03/13/2012 03:00 PM House ENERGY

        HB 323-NONATTAIN AREA HOME HEATING SYSTEM GRANTS                                                                    
                                                                                                                                
3:47:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER  announced the final  order of business  would be                                                               
HOUSE  BILL  NO. 323,  "An  Act  relating  to the  Alaska  energy                                                               
efficient  home grant  fund;  and creating  a  grant program  for                                                               
converting  homes in  regions  designated  as particulate  matter                                                               
nonattainment areas to efficient home heating systems."                                                                         
                                                                                                                                
3:47:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  moved  to  adopt  HB  323,  Version  27-                                                               
LS1275\M, as  the working  document.   There being  no objection,                                                               
Version M was adopted.                                                                                                          
                                                                                                                                
3:48:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER moved to  adopt the fiscal note identified                                                               
as  HB323-DOR-AHFC-03-01-12.    There  being  no  objection,  the                                                               
fiscal note was adopted.                                                                                                        
                                                                                                                                
3:48:46 PM                                                                                                                    
                                                                                                                                
BRANDON  BREFCZYNSKI,  staff  to  Representative  Tammie  Wilson,                                                               
Alaska State  Legislature, speaking  on behalf  of Representative                                                               
T. Wilson,  prime sponsor,  introduced HB  323.   Mr. Brefczynski                                                               
said  the  bill  would  provide assistance  for  designated  U.S.                                                               
Environmental  Protection Agency  (EPA)  Particulate Matter  (PM-                                                               
2.5)  Nonattainment  Areas,  in  order  to  resolve  air  quality                                                               
problems.    Inefficient  furnaces  and  non-EPA  certified  wood                                                               
stoves are  two of the  primary contributors to poor  air quality                                                               
at  the level  of PM-2.5.   The  bill would  establish a  program                                                               
administered by  the Alaska  Housing Finance  Corporation (AHFC),                                                               
Department of Revenue (DOR), providing  up to a $10,000 grant for                                                               
homeowners   residing  in   a  nonattainment   area  to   convert                                                               
inefficient,  oil-fired   furnaces  or  non-EPA   certified  wood                                                               
stoves, to new, cleaner oil-fired  furnaces or EPA certified wood                                                               
stoves.  Unlike  AHFC's energy efficiency rebate  program, or the                                                               
Fairbanks  North  Star  Borough's (FNSB)  wood  stove  change-out                                                               
program,  which  require  the   homeowner  to  pay  the  up-front                                                               
expenses of  energy efficiency upgrades,  HB 323 would  provide a                                                               
grant  for the  purchase  and installation  of  a more  efficient                                                               
heating  device.     Also,  HB  323  is  free   from  the  income                                                               
limitations  that are  part of  the AHFC  weatherization program.                                                               
This  legislation  is  needed  as  FNSB  is  located  in  an  EPA                                                               
nonattainment  area because  of its  poor air  quality, primarily                                                               
due to wood stoves and  oil-fired furnaces, which contaminate the                                                               
air  with  sulfur   dioxide.    The  borough   was  designated  a                                                               
nonattainment area in 2010, and  has until 2014 to attain cleaner                                                               
air by  developing a state  implementation plan  that establishes                                                               
limits or  standards to minimize emissions,  and also establishes                                                               
control  strategies;  HB   323  would  be  one   of  the  control                                                               
strategies.     However, if  FNSB  does not  meet attainment  and                                                               
develop  a  state implementation  plan,  EPA  could sanction  the                                                               
state by withholding federal highway  dollars, except for certain                                                               
safety projects.   Mr. Brefczynski explained that  to qualify for                                                               
the  program, a  homeowner must  operate a  furnace that  is less                                                               
than 80  percent efficient,  or a  non-EPA certified  wood stove.                                                               
To  verify that  these qualifications  are met,  an energy  rater                                                               
will visit the home and issue  a report to AHFC.  Subsequently, a                                                               
grant  would be  issued to  a vendor,  who would  receive payment                                                               
after the installation  of the heating device,  and the homeowner                                                               
would receive  an Internal  Revenue Service  (IRS) Tax  Form 1099                                                               
for reporting the income from the grant.                                                                                        
                                                                                                                                
3:52:43 PM                                                                                                                    
                                                                                                                                
MR. BREFCZYNSKI  provided information on the  savings gained from                                                               
replacing an  inefficient device;  for example, improving  from a                                                               
60 percent-efficient  furnace to an 85  percent-efficient furnace                                                               
will save  $30 out  of every  $100 spent  on fuel.   Furthermore,                                                               
replacing a  non-EPA certified wood  stove with an  EPA certified                                                               
wood  stove  will  "greatly  improve   our  air  quality."    The                                                               
following restrictions  are placed on  the program:   a homeowner                                                               
who has  already participated in  the AHFC energy  rebate program                                                               
or weatherization  program will  not be eligible  for a  grant; a                                                               
homeowner  who  qualifies  for  the  income-based  weatherization                                                               
program must utilize  that program; and a  homeowner who receives                                                               
a grant through  the HB 323 program is not  eligible to receive a                                                               
future   grant   from  the   AHFC   energy   rebate  program   or                                                               
weatherization program.   He concluded that HB  323 would provide                                                               
nonattainment  areas  with  another  tool  to  combat  local  air                                                               
quality issues  - by  the removal  of non-efficient  furnaces and                                                               
non-EPA certified wood  stoves - in order to  avoid EPA sanctions                                                               
and  to  improve the  health  of  those living  in  nonattainment                                                               
areas.                                                                                                                          
                                                                                                                                
3:54:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   SADDLER  asked   which  program   is  the   most                                                               
attractive option to a homeowner  in the Interior, the low-income                                                               
weatherization  program,  the  energy   rebate  program,  or  the                                                               
program proposed by HB 323.                                                                                                     
                                                                                                                                
3:55:27 PM                                                                                                                    
                                                                                                                                
MR.  BREFCZYNSKI  said the  weatherization  program  is best  for                                                               
those who  qualify.  For those  with capital on hand,  the rebate                                                               
program may be preferable as rebates  can be used to pay for more                                                               
than a furnace upgrade.  He said  the intent of HB 323 is to help                                                               
those who do  not qualify for the weatherization  program, yet do                                                               
not have  the funds necessary  to utilize the rebate  program, or                                                               
FNSB's wood stove change-out program.                                                                                           
                                                                                                                                
3:56:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked what efforts Fairbanks  has made to                                                               
comply with EPA's particulate matter standards.                                                                                 
                                                                                                                                
MR. BREFCZYNSKI said FNSB offers  a wood stove change-out program                                                               
that provides funds for three options:   the removal of a non-EPA                                                               
certified  wood   stove  or  an  outdoor   hydronic  boiler;  the                                                               
replacement  of  a  non-EPA  certified wood  stove  with  an  EPA                                                               
certified wood stove; and the  repair of a non-EPA certified wood                                                               
stove.  In addition, FNSB has  begun a public service campaign to                                                               
inform  residents  how to  burn  wood  efficiently.   In  further                                                               
response to Representative Saddler,  he said vehicular traffic is                                                               
not  an air  pollution problem  as FNSB  no longer  has a  carbon                                                               
dioxide (C02) nonattainment status.                                                                                             
                                                                                                                                
CO-CHAIR PRUITT  asked for  the extent of  the home  energy audit                                                               
required by the bill.                                                                                                           
                                                                                                                                
MR. BREFCZYNSKI  explained that  the energy  rater would  come to                                                               
the  home  and  determine  the   efficiency  level,  or  the  EPA                                                               
certification,   of  the   furnace,  take   pictures,  and   send                                                               
verification to the grant administer.                                                                                           
                                                                                                                                
CO-CHAIR PRUITT  suggested there could  be a minimum  standard of                                                               
efficiency for heating devices, instead  of an energy audit.  The                                                               
program  could  have  regulations  set for  a  percentage  of  an                                                               
efficiency level that would qualify.                                                                                            
                                                                                                                                
MR. BREFCZYNSKI added that the  energy rater will also assess how                                                               
much the retrofit will cost,  thus the rater will confirm whether                                                               
the device  qualifies, and  will provide an  estimate to  AHFC of                                                               
the cost, up to $10,000.                                                                                                        
                                                                                                                                
4:00:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PRUITT than  asked  whether there  is  a potential  for                                                               
personal liability to the energy rater  if his or her estimate is                                                               
low, and  the actual  cost is  over the  maximum grant  amount of                                                               
$10,000.                                                                                                                        
                                                                                                                                
MR. BREFCZYNSKI  said he  would provide  this information  to the                                                               
committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE PETERSEN gave an example  of a homeowner who had a                                                               
previous energy  audit, but did  not complete the  rebate program                                                               
due to a  lack of money.   In this case, could  the homeowner use                                                               
the previous  audit, or is it  necessary for the rater  to repeat                                                               
the audit.                                                                                                                      
                                                                                                                                
MR. BREFCZYNSKI said the rater would need to revisit the home.                                                                  
                                                                                                                                
REPRESENTATIVE PETERSEN called attention  to page 2, lines 12-13,                                                               
of the bill that read:                                                                                                          
                                                                                                                                
     25 percent of the gross floor area of the building for                                                                     
     which a grant is received may be devoted to commercial                                                                     
     use. ...                                                                                                                   
                                                                                                                                
REPRESENTATIVE  PETERSEN surmised  a  person using  a  home as  a                                                               
business could qualify.                                                                                                         
                                                                                                                                
MR.  BREFCZYNSKI said  yes, and  pointed out  that these  are the                                                               
same standards used by AHFC's energy rebate program.                                                                            
                                                                                                                                
REPRESENTATIVE SADDLER asked whether other states are offering                                                                  
similar grant programs.                                                                                                         
                                                                                                                                
4:03:53 PM                                                                                                                    
                                                                                                                                
MR. BREFCZYNSKI said he would provide this information to the                                                                   
committee.                                                                                                                      
                                                                                                                                
CO-CHAIR FOSTER held over HB 323.