00 CS FOR HOUSE BILL NO. 307(FIN) am 01 "An Act relating to the Regulatory Commission of Alaska; relating to regulation of 02 public utilities, pipeline carriers, and liquefied natural gas import facilities; relating to 03 approval of wholesale power agreements; relating to preapproval for construction of 04 energy facilities; relating to electric reliability organizations; relating to the taxation of 05 new electricity generation facilities; relating to the Alaska Energy Authority; relating to 06 the Railbelt Transmission Organization; requiring the Alaska Energy Authority to 07 submit a report about issuing rate reduction bonds for financing transmission system 08 upgrades; and providing for an effective date." 09 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 10 * Section 1. AS 39.25.110(11) is amended to read: 11 (11) the officers and employees of the following boards, commissions, 12 and authorities: 01 (A) [REPEALED] 02 (B) Alaska Permanent Fund Corporation; 03 (C) Alaska Industrial Development and Export Authority; 04 (D) Alaska Commercial Fisheries Entry Commission; 05 (E) Alaska Commission on Postsecondary Education; 06 (F) Alaska Aerospace Corporation; 07 (G) [REPEALED] 08 (H) Alaska Gasline Development Corporation and subsidiaries 09 of the Alaska Gasline Development Corporation; 10 (I) Alaska Energy Authority; 11 * Sec. 2. AS 42.04.020(f) is amended to read: 12 (f) Members of the commission are in the exempt service and are entitled to a 13 monthly salary equal to a step in Range 29 [RANGE 27] of the salary schedule in 14 AS 39.27.011(a) for Juneau, Alaska. The chair of the commission is entitled to a 15 monthly salary equal to a step in Range 29 [RANGE 27] of the salary schedule in 16 AS 39.27.011(a) for Juneau, Alaska. 17 * Sec. 3. AS 42.05.254(a) is amended to read: 18 (a) A regulated public utility or a certificated utility that provides 19 telecommunications services operating in the state shall pay to the commission an 20 annual regulatory cost charge in an amount not to exceed the maximum percentage of 21 adjusted gross revenue that applies to the utility sector of which the utility is a part. 22 The regulatory cost charges that the commission expects to collect from all regulated 23 utilities and certificated utilities providing telecommunications services may not 24 exceed the sum of the following percentages of the total adjusted gross revenue of all 25 regulated public utilities and certificated utilities providing telecommunications 26 services derived from operations in the state: (1) not more than .98 [.7] percent to fund 27 the operations of the commission, and (2) not more than .22 [.17] percent to fund 28 operations of the public advocacy function under AS 42.04.070(c) and 29 AS 44.23.020(e) within the Department of Law. An exempt utility that does not 30 provide telecommunications services shall pay the actual cost of services provided to 31 it by the commission. 01 * Sec. 4. AS 42.05.381(e) is amended to read: 02 (e) The commission shall adopt regulations for electric cooperatives, [AND 03 FOR] local exchange telephone utilities, and refuse utilities, setting a range for 04 adjustment of rates by a simplified rate filing procedure. A cooperative, [OR] 05 telephone utility, or refuse utility may apply for permission to adjust its rates over a 06 period of time under the simplified rate filing procedure regulations. The commission 07 shall grant the application if the cooperative, [OR] telephone utility, or refuse utility 08 satisfies the requirements of the regulations. The commission shall adopt 09 regulations specific to refuse utilities that provide for sufficient public notice and 10 an opportunity for ratepayers to meaningfully comment on rate filings. The 11 commission may review implementation of the simplified rate filing procedure at 12 reasonable intervals and may revoke permission to use the procedure or require 13 modification of the rates to correct an error. In this subsection, "refuse utility" 14 means a utility furnishing collection and disposal service of garbage, refuse, 15 trash, or other waste material to the public for compensation. 16 * Sec. 5. AS 42.05.381 is amended by adding new subsections to read: 17 (p) A determination of whether an electric utility's rate is just and reasonable 18 may consider whether the purpose of the rate is to increase diversity of supply, 19 promote load growth, or enhance energy reliability or energy security. 20 (q) For rate-making purposes, the commission shall not consider the 21 investment of a public utility in a liquefied natural gas import facility as utility 22 property, even if the liquefied natural gas import facility is exempt from regulation by 23 the commission. In this subsection, 24 (1) "investment" includes an investment in land used to connect to a 25 liquefied natural gas import facility used by the public utility to render service to the 26 public; 27 (2) "liquefied natural gas import facility" includes a facility used to receive or 28 unload natural gas or to store, transport, gasify, liquefy, or process received or 29 unloaded natural gas. 30 * Sec. 6. AS 42.05.431(b) is amended to read: 31 (b) A wholesale power agreement between public utilities, or between a 01 public utility and an independent power producer, is subject to advance approval 02 of the commission. A rate set in accordance with a wholesale power agreement 03 must disclose a state or local tax exemption provided to a utility or independent 04 power producer. After a wholesale power agreement is in effect, the commission 05 may not invalidate any purchase or sale obligation under the agreement. However, if 06 the commission finds that rates set in accordance with the agreement violate this 07 subsection or are not just and reasonable, the commission may order the parties to 08 negotiate an amendment to the agreement and if the parties fail to agree, to use the 09 dispute resolution procedures contained in the contract. In this subsection, 10 "independent power producer" means a legal entity, other than a public utility, 11 that owns or operates a facility for the generation of electricity; "independent 12 power producer" does not include a joint action agency established under 13 AS 42.45.310. 14 * Sec. 7. AS 42.05.431 is amended by adding a new subsection to read: 15 (i) Costs incurred by an electric cooperative utility organized under AS 10.25 16 that participates in an electric reliability organization certificated by the commission 17 under AS 42.05.760 must be allowed in the rates charged by the utility if the costs are 18 approved by the utility's board of directors in connection with a new or purchased 19 renewable energy facility with a nameplate capacity of less than 15,000 kilowatts or 20 power purchased from a renewable energy facility with a nameplate capacity of less 21 than 15,000 kilowatts. In this subsection, "renewable energy facility" means a facility 22 that generates electricity from renewable and alternative energy resources, including 23 geothermal, wind, solar, hydroelectric, hydrokinetic, tidal, and biomass energy. 24 * Sec. 8. AS 42.05.711(b) is amended to read: 25 (b) Except as otherwise provided in this subsection, [AND IN] (o) of this 26 section, and AS 44.83.700(d), public utilities owned and operated by a political 27 subdivision of the state, or electric operating entities established as the instrumentality 28 of two or more public utilities owned and operated by political subdivisions of the 29 state, are exempt from this chapter, other than AS 42.05.221 - 42.05.281 and 30 42.05.385. However, 31 (1) the governing body of a political subdivision may elect to be 01 subject to this chapter; and 02 (2) a utility or electric operating entity that is owned and operated by a 03 political subdivision and that directly competes with another utility or electric 04 operating entity is subject to this chapter and any other utility or electric operating 05 entity owned and operated by the political subdivision is also subject to this chapter; 06 this paragraph does not apply to a utility or electric operating entity owned and 07 operated by a political subdivision that competes with a telecommunications utility. 08 * Sec. 9. AS 42.05.760(a) is amended to read: 09 (a) An electric utility must participate in an electric reliability organization if 10 the utility operates in an interconnected electric energy transmission network served 11 by an electric reliability organization certificated by the commission. The commission 12 may not require an electric reliability organization for an interconnected bulk-electric 13 system if 14 (1) all of the load-serving entities operating in the interconnected bulk- 15 electric system are exempt under AS 42.05.711(b); or 16 (2) the sum of annual electric energy sales made by load-serving 17 entities operating in the interconnected bulk-electric system is less than 1,500,000 18 megawatt-hours. 19 * Sec. 10. AS 42.05.762 is amended to read: 20 Sec. 42.05.762. Duties of an electric reliability organization. An electric 21 reliability organization shall 22 (1) develop reliability standards that provide for an adequate level of 23 reliability of an interconnected electric energy transmission network; 24 (2) develop integrated resource plans under AS 42.05.780(a); 25 (3) establish rules to 26 (A) ensure that the directors of the electric reliability 27 organization and the electric reliability organization act independently from 28 users, owners, and operators of the interconnected electric energy transmission 29 network; 30 (B) equitably allocate reasonable dues, fees, and other charges 31 among all load-serving entities connected to the interconnected electric energy 01 transmission network for all activities under AS 42.05.760 - 42.05.790; 02 (C) provide fair and impartial procedures for the enforcement 03 of reliability standards; 04 (D) provide for reasonable notice and opportunity for public 05 comment, due process, openness, and balancing of interests in exercising its 06 duties; [AND] 07 (4) be governed by a board that 08 (A) includes as nonvoting members the chair of the 09 commission or the chair's designee and the attorney general or the attorney 10 general's designee; and 11 (B) is formed as 12 (i) an independent board; 13 (ii) a balanced stakeholder board; or 14 (iii) a combination independent and balanced 15 stakeholder board; and 16 (5) prioritize the reliability, stability, and cost to consumers of the 17 interconnected bulk-electric system served by the electric reliability organization 18 while considering cost to the consumer. 19 * Sec. 11. AS 42.05.770 is amended to read: 20 Sec. 42.05.770. Regulations. The commission shall adopt regulations 21 governing electric reliability organizations, reliability standards, and modifications to 22 reliability standards consistent with this section. Regulations under AS 42.05.760 - 23 42.05.790 must 24 (1) require that an electric reliability organization's tariff include 25 [(A) STANDARDS FOR] nondiscriminatory standards for 26 [OPEN ACCESS TRANSMISSION AND] interconnection; 27 [(B) STANDARDS FOR TRANSMISSION SYSTEM COST 28 RECOVERY;] 29 (2) provide a process to identify and resolve conflicts between a 30 reliability standard and a function, rule, tariff, rate schedule, or agreement that has 31 been accepted, approved, adopted, or ordered by the commission; 01 (3) allow an electric reliability organization to recover its costs through 02 surcharges added to the rate for each participating load-serving entity. 03 * Sec. 12. AS 42.06.286(a) is amended to read: 04 (a) A pipeline carrier operating in the state shall pay to the commission an 05 annual regulatory cost charge in an amount not to exceed the sum of the following 06 percentages of gross revenue derived from operations in the state: (1) not more than 07 .98 [.7] percent to fund the operations of the commission, and (2) not more than .22 08 [.17] percent to fund operations of the public advocacy function under 09 AS 42.04.070(c) and AS 44.23.020(e) within the Department of Law. A regulatory 10 cost charge may not be assessed on pipeline carrier operations unless the operations 11 are within the jurisdiction of the commission. 12 * Sec. 13. AS 43.98 is amended by adding a new section to read: 13 Article 2A. Taxation of New Electricity Generation Facilities. 14 Sec. 43.98.100. Taxation of new electricity generation facilities. An 15 electricity generation facility that is constructed and placed into service on or after 16 July 1, 2024, is not subject to state and local ad valorem, income, and excise taxes if 17 the electricity generation facility provides power only to a public utility. In this 18 section, "public utility" has the meaning given in AS 42.05.990. 19 * Sec. 14. AS 44.83.030 is amended to read: 20 Sec. 44.83.030. Membership of the authority. The members of the board of 21 directors of the authority [ALASKA ENERGY AUTHORITY] are 22 (1) the commissioner of revenue; 23 (2) the commissioner of commerce, community, and economic 24 development; and 25 (3) six public members appointed by the governor as follows: 26 (A) one member with expertise or experience in managing 27 or operating an electric utility that is not connected to an interconnected 28 electric energy transmission network as defined in AS 42.05.790; 29 (B) one member with expertise or experience in developing 30 energy projects in rural communities; 31 (C) one member with expertise or experience in managing 01 or operating an electric utility connected to an interconnected electric 02 energy transmission network as defined in AS 42.05.790; 03 (D) one member with financial expertise in large power 04 generation project development; and 05 (E) two members with expertise or experience in finance, 06 energy policy, energy technology, engineering, law, or economics [THE 07 MEMBERS OF THE ALASKA INDUSTRIAL DEVELOPMENT AND 08 EXPORT AUTHORITY]. 09 * Sec. 15. AS 44.83.030 is amended by adding new subsections to read: 10 (b) If the commissioner described in (a)(1) or (2) of this section is unable to 11 attend a meeting of the authority, the commissioner may, by an instrument in writing 12 filed with the authority, designate a deputy or director to act in the commissioner's 13 place as a member of the board at the meeting. For all purposes of this chapter, the 14 designee is a member of the board at the meeting. 15 (c) Public board members described in (a)(3) of this section serve for three- 16 year terms. 17 (d) If a vacancy occurs in the membership of the board, the governor shall 18 immediately appoint a member for the unexpired portion of the term. 19 * Sec. 16. AS 44.83.040(a) is amended to read: 20 (a) The board of directors of the authority shall elect a chair and vice-chair 21 every two years from among its members [OF THE ALASKA INDUSTRIAL 22 DEVELOPMENT AND EXPORT AUTHORITY SHALL SERVE AS OFFICERS 23 OF THE ALASKA ENERGY AUTHORITY]. The powers of the authority 24 [ALASKA ENERGY AUTHORITY] are vested in the board of directors, and five 25 board members [FOUR DIRECTORS OF THE AUTHORITY] constitute a quorum. 26 Action may be taken and motions and resolutions adopted by the authority 27 [ALASKA ENERGY AUTHORITY] at a meeting by the affirmative vote of at least 28 five board members [A MAJORITY OF THE DIRECTORS]. The members of the 29 board of directors of the authority [ALASKA ENERGY AUTHORITY] serve 30 without compensation, but they shall receive the same travel pay and per diem as 31 provided by law for board members under AS 39.20.180. 01 * Sec. 17. AS 44.83.040 is amended by adding a new subsection to read: 02 (e) The authority may, as the authority considers advisable, appoint persons as 03 officers, including an executive director, and employ professional advisors, counsel, 04 technical experts, agents, and other employees. The executive director and employees 05 of the authority are in the exempt service under AS 39.25. 06 * Sec. 18. AS 44.83.080 is amended to read: 07 Sec. 44.83.080. Powers of the authority. In furtherance of its corporate 08 purposes, the authority has the following powers in addition to its other powers: 09 (1) to sue and be sued; 10 (2) to have a seal and alter it at pleasure; 11 (3) to make and alter bylaws for its organization and internal 12 management; 13 (4) to adopt regulations governing the exercise of its corporate powers; 14 (5) to improve, equip, operate, and maintain power projects and bulk 15 fuel, waste energy, energy conservation, energy efficiency, and alternative energy 16 facilities and equipment; 17 (6) to issue bonds to carry out any of its corporate purposes and 18 powers, including the establishment or increase of reserves to secure or to pay the 19 bonds or interest on them, and the payment of all other costs or expenses of the 20 authority incident to and necessary or convenient to carry out its corporate purposes 21 and powers; 22 (7) to sell, lease as lessor or lessee, exchange, donate, convey, or 23 encumber in any manner by mortgage or by creation of any other security interest, real 24 or personal property owned by it, or in which it has an interest, when, in the judgment 25 of the authority, the action is in furtherance of its corporate purposes; 26 (8) to accept gifts, grants, or loans from, and enter into contracts or 27 other transactions regarding them, with any person; 28 (9) to deposit or invest its funds, subject to agreements with 29 bondholders; 30 (10) to enter into contracts with the United States or any person and, 31 subject to the laws of the United States and subject to concurrence of the legislature, 01 with a foreign country or its agencies, for the construction, financing, operation, and 02 maintenance of all or any part of a power project or bulk fuel, waste energy, energy 03 conservation, energy efficiency, or alternative energy facilities or equipment, either 04 inside or outside the state, and for the sale or transmission of power from a project or 05 any right to the capacity of it or for the security of any bonds of the authority issued or 06 to be issued for the project; 07 (11) to enter into contracts with any person and with the United States 08 and, subject to the laws of the United States and subject to the concurrence of the 09 legislature, with a foreign country or its agencies for the purchase, sale, exchange, 10 transmission, or use of power from a project, or any right to the capacity of it; 11 (12) to apply to the appropriate agencies of the state, the United States, 12 and a foreign country and any other proper agency for the permits, licenses, or 13 approvals as may be necessary, to acquire, construct, maintain, and operate power 14 projects in accordance with the licenses or permits, and to obtain, hold, and use the 15 licenses and permits in the same manner as any other person or operating unit; 16 (13) to enter into contracts or agreements with respect to the exercise 17 of any of its powers, and do all things necessary or convenient to carry out its 18 corporate purposes and exercise the powers granted in this chapter; 19 (14) to recommend to the legislature 20 (A) the pledge of the credit of the state to guarantee repayment 21 of all or any portion of revenue bonds issued to assist in construction of power 22 projects; 23 (B) an appropriation from the general fund 24 (i) for debt service on bonds or other project purposes; 25 or 26 (ii) to reduce the amount of debt financing for the 27 project; 28 (15) to carry out the powers and duties assigned to it under AS 42.45 29 and AS 44.83.700 - 44.83.720; 30 (16) to make grants or loans to any person and enter into contracts or 31 other transactions regarding the grants or loans; 01 (17) to promote energy conservation, energy efficiency, and alternative 02 energy through training and public education; 03 (18) to acquire a Susitna River power project, whether by construction, 04 purchase, gift, or lease, including the acquisition of property rights and interests by 05 eminent domain under AS 09; 06 (19) to perform feasibility studies and engineering and design with 07 respect to power projects; 08 (20) to acquire battery and other energy storage systems, whether 09 by direct ownership, purchase, grant, gift, or lease. 10 * Sec. 19. AS 44.83.090(b) is amended to read: 11 (b) The authority is not subject to the jurisdiction of the Regulatory 12 Commission of Alaska, except as provided in AS 44.83.700(d). Nothing in this 13 chapter, except as provided in AS 44.83.700 - 44.83.720, grants the authority 14 jurisdiction over the services or rates of a public utility or diminishes or otherwise 15 alters the jurisdiction of the Regulatory Commission of Alaska with respect to a public 16 utility, including any right the commission may have to review and approve or 17 disapprove contracts for the purchase of electricity by a public utility other than 18 wholesale agreements and contracts described in AS 42.05.431(c)(1). 19 * Sec. 20. AS 44.83 is amended by adding new sections to read: 20 Article 5A. Railbelt Transmission Organization. 21 Sec. 44.83.700. Railbelt Transmission Organization. (a) The Railbelt 22 Transmission Organization is created for the purpose of establishing an open access 23 transmission tariff that 24 (1) provides for recovery of transmission costs and related ancillary 25 services; and 26 (2) replaces wholesale charges assessed by unit by each utility in the 27 Railbelt with a new mechanism that fairly recovers and equitably allocates the costs of 28 operating the backbone transmission system 29 (b) For administrative purposes, the transmission organization is a division of 30 the Alaska Energy Authority. 31 (c) To assist in administering the open access transmission tariff, the 01 governance structure for the transmission organization must be made up of 02 representatives from the authority, each of the Railbelt utilities, and, as an ex officio 03 nonvoting representative, the chief executive officer of the applicable electric 04 reliability organization. 05 (d) Notwithstanding AS 42.05.711(b) and AS 44.83.090(b), the transmission 06 organization is subject to the jurisdiction of the commission for the purposes of 07 AS 44.83.700 - 44.83.720. The commission shall require the transmission organization 08 to file tariffs to achieve the purposes of AS 44.83.700 - 44.83.720. 09 Sec. 44.83.710. Revenue mechanism. (a) The transmission organization shall 10 hold and administer a commission-approved open access transmission tariff that 11 ensures nondiscriminatory access to the backbone transmission system. 12 (b) The transmission organization shall file with the commission a 13 transmission cost recovery methodology that ensures the reliability and sufficient 14 capacity of the backbone transmission system to support and promote state and 15 regional energy policies and a rigorous, dynamic economy. If the transmission 16 organization does not file a transmission cost recovery methodology with the 17 commission on or before July 1, 2025, the commission shall, after notice and 18 opportunity for public comment, establish a transmission cost recovery methodology 19 consistent with this section. 20 (c) The cost recovery methodology for the transmission organization must, as 21 approved by the commission, 22 (1) pool backbone transmission system costs and allocate those costs 23 through certificated load-serving entities on a coincident peak or load ratio share basis, 24 or a combination of both; and 25 (2) account for 26 (A) required backbone transmission system ancillary services; 27 (B) backbone transmission system congestion; 28 (C) disruptions to the backbone transmission system that result 29 in the isolation of one geographical area of the backbone transmission system 30 from another for more than 24 hours; and 31 (D) costs to own and operate the backbone transmission 01 system, as established by the commission or by contract, including 02 transmission costs associated with the Bradley Lake hydroelectric project. 03 (d) A Railbelt utility shall pass the commission-approved transmission costs 04 directly and transparently to the utility's customers. 05 Sec. 44.83.720. Definitions. In AS 44.83.700 - 44.83.720, 06 (1) "backbone transmission system" means the transmission assets in 07 the Railbelt that facilitate the transmission of electrical power under the standards 08 established by the Federal Energy Regulatory Commission; 09 (2) "commission" means the Regulatory Commission of Alaska; 10 (3) "Railbelt" means the geographic region from the Kenai Peninsula 11 to Interior Alaska that is connected to a common electric transmission backbone; 12 (4) "Railbelt utility" means a public electric utility certificated to 13 operate in the Railbelt that operates backbone transmission system assets; 14 (5) "transmission organization" means the Railbelt Transmission 15 Organization established by AS 44.83.700. 16 * Sec. 21. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 REPORT TO THE LEGISLATURE. (a) The Alaska Energy Authority shall, by 19 January 1, 2025, submit a report to the legislature that 20 (1) evaluates the feasibility of establishing the Railbelt Transmission 21 Organization created by AS 44.83.700, added by sec. 20 of this Act, as a special purpose 22 entity to issue long-term rate reduction bonds to finance the costs of upgrading and repairing 23 transmission infrastructure that supports the backbone transmission system, as defined in 24 AS 44.83.720, added by sec. 20 of this Act; 25 (2) recommends methods for using a competitive transition charge to retire 26 long-term rate reduction bonds; and 27 (3) identifies further aspects of a statutory framework needed for rate 28 reduction bonds, including recommended statutory provisions. 29 (b) The Alaska Energy Authority shall submit the report required 30 under (a) of this section to the senate secretary and the chief clerk of the house of 31 representatives and notify the legislature that the report is available. 01 * Sec. 22. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 TRANSITION: ALASKA ENERGY AUTHORITY BOARD MEMBERS. 04 Notwithstanding AS 44.83.030(c), added by sec. 15 of this Act, the governor shall appoint 05 two public members of the initial Alaska Energy Authority board of directors to one-year 06 terms, two public members to two-year terms, and two public members to three-year terms. 07 * Sec. 23. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 TRANSITION: RAILBELT TRANSMISSION ORGANIZATION. The Railbelt 10 utilities, as defined in AS 44.83.720, added by sec. 20 of this Act, shall form the Railbelt 11 Transmission Organization under AS 44.83.700, added by sec. 20 of this Act, on or before 12 January 1, 2025, modeled after the governance structure of the Bradley Lake Hydroelectric 13 Project, as outlined in the Bradley Lake Power Sales Agreement, including the creation, 14 duties, and methods of the Bradley Lake Project Management Committee, with any 15 adjustments the parties to the agreement determine are necessary. On or before January 1, 16 2025, the Railbelt Transmission Organization shall file with the Regulatory Commission of 17 Alaska a certificate under AS 42.05.221 to achieve the purposes of AS 44.83.700 - 44.83.720, 18 added by sec. 20 of this Act. 19 * Sec. 24. Sections 4, 5, and 21 of this Act take effect immediately under AS 01.10.070(c). 20 * Sec. 25. Except as provided in sec. 24 of this Act, this Act takes effect July 1, 2024.