Legislature(2021 - 2022)ADAMS 519
04/08/2022 01:00 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB168 | |
| HB170 | |
| HB307 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 9 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 168 | TELECONFERENCED | |
| += | HB 170 | TELECONFERENCED | |
| += | HB 307 | TELECONFERENCED | |
HOUSE BILL NO. 307
"An Act relating to the financing and issuance of
bonds for a liquefied natural gas production system
and natural gas distribution system; and providing for
an effective date."
3:12:18 PM
REPRESENTATIVE GRIER HOPKINS, SPONSOR, introduced the
legislation. He read from a prepared statement:
I'm pleased to offer HB 307 - a simple bill that is
part of a long-term, comprehensive, and paradigm-
shifting solution to a difficult problem.
In 2009, the U.S. Environmental Protection Agency
(EPA) designated portions of the Fairbanks North Star
Borough (FNSB) as a nonattainment area for air quality
related to PM2.5. Since that time, the communities of
Fairbanks and North Pole, State of Alaska, AIDEA and
the Interior Gas Utility have been actively engaged in
expanding the availability and use of natural gas
through the Interior Energy Project, a project
designed to bring lower-cost energy to as many
Interior residents and businesses as possible, as
quickly as possible.
A critical component of the Interior Energy Project or
IEP is financing for the development of a unified
public gas utility with competitive rates. SB 23 was
passed by the 28th Alaska Legislature in 2013 giving
the Alaska Industrial Development Authority (AIDEA)
the ability to provide financing tools for the
development of the IEP, including the ability to issue
up to $150 million in conduit revenue bonds to help
develop an integrated natural gas supply chain,
including expansion of natural gas liquefaction
facilities in the Matanuska-Susitna Borough and
expansion of natural gas mains and service lines in
Fairbanks and North Pole.
Authorization for issuing these bonds was originally
scheduled to expire June 30, 2018. Through the efforts
led by Rep. Thompson and former Senator Pete Kelly -
the Alaska Legislature extended access to AIDEA
bonding an additional five years to June 30, 2023.
Given market conditions and turmoil related to the
COVID-19 pandemic, IGU has paused the final investment
decision on its Titan liquid natural gas (LNG) plant
expansion project located in the Mat-Su Borough, which
will necessitate access to AIDEA bonds.
Bonds of $136 million of the original $150 million
authorized may be issued to provide up to the $275
million financing cap authorized under SB23.
HB 307 extends the authorization for AIDEA to issue
IEP-related bonds for an additional five years to June
30, 2028.
Members will find in their packets letters of support
for HB 307 from AIDEA as well as the Fairbanks North
Star Borough and the January 2022 quarterly report
from AIDEA to the legislature on the progress of the
IEP.
JOE HARDENBROOK, STAFF, REPRESENTATIVE GRIER HOPKINS,
provided a sectional analysis on the bill (copy on file):
Section 1:
Amends the uncodified law of the State of Alaska
enacted in 2013 to replace the expiration date of the
authority of AIDEA to issue bonds in support of the
project from June 30, 2023, to June 30, 2028.
Section 2:
Contains an immediate effective date.
Representative Carpenter wondered how the current
announcement of a natural gas pipeline from the North Slope
to the Interior of Alaska impacted the IEP.
Representative Hopkins replied that the IEP project
expanded natural gas lines throughout the Fairbanks area.
He emphasized that the Fairbanks area needed to be ready
for the time the gas line was completed. He explained that
when more affordable gas was supplied from the North Slope
customers would pay a lower interest rate through their
utility bill by extending the bonding authority and
expanding the infrastructure.
Co-Chair Merrick moved to invited testimony.
ELENA SUDDUTH, MANAGER, CUSTOMER SERVICE AND MARKETING,
INTERIOR GAS UTILITY, FAIRBANKS (via teleconference), was
in favor of HB 307. She related that AIDEA and the Interior
Gas Utility (IGU) had been working closely on all aspects
of the IEP that included liquefaction, transportation,
storage, regasification, and distribution of natural gas.
She listed the ways both entities had advanced the project.
Fairbanks Natural Gas and IGU had consolidated into one
natural gas utility to extend the availability of lower
cost energy to as many businesses and residences as
possible. She delineated that approximately 215 miles of
natural gas distribution lines had been installed to the
core non-attainment areas of Fairbanks and the North Pole.
In Fairbanks, 1,550 residential and commercial customers
were using natural gas. The natural gas utility could serve
8,500 properties if everyone with access to natural gas
mains converted. The North Pole distribution lines served
125 customers with the main lines reaching 3,000 commercial
and residential properties. She furthered that AIDEA and
IGU had been working on two storage projects. There was a
5.25 million gallon Liquified Natural Gas (LNG) storage and
gasification facility that was completed in Fairbanks in
late 2019 and a separate 150,000 gallon LNG storage and
gasification facility completed in the North Pole in 2021.
The IGU's customer base had increased about 40 percent
since the storage facilities were completed and it
anticipated 600 more customers converting to natural gas
for heating in 2022. She noted that AIDEA bonding was
critical to the continuing success of the project. As the
customer base grew, IGU would need to utilize further AIDEA
bonding to add approximately 100,000 gallons per day of LNG
capacity to the present output of the Titon Liquefaction
Facility located in the Mat-Su Borough. The existing plant
had a capacity of about 50,000 gallons per day. The utility
planned to utilize AIDEA bonding to expand more natural gas
mains into more neighborhoods in the Fairbanks and North
Pole communities. The bonding authority was not fully
utilized due to the COVID-19 pandemic, resulting oil price
drop, and economic uncertainty. She anticipated needing the
bonding over the following few years. The bill provided
additional time for the IEP to progress and realize the
project's goal of affordable natural gas to as many
customers as possible.
3:22:12 PM
Co-Chair Merrick set an amendment deadline for HB 307 for
Wednesday, April 13, 2022, at noon.
Representative Hopkins thanked the committee for hearing
the bill.
HB 307 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 9 Intent letter to AMCO Director_lic conversion and auctions 04.04.22.pdf |
HFIN 4/8/2022 1:00:00 PM |
SB 9 |
| SB 9 Amenement Pkt. 1 - 27 040722.pdf |
HFIN 4/8/2022 1:00:00 PM |
SB 9 |