04/09/2009 01:30 PM House FINANCE

HOUSE BILL NO. 44                                                                                                             
                                                                                                                                
     "An Act  relating to  investments applicable  to energy;                                                                   
     authorizing  the Alaska  Permanent  Fund Corporation  to                                                                   
     make   in-state   energy    project   investments;   and                                                                   
     authorizing certain  public corporations to  issue bonds                                                                   
     for energy projects."                                                                                                      
                                                                                                                                
REPRESENTATIVE  MIKE CHENAULT,  SPONSOR,  mentioned that  the                                                                   
Committee has  heard the  bill and has  made no changes  yet.                                                                   
The proposed  amendment would  not let  the bonds be  written                                                                   
without  approval from  Legislative Budget  and Audit.   This                                                                   
would ensure a legislative review process.                                                                                      
                                                                                                                                
Representative Chenault  emphasized that it was  time to make                                                                   
a move  forward on  in-state gas.   He named TransCanada  and                                                                   
the  Denali  Project  as  potential  projects  that,  at  the                                                                   
earliest, could  be ready in 2020.   He voiced  concern about                                                                   
the Railbelt's  energy  needs in  the next  5 years with  the                                                                   
possibility of  a gas shortage.   He thought  the legislature                                                                   
should  enlist  every  opportunity   possible  to  make  sure                                                                   
Alaskans have a long-term energy supply.                                                                                        
                                                                                                                                
2:02:22 PM                                                                                                                    
                                                                                                                                
Representative Joule asked if  there has been any analysis of                                                                   
the cost benefit of bringing gas  from the North Slope rather                                                                   
than importing it from somewhere else.                                                                                          
                                                                                                                                
Representative  Chenault did  not have  the numbers,  but was                                                                   
sure there  were studies which  showed which method  was more                                                                   
cost effective.   He related that the amount  of gas produced                                                                   
in Cook Inlet  is enough to heat Alaska homes  and businesses                                                                   
during  the  summer;  however,  the crunch  time  happens  in                                                                   
winter.   He was not  sure which would  be the cheapest,  but                                                                   
pointed  to the  unlimited gas  supply  available in  Alaska,                                                                   
which could benefit the Railbelt and rural areas.                                                                               
                                                                                                                                
2:05:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze Moved to adopt Amendment 1:                                                                                    
                                                                                                                                
     Page 3, line 6:                                                                                                            
     Delete "The"                                                                                                               
     Insert "Subject to (b) of this section, the"                                                                               
                                                                                                                                
     Page 3, following line 17:                                                                                                 
     Insert a new subsection to read:                                                                                           
     "(b) Bonds may not be issued under (a) of this section                                                                     
     without the prior written approval of the Legislative                                                                      
     Budget and Audit Committee."                                                                                               
                                                                                                                                
     Reletter the following subsection accordingly.                                                                             
                                                                                                                                
Co-Chair Hawker OBJECTED for discussion purposes.                                                                               
                                                                                                                                
Co-Chair Hawker read (b) and asked  if the Legislative Budget                                                                   
and Audit Committee has the authority as written.                                                                               
                                                                                                                                
TOM WRIGHT, STAFF, REPRESENTATIVE  MIKE CHENAULT, referred to                                                                   
a legal opinion in the members'  packets which addresses that                                                                   
question.   He  noted  that it  is  questionable.   The  LB&A                                                                   
Committee is being  allowed veto authorization  that might be                                                                   
improper.   He pointed out that,  in this case, it  is a pre-                                                                   
authorization.   The involvement of  LB&A is another  step in                                                                   
the process of approval.                                                                                                        
                                                                                                                                
Co-Chair Hawker did not agree with that opinion.                                                                                
                                                                                                                                
2:07:24 PM                                                                                                                    
                                                                                                                                
Representative  Gara explained that  currently the  bonds can                                                                   
be issued, but the bill would require legislative approval.                                                                     
                                                                                                                                
Mr. Wright agreed.                                                                                                              
                                                                                                                                
Representative  Gara concluded  that  a bonding  bill can  be                                                                   
passed which  requires no legislative approval;  therefore, a                                                                   
bonding bill  can be  passed which  requires approval  from a                                                                   
committee.  He  maintained that delegating it  to Legislative                                                                   
Council is  not a problem and  Amendment 1 does not  make the                                                                   
bill more challengeable.                                                                                                        
                                                                                                                                
2:09:04 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker concurred  with the concerns  raised  in the                                                                   
legal opinion  and agreed  that it could  become a  matter of                                                                   
litigation.                                                                                                                     
                                                                                                                                
Mr. Wright agreed  it was challengeable.  He  emphasized that                                                                   
the  bill authorizes  pre-authorization  for the  bonds.   He                                                                   
thought an argument could be made on other side.                                                                                
                                                                                                                                
Co-Chair  Hawker  WITHDREW  his  OBJECTION.  There  being  NO                                                                   
OBJECTION, Amendment 1 was adopted.                                                                                             
                                                                                                                                
Representative  Kelly  commented  on past  interactions  with                                                                   
Alaska Natural  Gas Pipeline  Development Authority  (ANGDA).                                                                   
He  questioned  ANGDA's  usefulness.    He  wanted  assurance                                                                   
regarding ANGDA's role.                                                                                                         
                                                                                                                                
2:11:21 PM                                                                                                                    
                                                                                                                                
Representative   Chenault  reported   that  there   was  some                                                                   
indifference with the process  and with the relationship with                                                                   
ANGDA.   He  shared that  when ANGDA  was put  up for  public                                                                   
vote, he  voted against it  due to their  view of  using only                                                                   
one route, which might have made  economic sense at the time.                                                                   
Over time, and  through the legislative process,  things have                                                                   
been added  to the ANGDA  scope, such as  a spur line  to the                                                                   
Cook Inlet.                                                                                                                     
                                                                                                                                
Representative Chenault stated  that his first choice was for                                                                   
private business  to build the line.   As a board,  ANGDA has                                                                   
put together  some good  programs, but  has strayed  from its                                                                   
original  scope sometimes.   However,  it is  the entity  out                                                                   
there  trying  to get  gas  to  communities  in Alaska  at  a                                                                   
reasonable  cost.   They are  not  the only  choice, but  the                                                                   
legislature needs to  step up and look at all  options.  This                                                                   
does not  give ANGDA permission  to go forward  regardless of                                                                   
cost.   It does  not preclude  ANGDA from  joining a  private                                                                   
company on this project.                                                                                                        
                                                                                                                                
2:14:29 PM                                                                                                                    
                                                                                                                                
Representative  Kelly asked  if  Representative Chenault  was                                                                   
comfortable with LB&A's role.                                                                                                   
                                                                                                                                
Representative   Chenault   observed   that   he   was   more                                                                   
comfortable with  LB&A's involvement,  rather than  having no                                                                   
legislative control once the bonds were issued.                                                                                 
                                                                                                                                
HB  44   was  HEARD  and   HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
2:16:45 PM