Legislature(2021 - 2022)ADAMS 519
04/28/2022 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB172 | |
| HB170 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 413 | TELECONFERENCED | |
| + | HB 350 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 172 | TELECONFERENCED | |
| += | HB 170 | TELECONFERENCED | |
HOUSE BILL NO. 170
"An Act establishing the Alaska energy independence
program and the Alaska energy independence fund in the
Alaska Industrial Development and Export Authority;
and providing for an effective date."
10:13:24 AM
Co-Chair Merrick indicated that the committee would
continue to hear amendments on HB 170, starting with
Amendment 8 Replacement.
Representative LeBon WITHDREW Amendment 8 Replacement.
10:14:11 AM
Co-Chair Merrick MOVED to ADOPT Amendment 9 (copy on file):
Page 11, Line 5
Delete "2022"
Insert "2023"
Vice-Chair Ortiz OBJECTED for discussion.
Co-Chair Merrick reviewed the amendment which was a
technical date change from January 2022 to January 2023.
Vice-Chair Ortiz WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment 9 was ADOPTED.
10:14:41 AM
Representative LeBon MOVED to ADOPT Amendment 10, 32-
GH1074\W.14 (Klein, 4/27/22) (copy on file):
Page 7, line 13, following "AS 44.99.115":
Insert "and prioritize programs that support
energy efficiency and renewable energy projects for
residential buildings, commercial buildings, and
community facilities"
Page 7, line 19, following "loaned,":
Insert "the amount loaned in communities that
receive, or have a resident who receives, power cost
equalization under AS 42.45.100 - 42.45.150,"
Page 9, following line 3:
Insert a new subsection to read:
"(d) In this section, "community facility"
means a water and sewer facility, public outdoor
lighting, a charitable educational facility, or
another community building whose operations are not
paid for by the state, the federal government, or
private commercial interests."
Page 9, lines 16- 19:
Delete all material.
Page 10. following line 16:
Insert a new bill section to read:
"*Sec. 12. The law of the State of Alaska is by
adding a new section to read:
CLEAN ENERGY FUND: INITIAL APPROPRIATION. At
least 35 percent of the initial appropriation made by
the Thirty-Second Alaska State Legislature to the
Alaska clean energy fund for loans and other forms of
financing for sustainable energy development under AS
44.88.450 - 44.88.456 must be distributed in
communities that receive or that have residents who
receive, cost equalization under AS 42.45.100 -
42.45.150.
Renumber the following bill sections accordingly.
Co-Chair Merrick OBJECTED for discussion.
Representative LeBon read from the amendment. He explained
that community facilities were defined in the same way as
in the power cost equalization (PCE) statutes. He thought
that the addition of the language in the amendment would
better direct the Alaska Industrial Development and Export
Authority (AIDEA) to develop programs that would help most
Alaskans. He reiterated that the monies were for loans, not
grants, and that AIDEA could not force people to undertake
or apply for loans. He hoped the amendment was a workable
solution to ensure that rural Alaska did not get left
behind.
10:18:28 AM
Representative Edgmon asked how commercial buildings would
be impacted by the legislation. He wondered if a title
change was necessary for the bill due to the numerous
references to PCE.
Representative LeBon responded that he envisioned the
program to benefit commercial buildings. He could not
anticipate whether a large commercial property would apply
for the program. He did not know if the intent of the bill
was to exclude privately owned properties. He hoped the
program would elicit projects that the legislature wanted
to support. He asked Representative Edgmon to repeat his
second question.
Representative Edmon repeated his question.
Representative LeBon thought Legislative Legal Services
should comment.
Co-Chair Merrick indicated her staff was trying to get
someone on the line to respond to the question.
Representative Josephson understood that when the funds
were appropriated by the legislature, rural Alaska would
receive a 35 percent share of the appropriation. After the
initial appropriation, rural Alaska would have no assurance
of receiving additional funds. He asked if he was correct.
Representative Wool responded that he had an earlier
amendment that addressed the issue. The amendment included
PCE language and acted as a defining statement. He did not
think the bill was a grant program, which was why the
initial language was difficult. He thought that AIDEA was
trying to reduce the risk associated with the loans to
attract commercial banks. If additional funds became
available after the initial appropriation, there was
nothing preventing a portion of the funds from being
distributed to rural Alaska. The intent was to ensure that
35 percent of the initial appropriation would go to rural
Alaska because it was not possible to force a loan onto
anyone. He thought a commercial building like the BP
building in Anchorage would still be eligible because the
building itself was not responsible for fossil fuel
projects.
Co-Chair Merrick relayed the names of people available
online for questions.
10:25:43 AM
Representative LeBon thought the AIDEA representative might
want to respond.
Representative Edgmon suggested the BP buildings might want
to add solar panels. He did not see anything in the bill
that was tied to energy standards.
10:26:33 AM
MORGAN NEFF, CHIEF INVESTMENT OFFICER, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY (via teleconference),
replied that the programs that AIDEA had been envisioning
under the green bank were similar to what Representatives
Wool and LeBon had been describing. He intended there to be
incentives to attract the private capital to adopt new
loans and to engage with all communities in Alaska.
Representative Josephson appreciated Representative Wool's
answer regarding the fund appropriations to rural Alaska,
but the response went in the direction he feared. He was
concerned that rural Alaska would only receive
appropriations from the first tranche of funds.
Representative Wool replied that the first tranche of funds
had a specific target. Anyone in Alaska could apply for the
remainder of the funds and there was no limitation. It was
important to first evaluate from where the loans would
derive and who would request the loans. Designating 35
percent to rural Alaska was a good start and subsequent
appropriations could be made in the future. He thought the
language in the bill was improved by the amendment.
10:31:03 AM
Representative Thompson thought the language stated that
the appropriations could be up to 35 percent.
Representative Wool corrected Representative Thompson by
explaining that the bill used the term, "at least." The 35
percent appropriation was the minimum.
10:32:14 AM
Representative LeBon explained the meaning of credit
enhancement. Banks typically looked to secure a loan with
the property in question, and AIDEA might partner with the
bank for financing purposes under the bill. The bank and
AIDEA would look for equity on behalf of the owner, which
would be considered a credit enhancement. The green bank
could also finance a project in a subordinated position and
stretch out the financing at a lower rate than AIDEA or the
commercial bank. He would also look at the possibility of
partnering with the United States Department of Agriculture
(USDA) through the loan guarantee program. It was
conceivable that the commercial banks might want to partner
with a rural program and finance a project in rural Alaska,
which would be another credit enhancement. He noted that
the enhancements could get creative. If multiple lenders
were involved, the risk for each party would decrease and
willingness to participate in financing would increase.
Banks could also be motivated to finance projects to meet
investment opportunities to underserved communities. He
thought that the success of the program would hinge on the
willingness of commercial banks to offer the loans to meet
federal obligations under the Community Reinvestment Act.
10:35:36 AM
Representative Wool suggested that if a person wanted to
put up solar panels on their house, they could get a short-
term loan at a high interest rate. He thought the interest
rate made solar panels not feasible for many people. The
program would help to stretch out a loan for a longer
period of time at a lower interest rate. He thought it
would be an improvement.
10:36:43 AM
Co-Chair Merrick asked Ms. Emily Nauman to comment on a
potential title change.
Representative Edgmon restated his question and asked if a
title change to include a reference to PCE would be needed
if Amendment 10 were to be adopted.
EMILY NAUMAN, DEPUTY DIRECTOR, LEGISLATIVE LEGAL SERVICES,
ALASKA STATE LEGISLATURE (via teleconference), did not
believe a title change would be needed. She thought the
changes would fall under the responsibility of AIDEA. She
would have the drafter of the amendment look and get back
to the committee.
Co-Chair Merrick WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment 10 was ADOPTED.
Representative Wool WITHDREW Amendment 1.
10:39:00 AM
Representative Wool MOVED to ADOPT Amendment 2,
32-GH1074\W.11 (Klein 4/20/22) (copy on file):
Page 9, following line 7:
Insert a new subsection to read:
"(b) The authority may not use the Alaska clean
energy fund established in AS 44.88.452 for
construction or renovation of fossil fuel power
generation projects."
Reletter the following subsections accordingly.
Representative Rasmussen OBJECTED for discussion.
Representative Wool MOVED to ADOPT conceptual Amendment 1
to Amendment 2 (copy on file).
Page 1, lines 3-4 of the Amendment
Delete all material
Replace with
(b) The authority may not use the Alaska
clean energy fund established in AS
44.88.452 for construction or renovation of
power generation projects greater than one
megawatt that use fossil fuel combustion.
Co-Chair Merrick OBJECTED for discussion.
10:39:29 AM
AT EASE
10:40:11 AM
RECONVENED
Co-Chair Merrick invited Representative Wool to restate his
motion.
Representative Wool MOVED to ADOPT conceptual Amendment 1
to Amendment 2 [SEE ABOVE].
Co-Chair Merrick OBJECTED for discussion.
Representative Wool reviewed the conceptual amendment. He
explained that the amendment would prevent the fund from
being used for construction of fossil fuel power generation
projects. However, he acknowledged that much of rural
Alaska was reliant on power houses, many of which needed to
be upgraded. If the conceptual amendment was adopted, it
would allow monies from the fund to be used for power
generation projects of fossil fuel of one megawatt or less,
which would cover most power houses. He explained that
power houses typically used "fossil fuel combustion," which
was included in the conceptual amendment.
10:42:52 AM
Representative Rasmussen asked if Mr. Curtis Thayer was
online.
Co-Chair Merrick asked Mr. Thayer if he had a copy of the
conceptual amendment.
Representative Rasmussen wondered if the 190 diesel power
houses across the state would be precluded from the fund if
the conceptual amendment passed that restricted
construction or renovation of power generation projects
larger than one megawatt. She was concerned that it would
constrain communities that wanted to participate and start
moving towards renewable energy.
10:44:09 AM
CURTIS THAYER, EXECUTIVE DIRECTOR, ALASKA ENERGY AUTHORITY,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT
(via teleconference), replied that the amendment would fix
the issue identified by Representative Rasmussen. He
explained that the aforementioned 190 power houses were
under one megawatt. He added that it would also allow for
communities to switch between energy sources and better
transaction away from fossil fuels. He supported the
amendment and thought it would be beneficial for rural
Alaska.
Co-Chair Foster appreciated the amendment. He asked for
more detail about the 190 communities. He wondered if hubs
such as Nome, Dillingham, and Bethel were above one
megawatt.
10:46:47 AM
AT EASE
10:57:28 AM
RECONVENED
Co-Chair Foster relayed that Nome had two 5.4 megawatt
generators and would be more comfortable if the limit in
the amendment was closer to six megawatts. He wanted to
learn more about other communities and come back to the
amendment.
Representative Wool thought that one megawatt covered most
of the small communities. He acknowledged that hub
communities had larger power generation needs. He did not
want to inhibit enhancement to facilities or the addition
of green energy. If the Nome, Kotzebue, or Dillingham hubs
wanted to add solar panels to their capacity, he did not
want it to be interpreted as renovation of fossil fuels. He
wanted communities to be able to add other forms of energy
to the grid and did not want it to be limiting.
Mr. Thayer responded that he was in alignment with
Representative Wool in that they both acknowledged that
adding a renewable energy source in a community would
necessitate renovation to the power house first. For
example, Kotzebue was developing an ambitious wind program,
but it had to connect to the power house. He did not want
that to be a disqualifier.
Representative Wool agreed and did not view the renovation
as being focused on the power house, but on the grid.
However, if it was considered renovation to a power house,
he was happy to take the word "renovation" out of the
amendment. His goal was to discourage new construction of
larger power houses that would generate fossil fuels.
Mr. Thayer indicated removing the language relating to
renovation would help provide clarity. Many rural
communities in the state were already developing renewable
energy sources, but all projects were also interfaced with
power houses. He thought the legislation would increase the
availability of more loans in rural Alaska.
Representative Wool thought taking out the word
"renovation" would alleviate the issue.
11:03:21 AM
Representative Johnson suggested that most places with a
large energy capacity would need a hybrid system. Power
needed to be consistent, and she did not think green energy
was consistent without a back-up. She would like someone to
speak to the integration of technologies. She questioned
how to leave one technology behind while moving towards a
different energy source. She thought Alaska should have all
energy sources available in order to avoid short-changing
any communities.
Mr. Thayer agreed with the comments by Representative
Johnson. He acknowledged that diesel power houses were the
backbone of many communities and when communities
introduced a green source of energy, battery technology was
needed. When the wind stopped blowing, the battery allowed
a smooth transition back to diesel. It was an evolving
topic in terms of finding the right mix for each community.
The next step would be financing the projects, especially
in rural Alaska.
11:07:14 AM
Co-Chair Foster was okay with moving forward with the
amendment knowing that it covered most of the smaller
villages in Alaska. He thought Nome might not qualify for
the fund. He could introduce an amendment on the floor if
he talked to his utility manager and found a change was
needed.
11:08:14 AM
AT EASE
11:09:08 AM
RECONVENED
Representative Rasmussen WITHDREW the OBJECTION.
There being NO further OBJECTION, conceptual Amendment 1 to
Amendment 2 was ADOPTED.
Co-Chair Merrick indicated that the committee would now
discuss Amendment 2 as amended.
11:09:46 AM
Representative Edgmon thought the bill benefited larger
communities and would benefit smaller communities as the
program grew. He was concerned that the committee had not
yet heard utility managers' opinions on the bill. He did
not think he had enough information to support the bill.
Co-Chair Merrick indicated it was not her intent to move
the bill out of committee yet. She offered to invite
testifiers to provide more information at subsequent
hearings of the bill.
Representative Edgmon appreciated it.
Representative Wool reviewed Amendment 2. The motivation
for the amendment was to prevent the development of new
fossil fuel sources. He thought adding renewable energy
sources to an existing power house would be acceptable and
he wanted to encourage it. He hoped the program would
succeed and that many people would apply for loans. He
wanted to take large fossil fuel power generation plants
reliant on diesel off the table.
11:14:02 AM
Representative Carpenter was concerned that during the
transition to green energy sources, there was a period of
time where "clean fossil fuel" would be needed to
facilitate a clean transition. He would not want to
prohibit developing renewable energy sources but was
concerned that sources such as wind and solar would not be
reliable enough in Alaska. He did not want to move towards
green technology that did not meet the needs of Alaska. He
did not think he could convert from diesel to natural gas
in his home if the bill passed.
Representative Edgmon had a question for Mr. Weitzner to
think about and respond to in future meeting. He asked if
the state's ability to attract outside investors would be
enhanced if additional safeguards were inserted into the
bill.
Representative Wool assured Representative Carpenter that
he could convert from diesel to natural gas in his house
already if he wanted to, unless his house burned more than
one megawatt which was unlikely. He reiterated that the
funds were intended for smaller projects for smaller
consumers. He did not think big power companies would
benefit.
11:19:54 AM
Representative Carpenter agreed that his house did not
generate more than one megawatt. However, he suggested that
there were businesses in the state that did. He did not
think there would be a lot of demand and that the amendment
would not cover a significant number of businesses.
11:20:44 AM
AT EASE
11:21:04 AM
RECONVENED
Representative Rasmussen WITHDREW the OBJECTION.
Representative Carpenter OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Josephson, LeBon, Ortiz, Rasmussen, Thompson,
Wool, Edgmon, Foster, Merrick
OPPOSED: Johnson, Carpenter
The MOTION PASSED (9/2). There being NO further OBJECTION,
Amendment 2 as amended was ADOPTED.
11:22:10 AM
Co-Chair Merrick concluded the amendment process on HB 170.
She noted that Mr. Thayer had some updated information to
share.
Mr. Thayer responded to the earlier discussion about the
capacities of regional hub powerplants. He relayed that
Bethel generated 15 megawatts, Kotzebue was just under 14
megawatts, Nome was 18 megawatts, and Dillingham was 6.3
megawatts. The communities also had some wind turbines that
were incorporated into the numbers, and most of the
turbines were running about 1.5 to 2 megawatts.
Co-Chair Foster clarified that Nome's 18 megawatts were
comprised of various power generating modules. He thought
the amendment was referring to each unit separately and not
the cumulative number.
11:23:52 AM
Representative Edgmon relayed he had heard from his utility
manager that Dillingham peaked at about 6.5 megawatts in
the winter, but at less difficult times of the year it
averaged around three megawatts.
HB 170 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick reviewed the agenda for the following
meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 350 Sectional.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 350 |
| HB 350 Sponsor Statement.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 350 |
| HB 350 Supporting Docs.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 350 |
| HB 350 ASD Bond Debt vs Facility Backlog for HB 350 070121.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 350 |
| HB 350 Sectional.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 350 |
| HB 170 Amendment 10 LeBon.Wool W.14 042822.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 170 |
| HB 170 Conceptual Amendment 1 to Amendment 2 Wool 042822.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 170 |
| HB 170 - AIDEA Response Letter to HF Committee 042822.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 170 |
| HB 226 Additional Documents- DOL Presentations 4.29.22.pdf |
HFIN 4/28/2022 9:00:00 AM |
HB 226 |