03/09/2009 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB31 | |
| SB121 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 121 | TELECONFERENCED | |
| + | SB 31 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 9, 2009
3:37 p.m.
MEMBERS PRESENT
Senator Lesil McGuire, Co-Chair
Senator Bill Wielechowski, Co-Chair
Senator Charlie Huggins, Vice Chair
Senator Hollis French
Senator Bert Stedman
Senator Gary Stevens
MEMBERS ABSENT
Senator Thomas Wagoner
COMMITTEE CALENDAR
SENATE BILL NO. 31
"An Act relating to a geothermal electricity production tax
credit under the Alaska Net Income Tax Act."
HEARD AND HELD
SENATE BILL NO. 121
"An Act relating to energy efficiency for public facilities with
the intent of reducing state operating costs."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 31
SHORT TITLE: GEOTHERMAL ELEC. PROD. TAX CREDIT
SPONSOR(S): SENATOR(S) MCGUIRE
01/21/09 (S) PREFILE RELEASED 1/9/09
01/21/09 (S) READ THE FIRST TIME - REFERRALS
01/21/09 (S) ENE, RES, FIN
02/12/09 (S) ENE AT 11:00 AM BUTROVICH 205
02/12/09 (S) Heard & Held
02/12/09 (S) MINUTE(ENE)
02/27/09 (S) ENE AT 11:00 AM BELTZ 211
02/27/09 (S) Moved CSSB 31(ENE) Out of Committee
02/27/09 (S) MINUTE(ENE)
03/02/09 (S) ENE RPT CS 1DP 2AM NEW TITLE
03/02/09 (S) DP: MCGUIRE
03/02/09 (S) AM: WIELECHOWSKI, STEDMAN
03/09/09 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 121
SHORT TITLE: ENERGY EFFICIENCY BLDGS/PUBLIC WORKS
SPONSOR(S): RESOURCES
02/20/09 (S) READ THE FIRST TIME - REFERRALS
02/20/09 (S) RES, FIN
03/09/09 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
TREVOR FULTON, Staff
to Senator Lesil McGuire
Alaska State Legislature
POSITION STATEMENT: Presented SB 31.
DAN STICKEL, Economist
Tax Division
Department of Revenue
Juneau AK
POSITION STATEMENT: Answered questions on SB 31.
TOM LAKOSH
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 31 and SB 121.
CHRIS ROSE, Executive Director
Renewable Energy Alaska Project
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 31 and SB 121.
SHELLY MORGAN, Staff
to Senator Bill Wielechowski
Alaska State Legislature
POSITION STATEMENT: Presented SB 121.
JOHN DAVIES, Research Director
Cold Climate Housing Research Center (CCHRC)
Fairbanks AK
POSITION STATEMENT: Spoke in support of SB 121.
STEVE HAAGENSON, Executive Director
Alaska Energy Authority (AEA)
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 121.
RANDY VIRGIN, Director
Sustainability and Efficiency Projects
Municipality of Anchorage
POSITION STATEMENT: Spoke in support of SB 121.
CHRIS HODGIN, Project Manager
Department of Transportation and Public Facilities (DOTPF)
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 121.
CAITLIN HIGGINS, Outreach Organizer
Alaska Conservation Alliance (ACA)
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 121.
STEVE ASH
Sitka Climate Action Plan Task Force
Sitka AK
POSITION STATEMENT: Spoke in support of SB 121.
MARCUS WALKER, Student
University of Alaska Anchorage
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 121.
KEN BAUER, Performance Contract Salesman
Siemens Building Technologies, Inc.
Issaquah WA
POSITION STATEMENT: Spoke in support of SB 121.
ACTION NARRATIVE
3:37:05 PM
CO-CHAIR LESIL MCGUIRE called the Senate Resources Standing
Committee meeting to order at 3:37 p.m. Present at the call to
order were Senators Stevens, Huggins, French, and Wielechowski.
Senator McGuire was on line. Senator Stedman arrived later.
SB 31-GEOTHERMAL ELEC. PROD. TAX CREDIT
CHAIR WIELECHOWSKI announced the consideration of SB 31.
3:38:06 PM
SENATOR MCGUIRE said SB 31 is a production tax credit bill; it
mirrors many other tax credits like the recent one for film
production. It will offer a 2.1-cent per kilowatt hour incentive
to invest in hydro, wave, biomass, in-river, solar, wind,
geothermal, and tidal energy projects. The bill allows public
utilities and co-ops to earn tax credit certificates that can be
traded on the open market. Many utilities are publicly owned,
and Senator McGuire wants to incentivize their investments as
well. The bill has received widespread support in Alaska and
even outside of Alaska. Energy producers from as far away as
Israel are looking to use this tax credit to reduce the risks of
investing. Wind can be costly and isn't predictable. One company
said this is one of the more costly areas in the world. Alaska
doesn't have a lot of the geological data that other
jurisdictions have. She is hoping the tax credit will attract
new projects to Alaska and provide an incentive for current
utility companies.
3:41:54 PM
SENATOR HUGGINS moved to adopt the committee substitute (CS) to
SB 31, labeled 26-LS0217\N [Version N].
CHAIR WIELECHOWSKI objected for the purpose of discussion.
TREVOR FULTON, Staff to Senator Lesil McGuire, Alaska State
Legislature, said the biggest difference in the CS from the bill
that passed out of the Senate Energy Committee is to limit the
tax credit to projects or expansions that come on line after
January 1, 2010. Senator Stedman was concerned that expansion
projects were excluded from the tax credit, and they are
important "so we changed the language that would accommodate
expansion projects while excluding existing projects that are
already on line." The CS also changes the definition of an
energy producer to require independent power producers to hold
an RCA [Regulatory Commission of Alaska] certification. "We
wanted to make sure that the bill applied to not just anybody
who sticks a windmill or wind generator on their house. We want
there to be a certain level of power production involved."
3:44:32 PM
MR. FULTON said the third set of changes in the CS are based on
suggestions from the reviser and are not substantive.
SENATOR STEVENS asked if an electric association that puts up
wind turbines before 2010 will be excluded from this tax credit.
MR. FULTON said yes. The bill is to incentivize taking a harder
look at the resources that are available in Alaska to determine
if there can be a viable project. In Senator Stevens' example,
the association has already decided it is a viable project, and
the project won't need an incentive.
CHAIR WIELECHOWSKI asked what the tax credit would cost if it
were made retroactive.
MR. FULTON said he doesn't know.
3:46:42 PM
DAN STICKEL, Economist, Tax Division, Department of Revenue,
Juneau, said according to the U.S. Department of Energy there
are 1.3 billion kilowatt hours of alternative energy used
annually in Alaska. If it all qualified for the credit it would
cost $27 million per year for four years.
MR. FULTON said the director of the Alaska Energy Authority
(AEA) said if the bill had no exclusions it would cost $133
million in credits just for the Bradley Lake hydro project.
SENATOR HUGGINS noted the mention of unused tax credits on both
page 2 and 3. "Are those two correlated to one another?"
3:48:53 PM
SENATOR HUGGINS said the bill mentions carrying the credits
forward for 20 years.
MR. FULTON said that is correct, and he asked if Senator Huggins
was seeing a redundancy.
SENATOR HUGGINS said he doesn't know what sum of money is being
considered "when you start carrying tax credits forward for 20
years potentially."
3:50:03 PM
MR. FULTON said there is an indeterminate fiscal note because it
is difficult to predict. He doesn't think anyone would stockpile
the tax credits for 20 years and then cash them in all at once.
The vast majority of tax credits issued through this program
would be sold or traded on an open market at a lower cost than
their face value.
SENATOR HUGGINS said it seems like a long time until 2028. It
appears to be a pretty dark hole.
MR. FULTON said that date was chosen because the bill sunsets in
2025, which is the governor's goal of when to have 50 percent
renewable energy. Then there are four years to use the credit.
SENATOR FRENCH wanted clarification that the credit given to
expansions of existing systems would be applied only to the
expansion and not to the whole system that it is part of.
3:52:16 PM
MR. FULTON said that is correct.
SENATOR FRENCH said Fire Island is noted in the fiscal note. The
state will participate in that, so will the state provide a tax
credit against investments that are funded by the state? The
bill may be over-stimulating certain projects.
MR. FULTON said that was just brought to the sponsor's attention
and she may need to revisit that.
3:53:17 PM
TOM LAKOSH, Anchorage, said he recognized the problem with
double funding, and he submitted language to preclude projects
with a subsidy of more than 50 percent of prior funding. Other
amendments he suggested is applying the subsidy to conservation
and to make the subsidy applicable to anyone who produces
alternative fuel, instead of just limiting it to those who get
the RCA certificate. It is important to encourage all folks to
provide alternatives. He suggested the following change: on page
2, line 1, after "for each kilowatt-hour" add "or per each
15,000 BTUs of heat value".
MR. LAKOSH suggested a change in the definition on page 3, line
6, by adding "conservation". Rural Alaska is having issues with
sustaining cultures and communities because of heating fuel
costs - not just electricity costs. If they could produce biogas
or liquid biofuels, "then we should be encouraging that type of
sustainable community instead of them having to pay out for
imported fuel." And they should be encouraged to conserve.
3:56:51 PM
MR. LAKOSH said it is important that the subsidy is applied to
all alternative energy producers. It discounts Alaska ingenuity
to limit it to those who get an RCA certificate. He suggested a
two-tiered system that takes environmental impacts into account.
There is an air quality problem in Fairbanks and in Juneau's
Mendenhall Valley. He suggested a base subsidy and a
supplemental subsidy. The supplemental subsidy could be adjusted
depending on adverse impacts to the environment, such as
particulate pollution or wildlife impacts, so that unclean
biomass or wood burning could have the subsidy cut off in
specific places. There could be an adjustment for locally
produced fuels that lead to a sustainable community. If you're
going through this process of social engineering, this bill
could ... provide for those things that we know are beneficial,
like improved air quality and sustainability. He encouraged the
committee members to look at his prior recommendations.
3:59:38 PM
SENATOR HUGGINS asked about the certificate of public
convenience on Page 3, line 9.
MR. LAKOSH said that should be stricken because all independent
power producers who are producing alternative energy or
conserving should be allowed to collect that 2.1 cents based on
kilowatt hours or BTUs. It would help bring down energy use and
produce alternative energy.
4:01:17 PM
SENATOR HUGGINS asked if a small energy producer would not be
eligible for the credit without the certificate.
MR. LAKOSH said that is the way he sees it. It is gross
discrimination and cuts out Alaskans with ingenuity who can help
us get down this road.
SENATOR HUGGINS asked Mr. Fulton if this was discussed in the
Senate Energy Committee.
MR. FULTON said that wasn't discussed in the committee, but it
came up later. The sponsor is trying to target projects that
will generate substantial amounts of energy. "We certainly
understand the value of smaller projects ... but we think there
needs to be some sort of threshold there so this program doesn't
get too unwieldy." He doesn't want to put too much burden on the
tax division. He didn't look into how the program would be
structured for a person who sells power to a neighbor. "We
didn't explore that route."
4:03:41 PM
SENATOR HUGGINS said a certificate of need in health care is
rather burdensome. It may be the right answer, but he hates to
get into the same challenge as is in the health field "and suits
and all those sorts of things over who can and who cannot." He
would like to discuss it with the sponsor.
SENATOR MCGUIRE said she would be happy to consider that.
CHRIS ROSE, Executive Director, Renewable Energy Alaska Project,
Anchorage, said his group includes 61 Alaska organizations,
including small and large utility companies, consumer groups,
environmental groups, Native organizations, government agencies,
and businesses. There is a policy committee that meets regularly
and it supports the bill. At the federal level the production
tax has been probably the most important incentive to get
renewable energy projects built around the country. It has made
a huge difference, despite its shortcomings, to incentivize
industry to build these projects. He has potential amendments.
4:05:55 PM
MR. ROSE said the credit should be a tiered system based on the
population the project serves. In the Railbelt it may cost 7
cents to produce a kilowatt hour, so a 2.1-cent incentive is
huge - almost 32 percent of the cost of producing that energy.
The cost of producing energy in a village may be 30 cents, even
without the overhead, so the 2.1-cent credit is small. A four-
tiered system would incentivize projects across the state.
Projects serving communities under 1,200 people should get a 10-
cent per kilowatt hour credit. The co-op would probably sell the
tax credits at a discount. This tax credit won't add up to a lot
of lost revenue because it won't include that many total people.
4:08:09 PM
MR. ROSE said the second tier would be for projects that serve
1,500 to 7,000 people, such as hub villages and communities with
a smaller population than Sitka. The credit could be 7 cents per
kilowatt hour. The third tier would include projects that serve
communities between 7,000 and 40,000 people. That will capture
the rest of Alaska except for the Railbelt. The credit could be
4 cents. The last tier would include the grid that serves all of
the Railbelt communities, from Homer to Fairbanks. The tiered
system will provide incentives to all the different communities.
He also suggested extending the credit for more than four years.
The federal production tax credit is ten years. There is a
concern of what this may cost the state in lost revenues, and he
said estimates can be done, but ten years gives more certainty
to the folks who are taking the risk to build these projects.
4:10:04 PM
MR. ROSE said his group is not quite sure about the provision
that allows for the tax credit to be given to producers whether
they are using the power or selling it. The sponsor's intention
is to incentivize the production of power for industrial and
other uses. "We see the merit in that; we're concerned about
actually tracking the kilowatt hours produced." It may be
difficult to track the kilowatt hours of a company within its
own system. One way around that is to have the producer obtain a
certificate from the RCA and sell the power back to themselves.
He is not sure that the RCA will allow that. The committee will
have to wrestle with the idea of the tax credit going to
projects that get other forms of state funding. The last
suggestion is to call it renewable energy, not alternative
energy. That definition is consistent with the Renewable Energy
Grant Fund that was passed last year. The definition in the bill
does relate to renewable energy, but it is good to make a
distinction between the two. So the title will need to change.
4:12:08 PM
SENATOR HUGGINS said the Legislative Budget and Audit committee
approved $100 million worth of projects. He asked how many of
those would be eligible.
MR. ROSE said they would all be eligible unless they are in
before 2010. The CS may give some incentive to wait. The credits
are tradable - which is a very good thing because most of these
entities don't pay taxes. By setting a period of time, like ten
years, the bill could say that every project gets that many
years. The Bradley Lake project has been in existence for over
ten years and would not benefit because its ten years are up.
4:13:59 PM
SENATOR HUGGINS said the RCA is made up good people and some are
his friends. He asked about "their task management and
efficiency and ultimately being able to satisfy the public."
MR. ROSE said it is the same with other agencies that deal with
energy in the state. This is big and Alaska needs to get more
people, and perhaps the RCA needs more resources.
SENATOR STEDMAN asked what tax credit Sitka projects would get.
MR. ROSE said his group came up with the tier idea this morning.
The intent was to include Sitka in the second tier at 7 cents.
SENATOR STEDMAN said Sitka, Ketchikan, Wrangell, Petersburg, and
Juneau are all in the 10 or 11-cent range in kilowatts, so he is
curious why Mr. Rose is using a population category.
4:16:13 PM
MR. ROSE said different ideas were discussed, and everyone
wanted to use a percentage of the cost of energy, but that might
be politically and administratively difficult. His group also
talked about the size of projects, but a small project could be
built in Anchorage. He is not wedded to the idea of population
parameters. The cost of energy is really the issue, and he wants
incentives for communities where costs are high.
SENATOR STEVENS asked how tax credits are traded.
MR. ROSE said there are big corporations in Alaska that have
high tax bills, and they would be able to buy the credits. The
nature of the market may create competition that would bring
down the price. The federal tax credit doesn't have the same
provision, and that has hurt the co-ops in Alaska.
4:18:30 PM
SENATOR STEVENS asked if there would be a clearinghouse.
MR. ROSE said there are already provisions for trading tax
credits, but he isn't that familiar with them himself.
SENATOR HUGGINS said oil and gas production tax credits were
debated for hours. He believes the legislature put in a
provision where the state could buy them so that smaller
companies wouldn't get gouged by larger ones. The state would
then be a leveling mechanism.
MR. ROSE said he needs to look into it, but there may be a
disadvantage to smaller, less sophisticated entities trying to
sell their credits to larger, more sophisticated ones.
SENATOR HUGGINS asked about the RCA certificate.
4:20:20 PM
MR. ROSE said there is a lot of concern about net metering in
Alaska. "If you don't require the certificate, then you're doing
backdoor net metering because you're giving some kind of credit
back to producers." It is not true net metering where someone
gets paid the retail price, but it will open up that whole
debate about it. "We felt it was a good idea to have either a
minimum amount of production ... or go to an independent power
producer level and have the RCA regulate it." He doesn't have a
huge preference one way or the other, whether it is a limit like
400 kilowatts or if it's an IPP [independent power producer].
"If it looks like it's going to be very difficult for all these
folks to apply for IPPs, maybe that's too much. If you allow it
to everybody, then essentially you're getting all the way into
that other issue of net metering."
CHAIR WIELECHOWSKI set SB 31 aside.
SB 121-ENERGY EFFICIENCY BLDGS/PUBLIC WORKS
4:21:57 PM
CHAIR WIELECHOWSKI announced the consideration of SB 121, which
requires the Alaska Department of Transportation and Public
Facilities (DOTPF) to assess and retrofit heated and lighted
buildings. It encourages performance-based contracting, which
has guaranteed savings. Representatives Gara and Thomas have a
similar bill in the House, and Senator Joe Thomas also has one.
The bill could save hundreds of millions of dollars over the
years in fuel costs. The state has done similar work on 24
buildings and saved $365,000 at 2006 energy rates and $557,000
at 2008 rates. They have cut natural gas use by 15 percent;
electricity by 22 percent; fuel oil by 36 percent; and they have
cut back on water usage. If the state had done 25 similar
contracts the savings would be about $13 million per year at
2008 rates. SB 121 is a job creation bill because of the
retrofitting jobs. It is a win-win bill.
4:23:43 PM
SHELLY MORGAN, Staff to Senator Bill Wielechowski, Alaska State
Legislature, said SB 121 will lower the cost of state buildings
by reducing energy use. It requires the Alaska Energy Authority
(AEA) to establish a database to identify energy consumption,
and it will use that to prioritize retrofit schedules. The
buildings that consume the most energy can be first. The bill
requires DOTPF to retrofit buildings when it will be cost
effective. Where there are no funds, this bill allows DOTPF to
use performance contracting with a qualified energy service
company so the state can achieve energy audits and efficiency
upgrades through a pay-as-you-save system. No money will be
spent out of pocket. Within 15 years or less all paybacks will
be made, and then the state will be saving large sums of money.
Beginning in 2004, DOTPF executed a performance contract for 8
facilities with Siemens Building Technologies. Siemens has
completed 16 facilities under two contracts. Each contract took
about two years to complete, and energy performance reports were
provided for the first three years. The report on the first
contract showed that the state saved $365,991.
4:26:50 PM
SENATOR HUGGINS asked about the cost of the retrofits.
MS. MORGAN said that because of the performance contracting,
there are no upfront costs. The only costs in the fiscal note
are for staffing and the database. She said DOTPF provided two
fiscal notes that were based on the original bill, not the CS.
They were based on a 10-year [pay back]. With it being 15 years,
there will be less costs per year. If the state did not use
performance contracting, it would cost about $17 million. The
fiscal note is about $363,000 for DOTPF and $100,000 for the AEA
to put together the energy index database.
4:28:31 PM
SENATOR HUGGINS asked if there is an updated code for new
construction.
MS. MORGAN said any new construction built to the most recent
international energy conservation code would be less costly than
retrofitting. The costs of retrofitting are paid by the savings.
SENATOR HUGGINS asked if new buildings have to be built under
new energy codes.
MS. MORGAN said, "If you build a new building under the
guidelines of SB 121, that new building would be required to be
built to the most recently published version of the
international energy conservation code standards, which would
bring it to what we're trying to bring these other buildings to
through retrofitting." This bill also allows for updates to be
made through utility bills. Currently it says every ten years,
but DOTPF is more interested in doing it every year. Updates can
be made every ten years or every year using utility bills. That
allows for observation of any substantial inefficiencies. When
the conservation code is updated, new buildings may not need any
retrofitting for a longer time.
4:31:01 PM
JOHN DAVIES, Research Director, Cold Climate Housing Research
Center, Fairbanks, supports SB 121. It addresses two key
recommendations that were in his group's report entitled: Alaska
Energy Efficiency Program and Policy Recommendations. The report
recommended establishing an energy-use index, which the
committee has just been discussing. It also recommended that the
governor require state agencies to reduce their energy
consumption. SB 121 addresses both recommendations.
MR. DAVIES noted that the CS has "cross talk" between the index
and the database in Section 4, subsections 1 and 2. It should be
clear that the index is the method for calculating the
efficiency of a building, and the database just collects the
information to make that calculation and report the index. The
report helps prioritize what is needed; state agencies have an
enormous number of buildings.
MR. DAVIES said that new construction goes to the international
energy conservation code, but he suggested that the standards be
made stronger. People trying to save energy would try to achieve
a higher target, or about 50 percent of the energy specified in
that standard. He supports the bill but it could be more
aggressive and save more energy.
4:34:51 PM
SENATOR HUGGINS said Mr. Davies made a comment about the
governor directing the AEA. He asked Mr. Davies if he has had
"any conversations with Mr. Haagenson or any of his subordinates
about the governor directing."
MR. DAVIES said not in recent weeks, but Mr. Haagenson is very
supportive "of this general idea." The specific recommendation
in the report was to have the governor do the directing, but as
long as it gets done it doesn't matter who does it.
SENATOR HUGGINS asked if the energy index is a major new task
for the AEA.
MR. DAVIES said it is neither major nor trivial. It would cost
about $50,000 to hire a consultant to get the database up and
running with an easy way to enter data. The basic information
that will be entered into the index is fuel bills and square
footage of the building. The database needs to be maintained,
and that may require a quarter of a person's time.
4:37:41 PM
STEVE HAAGENSON, Executive Director, Alaska Energy Authority
(AEA), Anchorage, said the AEA will measure the total energy
going into buildings on a BTU basis, and then it will divide by
occupancy or square footage to get an index. There will be a
database that will do a lot of the math and be a repository.
Once the data is there, there won't be a need to redo the math
until the buildings have been modified. AEA will then work with
DOTPF to put regulations in place.
4:39:21 PM
SENATOR HUGGINS asked if AEA had the time to do this.
MR. HAAGENSON said he hired someone three weeks ago who is all
charged up, and that person will do the work.
SENATOR HUGGINS said, "We continue to get way ahead of ourselves
as far as having a state energy policy, and we're cramming
square pegs in square holes and sometimes round pegs in square
holes. Does that make you uncomfortable?"
MR. HAAGENSON said not at all. There are energy policies and
plans, but a large component is conservation and efficiency.
Retention of heat in a building is one of the smartest things to
do, and this is a great step in that direction.
4:41:33 PM
RANDY VIRGIN, Director, Sustainability and Efficiency Projects,
Municipality of Anchorage, said SB 121 is a win-win bill. Alaska
is one of two states in the country without an efficiency
policy. It is high time. Buildings account for 39 percent of
total energy use and 72 percent of electricity use in the United
States. Efficiency programs can achieve measurable results.
California has the nation's leading efficiency effort and has
kept its per capita energy use flat since 1974, and the rest of
the nation has gone up around 50 percent. Anchorage has had
success in outdoor lighting by installing over 4,000 high-
efficiency LED fixtures that led to a 56 percent reduction in
energy use. The payback on the capital investment is six years,
and that assumes today's prices. The bulbs last five times as
long, so they reduce the labor to change bulbs. This investment
in efficiency is beating the market. It is a guaranteed return.
If that money had been put into the market, it would be doing a
lot worse. The bill sets out a goal of reducing energy use in
buildings by 20 percent, but that could be easily doubled to 40
percent without trying. Mr. Virgin said the facility managers
could reach a little, and the bar could be set at 60 percent.
4:44:39 PM
MR. VIRGIN said the bill allows the department to determine that
a retrofit is not cost effective. He urged the committee to set
an objective standard to determine if a retrofit is feasible,
and that could be done by setting a timeframe for the return on
investment. If the return is 15 years or less, then the facility
must do it. That will set the proper balance with the
expenditures on the front end. Thirdly, the bill allows the
department to not comply fully with ASHRAE [Heating,
Refrigeration, Air Conditioning Engineering] standards if there
are specific climate [issues], and he thinks that language could
be made into a more objective standard.
4:46:10 PM
CHRIS HODGIN, Project Manager, Department of Transportation and
Public Facilities (DOTPF), Anchorage, said DOTPF supports the
bill but has concerns with the 20 percent goal. It is a goal,
not a mandate, but he wants it to be clear that it doesn't mean
that 20 percent can be attained. Some buildings can save more
and some less. Rather than updating the energy use index in only
specific circumstances, he suggested continuous updates annually
to allow managers to evaluate their buildings "using the same
average of annual periods". That gives an apples-to-apples
comparison that won't miss inefficiencies. Even though the
capital costs are paid for through the realized energy savings,
there will be increased work for managers and administrators.
4:48:47 PM
CAITLIN HIGGINS, Outreach Organizer, Alaska Conservation
Alliance (ACA), Anchorage, said ACA is a coalition of 40 Alaska
conservation organizations with over 38,000 Alaskans. The bill
is critical because it addresses the demand side of energy; it
will result in instant savings for public facilities; and it
will better position Alaska to receive federal stimulus money
for efficiency. ACA has been very pleased with the legislature's
work on supply-side renewable energy, but it is equally
important to address the demand for energy. The cheapest energy
is the energy we don't have to use. SB 121 will result in real
savings for the state and a reduction in the impacts of
greenhouse gases. Public dollars will no longer be wasted by
inefficient lighting and drafty windows. The federal stimulus
package has $3.2 billion to help local governments implement
energy efficiency programs in a block grant program that seeks
to decrease energy consumption and fossil fuel emissions. It can
be used for energy audits; loan, rebate, and incentive programs;
grants for retrofits by nonprofits; and developing programs to
conserve energy and transportation. There is another $4 billion
for bonds that states and municipalities can issue to finance
renewable energy and efficiency projects. The bonds carry a low
interest rate and the bond holder receives federal credits in
lieu of interest. The bill appropriates $3.1 billion for the
state energy program, which provides grants and other funding to
state energy offices for energy efficiency and renewable energy.
"The normal matching requirements under the program do not apply
to the funding provided by the bill." Alaska should receive some
of these funds. States with an energy efficiency plan in place
will be higher on the list for receiving federal funds. This
bill will send a clear signal that Alaska is ready to use
federal dollars for efficiency upgrades.
4:52:26 PM
STEVE ASH, Sitka Climate Action Plan Task Force, Sitka, said
Sitka has already begun a process very similar to SB 121. It
joined the International Council for Local Environmental Issues
about one year ago. The first thing the task force did was
established an energy use index, and it is called a carbon
emissions inventory. It includes transportation, public and
private buildings, boats, and everything that consumes energy.
The task force focused on transportation and municipal
buildings. The group set a goal of a 25 percent reduction in
carbon emissions by 2020. There was a 2003 inventory, and in
2008 there was already a 10 percent reduction in emissions. This
was achieved by updating an oil burning furnace in Sitka's
middle school. This job will be easier than they thought.
Another school furnace can be upgraded. At $3.00 per gallon for
heating fuel, it will save over $250,000 per year for Sitka. By
2020, fuel will likely be more than $3.00 a gallon.
4:55:38 PM
MARCUS WALKER, Student, University of Alaska, Anchorage, said he
is a member of the Alaska Conservation Alliance and Alaska
Conservation Voters. He supports SB 121. He has been studying
how much energy Anchorage is using. He is working for Randy
Virgin on an energy index. Anchorage buildings are using immense
amounts of energy, and simple measures can significantly reduce
this. SB 121 can save an enormous amount of money for Alaska.
Some cities have been doing this work from the ground up, so it
is time to help push everyone in the right direction. There are
retrofitting programs in the villages, and just by replacing
light bulbs brought a 60-percent savings, which is important
since diesel costs so much.
4:57:33 PM
SENATOR HUGGINS said the Dena'ina Center is wonderful, but he
has heard people say they would hate to heat that place.
MR. WALKER said "Unfortunately with no standards that building
was built incredibly inefficient ... and Anchorage has to pay
for the electricity for a long time." This bill could help
retrofit it to save money.
CHRIS ROSE, Executive Director, Renewable Energy Alaska Project,
Anchorage, thanked the committee for the bill and said it will
stimulate the economy by creating jobs. Performance contracting
is proven, and more contractors might come into the state. The
nine recommendations from the Cold Climate Research Center
report included state leadership, and this is important state
leadership by focusing on state buildings. "Hopefully that will
lead to more public awareness of this issue."
SENATOR HUGGINS asked about expanding this bill to qualify for
more federal grants.
MR. ROSE said that if Alaska has this program, "we are least in
line." Without any program it is difficult for Alaska to apply.
5:00:55 PM
KEN BAUER, Performance Contract Salesman, Siemens Building
Technologies, Inc., Issaquah WA, said he doesn't have a lot to
add because other testifiers pointed out the benefits of the
bill. The best use of state funds is for projects that can be
done without using millions of dollars. There are some upfront
costs, but it is a very good investment and a way to reduce
energy without incurring huge expenses. The upgrades create
efficient buildings that are likely healthier buildings, and the
workforce will be more productive. It will also increase jobs in
designing, engineering, and building.
TOM LAKOSH, Anchorage, said he supports the bill, and it should
be combined with SB 119: efficiency standards for new
construction. There is overlap and conflict with SB 119.
Moreover, in order to get in line for the state's energy block
grants, Alaska needs to comply with section 4.10 of the stimulus
bill. It requires commercial and residential building codes that
Alaska doesn't have. "We need a real comprehensive conservation
bill for retrofit, new construction, commercial and residential
building codes." The residential building code has to meet the
international energy conservation code, and commercial codes
need to meet the ASHRAE standard. He would support the bill on
its own, but in order to get the stimulus money, "you need to
sit down, combine this with 119 and add the residential and
commercial building codes." Everyone in the state is so touchy
about building codes...
CHAIR WIELECHOWSKI said [the legislature] is working on building
codes so Alaska will be eligible for the stimulus funds.
MR. LAKOSH suggested putting that with SB 121 and SB 119. There
are conflicts between SB 121 and SB 119 that need to be worked
out. He supports having a 15-year payback period as the standard
for what will be done. That is critical because it goes far
beyond any of the standards and makes the most economical sense.
It is somewhat addressed in SB 119, but it is not clearly
spelled out. "Randy's language is the best on that." Get the
governor to sign one combined bill so Alaska can get the funds
and pay for all these energy savings that it really needs.
SB 121 was held over.
5:06:43 PM
The meeting was adjourned at 5:06 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 31 Bill Packet.pdf |
SRES 3/9/2009 3:30:00 PM SRES 3/13/2009 3:30:00 PM |
SB 31 |
| SB 121 Bill Packet.pdf |
SRES 3/9/2009 3:30:00 PM SRES 3/13/2009 3:30:00 PM |
SB 121 |