03/27/2012 03:00 PM House ENERGY

        HB 323-NONATTAIN AREA HOME HEATING SYSTEM GRANTS                                                                    
                                                                                                                                
4:17:08 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER announced that 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."                                                                         
                                                                                                                                
4:17:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER moved  to  adopt  the proposed  committee                                                               
substitute (CS) for  HB 323, Version 27-LS1275\I,  as the working                                                               
document.                                                                                                                       
                                                                                                                                
REPRESENTATIVE SADDLER objected for the purpose of discussion.                                                                  
                                                                                                                                
4:17:32 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:17 p.m. to 4:22 p.m.                                                                       
                                                                                                                                
[Although   not   formally   stated,   Representative   Saddler's                                                               
objection was treated as removed.]                                                                                              
                                                                                                                                
4:22:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER  announced the  proposed CS  for HB  323, Version                                                               
27-LS1275\I, was adopted as the working document.                                                                               
                                                                                                                                
4:22:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TAMMIE WILSON,  Alaska State Legislature, speaking                                                               
as the  sponsor of the  bill, explained  the first change  by the                                                               
proposed CS  specifies the grant  amount for a furnace  is $7,500                                                               
and  requires the  furnace  to  be installed.    Also, the  grant                                                               
amount  for an  Environmental Protection  Agency (EPA)  certified                                                               
wood stove is $5,000.  She  said, "It should be reflected also in                                                               
the fiscal  note: $1 million, not  $100 million."  The  source of                                                               
the aforementioned  estimate is the Fairbanks  North Star Borough                                                               
(FNSB) wood  stove change  out program,  which replaced  385 wood                                                               
stoves  for  $441,000.   Representative  T.   Wilson  stated  the                                                               
program authorized  by the  bill is  not a  free giveaway  but is                                                               
modeled after  the AHFC weatherization  and rebate  programs, and                                                               
from  funding that  is  currently  being used  for  this type  of                                                               
activity.                                                                                                                       
                                                                                                                                
4:23:48 PM                                                                                                                    
                                                                                                                                
CO-CHAIR PRUITT  called attention page  1, lines  6 and 7  of the                                                               
bill  that  specified  the  funds come  from  the  Alaska  energy                                                               
efficient home  grant fund.   He asked  whether this is  the same                                                               
fund given to AHFC for the weatherization program.                                                                              
                                                                                                                                
4:24:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T.  WILSON said, "There  is nothing in  that fund.                                                               
It is a  separate fund.  We  took it away from the  rebate one so                                                               
it would  not be confused, ...  [a] brand-new fund."   In further                                                               
response to Co-Chair  Pruitt she said the bill does  not create a                                                               
fund but makes changes to a fund that was not being utilized.                                                                   
                                                                                                                                
CO-CHAIR  PRUITT   expressed  his  understanding  that   an  EPA-                                                               
certified wood  stove will produce little  particulate matter and                                                               
will be O.K. to use.                                                                                                            
                                                                                                                                
REPRESENTATIVE T.  WILSON responded  that most  non-EPA certified                                                               
stoves do not  have catalytic converters, thus pollute  more.  As                                                               
guidelines become stricter, stoves will be cleaner.                                                                             
                                                                                                                                
CO-CHAIR PRUITT asked  about the possibility that  EPA may change                                                               
its regulations after people invest in new stoves.                                                                              
                                                                                                                                
4:25:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  T.  WILSON  recalled  that  the  air  quality  in                                                               
Fairbanks did not  change, but EPA reduced the  "numbers" from 65                                                               
parts per billion  to 35 parts per billion.   In fact, stoves are                                                               
not tested  in cold climates,  "so some of the  numbers sometimes                                                               
are skewed."   She pointed out that if Fairbanks  was able to use                                                               
the previous guidelines it would not be out of attainment.                                                                      
                                                                                                                                
CO-CHAIR PRUITT expressed  his concern that EPA  could change its                                                               
certification on stoves.                                                                                                        
                                                                                                                                
REPRESENTATIVE T.  WILSON pointed out  that EPA is not  likely to                                                               
change its certification on stoves,  but can change the number on                                                               
emissions, and  she described how  a concentration of homes  in a                                                               
neighborhood affects air quality.                                                                                               
                                                                                                                                
REPRESENTATIVE SADDLER  gave an example of  everyone in Fairbanks                                                               
getting  an EPA-certified  stove,  and asked  whether that  would                                                               
automatically meet attainment.                                                                                                  
                                                                                                                                
REPRESENTATIVE T.  WILSON said, "Gas  is probably the  only thing                                                               
that gets us there."  She  added that Fairbanks does not want its                                                               
residents  who have  gas  or  district heat  to  convert to  wood                                                               
stoves, but seeks to replace  existing non-certified wood stoves.                                                               
In  further  response to  Representative  Saddler,  she said  her                                                               
frustration  is  that  EPA  does  not provide  a  model  for  the                                                               
community or  the Department of Environmental  Conservation (DEC)                                                               
to follow, but simply sets levels for attainment.                                                                               
                                                                                                                                
4:30:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked whether the new  standards from EPA                                                               
came with any funding to achieve them.                                                                                          
                                                                                                                                
REPRESENTATIVE T. WILSON said yes.   Two years ago there was a $1                                                               
million  grant from  the Congestion  Mitigation  and Air  Quality                                                               
(CMAQ) Improvement Program  for testing and study,  but the funds                                                               
are now  gone.   In further  response to  Representative Saddler,                                                               
she  said Libby,  Montana,  had  funding from  EPA  to provide  a                                                               
program similar to that proposed by the bill.                                                                                   
                                                                                                                                
REPRESENTATIVE  PETERSEN  noted  to   qualify  for  a  grant,  an                                                               
existing oil furnace would have a  rating of less than 80 percent                                                               
efficiency.   He asked  if 80 percent  efficiency is  the highest                                                               
available for fuel oil.                                                                                                         
                                                                                                                                
REPRESENTATIVE  T. WILSON  explained  that in  a  cold climate  a                                                               
percentage from 82 to 90 does not greatly affect air quality.                                                                   
                                                                                                                                
CO-CHAIR PRUITT questioned whether  EPA would acknowledge a good-                                                               
faith effort if Fairbanks does not reach attainment by 2014.                                                                    
                                                                                                                                
REPRESENTATIVE  T. WILSON  indicated yes,  explaining that  there                                                               
must  be a  state  implementation plan,  and  this program  would                                                               
count  as one  of the  ways  to cure  the problem;  in fact,  the                                                               
intent  of HB  323 is  to show  EPA the  state's interest  and to                                                               
prevent  a ban  on burning  wood stoves  during times  of an  air                                                               
inversion.                                                                                                                      
                                                                                                                                
4:34:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked whether  there is an  impediment to                                                               
the reuse of a replaced stove.                                                                                                  
                                                                                                                                
REPRESENTATIVE  T.  WILSON said  the  FNSB  program destroys  the                                                               
replaced stoves.                                                                                                                
                                                                                                                                
REPRESENTATIVE SADDLER encouraged the reuse of stoves.                                                                          
                                                                                                                                
REPRESENTATIVE T.  WILSON pointed  out FNSB  has an  ordinance to                                                               
prevent  the  sale  of  non-EPA  certified  wood  stoves  in  the                                                               
nonattainment area.                                                                                                             
                                                                                                                                
4:36:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER removed  his objection.   There  being no                                                               
further  objection,   Version  I  was  adopted   as  the  working                                                               
document.                                                                                                                       
                                                                                                                                
4:36:45 PM                                                                                                                    
                                                                                                                                
STACY  SCHUBERT,   Director,  Governmental  Relations   &  Public                                                               
Affairs, AHFC, informed  the committee that the  zero fiscal note                                                               
submitted  by  AHFC [HB323-DOR-AHFC-03-01-12]  attached  analysis                                                               
that included  10,000 homes  participating in  the program  at an                                                               
average cost  of $10,000 per  grant.  Also,  additional operating                                                               
expenses to AHFC were estimated  at $1.8 million.  Alaska Housing                                                               
Finance Corporation  now recognizes that  the intent of  the bill                                                               
is for the legislature to appropriate  $1 million to the fund and                                                               
reduce the amount  of the grant thus the  corporation will revise                                                               
its  estimate  and   provide  an  amended  fiscal   note  to  the                                                               
committee.   She also clarified  that on page  1, lines 6  and 7,                                                               
the bill identifies the Alaska  energy efficient home grant fund,                                                               
which is  an inactive grant  fund within AHFC that  presently has                                                               
zero funds.   Testimony by AHFC on 3/22/12 referred  to a balance                                                               
of $64 million  in the home energy rebate fund;  this entire fund                                                               
is encumbered or obligated.                                                                                                     
                                                                                                                                
4:39:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PRUITT asked  whether the  lower grant  amounts in  the                                                               
proposed  CS are  adequate to  complete  the change  outs in  the                                                               
Fairbanks area.                                                                                                                 
                                                                                                                                
4:39:57 PM                                                                                                                    
                                                                                                                                
JOHN ANDERSON,  Project Officer, Weatherization, AHFC,  said AHFC                                                               
is  completing  its  weatherization outcomes  report  which  will                                                               
provide  details  on  every weatherization  project;  however,  a                                                               
recent  sample of  10 "boiler  swap-outs" in  the Fairbanks  area                                                               
indicated that they cost an average of $8,900.                                                                                  
                                                                                                                                
REPRESENTATIVE TUCK observed that  a homeowner cannot participate                                                               
in the energy rebate program  if they participate in the proposed                                                               
wood  stove or  furnace program.   He  asked whether  the sponsor                                                               
considered allowing  a homeowner to participate  in both programs                                                               
if the two grant amounts do not exceed $10,000.                                                                                 
                                                                                                                                
MS. SCHUBERT deferred to the sponsor.                                                                                           
                                                                                                                                
REPRESENTATIVE SADDLER  asked whether  the change  outs averaging                                                               
$8,900 were for gas furnaces or wood stoves.                                                                                    
                                                                                                                                
MR. ANDERSON answered that the change outs were from low-                                                                       
efficiency  oil furnaces  to high-efficiency  oil  furnaces.   In                                                               
further   response   to    Representative   Saddler,   said   the                                                               
weatherization and  rebate programs do not  recognize wood stoves                                                               
as  primary  sources  in  the  rating process,  so  there  is  no                                                               
analysis on wood stoves.                                                                                                        
                                                                                                                                
4:42:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER  opened public testimony  on the proposed  CS for                                                               
HB  323.   After determining  no  one wished  to testify,  public                                                               
testimony was closed.                                                                                                           
                                                                                                                                
CO-CHAIR PRUITT  noted that the  present bill is  for homeowners.                                                               
He asked whether AHFC's cost estimates included only owner-                                                                     
occupied homes.                                                                                                                 
                                                                                                                                
MR. ANDERSON  understood that AHFC's estimate  of 42,000 included                                                               
rentals and  owner-occupied units.   In  further response  to Co-                                                               
Chair Pruitt,  he said including only  owner-occupied units would                                                               
change the estimate, as will the  changes in the proposed CS.  He                                                               
offered to provide further estimates.                                                                                           
                                                                                                                                
4:44:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER held over HB 323.