05/05/2022 09:00 AM Senate FINANCE

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."                                                                                                        
                                                                                                                                
                                                                                                                                
9:55:48 AM                                                                                                                    
                                                                                                                                
Co-Chair Bishop  relayed that it  was the first  hearing for                                                                    
HB 307.  The committee  would hear  a bill  introduction and                                                                    
sectional  analysis  and  would   take  invited  and  public                                                                    
testimony.                                                                                                                      
                                                                                                                                
9:56:21 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRIER  HOPKINS, SPONSOR, relayed that  HB 307                                                                    
was   a   simple  bill   that   would   start  a   long-term                                                                    
comprehensive solution to a difficult  problem that had been                                                                    
worked  on  in Fairbanks  for  a  decade.  He spoke  from  a                                                                    
Sponsor Statement (copy on file):                                                                                               
                                                                                                                                
     In  2009,  the  U.S.  Environmental  Protection  Agency                                                                    
     (EPA)  designated the  more populated  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, and Interior  Gas Utility  (IGU) have                                                                    
     been  actively engaged  in  expanding the  availability                                                                    
     and use  of natural  gas through the  implementation of                                                                    
     the Interior  Energy Project (IEP), a  project designed                                                                    
     to  bring   lower-cost  energy  to  as   many  Interior                                                                    
     residents  and businesses  as possible,  as quickly  as                                                                    
     possible.                                                                                                                  
                                                                                                                                
     A key to reducing PM2.5  air pollution in the long term                                                                    
     is  expanding  the  availability of  affordable,  clean                                                                    
     burning natural  gas. A critical  component of  the IEP                                                                    
     is financing  for the development  of a  unified public                                                                    
     gas utility  with competitive rates. SB  23 (chapter 26                                                                    
     SLA 13)  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.                                                                                      
                                                                                                                                
     Among the financial tools granted  to AIDEA for the IEP                                                                    
     was 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  the  FNSB.  Authorization under  SB  23  for                                                                    
     issuing these bonds was  originally scheduled to expire                                                                    
     June 30, 2018.  Through the passage of  HB 119 (chapter                                                                    
     64  SLA 18)  in 2018,  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.                                                                                                                  
                                                                                                                                
Representative  Hopkins cited  that  there  were letters  of                                                                    
support from  the Alaska  Industrial Development  and Export                                                                    
Authority  (AIDEA), the  City  of  Fairbanks, the  Fairbanks                                                                    
Economic   Development   Corporation,  and   the   Fairbanks                                                                    
NorthStar Borough (copy on file).                                                                                               
                                                                                                                                
Senator Wilson thought  the Titan Facility was  good to have                                                                    
in the  borough and he would  love to see its  expansion. He                                                                    
asked  about how  the additional  bonding capacity  would be                                                                    
used. He referenced the capacity  of the railroad and moving                                                                    
gas containers.                                                                                                                 
                                                                                                                                
Representative Hopkins understood that  the funds would just                                                                    
be for the facility. For  specific plans, he deferred to the                                                                    
Interior Gas Utility.                                                                                                           
                                                                                                                                
10:00:35 AM                                                                                                                   
                                                                                                                                
DAN   BRITTON,   INTERIOR   GAS  UTILITY,   FAIRBANKS   (via                                                                    
teleconference),  stated  that  the current  plans  did  not                                                                    
include any  specific investment for rail  infrastructure as                                                                    
the Interior  Gas Utility (IGU) worked  towards expansion of                                                                    
liquefaction. He  continued that  IGU continued to  look for                                                                    
opportunities to  do so, but  the bonding  authorization had                                                                    
not identified a specific investment in rail.                                                                                   
                                                                                                                                
Co-Chair Bishop asked if Mr. Britton had anything to add.                                                                       
                                                                                                                                
Mr. Britton  noted that  in 2022, it  was estimated  that an                                                                    
additional  600 customers  would  be  converting to  natural                                                                    
gas. The funds  would be used for  expanding availability of                                                                    
gas,   through  the   distribution   system  expansion   and                                                                    
installation of new services as customers were interested.                                                                      
                                                                                                                                
Co-Chair   Bishop   referenced  the   anticipated   600-unit                                                                    
expansion and asked if it was above or below estimates.                                                                         
                                                                                                                                
Mr. Britton  stated the number  was slightly above  the pro-                                                                    
forma for  the current year of  approximately 457 customers.                                                                    
He  continued that  IGU had  reached over  300 approved-for-                                                                    
construction service lines already and  it was well ahead of                                                                    
the previous years progress.                                                                                                    
                                                                                                                                
10:02:29 AM                                                                                                                   
                                                                                                                                
Co-Chair Bishop OPENED public testimony.                                                                                        
                                                                                                                                
10:02:40 AM                                                                                                                   
                                                                                                                                
Co-Chair Bishop CLOSED public testimony.                                                                                        
                                                                                                                                
Co-Chair  Bishop relayed  that  the  amendment deadline  was                                                                    
Friday, May 6 at 5 oclock p.m.                                                                                                  
                                                                                                                                
HB  307  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.