Legislature(2015 - 2016)BARNES 124
04/13/2015 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| HB169 | |
| HB66 | |
| HB12 | |
| HB122 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 12 | TELECONFERENCED | |
| *+ | HB 169 | TELECONFERENCED | |
| += | HB 66 | TELECONFERENCED | |
| *+ | HB 122 | TELECONFERENCED | |
HB 169-RCA: RAILBELT ELECTRIC UTILITY REPORT
3:19:45 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 169, "An Act directing the Regulatory Commission
of Alaska to provide a report to the legislature relating to
electrical transmission in certain areas of the state; and
providing for an effective date."
3:20:20 PM
KONRAD JACKSON, Staff, House Labor & Commerce, Representative
Kurt Olson, Chair, stated that HB 169 would direct the
Regulatory Commission of Alaska (RCA) to review and make
recommendations regarding a process whereby an Independent
Railbelt Transmission Operator would be created. The Railbelt
energy system consists of an interconnected electrical
transmission system in Southcentral Alaska which encompasses the
Bradley Lake hydroelectric plant on Kachemak Bay near Homer
north to Fairbanks. The interconnection of the communities by
these transmission lines helps keep a significant number of
people of Alaskans safe and secure. With long distances between
utility companies and their generation facilities, the
interconnected system is of great importance. The interconnect
system helps bring reliable electricity to a large percentage of
Alaskans should not to be taken lightly, he said.
MR. JACKSON said the transmission authority proposed to be
evaluated by the RCA would act as more of a "craigslist" type of
authority. Instead of mandating utilities pledge their assets
to one controlling entity, this concept would allow continued
local control of assets while at the same time maximizing the
value and reliability of the interconnected system. Using this
approach, excess power could be posted as available and be
purchased as needed by any utility. This would promote usage of
the most economical power along the interconnected system at all
times. Without local control of assets, some utilities stand to
be losers while others stand to gain from these losses.
Consumer pricing and reliability across the Railbelt is critical
for any transmission company to work in the long-term.
3:22:35 PM
MR. JACKSON said that willing participation and continued local
control of assets should also be considered critical as Alaska
continues to look towards an ISO [Independent System Operator]
concept along the Railbelt. Last year the RCA was tasked with
the job of reporting to the legislature whether creating an
independent system operator was the best option to provide for
effective and efficient electrical transmission. The RCA is
nearing completion on its work and the intent of HB 169 is not
to interrupt the foregoing work, but to allow the legislature to
consider any further direction to the RCA. He characterized HB
169 as a first step in that regard. In response to
Representative Kito, he stated that House Bill 340 was
considered by the legislature in 2014 and directed the RCA to
look at a similar concept with an independent system operator
(ISO) and report back to the legislature. This bill refers to a
slightly different ISO and the reporting date falls one year
later, he said.
3:25:00 PM
REPRESENTATIVE KITO, referring to the fiscal note, suggested
some cost should be associated with it, but the fiscal note was
identified as indeterminate through 2021. He questioned why the
report would still be ongoing in 2021 and also said he was a
little confused why the fiscal note was indeterminate. He
further asked for clarification on the source of funding for the
report.
MR. JACKSON offered his belief that last year House Bill 340 had
a fiscal note. He deferred to Mr. Patch, RCA to speak to the
fiscal note. He surmised that some of the funds might be
available for this report, but Mr. Patch could better answer
questions on the fiscal note.
3:26:25 PM
BRAD JANORSCHKE, General Manager, Homer Electric Association
(HEA), stated that the RCA has been directing a study which was
funded during the last legislative session to consider whether
creating an ISO or similar structure for the Railbelt
transmission system is the best option for effective and
efficient use of the transmission system. Although the RCA's
efforts were appreciated, he offered his belief that HB 169
would provide additional direction and clarity on the RCA's
analysis. This bill would direct the RCA to evaluate the
creation of an independent entity to manage the transmission
system and the entity, regulated by the RCA, and must meet
criteria the Homer Electric Association (HEA) has identified as
important. The entity would be required to attain a Certificate
of Public Convenience and Necessity from the RCA and operate
under a tariff. Secondly, participation in such an entity would
be voluntary, he said, which is a critical attribute for HEA.
While each utility's participation is important, each utility
should voluntarily enter into the arrangement since a voluntary
model encourages cooperation and reduces the magnitude of
winners and losers. He said he recently talked to Alaska
Municipal Light & Power's (AML&P) chair, Jim Trent, who couldn't
participate today since he was attending an RCA hearing.
However, Mr. Trent advised him that he also felt very strongly
that any entity created should be voluntary in order to better
allow for consensus on a common set of principles and standards
and to mitigate any losers in the process. Lastly, the entity
envisioned in HB 169 will allow for continued local control of
assets, while at the same time it will maximize the value and
reliability of an interconnected system, he said.
3:29:20 PM
MR. JANORSCHKE said that the entity envisioned in HB 169 will
manage and create a voluntary and transparent wholesale energy
market without adding significant administrative overhead, which
will be the most economical distribution of wholesale power on
the Railbelt. He said that HEA has worked with other utilities,
without a middle man, to ask for bids on short term spot market
energy needs, which has been fairly successful. The Railbelt
has been going through some increases and ratepayers and members
have had to shoulder most of those rising costs. Thus the HEA
has tried to mitigate circumstances that will add to the costs.
Last September, all the Railbelt utilities signed a [MOU]
Memorandum of Understanding adopting guiding principles of a
Railbelt "transco" [or transmission company]. This bill appears
to be entirely consistent with those principles, he said. The
entity envisioned by HB 169 would be transparent and
nondiscriminatory and adhere to established planning and
reliability standards. He stated that these standards and
protocols would be based on established objective transmission,
operating, maintenance, planning, and design principles to
promote safety, reliability, and economic efficiencies across
the Railbelt grid.
3:31:16 PM
T.W. PATCH, Commissioner, Chair, Regulatory Commission of Alaska
(RCA), Department of Commerce, Community & Economic Development
(DCCED), stated he is a commissioner and Chair of the Regulatory
Commission of Alaska.
3:31:58 PM
The committee took an at-ease from 3:31 p.m. to 3:34 p.m.
3:34:33 PM
MR. PATCH stated that the RCA recently got a new state phone
system. [Mr. Patch was unable to testify due to technical
difficulties with the audio.]
3:35:46 PM
The committee took an at-ease from 3:35 p.m. to 3:36 p.m. due to
technical difficulties.
3:36:54 PM
CORY BORGESON, President & CEO, Golden Valley Electric
Association (GVEA), stated that the GVEA has 34,000 members and
provides electric service as an electric cooperative owned by
its members in Interior Alaska. He spoke in support HB 169.
The GVEA has faith in the RCA, he said, noting that Mr. Patch
has done a phenomenal job. Most Railbelt utilities generally
support changes in how the Railbelt interties are operated. He
related his understanding that how the Railbelt dispatches its
energy needs to be reevaluated, which is exactly what HB 169 is
intended to do. As Mr. Janorschke mentioned, the composition of
the Railbelt utilities has changed in the past few years and
will continue to evolve as Matanuska Electric Association (MEA)
becomes a self-generating utility. He reported that the
Railbelt consists of five utilities that produce third
generation and there needs to be additional rules and
regulations as the Railbelt becomes "a bigger club."
Historically, three utilities primarily produced all of the
energy, but as the Railbelt has grown and matured some
additional rules, organizations, and structures will be
necessary. The Railbelt utilities have been discussing the need
for change over the past few years.
MR. BORGESON acknowledged that some information that has come to
the legislature has been from independent power producers, who
have had some issues with their ability to connect to the
intertie for their own projects. As utilities have become more
complex, they realize that an evolution is necessary in the
Railbelt. He stated that Golden Valley Electric Association
(GVEA) supports the study that is contemplated in HB 169. All
six utilities have signed the "guiding principles," which
indicates the cooperative spirit that has evolved in the
Railbelt towards this issue. The guiding principles have been
filed with the RCA so they are also available for committee
members to review. One concept in the bill is for a voluntary
organization. As Homer Electric Association stated, that aspect
is important to them. The GVEA believes that the markets will
prevail and as the new system is developed, the Railbelt will
have a better economic dispatch of energy that will save
Alaskans on electric costs. He appreciated this bill coming
into play. He anticipated that discussions will continue over
the summer.
3:41:01 PM
CHAIR OLSON hoped the committee could work on HB 169 over the
legislative interim.
3:42:33 PM
CHAIR OLSON left public testimony open.
[HB 169 was held over.]
The committee took an at-ease from 3:42 p.m. to 3:44 p.m.