Legislature(1993 - 1994)
02/17/1993 01:30 PM House FIN
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HOUSE BILL 60
"An Act making appropriations for capital projects; and
providing for an effective date."
OVERVIEW - DEPARTMENT OF COMMERCE AND ECONOMIC
DEVELOPMENT
PAUL FUHS, COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC
DEVELOPMENT (DCED), provided the Committee with a synopsis
of the DECD Capital Improvement Project (CIP) requests.
[Attachment #2 & #3].
* Data Processing System Enhancement request for
$750 million dollars.
Wang Laboratories has filed for bankruptcy in
August 1992. DCED data bases are used extensively
for occupational, business and insurance
licensing, for corporate filings and for servicing
$230 million in outstanding loans, along with
several smaller systems. All data bases currently
use proprietary Wang equipment and software.
Requested money will be used to acquire the
equipment and software necessary for DECD to make
a 3-5 year transition from proprietary Wang
systems products in line with industry trends and
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standards.
* Economic Development Matching Grants request for
FY 93 Appropriation for $700 million dollars and
FY 94 Request for $750 million dollars.
Provides matching funds to communities and
nonprofits for economic development projects.
This program has been in place for the past 12
years. Leverages between $2.5 and $3.5 million in
federal and other funds each year.
* Small Business Assistance and Development - FY 94
Request for $550.0
Primarily matches federal funds for:
Small Business Development Centers $263.
Procurement Technical Assistance 150.
University Center for Economic Devl. 37.
Buy Alaska 50.
Small Business Forum 50.
* Alaska-Japan Fisheries Cooperation
FY 94 Request: $45.0
Based on 1985 Memorandum of Agreement between the
State of Alaska and the Japan Overseas Fisheries
Cooperation Committee. Funding used for meetings
and exchanges for the mutual benefit of Alaska and
Japan fisheries, particularly in the interest of
new product development. Past successes include
roe on kelp and surimi.
* Gold Rush Centennial Celebrations FY 94 Request:
$100.
First year of a five year program to organize
celebrations of the Gold Rush Centennial in the
Klondike, Nome, Fairbanks, and interior Alaska.
Money to be used for planning activities and
grants to local communities for events development
and promotion.
* Coal Initiatives FY 94 Request: $290.0
Money to be used for test shipments of Alaska coal
-- to confirm the suitability of the coal in a
number of combustion systems -- and for efforts at
opening new markets. The coal market is growing
at up to 80 million tons annually. Major
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prospects include Japan, Korea, Taiwain, the
Philippines, Mexico and Hawaii.
Representative Martin asked the criteria used to determine
the small business loans. Commissioner Fuhs stated that all
applicants are screened. The Economic Development Matching
Grants Program is not required to be paid back and
applicants can only receive this grant one time. None of
the programs listed are loan programs. He noted that there
are problems in the Business & Industry Development
Corporation (BIDCO) program. Representative Martin
disagreed with the University applying for small business
assistance and development grants. Commissioner Fuhs stated
that DCED's work is to promote the private sector business
in Alaska. DCED is trying to make businesses self
sufficient. He added that the University's budget has shown
double funding and this was incorrect accounting.
Currently, those funds have been separated and will be shown
only in the DCED budget request for the University Center.
Representative Martin questioned the value of the coal
initiative. Commissioner Fuhs stated that for a few years,
Alaska has been shipping eight hundred thousand tons of coal
to Korea. He expressed his enthusiasm with the current
efforts to create a fuel mixture which is not toxic and is
environmentally safe for shipping.
Representative Brown referenced Attachment #3, the small
business development request for $550 million dollars and
asked for further discussion on the budget interfacing.
Commissioner Fuhs replied the only area of duplication was a
Development Specialist position.
GUY BELL, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, stated in
the past there has been duplication with two separate
business center development programs operating. One
operates through the University system, and is funded
through the Small Business Assistance Development Program.
There are two other business assistance programs which are
operated through private nonprofit organizations, one in
Anchorage and one in Fairbanks. Two years ago, the funding
for those organizations was deleted from the operating
budget.
Representative Brown asked how many new employees would be
added with the proposed budget. Mr. Bell said none. All
additions are grants. Commissioner Fuhs added that the
grants are matched by equal amounts of federal money. Mr.
Bell reiterated that no staff is paid for out of the capital
request. He offered to provide the Committee a response in
writing in order to avoid confusion.
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Commissioner Fuhs interjected that Alaskan producers must be
certified in order to qualify for the product preference
program. The program has been very effective.
Representative Brown questioned the establishment of the
Economic Center at the University of Alaska. Commissioner
Fuhs commented that the center is in Anchorage and resulted
from a federal grant to help provide assistance to nonprofit
corporations. He admitted that he too had questioned the
component.
Representative Parnell inquired if full funding for the data
processing component was expected this year. Mr. Bell
responded that a new system was necessary by next year,
although the anticipated conversion time is three to five
years. The pace software is a difficult system to change.
Representative Parnell asked if the entire component was
being requested this year. Mr. Bell stated it was.
ALASKA ENERGY AUTHORITY
RON GARZINI, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY,
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, provided
the Committee with Attachment #4 and #5 which summarizes the
CIP requests for the Alaska Energy Authority (AEA).
DAVID DENIG-CHAKROFF, DIRECTOR, RURAL PROGRAMS, ALASKA
ENERGY AUTHORITY, DEPARTMENT OF COMMERCE AND ECONOMIC
DEVELOPMENT, explained the Operation, Technical and
Emergency Assistance component, CIP request of $1.3 million
dollars. This request addresses continuation of specific
programs designed to provide a wide range of energy systems
operations, technical and emergency assistance to rural
communities and utilities in evaluating deficiencies and
needs with respect to the collective energy systems and
facilities within a community. This may be accomplished by
conducting surveys and evaluating electrical generation,
distribution systems and waste heat systems serving the
community. Additionally, as assessments of the demand-side
alternatives such as insulation, heating and lighting
retrofits of local public buildings, energy control systems
and rate design could be made.
Mr. Denig-Chakroff continued with the second component:
Rural Utility Regionalization, Consolidation and Business
Management Training, CIP request for $270 million dollars.
The goal of the program is to create self-supporting
utilities in rural Alaska that can protect the State's
capital investments in power systems by continuously
operating and maintaining those systems in a safe, efficient
manner and providing reliable, affordable power to their
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customers without continual assistance from the State. This
will be done by developing the corporate strength of those
utilities.
(Tape Change, HFC 93-25, Side 2).
The Statewide Electric and Power Project Development program
CIP request for $1,000 million dollars would provide funding
for the engineering, environmental, and economic and
financial analysis of power projects throughout the State.
The objective is to respond in a timely manner to requests
from legislators, utilities and communities on power project
proposals and to develop a multi-year plan for
implementation through the issuance of revenue bonds and
minimal State contributions. If possible, the costs of
feasibility studies and financial packages would be recouped
from bond receipts.
Mr. Garzini noted the component - Energy Conservation and
Management Program for State-Funded Facilities - Phase One
CIP request for $550 million dollars. The State now owns
and operates more than 11.5 million square feet of
buildings. Additionally, the State pays for a portion of
the operating expense for square footage of school district
and municipally-owned facilities as well as space that is
leased from private owners. Responsible management of these
facilities requires that end-use energy consumption for each
facility be accurately estimated, so that energy costs may
be analyzed and minimized. The program is designed to
determine energy end-use in facilities for which the State
bears the operation costs, and to implement management
changes or capital projects designed to reduce energy costs
borne by the State general fund.
The next component is the Sutton-Glenallen Intertie
Feasibility Study CIP request for $500 million dollars.
Copper Valley Electric Association (CVEA) has proposed
construction of one hundred and twenty-seven miles of
transmission line between Sutton and Glennallen linking
CVEA to the Railbelt system.
The second item of the component is a CIP request for $500
million dollars for the Southeast Intertie Feasibility.
This project would fund the feasibility level evaluation of
a Tyee-Snettisham link of a Southeast Intertie transmission
system and bring it up to the same level in the project
approval process as the Tyee-Swan segment of a Southeast
Intertie. The project is justified to determine if the
transfer of surplus Tyee energy and possibly energy from
other potential hydroelectric projects along an
interconnected system. This is an acceptable alternative
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for meeting growing energy demands in Juneau.
Mr. Denig-Chakroff addressed the CIP request for $2.750
million dollars for the Rural Power Systems Upgrades. The
program would provide funding to continue Energy Authority
achievement of a variety of rural power systems upgraded
that have been identified through the Rural Technical
Assistance and Circuit Rider Maintenance programs or which
have been pointed out by community officials and
legislators. Projects realized under this program will
provide for more efficient operation of rural power systems.
The next CIP request is for $1 million dollars for the
Emergency Bulk Fuel Repairs/Spill Prevention. This project
would provide funding to make emergency repairs to bulk fuel
storage and handling systems in rural Alaska. Priority for
these funds would be communities whose systems are in such
poor repair that fuel vendors have threatened to refuse to
deliver fuel and/or where there is an imminent threat to
life, health, safety or the environment.
Mr. Garzini itemized the next CIP request of $5 million
dollars for the Component Renewal and Replacement - Alaska
Energy Authority - Owned Facilities. He pointed out that
this is not a request for State funding. It is a request to
receive monies from wholesale purchasers of power generated
by or wheeled over electrical systems owned by the Alaska
Energy Authority and to expend those monies for the renewal
and replacement of aging components of those facilities.
AEA has invested in those facilities a combined amount of $1
billion dollars.
Mr. Denig-Chakroff addressed Electrical System Life, Health
and Safety Improvements CIP request for $750 million
dollars. The program would provide follow-up funding of the
agency's program to correct problems in rural electric
systems that are or could become a threat to life, health
and safety in rural communities. Wherever possible, funds
will be used to leverage local matching funds.
The Bulk Fuel System Upgrades CIP request for $4.5 million
dollars would fund the design and upgrade of bulk fuel
storage and handling facilities in rural Alaskan communities
which are dependent upon seasonal fuel delivery and long-
term storage. Upgrades are critically needed in order to
resolve significant hazards to life and safety as well as
code violations and to ensure continued delivery of vital
petroleum products. The work will be accomplished through
grants and contracts with administrative and project
management oversight by the AEA.
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The Alternative & Applied Energy Technology Development CIP
request is for $700 million dollars. This program would
fund the development, design, construction, demonstration
and/or operational testing of technological enhancements to
energy systems including generation, storage, transmissions
heating and chilling and end-use efficiency and load
management. The program will be used to coordinate efforts
with energy research groups.
Mr. Garzini commented on the Reimbursable Authority CIP for
$5,000.0 thousand dollars. The authority to receive and
expend funds provided by others allows the Energy Authority
to enter into agreements with non-state entities and private
parties to either incorporate change orders into State
contracts or have the Energy Authority perform tasks which
the other party cannot itself accomplish.
Mr. Denig-Chakroff introduced CIP request for $5,000.0
thousand dollars for Electrical Service Extension Grant
Program which would be a matching grant program that
provides up to 60% of the cost of eligible projects proposed
by utilities for extending electrical service to private
residences and small businesses not currently served by an
electrical utility and, as a second priority, for making
improvements to existing utilities.
The King Cove Hydroelectric Project Construction CIP request
for $500 million dollars for the proposed King Cove hydro
project is located on Delta Creek, about five miles north of
the community of King Cove. A recent update of the project
analysis concluded that the proposal is technically and
economically feasible. With back-up diesel generation to
cover demand peaks and low water flow intervals, the hydro
project would supply most of the City's existing annual
demand and supply most of the anticipated growth
requirements over the next twenty years.
Mr. Garzini introduced the CIP request for $50 million
dollars for the Snettisham Acquisition which would provide
support for Energy Authority FY 93 costs of personnel,
travel, communications, and legal and consulting fees
related to the possible sale of the Snettisham Hydroelectric
Project to the State. The sale is part of the legislative
proposal authorizing the sale of the two federal
hydroelectric projects in Alaska and subsequent close out of
the Alaska Power Administration.
Co-Chair MacLean questioned the Governor's $250 million
dollar cut to the King Cove Hydroelectric Construction. She
asked if the cut would allow them to qualify for Electrical
Service Extension Funds. Mr. Garzini replied that the rule
for that fund is a 60\40 grant program for line extensions.
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King Cove could qualify if they were providing a line
extension.
Representative Brown inquired if a processing plant
currently existed in King Cove. Mr. Denig-Chakroff stated
it did and added that King Cove has one thousand residents.
Representative Brown discussed disapproval of the project
and stated it was not an economically feasible plan for that
size community. Mr. Garzini pointed out that the community
will assist in financing the balance.
Co-Chair MacLean asked for further detail on the Alternative
& Applied Energy Technology Development component. She
asked why funds were not available from the Science and
Technology Fund for that component. Mr. Denig-Chakroff
replied when a specific small technical problem is
identified, AEA does ask the Science and Technology Fund's
support.
Co-Chair MacLean requested more information on the Bulk Fuel
System upgrades. Mr. Denig-Chakroff offered to provide that
information. Co-Chair MacLean asked how the Sutton-
Glenallen feasibility study would impact the legislation
introduced by Representative Navarre. Mr. Garzini replied,
when the legislation was heard in the House Labor & Commerce
Committee, it was suggested that Representative Navarre
include the Sutton to Glenallen Intertie in that package.
Mr. Garzini noted that the project is not currently ready to
build because a feasibility report has not been completed.
Representative Brown asked if the Southeast Feasibility
Study would continue to need funding with the closure of
Greens Creek. Mr. Garzini replied that the forecasted
energy demands in Juneau still far exceed the capacity of
energy generated in that area.
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