Legislature(2021 - 2022)BARNES 124
03/08/2022 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| HB301 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 301 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 301-UTILITIES: RENEWABLE PORTFOLIO STANDARD
[Contains discussion of HB 371, HB 247, HB 358, and SB 179.]
10:19:15 AM
CHAIR SCHRAGE announced that the only order of business would be
HOUSE BILL NO. 301, "An Act relating to the establishment of a
renewable portfolio standard for regulated electric utilities;
and providing for an effective date."
10:20:07 AM
T.W. PATCH, Director of Planning, Alaska Energy Authority (AEA),
Department of Commerce, Community, & Economic Development,
presented a PowerPoint, titled "HB 301 Overview," on behalf of
the sponsor, House Rules by request of the governor. He
referenced slide 2, which listed AEA's programs and services.
He noted that the agency deals with many types of energy issues,
including the ownership of the Bradley Lake Hydroelectric Project
and some other energy transmission assets. He stated that if HB
371 becomes law, AEA would become involved with certain broadband
issues. Per rural Alaska, AEA constructs and maintains bulk fuel
tank farms, diesel powerhouses, and electrical distribution
grids. It also administers the Power Cost Equalization Program
(PCEP). He said if HB 247 becomes law, power cost equalization
(PCE) could be used to address the deferred maintenance for the
bulk fuel tank farms. He continued that AEA engages in
alternative energy and efficiency planning, funding, and
technical assistance. He pointed out that the agency
administers grants and loans through the Power Project Fund,
which is the primary source of funding for the construction of
rural power projects. He added that it also administers grants
through the Energy Builds Program. He explained if [HB 358]
becomes law, the sunset date for the Renewable Energy Fund (REF)
would be extended, and AEA would be submitting renewable energy
projects for the legislature's approval.
10:24:08 AM
MR. PATCH moved to slide 3, which introduced renewable portfolio
standards (RPS) to the committee. He stated that RPS are backed
with incentives, both punitive and fund inducements. He added
that each state's RPS are different, with many accompanied by a
tradable renewable energy credit certificate. He clarified that
credit certificates would not be part of the current
presentation.
10:25:30 AM
MR. PATCH informed the committee that SB 179 is a companion bill
for HB 301. He stated that the purpose of the proposed
legislation would be to promote energy independence, long-term
cost reductions, and the development of competitive markets in
the Railbelt [as seen on slide 4]. Rather than having renewable
energy goals, he said, the proposed legislation would create an
energy standard. He added that having RPS would align Alaska
with 30 other states and create a commitment to transition to a
percentage of renewable power. He expressed the belief that
enacting the proposed legislation would be the best way to
diversify Alaska's supply of energy sources and increase energy
security.
10:26:38 AM
MR. PATCH, in response to Representative Rauscher, explained
that if the proposed legislation is adopted, Alaska would align
with other states by having RPS. He added that each state's
renewable energy standards differ by percentages [of renewable
energy] and projected timelines.
REPRESENTATIVE RAUSCHER, with a follow-up question, asked
whether the standards in the proposed legislation would be
considered high compared to the standards in other states.
MR. PATCH responded that opinions vary. He stated that he has
heard it expressed that [the proposed legislation's requirement]
of achieving an 80 percent standard by 2024 would be
unrealistic, while other opinions have expressed that the
standard is too low. He deferred the question to the
representatives of utility companies scheduled in a subsequent
meeting on HB 301. In response to a follow-up question
concerning Alaska's standards relative to other states, he
offered to supply the information at a later time.
10:29:59 AM
REPRESENTATIVE KAUFMAN asked about "compliance risk." He
referenced the proposed legislation's requirement that a
percentage of power be obtained from a [renewable] source. He
questioned the management of this requirement in regard to
permitting and other risks.
CHAIR SCHRAGE interjected that representatives from the
utilities would be available to answer questions during a future
meeting. He suggested that would be the opportunity to question
feasibility.
10:30:47 AM
MR. PATCH, in agreement, stated that research or utility company
representatives would do better to answer the question. He
noted that the Regulatory Commission of Alaska (RCA) would be
monitoring the accomplishments of the utilities within the
Railbelt, which is the targeted area of the legislation.
10:32:07 AM
CHAIR SCHRAGE pointed out that the legislation's main objective
is listed on slide 4 as long-term cost reduction. He expressed
the understanding that other than providing adequate and
consistent power, the second priority of utility companies is to
provide low rates to customers. He expressed the opinion that
companies would seek cost reductions with or without the
legislation. He requested an explanation of the legislation's
capability to encourage long-term cost reductions outside of the
motivations that the utility companies already have.
MR. PATCH explained one of the attractive elements of renewable
energy is that there would be no cost associated with the
resource. For example, there is no cost to the wind, but there
would be infrastructure cost to harness the wind. He stated
that if the technology is efficient, such as a wind tower,
energy generation could be maximized. He said that presently
energy is gas generated, and the ratepayers would have to pay
the cost to retire the built assets of fuel-fire generation. He
surmised that, if careful over the long run, cost savings could
be achieved with free-power-source energy, but the existing
infrastructure would need to be paid off over time. He
expressed the opinion that there would be an opportunity in the
long term for cost reduction and fuel-cost savings.
REPRESENTATIVE RAUSCHER questioned whether expanding the
renewable energy portfolio would be the best way to diversify
Alaska's energy supply and increase energy security. He voiced
concern about the loss of economic activity if Alaska is forced
to move from reliable sources of energy to intermittent sources.
He questioned whether it would be feasible to attain energy
levels with percentages of intermittent solar and wind. He
suggested that blackouts and brownouts may result and questioned
the methods utility companies would use to provide electricity
in these situations.
MR. PATCH voiced the opinion that not all of the Railbelt
utilities would completely abandon thermal generation capacity.
REPRESENTATIVE RAUSCHER, with a follow-up question, clarified
that [in alignment with the legislation] 80 percent of energy
would be reliant on solar and wind. Considering this, he
questioned whether unforeseen blackouts would result from the
inability to maintain the [energy] supply.
10:38:27 AM
MR. PATCH expressed the belief that [maintaining the energy
supply] would be possible. He stated that, to deal with the
brownouts, plans are being made for improved battery storage in
the Railbelt; once this concern has been addressed, reserves
could be used with a quick-ramp thermal source to address a
catastrophic event and shorten a blackout. He noted that he is
not an expert in power management, but there are qualified
managers who carefully monitor the rate of power available for
distribution to customers.
MR. PATCH, responding to Chair Schrage, explained a brownout
happens when there is insufficient power to reach all the homes
within a distribution area of the utility. If there is
"frequency degradation," electricity will be intermittent.
REPRESENTATIVE FIELDS, with a follow up on Representative
Rauscher's question, voiced the opinion that due diligence has
not been done on HB 301 to justify the [percentages].
Nevertheless, he suggested that by using wind, solar, batteries,
hydro, and some gas capacity, a higher percentage of renewable
energy could be attained. He conjectured that if wind and solar
ramp down, batteries and gas could be used over the course of
the year, and the levels may average out to be 80 percent. He
questioned whether this is a correct perspective of the proposed
legislation.
MR. PATCH responded in the affirmative.
REPRESENTATIVE FIELDS, for the record, emphasized that it is not
certain that a higher [percentage of renewable energy] would
result in blackouts and brownouts. He stated that the
"technology is there," but the right [percentage] has yet to be
demonstrated.
10:40:37 AM
MR. PATCH indicated that Alaska has been considering renewable
energy options in the Railbelt's portfolio mix for 12 years,
since the enactment of a state energy policy. He stated that
the policy has been criticized as being aspirational,
nevertheless there has been an impact. Slide 5 highlighted some
achievements and goals made since the state's energy policy
began. He pointed out that on a national level some states have
had renewable standards as early as 2012, while other states
have had renewable goals. He reminded the committee that Alaska
adopted renewable energy goals in 2010, and the proposed
legislation would create a renewable standard. He offered slide
6 as a snapshot of the changes in the nation.
10:43:49 AM
REPRESENTATIVE RAUSCHER questioned whether there is data which
shows electricity rates changing in states with renewable energy
standards.
MR. PATCH expressed the opinion that the National Renewable
Energy Laboratory (NREL) has data, and several universities have
studied the issue. He said there is probably some data
addressing rate variation and the percentages in these states,
but he has not researched the issue. He offered to follow up
with a supplement on the data after the meeting.
10:45:43 AM
CHAIR SCHRAGE commented that slide 6 shows states shifting from
having no renewable energy policies to either [renewable energy]
goals or standards. He provided the interpretation that states
do not seem to be abandoning [renewable energy] goals or
standards.
MR. PATCH pointed out on slide 8 a snapshot of [energy
production by source] for the nation and Alaska. He listed the
common sources used for energy production: oil and gas, coal,
renewable energy, hydroelectric, and nuclear power. He stated
that 70 percent of the nation's power source is oil and gas. He
provided the following breakdown of Alaska's power sources: 65
percent from oil and gas, 27 percent from hydroelectric
generation, and 2 percent from renewable energy sources. He
explained if the Susitna-Watana Hydroelectric Project is built,
it would produce as much as 58 percent of the energy production
within the Railbelt. He added that with 2 percent from
renewable energy, this would achieve 60 percent, which would
still be short of the 80 percent target [proposed in the
legislation]. He explained that the 80 percent target would not
be realized until after the Susitna-Watana project is fully
operational. He offered that this may address Representative
Rauscher's question on the reasonability of the targeted
percentage. He emphasized that this is just a comment, and he
is not answering Representative Rauscher's question.
10:49:17 AM
MR. PATCH stated that AEA takes pride in the Bradley Lake
Hydroelectric Project. The Bradley Lake project supplies energy
to the Railbelt, which contains the largest concentration of
population in the state. He pointed out the project's specifics
listed on slide 9, commenting that hydroelectric energy is
renewable with clean benefits. He said that in recent history
the energy value of the Bradley Lake Project has been
supplemented by the Battle Creek Project. As shown on slide 10,
the Dixon Diversion Project is a supplement that is being
considered by AEA. He explained that, if this project were
advanced, more water would be made available behind the dam face
to move through the turbine generators, increasing the energy
supply. There are two options being considered for the Dixon
Diversion Project: a tunnel constructed from the Dixon Glacier
to Bradley Lake, and a powerhouse built on Martin River. Slide
11 shows the timeline for the Dixon Diversion Project and the
yearly approximate cost.
10:52:41 AM
REPRESENTATIVE ZULKOSKY questioned AEA's plans to move forward
with the funding for [the Dixon Diversion Project] in the
upcoming fiscal years. She questioned whether state
unrestricted general funds would be used.
CHAIR SCHRAGE requested that Mr. Patch prepare the information
for Mr. Thayer to present when he comes before the committee in
a future meeting.
MR. PATCH responded in the affirmative. He stated that between
January 25 and January 26 of this year AEA achieved a peak
demand of 820 megawatts. Slide 12 and slide 13 depict the
energy resources used to meet this peak demand. He offered that
the peak demand had been met with no brownouts or blackouts, and
all customers were served. He opined that there is a difference
in meeting the demand with hydro and meeting the demand with
other resources. He stated that in this case there was a
predominant deployment of wind and battery. He apologized for
the lack of promised information from NREL on fuel-cost savings
pertaining to these two slides. Nevertheless, it can be taken
away that using a combination of resources could meet
significant Railbelt demand. He offered to follow up with a
supplement when he receives the data [from NREL].
CHAIR SCHRAGE requested that Mr. Patch define "BESS" and "PV"
which appear on the slide.
MR. PATCH explained that "BESS" signifies a battery [energy]
storage system. He reiterated that batteries are being built
within the Railbelt, as they can act quickly to meet inadequate
generation and brownout concerns. He stated that "PV"
[photovoltaic] refers to solar energy.
10:56:44 AM
REPRESENTATIVE RAUSCHER, referring to the list of energy sources
on slide 12, expressed concern that biomass would not be easily
attained in the Interior and Western Alaska. He expressed the
opinion that neither geothermal nor hydro would work in the
winter. Concerning wind energy, he said, "I've seen very calm
days up north ... for weeks and weeks at a time without any
sunlight." He requested an explanation on the prospect of
meeting the percentage demands in these areas "utilizing even
half of the list."
MR. PATCH explained that HB 301 would impact regulated electric
utilities and probably would not affect areas outside of the
Railbelt. He said areas like Utqiagvik would not be covered by
HB 301. In response to a follow-up question, he clarified that
the proposed legislation would address regulated electric
utilities in the Railbelt.
10:59:46 AM
BOB PICKETT, Commissioner, Regulatory Commission of Alaska,
Department of Commerce, Community, & Economic Development,
clarified that there are regulated utilities throughout the
state, but the structure of the legislation deals with the bulk
interconnected Railbelt system; areas not part of the bulk
electric system would not be affected. In response to
Representative Rauscher, he explained that Copper Valley would
not be affected by the legislation because it is not
interconnected to the bulk electric system. He added that
Copper Valley would be included if, at some point, there is an
interconnection between Glennallen and the Matanuska electric
service areas. In response to a follow-up question, he said
[the proposed legislation] would cover five cooperatives up and
down the Railbelt.
11:01:32 AM
REPRESENTATIVE KAUFMAN, in reference to the energy mix presented
on slide 12, questioned the uniformity of the wind bandwidth
depicted on the graph. He questioned the representation of wind
reacting in a uniform matter as plotted on the graph.
MR. PATCH voiced the understanding that, as the sun heats the
earth, wind follows a predictable pattern, and wind is generated
in a belt-like distribution.
REPRESENTATIVE KAUFMAN, with a follow-up comment, clarified that
his question had not been about the amplitude, but about the
mix. He stated that wind power depicted in the graph seems like
a uniform band. He expressed the expectation that [the level of
power generated by the wind would fluctuate].
CHAIR SCHRAGE requested clarification on the consistency of the
wind power.
MR. PATCH voiced his understanding that the slide intends to
depict the demand for wind power, not wind power [generation].
He explained that he did not create the graph, and he reiterated
the unavailable numbers for these slides would have shown the
fuel-cost savings per demand.
CHAIR SCHRAGE, with follow-up comment, stated that each of these
energy sources may have surplus capacity that could be tapped to
meet demand. He related the understanding that [the graph
depicts] the utilization of an energy resource, not the amount
of energy produced by the resource to meet demand.
MR. PATCH confirmed Chair Schrage's statement.
REPRESENTATIVE KAUFMAN, with a follow-up comment, voiced
curiosity between the uniformity of the wind bandwidth versus
the variation in hydro bandwidth.
CHAIR SCHRAGE interjected that this question may be deferred to
energy experts [in a subsequent hearing].
11:06:30 AM
REPRESENTATIVE FIELDS, in relation to Representative Kaufman's
question, referenced page 16 of NREL's report and the output of
wind [energy] over time. He stated that every scenario in the
report, except the Susitna-Watana Project, has a high percentage
of energy provided by wind. He expressed the opinion that the
Susitna-Watana Project would be a multi-billion-dollar
investment with zero political energy for the capital outlay,
and, because of this, the project would not be built. He
expressed the opinion that the federal government would not fund
the project either. He said, "I think it is silly that we would
consider an 80 percent target predicated on Susitna-Watana." He
stated that without the Susitna-Watana project there would need
to be a very high percentage of energy provided by wind during
the course of the year. He questioned the number of states in
the Lower 48 which presently have wind supplying this amount of
energy. To create a steadier energy supply, he questioned
whether the high output of energy from the wind would require a
corresponding investment in pump storage.
MR. PATCH voiced the belief that there are states in the Lower
48 which engage, produce, and sell extremely high percentages of
wind energy. He stated that he does not have a copy of the NREL
document for reference, so he does not have a specific response,
and he does not know the availability of pump storage to support
wind in the Lower 48.
REPRESENTATIVE FIELDS, with a follow-up question, clarified that
to achieve any of the scenarios [listed in the NREL study] which
utilize high percentages of wind utilization, investments in
pump storage would have to be made. He stated that in the rest
of the country wind can be dispatched across state lines. He
argued that, in respect to wind percentages in Alaska, the
context should be "an island grid."
MR. PATCH responded that [using an island grid for Alaska] would
be "wise." He pointed out that Representative Fields raised a
different question concerning the necessary investment for
transmission expenditures. He stated that enhanced
transportation capabilities to move energy [would need to be
funded], and this applies to all energy sources.
11:09:58 AM
REPRESENTATIVE RAUSCHER expressed the opinion that without
building the Susitna-Watana Project, as Representative Fields
suggested, RPS levels would not be obtained, as this project
would be a key part of obtaining levels in the Railbelt.
11:10:30 AM
REPRESENTATIVE FIELDS, with a follow up on Representative
Rauscher's point, questioned whether pump storage capacity up
and down the Railbelt would provide enough hydro capacity if the
Susitna-Watana Project did not go through.
CHAIR SCHRAGE requested that Mr. Patch follow up with this
information after the meeting.
11:11:09 AM
MR. PATCH, moving to slide 14, stated that upgrades would be
necessary for not just the production of power, but for the
movement of generated power and the delivery to the load. He
noted that Railbelt utilities have worked to optimize the
availability and delivery of renewable and conventional energy.
He stated that AEA is working with the Railbelt electric
utilities, studying [energy transmission]. He pointed out that
the projects listed on Slide 15 have schedules and projected
budgets for achieving transmission. He stated that the total
cost for all the projects would be an estimated $261 million.
11:13:04 AM
REPRESENTATIVE FIELDS acknowledged that AEA has been mapping out
[energy transmission lines] for some time. He said, "Rather
than fund these, we've spent billions of dollars on PFDs, so I
think our record shows where our priorities have been." He
stated that the administration has suggested using some of the
oil windfall this year to fund critical transmission capital
projects.
MR. PATCH responded that he has not been part of this
discussion.
REPRESENTATIVE FIELDS suggested that AEA could respond in the
future. With a follow-up question, he asked the amount
ratepayers would have to pay for the [transmission capital
projects] if they were not funded by the oil windfall. He
requested that AEA model this and provide an answer at a later
date.
11:14:03 AM
REPRESENTATIVE ZULKOSKY reflected on Representative Rauscher's
request for follow-up information from AEA on the interconnected
data [used to set the percentages in RPS] and the final cost to
consumers. She requested that AEA also follow up with
information on the proposed legislation's ability to reduce
costs for consumers statewide, not just the Railbelt. She
pointed out that [the legislation proposes] significant state
investment in renewable projects in communities which already
benefit from the lowest cost of energy in the state. She stated
that AEA has not presented an assessment of the [the proposed
legislation's impact] on non-Railbelt communities. She
speculated that AEA's response would be that these costs create
"a floor" for PCE communities. She argued that there is a
continual lack of [energy] innovation reaching PCE communities.
She continued that PCE has been scrutinized in the Railbelt
Project as a financial instrument and not been presented as part
of the infrastructure. She requested to hear from AEA about how
its proposals would benefit all communities in Alaska. She
voiced skepticism that any of the energy innovations being
pursued in the state would have statewide reach. She expressed
disappointment in the lack of compelling arguments to ensure all
of Alaska is being considered for energy solutions.
MR.PATCH responded that he understands Representative Zulkosky's
concern. He pointed out that REF has delivered over $275
million in renewable energy projects, and the proposed HB 358
would extend its sunset date. He stated that presently AEA has
received applications from 39 communities seeking funding for
renewable energy projects. The applications are being reviewed
by the Department of Natural Resources, scored by contacted
economists, and evaluated by engineering experts. After this
process the applications would go before the Renewable Energy
Advisory Committee. The accepted applications would then be
submitted to the legislature for consideration for funding. He
pointed out that this exemplifies that there is value, thought,
consideration, and effort for renewable energy projects,
specifically for rural Alaska.
11:19:44 AM
REPRESENTATIVE FIELDS, in conjunction with his previous
information request on capital funds, requested information
concerning whether capital funding would be used by the
administration for the AEA prioritized list of renewable
projects. In reference to Representative Zulkosky's point, he
stated that the list includes multiple rural projects which have
been before the legislature, but no capital requests have been
made, and "we need to put our money where our mouth is."
11:20:36 AM
REPRESENTATIVE KAUFMAN, in reference to Representative Fields'
point, stated that he has heard about "alternative energy," but
he questioned whether there are "energy alternatives." He
posited that the available mix of energy across the state could
be optimized economically over time without a "political
percentage mandate." He questioned whether there has been a
proposal or plan addressing a statewide scope of alternatives,
including traditional, renewable, and nuclear energies. He
questioned how an optimal mix would look driven by market
economics.
CHAIR SCHRAGE requested Mr. Patch speak to AEA's analysis and
planning efforts which currently exist or have been planned.
MR. PATCH voiced the expectation that in the near future [RCA]
will have "a body that may be able to do precisely what it is
you want ... in terms of Railbelt energy." He said the
organization is in the early stages of development and would
address electric reliability. This organization would undertake
the preparation of an integrated resource plan for the Railbelt.
He stated there are older studies by AEA regarding energy mixes
and deployment of energy resources in rural Alaska. He offered
the belief that the most recent study would be dated, but he
would provide the committee with a copy of the study.
REPRESENTATIVE KAUFMAN responded that if the committee is
choosing options, a broad spectrum of options would be better.
11:23:19 AM
MR. PATCH, continuing with the presentation, clarified that the
projects listed on slide 15 would be funded by the ratepayers of
the Railbelt utility, not by the state. He stated that slide 16
is an overview of the Alaska Intertie, which moves power north
from Willow to Healy. The Intertie is operated jointly by AEA
and Railbelt utilities, and the transmission line improves the
reliability of energy distribution. It allows Golden Valley to
connect to and receive the benefit of lower cost energy
purchased from the Anchorage area, and, for these customers,
there is an annual cost savings of $30 million.
MR. PATCH stated that slide 17 lists the costs of projects which
would maximize the delivery of energy. He stated that slide 18
shows a brief history of the Susitna-Watana Hydroelectric
Project, and page 22 of the Appendix shows a rough timeline for
this project. He thanked committee members for their attention,
and he stated that he has noted the questions which require a
future response.
11:26:29 AM
REPRESENTATIVE RAUSCHER questioned whether the goal of HB 301
would be to reduce carbon.
MR. PATCH responded that he does not have the authority to
answer the question. He expressed the belief that the objective
of the legislation would be to incorporate renewable energy into
the portfolio mix of each of the Railbelt utilities, with the
view towards lowering cost. He said, "I am not the person you
can speak to whether or not the greenness of the energy is its
principal objective."
REPRESENTATIVE RAUSCHER requested that [AEA present] the
following information to the committee in the future: the amount
of carbon the proposed legislation would reduce; the stages the
carbon reduction would occur; and the benefit the state would
have with a reduced carbon footprint. He offered the assumption
that carbon reduction is the reason for the bill. He referenced
an earlier comment that wind, water, and solar are free. He
argued that, if this is so, the bill should create cheaper rates
for the ratepayer; but because ratepayers would have to pay the
installation costs over time, it would result in an increase in
rates. He expressed the opinion that Alaskans are already
struggling with high utilities. He posited that, instead of
focusing on the requirement that certain forms of energy be on
the grid, there should be a reliability and resiliency standard,
especially considering military readiness in the world stage
today.
[HB 301 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB301. Transmittal Letter.pdf |
HENE 3/8/2022 10:15:00 AM |
HB 301 |
| HB 301 AEA Overview Presentation to House Energy Committee 3.8.2022.pdf |
HENE 3/8/2022 10:15:00 AM |
HB 301 |
| HB301. Sectional Analysis. Version A.pdf |
HENE 3/8/2022 10:15:00 AM |
HB 301 |
| HB301. Version A.PDF |
HENE 3/8/2022 10:15:00 AM HENE 4/26/2022 10:15:00 AM |
HB 301 |
| HB301. Supporting Document. NREL Feasability Study (2022).pdf |
HENE 3/8/2022 10:15:00 AM HENE 3/15/2022 10:15:00 AM |
HB 301 |