Legislature(2009 - 2010)BUTROVICH 205
02/11/2010 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB203 | |
| HB20 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 220 | TELECONFERENCED | |
| += | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 20 | ||
| += | SB 203 | TELECONFERENCED | |
HB 20-FISHERIES LOANS:ENERGY EFFICIENCY/AMOUNT
4:08:29 PM
CHAIR WIELECHOWSKI announced HB 20 to be the next order of
business to come before the committee [CSHB 20(FIN) was before
the committee].
SENATOR STEVENS asked Tim Clark to comment on eliminating the
prohibition on people who have had loans in the past.
TIM CLARK, staff to Representative Edgmon, said in the past a
prohibition prevented anyone who has ever had a loan under
subsection A from becoming a borrower under subsection B. HB 20
eliminates that prohibition if the loan is for improving energy
efficiency of the vessel or operation.
SENATOR STEVENS asked if the balance that a fisherman can owe
according to the loan has changed.
MR. CLARK replied that the limits set in each program, A and B,
would remain the same. However, the total amount that a single
borrower can have outstanding from the combination of Program A
and Program B would increase from $300,000 to $400,000.
SENATOR STEVENS thinks that is a major improvement.
4:11:53 PM
SENATOR STEDMAN said he is concerned the parameters are too
broad and suggested targeting engines should be more specific.
He thought some discussion should take place on what should be
targeted.
GREG WINEGAR, Director, Division of Investments, said the
division had the authority, under Section B, to make a loan for
improving a vessel and went through a regulatory process to
provide a lower interest rate for an engine. In the last year or
so, the industry has suggested other types of improvements could
qualify such as certain types of hulls or generators that are
far more efficient. Some early testimony suggested that
expanding the language could be beneficial.
SENATOR STEDMAN asked if engines, but not generators, were
classified as qualifying in regulations.
MR. WINEGAR replied that is correct under Section B currently;
when the regulation was put in place engines were targeted.
Money can be borrowed for the other things, such as generators,
but the loan for a more efficient engine has a lower interest
rate.
4:14:37 PM
SENATOR STEDMAN asked if any engine qualifies in terms of energy
efficiency.
MR. WINEGAR said the engine must be more energy efficient. The
Division compares the efficiency rating of the engine being
purchased versus the engine being replaced. In almost every case
it is a "pretty substantial difference" because newer engines
are much more efficient.
SENATOR STEDMAN asked what the increase in efficiency is.
MR. WINEGAR answered that the efficiency increase is generally
in the 20 to 30 percent range with some as high as 40 percent.
He said the current regulation is under 3 AAC 80.055.02 [Alaska
Administrative Code, Title 3, Chapter 80, Section 55] and reads
"for an engine efficiency upgrade, an applicant must establish
to the satisfaction of the Department that the upgrade to be
financed with the loan will reduce emissions or improve fuel
productivity." He explained a set percentage does not have to be
met.
SENATOR STEDMAN asked about comparing engines. For example: If
an 8 year old Caterpillar was going to be replaced with a new
Caterpillar, does the Division look at the original consumption
specs from 8 years ago for the old Caterpillar engine or the
current consumption with wear and tear.
MR. WINEGAR replied that the Division does compare the specs of
the engine being replaced with the newer engine and gets input
from the borrower.
SENATOR STEDMAN asked if the specs used for comparisons are from
the 8 year old engine when it was new.
MR. WINEGAR replied that is correct.
4:17:03 PM
SENATOR STEDMAN said he is still concerned that HB 20 is too
broad. He asked what the lending capacity is.
MR. WINEGAR answered the fund itself will have a balance of
about $30 million at the end of the fiscal year. He said the
annual volume runs between $10 and $14 million.
SENATOR STEDMAN said some language exists adding another
subsection on upgrading vessels and gear for the purposes of
improving energy efficiency with a minimum 5 percent reduction.
He felt that was extremely low. He said he understood going from
a two stroke to a four stroke with a fuel consumption spread of
20 to 40 percent improvement, for example, but suggested HB 20
could allow any hull improvement or engine change to qualify.
MR. WINEGAR said he did not have an amendment in front of him.
He said he has no objection to some sort of limit and he is not
fixed on a certain percentage. He said the engine comparisons
the Division has looked at have been much higher than 5 percent.
He said he would defer to HB 20's sponsor but he has no
objection to inserting some criteria. He said that would be a
policy call by the Legislature.
4:19:09 PM
SENATOR STEVENS asked what the savings might be with the lower
interest rate.
MR. WINEGAR said the rate is prime minus 2 percent with a floor
of 3 percent. Right now, it would mean the difference between a
3 percent loan and a 5.5 percent loan because of the 3 percent
floor at this time.
CHAIR WIELECHOWSKI said this was the second day HB 20 was before
the committee and it has another referral to finance. He stated
he would like to get an amendment or move HB 20 out of
committee.
SENATOR STEVENS moved to report HB 20 from committee with
individual recommendations and accompanying fiscal notes. There
were no objections and CSHB 20(FIN) moved from the Senate
Resources Standing Committee.
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