HOUSE FINANCE COMMITTEE May 8, 1993 5:00 p.m. TAPE HFC 93-134, Side 2, #000 - end. TAPE HFC 93-135, Side 1, #000 - 397. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 5:00 p.m. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf ALSO PRESENT Representative David Finkelstein; Mike Greany, Director, Legislative Finance Division; Mel Kronseng, Legislative Staff, Representative Barnes; Shelby Stastny, Director, Office of Budget and Management. SUMMARY INFORMATION SB 106 "An Act authorizing power transmission interties between Anchorage and the Kenai Peninsula, between Healy and Fairbanks, and between the Swan Lake and Tyee Lake hydroelectric projects, and approving the design and construction costs of the interties; and providing for an effective date." HCS CSSB 106 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Community and Regional Affairs and with two zero fiscal notes by the Department of Commerce and Economic Development. SB 126 "An Act making special appropriations for design and construction of power transmission interties between Anchorage and the Kenai Peninsula, between Healy and Fairbanks, and between the Swan Lake and Tyee Lake hydroelectric projects; and providing for an effective date." HCS CSSB 126 (FIN) was reported out of Committee 1 with "no recommendation". SENATE BILL NO. 106 "An Act authorizing power transmission interties between Anchorage and the Kenai Peninsula, between Healy and Fairbanks, and between the Swan Lake and Tyee Lake hydroelectric projects, and approving the design and construction costs of the interties; and providing for an effective date." Co-Chair Larson asked if the Alaska Industrial Development and Export Authority (AIDEA) had been contacted in regards to CSSB 106(FIN) am(efd fld) and CSSB 126(RLS) am(efd fld). MEL KRONSENG, LEGISLATIVE STAFF, REPRESENTATIVE BARNES replied that AIDEA was contacted by both the Department of Law and Representative Barnes' staff. She stressed that the Alaska Energy Authority's corporation structure will be kept intact. Representative Brown understood that seventy employees of AEA would be laid off. She asked Ms. Kronseng to identify the employees that will be eliminated as a result of the legislation. Ms. Kronseng replied that approximately 35 CIP employees will be eliminated if operations are contracted to the private sector. Transfer of the Bradley Lake project to the utilities will result in the elimination or transfer of five employees. Other employees will be transferred to the Department of Community and Regional Affairs. She indicated that the exact number of employees who will be transferred or eliminated is unknown. She emphasized that there will be a six month transition period. Ms. Kronseng clarified that AIDEA will issue bonds. The Alaska Energy Authority will not continue to issue bonds. She stated that Mr. Snell indicated that AIDEA could take over the bond functions of AEA with the addition of two or three employees. Representative Brown referred to statutes being repealed by the legislation. Ms. Kronseng stated that statutes concerning rural functions of AEA are being repealed and transferred to teh Department of Community and Regional Affairs. Representative Parnell expressed support for the legislation. He expressed concern with the affect the legislation could have on bonds issued by AEA. He suggested that a written opinion stating that the bond capacity and authority of the AEA and AIDEA will not be impaired. 2 Co-Chair Larson reiterated the motion to move HCS CSSB 106 (FIN) from Committee (made by Representative Therriault during the 5/08/93 a.m., House Finance Committee meeting). There being NO OBJECTION, it was so ordered. HCS CSSB 106 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Community and Regional Affairs and with two zero fiscal notes by the Department of Commerce and Economic Development. SENATE BILL NO. 126 "An Act making special appropriations for design and construction of power transmission interties between Anchorage and the Kenai Peninsula, between Healy and Fairbanks, and between the Swan Lake and Tyee Lake hydroelectric projects; and providing for an effective date." Ms. Kronseng pointed out that the appropriation includes funding for the Department of Community and Regional Affairs to cover expenses of the functions being transferred. She expected that a portion of the appropriation will lapse. Co-Chair Larson provided members with AMENDMENT 1 (Attachment 1). Ms. Kronseng explained that the Amendment was requested by bond counsel to make AIDEA partner to the contracts. She clarified that the language is specific to the Northern and Southern intertie grants. Co-Chair Larson MOVED to ADOPT AMENDMENT 1. There being NO OBJECTION, it was so ordered. Representative Brown provided members with AMENDMENT 2 (Attachment 2). The Amendment was offered by Representative Brown on behalf of Representative Finkelstein. Amendment 2 would appropriate $8.0 thousand dollars for "ongoing residential and business energy efficiency improvement programs." REPRESENTATIVE DAVID FINKELSTEIN provided members with a memorandum, dated 5/08/93, explaining Amendment 2 (Attachment 3). He reviewed Attachment 3. He concluded that energy conserved is the same as energy produced. He emphasized that retrofitted and energy efficient buildings would result in lower operating costs by 20 to 30 percent annually. He maintained that costs would be recouped in approximately three years. Representative Brown MOVED to ADOPT AMENDMENT 2. Representative Martin OBJECTED. Co-Chair MacLean noted that there is a $17 million dollar capital appropriation to the 3 Alaska Housing Finance Corporation (AHFC) for home improvements. Representative Finkelstein stressed that the demand for the low income weatherization program in AHFC far exceeds the amount of money available. He stated that the Department of Transportation and Public Facilities cannot afford to retrofit state buildings. A roll call vote was taken on the motion to adopt Amendment 2. IN FAVOR: Brown OPPOSED: Grussendorf, Navarre, Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson Representative Hoffman was not present for the vote. The MOTION FAILED (1-9). Representative Brown provided members with AMENDMENT 3 (Attachment 4). Amendment 3 would appropriate $15.0 million dollars to the Department of Transportation and Public Facilities for institutional facilities demand-side management programs. Representative Navarre spoke in favor of Amendment 3. SHELBY STASTNY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET agreed that expenditures on energy efficiencies would result in savings. He acknowledged the legislature's prerogative to decide how the state's money is spent. Representative Navarre asked Mr. Shelby to investigate cost savings which would be generated by retrofitting state facilitates for energy efficiency. Representative Martin asked Mr. Shelby to develop a list of priorities for state facilities. Representative Hanley recommended that a comprehensive plan for increased energy efficiency be developed. Representative Grussendorf suggested that a deferred maintenance list be included. A roll call vote was taken on the motion to adopt Amendment 3. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson Representative Hoffman was not present for the vote. The MOTION FAILED (3-7). Representative Brown provided members with AMENDMENT 4 4 (Attachment 5). Amendment 4 would delete section 15. She stated that the intent is to allow the separation of HCS CSSB 106(FIN) and CSSB 126(RLS) am(efd fld). Representative Navarre spoke in support of Amendment 4. He felt that it would be bad policy to base the passage of CSSB 126(RLS) am(efd fld) on HCS CSSB 106(FIN). Ms. Kronseng stressed that authorization language is needed to execute the bonding package. Representative Brown MOVED to ADOPT AMENDMENT 4. Representative Hanley OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Hoffman, Navarre, Therriault OPPOSED: Foster, Hanley, Martin, Parnell, MacLean, Larson The MOTION FAILED (5-6). Representative Brown provided members with AMENDMENT 5 (Attachment 6). She explained that Amendment 5 incorporates suggestions made by residents in the Sutton/Glennallen area. The amendment mandates that feasibility studies are completed prior to the dispersion of funds. Representative Martin objected to the amendment. He felt that the restrictions placed by the amendment would be costly. Representative Brown WITHDREW AMENDMENT 5. Co-Chair Larson noted that Amendment 5 reflects the concerns of area residents. Representative Navarre asked for further information regarding the Tazimina River hydroelectric power project. Co-Chair Larson pointed out that the project is also contained in the capital budget. Ms. Kronseng explained that the intent is to build a small generator at the base of a waterfall located on the River. She observed that feasibility studies have been completed and the project is ready for construction. The total project cost is estimated at $10.0 million dollars. It will serve NewHalen and Nondalton. She added that six or seven other communities could be served. Representative Brown asked who would pay for the interties to connect other communities. Mr. Stastny explained that three or four communities would be connected without an additional intertie. There are two or three communities that would be connected with the addition of one intertie. Co-Chair MacLean noted that the project is on AEA's project list. 5 Representative Brown stressed that projects contained in HCS CSSB 126 (FIN) are not economically efficient uses of the state's money. Representative Hoffman expressed concern that AEA is being "dismantled". He stated that money would be better spent on solving fuel storage tank problems in Western Alaska. Representative Therriault MOVED to report HCS CSSB 126 (FIN) out of Committee with individual recommendations. HCS CSSB 126 (FIN) was reported out of Committee with "no recommendation". ADJOURNMENT The meeting adjourned at 6:30 p.m. 6