Legislature(2023 - 2024)ADAMS 519
04/25/2024 10:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB307 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 307 | TELECONFERENCED | |
| += | HB 154 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 25, 2024
10:08 a.m.
10:08:08 AM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 10:08 a.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Arthur Miller, CEO, Chugach Electric; Brad Janorschke,
General Manager, Homer Electric Association, Julie Estey,
Chief Strategy Officer, Matanuska Electric Association.
SUMMARY
HB 307 INTEGRATED TRANSMISSION SYSTEMS
HB 307 was HEARD and HELD in committee for
further consideration.
HB 154 AK HOUSING FINANCE CORP: SUSTAIN ENERGY
HB 154 was SCHEDULED but not HEARD.
Co-Chair Foster reviewed the meeting agenda.
HOUSE BILL NO. 307
"An Act relating to the taxation of independent power
producers; and increasing the efficiency of integrated
transmission system charges and use for the benefit of
ratepayers."
10:10:41 AM
ARTHUR MILLER, CEO, CHUGACH ELECTRIC, noted that there was
independence between the GRIP funding opportunity and the
transmission legislation. The transmission lines were
critical under GRIP but no other legislation was necessary
He introduced himself and the PowerPoint presentation
"House Bill 307" dated April 25, 2024 (copy on file).
Mr. Miller began on slide 2 and explained wheeling. He
asked how the costs were recovered. The costs were mostly
recovered through what happened when power was transmitted
through different regions and pay for each segment of the
transmission line. He remarked on the importance of no
additional cost, as there was a reallocation of the costs
among the different utilities. He stated that
theoretically, 113 rates would serve customers. He noted
the reliance on tariffs with a well-established precedent
10:15:24 AM
Mr. Miller continued that the other factor he wanted to
mention on slide 2 was that when they received wheeling
revenue, the customers were paying for the use of the
transmission system.
Mr. Miller continued on slide 3, and stated that wheeling
was not a profit center. He remarked that revenue was
approximately $30 million, and all transmission costs would
be recovered by retail members powered through the
transmission system. He noted that the bar remained flat at
$30 million, but the additional revenue was a credit to the
customers.
Representative Stapp remarked that the Bradley Lake power
that was purchased by the utility in Fairbanks, first went
through the Chugach infrastructure.
Mr. Miller agreed.
Representative Stapp surmised that there was a toll on the
transmission line, and the money from that toll was
returned to the Chugach rate payers.
Mr. Miller agreed. He explained that he did not look at it
as a toll but as use payment for use of the transmission
system. He explained that the Chugach customers paid more
for the use of that power than Golden Valley, because of an
agreement in the 1980s called the public service agreement.
He remarked that Chugach gave a 10 percent discount on the
wielding of Bradley Lake power. He stated that the
difference was made up by the Chugach retail members.
10:20:19 AM
Mr. Miller continued on slide 4. He stated that HB 307
represented quality work. He stated that Chugach thought
that more work needed to be done. He stated that in Section
42.05.915, it was shown what was included and not included
in a tariff. He stated that a tariff was not economically
driven, but reliability of the transmission system was what
was critical. He stated that it was important to identify
the importance of ancillary services, which were primarily
generation resources that supported the wheeling of power
throughout a system.
10:25:56 AM
Representative Josephson wondered whether SB 207 would
satisfy the concerns outlined in slide 4.
Mr. Miller responded in the negative, but he did not think
the work was complete.
Representative Coulombe relayed that her biggest concern
was the cost the last time the bill was presented. She
asked about slide 3 which seemed to confirm her suspicions.
She wondered whether the income from the other utilities
would reduce the cost for Chugach Electric customers.
Mr. Miller responded in the affirmative.
Representative Coulombe Asked about the origin of the 10
percent discount.
Mr. Miller replied that there was an agreement in the late
1980s, which was a time of evaluation of the project. He
stressed that the intent was to deliver the utilities to
those who needed it.
10:30:15 AM
Representative Coulombe wanted to understand what the bill
would do for the rates across the rail belt and asked if
there were details around winners and losers.
Mr. Miller replied that in general, the transmission costs
were allocated on a capacity structure
Representative Stapp asked about ancillary services.
Mr. Miller remarked that there were standard services that
were the same and formulistic based, but stated that each
cost structure would be different.
Representative Stapp queried the definition of "generation
rates."
Mr. Miller replied that the rate related to the generation
plants that provided the service.
Representative Stapp wondered whether the ancillary
services would be reflected in the transmission costs to
equalize the diversity and generation.
Mr. Miller responded it was up for determination because
there needed to be a recognition of the importance of
ancillary services. He explained that the ancillary
services were not added to the wheeling rate, and were a
separate charge.
Representative Stapp talked about the moment when the new
power generators came online. He wondered whether the
capital intensive was state capital or Chugach Electric
capital.
Mr. Miller responded that it was all of the above.
Representative Stapp wondered why there was not an
aggregate cost.
10:38:25 AM
Mr. Miller responded that Golden Valley got the benefit of
certain aggregated services that were provided by Bradley
Lake, without being interconnected in the system.
Representative Stapp wondered why there was not a wheeling
charge for the entirety of the wheeling system.
Mr. Miller responded that ultimately, any price distortion
would be supported by Chugach.
Representative Ortiz asked if there would be an impact
outside of the rail belt.
Mr. Miller replied that it was written for the rail belt
utilities.
Representative Ortiz noted that the bill addressed
independent power producers and transmission systems, but
there was no defined "rail belt."
Mr. Miller responded that the language could be modified to
specify the location.
10:43:54 AM
Representative Galvin was concerned that it would not
immediately lower rates for anchorage.
Mr. Miller thought having the utilities continuing to work
together would lower the cost eventually overall.
Representative Galvin asked if there was anything the leg
could do to build or reinforce lower rates.
Mr. Miller responded that the biggest thing was to avoid
overly prescriptive legislation.
10:49:56 AM
Representative Hannan remarked that the utilities had said
that the concern was that it was too broad, and stressed
that the rail belt should not see exclusion.
Mr. Miller replied that he would not have a problem
limiting it to the rail belt.
10:53:58 AM
Representative Stapp wondered if power being wielded was
being sold cheaper.
Mr. Miller responded in the affirmative.
Representative Stapp wondered whether it was a 10 percent
difference.
Mr. Miller responded in the affirmative.
Co-Chair Edgmon stressed that the issue was more than
simply integrating the entire system.
Mr. Miller thanked the committee for its time.
Co-Chair Foster wanted to make sure that they were not
rushing it.
11:00:34 AM
BRAD JANORSCHKE, GENERAL MANAGER, HOMER ELECTRIC
ASSOCIATION, he recommended that they slow down the
legislation. He stressed that the issue was complicated,
and wanted to ensure that he understood that there was an
actual problem.
11:07:10 AM
Representative Stapp asked
Mr. Janorschke replied that the utilities would continue to
import energy and use gas.
Representative Stapp asked about the pros and cons for the
bill.
Mr. Janorschke felt that lowering the cost for everyone in
the state was important, but he did not feel that uniting a
transmission system would make the lower cost possible.
Representative Stapp did not disagree, and he asked if the
leg should slow the match for GRIP funding.
Mr. Janorschke replied that the GRIP funding was not tied
to the legislation.
11:10:58 AM
Representative Cronk asked for a definition of I-lending.
Mr. Janorschke responded that it was when there was a
physical separation between all others on the rail belt.
Representative Cronk asked if ERO was the best structure.
Mr. Janorschke responded that he had not been too involved
in the process, so he could not express an accurate
opinion.
11:15:49 AM
Representative Cronk asked what the most pressing issue was
for utilities
Mr. Janorschke responded that it was gas.
Representative Cronk remarked that a majority of his
district was high cost and he was willing to do whatever
was necessary to get the rate down.
Representative Hannan wondered whether the committee
substitute for SB 217 should move forward in the
legislative process.
Mr. Janorschke responded that he had not seen the CS for
SB 217. He stressed that it was a complicated business and
everything that he had seen so far focused on the
transmission system. He wanted to hear what the regulatory
experts had to say.
11:19:42 AM
Representative Hannan asked whether or not a transmission
bill should see passage.
Mr. Janorschke preferred not to see a transmission bill
pass in the current session.
Representative Coulombe understood the rate issue was
something that needed to be solved, and stated that what
seemed to be unspoken was renewable energy. She asked if
there was a problem she was not understanding.
Mr. Janorschke replied that there was a large solar project
approved by the board, which was the largest battery
facility within 500 miles. He stressed that there was risk
associated with having one fuel and one supplier, so if it
was a large solar project, the bank would still need to be
paid for the mortgage through other generators of power.
Representative Coulombe remarked that the transmission line
was connected but not integrated would the bill help
renewables come online.
11:24:35 AM
Mr. Janorschke replied in the negative, and explained that
the biggest thing for renewables was a way to control.
Co-Chair Edgmon stressed that the legislature had been
dealing with energy issues all session and felt that action
should not be taken in the current session.
Mr. Janorschke agreed that it was in best interest of
everyone to get the correct legislation the first time.
11:29:33 AM
Co-Chair Edgmon he felt that there was a need to act in the
current session, and he was listening carefully and wanted
to factor it in to his decision.
Representative Galvin queried the reason for waiting.
Mr. Janorschke replied that conversations had only begun in
the previous November, so more time was required for the
legislation.
Representative Galvin asked if the group had been deputized
as the organization that was to better inform the governor
and legislature.
Mr. Janorschke was not sure about deputized individuals.
11:34:52 AM
Representative Stapp asked about the most critical issue
was the gas in Cook Inlet. He wondered what would help
Homer Electric as it related to gas.
Mr. Janorschke replied that he was not a gas expert.
Representative Stapp asked if the legislature should act on
the gas issue in the current session.
Mr. Janorschke replied that it was a very complicated
issue.
Representative Cronk represented rural district and rail
belt affected the rates in his district, however, he would
support a lower rate in Anchorage.
Representative Hannan asked about importing gas and whether
there was any legislative action that could be taken for
the ability to pursue it.
Mr. Janorschke responded that he was working with them on
that issue.
Representative Hannan surmised no leg action was needed for
the discussions to continue.
Mr. Janorschke responded in the affirmative.
11:40:39 AM
Co-Chair Johnson queried the status of the contract.
Mr. Janorschke replied that a past contract expired at the
end of March, and there was a one-year contract with Enstar
as part of the integration effort.
11:44:54 AM
AT EASE
11:45:51 AM
RECONVENED
11:46:28 AM
JULIE ESTEY, CHIEF STRATEGY OFFICER, MATANUSKA ELECTRIC
ASSOCIATION, she relayed that it was a complex issue and
MEA came to Alaska as a "short term loser" members did not
pay a lot of transmission costs. She supportive of the bill
as a new path forward.
Co-Chair Johnson wondered what would happen if the bill did
not move forward in the current year. She also asked about
the disagreements among the coops, and how those were
finding resolution.
Ms. Estey responded that the disagreements were a function
of the coops, and were all situated differently. She
stressed that there was an attempt to fix those overlays.
She remarked that there were different options, and each
provider was different. She stressed that there had been
agreements among the CEOs to determine solutions.
12:03:17 PM
Ms. Estey urged to take action on the bill.
Representative Hannan asked about the defining the
transmission as rail belt transmission exclusively.
Ms. Estey she would support whatever the southeast
communities felt was necessary.
12:12:52 PM
Representative Josephson asked for an email of a list of
the concrete bullet points.
Ms. Estey replied that MEA supported the passage of the CS
as is because although it was not perfect, the items needed
to see settlement.
Co-Chair Foster asked for a short summary of the CS.
Ms. Estey stressed that MEA was looking at all options.
12:16:39 PM
Co-Chair Foster intended to pick up the bill at the
afternoon meeting.
HB 307 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
12:18:32 PM
The meeting was adjourned at 12:18 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 154 Amendments 1-7 042324.pdf |
HFIN 4/25/2024 10:00:00 AM |
HB 154 |
| HB 307 Chugach Electric PP 042524 (2).pdf |
HFIN 4/25/2024 10:00:00 AM |
HB 307 |
| HB 392 Public Testimony Rec'd by 042824.pdf |
HFIN 4/25/2024 10:00:00 AM |
HB 392 |