Legislature(2011 - 2012)HOUSE FINANCE 519
03/31/2011 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB78 | |
| HB103 | |
| HB127 || HB175 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 78 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 103 | TELECONFERENCED | |
| += | HB 127 | TELECONFERENCED | |
| += | HB 175 | TELECONFERENCED | |
HOUSE BILL NO. 103
"An Act relating to the procurement of supplies,
services, professional services, and construction for
the Alaska Energy Authority; establishing the Alaska
Railbelt energy fund and relating to the fund;
relating to and repealing the Railbelt energy fund;
relating to the quorum of the board of the Alaska
Energy Authority; relating to the powers of the Alaska
Energy Authority regarding employees and the transfer
of certain employees of the Alaska Industrial
Development Export Authority to the Alaska Energy
Authority; relating to acquiring or constructing
certain projects by the Alaska Energy Authority;
relating to the definition of 'feasibility study' in
the Alaska Energy Authority Act; and providing for an
effective date."
2:38:34 PM
SARA FISHER-GOAD, EXECUTIVE DIRECTOR, ALASKA ENERGY
AUTHORITY, introduced HB 103 and offered an explanation of
the legislation:
On January 18, 2011, House Bill 103 (Companion Bill SH
42) was introduced by request of the Governor.
Alaska's Energy Policy target is to reach 50 percent
if its electricity generation through renewable energy
by 2015. A new large hydroelectric project is needed
to achieve this goal. This legislation would authorize
the Alaska Energy Authority (AEA to move forward on
pursuing such a project to supply electricity to the
railbelt region of the state. In November 2010, AEA
released its "Preliminary Decision Document"
identifying the Susitna Hydroelectric project as the
recommended project to pursue. CS HB 103 (ENE)
requires passage this session in order for AEA to file
preliminary permit application for the Susitna
(Wantana location) project with the Federal Energy
Regulatory Commission this year.
The House Energy committee amended HB 103 by removing
AEA's ability to adopt its own procurement regulations
and amending the new Alaska Railbelt Energy Fund by
requiring legislative appropriation from the fund.
Minor technical corrections and edits by Legislative
Legal Division were also made to the bill. AEA has no
objection to the changes.
CS HB 103 (ENE) authorizes AEA to 1) acquire,
construct and own new power projects 2) hire staff in
exempt service 3) create subsidiary corporations for
the purpose of acquiring, construction, owning,
maintaining and operating power projects 4) creates a
new Alaska Railbelt Energy Fund in AEA and 4) defines
the Board of Director's quorum as four of seven
members.
Ms. Fisher-Goad explained that developing an Alaska
Railbelt Energy Fund in AEA statutes had been a challenge.
She added that restructuring of the Alaska Industrial
Development and Export Authority (AIDEA) had resulted in
the restructuring of the AEA board; 5 public members and 2
commissioners. There had been a specific AEA statute that
defined the quorum as 3 and there was a provision to
correct the number.
Ms. Fisher-Goad provided history of the AEA. She shared
that the mission of the authority was to reduce the cost of
energy in Alaska. In the 1980s the AEA developed and owned
several energy projects: the Bradley Lake Hydroelectric
Project, the Alaska Intertie and the Larson Bay
Hydroelectric Project. At that time the first attempt to
develop the Susitna Hydroelectric Project had been
considered. In 1993 a reorganization effort removed the
power of constructing and owning new projects form the AEA.
The AIDEA board members became the AEA board and AIDEA
staff provided support and management of AEA programs. In
1999 the Department of Community and Regional Affairs had
been repealed in statute and former AEA programs were
reestablished into AEA. In the early 2000's most of AEA's
work was in rural energy construction projects which
received funding primarily from the Denali Commission. In
2008 the AIDEA and AEA boards made bylaw changes to allow
an AEA executive to be hired that was different from the
AIDEA executive director. In 2008 the Renewable Energy Fund
was established and in 2010 the Emerging Energy Technology
Fund was established. The AEA had been identified by the
governor as playing a key role in planning energy
infrastructure and financing projects. The legislation had
been introduced to further reestablish and recognized in
statute AEA's role in energy project and program
development.
2:44:33 PM
Ms. Fisher-Goad reiterated that the legislation allowed AEA
to construct and own new projects. She relayed that there
were approximately 40 people that were AIDEA employees that
would be transferred to AEA. She pointed out to the
committee that the provision to allow AEA to adopt its own
procurement regulations had been dropped. The ideas had
been that there were several ways for AEA to procure
services and that one consolidated regulatory process would
do. She said that there had been confusion as to how the
consolidation would be done which was deflecting time from
the Susitna project. The amended legislation also required
a legislative appropriation from the Alaska Railbelt Energy
Fund.
2:48:25 PM
BRIAN BJORKQUIST, SENIOR ASSISTANT ATTORNEY GENERAL,
DEPARTMENT OF LAW, provided a sectional analysis (copy on
file):
· Section 1: Would expressly authorize the legislature
to appropriate amounts in the Railbelt energy fund to
capitalize the new Railbelt energy fund, called the
Alaska Railbelt energy fund, created by Section 3 of
the bill. This would allow amounts to be appropriated
and transferred from the existing Railbelt Energy fund
into the new fund.
Representative Wilson MOVED to ADOPT CSHB 103(ENE), 27-
GH1822\B as a working document before the committee.
Representative Doogan OBJECTED for purpose of discussion.
Mr. Bjorkquist continued:
· Section 2: Would place in the exempt service the
executive director and other staff of AEA.
· Section 3: Would establish the new Railbelt energy
fund, called the Alaska Railbelt energy fund of AEA.
The legislature may appropriate money from the fund
for feasibility studies, license, permit, acquire or
construct, or to make grants for power projects and
electric transmission lines and interties that serve
the Railbelt region.
· Section 4: Would increase from 3 to 4 the quorum
requirement for meetings of the AEA board of directors
in reaction to statutory amendments made in 2010.
Those amendments increased the size of the AIDEA board
from 5 to 7. The AIDEA board serves as the board of
AEA. The proposed amendment would correct the quorum
for meetings of AEA's board of directors.
· Section 5: Would empower AEA to hire employees and
advisors in the exempt service. This power to hire
employees would be equivalent to powers the Alaska
Industrial Development and Export Authority (AIDEA)
currently possesses.
Representative Gara understood that the "exempt" status
carried equal weight in both organizations.
Mr. Bjorkquist replied that the employees maintained equal
status as exempt employees.
2:52:53 PM
Mr. Bjorkquist continued with sectional analysis:
· Section 6: Would expand AEA's powers to allow AEA to
acquire and construct new projects, and to conduct
feasibility studies of new power projects.
· Sections 7: Would empower AEA to establish subsidiary
corporations to support the acquisition, construction,
ownership, and operation of power projects, and
thereby potentially limit potential liability of AEA
or strengthen the financial viability of a project.
· Section 8: Would enable an AEA subsidiary to exercise
powers currently granted to AEA under AS 44.83.090.
For example, an AEA subsidiary would be exempt from
regulation by the Regulatory Commission of Alaska
(RCA) to the same extent as AEA is exempt (but
utilities contracting with the AEA subsidiary would
not be exempted, and RCA would still need to approve
power sales agreements between the AEA subsidiary and
the Railbelt utilities).
2:57:18 PM
Mr. Bjorkquist continued to discuss the sequential
sectional analysis:
· Section 9: Would provide that AEA must exercise for
new power projects, existing statutory authority
managing power projects. This obligation is currently
limited to power projects from the pre-1993, "former
energy program for Alaska."
· Section 10: Would make AS 44.83.396 apply to AEA
subsidiaries that own power projects. AS 44.83.393
addresses how AEA administers the power project and
contracts for operators, and includes provisions
providing for AEA to contract with qualified utilities
for the operation of the project. The amendment in
Section 10 will impose these same duties on a
subsidiary of AEA formed for a power project.
· Section 11: Would amend the definition of "feasibility
study" under AS 44.83.990(3) so that the term is not
limited to only pre-1993 power projects.
Mr. Bjorkquist noted that previous public testimony had
suggested that the statutory definition for feasibility
study should go back to the language that existed before
1993 and have very detailed provisions dealing with what
needed to be included within a feasibility study. In
reviewing the regulations that existed in 1993, it was
apparent that the provisions dealing with all aspects of
developing a power project had been aimed at the FERC
licensing process (traditional licensing process). He
explained that the new process was considered to be better
because of the coordination between the licensing
applicant, stakeholders and interested parties, resource
agencies and FERC. He stated that reverting to earlier
process would not be appropriate with the new licensing
process. In addition, AEA was evaluating projects
differently than in the past.
3:01:56 PM
Mr. Bjorkquist continued:
· Section 12: Would repeal the existing Railbelt energy
fund, AS 37.05.520. This repeal would become effective
under Section 15 when the balance of the fund is
appropriated to AEA for deposit into the new Alaska
Railbelt energy fund (created by Section 3), or
appropriated and expended on projects.
· Section 13: Would provide transitional provisions to
address the status of existing employees who perform
AEA functions with the Alaska Industrial Development
Export Authority. AEA has not possessed the statutory
authority to hire its own staff since the
reorganization of AEA affected by 1993 legislation
(ch. 18, SLA 1993). Since the 1993 legislation, AEA
programs have been implemented by AIDEA employees.
AEA's executive director, for example, is an employee
of AIDEA, but is independent from the executive
director of AIDEA. Sections 2 and 5 would authorize
AEA to hire its own employees, and thereby assume
greater control over the implementation of AEA
programs. Section 13 provides for the transition of
these employees from AIDEA to AEA.
· Section 14: Would instruct the revisor of statutes to
amend the statutory heading of AS 44.83.040 to reflect
that the section would also address AEA employees.
· Section 15: Would make the repeal of the existing
Railbelt energy fund, AS 37.05.520, contingently
effective when the balance of the fund is appropriated
to AEA for deposit into the new Alaska Railbelt energy
fund (created by Section 3), or appropriated and
expended on projects.
· Section 16: Would provide for an immediate effective
date, excepting the contingent effective date for
repeal of the existing Railbelt energy fund.
Vice-chair Fairclough opened public testimony.
Representative Gara recalled a comprehensive energy bill
passed in 2010 which created a revolving loan fund to help
businesses upgrade energy efficiency. At that time many
thought the bill should be inside AEA since AEA already had
the staff to address building energy efficiency. He asked
whether AEA would be supportive of amendment to move the
function to AEA.
Ms. Fisher-Goad replied that AEA would willingly work with
the legislature to address the commercial energy efficiency
loan issue. She clarified that SB 220 was a repeal and
reenactment of an existing loan program within the
Department of Commerce, Community and Economic Development
(DCCED). The fund remained with DCCED and was not
capitalized. Changes to the program with respect as to
where the loan program should exist were still being
considered. She did not believe that HB 103 was the
appropriate vehicle for the issue.
3:06:28 PM
Ms. Fisher-Goad shared that AEA had an energy efficiency
audit pilot program that had been started with ARRA funds
and had proven successful. She believed that AEA could
build upon it with respect to addressing commercial energy
efficiency needs.
Representative Gara asked if AEA was willing to move the
fund through different legislation, or had the authority
not yet decided how to move forward with the issue.
Ms. Fisher-Goad replied AEA was working to address the
issue and were exploring the options of how the fund should
be structured. She said that there had been concerns about
the existing language passed in SB 220.
Representative Gara asked whether AEA wanted to house the
program.
Ms. Fisher-Goad answered that it was not that AEA did not
want to house the project. She stressed that AEA needed to
do more work on the appropriate structure and owner of the
program. She felt that the agency had not had enough time
to address the issue.
Representative Wilson asked if the Railbelt Energy Fund was
currently used by most of the cooperatives in the state.
Ms. Fisher-Goad responded that the fund had a long history
that included more than just energy projects. She
understood that the original capitalization of the fund was
remaining money from the original efforts with the Susitna
project. The fund had been used for a variety of projects,
not always necessarily energy projects.
3:10:35 PM
Representative Wilson requested a listing of specific funds
that were being paid out to specific projects and what AEA
hoped to accomplish into the future.
Ms. Fisher-Goad stated that a history of the fund, as
requested by Co-Chair Stoltze, was available. She clarified
that the capital appropriation in capital budget was the
unencumbered balance of the existing Railbelt Energy Fund.
Representative Edgmon referred to the passage of HB 119,
which expanded AIDEA's authority relating to economic
development. He highlighted that AIDEA had the ability to
bond up to $400 million. He wondered why the power project
was not housed under AIDEA.
Ms. Fisher-Goad replied that in 2008 the intent was to
further distinguish AEA's mission as a corporation. She
relayed that AIDEA was a sister corporations to AEA and
should remain separate and distinct. The mission of AIDEA
was one of jobs and economic development. The two executive
directors were created with the intention that AIDEA and
AEA would pursue their missions separately.
Representative Edgmon hoped that the AEA could grow into a
recognized government department.
3:14:33 PM
Representative Guttenberg asked for a list of opportunities
for public comment on the project throughout the process.
Ms. Fisher-Goad said that the development of the
preliminary decision document had included a public hearing
process through the Railbelt. She assured the committee
that the legislation allowed for the public hearing
process.
Representative Doogan WITHDREW his OBJECTION.
There being no further OBJECTION CSHB 103(ENE), 27-GH1822\B
was ADOPTED as a working document before the committee.
Vice-chair Fairclough opened public testimony.
BOB PENNEY, SOLDOTNA (via teleconference), testified in
support for HB 103. He provided a brief history of the
project. He believed that the project should be funded in
full with state dollars.
3:23:51 PM
BECKY LONG, TALKEETNA (via teleconference), spoke in
opposition to HB 103. She opined that there had been a lack
of public hearing by AEA in the affected communities. She
stressed that there needed to be a meaningful, public
review on the state level, for the project. She expressed
concern that the state was committing significant financial
resources to one project. She felt that the AEA should be
required to conduct a state public process regarding the
Susitna project, and that an independent financial review
of the cost benefits of the proposal that reflected the
true overall cost of the project. She added that the
Talkeetna area would be the first area that would feel the
economic ramifications. She shared that studies had shown
that a 50 percent improvement in railbelt electrical
efficiencies could generate up to a $947 million increase
in economic output, $290 million in wages, $53 million in
business income and 9350 new jobs. She testified that she
was opposed to the Susitna project. She said that public
testimony for HB 103 had been the only means for the public
to express their opposition to the Susitna project.
3:29:51 PM
Representative Edgmon commented that talks with the AEA had
revealed that there would be further public involvement in
the process.
Representative Gara shared his frustration that there would
be significant impact to fisheries because of the Susitna
project. He stated that he had written AEA and the
Department of Fish and Game and they had replied that the
fisheries impacts had not been fully assessed at the time.
He wondered how an impact report could be determined
without a thorough assessment.
Vice-chair Fairclough closed public testimony.
Representative Gara pointed out that the bill did not
mention the Susitna project specifically but did allude to
it. He wondered whether the committee would have the
opportunity to delve into the economics of the Susitna
project before passing the bill.
Vice-chair Fairclough responded that it would be up to the
discretion of the chair.
Representative Gara pointed out to the committee that the
bill would move $67 million to AEA and that the governor
had announced he would use the money to start up work on
the Susitna Hydro project. He surmised that the legislation
was directly linked to the Susitna project. He felt that
debates surrounding HB 103 would be the only tome the
committee would have the opportunity to discuss the
economics of the project.
3:34:21 PM
Representative Doogan requested the official name of the
project at Susitna.
Ms. Fisher-Goad replied that the AEA referred to the
project as both the Susitna and Wantana projects; the two
were interchangeable in some respects. The site for the
project was at Wantana. She added that the bill did not
appropriate $67 million to the AEA; the capital
appropriation would AEA to move forward with the
preliminary permit application and the licensing and design
process. She offered that the FERC process could be further
discussed at the convenience of the committee.
Representative Doogan understood that the $67 million was
going to be used exclusively for work on Susitna/Wantana
project.
Ms. Fisher-Goad clarified that there were two items that
would allow AEA to move forward on the project: the
legislation and capital appropriation. She stressed that HB
103 would not move the funds. The governor's capital budget
proposed $65.7 million to AEA, as capital appropriation, to
move forward with the project.
Vice-chair Fairclough closed public testimony.
HB 103 was HEARD and HELD in committee for further
consideration.