  on this  one, and  it's up  to AIDEA  to work  out terms                                                               
going forward. Fairbanks  got caught like his  community of Sitka                                                               
did with  a large  project during a  high oil  price environment.                                                               
The price  changes, and  then "you're heading  down the  road and                                                               
you don't really  like the view, but it's kind  of too late." The                                                               
one  thing that  concerns him  about this  Fairbanks project  and                                                               
Sitka's Blue  Lake Project  is when the  bond and  finance people                                                               
"get  a  little  too  creative and  start  going  virtually  zero                                                               
interest for 15  years and pushing out the debt  to 50 years," it                                                               
pushes it to generations well  beyond "our existence" before it's                                                               
paid off. That  is not in the public's best  interest, he stated.                                                               
In Sitka's  case, a dam  was built  30 years ago,  was refinanced                                                               
twice, and  the amortization was  stretched out. So,  today Sitka                                                               
still owes half of the value of  that dam, which is 30 percent of                                                               
the utility  debt and 23 percent  of the payments. "If  it wasn't                                                               
for carrying that dam that should  have been paid for in 30 years                                                               
for  the  next  15,  the  current  project  wouldn't  be  such  a                                                               
financial  gagger."  He sees  similarity  in  this Fairbanks  gas                                                               
project with a 15-year deferment.  He told his colleagues to look                                                               
at it  with a  jaundiced eye  and get  advice from  state finance                                                               
staff. Sometimes putting these projects  together might not be in                                                               
the best  interests in the  long run, he  said, but he  does want                                                               
Fairbanks to get  natural gas, because of  the military advantage                                                               
and  the economic  activity it  can produce,  as well  as getting                                                               
away from wood and its particulate pollution.                                                                                   
                                                                                                                                
4:10:46 PM                                                                                                                    
MR.  THERRIAULT noted  that something  multi-generational like  a                                                               
hydro dam  will always have a  give-and-take on how long  to make                                                               
the payments.  Fifty years from now  folks are still going  to be                                                               
benefiting  from that  infrastructure, but  the question  is what                                                               
portion of  that cost  they should bear.  Rest assured,  he said,                                                               
that  as   the  Memorandum  of  Understanding   (MOU)  and  other                                                               
documents  are negotiated,  the  AIDEA board  will  insist on  an                                                               
enterprise that is strong enough to  go to the bond market, which                                                               
AIDEA will  help facilitate,  but it really  will be  the project                                                               
that is going  to the bond market. That then  determines the risk                                                               
and interest rate that gets set, he explained.                                                                                  
                                                                                                                                
SENATOR  STEDMAN  cautioned that  bond  covenants  often put  the                                                               
general  credit of  the community  on the  hook, as  well as  the                                                               
taxing authority of  the community. He said he  does not disagree                                                               
with Mr.  Therriault, but  there are  always these  bond covenant                                                               
hooks   where  if   it  doesn't   work  as   planned-perhaps  the                                                               
penetration ratio is not there,  the pricing environment changes,                                                               
or whatever-then they default right back to the taxpayer.                                                                       
                                                                                                                                
4:12:38 PM                                                                                                                    
CHAIR  GIESSEL  reminded  members   that  before  AIDEA  acquired                                                               
Pentex,  there  was  a  private entity  that  was  attempting  to                                                               
purchase  the Titan  LNG assets.  Also,  Marianne Kah,  corporate                                                               
economist for ConocoPhillips, predicted  that oil will stay under                                                               
$80 per  barrel for a  very long  time. However, she  didn't know                                                               
what that would equate to in diesel for heating.                                                                                
                                                                                                                                
MR. THERRIAULT  said as  oil goes  up and  down, fuel  oil prices                                                               
often  ratchet down,  and  it seems  like it  goes  back up  more                                                               
quickly.  A month  or so  ago, the  delivered fuel  oil price  to                                                               
residential consumers  was about $2.40  [per gallon]. So,  if oil                                                               
goes up to $80, the difference would grow.                                                                                      
                                                                                                                                
4:14:16 PM                                                                                                                    
MR.  STEWART noted  that his  last fuel  oil bill  was $2.50.  He                                                               
turned to  slide 13 and  said it shows  the scope of  the project                                                               
per the MOU, which is to infill the FNG system and then build-                                                                  
out  phases 1,  2, and  3. The  strength of  the project  will be                                                               
needed for  funding the  additional phases.  He then  displayed a                                                               
map of air  pollution in Fairbanks that showed North  Pole as the                                                               
main  "hot  spot"  and  said that  the  first  phase  development                                                               
covered  the southern  half of  it.  If allowed  to proceed,  the                                                               
entire hot  spot will be covered  and then the other  air quality                                                               
areas.                                                                                                                          
                                                                                                                                
4:15:20 PM                                                                                                                    
MR.  STEWART said  Cardno ENTRIX  [Inc.] researched  conversions,                                                               
since this  project hinges  on gas customers.  "We go  from about                                                               
1,000  customers-it  says here  1,140-up  to  a total  of  almost                                                               
9,000. The  demand profile goes  from what  is, in fact,  under a                                                               
bcf of gas.  I want to say  that FNG sales are  about 100 million                                                               
cubic feet a  year, up to a  total of more like  five-5.3 bcf. We                                                               
increase the deliverability up to  5.4 bcf-that's relative to the                                                               
plant  kind-of  sticker  production  rate of  LNG  of  about  7.5                                                               
million at full build out with  an estimated customer cost of gas                                                               
at  the meter  of  $15.50." He  added that  he  got an  order-of-                                                               
magnitude estimate  from Sierra Research, which  is the borough's                                                               
go-to  enterprise for  assessing  air quality,  of  a 10  percent                                                               
improvement in  air quality  in the  core of  Fairbanks and  a 25                                                               
percent improvement in the North Pole area.                                                                                     
                                                                                                                                
4:16:47 PM                                                                                                                    
MR.  STEWART said,  "Okay, so  again, the  scope of  the project,                                                               
Titans 1, 2, and 3, again  getting to that 7.5 billion cubic feet                                                               
of  capacity; large-scale  LNG storage."  When it  comes to  LNG,                                                               
storage is needed to help  with the deliverability and for taking                                                               
on firm customers, who need that  gas to show up, "so 5.2 million                                                               
gallons  worth  of storage  in  the  Fairbanks area  and  another                                                               
150,000 gallons in the IGU development zone out in North Pole."                                                                 
                                                                                                                                
4:18:22 PM                                                                                                                    
MR. STEWART, referring to page  17 of his presentation, said that                                                               
the key financing  term of $330 million is  "spoken to" regarding                                                               
the MOU.  It gives the structure  of the SETS loan,  he added. It                                                               
also speaks to  the amount of bonding that would  be necessary to                                                               
construct  all the  major  components. It  also  talks about  the                                                               
purchase  of Pentex  by IGU,  thereby  paying AIDEA  back to  its                                                               
revolving fund, with  interest, "and then the  process and timing                                                               
of system  integration." All is  contingent upon  an economically                                                               
sufficient gas  supply contract, due diligence,  and RCA approval                                                               
of transfer of ownership, he said.                                                                                              
                                                                                                                                
MR.  STEWARD said  the  sources  of funds  available  are in  the                                                               
appendix of the  MOU and consist of the balance  of the remaining                                                               
grant funds  of $42 million,  SETS funds  of $125 million,  and a                                                               
little  over  $140 million  in  private  sector bonds.  "So,  the                                                               
market  it helping  to finance  this," he  explained. Some  stray                                                               
commercial  debt  for  the  trucks  and  trailers  and  hopefully                                                               
reimbursement  of  the storage  tax  credit  helps balance  these                                                               
things out. "A total of $330 million," he said.                                                                                 
                                                                                                                                
4:18:56 PM                                                                                                                    
MR.  THERRIAULT  clarified  for  Senator  Hughes  that  the  $600                                                               
million (he misspoke)  is not added to that. The  $330 million is                                                               
basically half  of what  was estimated to  be the  total buildout                                                               
which was $600 million.                                                                                                         
                                                                                                                                
4:19:15 PM                                                                                                                    
MR. STEWART  said slide 19  describes the  use of funds,  or what                                                               
you get with  the money. The Titan 2 facility  is estimated to be                                                               
$46 million, and Titan 3  and subsequent tranches of LNG capacity                                                               
are $25  million a pop,  for a total  of about $71  million under                                                               
the  MOU, and  "transportation  at $4.75  million."  He said  LNG                                                               
storage  doesn't quite  compute for  the uninitiated.  Generally,                                                               
oil storage  is about $1 per  gallon; LNG storage is  more like a                                                               
factor of 1:8,  "so it's grossly expensive," but  it is necessary                                                               
in a disconnected  community where a fuel source  is delivered by                                                               
road. Lack  of storage  is part  of why  FNG couldn't  expand for                                                               
many  years, and  they  could not  get  authorization from  their                                                               
private  holders to  make  the investment  in  LNG storage.  This                                                               
takes  care  of  that  to  the tune  of  about  $53  million,  he                                                               
explained.  Regarding  the  purchase  of  Pentex,  he  said,  the                                                               
revolving fund  for the  original purchase  price is  payed back,                                                               
plus  interest.  That  is  about   $58  million,  and  there  are                                                               
incidental  costs with  the build-out  phases of  $87 million  in                                                               
North Pole, the infill in the  FNG service area, and "those other                                                               
incidentals." The chart on page  19 shows the customer conversion                                                               
program that is built into the programmatic funding.                                                                            
                                                                                                                                
4:21:13 PM                                                                                                                    
MR. STEWART next showed the terms  of the SETS loan that helps it                                                               
all work.  It has  a 15-year  deferral on the  front end  with no                                                               
principal payments  or interest accruing. The  interest rate will                                                               
be  0.25 when  "it  does  begin making  repayment  for a  35-year                                                               
payback term thereafter."  On the upside, he  said, remember that                                                               
heretofore it has made some  substantial investments in the State                                                               
of  Alaska on  a  non-payback at  all basis,  and  that was  with                                                               
grants. So, under this, there  was a revolving loan concept, "and                                                               
we were  hoping that  we could make  these funds  re-available in                                                               
the future."                                                                                                                    
                                                                                                                                
MR. STEWART  referred to slide  21 saying, "This is  the impact."                                                               
There is  a very  robust model that  underpins everything  in the                                                               
presentation,  he said.  If it  wasn't  for the  results of  that                                                               
modeling, the AIDEA board would  have never authorized the funds.                                                               
The model indicated  that a substantial investment  could be made                                                               
and the target of $15 could  be met, thereby having the chance to                                                               
accrue that  customer base.  Hopefully, that  rate could  be held                                                               
long enough to reach that  critical mass of customers that allows                                                               
this enterprise to be self-sustaining.                                                                                          
                                                                                                                                
4:22:02 PM                                                                                                                    
MR.  STEWART  said  the  next  steps  include  drafting  detailed                                                               
purchase, sale,  and financing documents  envisioned by  the MOU.                                                               
He noted that  he had a four-hour teleconference  today that came                                                               
hard on the  heels of a three-hour  teleconference yesterday. Due                                                               
diligence  is   progressing,  as  well  as   utility  integration                                                               
planning, he  added. Much of  his team's efforts are  involved in                                                               
that by  making a $60  million investment in an  existing utility                                                               
so they can  be united under community control. His  team is also                                                               
working  diligently to  achieve a  gas supply  contract that  can                                                               
underpin their design.                                                                                                          
                                                                                                                                
4:23:43 PM                                                                                                                    
SENATOR STEDMAN  said that,  for people  listening at  home, "$15                                                               
per mmbtu is  somewhere around $.05 a kilowatt or  $2 [per gallon                                                               
of] oil," and  "that's probably one reason why  the economics are                                                               
so challenging."                                                                                                                
                                                                                                                                
MR.  STEWART said  that is  one reason  his group  looked at  the                                                               
transmission of electricity by an  intertie from the North Slope.                                                               
Fairbanks is paying $.23 per kilowatt  hour now; it would have to                                                               
be $.05 per kilowatt to meet  that $2-oil goal. Even if Fairbanks                                                               
got  free electricity  today, the  administrative  costs of  GVEA                                                               
[Golden  Valley Electric  Association] would  still be  more like                                                               
$.10 to  $.13 per kilowatt hour,  and that would double  the cost                                                               
of heating a home.                                                                                                              
                                                                                                                                
MR. STEWART  said that the  immediate capital program is  to move                                                               
forward expeditiously on  the FEED and the LNG  storage. He hoped                                                               
to have  those under  construction this winter  but now  hopes to                                                               
have it  done this fall. He  said, "AIDEA put them  in a position                                                               
to be able to pass their  HB 105 resolution." Other steps are the                                                               
RCA approval  of a transfer  of ownership, the execution  of MOU-                                                               
related agreements, and the integration of IGU and FNG.                                                                         
                                                                                                                                
4:25:30 PM                                                                                                                    
MR.  STEWART said  the legislature  added reporting  requirements                                                               
for AIDEA in  HB 105 and implemented a  planning requirement, "so                                                               
we didn't get into the same kind  of position we had gotten in in                                                               
the North Slope where a sizable  amount of project funds had been                                                               
expended on something that actually  will not directly positively                                                               
impact  the  consumer in  Fairbanks."  It  is  called an  HB  105                                                               
resolution  where the  AIDEA  board will  certify  the source  of                                                               
natural gas and  the estimated project cost, as well  as the pre-                                                               
distribution cost  of that gas to  Fairbanks-essentially the city                                                               
gate price.  Most of what is  required for AIDEA is  built in and                                                               
envisioned by the MOU, he said.                                                                                                 
                                                                                                                                
4:26:40 PM                                                                                                                    
MR.  THERRIAULT added  that HB  105 required  a quarterly  report                                                               
that will  be delivered to the  legislature next week, and  it is                                                               
built around all  the components that the AIDEA board  has to see                                                               
before it can certify an "HB 105 plan."                                                                                         
                                                                                                                                
MR. STEWART said  there is a group in Fairbanks  looking for ways                                                               
to assist  homeowners and businesses with  conversions, which can                                                               
cost from $2,000 up to tens  of thousands of dollars. He spoke of                                                               
"$300 million  per year  sucked out of  Fairbanks' economy  for a                                                               
decade with the  cost of oil," so  "a lot of people are  in a bit                                                               
of a challenged  position." In the longer term,  the project will                                                               
focus  on  the  conversion program,  storage  tank  construction,                                                               
constructing LNG  plants, and  finalizing a  transportation plan,                                                               
as well as a distribution system expansion, he said.                                                                            
                                                                                                                                
4:27:56 PM                                                                                                                    
SENATOR VON IMHOF  asked if there is a timeframe  for the longer-                                                               
term goals.                                                                                                                     
                                                                                                                                
MR.  STEWART answered  yes; LNG  storage tank  construction takes                                                               
about  two years  and needs  to begin  in the  fall. The  storage                                                               
would have to be operating by  2020. The LNG facility takes about                                                               
18 months  to 2 years.  The "grand  schedule" is robust  he said.                                                               
The MOU  has a project schedule  built in, and it  has the timing                                                               
of when the funds are spent to do the different steps.                                                                          
                                                                                                                                
4:29:17 PM                                                                                                                    
MR. STEWART said the following  slides show the design layout for                                                               
the gas distribution  of the IGU with all  existing and projected                                                               
pipes. Phase  2 is  the zone  around Badger  Road in  North Pole.                                                               
Phases 4, 5, and  6 will take longer, but they  are subsumed by a                                                               
plan  to move  forward  with  the first  three  phases and  FNG's                                                               
infill,  scheduled  to  be  completed  by  2022  but  subject  to                                                               
conversion. He  said FNG is a  good operator. It has  not stopped                                                               
operating  like a  private sector  company just  because it  went                                                               
into public ownership.  He said he expects to  use their physical                                                               
and  mental resources  and  that  they will  act  prudently as  a                                                               
utility. What  that means, he said,  is if demand is  slower than                                                               
what  is  estimated by  Cardno,  construction  would probably  be                                                               
delayed rather than  charging ahead into a hole  and an imprudent                                                               
use of state  funds. "We would make our investments  for a return                                                               
as opposed to aspirational thinking," he stated.                                                                                
                                                                                                                                
4:31:05 PM                                                                                                                    
MR. STEWART  said, the purpose  and goals  of IEP are  to quickly                                                               
bring  affordable energy  to  as many  people  as possible,  help                                                               
stabilize the  local economy, improve air  quality, and hopefully                                                               
provide  a  model of  development  for  other similarly  situated                                                               
communities around  the state,  of which  there are  hundreds, he                                                               
summarized.                                                                                                                     
                                                                                                                                
CHAIR GIESSEL  thanked him  for coming and  said they  would look                                                               
forward to the quarterly update.                                                                                                
                                                                                                                                
         SB  92-VESSELS: REGISTRATION/TITLES; DERELICTS                                                                     
                                                                                                                                
4:32:11 PM                                                                                                                    
CHAIR GIESSEL announced consideration of  SB 92 and opened public                                                               
testimony.                                                                                                                      
                                                                                                                                
BRYAN   HAWKINS,   Vice    President,   Alaska   Association   of                                                               
Harbormasters and Port Administrators  (AAHPA), Homer, said he is                                                               
also the Harbormaster  for Homer and he supports SB  92. He noted                                                               
that he  served on  the ad  hoc Derelict Vessel  Task Force  as a                                                               
representative for AAHPA. He said:                                                                                              
                                                                                                                                
     Alaska  is a  maritime  state. Most  of our  population                                                                    
     lives next  to the ocean,  and our connection to  it is                                                                    
     vital  to  our  ability  to exist  either  by  directly                                                                    
     pulling our livelihoods from the  sea or simply because                                                                    
     of the fact that most of  our goods we purchase and use                                                                    
     every day are transported across the water.                                                                                
                                                                                                                                
     Alaska is in the business  of boats. We have a thinking                                                                    
     here: when  it comes to vessels  - any boat -  large or                                                                    
     small, and that is that we  behave as if they will last                                                                    
     forever.  That  is  evidenced  by   the  fact  that  we                                                                    
     currently have no plan for when they don't.                                                                                
                                                                                                                                
     Alaskans  must work  together to  develop a  cradle-to-                                                                    
     grave management  plan for our vessels.  This plan must                                                                    
     work to  protect the individual's rights  of ownership,                                                                    
     promote and encourage fleet renewal,  while at the same                                                                    
     time  protect the  state,  municipalities, and  private                                                                    
     land  owners from  becoming the  dump site  for vessels                                                                    
     that have no commercial value left in them.                                                                                
                                                                                                                                
     I realize this  is a huge task and  that we're starting                                                                    
     late, but I  don't believe it's an  impossible one. And                                                                    
     SB 92 is a big step forward in that effort. Thank you.                                                                     
                                                                                                                                
RACHEL LORD,  representing herself,  Homer, said  she facilitated                                                               
the  ad hoc  Derelict Vessel  Task  Force, but  her comments  are                                                               
hers. She said  she supports SB 92 and the  entire effort. It's a                                                               
huge step  forward. A couple  of days ago the  federal Government                                                               
Accountability  Office  came  out  with  a  report  requested  by                                                               
Alaska's entire congressional delegation  and many other senators                                                               
and congress  people from around  the country asking  the federal                                                               
government to  look at the  issue of derelict vessels.  It paints                                                               
the picture  that there is a  long way to go,  she stated. Alaska                                                               
is one  state that has  derelict vessel  laws, but they  are very                                                               
outdated.  This  bill   has  a  lot  of  pieces,   and  from  her                                                               
perspective on  the task  force, the  effort was  to look  at the                                                               
full  suite of  problems with  derelict vessels,  solutions being                                                               
used around the country, and what could work here.                                                                              
                                                                                                                                
MS. LORD encouraged  the committee to look at this  as a holistic                                                               
effort. She  has been  talking to  insurance companies  and still                                                               
feels like  insurance is a  really important tool. The  intent is                                                               
P&I [protection  and liability] insurance  covered by SB  92 with                                                               
the  wreck removal,  and  it is  not  to be  an  added burden  on                                                               
commercial  fishing fleets  or active  commercial  vessels but  a                                                               
protection  when  vessels  are  transferred and  when  folks  are                                                               
considering on-water  endeavors. But insurance is  just one piece                                                               
of a very large puzzle, she concluded.                                                                                          
                                                                                                                                
GREG ROCZICKA,  Kuskokwim River Salmon Management  Working Group,                                                               
Bethel, expressed  the working  group's whole-hearted  support of                                                               
SB 92.  He explained that  the Kuskokwim River  Salmon Management                                                               
Working  Group consists  of stakeholders  that have  been working                                                               
with  the  State  of  Alaska  on  fisheries  issues  since  1988,                                                               
including on  derelict vessels. Some of  the members participated                                                               
in the task force, and the  group has been pushing these kinds of                                                               
issues  for many  years. They  continue  to see  vessels sink  or                                                               
construction  outfits dropping  equipment off  the side  of their                                                               
barges.  They pose  a significant  navigation hazard.  People get                                                               
injured when outboards hit them,  and they damage boats. He spoke                                                               
of one  that is  in the  slough, and people  are hitting  them by                                                               
snow  machines at  night. It  is a  major concern  throughout the                                                               
whole  Kuskokwim  drainage,  which  is  Alaska's  second  longest                                                               
river, running from  the base of Mt. McKinley  to Nunivak Island.                                                               
Throughout  the  drainages,  people  have  similar  problems.  He                                                               
expressed  gratitude  that something  is  moving  forward to  put                                                               
teeth in some enforcement to address this problem.                                                                              
                                                                                                                                
CHAIR GIESEL noted  that photos from the next  speaker are posted                                                               
on BASIS.                                                                                                                       
                                                                                                                                
ALISSA NADINE ROGERS, Orutsararmiut  Native Council, Bethel, said                                                               
the  council is  the federally-recognized  body representing  the                                                               
Native village  of Bethel,  Alaska. The  council supports  SB 92,                                                               
because  it holds  people accountable  for  abandoning barges  on                                                               
public waters, and it streamlines  the state's ability to prevent                                                               
and manage  derelict vessels.  She said SB  92 will  address some                                                               
known 40-plus abandoned and derelict  vessels in Steamboat Slough                                                               
and 20 more  vessels within the Bethel  Native Corporation lands.                                                               
These hazards  have been abandoned  and derelict and  are mooring                                                               
on tribal  grounds. Over the  past decade, the council  and other                                                               
organizations  in  Bethel  have  been asking  for  assistance  to                                                               
remove them, she said, but there  is no agency that can help. For                                                               
example, a  boat sunk  in the  middle of  Steamboat Slough  a few                                                               
years ago, as shown in the  photos she provided to the committee.                                                               
It  has  become  increasingly dangerous  to  motorized  vehicles,                                                               
people,  and  the environment.  Senate  Bill  92 will  provide  a                                                               
program with  pro-active strategies to address  such occurrences,                                                               
and without  it, towns  like Bethel will  continue to  suffer the                                                               
dangerous  burden of  derelict and  abandoned vessels.  They will                                                               
continue  to  be  hazardous  to  traffic,  human  life,  and  the                                                               
ecosystem, and she urged support of this important legislation.                                                                 
                                                                                                                                
4:41:18 PM                                                                                                                    
STEVEN RUSSELL, 152 Degrees West  Environmental, Nikiski, said he                                                               
is  a   former  on-scene  coordinator  with   the  Department  of                                                               
Environmental  Conservation.  Currently,  he is  working  in  the                                                               
environmental field outside of state  government. He said much of                                                               
this legislation  is focused on  the registration and  titling of                                                               
vessels that operate in state  waters. State and federal managers                                                               
can spend  hundreds of  hours trying  to identify  ADV [abandoned                                                               
and  derelict vessel]  ownership,  mostly to  no  avail. A  state                                                               
registration and  titling system  will be a  significant resource                                                               
to reduce future problems, he stated,  but it is important to not                                                               
lose sight  of the  need to  deal with the  hundreds of  ADVs now                                                               
found  around the  state. These  vessels  are threatening  public                                                               
health  and  safety,  damaging   habitat,  and  interfering  with                                                               
commercial  fisheries and  subsistence lifestyles,  and they  can                                                               
impede  or  complicate  economic   opportunities  in  our  remote                                                               
communities.                                                                                                                    
                                                                                                                                
MR. RUSSELL said  section 24 deals with ADV  programs to increase                                                               
prevention,  assist   communities  to  develop   proper  disposal                                                               
options, educate  vessel owners and operators,  and develop other                                                               
programs that  incentivize the  removal of  the current  fleet of                                                               
abandoned  vessels on  state tidelands.  This effort,  of course,                                                               
should   receive   the  support   of   every   port  and   harbor                                                               
administration,  boatyards, vessel  owners, and  communities that                                                               
are affected by these vessels.  The bill will provide a long-term                                                               
plan essential to sound maritime operations.                                                                                    
                                                                                                                                
JOHN ERICKSON,  City Manager, Yakutat,  Alaska, said  he supports                                                               
SB 92. Yakutat has many  derelict vessels, and because Yakutat is                                                               
so isolated, trying to clean them  and get barges up to haul them                                                               
away is almost impossible. Anything  to help identify owners will                                                               
make a big difference for  Yakutat. There are many boats damaging                                                               
the environment, he added.                                                                                                      
                                                                                                                                
4:44:53 PM                                                                                                                    
BETTY  SVENSON, Deputy  Director, Alaska  Municipal League  (AML)                                                               
Juneau,  said the  AML  supports  SB 92,  and  the director  will                                                               
submit a letter of support and  a copy of a resolution supporting                                                               
improved management and prevention of derelict vessels.                                                                         
                                                                                                                                
4:45:57 PM                                                                                                                    
SENATOR MICCICHE,  Alaska State  Legislature, Juneau,  sponsor of                                                               
SB 92,  said there  is widespread exposure  and potential  in the                                                               
state and there has been  widespread damage. This bill is helpful                                                               
and well considered. He said he  doesn't plan to pass it out this                                                               
year; there is some work to do.                                                                                                 
                                                                                                                                
SB 92 was held in committee.                                                                                                    
                                                                                                                                
4:47:36 PM                                                                                                                    
CHAIR GIESSEL,  finding no  further business  to come  before the                                                               
committee, adjourned  the Senate  Resources Committee  meeting at                                                               
4:47 p.m.                                                                                                                       

Document Name Date/Time Subjects
Updated Agenda - 3 - 31 - 17.pdf SRES 3/31/2017 3:30:00 PM
IEP Update - Senate Resources_March 31_2017.pdf SRES 3/31/2017 3:30:00 PM
Interior Energy Project
SB 92 - Briefing on SB 92 - Distributed by City of Thorne Bay.pdf SRES 3/31/2017 3:30:00 PM
SB 92
SB 92 - Support - City of Thorne Bay.pdf SRES 3/31/2017 3:30:00 PM
SB 92
SB 92 - Support - Pictures of Vessels in Stemboat Slough.pdf SRES 3/31/2017 3:30:00 PM
SB 92
SB 92 - Support - Orutsararmiut Native Council.pdf SRES 3/31/2017 3:30:00 PM
SB 92
SB 92- Support - Carl Uchytil.pdf SRES 3/31/2017 3:30:00 PM
SB 92
SB 92 - Support - Alaska Municipal League.PDF SRES 3/31/2017 3:30:00 PM
SB 92
AIDEA Response to Giessel April 11 2017.pdf SRES 3/31/2017 3:30:00 PM
Interior Energy Project